Court Opinion

ID: 4652601
Source: CourtListenerOpinion
Date Created: 2021-01-20 16:17:38.48691+00
Date Added: 2024-06-11T08:01:48.499131
License: Public Domain

NO. 12-20-00106-CV

                              IN THE COURT OF APPEALS

                 TWELFTH COURT OF APPEALS DISTRICT

                                           TYLER, TEXAS

PETROCHOICE HOLDINGS, LLC &                              §       APPEAL FROM THE 402ND
PETROCHOICE HOLDINGS, INC.,
APPELLANTS
                                                         §       JUDICIAL DISTRICT COURT
V.

MARY PEARCE,                                             §       WOOD COUNTY, TEXAS
APPELLEE

                                       MEMORANDUM OPINION
        PetroChoice Holdings, LLC and PetroChoice Holdings, Inc. (PetroChoice unless
separately demarcated) appeals the trial court’s summary judgment order in favor of Mary
Pearce. PetroChoice raises three issues on appeal. We reverse and remand.

                                                BACKGROUND
        From 2000 to 2016, Universal Lubricants employed Pearce as a salesperson in the
industrial lubricant industry. Her job required her to travel, maintain customer relationships, and
sell lubrication products to Universal’s customers in her territory, which consisted of large
portions of Texas, Northern Louisiana, and part of Mississippi. In April 2016, PetroChoice
acquired Universal Lubricants. 1          Pearce received an email of the acquisition containing a
mandatory meeting notice at PetroChoice’s warehouse in Dallas, Texas. PetroChoice extended
an offer of at-will employment to some Universal employees such as Pearce. As a condition of
employment, PetroChoice required Pearce to sign an employment agreement containing, among
other items, a noncompetition covenant and confidentiality agreement. According to Pearce, she

        1
           Pearce understood that either PetroChoice Holdings, LLC or PetroChoice Holdings, Inc. acquired
Universal Lubricants. The record as it is currently developed does not definitively establish which entity acquired
Universal and employed Pearce.

                                                        1
wanted time to review the agreement, but was told that she must sign the agreement or be
immediately terminated. Pearce reluctantly signed the agreement.
       On October 12, 2018, Pearce attended another mandatory meeting at PetroChoice’s
warehouse. At the meeting, she was terminated. Pearce began looking for work in the industrial
lubricant industry, but had difficulty obtaining employment because of her PetroChoice
noncompetition agreement.       However, SB Fleet – Lube, LLC, learned that she had been
terminated at PetroChoice. Fleet Lube owner Lisle Budden called Pearce to set up a meeting to
discuss the matter. Pearce described Fleet Lube as a customer she worked with while employed
at PetroChoice. Pearce began working at Fleet Lube on January 2, 2019.
       Prior to accepting employment at Fleet Lube, Pearce filed the instant suit in Wood
County, Texas on November 8, 2018. 2 In her petition, Pearce sought a declaration that the
covenant not to compete was unenforceable because at no point did PetroChoice provide any
consideration in exchange for its execution.           Pearce also alleged that the covenant was
unreasonable as to the geographic territory covered by the agreement. PetroChoice Holdings,
LLC subsequently filed an answer and counterclaim denying Pearce’s allegations and claiming
that Pearce, in violation of their agreement, became employed by Fleet Lube, which it alleged is
a PetroChoice competitor. PetroChoice also alleged that she possessed and used its confidential
information, along with allegations that she improperly solicited its clients, interfered with those
relationships, and conducted business with its clients in violation of their noncompetition
covenant.
       During this litigation, PetroChoice Holdings, Inc. filed a separate claim against Pearce in
Wood County. After its efforts to obtain a temporary restraining order (TRO) to temporarily
enforce the agreement were unsuccessful, it nonsuited its claim against Pearce and filed suit
against Fleet Lube in Collin County. It also joined Pearce as a defendant in the Collin County
litigation, alleging the same claims against her as in its earlier nonsuited Wood County claim.
After successfully obtaining an ex parte TRO temporarily enforcing the agreement in Collin
County, it settled its claim with Fleet Lube, the terms of which included that Fleet Lube
terminate Pearce’s employment, and nonsuited the claim against Pearce. PetroChoice Holdings,
Inc. then filed a counterclaim against Pearce in her original declaratory judgment action against

       2
           Pearce filed suit in Wood County pursuant to a clause in her PetroChoice employment agreement
requiring that disputes arising from the agreement be litigated there.

                                                   2
it and PetroChoice Holdings, LLC. The basis for the counterclaim was the same as PetroChoice
Holdings, LLC’s earlier counterclaim, Petrochoice Holdings, Inc.’s nonsuited Wood County suit,
and its Collin County suit against Pearce. Based on this perceived forum shopping, Pearce filed
a motion for sanctions under Chapter 10 of the Texas Civil Practice and Remedies Code. The
trial court ordered that PetroChoice pay Pearce a total of $18,231.67 as sanctions. The trial court
recited in its order that the purpose of the sanction was to reimburse Pearce for expenses incurred
against PetroChoice’s “abuse of the judicial process designed and employed in an attempt to
place [Pearce] in a financial stranglehold in hopes that she would eventually become financially
unable to continue to pursue her remedies and continue litigation.”
       Thereafter, the parties filed competing motions for summary judgment regarding the
enforceability of the employment agreement’s noncompetition covenant. Pearce contended that
the agreement was unenforceable because PetroChoice failed to provide consideration for its
execution and that the agreement’s geographic limitation was unreasonable.                  Conversely,
PetroChoice contended that the agreement was enforceable because it provided Pearce
confidential information and training and that the agreement’s geographic limitations were
reasonable. The trial court granted Pearce’s motion and denied PetroChoice’s motion. Pearce
also filed a motion for costs and attorney’s fees, which the trial court granted in the amount of
$53,362.50 through trial, as well as contingent appellate attorney’s fees. Having disposed of all
parties and all issues, the trial court signed a final judgment and this appeal followed.

               SCOPE OF SUMMARY JUDGMENT ISSUES CONSIDERED ON APPEAL
       In Pearce’s brief, she contends that the trial court properly granted summary judgment in
part because PetroChoice materially altered the agreement by changing the identity of the parties.
Specifically, Pearce argues that “PetroChoice Holdings, LLC” was the party that executed the
agreement. After the agreement’s execution, PetroChoice representatives drew a line through
that name, replaced it with “PetroChoice Holdings, Inc.,” and initialed the change. Pearce argues
that this is a material change to the agreement that renders it null and void.
       With respect to this argument, we note that this ground was not presented to the trial
court in support of Pearce’s motion for summary judgment or in opposition to PetroChoice’s
competing motion for summary judgment. All theories in support of or in opposition to a motion
for summary judgment must be presented in writing to the trial court. See TEX. R. CIV. P.

                                                  3
166a(c). A motion for summary judgment must itself expressly present the grounds upon which
it is made, and must stand or fall on these grounds alone. See id.; Science Spectrum, Inc. v.
Martinez, 941 S.W.2d 910, 912 (Tex. 1997). A court cannot grant summary judgment on
grounds that were not presented. Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 204
(Tex. 2002). This court can only address grounds for summary judgment that were raised in
writing in the trial court. See TEX. R. CIV. P. 166a(c); Kaye/Bassman Intern. Corp. v. Help
Desk Now, Inc., 321 S.W.3d 806, 818 (Tex. App.—Dallas 2010, pet. denied); Hackberry Creek
Country Club, Inc. v. Hackberry Creek Home Owners Ass’n, 205 S.W.3d 46, 50 (Tex. App.—
Dallas 2006, pet. denied). In determining whether the grounds are expressly presented, we look
only to the motion itself; we do not rely on briefs or summary judgment evidence. Science
Spectrum, Inc., 941 S.W.2d at 912.
       Pearce did not advance the argument that PetroChoice materially altered the employment
agreement in her motion for summary judgment or in response to PetroChoice’s competing
motion for summary judgment. Because the trial court cannot grant a motion for summary
judgment on grounds not presented in the motion or in opposition thereto, we cannot consider
this ground for the affirmance of the trial court’s summary judgment. See TEX. R. CIV. P.
166a(c); Johnson, 73 S.W.3d at 204; Science Spectrum, Inc., 941 S.W.2d at 912;
Kaye/Bassman Intern. Corp., 321 S.W.3d at 818; Hackberry Creek Country Club, Inc., 205
S.W.3d at 50.

                    SUMMARY JUDGMENT – COVENANT NOT TO COMPETE
       PetroChoice contends in its first issue that the trial court erred in granting summary
judgment in Pearce’s favor, because the employment agreement containing the noncompetition
covenant is enforceable as a matter of law, or alternatively, that underlying factual issues remain
unresolved.
Standard of Review
       The movant for traditional summary judgment has the burden of showing that there is no
genuine issue of material fact and that it is entitled to judgment as a matter of law. See TEX. R.
CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). When
reviewing traditional summary judgments, we perform a de novo review of the record in the light
most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts

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against the motion. See Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006); KPMG Peat
Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999).
        When, as here, competing motions for summary judgment are filed, each party bears the
burden of establishing that it is entitled to judgment as a matter of law. Tarr v. Timberwood
Park Owners Ass’n, 556 S.W.3d 274, 278–79 (Tex. 2018). When the trial court grants one
motion and denies the other, we review the summary judgment evidence presented by both sides,
determine all questions presented, and may reverse the trial court’s judgment and render such
judgment as the trial court should have rendered, including rendering judgment for the other
movant. See Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex. 2009). If, however, a genuine fact issue exists, summary judgment for either party is
inappropriate, and we reverse and remand. McCreight v. City of Cleburne, 940 S.W.2d 285, 288
(Tex. App.—Waco 1997, pet. denied). A fact issue may be created either by disputed or
ambiguous facts. Id.
Applicable Law
        The enforceability of a covenant not to compete agreement is a question of law.
Powerhouse Prods., Inc. v. Scott, 260 S.W.3d 693, 696 (Tex. App.—Dallas 2008, no pet.); see
also Gorman v. CCS Midstream Servs., L.L.C., No. 12–09–00204–CV, 2011 WL 1642624, at
*3 (Tex. App.—Tyler 2011, no pet.) (mem. op.).             Likewise, what constitutes sufficient
consideration for a contract is generally a question of law, but can be a question of fact. Roark v.
Stallworth Oil and Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991) (holding factual questions
remained on consideration issue in summary judgment case due to failure to produce conclusive
proof); Burges v. Mosley, 304 S.W.3d 623, 629 (Tex. App.—Tyler 2010, no pet.) (question of
law).
        A covenant not to compete is enforceable if it is (1) ancillary to or part of an otherwise
enforceable agreement at the time the agreement is made and (2) reasonable, not imposing a
greater restraint than is necessary to protect the goodwill or other business interest of the
employer. See TEX. BUS. & COM. CODE ANN. § 15.50(a) (West 2011). The first element can be
broken down into two inquiries: (1) whether there is an “otherwise enforceable agreement,” and
(2) whether the covenant not to compete is “ancillary to or part of” that agreement at the time the
otherwise enforceable agreement was made. See Mann Frankfort, 289 S.W.3d at 849.

                                                 5
         With regard to the first inquiry, “otherwise enforceable agreements” can emanate from
at-will employment so long as the consideration for any promise is not illusory. Id. Moreover, a
unilateral contract formed when an employer performs a promise that was illusory when the
contract was formed can satisfy the requirements of the statute. See Alex Sheshunoff Mgmt.
Servs., L.P. v. Johnson, 209 S.W.3d 644, 651 (Tex. 2006). Thus, when an employer makes an
illusory promise of consideration and, later, performs in accord with the promise, the
consideration is no longer illusory. See id. Additionally, even in the absence of an express
promise to provide confidential information, when the nature of the employee’s work requires
confidential information to be provided for him to perform the work, the employer impliedly
promises the information will be provided. See Mann Frankfort, 289 S.W.3d at 850.
         Concerning the second inquiry, for a covenant not to compete to be “ancillary to or part
of” an otherwise enforceable agreement, the employer must establish both that (a) the
consideration given by the employer in the agreement is reasonably related to an interest worthy
of protection and (b) the covenant not to compete was designed to enforce the employee’s
consideration or return promise in the agreement. See Marsh USA Inc. v. Cook, 354 S.W.3d
764, 775 (Tex. 2011). “The covenant cannot be a stand-alone promise from the employee
lacking any new consideration from the employer.” Sheshunoff, 209 S.W.3d at 651. The
consideration from the employer “must give rise to the employer’s interest in restraining the
employee from competing.” Id. at 648–49. Business goodwill, confidential or proprietary
information, trade secrets, customer information, and specialized training are examples of
interests that can be, in appropriate circumstances, worthy of protection by a covenant not to
compete. See, e.g., Marsh USA Inc., 354 S.W.3d at 777; Sheshunoff, 209 S.W.3d at 651;
Neurodiagnostic Tex, L.L.C. v. Pierce, 506 S.W.3d 153, 163–64 (Tex. App.—Tyler 2016, no
pet.).
Discussion
         Pearce contended in her motion for summary judgment and supporting affidavits that
PetroChoice never promised or actually furnished her with any confidential information or
training that would satisfy the “ancillary to or part of an otherwise enforceable agreement”
requirement sufficient to render the agreement enforceable. PetroChoice argued in its competing
motion that her former supervisor established in his affidavit that the company provided
confidential information and training to Pearce after she began her employment there, and that in

                                                6
any event, Pearce admitted she received such confidential information from PetroChoice in her
deposition, rendering the agreement enforceable.
       Pearce explained in her initial affidavit that PetroChoice did not furnish her an office, that
she worked mainly in her automobile, traveled to visit her customers, maintained a home office,
and had a cell phone and company issued iPad. Pearce stated that PetroChoice never furnished
her a lead about a new customer, and that all customers developed while working for
PetroChoice were based entirely on her efforts, most of which came to her by referrals from
other customers.     Pearce continued that PetroChoice did not furnish her any confidential
information, and that it was unnecessary to do her job, because she had worked in the lubricant
business for more than thirty years. She stated that she could go online to obtain names of
potential customers, which she had done on a regular basis. She further explained that she
neither needed nor received any assistance from PetroChoice in that regard, and that she
developed her sales contacts on her own. Finally, she explained that when she was terminated,
she surrendered her phone that contained the names and contact information for customers that
she serviced for many years while working at Universal and PetroChoice, and that she shipped
all material back to PetroChoice, including her iPad and any documents or sales material she
possessed at the time of her termination. Pearce clarified in her deposition that she only had a
customer list of the customers she serviced while working for PetroChoice, many of whom she
had developed prior to PetroChoice’s acquisition of Universal. She testified that she did not
have a master list of PetroChoice’s customers or access to a company computer containing such
information, and that any information she received from PetroChoice was not confidential but
was instead available to the general public.
       In response to Pearce’s motion, PetroChoice relied on an affidavit from Rick Palmore,
PetroChoice’s former Western Regional Vice President and Pearce’s supervisor, along with
admissions by Pearce as to certain confidential information she held. The entirety of the relevant
portion of the affidavit stated only as follows:

       Specifically, during her employment with PetroChoice, PetroChoice provided Pearce access to
       PetroChoice’s confidential information including, among other things, names of PetroChoice’s
       clients, client contact and decision maker information, pricing information, profit margins, sales
       volume and history, types and amounts of products purchased, terms and conditions of contracts,
       accounts receivable information, and whether PetroChoice’s clients had bulk storage equipment on
       loan and the terms of the arrangements. PetroChoice also provided Pearce access to confidential
       information concerning PetroChoice’s products including chemical analyses and comparisons of

                                                       7
       PetroChoice’s products with competitors’ products. Further, PetroChoice provided Pearce with
       sales training including PetroChoice’s proprietary methods for competing with other distributors.

       Palmore’s affidavit was unaccompanied by any other facts or evidence explaining the
factually conclusory laundry list of alleged confidential information. See TEX. R. CIV. P. 166a(f);
Atmos Energy Corp. v. Paul, 598 S.W.3d 431, 467-68 (Tex. App.—Fort Worth 2020, no pet.)
(party’s summary judgment affidavit containing unexplained factually conclusory statements
held insufficient on appeal); Miner, Ltd. v. Anguiano, 383 F. Supp. 3d 682, 698 (W.D. Tex.
2019) (finding similar laundry list recitation of confidential information allegedly provided to
former employee, unaccompanied by further explanation or proof, insufficient under Texas law
to establish enforceability of noncompetition covenant for purposes of preliminary injunction).
       Other than Palmore’s affidavit, PetroChoice relied on statements in Pearce’s deposition
wherein she made certain admissions concerning the nature of the information she received
while at PetroChoice. Specifically, the following exchange took place:

       Q. Okay. The information that we’ve just talked about, we’ve talked about client names,
       addresses, product information, we’ve talked about the names of the people that you dealt with
       and their phone numbers that were in your cell phone, we’ve talked about quarterly reports that
       had total sales information, gallons, margins, reserve price list. With respect to that information,
       when you were at PetroChoice, were you free to share that information with PetroChoice’s
       competitors?
       A. No.
       Q. Did it — would you have thought that would have been an appropriate thing to do?
       A. No.
       Q. I assume Fleet-Lube has similar information like that pertaining to its customers?
       A. As far as pricing?
       Q. Well, just all the stuff that a company would have; names of clients, client contact information,
       product information, sales history, sales volume, pricing, margins, Fleet-Lube has to have all that,
       too, right?
       A. Sure.
       Q. And I assume that you wouldn’t think it would be appropriate to share that with a Fleet-Lube
       competitor, would it?
       A. Correct.

       ....

       Q. Okay. That’s all I was trying to get you to say. So, some of the information we just discussed
       is confidential.
       A. Sure.
       Q. Tell me what that would be.
       A. The sales volume, pricing.
       Q. Sure. What about contact person, who to call?
       A. No. It’s public knowledge.
       Q. Okay. Total — okay. Sales volume, pricing. Okay. Am I right in thinking that sales volume
       and pricing information with respect to clients changed over time, right? In other words, you
       might look in the beginning of 2019 and see a number on sales volume, but then you might look at

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         the end of 2019 — I’m sorry, 2018 — the beginning of 2018 and see a number and sales volume,
         then you look at the end of 2018 and see a different number, right? It would change over time.
         A. Yes.
         Q. And I assume pricing would, too. It has to change a lot, right? A lot of fluctuation on the price
         of oil and lubricants, and so forth. Am I right about that?
         A. Yes.

         Prior to the summary judgment hearing, Pearce filed a motion for leave to file a
supplemental affidavit, which the trial court granted. The purpose of the supplemental affidavit
was to (1) further expound upon her prior affidavit alleging that she received no confidential
information from PetroChoice, (2) explain her admissions in her deposition testimony, and (3)
rebut the alleged confidential information Palmore stated that PetroChoice provided in his
affidavit. 3 For example, she explained in her supplemental affidavit that even though she
admitted some of the information was confidential, it was actually her that provided the
information to PetroChoice. In relevant part, Pearce stated in her supplemental affidavit as
follows:

                   At the time I was forced to sign the Employment Contract with PetroChoice Holdings,
         LLC/Inc., I was promised nothing except what I was already entitled to receive. When Rick
         Palmore says that while I was at PetroChoice I was provided confidential information, the truth is
         that I was furnished no confidential information that I had not received for the past 16 years.
         PetroChoice never furnished me with any training, specialized or otherwise, that taught me how to
         sell the same products I had been selling for the past 16 years. PetroChoice continued to sell
         Universal’s products with Universal’s logo on them. An example is shown on Exhibit “A”
         attached hereto. All of their products continued to bear the Universal name and logo until around
         May of 2018. PetroChoice never came to me and said we have a new product that you are going
         to be selling for us. Nothing like that ever happened. I sold the same products and services I had
         been selling for 16 years. In fact, Rick Palmore told me that PetroChoice wanted to learn our way
         (Universal’s) of selling because of our success with customer retention and overall market success.
                   Insofar as sales volume is concerned, that is confidential but that was furnished by me to
         PetroChoice and not the other way around. Product pricing is something that every salesperson is
         given on a regular basis. Universal and PetroChoice would tell their salesperson what prices they
         could quote. That is standard in the industry. It is nothing unusual and product pricing continued

          3
            PetroChoice did not provide argument or authorities in its appellate brief that Pearce’s affidavit violated
the “sham affidavit” rule. It did make that argument in the trial court and briefly at oral argument. Under the sham
affidavit rule, if a party submits an affidavit that conflicts with the affiant’s prior sworn testimony and does not
provide a sufficient explanation for the conflict, a trial court may disregard the affidavit when deciding whether the
party has raised a genuine fact issue to avoid summary judgment. See Lujan v. Navistar, Inc., 555 S.W.3d 79, 82
(Tex. 2018). Here, Pearce filed the supplemental affidavit to establish her own right to summary judgment, not only
to avoid a competing motion for summary judgment. To the extent that her supplemental affidavit can be viewed in
the context of opposing PetroChoice’s competing motion for summary judgment, we hold that, as we have
described, the affidavit is not in direct conflict with her deposition testimony. Rather, the supplemental affidavit
further expounds upon her statements in her earlier affidavit that PetroChoice did not provide her any confidential
information or training. It was also made in response to the conclusory assertions in Palmore’s affidavit concerning
the nature and extent of any confidential information PetroChoice allegedly provided to her. Accordingly, we hold
that Pearce’s supplemental affidavit does not violate the “sham affidavit” rule. See id.

                                                          9
       as it had been for 16 years before I was forced to sign the Employment Agreement with
       PetroChoice.

       Pearce also stated elsewhere in her deposition that her employment at Fleet Lube would
violate the covenant based on the language used in the agreement. However, when understood in
context, she contended that the covenant was unenforceable, and that it was thus irrelevant
whether she violated the technical language in the agreement.
       PetroChoice relies on McKissock, LLC v. Martin, where a continuing education course
provider for real estate professionals sought to enforce a noncompetition agreement against one
of its former employees. See 267 F. Supp. 3d 841, 846-48 (W.D. Tex. 2016). The former
employee argued that her former employer did not provide her with any confidential information.
See id. at 853-54.      Despite the parties’ dispute concerning whether the company actually
provided any information that was confidential, the federal district court granted a preliminary
injunction in the employer’s favor. See id.
       Conversely, with respect to whether PetroChoice provided confidential information, other
similar cases have different results than McKissock. See, e.g., Miner, Ltd. v. Anguiano, 383 F.
Supp. 3d 682, 698 (W.D. Tex. 2019). In Miner, the employer was in the business of selling,
installing, and servicing material handling equipment and loading dock products. Id. at 689.
The company alleged that its former employee, a high-ranking account executive, possessed
confidential information required for the work to be performed. Id. at 688-89. Texas courts
have acknowledged that various types of consideration such as confidential information can, in
appropriate circumstances, satisfy the “ancillary to or part of” element to constitute an interest
worthy of protection. See, e.g., Neurodiagnostic Tex, 506 S.W.3d at 164. In Miner, the federal
district court examined the record and concluded as follows:

                 Plaintiff has not persuaded this court that this case involved the dissemination of
       “confidential information.” In DeSantis v. Wackenhut Corporation, the Texas Supreme Court
       rejected the plaintiff’s claim that its supposed confidential information—the identity of their
       customers, pricing policies, cost factors, and bidding strategies—was protectable under the
       confidentiality agreement. It explained that the plaintiff “failed to show that its customers could
       not readily be identified by someone outside its employ, that such knowledge carried some
       competitive advantage, or that its customers’ needs could not be ascertained simply by inquiry
       addressed to those customers themselves.” Additionally, the Texas Supreme Court noted the
       plaintiff “failed to show that its pricing policies and bidding strategies were uniquely developed,
       or that information about its prices and bids could not, again, be obtained from the customers
       themselves.”
                 Like Wackenhut, Plaintiff has not shown its business practices, pricing, margin, or
       strategy were uniquely developed or not readily accessible. Furthermore, Plaintiff’s alleged

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        “confidential information” is vague at best. Plaintiff struggles to identify and expand upon the
        alleged confidential information. The court will not infer a fact into existence. The Employment
        Agreement lacks consideration and is unenforceable.

Miner, 383 F. Supp. 3d at 698 (internal citations omitted). Palmore’s affidavit contains a similar
level of detail as the evidence in Miner.
        In any event, McKissock and Miner are preliminary injunction cases, where the chief
issue is whether temporary enforcement of the agreement pending resolution of the matter at trial
is necessary to prevent irreparable injury in the face of a substantial probability of recovery. See
Miner, 383 F. Supp. 3d at 698; see also McKissock, 267 F. Supp. 3d at 853-54. That is distinct
from the procedural posture and issue presented here, namely whether the record as it is currently
developed conclusively establishes the covenant’s (un)enforceability for the purpose of rendering
a full and final summary judgment without the need to resolve fact issues at trial.
        A more procedurally and factually analogous case comes from one of this Court’s prior
opinions. See generally Gorman v. CCS Midstream Services, L.L.C., No. 12-09-00204-CV,
2011 WL 1642624, at *1 (Tex. App.—Tyler Apr. 29, 2011, no pet.) (mem. op.). There, Gorman
worked for Mobley, a company eventually acquired by CCS, which was in the business of
transporting, managing, and disposing of oilfield fluids and liquids. Id. at *1. CCS acquired
Mobley because it had specific expertise in an area in which CCS sought to expand. Id. During
the acquisition, it offered certain high-level employees such as Gorman a written at-will
employment agreement that contained a noncompetition covenant. Id. Although Gorman signed
the agreement, CCS began to diminish Gorman’s responsibilities. Id. Dissatisfied, Gorman
resigned and became employed by a CCS competitor. Id. CCS filed suit to enforce the covenant
and obtained a TRO and a temporary injunction. Id. at *1-2. CCS then filed a motion for
summary judgment, alleging that the record conclusively showed that it provided Gorman
confidential information, which the trial court granted. Id. at *2.
        We reversed and remanded the suit because Gorman’s evidence raised a fact issue as to
whether CCS actually provided the consideration in the form of confidential information that
was reasonably related to an interest worthy of protection. 4 Id. at *8. On the one hand, CCS

        4
          Although Gorman contended that the covenant was enforceable as a matter of law on appeal, he did not
file a competing motion for summary judgment, and we noted that, even if Gorman had established that the
covenant was not enforceable as a matter of law, we could at most remand the proceeding. See Gorman, 2011 WL
1642624, at *8-9. In any event, we held that factual issues remained. See id.

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pointed to evidence that Gorman admitted in his deposition that he received various pieces of
confidential information, including pricing information and other financial information. Id. at
*4-5.   On the other hand, Gorman produced deposition testimony from Robert Miracle,
Gorman’s supervisor at both Mobley and CCS. Id. at *5. Miracle admitted that CCS acquired
Mobley and its valuable employees because of their preexisting expertise in an area that CCS
lacked. Id. at *5. Miracle testified that Gorman had knowledge of CCS’s financial statements
that detailed its expenses, and each category of expense makes up a percentage of the total
operating cost, which is then used to formulate the bid based on the acceptable profit margin. Id.
He testified that Gorman’s knowledge of this information would have given him and his new
employer a competitive advantage in formulating bids against CCS. Id. at *5-6. He stated that
the actual dollar amount of the expenses fluctuated, but the percentages and margins remained
the same. Id. at *6. However, Miracle admitted that Gorman acquired this knowledge at
Mobley, and that it largely remained the same after CCS acquired Mobley. See id. Both parties
disagreed as to whether the evidence established the enforceability of the covenant as a matter of
law, but we held that this conflicting evidence raised a fact issue. See id. at *8.
        Here, as in the similarly situated parties in Gorman, PetroChoice acquired Universal.
PetroChoice admits that the purpose of the purchase was at least in part to acquire Universal’s
goodwill and customers it had accumulated. Pearce also provided evidence consistent with this
purpose. For example, PetroChoice claimed that it provided her with training, but Pearce
pointed to emails from Palmore and other high-level PetroChoice employees after the acquisition
showing that they treated her as the “expert in Lifelines applications and would be the best
person to talk to,” they were presenting the program “and don’t have a complete understanding
of the entire program . . ., [that they would] love to pick [Pearce’s] brain, . . . [and] would like to
get [her] in front of a handful of key prospects, [secure the program, and provide some] demo
training.” The e-mail communication chain continued, saying that Pearce would provide a
“mentoring role” at the training as “best in class.” In other words, this evidence tends to show
that Pearce was the former Universal employee providing the knowledge and training to
PetroChoice employees after the acquisition.
        PetroChoice points to the Texas Supreme Court’s statement that “[t]he enforceability of
the covenant should not be decided on ‘overly technical disputes’ of defining whether the
covenant is ancillary to an agreement.” See Marsh USA Inc., 354 S.W.3d at 777. However,

                                                  12
given the procedural posture of this case at this juncture, we note that it must still establish its
entitlement to summary judgment on the covenant’s enforceability, of which this inquiry is a
component.     Palmore’s conclusory affidavit does little to negate Pearce’s evidence that
PetroChoice provided her no new information that she did not already know prior to its
acquisition of Universal.
       But this does not end our inquiry. In Pearce’s deposition, she admitted that the “sales
volume” and “pricing” were confidential. She explained in her supplemental affidavit that she
provided the “sales volume” information to PetroChoice, which is consistent with the evidence
that PetroChoice acquired Universal due to its customer base and goodwill. And it was Pearce
who either serviced the same Universal clients as she had over the past several years or
developed new clients herself while at PetroChoice after the acquisition.
       With respect to “pricing” though, the evidence is ambiguous.           She admitted in her
deposition that the “pricing” information was confidential as in Gorman. In her supplemental
affidavit though, Pearce claimed that PetroChoice provides pricing information to her, just as it
does to every salesperson on a regular basis, which, according to her, is an industry standard.
She stated that Universal and PetroChoice would tell the salesperson what prices they could
quote to a customer, but that product pricing is the same as it had been for the prior sixteen years
before her employment at PetroChoice.         Pearce admitted in her deposition that “pricing”
fluctuated.   Therefore, at least as to “pricing,” the facts are ambiguous, and she failed to
conclusively establish that PetroChoice did not provide her with that information that she
admitted was confidential.
       On the other hand, PetroChoice provided no evidence showing how its “pricing” is
reasonably related to an interest worthy of protection.         Pearce stated generally that this
information was consistent over time and that PetroChoice did not really provide her with
information she did not already possess prior to signing the agreement, but in her deposition,
Pearce admitted that “pricing” fluctuated over time. PetroChoice failed to explain the nature of
its pricing structure or otherwise show that “pricing” was actually “confidential” and an interest
worthy of protection as those terms are used in the covenant not to compete context. For
example, in DeSantis, the Texas Supreme Court explained that the employer “failed to show that
its customers could not readily be identified by someone outside its employ, that such knowledge
carried some competitive advantage, or that its customers’ needs could not be ascertained simply

                                                13
by inquiry addressed to those customers themselves.” DeSantis v. Wackenhut Corp., 793
S.W.2d 670, 684 (Tex. 1990). Additionally, it stated that the employer “failed to show that its
pricing policies and bidding strategies were uniquely developed, or that information about its
prices and bids could not, again, be obtained from the customers themselves.” See id.; see also
Miner, 383 F. Supp. 3d at 698. Therefore, without any evidence in this regard, along with its
failure to rebut Pearce’s evidence claiming that PetroChoice did not provide her any other
confidential information and training, PetroChoice has not shown its entitlement to summary
judgment.
       In conclusion, on the record before us, Pearce failed to establish that the agreement was
unenforceable as a matter of law. Moreover, PetroChoice neither conclusively negated an
element of Pearce’s claim nor established in its competing motion that the covenant was
enforceable as a matter of law. The record as it is currently developed shows only that disputed
or ambiguous facts remain concerning whether PetroChoice provided confidential information
worthy of protection to Pearce that would render its otherwise illusory implied promise to
provide confidential information enforceable. In other words, although the enforcement of the
covenant is a question of law, we hold that the record is not sufficiently developed at this
juncture for us to evaluate that matter as a question of law, because factual issues remain
unresolved, and neither party met their summary judgment burden. See Roark, 813 S.W.2d at
496; Gorman, 2011 WL 1642624, at *8.
       Finally, Pearce contends that the covenant was unreasonable as to its geographic scope.
However, since we have held that factual issues remain regarding the threshold issue of whether
the covenant was ancillary to an otherwise enforceable agreement, we need not examine this
issue. See TEX. R. APP. P. 47.1; Fielding, 289 S.W.3d at 849 (citing Light v. Centel Cellular Co.
of Tex., 883 S.W.2d 642, 644 (Tex. 1994)) (noting that whether agreement is “ancillary to or part
of an otherwise enforceable agreement” is threshold inquiry made prior to determining
convenant’s reasonableness as to time, geographical area, scope of activity to be restrained, and
that it does not impose greater restraint than necessary to protect employer’s goodwill or other
business interest). Furthermore, even if Petro Choice satisfied its burden on this threshold issue,
yet Pearce prevailed on her contention that the geographic territory covered by the covenant is
unreasonable, it would not result in a disposition that the agreement is unenforceable. See TEX.

                                                14
BUS. & COM. CODE ANN. § 15.51(c) (West 2011). Rather, the trial court would be required to
reform the covenant and enforce it as reformed. See id.
        PetroChoice’s first issue is sustained insofar as the trial court erred in granting summary
judgment in Pearce’s favor because fact issues remain to be resolved.

                                       ATTORNEY’S FEES
        PetroChoice contends in its second issue that the trial court erred in awarding attorney’s
fees to Pearce because the Covenant Not to Compete Act preempts her recovery of such fees
under the circumstances presented in this case. See TEX. BUS. & COM. CODE ANN. §§ 15.51(c),
15.52 (West 2011). Because we have held that underlying fact issues remain concerning the
enforceability of the covenant, and consequently reversed the trial court’s summary judgment in
Pearce’s favor, we need not address this issue, as it is unripe for review.   See TEX. R. APP. P.
47.1.

                                           SANCTIONS
        In PetroChoice’s third issue, it contends that the trial court abused its discretion in
assessing sanctions in the amount of $18,231.67 against it.
Standard of Review
        We review a sanctions order for an abuse of discretion. Brewer v. Lennox Hearth
Products, LLC, 601 S.W.3d 704, 717 (Tex. 2020); Am. Flood Research, Inc. v. Jones, 192
S.W.3d 581, 583 (Tex. 2006). A trial court abuses its discretion if it acts without reference to
guiding rules and principles such that the ruling is arbitrary or unreasonable. Brewer, 601
S.W.3d at 717; Jones, 192 S.W.3d at 583. When reviewing a sanctions order, we are not bound
by the trial court’s fact findings or conclusions of law; instead, we must review the entire record
independently to determine if the trial court abused its discretion. Brewer, 601 S.W.3d at 717;
Jones, 192 S.W.3d at 583.
Applicable Law
        Chapter 10 of the Civil Practice and Remedies Code authorizes sanctions for filing a
pleading or motion “for any improper purpose, including to harass or to cause unnecessary delay
or needless increase in the cost of litigation.” TEX. CIV. PRAC. & REM. CODE ANN. § 10.001(1)
(West 2017). The sanction must be limited to what is sufficient to deter repetition of the conduct

                                                15
and may include an order to pay to the other party the amount of the reasonable expenses
incurred by the other party because of the filing of the pleading or motion, including reasonable
attorney’s fees. Id. § 10.004(b), (c)(3) (West 2017).        The trial court shall describe in its
sanctions order the conduct the court has determined violated Section 10.001 and explain the
basis for the sanction imposed. Id. § 10.005 (West 2017).
       A court also has the inherent power to impose sanctions for the bad faith abuse of the
judicial process that may not be covered by rule or statute. See In re Bennett, 960 S.W.2d 35, 40
(Tex. 1997). This inherent power to impose sanctions may arise on the trial court’s own motion
in appropriate cases. See id. This inherent power includes sanctions imposed for interference
with a court’s traditional core functions, such as hearing evidence, deciding issues of fact raised
by the pleadings, deciding questions of law, rendering final judgment, enforcing its judgment,
managing its docket, and issuing and enforcing its orders. Liles v. Contreras, 547 S.W.3d 280,
290-91 (Tex. App.—San Antonio 2018, pet. denied). As part of this power, a court may also use
its inherent power to impose sanctions for conduct that, if tolerated, “breeds disrespect for and
threatens the integrity of our judicial system.” In re Bennett, 960 S.W.2d at 40.
       The Supreme Court recently emphasized that “[b]ecause inherent powers are shielded
from direct democratic controls, and because of their very potency, inherent powers must be
exercised with restraint, discretion, and great caution[,]” and to that end necessitates a finding of
bad faith. Brewer, 601 S.W.3d at 718 (internal quotations and footnotes omitted). The inherent
authority to sanction is also limited by due process, so such sanctions must be just and not
excessive. Id. (citing TransAmerican Nat. Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex.
1991)). First, in order for the sanction to be “just,” a direct relationship must exist between the
offensive conduct and the sanction imposed. American Flood, 192 S.W.3d at 583. This means
that a just sanction must be directed against the abuse and toward remedying the prejudice
caused the innocent party. Id. Second, sanctions must not be excessive, meaning that “the
punishment should fit the crime.” TransAmerican, 811 S.W.2d at 917. A sanction should be no
more severe than necessary to satisfy its legitimate purposes. Id. It follows that courts must
consider the availability of less stringent sanctions and whether such lesser sanctions would fully
promote compliance. Id.

                                                 16
Discussion
        After PetroChoice Holdings, LLC filed its answer and counterclaim to Pearce’s Wood
County suit, admitting that Wood County had proper venue, PetroChoice Holdings, Inc. filed its
separate claim against Pearce in Wood County, also averring that Wood County was a place of
proper venue concerning the enforceability and alleged breach of Pearce’s employment
agreement.      Immediately after unsuccessfully seeking a TRO, PetroChoice Holdings, Inc.
nonsuited its Wood County claim against Pearce and filed suit against Fleet Lube and Pearce in
Collin County, Texas. After obtaining the TRO in Collin County that it unsuccessfully sought in
Wood County, and after settling with Fleet Lube, PetroChoice Holdings, Inc. nonsuited the
Collin County claim and filed its counterclaim to Pearce’s original Wood County declaratory
judgment action.         All of these suits concern the same issue as it pertains to Pearce—the
enforceability and breach of the noncompetition covenant in her employment agreement. The
same attorneys represented both PetroChoice entities through this phase of these lawsuits.
        Based on this perceived forum shopping, Pearce filed a motion for sanctions under
Chapter 10 of the Texas Civil Practice and Remedies Code, alleging that this course of conduct
was taken for an improper purpose, including to harass or to cause unnecessary delay or
needlessly increase the cost of litigation. Pearce sought to recover its attorney’s fees and hourly
charges for paralegal services incurred in defending the Collin County action. After a hearing, 5
the trial court signed an order granting sanctions against PetroChoice, requiring it to pay Pearce
$18,231.67. The trial court, in its order found as follows:

        The Court reviewed and considered the pleadings, motions, testimony and exhibits filed by the
        parties and arguments by counsel. The Court weighed the credibility of the evidence presented
        giving [consideration to the] assertions and defenses of the parties. The parties to the original
        contract were aware that venue was proper in Wood County, Texas. The Court is of the opinion
        that despite venue was agreed and made an integral part of the contract, Defendant employed legal
        tactics that placed extreme financial hardship on Plaintiff by naming her as a party in a lawsuit in
        Collin County, Texas. It is the opinion of the Court that the procedural maneuvering by
        Defendant in filing a non-suit against Plaintiff in Wood County, naming her as a party in Collin
        County, and filing suit against her again in Wood County, was an abuse of the judicial process
        designed and employed in an attempt to place Plaintiff in a financial stranglehold in hopes that she
        would eventually become financially unable to continue to pursue her remedies and continue
        litigation. As such, sanctions are imposed against Defendants in the amount of $18,231.67 to
        reimburse expenses incurred by Plaintiff.

        5
           It is unclear whether the trial court conducted an oral hearing. Although the parties contend there was a
hearing, the record contains no reporter’s record. In any event, we recognize the trial court may base its sanctions
assessment “on the papers filed and the arguments of counsel” without an oral hearing or the need for a reporter’s
record. See Otis Elevator Co. v. Parmelee, 850 S.W.2d 179, 181 (Tex. 1993).

                                                        17
       As PetroChoice points out, the Wood County trial court was without authority to impose
sanctions under Chapter 10 for impermissible conduct occurring in the Collin County lawsuit.
See, e.g., Mantri v. Bergman, 153 S.W.3d 715, 718 (Tex. App.—Dallas 2005, pet. denied)
(holding that only court with jurisdiction where allegedly frivolous litigation was pending had
jurisdiction to impose sanctions under Chapter 10). Therefore, we may not affirm the sanctions
order under Chapter 10. See id.
       However, the trial court retains inherent power to sanction the parties and attorneys in
appropriate cases, even on its own motion. See In re Bennett, 960 S.W.2d at 40. Even though
Pearce’s motion invokes only Chapter 10, the trial court’s order granting sanctions is silent as to
the basis upon which it assessed sanctions. Furthermore, it states that it was based on an “abuse
of the judicial process,” which is often recited as a basis for an inherent power-based sanctions
order. Although the preferred practice is to explain the authority relied upon for assessing
sanctions in the order, reviewing courts have examined whether the sanction order may be
justified under the court’s inherent authority when the order is silent. See Houtex Ready Mix
Concrete & Materials v. Eagle Const. & Envtl. Services, L.P., 226 S.W.3d 514, 523–24 (Tex.
App.—Houston [1st Dist.] 2006, no pet.).
       Moreover, sanctions ordered under the court’s inherent authority are not necessarily
limited to conduct occurring solely within the sanctioning court. See Howell v. Tex. Workers’
Comp. Comm’n, 143 S.W.3d 416, 447 (Tex. App.—Austin 2004, pet. denied) (concluding that a
court may impose sanctions for conduct in another court pursuant to its inherent power to impose
sanctions); see also Finlan v. Peavy, 205 S.W.3d 647, 652-53 (Tex. App.—Waco 2006, no pet.)
(where plaintiff filed action in Waco court consisting of counts severed from prior complaint
already pending in Dallas district court and over which that court had asserted jurisdiction, Waco
court had inherent power to dismiss action without prejudice in order to protect Dallas court’s
jurisdiction to adjudicate entire dispute pending before it).
       Other courts have examined similar conduct to that in the instant case and upheld
inherent power-based sanctions. See, e.g., In re Bennett, 960 S.W.2d at 39-40 (upholding
inherent power-based sanction for similar forum shopping conduct that was not sanctionable
when viewed in a vacuum, such as filing suit and nonsuiting parties, but when viewed in entire
course of litigation, showed bad faith abuse of judicial process and interference with traditional

                                                 18
core functions of court); Liles, 547 S.W.3d at 294–95 (upholding sanctions based on otherwise
permissible conduct in another court that is part of overall litigation between parties).
Importantly, as recently explained by the Texas Supreme Court, such sanctions must be
predicated on an express bad faith finding. Brewer, 601 S.W.3d at 718-19. The trial court’s
description of the conduct justifying sanctions here is tantamount to a bad faith finding. 6
         But as we have stated, inherent power-based sanctions must be just and not excessive.
See id. at 718.       Assuming without deciding that the trial court could have concluded that
PetroChoice’s forum shopping was such an abuse to warrant sanctions under its inherent
authority, we conclude that the order fails to satisfy the required due process standards. In its
order, the trial court imposed sanctions in the amount of $18,231.67 to reimburse expenses
incurred by Pearce for defending the Collin County action, without any explanation as to how it
arrived at that amount.         Furthermore, Pearce’s attorney, without supporting documentation,
identified in his motion only $15,172.50 incurred in connection with the Collin County
litigation.7    Without any explanation showing the basis for its sanctions amount or any
supporting basis in the record justifying the trial court’s higher sanction in excess of Pearce’s
requested amount, we must conclude that the sanction is unjust and excessive, and we therefore
cannot affirm the sanctions order.            See Low v. Henry, 221 S.W.3d 609, 621–22 (Tex. 2007)
(reversing $50,000 sanction where trial court did not identify basis for imposing that sanction
amount); State Office of Risk Mgmt. v. Foutz, 279 S.W.3d 826, 837–38 (Tex. App.—Eastland
2009, no pet.) (when sanction does not explain basis for calculating amount, it constitutes an
impermissible arbitrary fine); IFC Credit Corp. v. Specialty Optical Sys., Inc., 252 S.W.3d 761,
772–73 (Tex. App.—Dallas 2008, pet. denied) (reversing inherent power-based sanction for
attorney fee sanction in amount unsupported by evidence and unexplained by trial court, holding

         6
           Bad faith in the sanctions context is not just intentional conduct but intent to engage in conduct for an
impermissible reason, willful noncompliance, or willful ignorance of the facts. Brewer v. Lennox Hearth Products,
LLC, 601 S.W.3d 704, 718. (Tex. 2020) (internal citations omitted). It includes “conscious doing of a wrong for a
dishonest, discriminatory, or malicious purpose.” Id. Improper motive, not perfection, is the touchstone. Id. at 719.
The trial court found in its order that PetroChoice’s legal tactics were an “abuse of the judicial process designed and
employed in an attempt to place [Pearce] in a financial stranglehold in hopes that she would eventually become
financially unable to continue to pursue her remedies and continue litigation.” This finding is tantamount to bad
faith.
         7
           Pearce’s attorney alleged that his firm incurred $9,990.00 in attorney’s fees and $5,182.50 for paralegal
services in his motion, but did not provide evidence of billing records or other documentation explaining the basis
for this amount of charges.

                                                         19
that “we are unable to determine a relationship between the sanction, the conduct, and the abuse
sought to be remedied”).
         PetroChoice’s third issue is sustained.

                                                  DISPOSITION
         Having determined that neither party met their summary judgment burden, that
unresolved fact issues remain, and that the trial court’s order granting sanctions against
PetroChoice contained reversible error, we reverse the trial court’s judgment in Pearce’s favor
and remand for further proceedings consistent with this opinion.

                                                                JAMES T. WORTHEN
                                                                   Chief Justice

Opinion delivered January 13, 2021.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

                                                         20
                                   COURT OF APPEALS

      TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

                                           JUDGMENT

                                          JANUARY 13, 2021

                                         NO. 12-20-00106-CV

                              PETROCHOICE HOLDINGS, LLC
                             & PETROCHOICE HOLDINGS, INC.,
                                      Appellants
                                         V.
                                    MARY PEARCE,
                                       Appellee

                                Appeal from the 402nd District Court
                           of Wood County, Texas (Tr.Ct.No. 2018-611)

                    THIS CAUSE came to be heard on the oral arguments, appellate record and
briefs filed herein, and the same being considered, because it is the opinion of this Court that
there was error in judgment of the court below, it is ORDERED, ADJUDGED and DECREED
by this Court that the judgment be reversed and the cause remanded to the trial court for further
proceedings in accordance with the opinion of this Court; and that this decision be certified to the
court below for observance.
                    James T. Worthen, Chief Justice.
                    Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

                                                     21