Appeal from the 295th District Court Harris County, Texas
Trial Court Cause No. 2010-34306
consists of Justices Boyce, Christopher, and Brown.
William J. Boyce, Justice
Gillet sued appellee ZUPT, LLC - of which Gillet is a
part-owner - seeking to force a buyout of his interest in
ZUPT. In a counterclaim, ZUPT contended that Gillet disclosed
ZUPT's trade secrets to a competitor that employed
Gillet. An arbitrator awarded each party damages but declined
to offset the damages in the award. The trial court confirmed
the award, and ZUPT sought a turnover order and appointment
of a receiver to collect the judgment.
appeals from the trial court's order appointing a
receiver and ordering turnover. Gillet contends that the
trial court lacked evidence of non-exempt assets subject to
turnover; that a charging order was the exclusive remedy to
collect against his membership interest in a limited
liability company; and that the turnover order was
inconsistent with the court's final judgment because it
required turnover of his membership interest in a manner
contradicting the final judgment.
reverse the trial court's turnover order for two reasons.
First, the trial court's turnover order requires Gillet
to turn over his membership interest in ZUPT but does not
mandate that Gillet receive a dollar credit equal to his
judgment for his interest. This potentially could lead to a
situation in which the receiver values Gillet's
membership interest in ZUPT at less than the value the final
judgment mandates Gillet receive for the interest; as a
result, the receiver could execute the turnover order in a
manner inconsistent with the final judgment. Second, the
turnover order requires turnover of a number of categories of
assets without evidence that such non-exempt assets exist. We
remand to the trial court to revise the turnover order
consistent with this opinion.
a limited liability company that develops and sells subsea
surveying services to customers in the oil and gas industry.
Gillet owns 45 percent of ZUPT.
gave notice in March 2009 of his intent to force ZUPT and its
members to purchase his interest in ZUPT in accordance with a
Buy-Sell Agreement. Unbeknownst to the other members of ZUPT,
Gillet already had accepted an offer at that time to work for
one of ZUPT's competitors.
resigned his employment at ZUPT in June 2009 and went to work
for the competitor. Gillet did not resign as a member of ZUPT
and still owns 45 percent.
appraisal conducted as a result of Gillet's buy-out
demand valued ZUPT at $1, 600, 000; 45 percent of $1, 600,
000 is $720, 000. The appraiser's $1, 600, 000 valuation
was based on a presumption that the entirety of ZUPT would be
sold, not just Gillet's 45 percent. It also was based on
a presumption that Gillet would sign an industry standard
non-compete agreement. After learning that Gillet refused to
sign a non-compete agreement and after applying a valuation
discount to Gillet's minority interest, the appraiser
revised his appraisal of Gillet's 45 percent interest to
sued ZUPT and its other individual owners in June 2010 for
oppression and subsequently added a claim for breach of
contract based on ZUPT's alleged breach of the Buy-Sell
and its other individual owners counterclaimed; among other
things, they asserted that Gillet misappropriated ZUPT's
confidential information and trade secrets and breached his
fiduciary duty by disclosing that confidential information
for the benefit of his new employer.
parties arbitrated the case in late 2012 and the arbitrator
rendered an arbitration award on January 29, 2013. In her
award, the arbitrator determined that ZUPT owed Gillet $499,
050 for the value of his 45 percent interest. She determined
that upon payment of the $499, 050 by ZUPT, Gillet
"shall surrender all of his certificates, shares or
other indicia of his ownership interest in ZUPT" and
Gillet's ownership interest in ZUPT would cease. The
arbitrator awarded Gillet $70, 060 for his reasonable and
necessary attorney's fees.
arbitrator also determined that Gillet breached his fiduciary
duty to ZUPT by disclosing ZUPT's trade secrets,
entitling ZUPT to recover actual damages of $1, 869, 164 plus
an additional $1, 000 permitted by the Texas Theft Liability
Act. The arbitrator awarded ZUPT $169, 612.25 for its
reasonable and necessary attorney's fees.
arbitrator awarded pre- and post-judgment interest and costs
of court to each party.
requested that the amount it owed Gillet for his ownership
interest in ZUPT be offset by the amount Gillet owed to ZUPT
for his breach of fiduciary duty. The arbitrator denied the
request for offset.
moved in the trial court to confirm the arbitration award.
The trial court signed a final judgment on June 15, 2015,
confirming the award. The final judgment awarded each party
amounts consistent with the arbitrator's award.
applied for turnover and appointment of a receiver in July
2015. The trial court held two hearings on the application.
The trial court ordered turnover and appointed a receiver to
collect non-exempt property to satisfy the judgments against