DARBY RILEY

BOARD CERTIFIED/CIVIL TRIAL LAW

TEXAS BOARD OF LEGAL SPECIALIZATION

darbyriley@rileylawfirm com

C H A R L E S A R I L E Y , P C

charlesriley@rileylalvfirm com

Fourlh Court of Appeals

300 Dolorosa, Suite 3200

San Antonio. Texas 78205-3037

CHRIS RILEY, M A

LEGAL ASSISTANT

June 2, 2015

Re. Barry Brooks et al. v. Excellence Mortgage, Ltd. et al.,

Cause No. 04-1 3-001 06-CV

TO THE HONORABLE JUSTICES BARNARD ANd ALVAREZ:

The appellant loan officers respectfully submit this letter, containing additional

citations and succinct comment, with respect o Appellees' Motion for Rehearing.

1. ANTITRUST CLAIMS

Motion for Summary Judgment limited to grounds asserfed by the Motion.

Attached hereto are peftinent excerpts from the mortgage company parties'

traditional Motion for Summary Judgment. The Motion at CR 126-128 shows the grounds

asserted on the loan officers' tortious interference and antitrust claims against the

mortgage company parties.

"When a motion for summary judgment asserts grounds A and B, it

cannot be upheld on grounds C and D, which were not asserted, even if the

summary judgment proof supports them and the responding party did not

except to the motion."

320 Lexington Ave. San Antonio, TX 78215-1913 Tel: (210) 225-1236 Fax: (2l0)221-7907

ACCEPTED

04-13-00106-CV

FOURTH COURT OF APPEALS

SAN ANTONIO, TEXAS

6/2/2015 4:36:48 PM

KEITH HOTTLE

CLERK

 FILED IN 4th COURT OF APPEALS SAN ANTONIO, TEXAS 6/2/2015 4:36:48 PM KEITH E. HOTTLE Clerk
Fourth Court of Appeals

June 2, 2015

Page:2

Roberfs v. Southwest Iexas Methodist Hospital, Sl 1 S.W.2d 141, 146 (Tex. AppSan Antonio 1991, writ denied), quoted in McConnell v. Southside lndependent School

District,858 S.W.2d 337, 342 (fex. 1993); T. Pnnoru, Suuunnv Juoctuerurs tN Texns:

PnRcrce , PRoceouRE, AND Rrvrew, 53.06t21 (3d ed. 2013).

The mortgage company parties only sought summary judgment on the antitrust

claim on the ground that their action "merely enforced reasonable non-disclosure

agreements." (CR 128-129). The Court's opinion on Motion for Rehearing finds a fact

issue on whether "Excellence falsely claimed it had the sole right to serve the pipeline

customers." Opinion, p. 18. Thus, having found that the mortgage company parties' did

not conclusively prove that the non-disclosure agreements gave them exclusive right to

serve the pipeline customers, the Court properly denied summary judgment on the

antitrust claims.

B. The Appel/ees' New Argument on Causation

The mortgage company parties go beyond their Motion for Summary Judgment in

arguing that the panel's Opinion on Motion for Rehearing "is inconsistent with appellants

pleaded causation theory" on the antitrust claim. (Appellees' Motion for Rehearing, p. 7).

They point out that the loan officers pleaded that the injunction suit by Excellence

Mortgage, Ltd. was groundless. (Third Amended Original Counterclaim, CR 269-270).

(The loan officers also pleaded that the moftgage company parties "unlawfully" refused

to transfer the loans as requested by the pipeline borrowers). ld.
Fourth Courl of Appeals

June 2, 2015

Page: 3

The mortgage company parties cite Houston Mercantile change Corp. v. Dailey

Petroleum Services Corp., 1993 WL 322901 (Tex. App.-Houston [14th Dist.] 1993, no

writ) for the proposition that a person who initiates a lawsuit is generally immune from

antitrust liability. The well-recognized exception is where the suit is groundless and/or

brought for an anticompetitive purpose, as alleged here. See /n re Burlington Nofthern,

822 F.2d 518, 527 ,529 (sth Cir. 1987). (Even a successful litigant may be found to have

abused the litigation process in order to effectuate an antitrust violation).

Thus, to succeed on this issue, the mortgage company parties had to first, move

for summary judgment on that ground, and second, conclusively prove that the suit was

not groundless and was not brought for an anticompetitive purpose. The mortgage

company parties did neither. The Court has properly denied summary judgment on the

antitrust claim.

2. TORTIOUS INTERFERENCE

A. As the Court found in its Opinion on Motion for Rehearing, page 22, the sole

ground asserted by the mortgage company parties for summary judgment on the tortious

interference claim is the contention that they "engaged in no tortious or wrongful conduct"

that prevented the pipeline customersfrom dealing with the loan officers. CR 126-127.

The Court had previously found that the loan officers had raised fact issues on each

element of an antitrust claim; it thus properly held the antitrust violation was an unlawful

act to support the tortious interference claim. ld.
Fourth Court of Appeals

June 2, 2015

Page:4

B. The mortgage company parties contend (Appellees' Motion for Rehearing,

pp. 9-10) that "appellants' pleadings did not base the tortious interference claim upon an

antitrust violation. See CR 265-66." However, the loan officers' Response to the

mortgage company parties' Motion for Summary Judgment clarifies the "unlaMul

conduct" complained of in the Third Amended Original Counterclaim. ld. A|CR 281-82,

the loan officers laid out the extensive unlaMul conduct, including the antitrust violations,

and cited the Texas Antitrust Statute. Where, as here, there was no objection to the lack

of a supporting pleading, "[a] movant may . try by consent an issue raised by the nonmovant in its summary judgment response which is not pled in its petition." Pnrrorl,

supra, S 3.06[1], citing Goodyear Tire and Rubber Co. v. Mayes,236 S.W.3d754,756 n.

1 (Tex. 2007).

C. The mortgage company parties contend (Appellees' Motion for Rehearing,

pp 6-7) that the Court should not have accepted the opinions of the loan officers' expert

witnesses that the pipeline customers' privacy rights were violated when their files were

transferred to Georgetown Mortgage without their knowledge or consent. This objection

was not preserved for appellate review. Moreover, such rights are spelled out in detail in

the FTC's Safeguards and Privacy Rules, 16 C.F.R. S 313.1 , et seq. See also 15 U.S.C.

$ 6801(a):

"Privacy obligation policy. lt is the policy of the Congress that each

financial institution has an affirmative and continuing obligation to respect

the privacy of its customers and to protect the security and confidentiality of

those customers' nonpublic personal information."
Fourth Court of Appeals

June 2, 2015

Page: 5

The mortgage company parties have not contended that they complied with this

federal policy or the regulations. The affidavits from the two experts put forth by the loan

officers established unlaMul conduct by the mortgage company parties, both in

transferring the pipeline loan files to Georgetown withouf transfer letters, and in refusing

to transfer the files to Premier with transfer letters.

Respectfully subm itted,

D^ lJ V'0 /%T

Darby Riley

Attorneys for Appellants

cc. Samuel V. Houston, lll

William H. Ford

Gregory A. Scrivener

(via e-serve)
Page 1 of 46,

EXCELLENCE MORTGAGE, LTD.

V.

NO. zoro-Cl-r6915

-P00067

IN THE DISTRICT COURT

zz5TH JUDICI-AL DISTRICT

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NTFN, INC. D/B/A PREMIER

NATIONWIDE LENDING, ROBIN C.

MORTON, BARRY BROOKS, HESTON

C. KING, STEFEN DOUGI.d.S BROOKS,

JANUARY MAY GOETTE, JOHANNA

BARTON, JESSE RODRIGUEZ

BENAVIDES, AND SANTEX, LTD.

GROTIIIIES FINANCIAL. LTD.. GROTHUES BROTHERS MANAGEMENT I.

LLC. AND GEORGETOWN MORTGAGE. LLC'S

MOTION FOR SUMMARY JUDGMENT

TO THE HONORABLE JUDGE OF THE COURT:

Counter-Defendants, Excelience Mortgage Ltd., LADTD-r, LLC, Grothues

Financial, Ltd., Grothues Brothers Management I, LLC, and Georgetown Mortgage,

LLC, file this Motion for Summary Judgment on Counter-Plaintiffs' Counter-Claims,

and in support thereof, wouid show the Court the following:

I. Introduction and Statement of Factst

This lawsuit arises from a dispute between an employer, Excellence, and its

former employees, the Counter-Plaintiffs., Excellence is in the mortgage business.

Robin Morton was the President of Excellence until her termination on September 24,

' This recitation of facts is intended to give the Court an overview of the lawsuit and the issues in this

motion. Material facts relied upon as summary judgment evidence are specifically cited in the relevant

section of the motion below.

2 There are no separate affirmative claims against LATD-r, LLC, Grothues Financial, Ltd., Grothues

Brothers Management I, LLC and Georgetown Mortgage. Ostensibly, the basis for liability against these

Counter-Defendants is some agency or participatory theory, but the exact nature of such is unclear jn

Counter-Plaintiffs'pleading. As such, if Excellence is not liable, neither are the other Counter-Defendants.

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The Counter-Plaintiffs' breach of contract claim seeks commissions they are

allegedly owed. Counter-Plaintiffs are not contractually entitled to any commissions. The

Production Personnel Compensation Policy unambiguously provides that a voluntarily

terminated employee is not entitled to a commission that closed cnd funded after

October 1, 2olo.r2 An employee who is terrninated by Excellence is entitled to "no

further commissions."t3 The potential loans at issue are those 9r which were in

Excellence's "pipeline."rq Of the 9r pipeline loans, none closed and funded before

October 1, 2oto.ls

Moreover, the documents are extraordinarily clear about whom the customers

belong to: Excellence. Counter-Plaintiffs have no right to leave an employer and attempt

to strip that employer of its business. There is no basis upon which Counter-plaintiffs

couid be legitimately entitled to any commissions for work they are not entitled to.

The unambiguous language of the Production Personnel Compensation policy

provides that the loan officer Counter-Plaintiffs are not entitled to any commission on

any loans' Summary judgment for Counter-Defendants is therefore proper on CounterPlaintiffs' breach of contract claims.

C. Counter-Plaintiffs' Interference with Prospective Business Relations

Claim

To establish a cause of action for tortious interference with prospective business

relationships, a plaintiff must show that (r) there was a reasonable probability that the

., Exhibit E.

's Id.

'+ Those are loans that are in some stage of the process starting from initial customer contact but which

have not yet closed. The 9r loans are tlose which Counter-Plaiitiffs sought to take with them when they left but which Counter-Defendants enjoined. They are tle bases of Coun-ter-P1aintiffs' breach of contract and interference claims.

ts Exhibit A. Counter-Defendants have produced to Counter-Plaintiffs settlement statements for those which have closed; but in the interest of maintaining borrower privacy, have not anached th"*.

5r6zo3.r

126
(Page 9 of 46)

parties wouid have entered into a business relationship; (2) the defendant committed an

independently tortious or unlararful act that prevented the relationship from occurring;

(3) the defendant either acted with a conscious desire to prevent the relationship from

occurring or knew the interference was certain or substantially certain to occur as a

result of the conduct; and (+) the plaintiff suffered actual harm or damages as a result of

the defendant's interference. Rtchardson-Eagle, Inc. u. Willfam M. Mercer, Inc., 2tg

S.W'gd 469, 475 (Tex, App.-Houston frst Dist.] z0o6, pet. denied). Independently

tortious means that the Counter-Plaintiffs must prove that Counter-Defendants'conduct

would be actionable under a recognized tort. WalMaft Stores, Inc. u. Sturges, 5z

S.W.gd TLL,T26 (Tex. zoor).

The agreements between the parties clearly define who the customers belong to:

Excellence. There is absolutely nothing unlawful or tortious about Excellence seeking to

retain its customers by enforcing its lawful agreements preventing Counter-Plaintiffs

from taking them. The conduct of using the legal process to prevent the loan officers

from taking those customers is neither unlawful nor tortious.r6 As is explained below,

Counter-Plaintiffs confuse legitimate protection of confidential information contractual

provisions with covenants not to compete,

Because Counter-Defendants engaged in no tortious or wrongful conduct, it

cannot be liable for tortious interference. Summary judgrnent is appropriate for

Excell ence on Cou nte r-Plai ntiffs' tortious interference cl aims,

'6 Indeed, the Employment Agreement (Exhibit C) has a provision allowing for injunctive relief for failure

to return company information, including customer information, after leaving employment.

5r6eo3,r

127
(Paqe 10 of 46)

D. Counter-Plaintiffs'Anti-Trustclaims.

Counter-Plaintiffs allege unfair trade restrictions under Tpx. Bus. & Corrru. CooE

$ rS'oS. To establish that a defendant contracted, combined, or conspired in restraint of

trade in violation of section 1S.oS, a plaintiff must show that the alleged contract,

combination, or conspiracy is unreasonable and has an adverse effect on competition in

the relevant market. winston u. Am. Med. Int'L,93o s.w.z d g4s, gsr-s2 (Tex. App.-

Houston [rst Dist.] 1996, writ denied). The Texas Antitrust Act does not prohibit all

restraints of trade; instead, it prohibits only those that restrain trade unreasonably,

DeSanhs u. Wackenhut Corp., zgg S.w.zd 67o,687 (Tex. 1990). counter-Defendants

did not restrain trade at all, but merely enforced reasonable non-disclosure agreemenrs.

"Non-disclosure agreements are different than non-compete covenants."

shoreline Gcs, rnc. u. McGaughev, g-o7-964-cv, zooS wL t747624 (Tex, App.-

corpus christi Apr. 17, zoo8, no pet.); citing zep Mfg. c,o. u. Harthcock, gz4 s.w.ed

654, 663 (Tex. App.-Dallas rgg2, no writ) (affirming the trial court's summary

judgment enforcing a non-disclosure clause despite being accompanied by an

unenforceable non-compete covenant); see also CRC-Euans Fipeline Int'I,Inc. v. Myers,

927 S.W.zd e59, e65 (Tex. App.-Houston [rst Dist.] 7996, no writ) (affirming the trial

court's denial of temporary injunction enforcing non-disclosure atreement, ,clespite the

fact that such agreements do not restrain trade, because trial court could have

reasonably found that former employees did not learn any trade secrets during the

course of their employment). While non-compete covenants are considered restraints of

trade, non-disclosure agreements are not. McGaughey at it; citing CRC-Euans, g2T

S.W.zd at e65; Zep,8z4 S.W.ed at 66g. Non-disclosure agreements do not necessarily

restrict a former employee's ability to compete with the former employer, nor do they

5r6ao3.r

128

r.o
(Page 11 af 46)

prohibit the former employee from using, in competition with the forrner employer, the

general knowledge, skill, and experience acquired in the former employrnent. Zep,8z4

S.W.ed at 663. Rather, such agreements prevent only the disclosure of trade secrets and

confidential information acquired by the former employee. fd,

The agreements do not provide, and Excellence has not asserted, that CounterPlaintiffs cannot work in the mortgage business. There is no restriction on where, when

and for whom that Counter-Plaintiffs can work. There is nothing preventing CounterPlaintiffs from using their general knowledge, skill, and experience acquired at

Excellence. Indeed, Counter-Plaintiffs are using their knowledge and skill and working

with a competitor in the same market. What Counter-Plaintiffs cannot d.o is steal

Excellence's existing customers. Excellence's efforts to prevent them from doing so are

not a restraint of trade. As such, surnmary judgment is proper for Counter-Defendants

on Counter-Plaintiffs' anti-trust claim,

E. Counter-PlaintiffMorton'sClaim

Counter-Plaintiff Morton pleads some ill-defined claim to alleged entitlement to

brokerage fees. Without stating any specific cause of action, counter-piaintiff Morton

alleges unless the 9r pipeline loans were transferred to a licensed broker after Morton's

termination, she is entitled to a brokerage fee.'z There is no authority cited for this

position' Summary judgment is proper for Counter-Defendants for at least tvvo reasons:

1) there is no recognizable cause of action for the alleged harm and z) nothing in

Morton's Ernployment Agreement entitles her to compensation after termination.

'z This appears to be what Counter-Plaintiff is contending although it is difficult to ascertain.

S162o3.1 11