Court Opinion

ID: 4025203
Source: CourtListenerOpinion
Date Created: 2016-08-16 06:17:40.644427+00
Date Added: 2024-06-11T14:44:56.309617
License: Public Domain

REVERSE in Part, RENDER in Part, and AFFIRM; Opinion Filed August 12, 2016.

                                         S   In The
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      No. 05-14-01388-CV

 PREMIER POOLS MANAGEMENT CORP. & SHAN POOLS, INC. D/B/A PREMIER
                    POOLS & SPAS, Appellants
                              V.
                  PREMIER POOLS, INC., Appellee

                      On Appeal from the 101st Judicial District Court
                                   Dallas County, Texas
                           Trial Court Cause No. DC-12-07182

                             MEMORANDUM OPINION
                        Before Justices Fillmore, Stoddart, and Schenck
                                  Opinion by Justice Schenck
       Premier Pools, Inc. (“Premier Pools”) sued Premier Pools Management Corp. (“PPMC”)

and Shan Pools, d/b/a Premier Pools and Spas (“Shan Pools”) for common-law trademark

infringement, trademark dilution, and unfair competition. A jury returned a verdict in favor of

Premier Pools and the trial court entered judgment on that verdict. On appeal, PPMC and Shan

Pools challenge the legal and factual sufficiency of the evidence to support various jury findings

and argue the trial court erred in granting injunctive and declaratory judgment relief. We

conclude Premier Pools is not entitled to relief under the Uniform Declaratory Judgments Act,

but is entitled to all other relief awarded. Accordingly, we reverse, in part, that portion of the

trial court’s judgment awarding relief pursuant to the Uniform Declaratory Judgments Act, and

render judgment, in part, that Premier Pools take nothing on its attendant attorney’s fee claim.
We otherwise affirm the trial court’s judgment. Because all issues are settled in law, we issue

this memorandum opinion. TEX. R. APP. P. 47.4.

                                         FACTUAL & PROCEDURAL BACKGROUND

          In 1989, the Dodd family established Premier Pools as a Texas corporation with its

headquarters in Lewisville, Texas. Premier Pools is in the business of constructing swimming-

pools in North Texas.                  The year before the Dodds established Premier Pools, Paul Porter

(“Porter”) founded a pool-construction company called Premier Pools and Spas, Inc. in

California and eventually expanded the business to Arizona, Nevada, and New Mexico. In 2010,

after a business deal with his former business partner, Porter created PPMC with the intent of

licensing the trade name “Premier Pools and Spas” to pool builders across the country in

exchange for royalty payments. 1

          In March of 2011, PPMC entered into a licensing agreement with Premier Pools of DFW,

Inc., a corporation established by Shan Johnson (“Johnson”) and Mike Ribnikar, to operate as

Premier Pools and Spas in four North Texas counties—Collin, Dallas, Denton, and Tarrant.

Johnson attempted to register the business as “Premier Pools of DFW, Inc.,” but the Texas

Secretary of State denied the application because the name was already taken by the Dodds. As

a result, Johnson registered the business under the name “Shan Pools, Inc.” and filed an assumed

name certificate in Tarrant County to do business as “Premier Pools and Spas.”

          In April of 2011, Johnson tried to register Premier Pools and Spas and Shan Pools’s

physical address, phone number and a domain name with the words premier and pools with

Google. In doing so, he learned the domain name was already registered to another business.

Johnson assumed that another PPMC licensee already registered the name in Texas.

   1
       Porter’s partner reserved the right to use the name “Premier Pools” in the Sacramento, California area.

                                                                      –2–
       In 2011, Sean Dodd became aware that Shan Pools was operating as Premier Pools in

North Texas after a Flower Mound building inspector contacted him to let him know the city was

preparing to “red tag” a pool permitted to Premier Pools. Sean Dodd did not recognize the

address on the permit as being a property at which his family’s iteration of “Premier Pools” was

constructing a pool. He drove by the property and discovered a “Premier Pools & Spas” sign in

the front yard. Soon thereafter, the Dodds received a letter from PPMC soliciting Premier Pools

to become a licensee of PPMC. Sean Dodd contacted Porter and PPMC and asked them to stop

using the name Premier Pools in Premier Pools’s existing trade area. PPMC refused to do so

and, according to Sean Dodd, Porter threatened to “squash” Premier Pools. Shortly thereafter,

Premier Pools filed a lawsuit against PPMC and Shan Pools for trademark infringement,

trademark dilution, and unfair competition.

       The jury returned a verdict in favor of Premier Pools finding Premier Pools’s mark was

eligible for protection, and that PPMC and Shan Pools’s conduct constituted trademark

infringement, trademark dilution, and unfair competition, and caused irreparable harm to Premier

Pools. The jury found that Premier Pools had proven sustained lost profits of $287,976 as a

result of appellants’ conduct and that Premier Pools should be awarded PPMC’s profits of

$167,030. The trial court entered a judgment incorporating the jury’s findings. In addition, the

trial court declared Premier Pools has and continues to have exclusive right to the use of the

trade name and trademark “Premier Pools” in the various north Texas Counties in which the jury

found “Premier Pools” had acquired secondary meaning, issued a permanent injunction, and

awarded Premier Pools its attorney’s fees.

       On appeal, appellants raise the following issues. First, appellants challenge whether the

evidence was legally and factually sufficient to establish that the mark “Premier Pools” was

eligible for protection in any or all of the counties at issue in the case. Second, appellants

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contend that the evidence was legally and factually insufficient to support the jury’s findings of

trademark infringement, trademark dilution, and unfair competition. Third, appellants argue the

trial court erred by granting injunctive relief to Premier Pools because the “irreparable harm”

findings on which the relief was based should have been disregarded as being in fatal conflict

with the damages findings.       Fourth, appellants contend the awards for lost profits and

disgorgement of profits are supported by legally insufficient evidence. Fifth, appellants allege

the trial court erred by awarding relief pursuant to the declaratory judgments act because the

claims under the act were improperly added as an expedient for seeking attorney’s fees. Sixth,

and finally, appellants argue the award of attorney’s fees to Premier Pools constitutes error

because Premier Pools did not segregate its fees between claims for which they are recoverable

and claims for which fees are not recoverable.

I.     SUFFICIENCY OF THE EVIDENCE

          A.      Standard of Review

                  1.     Legal Sufficiency

       The test for legal sufficiency is “whether the evidence at trial would enable reasonable

and fair-minded people to reach the verdict under review.” City of Keller v. Wilson, 168 S.W.3d
802, 823 (Tex. 2005).       In our review of the evidence, we “credit favorable evidence if

reasonable jurors could, and disregard contrary evidence unless reasonable jurors could

not.” Id. We will uphold the jury’s finding if more than a scintilla of competent evidence

supports it. Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009).

                  2.     Factual Sufficiency

       When reviewing a jury verdict to determine the factual sufficiency of the evidence, we

must consider and weigh all the evidence, and should set aside the verdict only if it is contrary to

                                                 –4–
the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709
S.W.2d 175, 176 (Tex. 1986) (per curiam).

            B.       Was the Name “Premier Pools” Eligible for Protection in the Claimed Trade
                     Area?

         In their first issue, appellants challenge the sufficiency of the evidence to support the

jury’s finding that “Premier Pools” was a mark eligible for protection in any or all of the counties

at issue.

         The parties stipulated that the mark “Premier Pools” is not inherently distinctive.

Therefore, the name “Premier Pools” is eligible for protection only if it has acquired “secondary

meaning.”        Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 543 (5th Cir.

2015).

         Secondary meaning develops when, through use over an extended period of time,

consumers who are exposed to the mark begin to associate the mark with a single source. Zapata

Corp. v. Zapata Trading Int’l, Inc., 841 S.W.2d 45, 48 (Tex. App.—Houston [14th Dist.] 1992,

no writ). Because trademark protection operates in rem, rather than simply between the parties,

the secondary meaning inquiry poses the consumer association question as a general, rather than

a personal, manner. See e.g., Tone Bros., Inc. v. Sysco Corp., 28 F.3d 1192, 1204 (Fed. Cir.

1994). What is critical of a mark that is not inherently distinctive is that a significant portion of

the relevant consuming market has come to identify the name with a particular source—not

necessarily the claimant. Id. Once this is established, the question then turns to priority of use

in the trade area.

         Whether secondary meaning has attached to a mark is a question of fact in each case.

BankTEXAS, N.A. v. First Bank, No. 05–96–00497–CV, 1998 WL 12658, at *2 (Tex. App.—

Dallas Jan. 15, 1998, no writ)(not designated for publication). As with proof of any fact,

secondary meaning can be established through direct and circumstantial evidence. Zapata Corp.,
                                                –5–
841 S.W.2d at 48. Evidence such as the amount and manner of advertising, sales volume, and

length and manner of use constitute circumstantial evidence relevant to the issue of secondary

meaning. Id. Direct evidence can consist of consumer surveys and consumer testimony. Echo

Travel, Inc. v. Travel Assocs., Inc., 870 F.2d 1264, 1287 (7th Cir. 1989).

       Consistent with these methods of proving secondary meaning, the trial court instructed

the jury it should consider the following factors to decide whether the name “Premier Pools” had

acquired secondary meaning.

       (1) the amount and manner of advertising, promotion, and other publicity of
           Plaintiff’s services using the Mark [Premier Pools]. Do not consider
           advertising or promotion undertaken by Plaintiff after Shan’s first use of the
           name “Premier Pools and Spas” in deciding whether the Mark has acquired
           secondary meaning;

       (2) the sales volume of Plaintiff’s services using the Mark;

       (3) the length and manner of Plaintiff’s use of the Mark;

       (4) consumer testimony, or other evidence of actual confusion;

       (5) consumer surveys; and

       (6) whether Defendants intended to copy the Mark.

None of these factors alone are dispositive of the issue of secondary meaning. In combination,

the factors may prove secondary meaning. Zapata Corp., 841 S.W.2d at 48. While appellants

argue Premier Pools had to establish (1) the size of the consuming public in the counties listed in

the jury charge, and (2) the portion of that consuming public that associated the mark with a

particular source, and failed to do so, they cite no authority to support such a required showing,

and we find none. Moreover, while the jury was asked to determine whether the mark “Premier

Pools” had acquired secondary meaning in twelve different counties, the liability questions

submitted to the jury were not conditioned on a specific county finding as we will detail later.

The evidence adduced at trial supports a determination that the relevant market is not segmented

among and between the listed counties. As a result, the jury was entitled to answer the liability
                                               –6–
questions if it found “Premier Pools” had acquired secondary meaning in any one of the listed

counties because county lines within the trade area did not matter. Therefore, we focus our

analysis on the secondary meaning factors the trial court submitted to the jury and the evidence

presented concerning same, not specific counties.

       As an initial matter, we note that Premier Pools was not required to satisfy all of the

factors in order to establish secondary meaning. See Astoria Indus. of Iowa, Inc. v. Brand FX

Body Co., No. 2–08–144–CV, 2010 WL 1433404, at *6 (Tex. App.—Fort Worth Apr. 8, 2010,

pet. denied)(mem.op.). While we address each of the individual factors, our ultimate decision as

to whether the evidence is legally and factually sufficient to support the jury’s finding of

secondary meaning rests upon the cumulative evidence.

                  1.     Advertising

       Premier Pools presented evidence that the best advertising in the highly competitive pool

construction business is by word of mouth—that is to say by reference tracing back directly or

indirectly to prior customers. Advertising by word of mouth is a mode through which a name

can achieve secondary meaning. Winning Ways, Inc. v. Holloway Sportswear, Inc., 913 F. Supp.
1454, 1471 (D. Kan. 1996). Unlike more commoditized products, few people have direct repeat

history of prior purchases and, given the expense involved, consumers are likely to seek neutral

first-hand experience.

       Sean Dodd testified that Premier Pools relies, in part, upon word of mouth to generate

business and that its reputation has led to construction projects in twelve North Texas counties.

Sean Dodd and the owner of Robertson Pools, one of Premier Pools’s competitors, explained

how the construction of a single pool in a neighborhood or community starts the process of

spreading the word and can lead to multiple construction jobs. Sean Dodd further testified that

Premier Pools advertises by placing yard signs at each of its construction sites, which totaled

                                              –7–
over 1,400 prior to Shan Pools’s entrance into the market. It also distributes brochures, has a

listing in the phone book and sponsors youth sports and racing teams. PPMC conceded that yard

signs and word of mouth are viable means of finding leads to customers because people trust

friends and neighbors. Nevertheless, appellants argue Premier Pools’s lack of internet presence

prior to Shan Pools’s entrance into the market vitiates against a finding the mark “Premier Pools”

acquired a secondary meaning. Appellants cite no authority to support this argument and the

evidence establishes the clientele for custom pools is limited and more referral based than

internet sourced. Indeed, appellants produced no evidence below to suggest that consumers are

likely to purchase a custom pool based solely on the presence of an internet advertisement and

Sean Dodd testified that Premier Pools’s internet advertising, which it instituted after Shan Pools

entered the market, has led to the consummation of only two pool sales.

                  2.     Sales Volume

       The Dodds testified Premier Pools built over 1,400 pools in North Texas before Shan

Pools entered the market and grossed sales in excess of 28 million dollars.

                  3.     Length and Manner of Use

       Premier Pools established it used the name Premier Pools in the North Texas market for

twenty-two years before Shan Pools entered the market. Evidence showing long and extensive

use supports the conclusion that a trade name has acquired secondary meaning. Zapata Corp.,
841 S.W.2d at 48.

                  4.     Customer Testimony or other Evidence of Confusion

       As to actual confusion, Premier Pools offered the testimony of nine impartial witnesses

and the testimony of Peter Dodd, Sean Dodd, and Johnson.

       The first impartial witness was a consumer for whom Premier Pools built a pool in 1997.

She testified she went online to contact Premier Pools about re-plastering her pool, but she was

                                               –8–
able to reach only Shan Pools. The second witness was a prospective customer who was referred

by a neighbor for whom Premier Pools built a pool. However, the second witness mistakenly

contacted Shan Pools, who never told him it did not build his neighbor’s pool, although that

witness later realized his mistake and reached Peter Dodd at Premier Pools. The third witness

knew of Premier Pools from referrals from friends who had hired Premier Pools to build their

pools as well as from his work for a custom home builder. He also mistakenly contacted Shan

Pools instead of Premier Pools and realized his mistake and eventually engaged Premier Pools to

build his pool.   The fourth witness testified he had recommended Premier Pools to many

neighbors and friends after Premier Pools built his pool nineteen years previously, but he knew

of at least one incident where his neighbor mistakenly contracted with Shan Pools instead of

Premier Pools. The fifth witness was a custom home builder who recommended Premier Pools

to clients who mistakenly contacted Shan Pools, who ended up building their pool. The sixth

witness was a structural engineer who contracted with Shan Pools to do some engineering work

for “Premier Pools,” which he assumed was the Dodds’ company as he knew of no other, but he

learned of his mistake when he sent his invoice to Peter Dodd. The seventh witness was the

owner of one of Premier Pools’s competitors, and he testified in his decades-long experience, he

only knew of one Premier Pools until one of his salesmen ran into another Premier Pools. The

eighth witness was another former customer of Premier Pools who had his pool built by the

Dodds based on the recommendation of his father-in-law for whom Premier Pools had built two

pools. He attempted to find the number for Premier Pools on the internet and mistakenly called

Shan Pools. When he realized his mistake, he found the number for Premier Pools and cancelled

his appointment with Shan Pools. The ninth witness testified he had received recommendations

from numerous sources to contact Premier Pools, but he mistakenly contacted and contracted

                                              –9–
with Shan Pools whose performance left him with the impression of doing business with

“Premier Pools” to be “proceed with caution.”

        At trial, Johnson admitted that some customers, vendors, subcontractors, and cities have

been confused by Shan Pools’s use of the name Premier Pools. In addition, Peter Dodd testified

he was aware of 80 instances of confusion and Sean Dodd testified he was aware of five sales

Premier Pools lost due to the confusion created by Shan Pools’s entrance into the market.

                      5.   Customer Survey

        While consumer survey evidence is often highly instructive of secondary meaning, it is

not required in all cases. Nola Spice, 783 F.3d at 546. While appellants hired an expert to

conduct a survey and testify about the results, Premier Pools’s marketing expert Lou Pelton, PhD

(“Dr. Pelton”), testified that this case does not lend itself to meaningful survey analysis because

the custom pool construction business is a service, not a product, and is reliant upon referrals and

word of mouth because trust is important when hiring a pool builder to construct a pool, which

on average costs around $50,000.          Premier Pools’s expert explained that under such

circumstances, if a survey is performed it should be conducted as a focus group of property

owners with the financial ability and desire to build a swimming pool. Appellants’ expert

conducted an internet survey of individuals who volunteered to participate in surveys generally

in exchange for points redeemable for such things as clock radios. The respondents fell within a

broad category of individuals who said they might consider, regardless of their home ownership

and financial means and ability to spend $50,000 on a pool, building or remodeling a pool of

unspecified cost at an unspecified time. The jury was not required to credit appellants’ survey as

controlling the secondary meaning question in view of its breadth and Dr. Pelton’s testimony

refuting its value.

                                               –10–
                 6.      Intent to Copy

       As to whether appellants intended to copy the mark, the evidence shows Shan Pools

attempted to register the name Premier Pools with the Texas Secretary of State without success.

In addition, when Johnson attempted to register a domain name including the words premier and

pools with Google, he was told the name had already been registered. The denial of Shan

Pools’s application with the Texas Secretary of State and interaction with Google is some

evidence Shan Pools knew the name “Premier Pools” was already in use when it entered the pool

construction market and, by proceeding without further inquiry, intended to copy the mark.

       As to PPMC, it invited Premier Pools to become one of its licensees suggesting it was in

a unique position to benefit from the relationship since it was already called Premier Pools. This

is some evidence from which the jury could have concluded PPMC intended to copy the mark in

North Texas.

       Considering and weighing all of the evidence in the record pertinent to the finding the

name “Premier Pools” is eligible for protection, we determine that there is more than a scintilla

of competent evidence to support the finding, and the jury’s finding that the mark had acquired

secondary meaning is not so contrary to the overwhelming weight of all the evidence as to be

clearly wrong and unjust. Accordingly, we conclude that the evidence is legally and factually

sufficient to support the jury’s finding that the name “Premier Pools” has acquired secondary

meaning. We overrule appellants’ first issue.

          C.     Liability findings

       In their second issue, appellants argue the trial court erred in rendering judgment in favor

of Premier Pools because the evidence is legally insufficient to establish one or more elements

on Premier Pools’s claim for trademark infringement, trademark dilution, and unfair competition.

                                                –11–
                   1.     Infringement

         Appellants argue that, because the question on infringement did not include a county-by-

county determination of infringement, it is impossible to tell if the jury’s answer to the question

concerned a county in which Premier Pools attained secondary meaning. As an initial matter,

appellants did not object to the lack of a county-by-county determination of infringement or

otherwise bring to the trial court’s attention a request for such a determination, and thus, waived

any complaint about the lack of such a finding.        See In re A.V., 113 S.W.3d 355, 358 (Tex.

2003). In any event, under the circumstances presented in this case, a county-by-county

determination of infringement was not required. The Dodds and the owner of Robertson Pools

explained that when considering high-end purchases, people tend to seek referrals and

recommendations from others with relevant experience. The North Texas market is comprised

of numerous counties and is metropolitan in nature.          Peter Dodd testified that the whole

metroplex is interconnected and customers are often referred to Premier Pools by individuals

who live in other counties. Sean Dodd testified that someone may work in Dallas, live in Frisco,

and tell friends about a pool Premier Pools built in University Park. Consequently, county lines

are not significant in the infringement analysis.

         Moreover, and pertinent to the issue of infringement, the first party to make commercial

use of a mark in a trade area is generally held to be the “senior” user and is entitled to enjoin

other “junior” users from using the mark, or one that is deceptively similar to it, subject to limits

imposed by the senior user’s market and natural area of expansion.        See Union Nat’l Bank of

Tex., Laredo, Tex. v. Union Nat’l Bank of Tex., Austin, Tex., 909 F.2d 839, 842-43 (5th Cir.

1990).    The evidence in this case establishes Premier Pools is the senior user of the mark

“Premier Pools” in North Texas. As such, Premier Pools is entitled to enjoin other junior users

from using the mark in its market and its natural area of expansion. Peter Dodd and Sean Dodd

                                                –12–
testified to their use of the mark in every single county at issue. They also testified to their

intention to continue to grow their business and build pools in all of the identified counties.

Thus, the evidence is legally sufficient to support the jury’s finding of infringement.

                  2.      Dilution

       A mark is diluted if there is a likelihood of dilution due to blurring or tarnishment. Scott

Fetzer Co. v. House of Vacuums, Inc., 381 F.3d 477, 489 (5th Cir. 2004). “Blurring” and

“tarnishment” were defined in the jury charge as follows:

       Blurring occurs when the plaintiff’s trademark or trade name is used by the
       defendant as its own trade name, thereby weakening the plaintiff’s ability to use
       the name as a unique identifier of its goods and services.

       Tarnishment occurs when the plaintiff’s trademark or trade name is used by the
       defendant as its own trade name in a manner that tarnishes or appropriates the
       goodwill and reputation associated with the trademark or tradename.

       Appellants argue PPMC and Shan Pools cannot be held liable for diluting Premier Pools

mark because PPMC did not use Premier Pools as its own trade name and Shan Pools did

business under “Premier Pools and Spa,” not “Premier Pools.” Premier Pools presented evidence

that PPMC licensed the name “Premier Pools and Spas” to Shan Pools and that the use of the

name Premier Pools and Spa in the same market in which Premier Pools operates, to sell pool

construction services to consumers, caused confusion and thus blurred the source of the service.

See E. & J. Gallo Winery v. Spider Webs Ltd., 129 F. Supp. 2d 1033, 1041 (S.D. Tex. 2001).

Thus, the evidence supports the jury’s finding appellants diluted Premier Pools’s mark.

                  3.      Unfair Competition

       Unfair competition is the use or simulation by one person of the name, symbols, or

devices of a business rival in such a manner as is calculated to deceive and cause the public to

deal with the second user when they intended to and would otherwise have dealt with the first

user. Jud Plumbing Shop on Wheels, Inc. v. Jud Plumbing & Heating Co., Inc., 695 S.W.2d 75,

                                               –13–
78 (Tex. App.—San Antonio 1985, no writ). To prove unfair competition, it is not necessary to

prove that the defendants intended to deceive the public or that anyone was actually deceived.

Hudgens v. Goen, 673 S.W.2d 420, 423 (Tex. App.—Ft. Worth 1984, writ ref’d n.r.e.).

However, either actual or probable deception must be shown, and a mere possibility of deception

is not enough. Line Enters., Inc. v. Hooks & Matteson Enters., Inc., 659 S.W.2d 113, 117 (Tex.

App.—Amarillo 1983, no writ).

        Appellants challenge the jury’s finding of unfair competition arguing PPMC is not a

business rival of Premier Pools and PPMC and Shan Pools did not use the name “Premier Pools”

in a manner calculated to deceive. While PPMC may not construct pools itself, its business

model and profits are tied to pool construction. As to deception, Premier Pools did not have to

prove Shan Pools intended to deceive consumers. A showing of actual or probable deception is

sufficient. Numerous witnesses testified that they contacted Shan Pools believing it was Premier

Pools. In addition, Shan Pools represented in its advertisements that it was established in 1988—

a year strikingly similar to the year Premier Pools was established—even though it did not exist

until 2011. This evidence supports the jury’s finding appellants engaged in unfair competition.

        We overrule appellants’ second issue.

          D.      Damages

        In their fourth issue, appellants argue there is no evidence to support an award of lost

profits and an award for disgorgement of profits.

                  1.     Lost profits

        At trial, Premier Pools’s damage expert presented two alternative calculations of lost

profit damages. One was based on the specific pools the Dodds were able to identify that

Premier Pools lost to Shan Pools, and the other on a projection of lost pool sales in 2011 and

2012.

                                                –14–
         Premier Pools’s expert derived the first measure of lost profits by calculating the profits

Premier Pools lost on three identifiable pool sales that went to Shan Pools instead of Premier

Pools.    He testified the lost profits from those sales totaled $56,698. Premier Pools’s expert

derived the second measure of lost profits based upon Sean Dodd’s testimony that Premier Pools

lost at least fifteen pool sales in 2011 and 2012 due to Shan Pools’s infringement on Premier

Pools’s trade name. Premier Pools’s expert calculated Premier Pools’s average profit per pool

during those years and concluded Premier Pools lost profits of $287,976 on these pools. The

jury chose to award Premier Pools the higher measure of lost profit damages.

         While proof of lost profits need not be exact, it cannot be speculative. Phillips v. Carlton

Energy Grp., LLC, 475 S.W.3d 265, 279, (Tex. 2015). Appellants are critical of Premier Pools’s

expert’s reliance on Sean Dodd’s testimony concerning lost sales arguing Sean Dodd’s testimony

is speculative. We disagree. Texas courts permit business owners to testify about the effect that

another’s conduct has had upon its business, including what they had reasonably anticipated

from the business activities they were prevented from undertaking as a result of another’s

conduct. Am. Heritage, Inc. v. Nevada Gold & Casino, Inc., 259 S.W.3d 816, 827 (Tex. App.—

Houston [1st Dist.] 2008, no pet.).     Sean Dodd based his conclusions on the number of pools

sales lost on past experience and market conditions, and Premier Pools’s expert used actual

financial data to calculate the lost profits. Consequently, Premier Pools’s evidence of lost profits

was not speculative and the jury’s finding is supported by the evidence.

                   2.      Disgorged profits

         The evidence established PPMC’s profits from infringement of Premier Pools’s trade

mark were the royalty payments it received from Shan Pools’s sales. Johnson testified Shan

Pools paid PPMC royalties of $186,806.87.          PPMC’s records showed royalty payments of

                                                –15–
$164,205. The jury awarded profits of $167,030, which is within the range of the evidence

presented.

       In addition to arguing there is no evidence to support disgorgement of profits, PPMC

argues the disgorgement award is duplicative of the lost profits award.          Lost profits are

compensatory and are awarded to restore the claimant to its position ex ante. George P. Roach,

Compensation Forfeiture: Stacking Remedies against Disloyal Agents, 47 St. Mary’s L.J. 249,

287–89 (2015). Disgorgement of profits is intended to eliminate unjust enrichment to the

defendant by redirecting it to the claimant.     Id.   While it is conceivable that under some

circumstances an award of lost profits and disgorgement of profits can result in a double

recovery, those circumstances have not been shown to exist in this case. And, in any event,

PPMC did not object to the submission of the disgorgement of profits question on this or any

other ground and thus waived this complaint. Hopkins Cnty. Hosp. Dist. v. Allen, 760 S.W.2d
341, 343 (Tex. App.—Texarkana 1988, no writ) (Hospital District could not complain on appeal

that the submission of a damage question allowed a double recovery because the Hospital

District did not object to the charge on double recovery grounds); see also Wilgus v. Bond, 730
S.W.2d 670, 672 (Tex. 1987). Under these specific circumstances, we conclude the trial court

did not err in requiring PPMC to disgorge the royalty payments it received from Shan Pools.

        Accordingly, we overrule appellants’ third issue.

II.    INJUNCTIVE RELIEF BASED ON FINDINGS OF “IRREPARABLE HARM”

       Appellants argue the jury’s finding of irreparable harm is contradicted by the jury’s

damages findings. We disagree. Among the damages Premier Pools claims it suffered as a

result of appellants’ conduct is a loss of reputation. The threat of loss of reputation may support

a finding of irreparable harm, so long as it is not impermissibly speculative. Pruvit Ventures,

Inc. v. Forevergreen Int’l LLC, 4:15–CV–571, 2015 WL 9876952, at *5 (N.D. Tex. Dec. 23,

                                              –16–
2015). We note that it is difficult to value the damage to a business reputation caused by the

distribution of products bearing another’s trademark. Controls Int’l, Inc. v. Kinetrol, Ltd., No.

Civ.A.3:97–CV–2504–D, 1998 WL 158678, at *7 (N.D. Tex. Mar. 25, 1998). Such valuation

difficulties may justify a finding of a threat of prospective irreparable injury. See Opticians

Ass’n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 195 (3d Cir. 1990) (stating that loss of

control of reputation can constitute irreparable injury); Power Test Petroleum Distribs., Inc. v.

Calcu Gas, Inc., 754 F.2d 91, 95 (2d Cir. 1985) (stating that reputation is neither calculable nor

precisely compensable, and holding that irreparable injury exists when control over reputation

will be lost); see also Lakedreams v. Taylor, 932 F.2d 1103, 1109 (5th Cir. 1991) (“[W]hen

economic rights are especially difficult to calculate, a finding of irreparable harm may be

appropriate.”). In addition, the likelihood of confusion itself can constitute irreparable injury.

Hawkins Pro–Cuts, Inc. v. DJT Hair, Inc., No. CA 3–96–CV–1728–R, 1997 WL 446458, at *7

(N.D. Tex. July 25, 1997).

       Multiple witnesses testified about the confusion caused by Shan Pools doing business as

Premier Pools and Spas in the North Texas trade area. Neither the injunction nor the posture of

the case call for us to opine on the parties’ rights elsewhere at this stage. In addition, Sean Dodd

testified about the harm Shan Pools caused to Premier Pools’s reputation. More particularly,

Sean Dodd testified that complaints filed against Shan Pools with the Better Business Bureau

appear to be complaints against Premier Pools and that Better Business Bureau ratings are

important to consumers. Sean Dodd testified that he could not put a dollar amount on the value

of the reputation Premier Pools has lost as a result of PPMC’s and Shan Pools’s actions and that

there is no amount of money that can replace what Premier Pools lost in reputation.

       On the present record, we conclude Premier Pools established a threat of irreparable

injury. We overrule appellants’ third issue.

                                               –17–
III.   RELIEF PURSUANT TO THE DECLARATORY JUDGMENT ACT

       In their fifth issue, appellants argue the trial court erred in awarding Premier Pools’s

attorney’s fees. We agree. Texas law prohibits the recovery of attorney’s fees unless authorized

by statute or contract. Tony Gullo Motors, I, L.P. v. Chapa, 212 S.W.3d 299, 310 (Tex. 2006).

Here, the trial court based the award on the Uniform Declaratory Judgments Act, TEX. CIV.

PRAC. & REM. CODE ANN. § 37.009 (West 2015). “The Declaratory Judgments Act is ‘not

available to settle disputes already pending before a court’” or an issue that is “already before the

court as part of the plaintiff’s case.” BHP Petroleum Co., Inc. v. Dillard, 800 S.W.2d 838, 841

(Tex. 1990) (citing Heritage Life v. Heritage Grp. Holding, 751 S.W.2d 229, 235 (Tex. App.—

Dallas 1988, writ denied)). Moreover, a party cannot assert a claim under the declaratory

judgments act merely to justify an award of attorney’s fees that would otherwise be

impermissible. Tanglewood Homes Ass’n v. Feldman, 436 S.W.3d 48, 69 (Tex. App.—Houston

[14th Dist.] 2014, no pet.).

       Here, the declaratory judgment claim added nothing and provided access to no remedy

that was not otherwise available pursuant to Premier Pools’s other causes of action. Specifically,

while the trial court granted declaratory relief to “declare the prior rights of the plaintiff in the

use of the name and mark in the area found by the jury,” that relief was available as remedies for

other claims previously asserted. We sustain appellants’ fifth issue.

       Because we have sustained appellants’ fifth issue, we pretermit their sixth issue

complaining about the lack of segregation of attorney’s fees. TEX. R. APP. P. 47.1.

                                           CONCLUSION

       We reverse the portion of the trial court’s judgment awarding Premier Pools declaratory

judgment relief and render judgment that Premier Pools take nothing on its attorney’s fee claim.

                                               –18–
      We affirm the remainder of the trial court’s judgment.

                                                   /DAVID J. SCHENCK/
                                                   DAVID J. SCHENCK
                                                   JUSTICE

141388F.P05

                                            –19–
                                        S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

PREMIER POOLS MANAGEMENT                             On Appeal from the 101st Judicial District
CORP. AND SHAN POOLS, INC. D/B/A                     Court, Dallas County, Texas
PREMIER POOLS AND SPAS, Appellant                    Trial Court Cause No. DC-12-07182.
                                                     Opinion delivered by Justice Schenck.
No. 05-14-01388-CV         V.                        Justices Fillmore and Stoddart participating.

PREMIER POOLS, INC., Appellee

         In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED in part and REVERSED in part. We REVERSE that portion of the trial court's
judgment awarding PREMIER POOLS, INC. declaratory judgment relief and attorney’s fees and
RENDER judgment that PREMIER POOLS, INC. take nothing on its claim for attorney’s fees.
In all other respects, the trial court’s judgment is AFFIRMED.

       It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 12th day of August, 2016.

                                              –20–