Court Opinion

ID: 4061636
Source: CourtListenerOpinion
Date Created: 2016-09-29 20:11:51.856088+00
Date Added: 2024-06-11T14:27:27.794874
License: Public Domain

ACCEPTED
                                                                              04-13-00106-CV
                                                                  FOURTH COURT OF APPEALS
                                                                       SAN ANTONIO, TEXAS
                                                                        5/18/2015 12:25:08 PM
                                                                               KEITH HOTTLE
                                                                                       CLERK

                        NO. 04-13-00106-CV

                                                          FILED IN
                  IN THE COURT OF APPEALS    4th COURT OF APPEALS
              FOURTH COURT OF APPEALS DISTRICTSAN ANTONIO, TEXAS
                     SAN ANTONIO, TEXAS      5/18/2015 12:25:08 PM
                                                        KEITH E. HOTTLE
                                                             Clerk

BARRY BROOKS, HESTON C. KING, STEFEN DOUGLAS BROOKS, JOHANNA BARTON,
                   AND JESSE RODRIGUEZ BENAVIDES,
                                                     Appellants
                                 v.
                 EXCELLENCE MORTGAGE, LTD., ET AL.,

                                                      Appellees

ON APPEAL FROM THE 225TH JUDICIAL DISTRICT COURT, BEXAR COUNTY, TEXAS
HONORABLE CATHY STRYKER, JUDGE OF THE 224TH DISTRICT COURT, PRESIDING
                      CAUSE NO. 2013-CI-01173

            APPELLEES’ MOTION FOR REHEARING

SAMUEL V. HOUSTON, III                WILLIAM H. FORD
State Bar No. 24041135                State Bar No. 07246700
HOUSTON DUNN, PLLC                    GREGORY SCRIVENER
4040 Broadway, Suite 440              State Bar No. 24013480
San Antonio, Texas 78209              FORD MURRAY, PLLC
(210) 775-0882                        10001 Reunion Place, Suite 640
(210) 826-0075 (fax)                  San Antonio, Texas 78216
sam@hdappeals.com                     (210) 731-6400
                                      (210) 731-6401 (fax)
                                      bill.ford@fordmurray.com
                                      greg.scrivener@fordmurray.com

                ATTORNEYS FOR APPELLEES
             EXCELLENCE MORTGAGE, LTD., et al.
                                   TABLE OF CONTENTS
                                                                                                      Page

TABLE OF CONTENTS .................................................................................. i
TABLE OF AUTHORITIES ........................................................................... ii
SUMMARY OF THE ARGUMENT................................................................ 1
ARGUMENT.................................................................................................. 2
        I.      The Panel Incorrectly Reversed the Summary Judgment
                on the Appellants’ Antitrust Claims. .......................................... 2
                A.      Appellants’ Antitrust Claims Were Based Upon
                        Excellence’s Decision to Sue to Enforce Confidentiality
                        Provisions. ......................................................................... 2
                B.      In Abandoning Its Prior Analysis, the Panel Erred By
                        Ignoring Appellants’ Pleadings and Excellence’s Motion
                        for Summary Judgment. ................................................... 4
        II.     The Panel Erred When It Reversed the Summary Judgment on
                Appellants’ Tortious Interference with Prospective Business
                Relations Claims. ........................................................................ 8
        III.    Conclusion and Prayer............................................................... 11
CERTIFICATE OF COMPLIANCE .............................................................. 12
CERTIFICATE OF SERVICE....................................................................... 13
                              TABLE OF AUTHORITIES

                                                                                             Page
CASES
Brooks v. Excellence Mortg., Ltd.,
  No. 04-13-00106-CV, 2015 WL 1523067
  (Tex. App.—San Antonio Apr. 1, 2015, no pet. h.) ............................. 5, 6, 9
Houston Mercantile Exch. Corp. v. Dailey Petroleum Servs. Corp.,
 No. B14-92-00818-CV, 1993 WL 322901
 (Tex. App.—Houston [14th Dist.] Aug. 26, 1993, no writ)
 (not designated for publication) ................................................................ 5
Marlin v. Robertson,
 307 S.W.3d 418 (Tex. App.—San Antonio 2009, no pet.) .......................... 4
Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) .................................. 4
Mendelovitz v. Adolph Coors Co., 693 F.2d 570 (5th Cir. 1982) .............. 5, 7
Morriss v. Enron Oil & Gas Co.,
 948 S.W.2d 858 (Tex. App.—San Antonio 1997, no writ).......................... 7
RTLC AG Prods., Inc. v. Treatment Equip. Co.,
 195 S.W.3d 824 (Tex. App.—Dallas 2006, no pet.).................................... 5
Shoreline Gas, Inc. v. McGaughey,
  No. 13-07-00364-CV, 2008 WL 1747624
  (Tex. App.—Corpus Christi Apr. 17, 2008, no pet.) (mem. op.) ................ 3
United Way of San Antonio, Inc. v. Helping Hands Lifeline Found., Inc.,
 949 S.W.2d 707 (Tex. App.—San Antonio 1997, writ denied) ................... 6
Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711 (Tex. 2001) ................ 8, 10
Zep Mfg. Co. v. Harthcock,
  824 S.W.2d 654 (Tex. App.—Dallas 1992, no writ).................................... 2

STATUTES
TEX. BUS. & COM. CODE § 15.05(a) .................................................................. 4

                                                 ii
TO THE HONORABLE COURT OF APPEALS:
       Appellees, referred to collectively as “Excellence,” respectfully present
this motion for rehearing asking the panel to reconsider those portions of its
opinion on rehearing wherein it reversed the summary judgment order
disposing of appellants’ claims under the Texas Free Enterprise and Antitrust
Act of 1983 and claims for tortious interference with prospective business
relations. 1

                      SUMMARY OF THE ARGUMENT
       The panel should seriously reconsider its decision to completely

abandon its prior analysis. Excellence does not seek rehearing simply because

the opinion on rehearing is dramatically different than the original opinion.

Rather, Excellence seeks rehearing because the panel’s analysis is not

supported by the record. In reversing the summary judgment on the antitrust

and tortious inference with prospective business relations claims, the opinion

essentially rewrites appellants’ pleading to change the factual basis of the

claims against Excellence. This is not permissible. In the end, the panel had it

right the first time. The opinion on rehearing should be withdrawn and the

original analysis should be included in a new opinion affirming the summary

judgment order in its entirety.

1
  In its opinion on rehearing, the panel affirmed the summary judgment on appellants’
contract-based claims for commissions that were paid on loans that closed and funded after
they resigned on October 1, 2010. Although the panel’s analysis in the opinion on rehearing
is markedly different than that contained in the original opinion, this motion for rehearing
does not address the contract-based claims as Excellence maintains that summary
judgment was appropriately granted by the trial court on those claims.

                                             1
                                 ARGUMENT

I.    The Panel Incorrectly Reversed the Summary Judgment on
      the Appellants’ Antitrust Claims.

      A.    Appellants’ Antitrust Claims Were Based Upon
            Excellence’s Decision to Sue to Enforce Confidentiality
            Provisions.
      Appellants asserted a claim under the Texas Free Enterprise and

Antitrust Act of 1983 (hereinafter “the Act”), because they were not permitted

to close loans for “pipeline customers,” i.e., customers who had pending loans

with Excellence at the time that appellants resigned. CR 269. Appellants based

their antitrust claims upon the injunctive relief that Excellence obtained when

it sued to enforce confidentiality provisions found in the Employment

Agreements and Employee Confidentiality Agreements signed by appellants.

See CR 150, 158, 269-70. Appellants asserted that Excellence “asserted in bad

faith” “a groundless claim” that permitted it to obtain a “groundless

injunction.” CR 269-70.

      Appellants attempted to bring Excellence’s lawsuit within the reach of

the Act by alleging that the confidentiality provisions were effectively

covenants not to compete. CR 269-70. Presumably, this allegation was

purposeful, because a covenant not to compete could conceivably fall within

the Act’s reach, whereas a confidentiality provision that restricts the disclosure

of confidential information does not. “Noncompete covenants are different

than nondisclosure covenants.” Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654,

663 (Tex. App.—Dallas 1992, no writ). The latter provision is not considered a

                                        2
restraint on trade because it “do[es] not necessarily restrict a former

employee’s ability to compete with the former employer” or prevent a former

employee from using “the general knowledge, skill, and experience acquired in

[the] former employer.” Shoreline Gas, Inc. v. McGaughey, No. 13-07-00364-

CV, 2008 WL 1747624, at *10 (Tex. App.—Corpus Christi Apr. 17, 2008, no

pet.) (mem. op.).

      In moving for summary judgment, Excellence asserted that there could

be no claim under the Act because (1) the confidentiality provisions were most

appropriately described as a nondisclosure agreement, and (2) nondisclosure

agreements are not covered by the Act. CR 128-129. Therefore, Excellence’s

enforcement of the provisions through a lawsuit could not give rise to an

antitrust claim as a matter of law.

      In its original opinion, the panel analyzed the confidentiality provisions

and rejected the appellants’ allegation that the provisions constituted a

covenant not to compete. Slip op. at 21. 2 Further, based upon its review of the

provisions, as well as the record, the panel concluded that there was nothing to

support the appellants’ allegation that they would be able to solicit those

pipeline customers without using Excellence’s confidential information and

without violating their agreements with Excellence. Id. Under the provisions,

confidential information specifically included “the identity of the Company’s

2
 Excellence cites to the original slip opinion because the opinion has been removed from
Westlaw.

                                           3
customers, customer personal data information, customer contact

information, customer account information and balances, and customer

investment preferences.” CR 150. According to the panel’s original opinion,

appellants did not have a viable claim:

      Information containing the names and addresses of individuals
      with whom the loan officers came into contact during their
      employment at Excellence, is precisely the information Appellants
      each contracted with Excellence not to disclose. There is no
      evidence Excellence sought to prevent Appellants from working or
      being employed by Premier; they simply sought the protection of
      the confidential information outlined in Appellants’ employment
      agreements.

      Accordingly, section 15.05 of the Texas Business and Commerce
      Code’s prohibition against antitrust actions does not apply.”
      (citing Marsh USA Inc. v. Cook, 354 S.W.3d 764, 768 (Tex. 2011)).

Slip Op. at 21.

      B.    In Abandoning Its Prior Analysis, the Panel Erred By
            Ignoring Appellants’ Pleadings and Excellence’s Motion
            for Summary Judgment.
      On rehearing, the panel essentially rewrites the appellants’ pleadings

with respect to the antitrust claims. The Act declares that “[e]very contract,

combination, or conspiracy in restraint of trade or commerce is unlawful.”

TEX. BUS. & COM. CODE § 15.05(a). To prevail on a claim under the Act, the

“plaintiff must show that the alleged contract, combination, or conspiracy is

unreasonable and has an adverse effect on competition in the relevant

market.” Marlin v. Robertson, 307 S.W.3d 418, 427 (Tex. App.—San Antonio

2009, no pet.).

                                      4
       The act underlying appellants’ claims was Excellence’s decision to sue to

enforce the confidentiality provisions. CR 269-70. Those provisions serve as

the “contract” required by the Act. Just like in other cases where a plaintiff

alleges that a particular contract affords rights that are “unreasonable” for

purposes of antitrust law, the court evaluates whether the enforcement of

those provisions results in a violation of the Act. See, e.g., Mendelovitz v.

Adolph Coors Co., 693 F.2d 570, 578 (5th Cir. 1982) (analyzing whether a

contract between beer manufacturer and distributors imposing territorial

restrictions and quality control procedures violated the Act); RTLC AG Prods.,

Inc. v. Treatment Equip. Co., 195 S.W.3d 824, 830-32 (Tex. App.—Dallas

2006, no pet.) (analyzing whether a tying arrangement violated the Act).

Appellants’ summary judgment response confirms this. E.g., CR 284 (arguing

that the confidentiality provisions were effectively covenants not to compete

that violated the Act). 3

       On rehearing, the panel does not directly address the confidentiality

provisions and Excellence’s decision to enforce them through the lawsuit. See

Brooks v. Excellence Mortg., Ltd., No. 04-13-00106-CV, 2015 WL 1523067, at

*10 (Tex. App.—San Antonio Apr. 1, 2015, no pet. h.) (only noting that

3
  A person who initiates a lawsuit is “generally immune from antitrust liability, under the
right of petition guaranteed by the Bill of Rights and the Texas constitution.” Houston
Mercantile Exch. Corp. v. Dailey Petroleum Servs. Corp., No. B14-92-00818-CV, 1993 WL
322901, at *3 (Tex. App.—Houston [14th Dist.] Aug. 26, 1993, no writ) (not designated for
publication). “To base an antitrust claim upon litigation, a party must show that the lawsuit
is not protected petitioning, but instead is sham litigation.” Id.

                                             5
Excellence argued that it was seeking to enforce the confidentiality

provisions). Unlike the original opinion, there is no analysis of the

confidentiality provisions and whether customer information is protected

from disclosure. There is also no discussion regarding the distinction between

a covenant not to compete and a nondisclosure agreement, including the fact

that the latter is not a restraint on trade.

       Ignoring appellants’ pleading, the panel finds a whole new basis for

appellants’ antitrust claims. Rather than directly addressing the lawsuit, the

panel relies upon conclusory allegations made by appellants in their summary

judgment affidavits that (unnamed) state or federal laws were violated when

Excellence transferred loan files to Georgetown. See Brooks, 2015 WL
1523067, at *9-10. Importantly, appellants do not identify relevant statutes or

regulations that were violated. 4 Nonetheless, based upon its reading of the

affidavits (as opposed to the live pleading), the panel construes—or perhaps

changes—appellants’ pleadings to allege some sort of “combination” or

“conspiracy” between Excellence and Georgetown Mortgage to violate

unidentified state or federal law (and not necessarily the Act itself). Id. at *10

(“. . . such transfers are prohibited under state or federal regulations,

4
 The panel’s reliance upon the affidavits to establish a legal conclusion, i.e., that some state
or federal law requires certain performance, is improper. See United Way of San Antonio,
Inc. v. Helping Hands Lifeline Found., Inc., 949 S.W.2d 707, 713 (Tex. App.—San Antonio
1997, writ denied) (“Under Texas law, a witness may not give legal conclusions or interpret
the law to the jury.”).

                                               6
Georgetown and Excellence worked together to effect the transfers. . . .”).5 The

panel’s opinion also omits citations to the laws that were allegedly violated.

      The panel cannot alter the basis for the appellants’ claims through its

own reading of affidavits. The Court has previously explained that “a plaintiff

can recover, if at all, only on the cause of action pleaded by him. His claims are

fixed by the factual circumstances alleged in the petition . . . .” Morriss v.

Enron Oil & Gas Co., 948 S.W.2d 858, 873 n.14 (Tex. App.—San Antonio 1997,

no writ) (citation omitted). The panel should revisit its opinion to correct this

serious error.

       Not only does the panel fail to give effect to the actual pleading, but its

construction is actually inconsistent with appellants’ pleaded causation theory.

Causation is an element of a claim under the Act, and the contract,

combination, or conspiracy complained of by a plaintiff must have a causal

nexus to the injury. Mendelovitz, 693 F.2d at 578. To the extent that

appellants were denied access to Excellence’s confidential information,

including customer names, it was because Excellence sued to enforce the

confidentiality provisions and was granted injunctive relief. The transferring

of loan files between Excellence and Georgetown was not the source of the

5
 This allegation is problematic given the appellants’ overall position in the appeal that
Excellence “ceased to exist” in late September 2010. Excellence is unaware of any authority
that would suggest that a defunct company can participate in a “conspiracy” or
“combination” for purposes of a claim under the Act. Further, it is well-established that a
company cannot conspire with its own employees for purposes of the Act. Red Wing Shoe
Co., Inc. v. Shearer’s, Inc., 769 S.W.2d 339, 345 (Tex. App.—Houston [1st Dist.] 1989, no
writ).

                                            7
alleged injury. Therefore, the panel erred in rejecting its earlier analysis

wherein it directly addressed the source of appellants’ claims: the

confidentiality provisions, the lawsuit, and the injunction.

      Given the foregoing, the panel should issue a new opinion reinstating the

analysis in its earlier opinion where it addressed the actual issues presented by

the pleadings and Excellence’s motion for summary judgment.

II.   The Panel Erred When It Reversed the Summary Judgment on
      Appellants’ Tortious Interference with Prospective Business
      Relations Claims.
      Excellence’s suit to enforce the confidentiality provisions is at the center

of appellants’ claims for tortious interference with prospective business

relations. See CR 265. (“The suit induced Premier, Counter-Plaintiffs’ new

employer, to agree not to do business with the 91 prospective borrowers in

order to avoid litigation.”); see also CR 282 (“Such conduct of maliciously

filing the groundless suit . . . is independently tortious.”). Excellence moved for

summary judgment, asserting that its decision to file suit and seek injunctive

relief was not independently tortious or unlawful for purposes of appellants’

tortious interference claim. See CR 127; see also Wal-Mart Stores, Inc. v.

Sturges, 52 S.W.3d 711, 713 (Tex. 2001) (discussing elements of claim).

      In its original opinion, the panel correctly noted that appellants’ claims

were based upon Excellence’s lawsuit. Slip Op. 15 (“The tortious act alleged by

Appellants is the filing of this lawsuit, an allegedly baseless and groundless

suit.”). The panel analyzed the various authorities cited by Excellence and

                                        8
concluded that “[f]iling a lawsuit is not independently a tortious act.” Id. at 16.

Further, given that the employment agreements specifically authorized

Excellence to seek injunctive relief in connection with a suit to enforce its

rights under the confidentiality provisions, the panel correctly concluded that

summary judgment had been properly granted. Id.

      On rehearing, the panel again rewrites the appellants’ pleading and

abandons its prior analysis. The panel concludes that the summary judgment

must be reversed because there is a fact question as to whether Excellence

committed an unlawful act. Brooks, 2015 WL 1523067, at *11. But the

purported unlawful act identified by the panel is not the lawsuit to enforce the

confidentiality provisions. According to the opinion on rehearing, the unlawful

act complained about by appellants is “an antitrust violation.” Id.

      The panel’s analysis in the opinion on rehearing must be rejected

because it is not consistent with the pleaded allegations. Appellants brought a

tortious interference claim because Excellence filed “this groundless suit in the

name of Excellence (then defunct) to prevent and unlawfully interfere with

such business relationships.” CR 266. Completely rejecting its prior analysis

and the plain language in appellants’ pleading, the panel now reasons that

there is a fact question as to whether Excellence tortiously interfered with

prospective relationships because there is also a fact question as to whether it

committed an antitrust violation. The panel does this even though appellants’

pleadings did not base the tortious interference claim upon an antitrust

                                        9
violation. See CR 265-66. Further, the antitrust violation described earlier in

the opinion on rehearing rested upon the alleged violation of state or federal

law regarding the transfer of files between mortgage lenders. See I.B, supra.

But this is not the cause of appellants’ alleged injury. See id.

      There is no explanation as to why the panel looked outside of appellants’

pleading. The independently tortious/unlawful conduct element of a tortious

interference with prospective relations claim rests upon conduct that is

directed toward a third party that leads the third party not to do business with

the plaintiff. See Wal-Mart Stores, Inc., 52 S.W.3d at 726 (providing

examples). The allegedly unlawful transfer of loans between Excellence and

Georgetown Mortgage does not meet that definition. Presumably, this is

precisely why appellants complained about the so-called “groundless

injunction” that prevented them from pursuing those pipeline customers.

      The panel had it right the first time. Based upon appellants’ pleadings,

the issue was whether the filing of the lawsuit was independently tortious or

unlawful. The panel analyzed the record and the relevant authorities in its

original opinion and correctly concluded that Excellence was entitled to

summary judgment. See Slip Op. 15-16. Accordingly, this motion for rehearing

should be granted.

                                       10
III. Conclusion and Prayer.

      Applying the law to the record, it is beyond dispute that Excellence was

entitled to summary judgment on appellants’ antitrust and tortious

interference with prospective business relations claims.

      WHEREFORE, PREMISES CONSIDERED, Appellees Excellence

Mortgage Ltd.; LATD-1, LLC; Grothues Financial, Ltd.; Grothues Brothers

Management 1, LLC; and Georgetown Mortgage LLC respectfully pray that the

panel grant this motion for rehearing, withdraw the panel opinion and

judgment dated April 1, 2015, issue a new opinion and judgment affirming the

trial court’s summary judgment order in its entirety, and grant other further

relief to which appellees may be justly and equitably entitled.

                                      11
                                 Respectfully submitted,

                                 /s/ Samuel V. Houston, III
                                 SAMUEL V. HOUSTON, III
                                 State Bar No. 24041135
                                 HOUSTON DUNN, PLLC
                                 4040 Broadway, Suite 440
                                 San Antonio, Texas 78209
                                 Telephone: (210) 775-0882
                                 Fax: (210) 826-0075
                                 sam@hdappeals.com

                                 WILLIAM H. FORD
                                 State Bar No. 07246700
                                 GREGORY SCRIVENER
                                 State Bar No. 24013480
                                 FORD MURRAY, PLLC
                                 10001 Reunion Place, Suite 640
                                 San Antonio, Texas 78216
                                 Telephone: (210) 731-6400
                                 Fax: (210) 731-6401
                                 bill.ford@fordmurray.com
                                 greg.scrivener@fordmurray.com
                                 ATTORNEYS FOR APPELLEES
                                 EXCELLENCE MORTGAGE LTD.;
                                 LATD-1,   LLC;    GROTHUES
                                 FINANCIAL, LTD.; GROTHUES
                                 BROTHERS MANAGEMENT 1, LLC;
                                 AND GEORGETOWN MORTGAGE
                                 LLC

                CERTIFICATE OF COMPLIANCE

     In accordance with Texas Rule of Appellate Procedure 9.4, the
undersigned certifies that the foregoing brief contains 2,561 words.

                                  /s/ Samuel V. Houston, III
                                  SAMUEL V. HOUSTON, III

                                12
                      CERTIFICATE OF SERVICE
      This is to certify that a true and correct copy of the foregoing document
has been served in accordance with the Texas Rules of Appellate Procedure on
the 18th day of May, 2015, to the following:
Darby Riley                                Via e-mail/e-serve
Riley & Riley
320 Lexington Avenue
San Antonio, Texas 78215-1913
(210) 225-7236
(210) 227-7907 (fax)

                                        /s/ Samuel V. Houston, III
                                        SAMUEL V. HOUSTON, III

                                      13