1 ... S ee Te x. R. App . P. 47. 4. 

## COURT OF APPEALS SECOND DISTRICTOFTEXAS FORT WORTH NO. 2 - 0 7 - 3 1 7 - CV
A V ERY PH A RM A C EU TI C A LS, I N C . A PPELL A N TS/ C RO SS- A PPELL EES AND ALSANK ARY V . HA YN ES AN D BO O NE, L . L . P. , APPE L L EE S/ CRO SS- APPE L L AN TS C RA I G PRI C E, JO H N BU TLER E AT ON, AN D B I L LNA I F E H

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FR O M THE 96TH DI STRI CT CO URT O F TARRA NT CO UN TY

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### M E M ORANDU M OP I NI ON 1

----- ----- -- I. I N T R OD U C T I ON Ap p e l l a n t s a n d Cr o s s - Ap p e l l e e s Av e r yP h a r ma c e u t i c a l s , I n c . a n d Al Sanka r y ( col l ec t i vel y “ A ppe l l ant s” ) ap pea l f r om t he t r i al co urt ’ s or dergr ant i ng
su m m a ry j udgm enti n f avo rofA ppe l l ee s and Cr os s- A ppe l l ant s H ayn esan d2 ... In i ti a l l y , h o w e v e r, a c c o rd i n g to V e r V y n c k , a t th e ti m e o f A v e ry ’s

f or m at i on, V erV ync k o w ned 50% ofA very, Sank ary ow n e d 24% , St eve Her m a n ( Sa nk a r y’ s n e ph e w ) o w ne d 24% , a nd a no t he ri nd i vi du a l o w ne d 1% . 2 B o o n e , L .L .P ., C r a ig P r ic e , J o h n B u t le rE a t o n , a n d B ill N a if e h (c o lle c t iv e ly “Appel l e e s ” ). I n s eve n i ss ues , A ppe l l ant s ar guet hatt he t r i al co urter r ed by gr ant i ng A ppel l ees’ m ot i on f or s um m ar y j udg m ent , by over r ul i ng A ppel l ant s’
o bj e c t i o n s t o A p p e l l e e s ’ s u mma r yj u d g me n te v i d e n c e , a n d b yde nyi ng A ppel l ant s’ m ot i on f ornew t r i al . I n a si ngl e cr oss- i ssue, A ppel l ees ar gue t hat t h e t r ia l c o u rt s h o u ld h a v e g r a n t e d A p p e lle e s ’ p le a t o t h e ju r is d ic t io n . W e w ill
a f f i r m. II . F ACT UALANDP ROC ED URALB ACKGROUND J o h n V e r V y n c k , a fo rm e r e m p l o y e e o f R e s p i ra to ry D ru g g i s t, In c . (“R D I”),
a n A l a b a m a b u sine ss , a p p roa c h e d S a n k a ry i n 2 0 0 0 w i th a b u sine ss p l a n to d e v e lo p A v e r y — a b u s in e s s d e s ig n e d t o b e a w h o le s a l e d is t r ib u t o ro fg e n e r ic phar m aceut i cal s, i ncl udi ng r espi r at or y m edi cat i ons and pl ast i c vi al s. V erV ynck
a n d S a n k a rys u b s e q u e n tl ye n te re d i n to a b u s i n e s s re l a ti o n s h i p to g e th e r, A v e ry ’s
art i cl es ofi ncor por at i on w er e file d in Jul y 20 00 , and S ankar y m ade an i ni t i al
ca pi t al i nve st m ent i n A very ofap pr oxi m at el y $300, 000 . VerV ync k a nd Sanka r y ea ch ow ned 50% ofA very; V e r V y n c k , S a n k a r y , a n d H e r m a n in it ia lly 23 ... H er m an l at ers ol d hi s sh ar est o Sank ary a nd l eftt he boa r d. 3 served as A ver y’ s di r ect or s; V e rV y n c kw a s A v e ry ’sp re s i d e n t; a n d S a n k a ry 3

w a s A v e ry ’sc h i e f e x e c u ti v e o ffice r. V erV ynck w as t he “key m an” atA ver y due t o hi s ph a rm aceut i cal exp er i enc e, but Sanka r y pl aye d a su bs t ant i al r ol e i n t he day

- to -d a y d e ci si on
m aki ng pr ocess atA ver y, accord in g to V erV ynck and M ar k A cker , a f or m er A v e ry e m p l o y e e . A t an y g i v e n ti m e , A v e ry e m p l o y e d b e tw e e n tw e n ty to t w ent y- t w o em pl oyees. A ver y cond uct ed busi ness outofa bui l di ng i n Eul ess
ow ne d bySa nk a r y be f or e m ov i ng t o a l oc a t i on i n Fo rtW ort h i n l a t e 2002 . H ayn esan d Booner epr es ent ed A very and V er V ync k, i ndi vi dua l l y, on a
num berofdi f f er entm att er s. Accor di ng t o Pr i cean d Ea t on, H ayn esan d Boone at t or neys, H aynes and B oon e w as notgener al orcor por at e counsel f orei t her V erV ynck orA very, and H aynes and B oon e di d not pr ovi de day- to -day l egal
cou ns el t o VerV ync k o rA very; V erV ync k a nd Avery e nga ged H ayn esan d Boone on a “ pr oj ec t - bas ed b a s i s . ” Fori ns t anc e, ac cor di ng t o Ea t on, he “r evi ew ed and r evi se d a n i nde pen den tco nt r ac t orag r e e m e n t f orA very on M ar ch 30, 200 1, and A pr i l 1, 2001 ”; i n Ju l y 2001, atV erV ync k’ s r equ es t , he “pr epar ed a shel l docum entf or a st ock pur chase agr eem entbet w een V erV ynck and [ Sanka r y] w her e V er V ync k w oul d pur cha se Sanka r y’ s A very s t ock ”; an d4 ... A cc or di ng t o Ea t on, “ N ei t heroft hes e d r aftag r ee m ent s con t ai ned an y

s a l e s p ri c e te rm s .”

5 ... A Ja nua r y 2, 200 1 l ett er add r es se d t o V er V ync k f r om Pr i ceco nce r ns “Re sp i r at ory Dr uggi st , I nc. , Res pi r at ory D i st r i bui t or s, I nc. / Ri cha r d Pow el l ” and st at est hat“ [ i ] ti s m y un der st and i ng t hat , at t hi s t i m e, w e ar e n otad dr es si ng a n yo u ts ta n d i n g l e g a l i s s u e s fo r A v e ryP h a rm a c e u ti c a l s .” 4 i n N ovem ber20 01 , atV erV ynck’ s requ est , he “r evi sed t he dr af tst ock pur chase agr eem entby r em ovi ng cert ai n pr ovi si ons and f o rw a rd e d i tt o V er V y n c k .” 4 In D e c e m b e r 2 0 0 1 , a t V e r V y n c k ’sre q u e s t, E a to n p re p a re d a p ro m i s s o ry not e a nd s ec ur i t y a gr ee m entbe t w ee n A very and Sanka r y r ega r di ng a l oan by S a n k a ryto A v e ry . P u rs u a n t to th e n o te , A v e ryp ro m i s e d t o p a yS a n k a ry $ 3 9 3 ,0 3 9 . 0 0 . T h e s e c u r it ya g r e e m e n tg a v e S a n k a r ya s e c u r it yin t e r e s tin
v a r io u s t y p e s o fA v e r yc o lla t e r a l. A tsom e poi nt af t er A ver y’ s f or m at i on, R D I i ni t i at ed l i t i gat i on i n A l abam a agai ns t V erV ynck, A cker , and T i m Fi ckl i ng ( a f or m erA ver y em pl oyee)
com pl ai ni ng of al l eged vi ol at i ons ofnonco m pet e agr eem ent s w i t h R D I . Y ancey B u rne tt rep res e n ted V e r V y n c ki n the A l a b a m a l i ti g a ti o n , b u t a c c o r d in g to A p p e l l e e s , H a y n e s a n d B o o n e a l s o p ro v i d e d a d v i c e to V e r V y n c ka n d A v e ry
a bo ut t he m a t t e r un t i l J a nu a r y 2, 2001 . F o llo w in g a t r ia l, t h e A la b a m a c ir c u it 5 j udges i gne d a n “O r derG r ant i ng Rel i efPur su antt o Br ea ch ofEm pl oym ent6 ... T h e o r d e rs p e c if ic a lly e n jo in e d V e r V y n c k “ f r o m d ir e c t lyo rin d ir e c t ly

sol i ci t i ng . . . oraccept i ng . . . any busi ness f r o m any ofRD I ’ s f or m er c u s t o m e r s w h ic h in v o lv e s r e s p ir a t o r y m e d ic a t io n s o ru n itd o s e v ia ls u t iliz e d in th e s a l e o f re s p i ra to rym e d i c a ti o n s ” ; “f ro m h i ri n g a w a yo r a tte m p ti n g to h i re aw a y . . . an y RD I em pl oye e” ; “ f r om di r ec t l y ori ndi r ec t l y e nga gi ng i n a ny bus i nes s dea l i ng i n a ny w ay w i t h t he hom e h ea l t h ca r e f i el d asi tr el at est o t he pur cha seors al e of r es pi r at ory m edi ca t i on a nd un i tdos e v i al s; “ f r om ope r at i ng asa s ol e p r opr i et or , orow ni ng a ny i nt er es ti n a ny p er so n, f i r m , co r por at i on, part ner sh i p, orot heren ti ty e nga ged i n t he bus i nes s ofpur cha si ng ors el l i ng r es pi r at ory m edi ca t i onsan d uni t dos e vi al s and r el at ed equ i pm ent ”; an d “ f r om di r ec t l y or i ndi r ec t l y ow ni ng any i nt er es t i n, or bec om i ng em pl oye d i n , a ny e n ti tye n g a g e d i n th e b u s i n e s s o f th e s a m e o r s i m i l a r n a tu re a s [R D I]. ”

7 ... A ccor di ng t o Eat on, he “di d not nego t i at e any of t he t er m s ofei t her agr eem ent , ” and he “w as unaw ar e w het hert he agr eem ent s w er e everexecut ed o r c o n s u m m a te d .”

8 ... T h e s u m m a r yju d g m e n t e v id e n c e isu n c le a rre g a r d in g a ll o ft h e d e t a ils s u r r o u n d in g t h e e f f e c t , ifa n y , o ft h e a g r e e m e n t s . F ic k lin g t e s t if ie d in h is d e p o sit i o n tha t he “s i g n e d b a c k ” th e A v e ry s to c k s to V e r V y n c k a t so m e p o i n t, butheal so ag r ee d t hathe“ di dn’ ten d up ow ni ng a nyt hi n g ” a fte rs i gni ng t he 5 A g r e e m e n t s ” o n F e b r u a r y 2 0 , 2 0 0 2 , t h a te n jo in e d V e rV y n c kf r o m c e rt a in cond uct
— i ncl udi ng com pet i ng w i t h R D I

— f orei ghteen m onths. 6 A f t eren t r y oft he A l aba m a i nj unc t i on, V erV ync k s o u g h t adv i cef r om H ayn esan d Boo n e re g a rdi ng hi s com pl i anc e w i t h t he enj oi ni ng or deran d t he
o r d e r ’s e f f e c to n A v e r y . In a n e f f o rtt o c o m p lyw it h t h e o r d e r , V e rV y n c ks o ld h is s h a r e s in A v e r yt o F ic k lin g e f f e c t iv e M a r c h 1 9 , 2 0 0 2 . E a t o n p r e p a r e d “ s h e ll d o c u m e n t [s ]” f o ra S t o c kP u r c h a s e A g r e e m e n ta n d a n O p t io n A g r e e m e n t(in
w hi ch Fi ckl i ng gr ant ed V erV ynck t he opti on t o pur chase back t he A ver y shar es ata l at erdat e) f orV erV ync k a nd F i ck l i ng t o c ar r y ou tt he t r ans ac t i on. 7 8agr eem ent s. W hat evert he case, Eat on pr epar ed t he docu m ent s. 9 ... S a n k a ry o p i n e d tha t A W P w a s f o rm e d b e h i n d h i s b a c kan d to ci r cum ventt he A l abam a or derand t hatA ppel l ees di d not i nf or m hi m orr eveal t hatt hey w er e f or m i ng A W P; had t hey don e so, he w oul d have ob j ect ed. V er V ync k a nd Acke r , how eve r , o p i ned t hatSank ary w asaw ar e o fA W P an d t he nat ur e ofi t s busi ness. 6 I tw as al so ( som ehow ) det er m i ned t hatV erV ynck cou l d sel l vet er i nar i an p r o d u c t s (n o tre s p ir a t o r yd r u g s ) t o v e t e r in a r ia n c lin ic s a n d w h o le s a le r s y e ts t ill
c o m p lyw it h t h e A la b a m a o r d e re n jo in in g h im f r o m c o m p e t in g w it h R D I. T o t h is
e n d , Ha y n e s a n d B o o n e f o r me d Av e r y W h o l e s a l e P h a r ma c e u t i c a l s, I nc. (“ A W P ” ). VerV ync k w as A W P’ s so l e sh ar eho l der and di r ec t or . A W P w asnot

9
a s ubs i di ary ordi vi si on ofA very. A notherbusi ness t hatH aynes and B oon e f or m ed atV erV ynck’ s r equest
w a s In f i ni t y C us t om Pl asti cs, I nc . ( “I nfi ni t y” ) . A ve r y p urch ase d p l asti c v i a ls (ab o u t t w o m il li o n p e r m o n th ) fr o m a F l o ri d a co m p a n yan d u se d the v i a l s to package m edi cat i on. A ccor di ng t o V erV ync k , h e and S ankar y deci ded t hat t hey shou l d devel op t hei row n m edi cat i on vi al pr od u c t. C onsequ ent l y, t hey
c o n c e iv e d In f in it y“ t o p u r c h a s e t h e s e c o n t a in e r s f r o m t h e m a n u f a c t u r e ra n d s e ll th e m b a c kto A v e ry .” V e r V y n c kw a s In fi n i ty ’ss o l e s h a re h o l d e r a n d d i re c to r. S a n k a ry , h o w e v e r, c h o s e to b e a c a p i ta l i n v e s to r i n In fi n i ty , n o t a s h a re h o l d e r,10 ... S a n k a r ys a id h e h a d n o id e a t h a t In f in it y w a s b e in g f o r m e d w h e n it

h a ppe ned and t hat A ppe l l ee s di d not i nf or m hi m or r eve al t hat t h e y w e re f or m i ng I nf i ni t y. H ad t hey done so , he w oul d hav e o bj ec t ed. ButN i ckLe t so n, an A ver y sal esm an, re a s oned t hatSan kar y w or ked i ndep enden t l y on a “vi al t r a y ,” a n d V e rV y n c ko p in e d t h a tS a n k a r yw a s in v o lv e d in e f f o rt s t o o b t a in f i nan ci ng f orl ea si ng v i al

- se al i ng e qui pm entt o I nf i ni t y.

11 ... Th e vi al w as desi gned t o be seal ed usi ng an ul t r asoni c seal eri nst ead ofa heatseal er . N ai f eh sai d t hatBe rn a rd Str ong , a “Cal i f or ni a pl ast i cs i n v e n to r, c a m e u p w i th th e s p e c i fi c fe a tu re s o f th e v i a l .”

12 ... V erV ync k o pi ned t hatSank ary w asf ul l y a w ar e o ft he C SA , but S a n k a r yc la im e d a th is F e b r u a r y2 0 0 5 d e p o s it io n t h a t h e d id n o t le a r n a b o u tit 7 accor di ng t o V erV ynck. L e t s o n o p in e d t h a th e w a s t h e in d iv id u a l re s p o n s ib le 10 f or d e v e l o p i n g t h e v i a l t o i mp l e me n t t h e Av e r y / I n f i n i t y p l a n a n d t hathe d e v e lo p e d s u c h a v ia l. I n A u g u st 2 0 0 2 , L e t s o n an d V e r V y n c k , o n b e h a l f of I n fi n i ty, m e t w i th N ai f eh, an ot her H ayn es and Boone att or ney , t o c ons ul tr ega r di ng t he app l i ca t i on f ora pat entoft he new l y de vel ope d vi al an d pr oce ssf or f i l l i ng a nd s ea l i ng t he
v ia l. Accor di ng t o Nai f eh, “ I tw asco nf i r m ed a t th e m ee t i ng t hat[ I nf i ni t y] 11

w oul d ow n al l pat ent s r el at ed t o t he vi al and t he pr oce ss . ” H ayn esan d Boone f i l e d a p r ov i s i on a l p a t e nta pp l i c a t i on fo r th e v i a l o n ora bo utNov e m be r20, 2 0 0 2 , a n d th e v i a l te c h n o l o g yw a s a s s i g n e d to In fi n i ty . A t V e r V y n c k ’s
r equ es t , H ayn esan d Booneal so p re p a red a Cont r ac tSuppl y Agr ee m ent (“C S A ”) b e tw e e n A v e ry a n d I n fi n i ty e ffec ti v e J a n u a ry 1 , 2 0 0 3 , i n w h i c h I n fi n i ty agr eed t o sel l and A ver y agr eed t o pur chase vi al s. 12unt i l r ec ent l y. 13 ... A cc or di ng t o Sank ary, how eve r , H ayn esan d Boone di d notha ve t he aut hor i t y t o ope n a f i l e f ort he sa l e o fA very t o St and ar d.

14 ... Sanka r y a l so s ued A & R Phar m ac y, a/ k/ a Ai r w ay Rel i efPha r m ac y, I n c . , ( “ A&R ” ) t o r e c o v e rmo n e yo we d u n d e ra p r o m i ssor y not e t h a tA&R execut ed i n f avorof S ankar y i n D ecem ber 20 01 . A & R i s yetanot herV erV ynck pha r m ac eut i ca l bus i nes s t hatSank ary i nve st ed i n. 8 I n M a r c h 2 0 0 3 , V e r V y n c kan d S a n k a ry s i g n e d a l e tter ad d res se d to S t andar d M anagem ent C or por at i on ( “Standar d”) det ai l i ng t he t er m s by w hi ch A very w oul d se l l i t s st ockt o St and ar d. But a sal e ofA ver y t o S t andar d never 13 hap pen ed. U lt im a t e ly , t h e A v e r yv ia l w a s n e v e rm a n u f a c t u r e d in c o m m e r c ia lly f easi bl e num ber s, I nf i ni t y neversol d any vi al s— i ncl udi ng t o A ver y, A ver y never pai d any m oney to I nf i ni t y, and I nf i ni t y neversol d any pr od u c ts . T h e U ni t ed St at esPat entan d Tr ade m ar k Of f i ce al so r ej ec t ed t he pat entap pl i ca t i on f ort he A v e r yv ia l. I n A pr i l 20 03 , San kar y sued V erV ynck and A ver y t o r ecoverm oney
o w e d u n d e rt h e p r o m is s o r yn o t e t h a tA v e r ye x e c u t e d in f a v o ro fS a n k a r yin D e c e m be r2001 . I n M a y2 0 0 3 , S a n k a r y , Ve rVy n c k , a n d t h e o t her 14 def end ant s r ea che d a s ett l em entag r ee m ent . The se t t l em entag re e m ent pr ovi ded i n pa rt th a t t he part i es“ agr eet o t he sa l e o ft he as se t s ofA very, [ I nf i ni t y] , and [ A W P] t o D r ugm ax, I nc. . . . on t he t er m s set f ort h i n t he A sset15 ... San kar y al so obt ai ned a t em por ar y r est r ai n in g or derw hen he sued

V e r V ynck and A ver y i n A pr i l 20 03 t hatenj oi ned V erV ynck and t he ot her d e fen d a n ts fr o m “ta k i n g a c t io n s th a t w i l l d i m i n i sh . . . S a n k a ry’s s e c u ri ty in t e r e s t s .” V e rV y n c kre a s o n e d t h a tS a n k a r yf o r c e d h im t o a g r e e t o t h e s a le ofA very’ s, I nf i ni t y’ s, an d AW P’ s as se t s by w ay of th e tem por ary r es t r ai ni ng or der bec aus e V er V ync k cou l d not “h ave an i nco m e, pr ovi de fo r m y fa m i l y. I w a s b a s i c a l l yk i c k e d o u t o f th e c o m p a n y .”

16 ... A ppel l ant s al l eged i n part t hat A ppel l ees f ai l ed t o di ssuade V erV ynck f r om br ea chi ng du t i esow ed t o Aver y; ch ar ged orac ce pte d p a y m ent s f r om A ver y f orl egal w or k per f or m ed f or ort o benefi tot her s; di scl osed confi denti al orpr i vi l ege d i nf or m at i on t o VerV ync k a t a t i m e w hen hew asen j oi ned f r om o w ni ng or op e r a t i ng Ave r y; f a i l e d t o r e nd e r f ul l a nd f a i r di s c l os ur e o f f a c ts m a teri a l to A p p e l l a n ts’ rep res e n tati o n ; fai l e d to a d e q u a tel y p e rf o rm a c o n fl i c ts c h e c k ; a n d re p r e s e n t e d A p p e lla n t s a n d V e r V y n c k , A W P , a n d In f in it ya ta t im e w hen such r epr esent at i on i nvol ved subst ant i al l y r el at ed m at t er s i n w hi ch V er V ync k’ s i nt er es t s w er e m at er i al l y a nd di r ec t l y a dve r set o t he i nt er es t s of A ppel l ant s. 9 Pur chas e A g re em ent( “APA ”) . ” Consi st entw i t h t hi s t er m , A very, A W P, an d I nf i ni t y sol d al l oft hei rasset s t o D i scount R x, I nc. pur suant t o t he A PA on M ay 14, 2003 . Sank ary r em ai nsA very’ s so l e d i r ec t oran d sh a re h o l d er , an d he

15 cl ai m s t o hol d s hr ar eho l der ’ s and di r ec t or ’ s m ee t i ngs , b utA very ha s no
em pl oyees, no busi ness l ocat i on, and no asset s. A ppel l ant s sued A ppel l ees i n M ar ch 20 04 . A ppel l ant s’ sevent h am ended
or i gi nal pet i t i on assert ed cl ai m s agai nstA ppel l ees f or l egal m al pr act i ce, br each
o f f i d u c i a ry d u ty, fr a u d , n e g l i g e n t m i sre p res e n tati o n , a n d co n sp i rac yto def r aud . A p p e l l ee s m ove d f ors um m ary j udgm enton Appel l ant s’ cl ai m s on

16
no e vi den cean d t r adi t i ona l gr oundsan d f i l ed a p l ea t o t he j ur i sd i ct i on17 ... The t r i al co urt or i gi nal l y si gne d an or dergr ant i ng Appel l ee s’ m ot i on

f ors um m ary j udgm enton Augus t 2 1 , 2 0 06. Ther ea f t er , a vi si t i ng j udge gr ant e d A p p e l l a n t s ’ mo t i o n f o rn e w t r i a l , a n d A p p e l l e e s f i l e d t h e i rs e c ond t r a di t i on a l a nd n o- e vi de nc e m ot i on s f ors um m a r y j ud gm e nti n Apr i l 2007 . 10 cha l l eng i ng Appel l ant s’ s t and i ng. The t r i al co urts i g n ed an or dergr ant i ng
s u m m a r yju d g m e n tt o A p p e lle e s o n J u n e 1 8 , 2 0 0 7 ; t h e t r ia l c o u rtd id n o tru le on Appel l ee s’ pl ea t o t he j ur i sd i ct i on. 17 II I. S UMM ARYJ UDGMENT A ppel l ant s ar gue i n t hei r f i r st , second, t hi r d, f ourt h, and f i f t h i ssues t hat th e tr ia l c o u rt e rre d b y g ra n tin g A p p e ll e e s ’ m o tio n fo r s u m m a ryju d g m e n t. In t h e irs ix t h is s u e , A p p e l l a n t s a r g u e t h a tt h e t r ia l c o u rte r r e d b yd e n y in g t h e ir obj ect i ons t o partofA ppel l ees’ sum m ar y j udg m entevi dence. A . S t andar d ofRev i ew A f t eran ad equ at e t i m e f ordi sc ove r y, t he part y w i t houtt he bur den of pr oofm ay, w i t hout pr es ent i ng e vi den ce , m ovef ors um m ary j udgm enton t he gr ound t hatt her e i s no e vi den cet o s upportan e s s e nt i al el em entoft he
non m ov ant ’ s cl ai m ordef ense. Tex. R. C i v. P. 16 6a( i ) . The m ot i on m ust
s p e c i fi c a l l y s ta te th e e l e m e n ts fo r w h i c h th e re i s n o e v i d e n c e . Id .; John so n v. Bre wer & Pr itch a rd , P. C. , 7 3 S .W .3 d 1 9 3 , 2 0 7 (T e x . 2 0 0 2 ). T h e t r i a l c o u rt
m us tgr antt he m ot i on un l es s t he nonm ova ntpr oduc e s s u m m ary j udgm ent
e v i d e n c e th a t ra i s e s a g e n u i n e i s s u e o f m a te ri a l fa c t. S ee T e x . R. Ci v. P.11

1 6 6 a (i ) & c m t.; Sw
. Elec . Po w er Co. v. Grant, 73 S. W . 3d 211, 215 ( Tex. 2 0 0 2 ). W h e n re v i e w i n g a n o -e v i d e n c e s u m m a ry j u d g m e n t, w e e x a m i n e th e e n ti re
r e c o r d in t h e lig h t m o s tf a v o r a b le t o t h en o n m o v a n t , in d u lg in g e v e r yre a s o n a b le i n fe re n c e a n d re s o l v i n g a n y d o u b ts a g a i n s t th e m o ti o n . Sudan v. Su dan , 199 S. W . 3d 291 , 292 ( Tex. 200 6) . I f t he nonm ova ntbr i ngsf or w ar d m or e t han a sci nt i l l a of pr obati ve evi dence t hat r ai ses a genu i ne i ssue ofm at er i al f act , t hen
a n o -e v i d e n c e s u m m a ry j u d g m e n t i s n o t p ro p e r. Moore v. K MartCor p. , 981 S . W . 2d 26 6, 26 9 ( Tex . A pp. — S an A nt oni o 19 98 , pet . deni ed) . W e r evi ew a
no- evi den ces um m ary j udgm ent f or evi den ce t hatw oul d e nab l e r ea so nab l e a nd fa i r-m i n d e d j u ro rs to d i ffe r i n th e i r c o n c l u s i o n s . Ham i lton v. W

i l so n , 249 S. W . 3d 425, 426 ( Tex. 2008 ) ( ci t i ng City of Kel ler v. W i l so n , 168 S. W . 3d 802, 8 2 2 (T e x . 2 0 0 5 )). W h e n a tr i a l c o u rt ’s o rde r g ran ti n g su m m a ry j u d g m e n t d o e s n o t sp e c i fy t he gr ound orgr oundsr el i ed on f ori t s r ul i ng, s um m ary j u d gm entw i l l be af f i r m ed on a ppe al i fan y oft he t heo r i espre s e n te d t o t he t r i al co urtan d p re s e rv e d fo r a p p e l l a te re v i e w a re m e ri to ri o u s . Provident Lif e & A cci

dent I ns.18 ... A ppe l l ee s al so fi l e d a t r adi t i ona l m ot i on f ors um m ary j udgm enton

A p p e l l a n ts’ cl a i m s. B u t w h e n a p a rt y m o v e s fo r su m m a ry j u d g m e n t u n d e r bo th r ul es 16 6a( c) and 1 66 a( i ) , w e w i l l f i r st r evi ew t he t r i al court ’ s j udg m entunder th e s ta n d a rd s o f ru l e 1 6 6 a (i ). F o rd Mo to r Co . v. Ri

d g wa y, 135 S . W . 3d 598, 600 ( Tex. 2004 ) . I ft he app el l ants fa i l ed t o pr oduc e m or e t han a sc i nt i l l a o f e v i d e n c e u n d e r th a t b u rd e n , th e n th e re i s n o n e e d to a n a l y z e w h e th e r a p p e l l e e ’s s u m m a ryj u d g m e n t p ro o f s a ti s fi e d th e l e s s s tri n g e n t ru l e 1 6 6 a (c ) b u rd e n . Id. Becau se w e af f i r m t he t r i al court ’ s gr antofsum m ar y j udg m enton no- evi dence g ro u n d s , w e d o n o t s e t fo rth a n d u ti l i z e th e tra d i ti o n a l m o ti o n fo r s u m m a ry j u d g me n ts t a n d a r d o fr e v i e w. 12 Co . v. K

n o tt, 1 2 8 S .W .3 d 2 1 1 , 2 1 6 (T e x . 2 0 0 3 ); Star- Telegr am, I nc. v. D oe , 9 1 5 S .W .2 d 4 7 1 , 4 7 3 (T e x . 1 9 9 5 ). 18 B . S a n k a ry ’sL e g a l M a lp r a c t ic ea n d B re a c h o fF id u c ia ryD u tyC la im s 1. M al pr act i ce In th e i r th i rd i s s u e , A p p e l l a n ts c h a l l e n g e th e tri a l c o u rt’sg ra n t o f s u m m a ry j udgm enti n f avo r of A ppe l l ee s on t he gr ound t hat Sanka r y w as nota cl i entof A ppe l l ee s. Appel l ee s cl ai m ed i n t hei rno- evi den cem ot i on f ors um m a ry j udg m entt hatt her e i s no evi dence S ankar y w as evert hei rcl i entand t hatt hey
nev erow ed Sanka r y a ny d ut y. L e g a l m a l p ra c ti c e i s a to rt c a u s e o f a c ti o n b a s e d o n n e g l i g e n c e . Beltv. Oppen hei

m er , Blend, Har

r i son & Tate, I

nc. , 1 9 2 S .W .3 d 7 8 0 , 7 8 3 (T e x . 2 0 0 6 ). To pr e v a i l o n a l ega l m al pr ac t i cecl ai m , a pl ai nt i f fm us ts how t hat( 1) t he att or neyow ed t he pl ai nt i f fa dut y, ( 2) t he att or neybr ea che d t hatdut y, ( 3) t he br ea ch pr oxi m at el y c aus ed t he pl ai nt i f f ’ s i nj ur i es , an d ( 4) d a m a gesoc cur r ed.13

A lexander v. Turtur

& A ssocs. , I

nc. , 1 4 6 S .W .3 d 1 1 3 , 1 1 7 (T e x . 2 0 0 4 ); Gr i der
v. Mi ke O ’Brien, P. C. , 2 6 0 S .W .3 d 4 9 , 5 5 (T e x . A p p .— H o u s to n [1 s t D i s t.] 2 0 0 8 , p e t. d e n i e d ). A t c o m m o n l a w , th e ru l e o f p ri v i tyl i m i ts a n a tto rn e y ’s l i a b i l i tyto th o s e i n p ri v i tyw i th th e a tto rn e y . McCam i sh, Marti

n, Brown & L oe f f ler v. F . E. App l

i ngI nteres ts , 9 9 1 S . W . 2 d 7 8 7 , 7 9 2 ( T e x . 1 9 9 9 ) . An
a t t o r n e yin T e x a s ist h e r e f o r e n o tlia b le f o rm a lp r a c t ic e t o a n y o n e o t h e rt h a n h is
c l i e n t. Id .; se eals o Ba rc e lo v. E l l i o tt, 9 2 3 S .W .2 d 5 7 5 , 5 7 7 (T e x . 1 9 9 6 ); Stanc u v. Stalcup , 1 2 7 S .W .3 d 4 2 9 , 4 3 2 (T e x . A p p .— D a l l a s 2 0 0 4 , n o p e t.); Gam boa v. Sh aw , 956 S . W . 2d 662, 664 ( Tex. A pp. — San Ant oni o 1997, no
w ri t); S tonewal

l Sur plus Li nes I ns. Co. v. D rabek , 835 S. W . 2d 708, 710 ( Tex. A pp. — C or pusChr i st i 199 2, w r i t den i ed) ( “I ti s w el l s ett l ed t hatpe r so nsout si de t he at t or ney- cl i ent r el at i onshi p do not have a cause ofact i on f ori nj ur i es t hey
m i ghts us t ai n duet o t he att or ney ’ s fa i l u re t o pe r f or m orhi s neg l i gen t p e rfo rm a n c e o f a d u tyo w e d to h i s c l i e n t.” ). Th e at t or ney- cl i entr el at i onshi p i s a cont r act ual r el at i onshi p w her eby an
a tto rn e y a g re e s to re n d e r p ro fe s s i o n a l s e rv i c e s fo r a c l i e n t. Tanox, I nc. v. A ki

n, G ump, Strauss, Hauer & Feld, L. L. P. , 1 0 5 S. W . 3d 244, 254 ( Tex. A pp. — H oust on [ 14 t h D i st . ] 20 03 , pet . deni ed) . Th e r el at i onshi p can be cr eat ed b ya n e x p re s s c o n tra c t o r i t c a n b e i m p l i e d fro m th e a c ti o n s o f th e p a rti e s . Id .; Honeycu tt v. Bi

l l i ngsley , 9 9 2 S .W .2 d 5 7 0 , 5 8 1 (T e x . A p p .— H o u s to n [1 s t D i s t.]19 ... Fori nst ance, t he r el at i onshi p can be i m pl i ed f r om t he part i es’ condu ct

i ndi ca t i ng t he i nt entt o e nt eri nt o su ch a r el at i ons hi p, or i tca n bei m pl i ed f r om th e a tto rn e y ’sg ra tu i to u s re n d i ti o n o f p ro fe s s i o n a l s e rv i c e s . So telo v. S te wa rt, No. 08- 06- 00145

- CV , 2008 W L2174 425, a t*3 ( Te x. App . — ElPa s o M a y 22, 2 0 0 8 , p e t. fi l e d ). 14 1 9 9 9 , p e t. d e n i e d ). I n de t er m i ni ng w het hera con t r ac t ualr el at i ons hi p c an be 19 i m pl i ed, w e u se an obj ec t i ve st and ar d, l ook i ng a tw hatt he part i ess ai d a nd di d,
a n d w e d o n o t c o n s i d e r th e i r u n s ta te d , su bj e c ti v e b e l i e fs . Tan ox, I nc. , 105 S .W .3 d a t 2 5 4 ; Roberts v. Healey , 991 S. W . 2d 873 , 880 ( Tex. A pp. — H ous t on [1 4 th D i s t.] 1 9 9 9 , p e t. d e n i e d ). D if f ic u lt ie s in d e t e r m in in g t h e e x is t e n c e o fa n a tt o r n e y -c lie n tre la t io n s h ip
ca n oft en occ urw hen a l aw yerr epr es ent s a s m al l en t i t y w i t h “ ext ens i ve
com m on ow ner shi p and m anagem ent . ” Ma c Fa rla n e v. Nel so n , No. 03- 04- 0 0 4 8 8 -C V , 2 0 0 5 W L2 2 4 0 9 4 9 , a t * 4 (T e x . A p p .— A u sti n S e p t. 1 5 , 2 0 0 5 , p e t. d e n i e d ) (m e m . o p .) (c i ti n g R e s ta te m e n t (T h i rd ) o f th e L a w G o v e rn i n g L a w y e rs § 14 cm t . f( 200 0) ) . Gener al l y, how eve r , r end er i ng l ega l s e rv i ce s t o a
cor por at i on do esnot , by i t se l f , cr ea t e p r i vi t y be t w ee n th e att or neyan d t he
c o rp o ra ti o n ’si n v e s to rs , i ts o ffice rs a n d d i re c to rs , a n d i ts s h a re h o l d e rs . G o e th
v. Crai g, Ter r i l l & Hal e, L. L. P. , No. 03- 03- 00125

- CV , 2005 W L8503 49, a t*6 (T e x . A p p .— A u s ti n A p r. 1 4 , 2 0 0 5 , n o p e t.) (m e m . o p .); se e al soGam boa , 956 S .W .2 d a t 6 6 4 ( h o l d i n g tha t pu rpo rt e d sh a reh o l d e r w a s n o t i n p ri v i ty w i th15

at t or ney w ho r epr esent ed c or por at i on and t hus coul d not m ai nt ai n l egal
m a lp r a c t i c e c la im b a s e d o n a t t o r n e y ’s re p r e s e n t a t io n o fc o r p o r a t io n ). T h is is bec aus e a co r por at i on i s a l ega l ent i t y se par at e a nd a partf r om t he per so nsw ho
com pos e i t , an d a ca us e o fac t i on a gai ns tonew ho hasi nj ur ed t he cor por at i on b e l o n g s to th e c o rp o ra ti o n a n d n o t to th e s h a re h o l d e rs . W al ker v. A nder

so n , 2 3 2 S .W .3 d 8 9 9 , 9 1 8 (T e x . A p p .— D a l l a s 2 0 0 7 , n o p e t.); Ha jd i kv. W i nga te , 7 5 3 S .W .2 d 1 9 9 , 2 0 1 ( T e x . A p p .— H o u s to n [1 s t D i s t.] 1 9 8 8 ), a ff’d, 795 S .W .2 d 7 1 7 (T e x . 1 9 9 0 ). I n t he pr es entca se , Sank ary a r gue s t hatt he evi den ce i s s uch t hathe “c o u l d h a v e rea so n a b l yco n c l u d e d tha t [ A p p e ll e e s] rep res e n ted h i s i n tere sts al ong w i t h t hos e of A very. ” Rel yi ng on de pos i t i on t es t i m ony and af f i dav i t s, he t hus c o n te nds t hatan at t or ney- cl i entr el at i onshi p bet w een he and A ppel l ees
c o u l d b e i m p l i e d fro m th e p a rti e s ’ c o n d u c t. S ee Tan ox, I nc. , 1 0 5 S .W .3 d at 254. S a n k a r yt e s t if ie d in h is d e p o s it io n t h a tH a y n e s a n d B o o n e re p r e s e n t e d h im i n co n n e c ti o n w i th th e p rep a rati o n o f t h e D e c e m b e r 3 1 , 2 0 0 1 p rom i ss o ry n o te
m ade payab l e t o hi m by A ver y. H e t est i f i ed as f ol l ow s: [ A ppe l l ee s’ att or ney ] : You w er e r epr es ent ed by Hayne s and Boone i n c o n n e c ti o n w i t h y o u r s e c u ri n g a n o te fro m A v e ry P h a rm a c e u ti c a l , c o rr e c t?16

[ S ankar y] : Evi dentl y, yeah. Th ey dr ew i t up. A nd evi dentl y i ft hey w or ke d f ort he

--i ft heyw or ke d f orA very, t heyw er e w or ki ng f or m e. Sanka r y s i m i l ar l y op i ned t hatH ayn esan d Boone r epr es ent ed hi m i n c onne ct i on
w i t h t he pr epa r at i on of t he D ec em ber31, 2001 s ec ur i t y a gr ee m entt hatga ve hi m a secur i t y i nt er esti n A ver y col l at er al . Bu tSan kar y’ s subj ect i ve bel i eft hat H ayn esan d Booner epr es ent ed hi m s i m p l y b e c a us e i tdr aft ed t he not e a nd
secur i t y agr eem enton behal fofA ver y i s i nsuf f i ci entt o r ai se a f acti ssue t hat H ayn esan d Booneal so ow ed hi m an y du t y ofca r e b ec aus e Hayn esan d Boone’ s r epr es ent at i on ofA very ( t he r end er i ng ofl egal s ervi ce s t o a
c o rp o ra ti o n ) d i d n o t, b yi ts e l f, c re a te p ri v i ty w i t h S a n k a ry . S e eG o e th , 2005 W L 850 349 , at* 6 ; s ee al so Tan ox, I

nc. , 1 0 5 S .W .3 d a t 2 5 4 ; Gam boa , 956 S. W . 2d at664. Sanka r y po i nt s t o no ot herev i den ceobj ec t i vel y de m ons t r at i ng t hatH ayn esan d Booner epr es en te d hi m i ndi vi dua l l y w i t h r ega r d t o t he p rep a rati o n o f t h e A v e ry p rom i ss o ry n o te a n d se c u ri ty a g ree m e n t. S a n k a r yf u rt h e ro p in e d t h a tH a y n e s a n d B o o n e r e p r e s e n t e d h im in
con nec t i on w i t h i t s pr epa r at i on of a p r om i ss ory no t e m adepa yab l e t o hi m by A & R and a secur i t y agr eem ent w i t h A & R . H e al so st at ed i n hi s af f i davi tt hat H ayn esan d Boone“ re pr es ent ed [ A very] an d t he of f i ce r s, di r ec t or s[ , ] an d shar ehol der s of [ A ver y] begi nni ng i n 20 01 ” and t hat“[ a] l t hou gh I m ay have had
m o re th a n o n e atto rne yat ti m e s, I sti l l co n side red [ H a y n e s a n d B o o n ] to20 ... O ne ofoursi st ercourt s l i st ed i n a m em or andu m opi ni on sever al

f act or s t o consi der i n det er m i ni ng w het heran ent i t y l aw yeral so r epr esent s an i ndi vi dua l a s s o ci at ed w i t h t he ent i t y. Thos e f ac t or s i ncl udet he f ol l ow i ng: w het hert he l aw yeraf f i r m at i vel y a ss um ed t he dut y ofi ndi vi dua l r epr es ent at i on, w het hert he i ndi vi dual had i ndep enden tre p r esent at i on, w het hert he l aw yer pr evi ous l y r epr es ent ed t he i ndi vi dua l on a pe r so nalba si s, an d w h e thert he 17 r epr ese n tt he i nt er es t s of[ A very] an d m ys el ff r om 2001 i nt o 2003. ” But Sanka r y di r ec t s us t o no su m m ary j udgm entev i den ceobj ec t i vel y de m ons t r at i ng th a t H a y n e s a n d B o o n e rep res e n ted h i m i n d i v i d u a l l yi n reg a rd to the A & R n o te and s ec ur i t y a gr ee m ent , nordo e s h e poi ntt o e vi den ces upport i ng t he content i ons setf ort h i n hi s af f i davi t , w h ic h conf l i ctw i t h w el l

- est abl i shed
c a s e l a w . S ee W

al ker, 2 3 2 S .W .3 d a t 9 1 8 ; Tan ox, I nc. , 105 S. W . 3d a t254; G o e th , 2005 W L8503 49, a t*6. Sanka r y a l so i ncl ude d i n hi s su m m ary j udgm ent evi den cet he af f i dav i tof Jam es M cC or m i ck. I n t he af f i davi t , M cC or m i ck det ai l ed t he “f act s and i ssues” t hathe consi der ed i n ar r i vi ng athi s opi ni ons, and he opi ned t hatSan kar y had
an att or ney - cl i entr el ati o n s h i p w i t h Appel l ee s. W i t h a f ew ex ce pt i ons , t he “f act s and i ssues”r el i ed upo n by M cC or m i ck i n ar r i vi ng athi s opi ni on con si st ofm any of t he sam e f act s det ai l ed i n t he “Backg r oun d” sect i on abo ve. These f act s, and t hose r el i ed upo n by M cC or m i ck, do not dem onst r at e t hatA ppel l ees had an att or ney - cl i entr el at i ons hi p w i t h Sank ary. The y i n s te a d s how t he exi st enc e o fan att or ney - cl i entr el at i ons hi p w i t h VerV ync k, A very, orbot h. 20e v i d e n c e d e mo n s t r a t e s t h e i n d i v i d u a l ’ s r e l i a n c e o n o r e x p e c t a t i o n s oft he

l a w y e r’ss e p a ra te re p re s e n ta ti o n . See Mac Far l ane , 2005 W L2240 949, a t*4. To t he ext entt hese f a c to r s ar e appl i cabl e t o t he anal ysi s ofw het heran att or ney - cl i entr el at i ons hi p exi st ed bet w ee n Sanka r y and A ppe l l ee s, ea ch oft he f a c t o r s w e ig h s in f a v o ro fa d e t e r m in a t io n t h a tn o a t t o r n e y -c lie n tre la t io n s h ip exi st ed. 18 Exa m i ni ng t he ent i r e r ec o r d i n t he l i ghtm os tf avo r abl e t o Sank ary a nd i ndul gi ng e very r ea so nab l e i nf er enc e a nd r es ol vi ng a ny d o ubt s aga i ns tt he
m ot i on, Sank ary f ai l e d to pr oduc e s um m ary j udgm entev i den cer ai si ng a genu i ne i ssue o f m at er i al f actt hatA ppel l ees ow ed hi m a dut y ofcar e as a
re s u l t o f a n a tto rn e y -c l i e n t r e l a t i o n s h i p . S ee T e x . R . C i v . P . 1 6 6 a (i ); F. E. A pp l i ngI n terests , 9 9 1 S .W .2 d a t 7 9 2 (h o l d i n g th a t p ri v i tyl i m i ts a n a tto rn e y ’s l i a b i l i t y t o t h o s e i n p ri v i tyw i th th e a tto rn e y ); se e al soEs tate o f

Bradb ur

n v. Sawko , N o . 0 2 -0 2 -0 0 1 9 2 -C V , 2 0 0 3 W L2 1 3 5 9 5 1 4 , a t * 3 (T e x . A p p .— F o rt W ort h Jun e 12 , 20 03 , no pet . ) ( m em . op. ) ( af f i r m i ng gr antofno- evi dence
m o ti o n fo r s u m m a r yj u d g m e n t o n l e g a l m a l p ra c ti c e c l a i m ). A c c o rd i n g l y , w e hol d t hatt he t r i alco urtdi d noter rby gr ant i ng s um m ary j udgm ent i n f avo rof A p p e l l e e s o n S a n k a ry ’sl e g a l m a l p ra c ti c e c l a i m . W e o v e rru l e A p p e l l a n ts ’ th i rd i ssue. 2 . B rea c h o f Fi d u c i a ry D u ty I n pa rtoft hei rf i f t h i ss ue, A ppe l l ant s cha l l eng e t he t r i al co urt ’ s gr antof
sum m ar y j udg m enti n f avorof A ppel l ees on t he br each off i duci ar y duty cl ai m s.19

To r ec ove r on a b r ea ch off i duc i ary du t y c l ai m , a pl ai nt i f fm us tf i r sts how th a t th e d e fe n d a n t o w e d a fi d u c i a ryd u ty . A better Trucki ng Co. v. A r

i z pe , 113 S. W . 3d 5 0 3 , 508 ( Tex. A pp. — H ous t on [ 1stD i st . ] 2003 , no p et . ) ( l i st i ng el em ent s ofbr each off i duci ar y duty cl ai m as exi st ence off i duci ar y duty, br each oft he dut y, ca us at i on, an d da m age s) . Fi duc i ary dut i es ar i se w hen an att or ney c l i e n t re l a ti o n s h i p i s c re a te d . Meyer v. Cathey , 167 S . W . 3d 327, 330 ( Tex. 2 0 0 5 ); T

ro us da lev. Hen ry , 2 6 1 S .W .3 d 2 2 1 , 2 2 9 (T e x . A p p .— H o u sto n [ 1 4 th D i st.] 2 0 0 8 , p e t. fi l e d ) (stati n g tha t i n T e x a s, a fi d u c i a r y r e la t i o n sh i p ex i sts b e tw e e n a tto rn e ya n d c l i e n ts a s a m a tte r o f l a w ). H avi ng de t er m i ned t hat S a nka r y f ai l ed t o pr oduc e s um m ary j udgm ent evid e n c e d e m o n s tr a tin g th e e x is te n c e o f a n a tt o rn e y -c li e n t re la tio n s h ip b e tw e en h e a n d A p p e l l e e s , A p p e l l e e s th e re fo re o w e d S a n k a ryn o fi d u c i a ryd u ti e s . T h e re bei ng no ev i den ceoft he exi st enc e o fa f i duc i ary d u ty ow ed t o Sank ary by A p p e l l e e s , w e h o l d th a t th e tri a l c o u rt d i d n o t e rr b yg ra n ti n g s u m m a ry ju d g m e n tin f a v o ro fA p p e ll e e s o n S a n k a r y ’s b r e a c h o ff id u c ia r yd u t yc la im . S eeT e x . R . C i v . P . 1 6 6 a (i ); S wank v. Cunn i ngh am , 258 S. W . 3d 647, 666 (T e x . A p p .— E a s t la n d 2 0 0 8 , p e t . d e n ie d ) ( “ A n a t t o r n e y -c lie n tre la t io n s h ip d id not exi stbet w een B eck Red den orSm yserK apl an and A M PS . I n t he absence ofan att or ney - cl i entr el at i ons hi p, Bec k Red den an d Sm ys erKapl an di d notow e20

fi d u c i a ryd u ti e s to A M P S , a n d A M P S c o u l d n o t re c o v e r o n a b re a c h o f fi d u c i a ry duty cl ai m agai nstt hem . ”) . W e over r ul e t hi s partofA ppel l ant s’ f i f t h i ssue. C . A v e ry ’sL e g a l M a lp r a c t ic ea n d B r e a c h o fF id u c ia ryD u tyC la im s 1. M al pr act i ce In a n o th e r p a rt o f th e i r fi fth i s s u e , A p p e l l a n ts a rg u e th a t t h e tri a l c o u rt
er re d b y g r ant i ng sum m ar y j udg m enti n f avorofA ppel l ees on t he l egal
m al pr a c ti cecl ai m s. Appel l ee s con t end ed i n t hei rno- evi den cem ot i on f or
sum m ar y j udg m entt hatA ver y di d not suf f erany dam ages. W hi l e u nce rt ai nt y a s t o t he am ount of dam age s i s not f at al t o r ec ove r y, l a c ko f e v i d e n c e o r u n c e rta i n ty a s to th e fa c t o f d a m a g e s i s . Mc K n igh tv. Hill & Hi l l Exter m i nators, I

nc. , 6 8 9 S .W .2 d 2 0 6 , 2 0 7 (T e x . 1 9 8 5 ); Pac e Cor p. v. Jacks on , 15 5 T ex. 17 9, 19 0, 28 4 S . W . 2d 34 0, 34 8 ( 19 55 ) . D am ages m ust b e a s c e rta i n a b l e i n s o m e m a n n e r o th e r th a n b ym e re s p e c u l a ti o n o r c o n j e c tu re and by r ef er enc e t o s om e f ai r l y de f i ni t e s t and ar d, es t abl i sh e d e x p er i enc e, or d i re c t i n fe re n c e fro m k n o w n fa c ts . A .B.F . F rei gh t S ys ., I

n c . v. A us tri

a nImp o rt S erv. , I nc. , 7 9 8 S .W .2 d 6 0 6 , 6 1 5 (T e x . A p p .— D a l l a s 1 9 9 0 , w rit d e n ie d ). If dam age s ar e t oo r em ot e, t oo un ce rt ai n, orpur el y c onj ec t ur al , t heyca nnotbe
re c o v e re d . A rthur A nder sen & Co. v. Per

ry Equi p. Cor p. , 945 S. W . 2d 812, 816 (T e x . 1 9 9 7 ); Swank , 258 S. W . 3d a t667.21

The tw o c om pone nt s ofpr oxi m at e c aus e a r e c aus e i n f ac tan d fo re s e e a b i l i ty . Rodger s v. Wea ther

sp oon , 141 S . W . 3d 342, 345 ( Tex. A pp. — D al l as2004 , no p et . ) . C aus e i n f ac tm ea nst hatt he def end ant ’ s ac t s or
om i ss i onsw er e a s ubs t ant i al f ac t or i n br i ngi ng a boutt he i nj ury t hatw oul d not
o t h e r w is e h a v e o c c u r r e d , a n d f o r e s e e a b ilit y o fh a r m m e a n s t h a tt h e a c t o rc o u ld
a n ti c i p a te th a t h i s a c ti o n s c o u l d i n j u re a n o th e r. Id . Appe l l a nt s i nc l ud e d i n t he i r s um m a r y j ud gm e nt e vi de nc e a Ju l y 2003
r eportt hatLet son pr epar ed det ai l i ng A ver y’ s pr oj ect ed and “Est i m at ed S al es” oft he vi al t hat L e t so n de vel ope d ha d Aver y ul t i m at el y s ol d t he vi al . L et so n
r e a s on e d i n t herep o rt th a t“ Ave r y c on c l ud e d t ha ta n e s t i m a t e d 18, 000, 000
v i a l s c o u l d b e s o l d d i re c t to e n d u s e rs w i th i n o n e m o n th ” a n d th a t “ A v e ry ant i ci pat ed end usersal es t o exceed $ 90 0, 00 0 p erm onth. ” Co nsi der i ng t hese f ig u r e s a n d t h e t h r e e -y e a rC S A t h a t In f in it y h a d w it h A v e r y , L e t s o n t e s t if ie d in h i s d e p o sit i o n tha t A v e ry s u ff e r e d ap p rox i m a tel y$ 2 2 .5 m i l l i o n i n l o st p rofi ts dam ages. Let son’ s opi ni on t hatA ver y suf f er ed $ 22 . 5 m i l l i on i n l ostpr of i t s dam ages i s l ac ed w i t h a nd r el i antupon s pec u l a ti o n a n d con j ec t ur e. I n a r r i vi ng a tt he $22
. 5 m i l l i on f i gur e, Le t so n r ea so ned t hat t he vi al s w oul d bem anu f ac t ur ed and l abe l ed atI nf i ni t y, t hatA very w oul d di st r i but e t he pr oduc t s, an d t hat“ l ar ge nat i ona l ac cou nt s w oul d buydi r ec t l y f r om I nf i n i t y. ” Le t so n i den t i f i ed f i ve22

bus i nes se s ( ac cou nt s) t hathet hough tw oul d pur cha sepr oduc t s di r ec t l y f r om I nf i ni t y, but he ac kno w l edg ed t hat onl y on e w asac t ual l y a cu st om erofA very. T w o o th e r a c c o u n ts “ w a n te d a d e m o n s tra ti o n o f th e e q u i p m e n t b e fo re
c o m m it m e n t, ” a n d the re w a s n o ev i d e n c e tha t t h e tw o rem a i n i n g ac c o u n ts
w e re A v e ryc u s to m e rs a n d n o e v i d e n c e th a t th e fo u r n o n -A v e ryc u s t o m e rs i n te n d e d a t a n yp o i n t to e n te r i n to a b u s i n e s s re l a ti o n s h i p w i th In fi n i tyo r A v e ry f ort he pur pose ofpur chasi ng vi al s. Th e vi al pr oj ectal so suf f er ed f r om a l ack ofcapi t al . Let son t est i f i ed t hat t he new vi al w as neverm anufact ur ed i n com m er ci al l y f e a s ib le num ber s. A c c o rd i n g to L e ts o n , A v e ry h a d “ o n e s m a l l c a p a c i ty m o l d th a t w o u l d w o rk . W e p ro d u c e d s a m p l e s . W e s e a l e d v i a l s . W e d i d d e m o n s tra ti o n s .” H o w e v e r, “[ w ] i t h t he m ol d c apa ci t y t hat[ A very] ha d, w e c oul d nots uppl y ou rex i st i ng
c u sto m e rs” b e c a u se the co m p a n yl a c k e d the ca p i tal to fu n d the p rojec t. S i g n i fi c a n tl y , a l l o f A v e ry’s a ss e ts w e re so l d to D i sc o u n t R xp u rsu a n t t o t h e A P A o n M a y1 4 , 2 0 0 3 . L e t s o n t e s t if ie d t h a th is d a m a g e s m o d e l is dep end enton t he sa l e of A very’ s as se t s t o Di sc ountRx notha ppe ni ng, an d he agr eed t hati tw as t he shar ehol der s’ deci si on t o sel l t he asset s. M or eover , accor di ng t o A ppel l an ts ’ sum m ar y j udg m entevi dence, D i scount R x’ s sal es f i gur es f ort he vi al t hati tevent ual l y began t o sel l aft er p u rc h a s i n g A v e rya re c o n s i d e ra b l yl e s s th a n L e ts o n ’sp ro j e c ti o n th a t A v e ry21 ... I nde ed, A ppe l l ee s su ppl em ent ed t hei r m ot i ons f or su m m ary j udgm ent

w i t h e vi den cet hatt he pat enth a d be en r ej ec t ed by t he U ni t ed St at esPat ent and T r adem ar k O f f i ce. 23 w oul d have sol d appr oxi m at el y f i f t een t o ei ghteen m i l l i on vi al s t o end user s per
m ont h. Le t so n t es t i f i ed t hat i t t ook D i sc ount Rx t w o yea r s t o ge tt he vi al t o t he
m a rk e t a fte r th e p u rc h a s e o f A v e rya n d th a t a c c o rd i n g to “ m a rk e t k n o w l e d g e ,” D is c o u n t R x has had m onthl y sal es i n t he am oun tof“hal fa m i l l i on t o t hr ee q u a rte rs o f a m i l l i o n v i a l s a m o n th .” Le t so n’ s $22
. 5 m i l l i on da m age s f i gur e i s bas ed on l os tpr of i t s f r om t he
sa l e o ft he vi al t hat h e w o rk e d t o de vel op w hi l e e m pl oye d byA very. L et so n and V erV ync k m etw i t h N ai f eh i n 2002 t o c ons ul tr ega r di ng t he app l i ca t i on f or a p at ent o f t he vi al . Appel l ant s hav e o f f er ed no e vi den cet hatt he pat ent app l i ca t i on f ort he new vi al w asev erap pr ove d. A v e ry ’s d a m a g e s f ig u r e is 21
s p e c u la t iv e in t h e a b s e n c e o fa n a p p r o v e d p a t e n tf o rt h e n e w v ia l. A ppel l ant s cont end t hatA ver y suf f er ed dam ages f r om A ppel l ees’ f or m at i on ofA W P a n d In fi ni t y. Appel l ant s ar guet hatA ppe l l ee s ca us ed t he f o rm a ti on ofA W P t o e vad e t he RD I i nj unc t i on a nd t o de f r aud A ppe l l ant s and t hata con f l i cto f i nt er es tar os e w hen A ppe l l ee s f or m ed A W P. Rega r di ng I nf i ni t y, A ppel l ant s com pl ai n t hatA ppel l ees per f or m ed no con f l i ctchecks.24

T h e r e isn o s u m m a r yju d g m e n te v id e n c e t h a t A v e r y w a s d a m a g e d a s a re s u lt oft he f or m at i on ofA W P an d I nf i ni t y. A ppel l ant s ar gue t hatA ver y suf f er ed dam ages f r om A ppel l ees’ p rep a rati o n o f t h e F i c k l i n g S to c kP u rch a se A g ree m e n t a n d O p ti o n A g ree m e n t. They con t end t hatFi ck l i ng w asa “s t r aw m an”an d t hathew asne veri n c har ge ofA very, butt here i s n o e v i den cet hatA very w asda m age d a s a r es ul tof A ppel l ees’ pr epar at i on of t he Fi ckl i ng do cum ent s. A ppel l ant s cont end t hatA ver y suf f er ed dam ages as a r esul tofA ppel l ees’ p r e p a r a t io n o ft h e C S A b e t w e e n A v e r ya n d In f in it y . S a n k a r ya g r e e d in h is depo si t i on, how ever , t hatnota si ngl e pr odu ctw as sol d und ert he C S A norhad A ver y everpai d a si ngl e di m e t o I nf i ni t y. C onsequ ent l y, t her e i s no evi dence t h a tAv e r ywa s d a ma g e d a s a r e s u l to fAp p e l l e e s ’ p r e p a r a t i o n o ft h e CS A. A ppel l ant s ar gue t hat A ver y suf f er ed dam ages as a r esul tofA ppel l ees’ pr epa r at i on oft he vi al as s i g n m entdoc um ent s and t he pr ovi si ona l pa t ent appl i cat i on. A s det ai l ed abov e, how ever , A ppel l ant s pr odu ced no evi dence t hat t he app l i ca t i on f or t he pat entha s bee n a ppr ove d, an d Appel l ant s’ ev i den ceof Let son’ s opi ni on r egar di ng l ostpr of i t s dam ages i s specul at i ve. A ppe l l ant s f urt he r a rg ue t hatA very s uf f er ed dam age s asa r es ul tof A ppe l l ee s’ f r aud ul entorne gl i gen tne got i at i onsw i t h St and ar d. Th ey con t end t hatA ppel l ees di d not t i m el y com m uni cat e an of f erby S t andar d t o pur chase25

A v e ry , a n d th e y s u b m i tte d a n e m a i l fro m P ri c e i n w h i c h P ri c e i n d i c a te d a d e s i re to se t up a c o n fere n c e ca l l b e tw e e n A v e ry, S a n k a ry, an d the i r co u n se l to di scus s t he sal e. Thi s em ai l al one, how ever , i s no evi dence t hatA ppel l ees’
a l l e g e d u n ti m e l yco m m u n i c a ti o n o f t h e S tan d a rd o ffer ca u se d S tan d a rd n o t t o pur cha seA very, nordoe s t he ext entofA ppe l l ant s’ s um m ary j udgm ent
e v i d e n c e i n d i c a te a s m u c h e i th e r. A very’ s evi den ceofda m age s i s si m pl y to o r em ot e, t oo un ce rt ai n, or pur el y c onj ec t ur al , s uch t hat t he dam age s ca nnotber ec ove r ed asa m att erof l a w . See Arthur

A nder sen & Co. , 9 4 5 S .W .2 d a t 8 1 6 . E x a m i n i n g th e e n ti re
r ec ord i n the l i gh tm os tf av orab l e to A ve r y a nd i nd ul gi ng ev ery r e a s o n a b le i n fe re n c e a n d re s o l v i n g a n yd o u b t s a g a i n s t A p p e l l e e s ’ m o ti o n fo r s u m m a ry j udg m ent , w e hol d th a t A v er y f ai l ed t o pr odu ce sum m ar y j udg m entevi dence
r ai si ng a ge nui ne i ss ue of m at er i al f ac tt hati ts uf f er ed dam age s r es ul t i ng f r om A ppel l ees’ com pl ai ned- ofcondu cto r t hatA ppel l ees’ com pl ai ned- ofcondu ct p ro x i m a te l yc a u s e d A v e ryd a m a g e s . S ee Tex. R. C i v. P. 166 a( i ) . A cc or di ngl y,
w e over r ul e t hi s partofA ppel l ant s’ f i f t h i ssue.

2 . B rea c h o f Fi d u c i a ry D u ty In a n o th e r p a rt o f th e i r fi fth i s s u e , A p p e l l a n ts c h a l l e n g e th e tri a l c o u rt’s g ra n t o f s u m m a ryj u d g m e n t i n fa v o r A p p e l l e e s o n A v e ry ’sb re a c h o f fi d u c i a ry d u t yc l a i m.26

Th e essence ofa cl ai m f orbr each off i duci ar y duty f ocuses on w het her
a n a tto rn e y o b ta i n e d a n i m p ro p e r b e n e fi t fro m re p re s e n ti n g th e c l i e n t. McG ui re, Craddo ck, S trother & Hale, P. C
. , v. Transconti nental Realty I

nvestors, I

nc. , 251 S .W .3 d 8 9 0 , 8 9 4 (T e x . A p p .— D a l l a s 2 0 0 8 , p e t. d e n i e d ); K i mle c o Pe tro le um, I nc. v. Mor

r i so n & Shelton , 91 S. W . 3d 921, 923 ( Te x. App . — Fo rtW ort h 2002, pet . deni ed) ( st at i ng t hatt he f ocus of a br each of f i duci ar y duty i s w het heran att or neyobt ai ned an i m pr ope rbe nef i tf r om r epr es ent i ng a cl i e ntan d t hatt he
e s s e n c e o f a b r e a c h o f f i d u c i a r y d u t y i n v o l v e s t h e i n t e g r i t y a n d f i d e l i t y o fan att or ney ) . An at t or neybr ea che s hi s f i duc i ary dut y t o a cl i ent w hen he , am ong
o t h e rt h in g s , s u b o r d in a t e s h is c lie n t ’s in t e r e s t s t o h is o w n , e n g a g e s in s e lf d e a l i n g , fai l s to d i sc l o se co n fl i c ts o f i n tere st, or m a k e s m is rep res e n tati o n s to
a c h i e v e th e s e e n d s . T ra n s c o n ti

n en ta l Re a lty I

n ves to rs, Inc. , 25 1 S . W . 3d at 894 . Fe e f or f ei t ur e i s app r opr i at e onl y w her e t her e i s a br ea ch of a d ut y a nd
a c le a r a n d s e r io u s v io la t io n o f a d u t y t o a c lie n t t h a t d e s t r o y s o rs e v e r e ly i m p a i rs th e a tto rn e y -c l i e n t re l a ti o n s h i p . Bi lodeau v. Webb , 170 S. W . 3d 904, 9 1 6 (T e x . A p p .— C o rp u s C h ri s ti 2 0 0 5 , p e t. d e n i e d ). A v e ry g e n e ral l yd i rec ts u s to S a n k a ry’s a ffi d a v i t, M c C o rm i c k ’s affi d a v i t,
a n d L e ts o n ’sa ffid a v i t a s e v i d e n c e th a t A p p e l l e e s b re a c h e d o n e o r m o re f id u c ia r yd u t ie s o w e d t o A v e r y . Itlis t s n u m e r o u s a c t s o ro m is s io n s a lle g e d ly const i t ut i ng on e orm or e br eaches off i duci ar y duty, i ncl udi ng t hatA ppel l ees27

b re a c h e d th e i r f i d u c i a ryd u ti e s to A v e ry“ i n b e i n g d i s l o y a l ,” “ i n v i o l a ti n g fi rm pol i ci es desi gned t o pr eventt he t ype of confl i ct s, i nj u ri es, and dam ages
c o m p l a i n e d o f,” “ i n fa v o ri n g o n e c l i e n t o v e r th e o th e r,”“ i n c o n ti n u i n g to w o rk agai nstt he i nt er est s of A ver y and S ankar y, even af t er [ A ppel l ees] ant i ci pat ed t hat t heywo u l d b e s u e d b yA v e r ya n d / o rS a n k a r y , ” a n d “ i n v i o l a t i n g a n d / or f ai l i ng t o com pl y w i t h num er ouspr ovi si onsoft he Texa s D i sc i pl i nary Rul esof Pr of essi onal C ond uct . ” N one of A ppel l ant s’ evi dence, how ever , dem onst r at es t hat

— by w ay oft he com pl ai ned ofac t s orom i ss i ons — A ppe l l ee s obt ai ned an y t ype of i m pr operbenef i t . Ther e i s no evi dence t o i ndi cat e t hatA ppel l ees
su b o rdina ted A v e ry’s i n tere sts to th e i r o w n , e n g a g e d i n se l f d e a l i n g , fai l e d to di sc l os e c onf l i ct s ofi nt er es t , orm adem i sr epr es ent at i onst o a chi evet hi s end . S ee Transconti

nenta l Realty I

nvestors, I

nc. , 2 5 1 S .W .3 d a t 8 9 4 . A v e ry ’s l aund r y l i stofal l eged br eaches o f fid u c iary duty i nst ead com pr om i ses l egal
m a lp r a c t ic e c o m p la in t s t h a tS a n k a r yh a s o f A p p e lle e s . A n d a f e e f o r f e it u r e is not appr opr i at e und er t hese ci r cum st ances. Becau se A ppel l ant s f ai l ed t o r ai se
a g e n u i n e i s s u e o f m a te ri a l fa c t to s h o w th a t A p p e l l e e s b r e a c h e d a fi d u c i a ry d u ty to A v e ry , w e h o l d th a t th e tri a l c o u rt d i d n o t e rr b y g ra n ti n g s u m m a ry j u d g m e n t i n fa v o r o f A p p e l l e e s o n A v e ry ’sb re a c h o f fi d u c i a ryd u tyc l a i m . S ee Tex . R. C i v. P. 16 6a( i ) . W e over r ul e t hi s partofA ppel l ant s’ f i f t h i ssue. D . A v e ry ’sa n d S a n k a ry ’sR e m a in in g C la im s28

In a n o th e r p a rt o f th e i r fi fth i s s u e , A p p e l l a n ts a rg u e t h a t th e tri a l c o u rt
er r ed by gr ant i ng su m m ary j udgm ent i n f avo rofA ppe l l ee s on t he f r aud , f r aud by nondi sc l os ur e, con sp i r ac y t o def r aud , and neg l i gen t m i s r epr es ent at i on cl ai m s. 1. Fr aud ,Fraud by N ondi sc l os ur e,an d Consp i r ac y t o Def r aud Th e el em ent s ofcom m on l aw f r aud ar e t hat( 1) a m at er i al
m i sr epr es ent at i on w asm ade ; ( 2) t he r epres ent at i on w asf al se ; ( 3) w hen t he
r e p r e s e n t a t io n w a s m a d e , t h e s p e a k e r k n e w itw a s f a ls e o rm a d e itre c k le s s ly
w i t hou t a n y k now l edg e o ft he t r ut h a nd a s a p os i t i ve as se rt i on; ( 4) t he
r epr esent at i on w as m ade w i t h t he i nt ent i on t hati tbe act ed upo n by t he ot her p a rt y ; (5 ) th e p a rt yac ted i n rel i a n c e u p o n th e rep res e n tati o n ; a n d ( 6 ) th e p a rt y
s u ffe re d i n j u ry . John son & Hi ggi ns of Tex . , I

nc. v. Kenneco Ener gy, I nc. , 962 S .W .2 d 5 0 7 , 5 2 4(T e x . 1 9 9 8 ). F ra u d b yn o n d i s c l o s u re is a s u b c a te g o ryo f fra u d . Schl um ber ger Tech. Cor p. v. Swans on , 959 S . W . 2d 171, 181 ( Tex. 199 7) . The el em ent s off r aud by n ondi sc l os ur e r equ i r e ( 1) a del i ber at e f ai l ur e t o di sc l os e m at er i al f ac t s, ( 2) by
onew ho ha d a dut y t o di sc l os e s uch f ac t s, ( 3) t o a not herw ho w asi gnor antof t he f ac t s and di d notha ve an equ al opport uni t y t o di sc ove r t hem , ( 4) w i t h t he i nt ent t h e l i s t e n e r a c t o r r e f r a i n f r o m a c t i n g , a n d ( 5 ) t h e l i s t e n e r r e l i e s o n t he
n o n d i s c l o s u re re s u l ti n g i n i n j u ry . 7 9 7 9A i rpo rt Ga rag e, L .L.C
. v. D o l l a r Ren t A29

Car Sys. , I nc. , 2 4 5 S .W .3 d 4 8 8 , 5 0 7 n .2 7 (T e x . A p p .— H o u s to n [1 4 th D i s t.] 2 0 0 7 , p e t. d e n i e d ); se e a l so Bradfo rd v. Ven to , 48 S. W . 3d 749, 754– 55 ( Tex. 2 0 0 1 ). The el em ent s of a con sp i r ac y- t o- def r aud cl ai m ar e ( 1) a com bi nat i on by t w o orm or e p er so ns ; ( 2) an obj ec tt o beac com pl i sh ed; ( 3 ) a m ee t i ng oft he
m i nds on t he obj ect or cour se of act i on; ( 4) one or m or e unl aw f ul , overtact s;
a n d (5 ) d a m a g e s a s th e p ro x i m a te re s u l t. Masse y v. A r m co Steel

Co. , 652 S .W .2 d 9 3 2 , 9 3 4(T e x . 1 9 8 3 ); Hi n o j o s a v. A sh cra ft L a wF i rm , No. 11- 03- 0 0 1 4 5 -C V , 2 0 0 4 W L 1 9 6 0 2 1 7 , a t * 3 ( T e x . A p p .— E a stl a n d S e p t. 2 , 2 0 0 4 , p e t. d e n i e d ) (m e m . o p .); s e ea ls o S ch lum b er g er Well Surve yingCo r

p . v. No rtexOil & GasCor

p. , 43 5 S . W . 2d 85 4, 85 7 ( Tex . 19 69 ) ( i ncl udi ng r equi r em ent s t hat per sons undert ake an i nt ent i onal , concert ed act i on t o def r aud) . C i vi l conspi r acy i s a d er i v a t i v e t o rt ; t h a t i s , a d e f e n d a n t ’ s l i a b i l i t y f o r c o n s p i r a c y d e p e n d s on part i ci pat i on i n som e und er l yi ng t ortf orw hi ch t he pl ai nt i f fseeks t o hol d atl east
o n e o f th e n a m e d d e fe n d a n ts l i a b l e . T ilto n v. Ma r

sh a ll, 925 S. W . 2d 672, 681 ( Tex . 19 96 ) . Recov er y i s notbased on t he c o n s p ira c y ; i ti s based on an
u n d e rl y i n g to rt. L e s i ka r v. Rapp ep o rt, 33 S. W . 3d 282, 301– 02 ( Tex. A p p .— T e x a rk a n a 2 0 0 0 , p e t. d e n i e d ). A ppe l l ant s poi ntt o t he f ol l ow i ng st at em ent s i n t hei rbr i efasev i den ceof A ppe l l ee s’ al l ege d f r aud , f r aud by nondi sc l os ur e, an d c ons pi r ac y t o de f r aud :30

•fa i l i n g to m a k e a fu l l d i sc l o su re to A p p e l l a n ts o f m a teri a l fa c ts af f ec t i ng Appel l ee s’ r epr es ent at i on; •suppr essi ng f act s; •f ai l i ng t o pr ovi de i nf or m ed di scl osur e; •fa i l i n g to o b tai n i n fo rm e d co n se n t; •c o n ti n u i n g to re p res e n t V e r V y n c k , A W P , a n d I n fi n i ty w i th i nt er est s adver se t o A ppel l ant s;

• f a ilin g t o in f o r m A p p e lla n t s t h a tV e r V y n c k o w n e d a p a rt o fo ra ll o f A v e rya n d a n yb u s in e s s th a t c o m p e te d w ith R D I; •hi di ng t he R D I i nj uncti on f r om A ppel l ent s; •c r ea t i ng AW P an d I nf i ni t y f or V erV ync k t o c om pet e w i t h Aver y; •f ai l i ng t o t ak e s t epst o pr eve ntt hi r d pa rt y Ve r V y n ckf r om ac ce ss i ng Avery’ s f undsorpr ope rt y i n e vad i ng t he RD I i nj unc t i on; •a ttem p ti n g to c o v e r up A p p e l l e e s’ m i sc o n d u c t; •f ai l i ng t o k ee p A ppe l l ant s ade qua t el y i nf or m ed r ega r di ng neg ot i at i onsw i t h a t t em pt ed pur cha s e by St and ar d, i ncl udi ng p rev e n ti n g the sa l e to S tan d a rd a n d m a k i n g m i sre p res e n tati o n s to St and ar d;

• d e la y in g in t h e d is c lo s u r e o fin f o r m a t io n w h ic h p r e v e n t e d t h e s a le ofA very t o St and ar d; •c onc ea l i ng orot her w i sei m pai r i ng t he “v er i t y, ” l egi bi l i t y, or ava i l abi l i t y oft he RD I i nj unc t i on, t h e S t ockPur cha seA gr ee m ent and an O pti o n Agr ee m entw i t h Fi ck l i ng, co r por at e d ocu m ent s f or I nf i ni t y and A W P, t he C S A , t he assi gnm entofth e A ver y vi al pat ent , and t he acqui si t i on of docu m ent s f orStandar d’ s pot ent i al pur cha seofA very; an d31

• n o td is c lo s in g t h e e x is t e n c e , n a t u r e , im p lic a t io n s , a n d p o s s ib le adv er seco ns equ e n c esoft he Fi ck l i ng St ockPur cha seA gr ee m ent and O pt i on A gr ee m ent , t he f or m at i on and si gni f i ca nce of A W P an d I nf i ni t y, t he C SA , and t he ongoi ng r epr es ent at i on of V erV ync k a nd V erV ynck’ s i nt er est s cont r ar y t o A ppel l ant s’ i nt er est s. C o n s i d e ri n g th e a b o v e s ta te m e n ts a n d th e e x te n t o f A p p e l l a n ts ’ su m m a ry j udg m entevi dence, t her e i s no evi dence r ai si ng a genu i ne i ssue ofm at er i al f act t hatA ppel l ees m ade t o A ppel l ant s a m ate r i al , f al se r epr esent at i on t hatw as kno w n t o be f al seort hatw asm ader ec kl es sl y a nd w i t houtan y k now l edg e o f th e tru th . S ee John son & Hi ggi ns of Tex. , I nc. , 96 2 S . W . 2d at52 4. Because A p p e l l a n t s fa i l e d to ra i s e a g e n u i n e i s s u e o f m a te ri a l fa c t o n o n e o r m o re cha l l eng ed f r aud el em ent s, w e h ol d t hatt he t r i al co urt di d noter rby gr ant i ng
s u m m a ryj u d g m e n t i n fa v o r o f A p p e l l e e s o n A p p e l l a n ts ’ fra u d c l a i m s . S eeTex. R . C i v. P. 16 6a( i ) . W e over r ul e t hi s partofA ppel l ant s’ f i f t h i ssue. A ppel l ant s di r ectus t o evi dence app ar ent l y dem onst r at i ng t hatA ppel l ees f ai l ed t o di scl ose var i ous f act s, but t her e i s no sum m ar y j udg m entevi dence t hat A ppel l ees delib era telyf ai l ed t o di scl ose t he m at er i al f act s w i t h t he i ntent t hat A ppe l l ant s ac torr ef r ai n f r om ac t i ng ba se d on t he nondi sc l os ed i nf or m at i on. Se e7 979 Ai

r p o rtGa rag e, L . L . C. , 24 5 S . W . 3d at50 7 n . 27 . Because A p p e l l a n ts f a i l e d to ra i s e a g e n u i n e i s s u e o f m a te ri a l fa c t o n o n e o r m o re cha l l eng ed f r aud by nondi sc l os ur e e l em ent s, w e hol d t hat t he t r i al co urtdi d not
er rby gr anti n g su m m ary j udgm enti n f avo rofA ppe l l ee s on Appel l ant s’ f r aud22 ... In a ny event, t her e i s al so no sum m ar y j udg m entevi dence t hat

A p p e l l e e s h a d a m e e ti n g o f th e m i n d s to c o m m i t o n e o r m o re u n l a w fu l , o v e rt fra u d u l e n t a c ts . S ee Massey , 6 5 2 S .W .2 d a t 9 3 4 . 32 b yn o n d i s c l o s u re c l a i m s . S ee Tex. R. Ci v. P. 166a( i ) . W e ove r r ul e t hi s partof A ppel l ant s’ f i f t h i ssue. B e c a u s e t h e r e i s n o g e n u i n e i s s u e o f m a te ri a l fa c t o n A p p e l l a n ts ’ to rt cl ai m s, t her e i s no genui ne is s u e ofm at er i al f actsupport i ng A ppel l ant s’ d e ri v a ti v e c o n s p i ra c yto d e fra u d c l a i m . See Ti lton , 9 2 5 S .W .2 d a t 6 8 1 ; Lesi kar, 33 S. W . 3d a t301– 02. Bec aus e Appel l ant s f ai l ed t o r ai sea gen ui ne i ss ue of 22
m a te ri a l fa c t o n o n e o r m o re c h a l l e n g e d c o n s p i r a c yto d e fra u d e l e m e n ts , w e hol d t hatt he t r i alco urtdi d not er r by gr ant i ng s um m ary j udgm enti n f avo rof A p p e l l e e s o n A p p e l l a n ts ’ c o n s p i ra c yto d e fra u d c l a i m s . S ee T e x . R . Ci v. P. 16 6a( i ) . W e over r ul e t hi s partofA ppel l ant s’ f i f t h i ssue.

2. N egl i gen tM i srepres ent at i on A n a t to rneyca n bes ubj ec tt o a ne gl i gen tm i sr epr es ent at i on c l ai m i n a
c a s ei n w h i c h h e i s n o t s u bj e c t to a l e g a l m a l p ra c ti c e c l a i m . F.E. A pp l i ng I n terests , 991 S . W . 2d at792. U nde r t he t ort ofne gl i gen tm i sr epr es ent at i on, l i a b i l i ty i s n o t ba se d o n the b rea c h o f du ty a p rofe ss i o n a l o w e s h i s o r h e r cl i e n ts
or ot her s i n pr i vi t y, buton a n i nde pen den tdut y ow ed t o t he nonc l i entba se d on t he pr of es si ona l ’ s m ani f es taw a re n e ssoft he nonc l i ent ’ s r el i anc e o n t he33

m i sr epr es ent at i on a nd t he pr ofe s s i ona l ’ s i nt ent i on t hatt he nonc l i ents o r el y. Id . Thus , t he el em ent s ofa neg l i gen tm i sr epres e n t at i on c l ai m ar e ( 1) t he
r epr es ent at i on i s m adeby a d ef end anti n t he cou r seofhi s bus i nes s ori n a t r ansact i on i n w hi ch he has a pecun i ar y i nt er est , ( 2) t he def e n d a n t supp l i es f al sei nf or m at i on f ort he gui dan ceof ot her s i n t hei r bus i nes s, ( 3) t he def end ant di d not exe r ci se r ea so nab l e c ar e o rco m pet enc e i n obt ai ni ng orco m m uni ca t i ng t he i nf or m at i on, an d ( 4) t he pl ai nt i f fs uf f er s pec uni ary l os s by j us t i f i abl y r el yi ng
o n th e re p re s e n ta ti o n . Fed. Land BankA ss ’ n of Tyler v. Sloan e , 825 S. W . 2d 4 3 9 , 4 4 2 (T e x . 1 9 9 1 ); Gra n d Ch a mp i

o nF i l m Pro d. , L . L . C. v. Ci n ema r kUSA, I nc. , 257 S . W . 3d 478, 485 ( Tex. A pp. — D al l as 200 8, no pe t . ) . Fo ra neg l i gen t
m i s re p re s e n ta ti o n , re l i a n c e m u s t b e j u s ti fi a b l e . Er nst& Young, L. L. P. v. Pac. Mut. Li f e I ns . Co. , 5 1 S .W .3 d 5 7 3 , 5 7 7 (T e x . 2 0 0 1 ). A ppel l ant s do noti ncl ude a si ngl e r ecor d ci t at io n i n t hei ropeni ng br i ef di r ect i ng us t o evi dence t hatt hey cl ai m r ai ses a genu i ne i ssue ofm at er i al f act to s u p p o rt th e i r n e g l i g e n t m i s re p re s e n ta ti o n c l a i m . S ee Tex. R. A pp. P. 38. 1( h) ( r equ i r i ng t hatbr i ef s con t ai n a cl ea r and con ci sear gum entf ort he con t ent i ons
m ade w i t h appr opr i at e ci t at i ons t o aut hor i t i es and t o t he r ecor d) . N onethel ess,
c o n side ri n g allo f t h e ev i d e n c e su b m i tted b yA p p e l l a n ts i n the i r r e sp o n se to A ppe l l ee s’ m ot i on f ors um m ary j udgm ent , i ncl udi ng t he evi den ce det ai l ed i n t he bul l etpoi nt s i m m edi at el y above, none of i tr ai ses a genu i ne i ssue ofm at er i al34

fac t t h a t A p p e l l e e s s u p p l i e d A p p e l l a n ts w i th fal se i n fo rm a ti o n tha t A p p e l l a n ts
c o n s e q u e n tl yj u s ti fi a b l yre l i e d o n . See Sl oan e , 82 5 S . W . 2d at44 2. A ppel l ant s’ cl ai m s a re in s t ead m ost l y based upo n A ppel l ees’ al l eged f ai l ur es t o di scl ose i nf or m at i on r el at ed t o m at t er s associ at ed w i t h A ppel l ees’ r ender i ng of servi ces f orV erV ynck, A ver y, A W P, o rI nf i ni t y. Because A ppel l ant s f ai l ed t o r ai se a ge n u i n e i s s u e o fma t e r i a l f a c to n o n e o rmo r e c h a l l e n g e d n e gl i gen t
m i sr epr es ent at i on e l em ent s, w e h ol d t hatt he t r i al cou rt di d not er r by g r ant i ng
su m m ary j udgm enti n f avo rofA ppe l l ee s on Appel l ant s’ ne gl i gen t
m i s re p re s e n ta ti o n c l a i m s . S ee Tex. R. Ci v. P. 166a( i ). W e o ver r ul e t he
r em ai nderofA ppel l ant s’ f i f t h i ssue. E. A udi o C assett e Tap e Evi dence I n t hei r si xt h i ssue, A ppel l ant s ar gue t hatt he t r i al courter r ed and abu sed i t s di scr et i on byover r ul i ng t hei robj ect i on t o an audi o cassette t ape t hat A ppel l ees i ncl uded i n t hei rsum m ar y j udg m entevi dence. The t ape contai ns a
rec o rde d tel e p h o n e co n v e rsa ti o n b e tw e e n S a n k a ry a n d V e r V y n c k . A p p e l l a n ts
c o n ten d tha t A p p e ll e e s f a i l e d to p rop e rl yau th e n ti c a te th e tap e an d fai l e d to sh ow t hatt he r ec or di ng w as ac cur at e and t hat i t had no c han ges , de l et i ons , or
a d d it io n s . B e c a u s ew e a f f ir m t h e t r ia l c o u rt ’s g r a n to fs u m m a r yju d g m e n tin f avo rofA ppe l l ee s on no - ev i d e ncegr ounds , w e h ol d t hater r or , i fan y, i n t he tri a l c o u rt’so v e rru l i n g o f A p p e l l a n ts ’ o bj e c ti o n to th e ta p e w a s h a rm l e s s . W e35

d o n o t c o n s i d e r A p p e l l e e s ’ s u m m a ry j u d g m e n t e v i d e n c e s u b m i tte d i n s u p p o rt
o f th e i r tra d i ti o n a l m o ti o n fo r s u m m a ry j u d g m e n t to a rri v e a t o u r h o l d i n g s . S ee T e x . R . Ci v . P . 1 6 6 a ( i ) ; T e x . R . Ap p . P . 4 4 . 1 ( a ) ( 1 ) . W e o v e r r u l e Ap p e l l ant s’ si xt h i ssue. IV . M OT I ON F ORN EWT RI AL I n the i r se v e n th is su e , A p p e l l a n ts a rgu e tha t t h e tr i a l co u rtab u se d i ts di scr et i on bydenyi ng t hei rm ot i on f ornew t r i al . Theycont end t hatt hey “f i l ed th e i r m o ti o n fo r n e w tri a l to b ri n g th e t r i a l c o u rt’sa tte n ti o n to th e e rro rs
com m i t t e d in gr ant i ng t he sum m ar y j udg m ent s. ” Because w e af f i r m t he t r i al
court ’ s gr antofsum m ar y j udg m enti n f avorofA ppel l ees on al l ofA ppel l ant s’ cl ai m s, w e h o l d t h a tt h e t r i a l c o u rtd i d n o ta b u s e i t s d i s c r e t i o n b yd e n y i ng A ppel l ant s’ m ot i on f ornew t r i al . W e over r ul e A ppel l ant s’ sevent h i ssue. Becau se A ppel l ant s’ t hi r d, f i f t h, si xt h, and sevent h i ssues ar e di sposi t i ve,
w e n e e d n o t c o n s i d e r A p p e l l a n ts ’ fi rs t, s e c o n d , a n d fo u rth i s s u e s . S eeTe x. R. App. P. 47. 4. V . P L EA TO THEJ U R I S D I C T I ON I n t hei r so l e cr os s- poi nt , A ppe l l ee s ar guet hatt he t r i al co urts houl d ha ve
su st ai ned t hei r pl ea t o t he j ur i sd i ct i on. Beca us e w e af f i r m t he t r i al co urt ’ s gr ant ofs um m ary j udgm ent i n f avo r ofA ppe l l ee s on Appel l ant s’ cl ai m s, w e n ee d not
con si derA ppe l l ee s’ ar gum entco m pl ai ni ng of t he t r i al cou rt ’ s f ai l ur e t o gr antt he36

p l e a to th e j u ri s d i c ti o n . S ee id . A ccor di ngl y, w e over r ul e A ppel l ees’ cr ossp o i n t. V I. C ON C L U S I ON H avi ng ov er r ul e d A ppel l ant s’ t hi r d, f i f t h, si xt h, and sevent h i ssues, A p p e l l a n ts ’ d i s p o s i ti v e i s s u e s , a n d h a v i n g o v e rru l e d A p p e l l e e s ’ c ro s s -i s s u e , w e af f i r m t he t r i al court ’ s or dergr ant i ng sum m ar y j udg m enti n f avorofA ppel l ees on A ppel l ant s’ cl ai m s. P E R CU R I AM PA N EL: D IX O N W . H O LM A N , J. ( Seni orJus t i ce , Ret i r ed, Si t t i ng by A ss i gnm ent ) ; LI V I N G STO N an d DA U PH I N O T, JJ. DEL I VERE D: F e br ua r y 5, 2009