Court Opinion

ID: 3069822
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:17:14.398683+00
Date Added: 2024-06-11T11:41:39.092114
License: Public Domain

COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH

                            NO. 02-13-00422-CV

KODIAK PRODUCTS CO., INC.                                         APPELLANT

                                      V.

CHARLES H. DEEGEAR, JR. AND                                        APPELLEES
DEEMAXX COMPONENTS, INC.

                                   ----------

         FROM THE 236TH DISTRICT COURT OF TARRANT COUNTY
                   TRIAL COURT NO. 236-252084-11

                                   ----------

                       MEMORANDUM OPINION1

                                   ----------

     Appellant Kodiak Products Co., Inc. filed suit against Appellees Charles H.

Deegear, Jr. and Deemaxx Components, Inc., asserting claims for unfair

competition, misappropriation of trade secrets and confidential information,

violations of the Texas Theft Liability Act, and conversion.      Deegear and

     1
      See Tex. R. App. P. 47.4.
Deemaxx pled the affirmative defense of settlement and release and

counterclaimed for declaratory judgment. After a series of motions for summary

judgment, the trial court entered a final judgment ordering that Kodiak take

nothing by its claims and awarded declaratory relief and attorney’s fees to

Deegear and Deemaxx. In four issues, Kodiak argues the trial court erred by (1)

granting Deegear and Deemaxx’s motion for traditional summary judgment on

their settlement and release defense; (2) granting Deegear and Deemaxx’s no-

evidence motion for summary judgment on Kodiak’s unfair competition claim; (3)

granting Deegear and Deemaxx’s motion for summary judgment on their

counterclaim for declaratory relief; and (4) awarding Deegear and Deemaxx trial

and appellate attorney’s fees. We affirm in part and reverse and remand in part.

                                      I.
                                  Background

      This appeal arises out of the second lawsuit between the parties. Kodiak

manufactures, assembles, and sells disc brakes and brake components to trailer

manufacturers, trailer parts distributors, trailer axle manufacturers, and trailer

dealers across the country. Deegear began working at Kodiak as a part-time

employee in 1992. By 2004, Deegear was Kodiak’s president. He also sat on

the board of directors and owned fifty percent of Kodiak’s stock. As an employee

and president of Kodiak, Deegear acquired knowledge of Kodiak’s trade secrets

and confidential and proprietary information.

                                        2
      In 2009, Deegear initiated negotiations with William Glidewell—Kodiak’s

founder, chief executive officer, and owner of the other fifty percent of Kodiak’s

stock—to purchase Glidewell’s shares. According to Glidewell, Deegear made

him an “unfairly low offer” for his Kodiak shares and threatened to “take Kodiak’s

employees and customers and force Kodiak to liquidate if [Glidewell] wouldn’t

accede to his demands.” Glidewell claims that he then learned that Deegear had

committed corporate malfeasance, including misuse of corporate funds.         On

August 17, 2009, Glidewell and Kodiak’s board of directors had Deegear

escorted from Kodiak’s premises and began a formal ethics investigation into his

activities as president of Kodiak.      Glidewell claims Kodiak’s investigation

revealed that Deegear had breached his fiduciary duties to Kodiak, had failed to

properly report to the board of directors, had mismanaged key matters, had

improperly shared confidential information with third parties, had falsified

expense reports, had used company credit cards against company policy, and

had threatened to steal corporate employees, customers, and vendors to directly

compete with Kodiak and force it out of business.

      In September 2009, Kodiak sued Deegear for breach of fiduciary duty,

breach of contract, theft, and declaratory and injunctive relief. Kodiak alleged,

among other things, that Deegear had taken its trade secrets and was

threatening to take its “customers and vendors and open his own business to

compete with Kodiak.” Kodiak sought a temporary and permanent injunction to

“restrain Deegear from using or disclosing or continuing to retain Kodiak’s

                                        3
information” and to “restrain Deegear from directly competing with Kodiak for a

period of at least a year.”

      On November 19, 2009, the parties settled the lawsuit and executed a

settlement agreement with an effective date of October 5, 2009. Kodiak agreed

to pay Deegear $330,000, and Deegear agreed to transfer all of his Kodiak stock

to Kodiak and to resign. Kodiak and Deegear also agreed to release their claims

against each other and to file a joint motion to dismiss the lawsuit with prejudice

within five days of the execution of the settlement agreement. On December 9,

2009, the trial court signed an order dismissing the suit with prejudice.

      In   June    2010,      Deegear   formed   Deemaxx.      Deemaxx      designs,

manufactures, and sells disc brakes and brake components in the trailer industry

and competes with Kodiak.         Kodiak claims that since 2010, it has received

reports from vendors, distributors, customers, and others in the industry that

Deegear and Deemaxx were trying to manufacture and sell rotors, brakes, and

other components in competition with Kodiak that appeared to be based upon

drawings that were nearly identical to Kodiak’s drawings for similar components

and parts. Some of Kodiak’s U.S. partners and distributors reported to Kodiak

that Deegear, acting through Deemaxx, was soliciting sales of competing

components and parts that appeared to be based on confidential information and

designs that Deegear had and had access to while he was at Kodiak. One of

Deemaxx’s representatives gave one of Kodiak’s customers a price sheet.

Kodiak customers and vendors also received Deemaxx brochures that described

                                          4
Deemaxx’s brakes and extolled their virtues and alleged advantages over similar

Kodiak products.    All of Kodiak’s larger customers and distributors reported

receiving repetitive calls from Deegear and Deemaxx trying to solicit business

away from Kodiak. Deemaxx’s website contained pictures and descriptions of

products similar to Kodiak’s products. Kodiak believed that Deemaxx’s brakes

and other parts were based on engineering drawings that contained

information—including    verbatim    instruction   notes—virtually   identical   to

information contained in Kodiak’s drawings for the same parts.         And at the

National Association of Trailer Manufacturers annual trade show in February

2011, Deegear and Deemaxx displayed three different disc brake sets that were

identical to Kodiak’s brakes.   Kodiak believed that these brakes were made

based upon drawings and information belonging to Kodiak that Deegear obtained

while employed by Kodiak and that Deegear and Deemaxx had no right to use.

      On April 6, 2011, Kodiak sued Deegear and Deemaxx, asserting claims for

unfair competition, misappropriation of trade secrets and confidential information,

violation of the Texas Theft Liability Act, and conversion. Kodiak also sought a

temporary and permanent injunction compelling Deegear and Deemaxx to return

Kodiak’s trade secrets or confidential information and to restrain Deegear and

Deemaxx from any further acts of unfair competition against Kodiak and from

using or disclosing its trade secrets or confidential information. In their answer,

Deegear and Deemaxx asserted several affirmative defenses, including prior

settlement and release based on the release language in the 2009 settlement

                                        5
agreement.    They also filed a counterclaim asserting breach of contract and

tortious interference claims and seeking a declaratory judgment to determine the

parties’ rights under the settlement agreement.

      Deegear and Deemaxx filed a motion for summary judgment seeking a

traditional summary judgment on their prior settlement and release defense and

a no-evidence summary judgment on Kodiak’s unfair competition claim. The trial

court granted Deegear and Deemaxx’s summary judgment motion on their

affirmative defense with respect to Kodiak’s claims for misappropriation of trade

secrets and confidential information, violations of the Texas Theft Liability Act,

and conversion. Deegear and Deemaxx supplemented their no-evidence motion

for summary judgment. The trial court granted the supplemental motion, thereby

disposing of all of Kodiak’s claims.

      Deegear and Deemaxx filed a motion for traditional summary judgment on

their declaratory judgment counterclaim. The trial court granted the motion and

declared that the settlement agreement released Deegear and Deemaxx from all

claims asserted by Kodiak in the 2009 lawsuit and any claims or causes of action

that could be brought by Kodiak on or after October 5, 2009, whether or not such

claims or causes of action were connected in any way to Deegear’s relationship

with Kodiak. The trial court also granted Deegear and Deemaxx’s claims for

attorney’s fees pursuant to the Declaratory Judgment Act and found that they

were entitled to recover attorney’s fees “in an amount to be determined.”

                                        6
      By agreement of the parties, the issue of attorney’s fees was submitted to

the trial court by motions and affidavits. The trial court granted Deegear and

Deemaxx’s request for attorney’s fees and entered a final judgment ordering that

Kodiak take nothing on its claims, declaring the parties’ rights under the

settlement agreement, and awarding Deegear and Deemaxx $215,559.62 in trial

attorney’s fees and conditional appellate attorney’s fees of $60,000 if Kodiak

unsuccessfully appealed the judgment to the court of appeals, $15,000 if Kodiak

filed a petition for review with the supreme court, $25,000 if the supreme court

ordered full briefing on the petition for review, and $20,000 if the supreme court

granted the petition for review. Kodiak appealed.

                                     II.
                             Standards of Review

      We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,

315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the

light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could, and disregarding evidence contrary to the

nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every

reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,

Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008).         A plaintiff is entitled to

summary judgment on a cause of action if it conclusively proves all essential

elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710

                                        7
S.W.2d 59, 60 (Tex. 1986). A defendant is entitled to summary judgment on an

affirmative defense if the defendant conclusively proves all the elements of the

affirmative defense. Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508–09

(Tex. 2010); see Tex. R. Civ. P. 166a(b), (c). To accomplish this, the defendant-

movant must present summary judgment evidence that conclusively establishes

each element of the affirmative defense. See Chau v. Riddle, 254 S.W.3d 453,

455 (Tex. 2008).

      After an adequate time for discovery, the party without the burden of proof

may, without presenting evidence, move for summary judgment on the ground

that there is no evidence to support an essential element of the nonmovant’s

claim or defense. Tex. R. Civ. P. 166a(i). The motion must specifically state the

elements for which there is no evidence. Id.; Timpte Indus., Inc. v. Gish, 286
S.W.3d 306, 310 (Tex. 2009). The trial court must grant the motion unless the

nonmovant produces summary judgment evidence that raises a genuine issue of

material fact. See Tex. R. Civ. P. 166a(i) & cmt.; Hamilton v. Wilson, 249 S.W.3d
425, 426 (Tex. 2008).

      When reviewing a no-evidence summary judgment, we examine the entire

record in the light most favorable to the nonmovant, indulging every reasonable

inference and resolving any doubts against the motion. Sudan v. Sudan, 199
S.W.3d 291, 292 (Tex. 2006). We review a no-evidence summary judgment for

evidence that would enable reasonable and fair-minded jurors to differ in their

conclusions. Hamilton, 249 S.W.3d at 426 (citing City of Keller v. Wilson, 168

                                       8
S.W.3d 802, 822 (Tex. 2005)). We credit evidence favorable to the nonmovant if

reasonable jurors could, and we disregard evidence contrary to the nonmovant

unless reasonable jurors could not. Timpte Indus., 286 S.W.3d at 310 (quoting

Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006)).                If the

nonmovant brings forward more than a scintilla of probative evidence that raises

a genuine issue of material fact, then a no-evidence summary judgment is not

proper. Smith v. O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009); King Ranch, Inc.

v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003), cert. denied, 541 U.S. 1030

(2004).

                                      III.
                                    Analysis

A.    Summary Judgment on Deegear and Deemaxx’s Affirmative Defense

      In its first issue, Kodiak complains the trial court erred by granting Deegear

and Deemaxx’s motion for summary judgment on their affirmative defense of

settlement and release. Specifically, Kodiak argues that summary judgment was

improper because (1) the settlement agreement specifically states that the

parties were only releasing claims that arose “prior to, or at the time of, the

effective date” of the settlement agreement and Kodiak’s claims in this lawsuit

arose after the effective date and (2) Deemaxx was not a party to the settlement

agreement and did not exist when the settlement agreement was executed.

                                         9
      1.     Applicable Law

      A release is an agreement or contract in which one party agrees that a

legal right or obligation owed by the other party is surrendered. Dresser Indus.,

Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 508 (Tex. 1993). It is subject to

the normal rules of contract construction, including the rules of ambiguity. Nat’l

Union Fire Ins. Co. of Pittsburgh, Pa. v. Ins. Co. of N. Am., 955 S.W.2d 120, 127

(Tex. App.—Houston [14th Dist.] 1997), aff’d, 20 S.W.3d 692 (Tex. 2000).           A

release extinguishes a claim or cause of action and is an absolute bar to any

right of action on the released matter. Dresser Indus., 853 S.W.2d at 508.

      To release a claim effectively, the releasing instrument must “mention” the

claim to be released. Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 938

(Tex. 1991); see Keck, Mahin & Cate v. Nat’l Union Fire Ins. Co. of Pittsburgh,

Pa., 20 S.W.3d 692, 698 (Tex. 2000).          Claims not clearly within the subject

matter of the release are not discharged, even if those claims exist when the

release is executed. Keck, 20 S.W.3d at 698. It is not necessary, however, for

the parties to anticipate and explicitly identify every potential cause of action

relating to the subject matter of the release.      Id.   Although releases include

claims existing at the time of execution, they may also include unknown claims

and damages that develop in the future. See id.

      In construing a release, as with other contracts, the primary effort is to

ascertain and give effect to the intention of the parties to the release, considering

the instrument as a whole. Stafford v. Allstate Life Ins. Co., 175 S.W.3d 537, 541

                                         10
(Tex. App.—Texarkana 2005, no pet.) (reasoning that a contract must be read as

a whole rather than isolating a certain phrase, sentence, or section of the

agreement).     The contract’s language is to be given its plain grammatical

meaning unless doing so would defeat the parties’ intent. Id. In determining

intent, we must look to the contract, not what the parties allegedly meant. Union

Pac. R.R. v. Novus Int’l, Inc., 113 S.W.3d 418, 421 (Tex. App.—Houston [1st

Dist.] 2003, pet. denied). An unambiguous contract will be enforced as written.

David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008).

      2.      Application

      In their motion for summary judgment, Deegear and Deemaxx contended

that in the settlement agreement, Kodiak released them from the claims asserted

in the 2011 lawsuit that arose from or related to the same factual bases, claims,

and causes of action in the 2009 lawsuit. In the 2009 lawsuit, Kodiak alleged that

as an employee and officer of Kodiak, Deegear had acquired knowledge of

Kodiak’s trade secrets and confidential and proprietary information, including, but

not limited to (1) its product development plans; (2) the limitations of its products;

(3) its engineering designs and design concepts; (4) the technical data and

specifications of its products; (5) its product costs and pricing information; (6) its

financial information; (7) the compensation levels it could and did offer its

employees and outside sales agents; (8) its business development plans; (9) its

marketing plans and strategy; and (10) information on its customer prospects and

on customer contacts. Kodiak alleged, among other things, that Deegear had

                                         11
taken Kodiak’s trade secrets and was threatening to take Kodiak’s “customers

and vendors and open his own business to compete with Kodiak.” Kodiak sought

a temporary and permanent injunction to “restrain Deegear from using or

disclosing or continuing to retain Kodiak’s information” and to “restrain Deegear

from directly competing with Kodiak for a period of at least a year.”

      The settlement agreement provided in relevant part as follows:

             This SETTLEMENT AGREEMENT (the “Agreement”) is made
      effective as of October 5, 2009, (the “Effective Date”) by and
      between Kodiak Products Co., Inc. (“Kodiak”)[,] William E. Glidewell
      (“Glidewell”), Sylvia Hartless (“Hartless”)[,]2 and Charles H. Deegear,
      Jr. (“Deegear”), and is entered into with the full consent and approval
      of Deegear’s spouse.

             ....

              WHEREAS, the parties desire to resolve and settle these
      disputes and finally and forever resolve all claims of any kind and
      character relating to or arising from the events and allegations set
      forth in the Lawsuit . . . .

             ....

            2.    Covenants by Kodiak: In consideration of these recitals
      and the promises and agreements set forth in this Agreement, on
      which the other parties hereto rely in agreeing to their covenants,
      Kodiak agrees to perform the following:

                    ....

                    2.4 Release of Deegear:   Kodiak, for itself and
                    anyone claiming through it or on its behalf,
                    IRREVOCABLY       AND       UNCONDITIONALLY

      2
        Hartless was a third-party defendant in the 2009 lawsuit. The record does
not reflect the claims against her, but based upon the settlement agreement, it
appears that she was aligned with Kodiak and Glidewell.

                                         12
                   RELEASES, ACQUITS AND FOREVER DISCHARGES
                   Deegear, and anyone or any entity acting through or on
                   his behalf, including without limitation any past, present,
                   and future agents, employees, shareholders, directors,
                   insurers, officers, heirs, administrators, executors,
                   spouses, and attorneys, from any and all claims or
                   causes of action whatsoever, whether known or
                   unknown, whether accrued or unaccrued, and whether
                   connected in any way with Deegear’s relationships with
                   Kodiak, Glidewell, Hartless, or not, including, but not
                   limited to, any claims or causes of action arising under
                   contract, any law, common or statutory, that provides
                   any sort of right, benefit, or cause of action that can be
                   the subject of a release under applicable law, which
                   may have arisen, or which may arise, prior to, or at the
                   time of, the Effective Date of this Agreement.

      In the 2011 lawsuit, Kodiak alleged that “Deegear had and ha[s] access to

Kodiak’s trade secrets and confidential information only because he was

employed by Kodiak” and that “Deegear, following his resignation [from Kodiak],

retained copies of documents and other things containing Kodiak’s [c]onfidential

[i]nformation, including product specifications and designs, customer lists,

vendors lists, vendor capabilities, vendor cost and pricing information, customer

and product pricing information, customer purchase requirements, and marketing

strategies.”   Kodiak further alleged that Deegear and Deemaxx had

misappropriated Kodiak’s trade secrets and confidential information. Kodiak also

asserted conversion and Texas Theft Liability Act claims against Deegear.

Kodiak sought temporary and permanent injunctive relief enjoining Deegear from

any further use or disclosure of Kodiak’s trade secrets or confidential information

and compelling Deegear and Deemaxx to return any and all documents or other

                                        13
things that contained Kodiak’s trade secrets or confidential information. Even

though the claims in the 2009 lawsuit differ from those asserted in the 2011

lawsuit, both lawsuits arise from and relate to Deegear’s employment with Kodiak

and the information he allegedly gained during his tenure at Kodiak.

      Kodiak argues that because the settlement agreement’s release provisions

only released Deegear from claims or causes of action arising prior to October 5,

2009, its claims in the 2011 lawsuit were not barred by the release. The release

provision in the settlement agreement is divided into two parts. The first part

reads as follows:

      2.4 Release of Deegear: Kodiak, for itself and anyone claiming
      through     it    or  on    its   behalf,   IRREVOCABLY          AND
      UNCONDITIONALLY RELEASES, ACQUITS AND FOREVER
      DISCHARGES Deegear, and anyone or any entity acting through or
      on his behalf, including without limitation any past, present, and
      future agents, employees, shareholders, directors, insurers, officers,
      heirs, administrators, executors, spouses, and attorneys, from any
      and all claims or causes of action whatsoever, whether known or
      unknown, whether accrued or unaccrued, and whether connected in
      any way with Deegear’s relationships with Kodiak, Glidewell,
      Hartless, or not,

And the second part states:

      including, but not limited to, any claims or causes of action arising
      under contract, any law, common or statutory, that provides any sort
      of right, benefit, or cause of action that can be the subject of a
      release under applicable law, which may have arisen, or which may
      arise, prior to, or at the time of, the Effective Date of this Agreement.
      [Emphasis added.]

                                         14
Kodiak contends the underlined clause at the end of part two applies to all of

paragraph 2.4, and therefore, the settlement agreement does not release claims

arising after the settlement agreement’s effective date.

      Part one releases Deegear “from any and all claims or causes of action

whatsoever, whether known or unknown, whether accrued or unaccrued, and

whether connected in any way with Deegear’s relationships with Kodiak,

Glidewell, Hartless, or not.”   This broad language releases Deegear from all

possible claims, including future claims.       Kodiak contents that this broad

language is limited by part two. Part two, however, is illustrative, stating that the

released claims include, but are not limited to, “any claims or causes of action

arising under contract, any law, common or statutory, that provides any sort of

right, benefit, or cause of action that can be the subject of a release under

applicable law.”

      Under the “last antecedent” doctrine, the final clause of part two does not

limit the broad language of part one of paragraph 2.4. The “last antecedent”

doctrine is “a canon of contract and statutory construction” by which “‘relative and

qualifying words, phrases and clauses are to be applied to the words or phrases

immediately preceding, and are not to be construed as extending to or including

others more remote.’” Certain Underwriters at Lloyd’s of London Subscribing to

Policy Number: FINFR0901509 v. Cardtronics, Inc., 438 S.W.3d 770, 782 (Tex.

App.—Houston [1st Dist.] 2014, no pet.) (op. on reh’g) (quoting Montanye v.

Transamerica Ins. Co., 638 S.W.2d 518, 521 (Tex. App.—Houston [1st Dist.]

                                         15
1982, no writ)). “[M]odifiers are intended to refer to the words closest to them in

the sentence.” Samano v. Sun Oil Co., 621 S.W.2d 580, 581–82 (Tex. 1981).

Thus, in this case, the final clause refers back to the illustrative language in part

two. It does not limit the broad release language in part one.

      Next, Kodiak contends that because Deemaxx was not a party to the

settlement agreement and did not exist when the settlement agreement was

executed, Kodiak did not release its claims against Deemaxx. Paragraph 2.4

applies not only to Deegear, but to “anyone or any entity acting through or on his

behalf, including without limitation any past, present, and future agents,

employees, shareholders, directors, insurers, officers, heirs, administrators,

executors, spouses, and attorneys.” This includes Deemaxx.

      We conclude that paragraph 2.4 of the settlement agreement releases all

of Kodiak’s claims against Deegear and Deemaxx, including those arising after

the effective date of the settlement agreement.          Therefore, Deegear and

Deemaxx conclusively proved their affirmative defense as a matter of law, and

the trial court did not err by granting summary judgment with respect to Kodiak’s

claims for misappropriation of trade secrets and confidential information,

violations of the Texas Theft Liability Act, and conversion.       Accordingly, we

overrule Kodiak’s first issue.

                                         16
B.    No-Evidence Summary Judgment on Kodiak’s Unfair Competition
      Claim

      By its second issue, Kodiak argues the trial court erred by granting

Deegear and Deemaxx’s supplemental no-evidence motion for summary

judgment on Kodiak’s unfair competition claim.          In support of its unfair

competition claim, Kodiak alleged in paragraphs 42 and 43 of its first amended

petition as follows:

             42. Likewise, Deegear’s and Deemaxx’s false advertising
      constitutes unfair competition. Deegear and Deemaxx make false
      statements (on the internet and in marketing materials provided to
      prospective customers and distributors) that: (a) their products are
      the subject of pending patent applications; (b) their products are
      unique compared to others in the industry, including Kodiak’s; and
      (c) their products out-perform others in the industry, including
      Kodiak’s.

            43. Deegear and Deemaxx have made these statements on
      the internet and in marketing materials provided to prospective
      customers and distributors with the intent to deceive those
      prospective customers and distributors (as well as the public,
      generally) concerning the nature of their products, the patent
      protection of their products, and their products’ relative performance.
      These statements are also made with an intent that prospective
      customers and distributors (as well as the public, generally) rely on
      those statements when making decisions to purchase Deemaxx’s
      products or to purchase competitors’ products (including Kodiak’s).

      In their supplemental no-evidence motion for summary judgment, Deegear

and Deemaxx characterized Kodiak’s claim as a false advertising claim under the

Lanham Act and argued that there was no evidence to support the claim. See 15

U.S.C.A. § 1125(a)(1)(B) (West 2009) (“Any person who . . . in commercial

advertising or promotion, misrepresents the nature, characteristics, qualities, or

                                        17
geographic origin of his or her or another person’s goods, services, or

commercial activities, shall be liable in a civil action by any person who believes

that he or she is or is likely to be damaged by such act.”). Kodiak specially

excepted to Deegear and Deemaxx’s motion, arguing that the motion’s grounds

were unclear and ambiguous because Deegear and Deemaxx challenged a

cause of action that Kodiak had not pled.

      Kodiak argues that the trial court erred in granting Deegear and

Deemaxx’s no-evidence motion for summary judgment for three reasons. First,

the trial court erred in overruling Kodiak’s special exceptions.3 Second, Deegear

and Deemaxx’s motion, which asserted there was no evidence of a false

advertising claim under the Lanham Act, erroneously challenged a claim not

asserted by Kodiak.      Third, notwithstanding the label placed on Kodiak’s

allegations in its first amended petition, it presented sufficient evidence to raise

genuine issues of material fact that precluded the granting of summary judgment.

We address each of these arguments in turn.

      3
        The record does not show that the trial court ruled on Kodiak’s special
exceptions, but by granting Deegear and Deemaxx’s no-evidence motion, it
implicitly overruled Kodiak’s special exceptions. See Fieldteck Avionics &
Instruments, Inc. v. Component Control.Com, Inc., 262 S.W.3d 813, 824 n.3 (Tex
App.—Fort Worth 2008, no pet.) (“[A] trial court implicitly overrules special
exceptions when it grants summary judgment on the motion to which the special
exceptions pertain.”).

                                        18
      1.      Kodiak’s special exceptions

      Kodiak argued in its special exceptions that Deegear and Deemaxx’s

supplemental no-evidence motion was unclear and ambiguous because (1) it

was premised on the erroneous assumption that Kodiak asserted a false

advertising claim under the Lanham Act and (2) Deegear and Deemaxx did not

address the actual grounds upon which Kodiak’s unfair competition claim was

based—Deegear and Deemaxx’s misappropriation of Kodiak’s designs for disc

brake and brake components and their false statements about their products on

the Internet and in marketing materials. Kodiak asserts that the trial court should

have sustained Kodiak’s special exceptions and required Deegear and Deemaxx

to redraft their no-evidence motion.

      In summary judgment proceedings, special exceptions are intended to

ensure that the parties and the court are focused on the same grounds. See

McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342–43 (Tex. 1993).

The trial court has broad discretion in ruling on special exceptions, and its ruling

will not be disturbed absent an abuse of discretion. Alejandro v. Bell, 84 S.W.3d
383, 389 (Tex. App.—Corpus Christi 2002, no pet.). Even though Kodiak did not

agree with the summary-judgment grounds alleged in Deegear and Deemaxx’s

motion, the grounds were clear from the motion. Thus, we conclude that the trial

court did not abuse its discretion by implicitly overruling Kodiak’s special

exceptions.

                                        19
      2.     Deegear and Deemaxx’s supplemental no-evidence motion for
             summary judgment

      Kodiak argues alternatively that the trial court erred in granting Deegear

and Deemaxx’s supplemental no-evidence motion for summary judgment

because the motion was fatally defective in that it raised a no-evidence ground

on the presumption that Kodiak had pled a false advertising cause of action

under the Lanham Act.      In the further alternative, Kodiak argues that if we

conclude that it alleged a false advertising claim under the Lanham Act or that

the elements of a Lanham Act claim are common to Kodiak’s unfair competition

claim, the trial court erred in granting the motion because Kodiak presented

sufficient evidence to raise a genuine issue of material fact on the elements

challenged by Deegear and Deemaxx.

      Kodiak contends that its unfair competition claim as pled in paragraphs 42

and 43 arose under the Texas common law, not the Lanham Act. “The law of

unfair competition is the umbrella for all statutory and nonstatutory causes of

action arising out of business conduct which is contrary to honest practice in

industrial or commercial matters.”   U.S. Sporting Prods., Inc. v. Johnny Stewart

Game Calls, Inc., 865 S.W.2d 214, 217 (Tex. App.—Waco 1993, writ denied)

(quoting Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th

Cir. 1974)). Unfair competition includes a number of types of objectionable trade

practices,   including   trademark    infringement,   dilution   of   good    will,

misappropriation of business value, palming off, passing off, and theft of trade

                                        20
secrets. Healthpoint, Ltd. v. River’s Edge Pharms., LLC, No. SA-03-CV-984-RF,

2005 WL 356839, at *3 (W.D. Tex. Feb. 14, 2005); U.S. Sporting Prods., 865
S.W.2d at 217. Unfair competition requires that the plaintiff show an illegal act by

the defendant that interfered with the plaintiff’s ability to conduct its business.

Schoellkopf v. Pledger, 778 S.W.2d 897, 904–05 (Tex. App.—Dallas 1989, writ

denied). The illegal act need not necessarily violate criminal law, but it must at

least be an independent tort.       Id. (“Without some finding of an independent

substantive tort or other illegal conduct, we hold that liability cannot be premised

on the tort of ‘unfair competition.’”).

      In support of its unfair competition claim, Kodiak alleged that Deegear and

Deemaxx engaged in false advertising.          As pointed out by Deegear and

Deemaxx in their summary judgment reply and on appeal, Texas does not

recognize a common law false advertising claim.           See VendEver LLC v.

Intermatic Mfg. Ltd., No. 3:11-CV-201-B, 2011 WL 4346324, at *4, n.4 (N.D. Tex.

Sept. 16, 2011) (“It is unclear whether there is in fact a common law cause of

action for false advertising under Texas law.”); see also Charles M. Hosch,

Business Torts, 65 SMU L. Rev. 315, 328 (2012) (“The [VendEver] court’s point

was well taken because there really is no such cause of action as ‘common law

false advertising’ in Texas or in many other states.”).         Additionally, false

advertising claims are different from unfair competition claims. “[I]n the former

case, the defendant makes no secret of the origin of the goods in himself, but

merely misrepresents certain qualities or characteristics that his goods may or

                                          21
may not have; in the latter case, the defendant misrepresents his goods to be

those of another.” Chevron Chem. Co. v. Voluntary Purchasing Grps., Inc., 659
F.2d 695, 701 (5th Cir. 1981).

      Thus, we construe Kodiak’s unfair competition claim as a claim for false

advertising in violation of the Lanham Act. See Healthpoint, Ltd. v. Ethex Corp.,

No. SA-01-CA-646-OG, 2004 WL 2359420, at *9 (W.D. Tex. July 14, 2004)

(“Healthpoint’s allegations in support of its claim of common law unfair

competition are those also alleged for false advertising in violation of the Lanham

Act. Accordingly, the claim for common law unfair competition will be analyzed

under the elements of the claim of false advertising in violation of the Lanham

Act.”); see also Healthpoint, Ltd. v. Allen Pharm., LLC, No. SA-07-CA-0526-XR,

2008 WL 728333, at *4 (W.D. Tex. Mar. 18, 2008) (finding common law unfair

competition claim in false advertising case dependent on Lanham Act false

advertising claim and analyzing such claim under the elements of the Lanham

Act). To establish liability for false advertising under the Lanham Act, the plaintiff

must show that (1) the defendant made a false statement of fact about its product

in a commercial advertisement; (2) the statement actually deceived or has a

tendency to deceive a substantial segment of its audience; (3) the deception is

likely to influence a purchasing decision; (4) the defendant caused the false

statement to enter interstate commerce; and (5) the plaintiff has been or is likely

to be injured as a result. Astoria Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d
616, 629–30 (Tex. App.—Fort Worth 2007, pet. denied) (op. on reh’g).

                                         22
      In their supplemental no-evidence motion for summary judgment, Deegear

and Deemaxx alleged there was no evidence to support any of the elements of

Kodiak’s false advertising claim. Thus, Kodiak was required to bring forward

evidence raising a genuine issue of material fact on each element. See Tex. R.

Civ. P. 166a(i). Kodiak, however, failed to bring forward any evidence to raise a

genuine issue of fact that Deegear and Deemaxx’s alleged deception was likely

to influence a purchasing decision.

      Additionally, Kodiak failed to present more than a scintilla of probative

evidence that it was or is likely to be injured as a result of Deegear and

Deemaxx’s alleged false statements. Kodiak attached to its response an affidavit

from Christopher Martinez, its damages expert. Martinez stated that Kodiak’s

annual sales during its fiscal years 2006 through 2010 trended in a manner

similar to personal expenditures for durable goods, but after Deemaxx entered

the market in March 2011, Kodiak’s sales during fiscal year 2011 fell, even

though personal expenditures for durable goods continued to rise.       Martinez

further stated that Kodiak’s sales fell in fiscal year 2012 and trended downward

through August 2012. Based on the assumption that Kodiak’s sales would have

continued to trend in a manner similar to personal expenditures for durable

goods but for Deegear and Deemaxx’s acts, Martinez calculated that Kodiak

would have realized additional revenues of $1,956,326 from March 1, 2011,

though August 31, 2012, and, based upon these lost revenues, calculated that

Kodiak suffered $524,524 in lost profits. There was no evidence, however, that

                                       23
Deemaxx’s entry into the market caused the drop in Kodiak’s sales. In fact,

Martinez expressly stated that “[f]or the purpose of assessing the extent of

potential damages, I have assumed that the observed decline in Kodiak’s sales

beginning in March 2011 is attributable to the alleged acts of [Deegear and

Deemaxx].”

      Kodiak argues that Martinez’s assumption is supported by Glidewell’s

affidavit testimony and that together, their affidavit testimony raises genuine

issues of material fact that Deegear and Deemaxx caused or were likely to cause

Kodiak harm. Glidewell testified that Deegear and Deemaxx were attempting to

solicit business away from Kodiak; were trying to manufacture and sell rotors,

brakes, and other components to compete with Kodiak’s products; had created

and distributed marketing materials to Kodiak’s customers and vendors

promoting Deemaxx’s brakes over Kodiak’s brakes; and were targeting Kodiak’s

customers, distributors, and vendors. This testimony, however, is insufficient to

support Martinez’s assumption that the decline in Kodiak’s sales is attributable to

Deegear’s and Deemaxx’s acts. Nor is it sufficient on its own to raise a genuine

issue of material fact that Kodiak was or is likely to be injured as a result of

Deegear and Deemaxx’s alleged false advertising. Thus, the trial court did not

err by granting Deegear and Deemaxx’s supplemental no-evidence motion for

summary judgment on Kodiak’s unfair competition claim. We overrule Kodiak’s

second issue.

                                        24
C.    Summary Judgment on Deegear and Deemaxx’s Counterclaim for
      Declaratory Judgment

      In its third issue, Kodiak argues the trial court erred in granting Deegear

and Deemaxx’s motion for summary judgment on their counterclaim for

declaratory relief because the counterclaim was improperly used to recover

attorney’s fees on disputes already pending before the trial court. Kodiak argues

in its fourth issue that because declaratory relief was improper as matter of law,

the trial court erred in awarding attorney’s fees to Deegear and Deemaxx under

the Declaratory Judgment Act. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009

(West 2015) (“In any proceeding under this chapter, the court may award costs

and reasonable and necessary attorney’s fees as are equitable and just.”).

Kodiak also challenges the attorney’s fees on the ground that Deegear and

Deemaxx failed to segregate their fees.

      1.     Applicable Law

      A counterclaim for declaratory judgment is improper if it is nothing more

than a mere denial of the plaintiff’s claims and the counterclaim fails to have

greater ramifications than the original suit. BHP Petroleum Co. v. Millard, 800
S.W.2d 838, 842 (Tex. 1990) (orig. proceeding). To have “greater ramifications”

than the original suit, the counterclaim should seek some sort of affirmative relief.

HECI Exploration Co. v. Clajon Gas Co., 843 S.W.2d 622, 638–39 (Tex. App.—

Austin 1992, writ denied); see also Tex. R. Civ. P. 96; Warrantech Corp. v.

Steadfast Ins. Co., 210 S.W.3d 760, 770 (Tex. App.—Fort Worth 2006, pet.

                                          25
denied) (“The Declaratory Judgment Act is not available, however, to settle

disputes already pending before a court.”). “To qualify as a claim for affirmative

relief, a defensive pleading must allege that the defendant has a cause of action,

independent of the plaintiff’s claim, on which he could recover benefits,

compensation or relief, even though the plaintiff may abandon his cause of action

or fail to establish it.” Gen. Land Office of Tex. v. OXY U.S.A., Inc., 789 S.W.2d
569, 570 (Tex. 1990) (quoting Weaver v. Jock, 717 S.W.2d 654, 657 (Tex.

App.—Waco 1986, writ ref’d n.r.e.)).

      Even though the Declaratory Judgment Act permits a trial court to “award

costs and reasonable and necessary attorney’s fees as are equitable and just,”

Tex. Civ. Prac. & Rem. Code Ann. § 37.009, a party bringing a counterclaim

under the act may only recover its attorney’s fees “if the counterclaim is more

than a mere denial of the plaintiff’s cause of action.” HECI Exploration Co., 843
S.W.2d at 638. The award or denial of attorney’s fees is within the trial court’s

sound discretion. Warrantech Corp., 210 S.W.3d at 769–70 (citing Oake v. Collin

Cnty., 692 S.W.2d 454, 455 (Tex. 1985); Redwine v. AAA Life Ins. Co., 852
S.W.2d 10, 17 (Tex. App.—Dallas 1993, no writ)). However, “a counterclaim

brought under the Declaratory Judgment Act presenting no new controversies

but brought solely to pave an avenue to attorney’s fees is improper.” Id. at 770.

      2.    Application

      In their motion for summary judgment on their declaratory judgment

counterclaim, Deegear and Deemaxx asked the trial court to “declare the rights

                                        26
and duties of the parties as they relate to the contractual release between plaintiff

and defendants” and argued they were entitled to declaratory relief as to “the

construction and validity of the release in the [s]ettlement [a]greement not only as

it applies to Kodiak’s current claims by [sic] potential future claims by Kodiak.”

The trial court granted Deegear and Deemaxx’s motion and entered a declaration

that Kodiak, in the settlement agreement,

      fully released Deegear from any claims or causes of action
      (including those asserted herein) that could be brought by Kodiak
      against Deegear on or after October 5, 2009, whether or not such
      claims or causes of action are connected in any way to Deegear’s
      relationships with Kodiak [and]

             . . . fully released anyone or any entity acting through or on
      Deegear’s behalf from any claims or causes of action (including
      those asserted herein) that could be brought by Kodiak against such
      person or entity on or after October 5, 2009, whether or not such
      claims or causes of action are connected in any way to Deegear’s
      relationships with Kodiak, and Kodiak has thereby fully release[d]
      Deemaxx from such claims.

      Deegear and Deemaxx argue that the declaratory relief requested had

greater ramifications than Kodiak’s lawsuit and sought affirmative relief because

the trial court declared that paragraph 2.4 of the settlement agreement released

(1) claims that did not arise from Deegear’s relationships with Kodiak, (2) claims

against nonparties acting through or on Deegear’s behalf, and (3) future claims

that may be asserted after the conclusion of this litigation. But their request for

declaratory relief was nothing more than a restatement of their affirmative

defense and had no greater ramifications than Kodiak’s claims. As discussed

above, Deegear and Deemaxx sought summary judgment on their affirmative

                                         27
defense of settlement and release based upon paragraph 2.4 of the settlement

agreement, which stated that Kodiak released Deegear from claims “whether

connected in any way with Deegear’s relationships with Kodiak . . . or not” and

“anyone or any entity acting through or on his behalf.” They also argued that

Kodiak released them from future claims. In substance, Deegear and Deemaxx’s

requested declarations are identical to the basis for their affirmative defense.

See HECI Exploration, 843 S.W.2d at 639.            The declaratory judgment

counterclaim does not allege a cause of action independent from Kodiak’s claim

on which Deegear and Deemaxx could recover relief if Kodiak abandoned its

cause of action. See BHP Petroleum, 800 S.W.2d at 842; HECI Exploration, 843
S.W.2d at 639.     Deegear and Deemaxx asked for no greater relief in their

declaratory judgment counterclaim than they asked for without the counterclaim.

See HECI Exploration, 843 S.W.2d at 639. Accordingly, we conclude that as a

matter of law, the trial court erred in granting summary judgment on Deegear and

Deemaxx’s declaratory judgment counterclaim and abused its discretion in

awarding them attorney’s fees under the Declaratory Judgment Act. We sustain

Kodiak’s third and fourth issues.

                                       IV.
                                    Conclusion

      We overrule Kodiak’s first and second issues. Having sustained Kodiak’s

third and fourth issues, we reverse the trial court’s judgment as to Deegear and

Deemaxx’s declaratory judgment counterclaim and the award of attorney’s fees,

                                       28
and we remand this case to the trial court for further proceedings consistent with

this opinion.4 See Tex. R. App. P. 43.2(d). We affirm the remainder of the trial

court’s judgment. See Tex. R. App. P. 43.2(a).

                                                  /s/ Anne Gardner
                                                  ANNE GARDNER
                                                  JUSTICE

PANEL: DAUPHINOT, GARDNER, and WALKER, JJ.

DELIVERED: June 4, 2015

      4
        When, as here, only one party moves for summary judgment and an
appellate court reverses that summary judgment, the case must be remanded to
the trial court. See Herald-Post Publ’g Co. v. Hill, 891 S.W.2d 638, 640 (Tex.
1994); see also CRA, Inc. v. Bullock, 615 S.W.2d 175, 176 (Tex. 1981) (“A
summary judgment was granted and the adverse party did not also seek a
summary judgment. In this situation where upon appeal it is determined that the
summary judgment was improperly granted, the appeal does not afford a basis
for rendering a judgment for the non-moving party.”).

                                       29