Opinion
No. 05-17-01281-CV
08-13-2019
KENNETH W. MORRISON, RICK ADAMS, AND STONECOAT OF TEXAS, LLC, Appellants v. JOHN D. PROFANCHIK, SR., Appellee
On Appeal from the 416th Judicial District Court Collin County, Texas
Trial Court Cause No. 416-02057-2015
MEMORANDUM OPINION
Before Justices Whitehill, Partida-Kipness, and Pedersen, III
Opinion by Justice Partida-Kipness
Justice Whitehill did not participate in oral argument, but participated in the resolution of this appeal. Justice Carlyle participated in oral argument, but did not participate in the resolution of the appeal.
After a jury trial, appellants Kenneth W. Morrison, Rick Adams, and Stonecoat of Texas, LLC appeal from a final judgment incorporating an adverse, take-nothing summary judgment on their counterclaims against John D. Profanchik, Sr. for (1) breach of his nondisclosure/noncompete agreement with Stonecoat, (2) his interference with Stonecoat's nondisclosure/noncompete contracts of others, and (3) misappropriation of trade secrets. In three issues, appellants generally complain the nondisclosure/noncompete contracts were enforceable, there was evidence that Profanchik was competing with appellants and interfered with their nondisclosure/noncompete contracts with others, and the trial court erred by granting summary judgment on their misappropriation of trade secrets claim. For the reasons that follow, we conclude the trial court did not err in granting summary judgment against appellants. Accordingly, we affirm. We issue this memorandum opinion because the issues are well-settled in law. See TEX. R. APP. P. 47.4.
Although three appellants are listed, only Stonecoat of Texas, LLC filed the counterclaim on which the trial court granted the take-nothing summary judgment which is the subject of this appeal.
BACKGROUND
This is at least the fourth lawsuit that has arisen from disputes involving two limestone veneer companies, Stonecoat of Texas, LLC and ProCal Stone Design LLC, and their owners. In the case before us, Profanchik sued appellants for various tort causes of action arising out the parties' negotiations and conduct after Profanchik and his son-in law allegedly sought to purchase a Stonecoat franchise. Profanchik alleged that during a meeting in February 2015, Morrison represented to him, among other things, that Morrison owned Stonecoat and that Profanchik should purchase a controlling interest in it. Profanchik signed a nondisclosure/noncompete agreement with the understanding that Morrison would be divulging confidential and trade secret information in response to Profanchik's due diligence. According to Profanchik's petition, shortly after signing the nondisclosure/noncompete agreement, Profanchik allegedly discovered documents that suggested many of Morrison's representations were untrue and revealed the companies' legal troubles and other improprieties. Profanchik ultimately walked away from a Stonecoat deal and instead started ProCal Stone Design, also a limestone veneer company.
See Morrison v. Profanchik, No. 03-17-00593-CV, 2019 WL 2202210 (Tex. App.—Austin, May 22, 2019, no pet. h.); Morrison v. ProCal Stone Design, LLC, No. 05-17-00696-CV, 2018 WL 4090637 (Tex. App.—Dallas Aug. 28, 2018, pet. denied) (mem. op.); Morrison v. Profanchik, No. 05-17-00680-CV, 2018 WL 4090635 (Tex. App.—Dallas Aug. 28, 2018, pet. denied) (mem. op.).
Profanchik's son-in-law, Justin Kinser also signed a nondisclosure/noncompete clause.
In response to Profanchik's lawsuit, appellants filed a counterclaim against Profanchik alleging he breached the nondisclosure/noncompete agreement he signed and also interfered with Stonecoat nondisclosure/noncompete agreements signed by others. Appellants asserted various claims against Profanchik including breach of contract, breach of fiduciary duty, misappropriation of trade secrets, theft, and tortious interference with existing contracts.
Profanchik moved for summary judgment on all of appellants' counterclaims asserting both traditional and no-evidence grounds. Appellants then moved for summary judgment on Profanchik's claims against them. After a hearing, the trial court granted Profanchik's motion on appellants' counterclaims and denied appellants' motion on Profanchik's claims. Profanchik's claims were then tried to a jury, which returned a take-nothing verdict. The trial court rendered a final judgment on the jury's verdict, incorporating its earlier take-nothing summary judgment on appellants' counterclaims. In the final judgment, the trial court also rendered a declaratory judgment that the nondisclosure/noncompete agreement between appellants and Profanchik is unenforceable as a matter of law. Appellants timely filed this appeal.
ANALYSIS
Before analyzing the merits of this appeal, we first consider issues related to appellants' briefing and preservation of appellate complaints. The only citations to the almost 3,000-page clerk's record appear in the section entitled "Statement of the Case" and "Statement of Facts." Within the "Statement of Facts" section, excluding citations to certain provisions in the various nondisclosure/noncompete agreements at issue, appellants cite exclusively to various paragraphs in the thirty-four-page affidavit of Ken Morrison. Elsewhere, appellants merely cite to "the summary judgment record" or "the summary judgment evidence record" without further guidance or clarification.
Although appellants identify three issues, they have not presented a separate argument for each issue or cause of action and instead argue their first two issues together under the heading "I. The District Court Erred in Granting Summary Judgment for Plaintiff with respect to the NDA/Non-Compete Contracts." Appellants' complaints about the ruling on its misappropriation of trade secrets is addressed in the argument section under heading "II. The District Court Erred in Granting Summary Judgment for Plaintiff Regarding Stonecoat's Trade Secrets Misappropriation Counterclaim." Although the argument section of appellants' brief is supported by legal authority, it provides no citations to the record or discussion of the facts as they relate to the issue presented.
The appellate rules require a brief to contain a clear and concise argument for the contentions made with appropriate citations to authorities and the record. See TEX. R. APP. P. 38.1(i). Appellants have the burden to present and discuss their assertions of error in compliance with the appellate briefing rules. We have no duty, or even right, to perform an independent review of the record and applicable law to determine whether there was error. See Bolling v. Farmers Branch Indep. Sch. Dist., 315 S.W.3d 893, 895 (Tex. App.—Dallas 2010, no pet.). Mindful of our obligations to construe the briefing rules liberally, we have structured our discussion of appellants' complaints about the trial court's summary judgment ruling in terms of the various causes of action to which they relate. On appeal, appellants challenge only the trial court's summary judgment ruling with respect to their claims for breach of contract, tortious interference, and misappropriation of trade secrets claims against Profanchik. Accordingly, our discussion will be limited to those causes of action.
Because appellants do not challenge the summary judgment ruling with respect to their breach of fiduciary duty claim and theft of property claim, they have waived any error with respect to these causes of action. See Jacobs v. Satterwhite, 65 S.W.3d 653, 655-56 (Tex. 2001) (per curiam). Accordingly, we need not address these causes of action. See TEX. R. APP. P. 47.1.
We review the trial court's summary judgment ruling de novo. See B.C. v. Steak N Shake Operations, Inc., 512 S.W.3d 276, 279 (Tex. 2017). The movant for traditional summary judgment has the burden to establish there is no genuine issue of material fact and that it is entitled to summary judgment as a matter of law. See TEX. R. CIV. P. 166a(c). No-evidence motions are reviewed under the same legal sufficiency standard as a directed verdict. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). Thus, the non-movant must produce more than a scintilla of evidence to support each challenged element of its claims. See id. When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Where, as here, a party moves for summary judgment on multiple grounds and the trial court's order does not does not specify the ground or grounds upon which it was based, the appealing party must negate all possible grounds upon which the order could have been based. See Jarvis v. Rocanville Corp., 298 S.W.3d 305, 313 (Tex. App.—Dallas 2009, pet. denied).
In their first and second issues, appellants generally complain about the trial court's summary judgment ruling with respect to their contract claim based on Profanchik's breach of his nondisclosure/noncompete agreement with Stonecoat and their tortious interference claims based on Profanchik's alleged interference with the nondisclosure/noncompete agreements Stonecoat executed with Justin Kinser, Irma Villareal, and Alfred Gonzalez. The argument portion of appellants' brief discusses these two issues together, focusing its analysis largely on the enforceability of the various nondisclosure/noncompete agreements.
Irma Villareal and Alfred Gonzalez were former Stonecoat employees who went to work for Profanchik's company, ProCal.
We first address appellants' tortious interference claims. Profanchik moved for summary judgment on appellants' tortious interference claims on various traditional and no-evidence grounds, including the grounds that these claims were barred by the applicable statute of limitations and laches. Appellants have not challenged these grounds on appeal. If an appellant fails to challenge all possible grounds on which summary judgment may have been granted, we must accept the validity of the unchallenged grounds and affirm the adverse ruling. See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970); see also St. John Missionary Baptist Church v. Flakes, 547 S.W.3d 311, 314 (Tex. App.—Dallas 2018, pet. filed) (en banc). Because these unchallenged grounds could independently support the trial court's summary judgment ruling, any error in the grounds challenged on appeal with respect to these claims is harmless. Flakes, 547 S.W.3d at 314-15. Appellants have therefore failed to establish any reversible error in connection with the trial court's ruling on their tortious interference claims. See TEX. R. APP. P. 44.1(a) ("No judgment may be reversed on appeal on the ground that the trial court made an error of law unless the court of appeals concludes that the error complained of (1) probably caused the rendition of an improper judgment; or (2) probably prevented the appellant from properly presenting the case to the court of appeals.").
We next address appellants' breach of contract claim against Profanchik. The elements of a breach of contract claim are (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages to the plaintiff resulting from that breach. Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 837 (Tex. App.—Dallas 2014, no pet.). In addition to several traditional grounds, Profanchik moved for summary judgment on appellants' breach of contract claim on the grounds that there was no evidence of any of the foregoing elements of a breach of contract claim.
On appeal, appellants contend "Profanchik failed to meet the summary judgment standard to establish no evidence that John Profanchik violated his NDA/Non-compete contract," arguing Profanchik did not establish as a matter of law that Profanchik did not breach his contract. To the extent Profanchik moved for a traditional summary judgment on the breach element of appellants' contract claim, we agree Profanchik had the burden to conclusively negate that he breached the nondisclosure/noncompete agreement. With respect to Profanchik's no-evidence grounds for summary judgment, however, it was appellants who had the burden to produce more than a scintilla of evidence to raise a material fact issue on whether Profanchik breached the nondisclosure/noncompete agreement as well as the other challenged elements in order to defeat summary judgment. See Merriman, 407 S.W.3d at 248. Nowhere in the two-and-one-half pages of the argument section of appellants' brief, where the breach element of appellants' contract claim against Profanchik is addressed, do appellants explain how Profanchik breached the nondisclosure/noncompete agreement nor do they provide even a single citation to evidence in the summary judgment record supporting Profanchik's alleged breach. Searching the rest of appellants' brief, we note that in the "Statement of Facts" section, appellants cite exclusively to paragraphs eight and nine of Morrison's affidavit as evidence that Profanchik breached the nondisclosure/noncompete agreement. Those paragraphs provide as follows:
8. Attached as Exhibit 1 to this Affidavit is a copy of a written contract executed by John Profanchik (the "Profanchik Contract"). The Profanchik Contract was signed by John Profanchik. Based on my personal knowledge of the Profanchik Contract and the negotiations of the Profanchik Contract, of which I was personally involved, and the continuing performance of the Profanchik Contract and the application of the Profanchik Contract of which I am personally involved, the Profanchik Contract was signed by the parties as reflected on the contract of each parties' free will and without any undue influence or duress. The Profanchik Contract is continuing in nature. John Profanchik received due and adequate consideration for his promises in the Profanchik Contract as stated in the contract and including, but not limited to, receipt, delivery and access to privileged and confidential information, intellectual property and trade secrets of Stonecoat. He also received financial information regarding the operations of Stonecoat, attorney-client privileged information regarding lawsuits, privileged information regarding patents and trademarks and other intellectual property, and information regarding wages and salaries and commissions paid by Stonecoat, and he also received specialized intellectual property and day-to-day training regarding the operations of the Stonecoat business. The Profanchik Contract has not terminated and is still in effect. John Profanchik has failed to perform his obligations under the Profanchik Contract. John Profanchik has competed and is competing against Stonecoat today. John Profanchik inevitably disclosed confidential and proprietary information, intellectual property and trade secrets of Stonecoat to Stonecoat's competitor, Procal Stone Design, LLC, ("Procal") of which John Profanchik is the majority member and holds the majority interest of the company.
9. Procal competes with Stonecoat. John Profanchik has and is using proprietary and confidential information, intellectual property and trade secrets of Stonecoat to compete against Stonecoat. Based on the documents that I have reviewed which have been produced in this case by plaintiff, John Profanchik has in his possession intellectual property, and confidential and proprietary property and information of Stonecoat. Based on the documents that I have reviewed, John Profanchik and his company, Procal, have used and are using the intellectual property and confidential and proprietary information, business strategies and business opportunities and trade secrets of Stonecoat to operate Procal.
In these two paragraphs, Morrison does little more than broadly state that Profanchik is using Stonecoat's confidential and proprietary information to compete with Stonecoat. Neither paragraph identifies any specific material that Profanchik allegedly used, demonstrates the secret or proprietary nature of material, nor does Morrison describe how use of the alleged material breached the nondisclosure/noncompete agreement. In their reply brief, appellants cite two additional paragraphs of Morrison's affidavit to support the breach element of their contract claim against Profanchik. Although these paragraphs reference certain documents attached as exhibits that Morrison broadly asserts are Stonecoat's intellectual property, the paragraphs suffer from the same conclusory nature as the paragraphs referenced in appellant's opening brief.
We conclude the sole evidence relied on by appellants to support reversal of the trial court's summary judgment on its breach of contract claim is conclusory. A conclusory statement is one that does not provide the underlying facts to support the conclusion. See Bastida v. Aznaran, 444 S.W.3d 98, 105 (Tex. App.—Dallas 2014, no pet.). An affidavit that is conclusory is not proper summary judgment evidence to be considered on appeal. See Ryland Grp., Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per curiam). Accordingly, the trial court did not err in granting the no-evidence summary judgment on appellants' breach of contract claim. Having concluded the trial court's summary judgment on appellants' tortious interference and breach of contract claims is sustainable on other grounds, we need not address appellants' arguments regarding the enforceability of the various nondisclosure/noncompete agreements. We resolve appellants' first and second issues against them.
This opinion should not be construed to require direct evidence that a party is misusing confidential information or trade secrets. These facts, like all other types of facts, can be proved with circumstantial evidence. See Russell v. Russell, 865 S.W.2d 929, 933 (Tex. 1993).
In their third issue, appellants challenge the adverse summary judgment on their claim for misappropriation of trade secrets under the Texas Uniform Trade Secrets Act (TUTSA). Profanchik moved for summary judgment on misappropriation of trade secrets on both traditional and no-evidence grounds. He asserted appellants had no evidence they had any trade secrets, no evidence Profanchik improperly obtained a trade secret, no evidence Profanchik used any such trade secret, and no evidence that appellants had been damaged by the alleged use of the trade secret.
The elements of a claim for violation of TUTSA are (1) ownership of a trade secret; (2) misappropriation of the trade secret; and (3) an injury to the plaintiff or unjust enrichment to the defendant. See TEX. CIV. PRAC. & REM. CODE ANN. § 134A.002-.004; see also Morgan v. Clements Fluids S. Tex., Ltd., No. 12-18-00055-CV, 2018 WL 5796994, at *4 (Tex. App.—Tyler Nov. 5, 2018, no pet.) ("The elements of misappropriation of trade secrets are (1) ownership of a trade secret; (2) misappropriation of the trade secret; and (3) an injury, if the plaintiff is seeking damages."); Universal Plant Servs., Inc. v. Dresser-Rand Grp., Inc., 571 S.W.3d 346, 360 (Tex. App.—Houston [1st Dist.] 2018, no pet.) ("To establish misappropriation of trade secrets under Texas law, a plaintiff must show the existence of a trade secret that the defendant acquired through a breach of a confidential relationship or through other improper means and that the secret was used without authorization, resulting in damages to the plaintiff."). A trade secret is information that the owner has taken reasonable measures to keep secret and "the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information." Id. § 134A.002(6).
Appellants generally argue there are material fact issues regarding the existence and misappropriation of trade secrets that preclude summary judgment. In their opening brief, however, appellants vaguely contend "there is no question that the summary judgment record contains disputed facts regarding trade secrets of StoneCoat" and "marketing strategy, vendor lists, sales information, proprietary financial information (including strategies, profit margins, and financial plans), and the like, as well as customer lists constitute trade secrets." In their argument under this issue, appellants make no attempt to identify or discuss the specific evidence they assert creates the fact issues that make the summary judgment improper. Once again, in their four- to five-page discussion under this issue, appellants have not provided a single citation to the summary judgment record where the supposed evidence upon which they rely can be located. Moreover, appellants do not even address Profanchik's no-evidence ground that they had no evidence of damages to support this cause of action.
We reject appellants' attempt to present their damages argument in their reply brief after Profanchik has pointed out their failure to do so in their opening brief. A party cannot raise a new issue in a reply brief. See Dallas Cty. v. Gonzalez, 183 S.W.3d 94, 104 (Tex. App.—Dallas 2006, pet. denied); see also In re K.K.W, No. 05-16-00795-CV, 2018 WL 3968475 at *11 (Tex. App.—Dallas Aug. 20, 2018, pet. denied) (mem. op.) (reply brief cannot be used to challenge ground for summary judgment not challenged in party's brief on merits).
When a trial court grants a no-evidence summary motion, in order to adequately challenge on appeal each possible ground for summary judgment, appellant must cite the specific evidence in the record that it relied upon to defeat the motion and describe why that evidence raised a fact issue. Manautou v. Ebby Halliday Real Estate, Inc., No. 05-13-01035-CV, 2015 WL 870215, at *3 (Tex. App.—Dallas Feb. 27, 2015, pet. denied) (mem. op.). It is well-established that it is not the duty of the appellate court to make an independent search of the voluminous summary judgment record before us for evidence to support appellants' contentions. See King v. Wells Fargo Bank. N.A., 205 S.W.3d 731, 734-35 (Tex. App.—Dallas 2006, no pet.). Moreover, as stated above, when an appellant fails to challenge on appeal each grounds on which summary judgment could have been granted, we must uphold the summary judgment on the unchallenged ground. See Malooly Bros., 461 S.W.2d at 121; Flakes, 547 S.W.3d at 314-15.
We conclude that appellants did not carry their burden to demonstrate a genuine issue of material fact exists on the challenged elements of their trade misappropriation claim. Accordingly, we hold that the trial court did not err in granting summary judgment on this claim.
We resolve appellants' third issue against them.
CONCLUSION
We conclude appellants have failed to show any reversible error in connection with the trial court's adverse summary judgment on their counterclaims. We therefore affirm the trial court's judgment.
/Robbie Partida-Kipness/
ROBBIE PARTIDA-KIPNESS
JUSTICE 171281F.P05
JUDGMENT
On Appeal from the 416th Judicial District Court, Collin County, Texas
Trial Court Cause No. 416-02057-2015.
Opinion delivered by Justice Partida-Kipness, Justices Whitehill and Pedersen, III participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee John D. Profanchik, Sr. recover his costs of this appeal from appellants Kenneth W. Morrison, Rick Adams, and Stonecoat of Texas, LLC. Judgment entered this 13th day of August, 2019.