Court Opinion

ID: 3122719
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:31:15.109016+00
Date Added: 2024-06-11T12:46:55.833098
License: Public Domain

COURT OF APPEALS
                           SECOND DISTRICT OF TEXAS
                                FORT WORTH

                               NO. 02-09-00450-CV

PAULA GAUGHAN AND DEAN                                                APPELLANTS
SANDERS

                                          V.

NATIONAL CUTTING HORSE                                                   APPELLEE
ASSOCIATION

                                       ----------

         FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY

                                       ----------

                                     OPINION
                                       ----------

                                  I. Introduction

      Appellants Paula Gaughan and Dean Sanders (collectively, Gaughan) and

Appellee National Cutting Horse Association (the NCHA) filed cross-motions for

summary judgment in Gaughan‘s suit against the NCHA for a declaratory

judgment that the NCHA‘s books and records that Gaughan sought to inspect

and copy are not confidential. The trial court initially entered a protective order in
favor of the NCHA that prohibited Gaughan from disseminating the NCHA‘s

books and records to others. Later, the trial court granted the NCHA‘s motion for

summary judgment, denied Gaughan‘s motion for summary judgment, and

incorporated the protective order into the final judgment. Gaughan contends in

three issues that the trial court erred by entering the protective order and thereby

prohibiting her from disclosing documents designated as confidential by the

NCHA, by granting summary judgment for the NCHA on the ground that the

NCHA‘s records are entitled to confidential treatment under the law, by denying

her motion, and by ruling that there are no genuine issues of material fact

concerning the reasonableness and necessity of the NCHA‘s attorney‘s fees.

We affirm.

                    II. Factual and Procedural Background

      The NCHA is a non-profit corporation organized and existing under Texas

law. Gaughan is a member in good standing of the NCHA.1 On April 21, 2008,

Gaughan made a written request pursuant to article 1396-2.23 of the Texas Non-

Profit Corporation Act to ―inspect the books and various financial records of the

NCHA.‖2 Gaughan requested six categories of documents from the NCHA—

      1
        Sanders was originally a plaintiff in this lawsuit, but he withdrew from the
lawsuit as a plaintiff. He is a party to this appeal because he and Gaughan are
jointly and severally liable under the trial court‘s judgment for the NCHA‘s
attorney‘s fees.
      2
       The written request actually cited Texas Business Organizations Code
section 22.351, the successor to article 1396-2.23. See Tex. Bus. Org. Code

                                     2
including employment contracts, bank statements, payroll records, and payments

to vendors—for the stated purpose that Gaughan was ―genuinely interested in

fostering increased participation in NCHA events by lowering the costs

associated with that participation and making sure that the membership dues and

other monies received by the NCHA are being spent with the best interests of the

NCHA membership in mind.‖ The NCHA responded to Gaughan‘s letter on April

28, 2008, enclosing audited financial statements for the years 2004 through

2007, but it requested that Gaughan clarify her stated purpose, pay for staff and

professional time necessary to respond to the request, and agree to maintain the

confidentiality of certain information relating to third parties (such as employees

and vendors) before the NCHA would produce the remaining requested records.

      Gaughan responded to the NCHA on May 9, 2008, disagreeing that her

stated purpose was inadequate but also clarifying that she wished to review the

financial records to confirm that the ―NCHA is not guilty of waste or

mismanagement in its financial affairs and in the administration of the NCHA‘s

business.‖   Gaughan declined to enter into a confidentiality agreement and

objected to paying for staff or professional fees associated with the NCHA‘s

compliance with her inspection request.       Gaughan also requested that all

responsive documents be produced within one week.

Ann. § 22.351 (West 2009). However, the parties agree that article 1396-2.23
applies to this case.

                                    3
      The NCHA responded on May 13, 2008, again asserting the confidentiality

of some of its records, specifically records relating to its employees, third-party

vendors, and sponsors. The NCHA stated that the confidentiality of its records

―does not mean that you cannot have access to some or all of the information

you desire[,] but it does mean that any access you may have must be in

accordance with procedures which are in the best interest of [the NCHA] and

include fulfilling [the NCHA]‘s obligation of confidentiality.‖

      Gaughan filed suit against the NCHA on May 20, 2008, seeking a judicial

declaration that she is entitled to inspect and photocopy each of the categories of

records identified in her April 21, 2008 letter. Gaughan also sought and obtained

a temporary restraining order to prevent the NCHA from destroying or altering the

records she sought to inspect and copy. The NCHA filed a motion to dissolve the

temporary restraining order and offered to disclose all documents requested by

Gaughan subject to entry of a protective order to prevent her disclosure of

information the NCHA believed to be confidential. Following the hearing on the

NCHA‘s motion, the trial court dissolved the temporary restraining order and

granted the NCHA‘s request for entry of a protective order.

      The trial court then signed a protective order permitting the NCHA to

designate certain documents that it had agreed to produce to Gaughan as

confidential (by stamping ―Confidential‖ in a conspicuous manner on each page

to be so designated) and prohibiting Gaughan from reproducing, disclosing, or

disseminating those documents to anyone other than her counsel except upon

                                       4
order of the trial court. The order stated that it was entered solely to facilitate

review and provided that at any time after delivery of documents designated as

confidential, counsel for Gaughan could challenge the designation by written

notice to the NCHA and a motion to challenge the confidential nature of all or a

portion of the information, in which event the NCHA would have the opportunity

to establish that the disputed documents were entitled to confidential treatment.

      After entry of the protective order, the NCHA produced 89,214 pages of

documents to Gaughan but designated 36,556 of those pages as confidential as

permitted by the protective order. It is undisputed that Gaughan reviewed and

copied all documents she requested from the NCHA, including the documents

designated as confidential. The NCHA also counterclaimed against Gaughan,

seeking recovery of its attorney‘s fees and a judicial declaration that it had ―acted

reasonably and in accordance with the law in responding to [Gaughan‘s]

requests to review the NCHA documents.‖

      Gaughan and the NCHA eventually filed cross-motions for summary

judgment. In her motion, Gaughan requested, among other things, a judicial

declaration that ―NCHA may not prevent [her] from disclosing to her fellow NCHA

members or to other third parties the substance and form of all records reflecting

the NCHA‘s financial activity.‖3   Gaughan argued that articles 1396-2.23 and

      3
      Gaughan sought three additional judicial declarations via summary
judgment, but she does not assert on appeal that the trial court erred by denying
her motion for summary judgment on those grounds. Thus, we do not address
Gaughan‘s request for those three additional judicial declarations. See generally

                                     5
1396-2.23A of the non-profit corporation act required the NCHA to make its

books and records available to members and the general public alike, that the

NCHA is therefore precluded from designating any of its financial records as

confidential, and that the trial court should withdraw the protective order because

it contravenes articles 1396-2.23 and 1396-2.23A. In addition, Gaughan‘s motion

for summary judgment included the following alternative request for relief:

             Strictly in the alternative, and only because [the trial court‘s]
      Protective Order otherwise requires it and remains in force until it is
      withdrawn as requested hereinabove, Gaughan moves the Court to
      conduct an in camera inspection of the 36,556 pages of NCHA
      books and records that the NCHA has classified as confidential and,
      upon inspection of same, declare that they are not properly
      classified as confidential documents given the statutory mandate
      that they be made available to the NCHA members and the general
      public alike. [Emphasis added.]

      The NCHA‘s motion sought summary judgment on its claims for a judicial

declaration and attorney‘s fees.     Within the motion, the NCHA argued that

Gaughan did not need to file the lawsuit to obtain the requested documents; that

Texas law supports the trial court‘s entry of the protective order; that the

protective order provided a mechanism for Gaughan to challenge the NCHA‘s

designation of any document as confidential; and that Gaughan had never

challenged the NCHA‘s designation of any document as confidential—despite

LeBlanc v. Riley, No. 02-08-00234-CV, 2009 WL 885953, at *3 (Tex. App.—Fort
Worth Apr. 2, 2009, no pet.) (mem. op.) (holding that a general issue broadly
challenging a summary judgment is permissible but requiring an appellant to
present argument and legal authority on appeal to preserve error on a particular
cause of action on which the trial court granted summary judgment).

                                     6
having possession of the vast majority of the documents for months—but instead

claimed that no information contained in the documents requested under art.

1396-2.23 could be treated as confidential and that the protective order regarding

the documents requested was contrary to law.

      In its final judgment granting the NCHA‘s motion for summary judgment

and denying that of Gaughan, the trial court declared that the NCHA had fully

complied with all of Gaughan‘s requests to review documents of the association

and all legal requirements, that the NCHA had designated documents as

confidential in accordance with the protective order, that Gaughan had taken no

action to contest the designations, and that the documents designated as

confidential by the NCHA were thus entitled to confidential treatment as a matter

of law. The trial court further ordered Gaughan to return all records marked as

―Confidential‖ to the NCHA and to not disclose, disseminate, or reveal any of the

―Confidential‖ records or their contents to any third parties. This appeal followed.

                             III. Standard 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,

                                     7
Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A defendant who conclusively

negates at least one essential element of a cause of action is entitled to

summary judgment on that claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d
494, 508 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c). When both parties move

for summary judgment and the trial court grants one motion and denies the other,

the reviewing court should review both parties‘ summary judgment evidence and

determine all questions presented. Mann Frankfort, 289 S.W.3d at 848; see

Myrad Props., Inc. v. Lasalle Bank Nat’l Ass’n, 300 S.W.3d 746, 753 (Tex. 2009).

The reviewing court should render the judgment that the trial court should have

rendered. Mann Frankfort, 289 S.W.3d at 848.

                                IV. Discussion

A. The Protective Order

      Gaughan contends in her first issue that the trial court erred by entering

the protective order and declaring by summary judgment that any of the NCHA‘s

records regarding its business transactions with sponsors, vendors, and

employees are entitled to confidential treatment under the law. She contends the

trial court‘s orders are contrary to the Texas statutes that require non-profit

corporations to make their financial records open and available for inspection and

copying by the general public. Specifically, Gaughan argues that because the

NCHA is a non-profit corporation obligated by article 1396-2.23A to make its

records, books, and annual reports available to the public for inspection and

copying, it cannot shield those records behind a claim of confidentiality. The

                                    8
NCHA responds that a member of a non-profit corporation may inspect ―a much

broader spectrum of records‖ under article 1396-2.23 than the public is entitled to

inspect under article 1396-2.23A and that protective orders are permissible under

Texas law to ensure that confidential information provided to members pursuant

to these or similar inspection statutes is protected from disclosure to others.

      1. Articles 1396-2.23 and 1396-2.23A

      Article 1396-2.23 of the Texas Non-Profit Corporation Act provides:

      A. Each corporation shall keep correct and complete books and
      records of account and shall keep minutes of the proceedings of its
      members, board of directors, and committees having any authority of
      the board of directors and shall keep at its registered office or
      principal office in this State a record of the names and addresses of
      its members entitled to vote.

      B. A member of a corporation, on written demand stating the
      purpose of the demand, has the right to examine and copy, in
      person or by agent, accountant, or attorney, at any reasonable time,
      for any proper purpose, the books and records of the corporation
      relevant to that purpose, at the expense of the member.

Tex. Rev. Civ. Stat. Ann. art. 1396-2.23 (expired Jan. 2010). Similarly, but not

identically, article 1396-2.23A provides, in relevant part:

      A. A corporation shall maintain current true and accurate financial
      records with full and correct entries made with respect to all financial
      transactions of the corporation, including all income and
      expenditures, in accordance with generally accepted accounting
      practices.

      B. Based on these records, the board of directors shall annually
      prepare or approve a report of the financial activity of the corporation
      for the preceding year. . . .

      C. All records, books, and annual reports of the financial activity of
      the corporation shall be kept at the registered office or principal

                                      9
      office of the corporation in this state for at least three years after the
      closing of each fiscal year and shall be available to the public for
      inspection and copying there during normal business hours. The
      corporation may charge for the reasonable expense of preparing a
      copy of a record or report.

Id. art. 1396-2.23A (expired Jan. 2010) (emphasis added).

      2. Scope and Purpose of article 1396-2.23A (public’s right to inspect)

      Gaughan argues that, because article 1396-2.23A mandates public access

to the financial records of a non-profit corporation, the protective order allowing

the NCHA to shield its financial records from public disclosure by designating

them as confidential is contrary to Texas law. However, Gaughan‘s argument is

premised on the incorrect assumption that all of the records of a non-profit

corporation that a member is entitled to inspect and copy are financial records

available to the public generally. As is clear from article 1396-2.23(B), a member

of a non-profit corporation may, following written demand stating a proper

purpose, examine ―the books and records of [that] corporation relevant to that

purpose.‖ Id. art. 1396-2.23(B). Under article 1396-2.23A, however, a member

of the public may only inspect the ―records, books, and annual reports of the

financial activity of the corporation.‖ See id. art. 1396-2.23A (emphasis added).

Thus, the NCHA argues, a member of the public may only inspect financial

records of a non-profit corporation while a member of the corporation may

inspect all records of that corporation. See id. arts. 1396-2.23, 1396-2.23A.

      The records Gaughan received from the NCHA include both financial

records available for inspection by the public and non-financial records not

                                     10
available for inspection by the public. For example, Gaughan received vendor,

sponsorship, and employment contracts and documents containing the

addresses and Social Security Numbers of the NCHA‘s employees. Article 1396-

2.23A, addressing the public‘s right of inspection, does not provide that the public

has the right to inspect records that are not financial records.

      Moreover, article 1396-2.23, addressing the right of a member to inspect a

broader spectrum of records than is allowed for the public, provides for neither a

right of inspection by the public of such records nor a right by a member to

publish such information to the public.4 Thus, the NCHA argues, and we agree,

that Gaughan‘s theory that she is entitled to disseminate or share with the public

all documents she received would engraft a right of inspection by the public onto

article 1396-2.23, which speaks only to the right of inspection by members. If the

legislature had intended that a member would have the right to disclose all books

and records of a non-profit corporation to the public, there would have been no

need for two separate statutes and no need to require a member to provide a

written request stating a proper purpose.         Therefore, we decline to adopt

Gaughan‘s interpretation of the two statutes by conflating them so as to provide a

      4
         When the legislature passes two separate statutes on the same general
subject matter, it is presumed to have done so for a particular purpose, and
meaning must be given to both statutes. See Aldine Indep. Sch. Dist. v. Ogg,
122 S.W.3d 257, 270 (Tex. App.—Houston [1st Dist.] 2003, no pet.); Font v.
Carr, 867 S.W.2d 873, 881 (Tex. App.—Houston [1st Dist.] 1993, writ dism‘d
w.o.j.).

                                     11
right of the public to inspect all books and records of a non-profit corporation,

including records only available to members.

      The Texas Supreme Court has held that the phrase ―financial records‖ in

article 1396-2.23A ―does not include the names of contributors or members‖ and

that article 1396-2.23A ―does not require the blanket disclosure of contributors‘

names for public inspection.‖ In re Bay Area Citizens Against Lawsuit Abuse,

982 S.W.2d 371, 381–82 (Tex. 1998) (hereinafter BACALA). In so holding, the

BACALA court looked to the legislative intent of that statute, observing that it

appeared ―that article 1396-2.23A was intended to remedy a specific problem:

the lack of accountability regarding a non-profit corporation‘s use of funds

solicited from the public.‖ Id. at 381 (citing Texas Appellate Practice & Educ.

Resource Ctr. v. Patterson, 902 S.W.2d 686, 689 (Tex. App.—Austin 1995, writ

denied)). In that regard, the court quoted relevant background information from

the bill analysis regarding article 1396-2.23A‘s purpose:

      During the last interim, the author attempted to conduct a study of a
      non-profit drug rehabilitation program in Houston. This program had
      been soliciting funds from the public and portrayed itself as a
      charitable endeavor. However, there were rumors that its funds
      were being used for investments in such businesses as nightclubs.
      During the six month investigation, the author of this bill was unable
      to determine how the program‘s funds were being used because the
      records were inadequate. A major recommendation from the study
      was that Texas law should be amended to require non-profit
      organizations soliciting funds from the public to keep adequate
      records showing how the funds were actually being used.

Id. at 381 (quoting Senate Comm. on Bus. & Indus. Bill Analysis, Tex. S.B. 857,

65th Leg., R.S. (1977)). Thus, the BACALA court concluded the purpose of the

                                    12
legislation was not to force non-profit corporations to identify the exact sources of

their income but was instead designed ―to expose the nature of the expenditures

of that money once received from the public and to make non-profit organizations

accountable to their contributors for those expenditures.‖          Id.   The court

continued, ―[T]he seemingly broad scope of the statute‘s language is not

matched by the legislative intent behind the statute.‖ Id.; see also Patterson, 902
S.W.2d at 688–89 (concluding legislature designed art. 1396-2.23A as a

mechanism for making non-profit corporations accountable for donations solicited

from the public).

      It follows that, although amounts received from or paid to vendors,

sponsors, or employees may constitute ―financial records,‖ the underlying

contracts themselves (or the employees‘ addresses and social security numbers)

are not financial records that the public is entitled to inspect. See BACALA, 982
S.W.2d at 381–82. Thus, even assuming that the public is entitled by art. 1396-

2.23A to inspect all financial documents of a non-profit corporation without regard

to confidentiality, a question we are not called upon to decide, we must still

determine whether documents Gaughan may inspect under art. 1396-2.23 (and

which are not available to the public) may be subject to protection from

disclosure to others because of confidentiality considerations.5

      5
       Because Gaughan is a member of the NCHA, the applicable statute in this
case is article 1396-2.23(B), governing the right of a member of a non-profit
corporation, not the right of the public under article 1396-2.23A.

                                     13
      3. Scope and Purpose of article 1396-2.23 (member’s right to inspect)

      Gaughan asserts that the scope of article 1396-2.23, which provides for

the inspection rights of a member of a non-profit corporation, is absolute in

prohibiting any record from being treated as confidential and does not allow a

non-profit corporation to require a pledge or order of non-disclosure in order to

inspect and copy its records. We disagree for reasons urged by the NCHA.

      Decisions under article 1396-2.23 recognize that the statute is not absolute

in its disclosure requirements for members and that orders to protect confidential

information are proper in requests made under that statute. In Citizens Ass’n for

Sound Energy (CASE) v. Boltz, 886 S.W.2d 283, 285–86 (Tex. App.—Amarillo

1994, writ denied), cert. denied, 516 U.S. 1029 (1995), a member of CASE, a

non-profit association, sought review of CASE‘s records under article 1396-2.23.

CASE opposed the production of certain documents and challenged the

constitutionality of the statute. Id. at 286. The trial court entered a protective

order addressing the confidential nature of the requested documents and ordered

CASE to produce such documents under that protective order. Id. at 287. On

appeal by CASE, the court of appeals affirmed, holding that in view of the

protective order which prohibited the member from disclosing the confidential

information contained in such documents, CASE‘s challenges to the statute were

without merit. Id.

      In Professional Microfilming, Inc. v. Honorable Sam Houston, 661 S.W.2d
767, 768 (Tex. App.—Fort Worth 1983, orig. proceeding), a case in which

                                    14
mismanagement of Professional Microfilming, Inc. (PMI) was alleged, this court

considered a financial records request by a shareholder and former director of

PMI. On mandamus, PMI complained of a discovery order by the trial court that

would have allowed the shareholder, who had become a competitor of PMI, to

review records containing PMI‘s sensitive customer, cost, and pricing information

pursuant to a request made under business corporations act article 2.44.6 Id. at

768–69. PMI asserted that any such review of PMI‘s confidential information by

the shareholder would be damaging to PMI. Id. The trial court required PMI to

produce the information but entered an order prohibiting the shareholder and

former director from disclosing any of the contents of those records to third

parties. Id. at 769. In denying mandamus relief sought by PMI, this Court stated:

      We also hold that Judge Houston‘s discovery order adequately
      considered the sensitivity of the requested data, and the potential for
      misuse of that data by Hightower and Eikon. Judge Houston‘s order
      enjoined Hightower from disclosing the information or using it for
      purposes other than those connected with the litigation. The order
      also provided that the documents requested to be produced be
      sealed in envelopes and filed with the court, to be opened only by
      order of the court. Judge Houston thus set up a procedure which
      would allow him to examine each document before disclosing it to

      6
        Texas Business Corporations Act article 2.44 entitled directors and certain
shareholders of a corporation to review the books and records of a corporation
for any proper purpose. Tex. Rev. Civ. Stat. Ann. art. 2.44. (expired Jan. 2010);
see also Tex. Bus. Org. Code Ann. § 21.218 (West 2009) (current version of
expired article 2.44). That statute, which is applicable to for-profit corporations, is
similar to article 1396.-2.23, which is applicable to non-profit corporations and at
issue in this case. Texas courts have looked to precedent under article 2.44
when dealing with issues presented under article 1396-2.23. See CASE, 886
S.W.2d at 289.

                                      15
      Hightower, and impose even greater restrictions than the initial
      injunction if necessary.

Id. at 770 (emphasis added). Thus, we acknowledged in PMI that the need to

protect certain confidential information from dissemination to others may exist

even when a statutory right to inspection by the shareholder is invoked. Id.; see

also Lewis v. Pa. Bar Ass’n, 701 A.2d 551, 555 (Pa. 1997) (holding documents

otherwise accessible to members may be protected from disclosure to third

parties by considerations of privacy, such as references to employee‘s health

records; privilege, such as records protected by attorney-client privilege or work

product doctrine; or confidentiality where both corporate purpose and public‘s

interest are served by keeping information confidential); Stroud v. Grace, 606
A.2d 75, 89 (Del. 1992) (holding corporation‘s refusal to provide certain financial

information to shareholder without confidentiality agreement signed by

shareholders did not violate corporation‘s duty of disclosure); Pershing Square,

L.P. v. Ceridian Corp., 923 A.2d 810, 819–20 (Del. Ch. 2007) (holding publication

to others by shareholder may be limited where information is confidential and

release would harm company); Disney v. The Walt Disney Co., 857 A.2d 444,

446 (Del. Ch. 2004) (holding that shareholder could not use right of inspection to

publicly disseminate otherwise confidential records and that production was

properly conditioned upon confidentiality agreement, subject to challenge of

company‘s designation in court if parties could not resolve disagreements).

                                    16
      Gaughan relies upon Sharyland Water Supply Corp. v. Block, 755 F.2d
397 (5th Cir. 1985), as the single case to support her position. Gaughan cites a

statement from the opinion in that case for the proposition that article 1396-2.23

neither forbids a member from disclosing books and records provided to him by a

non-profit corporation nor requires the member to pledge non-disclosure to

others in order to obtain the corporation‘s books and records. Id. at 398. But

Sharyland does not support the proposition that no restrictions on dissemination

to others can be placed on an article 1396-2.23 request by a member of a non-

profit corporation. That case did not deal with the right to inspect books and

records under article 1396-2.23; rather, it involved a Freedom of Information Act

request made to a third party to whom the corporation had provided information

as part of a loan application. Id. Moreover, Sharyland is distinguishable because

it involved audited financial statements that a member of the public is entitled to

inspect under article 1396-2.23A. Id. at 399. The NCHA does not dispute that its

audited financial reports are subject to disclosure under the Freedom of

Information Act.

      In addition, a member‘s own right to inspect and copy books and records

under article 1396-2.23 does not trump privileges or other rights to confidentiality

provided for by Texas law. In Huie v. DeShazo, 922 S.W.2d 920, 923–25 (Tex.

1996), the supreme court held that a trustee‘s duty of disclosure does not

override the attorney-client privilege and expressly rejected a claim that the

provisions of article 1396-2.23 overrode a claim of attorney-client privilege. In

                                     17
analyzing an argument similar to the one made by Gaughan in this case, the

Texas Supreme Court held as follows:

      [Real party in interest] Chenault relies on Burton v. Cravey, 759
S.W.2d 160 (Tex. App.—Houston [1st Dist.] 1988, no writ), for the
      proposition that the attorney-client privilege does not apply where a
      party has a right to information independently of the rules of
      discovery. In Burton, condominium owners filed a trial court
      mandamus action against the condominium association to enforce
      their statutory right to inspect the association‘s books and records.
      See Tex. Prop. Code Ann. § 81.209; Tex. Rev. Civ. Stat. Ann. art.
      1396-2.23. The trial court allowed inspection of the records,
      including those in the possession of the association‘s attorney,
      finding as a factual matter that the attorney‘s records constituted part
      of the association‘s records. The court of appeals affirmed, holding
      that the attorney-client privilege did not apply in light of the owners‘
      unqualified right of inspection. 759 S.W.2d at 162.

             It is unclear whether the records at issue in Burton were
      merely records of the association in the possession of the attorney,
      or whether they contained separate confidential attorney-client
      communications. To the extent that they consisted of the former, we
      agree that they were not protected. See [Nat’l Tank Co. v.]
      Brotherton, 851 S.W.2d [193,] 199 [(Tex. 1993)]. However, to the
      extent that the court held that the owners’ statutory right of
      inspection somehow trumped the privilege for confidential attorney-
      client communications, we disapprove of its holding, for the reasons
      previously discussed. We also disapprove of the court’s dicta that
      the trial court could, in its discretion decline to apply the attorney-
      client privilege even if all the elements of Rule 503 were met. See
759 S.W.2d at 162.

Id. at 924 (emphasis added). Other jurisdictions agree. See Schein v. N. Rio

Arriba Elec. Coop., Inc., 122 N.M. 800, 806 (N.M. 1997) (holding corporate

documents subject to attorney-client privilege may be withheld from shareholders

but upholding denial of protection for information examined by trial court in

camera and found not to contain indicia of confidentiality); Nat’l Football League

                                     18
Props., Inc. v. Superior Court, 75 Cal. Rptr. 2d 893, 898 (Cal. Ct. App. 1998)

(holding shareholder status does not in and of itself entitle an individual to

unfettered access to corporate confidences); Riser v. Genuine Parts Co., 150
Ga. App. 502, 504 (Ga. Ct. App. 1979) (holding trial court did not err by denying

corporate information to shareholder that contained confidential management

information, legal opinions, and personnel evaluation in absence of compelling

reason); Morton v. Rogers, 20 Ariz. App. 581, 586 (Ariz. Ct. App. 1973) (holding

right of director and shareholder to examine books and records does not extend

to trade secrets); see also In re LTV Secs. Litig., 89 F.R.D. 595, 604 (N.D. Tex.

1981) (applying federal law in securities fraud suit and recognizing shareholder‘s

statutory or common law right to inspection could not overcome otherwise valid

assertion of attorney-client privilege); 5A FLETCHER CYCLOPEDIA OF THE

LAW OF CORPORATIONS § 2239.10 (2011) (collecting cases holding

shareholders not entitled to trade secrets or confidential information contained in

books and records of corporation unless such affects financial status of

corporation or value of stock).7

      7
        Gaughan does not contend that she has been denied the opportunity to
inspect confidential or attorney-client communications, but the broader principle
revealed by BACALA, Huie, CASE, PMI, and similar opinions—that the scope of
the right of inspection for members of a non-profit corporation may be limited by
legitimate considerations of privilege, trade secrets, and confidentiality—as well
as the differing access granted to members and the public under articles 1396-
2.23 and 1396-2.23A, reveals that even members of a non-profit corporation do
not have unfettered access to the non-profit‘s corporate records.

                                    19
      Moreover, by accepting and renewing her membership each year in the

NCHA, Gaughan has agreed to abide by the rules, policies, and agreements

made by the NCHA. Gaughan has not disputed that those rules include the

Employee Handbook and the Financial Disclosure Policy and Procedure adopted

by the executive committee of the NCHA in 2004, which contain the association‘s

policies for treating employee and third party business information as

confidential. By its Employee Handbook and the Disclosure Policy, the NCHA

makes representations to its employees, vendors, sponsors, and other persons

with whom it does business that it will maintain certain information as

confidential.   Gaughan disputes that any employment contract or business

agreement with vendors or sponsors produced to her by the NCHA contain

confidentiality agreements, but the documents in question have not been made a

part of the record on appeal. In any event, the Disclosure Policy limits the right of

the NCHA and its members to further disseminate such information to others

because the NCHA has an obligation to protect the information as confidential.

Gaughan has not argued or cited any authority to the effect that she cannot

contractually agree not to disseminate to the public or the press any confidential

information provided to her as a member.

      That Gaughan may be entitled to review the requested records under the

applicable statute as a member of the corporation does not mean that she can do

so without maintaining the confidentiality of information contained in those

documents as agreed by her and as ordered by the trial court.           The above-

                                     20
referenced cases recognize that fact. The same type of prophylactic protective

order afforded in both CASE and PMI was properly afforded by the trial court in

this case; that is, Gaughan‘s receipt, inspection, and copying of the books and

records of the NCHA was subject to the procedure outlined in the order

prohibiting her from sharing with others the documents designated ―Confidential‖

by the NCHA unless she challenged the confidential designation of specific

documents or categories of documents, providing the NCHA the opportunity to

furnish proof to support its designation of confidentiality.    We agree with the

NCHA that this is the only way to balance and reconcile Gaughan‘s statutory

right to review such documents and the NCHA‘s duty to maintain as confidential

third party business information contained in those documents.

      4.     Confidentiality as to other members of the NCHA

      On appeal, Gaughan has argued that she only wishes to share the

documents in question with her fellow members of the NCHA, not the general

public, in order to enable the membership to make informed decisions as to their

votes for officers and directors as well as to participate in governance by

determining the most reasonable and prudent course for the future of the

association. But we note that Gaughan requested in both the trial court and in

this court that the protective order be set aside in its entirety, which would enable

her to publish all of the information to the press and public as well as her fellow

members.    Moreover, the NCHA is a national organization with over 20,000

members. The NCHA acknowledges that other members have a right to review

                                     21
its records upon written request for a proper purpose stated.          However, the

Texas statutes make the NCHA the respository of its books and records. If other

members request inspection, the NCHA is entitled to require those members to

agree to abide by its disclosure policy or to enforce that policy as to confidential

information just as it did as to Gaughan.     If Gaughan is allowed to disseminate

those records to other members, the NCHA will be unable to track the

dissemination or to require that those other members abide by its Disclosure

Policy as to confidential information to ensure that the confidential information is

protected.

      Because Gaughan received records from the NCHA that the public does

not have the right to inspect under article 1396-2.23A, and because her right to

inspect and copy those documents was subject to protection from further

disclosure as confidential, the trial court did not err by entering the protective

order or by declaring that the records produced to Gaughan were subject to

confidential treatment prohibiting her from further disseminating them to others.

Moreover, because it is undisputed that the NCHA produced to Gaughan all

records that she requested, the trial court did not err by declaring that the NCHA

―fully complied with all legal requirements relating to [Gaughan‘s] requests to

review records of the association.‖ We therefore overrule Gaughan‘s first issue. 8

      8
        Gaughan‘s first issue contends that the trial court erred by declaring that
the NCHA‘s ―financial records‖ are entitled to confidential treatment, but it is clear
from Gaughan‘s briefing on appeal and in the trial court that she contends that
the trial court erred by entering the protective order concerning any of the records

                                      22
B. Designation of Documents as Confidential Under Protective Order

      Gaughan argues in her second issue that the trial court erred by declaring

that the NCHA‘s financial records are entitled to confidential treatment under the

law because it did not examine the records in camera to determine whether the

assertion of confidentiality was valid. The NCHA responds that Gaughan did not

follow the terms of the protective order to challenge the designation of any

records as confidential.

      After the trial court entered the protective order, the NCHA produced

89,214 pages of documents to Gaughan and designated 36,556 of those pages

as confidential. The protective order provided that ―any time after the delivery of

Confidential Information, counsel for [Gaughan] may challenge the Confidential

designation of all or any portion thereof by providing written notice thereof to

counsel for the NCHA‖ and that if the parties could not reach an agreement,

Gaughan could ―file a motion with the Court to challenge the confidential nature

of all or a portion of the Confidential Information.‖ The trial court‘s judgment

includes a declaration that Gaughan ―took no action pursuant to the terms of the

[Protective] Order to contest the ‗Confidential‘ designation of records and,

therefore, the documents designated as ‗Confidential‘ by the NCHA are therefore

entitled to confidential treatment under the law.‖

she requested from the NCHA. As discussed above, however, Gaughan
requested and received records that a non-member may not inspect.

                                     23
      Gaughan argues that the trial court erred by making this declaration

because she gave written notice to the NCHA‘s counsel on March 18, 2009, and

included within her motion for summary judgment a global request for in camera

review of the 36,556 pages of confidential documents. However, the March 18

letter is not in the summary judgment record. While the NCHA‘s March 23 letter

responding to the March 18 letter is in the summary judgment record, the March

23 letter from the NCHA‘s counsel only mentions a general assertion by

Gaughan that she ―has the right to keep and disseminate all information

produced by the NCHA in this matter.‖ The March 23 letter does not mention or

refute any contentions as to why all or part of the documents designated as

confidential by the NCHA should not be designated as confidential, nor does it

suggest that Gaughan sent the March 18 letter for the purpose of complying with

the protective order.   Thus, contrary to Gaughan‘s contention, the summary

judgment record does not contradict the trial court‘s declaration that Gaughan

―took no action pursuant to the terms of the [Protective] Order to contest the

‗Confidential‘ designation of records.‖ And because Gaughan did not present

summary judgment evidence that she complied with the protective order, the trial

court did not err by declaring that ―the documents designated as ‗Confidential‘ by

the NCHA are therefore entitled to confidential treatment under the law.‖

      Under the unique facts and procedural posture of this case, we hold that

the trial court did not err by declaring that Gaughan ―took no action pursuant to

the terms of the [Protective] Order to contest the ‗Confidential‘ designation of

                                    24
records‖ and that ―the documents designated as ‗Confidential‘ by the NCHA are

therefore entitled to confidential treatment under the law.‖          We overrule

Gaughan‘s second issue.9

C. Attorney’s Fees

      Gaughan contends in her third issue that the trial court erred by granting

summary judgment for the NCHA‘s attorney‘s fees because fact issues remain as

to whether the fees were reasonable and necessary.

      ―While reasonableness of an attorney‘s fee award often presents a

question of fact, an ‗affidavit filed by the movant‘s attorney that sets forth his

qualifications, his opinion regarding reasonable attorney‘s fees, and the basis for

his opinion will be sufficient to support summary judgment, if uncontroverted.‘‖

Cammack the Cook, L.L.C. v. Eastburn, 296 S.W.3d 884, 894 (Tex. App.—

Texarkana 2009, pet. denied) (quoting In re Estate of Tyner, 292 S.W.3d 179,

184 (Tex. App.—Tyler 2009, no pet.)); see Bocquet v. Herring, 972 S.W.2d 19,

21 (Tex. 1998) (―In general, ‗[t]he reasonableness of attorney‘s fees . . . is a

question of fact for the jury‘s determination.‘‖) (quoting Trevino v. Am. Nat’l Ins.

      9
        We do not reach the issues of whether the NCHA met its burden of
establishing confidentiality as to particular categories of records, or whether a
non-member may disseminate to other non-members information received
pursuant to article 1396-2.23A. Those issues are not before us given the unique
procedural posture of this case and Gaughan‘s request that the trial court declare
that all records produced by the NCHA are not confidential despite her receipt of
documents to which a non-member does not have the right to inspect. See
generally Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009) (―It is well
settled that a trial court cannot grant a summary judgment motion on grounds not
presented in the motion.‖).

                                     25
Co., 140 Tex. 500, 168 S.W.2d 656, 660 (1943)). Texas courts consider eight

factors when determining the reasonableness of attorney‘s fees:

      (1) the time and labor required, the novelty and difficulty of the
      questions involved, and the skill required to perform the legal service
      properly;

      (2) the likelihood . . . that the acceptance of the particular
      employment will preclude other employment by the lawyer;

      (3) the fee customarily charged in the locality for similar legal
      services;

      (4) the amount involved and the results obtained;

      (5) the time limitations imposed by the client or by the
      circumstances;

      (6) the nature and length of the professional relationship with the
      client;

      (7) the experience, reputation, and ability of the lawyer or lawyers
      performing the services; and

      (8) whether the fee is fixed or contingent on results obtained or
      uncertainty of collection before the legal services have been
      rendered.

Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997)

(citing Tex. Disciplinary R. Prof. Conduct 1.04, reprinted in Tex. Gov‘t Code, tit. 2,

subtit. G app. (State Bar Rules, art. X, § 9) (West 2005)).

      The NCHA offered an affidavit by its lead counsel as summary judgment

evidence of the reasonableness and necessity of its attorney‘s fees.10 In the

      10
       The NCHA attached redacted fee statements and a summary of the rates
and fees charged by the law firm to the affidavit.

                                      26
affidavit, the NCHA‘s counsel outlined the work performed for the NCHA in the

case and, among other things, testified (1) that he had been ―practicing law for

over twenty two years in the State of Texas‖; (2) that he had been involved in

―numerous cases like this one in Tarrant County, Texas‖; (3) that he was ―familiar

with the usual and customary fees for the work done on cases of this type in

Tarrant County, Texas‖; (4) that the fees charged by his firm ranged from $100 to

$300 per hour ―depending upon the person performing these services and their

level of experience‖; (5) that the hourly rates were reasonable and necessary for

the services performed; and (6) that ―based on the work done in the case, the

amount of time spent, the nature of the tasks performed[,] and the amount in

controversy,‖ it was his opinion that ―the reasonable and necessary attorneys‘

fees incurred by the NCHA‖ were $84,243.             Gaughan did not file any

controverting   summary    judgment      evidence.    Thus,   NCHA     presented

uncontroverted summary judgment evidence of four of the Arthur Anderson

factors. See id.

      Gaughan argues that the trial court erred by granting summary judgment

for the NCHA because the issues of reasonableness and necessity are questions

of fact and because the fees that the NCHA‘s counsel testified were reasonable

and necessary included $5,800 in fees charged before the lawsuit was filed, over

$3,200 for services by an attorney not listed on the pleadings in the case for

―attention to file on pending issues,‖ and ―tens of thousands of dollars in

attorneys‘ fees for the review and provision of the NCHA‘s financial records.‖

                                    27
Gaughan argues that these charges ―represented fact issues that precluded the

entry of summary judgment.‖

      First, while the reasonableness and necessity of attorney‘s fees is

generally a question of fact, ―[a]n attorney‘s affidavit can sufficiently establish the

reasonableness of attorney‘s fees for purposes of summary judgment.‖ Basin

Credit Consultants, Inc. v. Obregon, 2 S.W.3d 372, 373 (Tex. App.—San Antonio

1999, pet. denied); see Cammack the Cook, 296 S.W.3d at 894; see also

Bocquet, 972 S.W.2d at 21 (stating that ―in general,‖ reasonableness of

attorney‘s fees is a question of fact).     Second, the NCHA sought more than

$84,000 in attorney‘s fees, but the trial court awarded the NCHA $75,000 in

attorney‘s fees. It therefore appears that the trial court did not award the NCHA

the $5,800 in fees charged before the lawsuit or the approximately $3,200 for

services by the attorney for ―attention to file on pending issues.‖ Even if it did,

the applicable statute does not prohibit recovery of fees incurred before the

lawsuit is filed or billed by an attorney not listed on the pleadings. See Tex. Civ.

Prac. & Rem. Code Ann. § 37.009 (West 2008) (―In any proceeding under this

chapter, the court may award costs and reasonable and necessary attorney‘s

fees as are equitable and just.‖). Finally, we held above that, given the unique

factual and procedural context of this case, the NCHA‘s records are entitled to

confidential treatment.     Therefore, the services performed by the NCHA‘s

attorneys in reviewing, designating, and producing records to Gaughan were not

                                      28
rendered unreasonable or unnecessary based on Gaughan‘s contention that no

NCHA records are entitled to confidential treatment.

      The NCHA‘s summary judgment established its entitlement to summary

judgment as to the amount of attorney‘s fees, and Gaughan‘s arguments are

mere criticisms of the amount sought without contradicting evidence. See Basin

Credit Consultants, 2 S.W.3d at 373, 374 (holding that opposing affidavit did not

create fact issue for summary judgment purposes because it only criticized the

amount of fees sought as excessive and did not ―set forth the affiant‘s

qualifications or the basis for his opinion as to what a reasonable fee would be‖).

We hold that the trial court did not err by granting summary judgment to the

NCHA for $75,000 in attorney‘s fees, and we overrule Gaughan‘s third issue.

                                 V. Conclusion

      Having overruled each of Gaughan‘s three issues, we affirm the trial

court‘s judgment.

                                                   ANNE GARDNER
                                                   JUSTICE

PANEL: GARDNER and MCCOY, JJ.; and WILLIAM BRIGHAM (Senior Justice,
Retired, Sitting by Assignment).

DELIVERED: July 28, 2011

                                    29