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Pike v. Texas EMC Management, LLC

Court of Appeals of Texas, Tenth District

May 31, 2017

CLINTON W. (BUDDY) PIKE, SR., DANIEL L. WALKER, W. TOBIN WILSON, VHSC CEMENT, LLC AND FEW READY MIX CONCRETE CO., Appellants
v.
TEXAS EMC MANAGEMENT, LLC, TEXAS EMC PRODUCTS, LP AND EMC CEMENT, BV, Appellees

          From the 77th District Court Limestone County, Texas Trial Court No. 30, 023-A

          Before Chief Justice Gray, Justice Davis, and Justice Scoggins [*]

          MEMORANDUM OPINION

          AL SCOGGINS Justice

         In numerous issues, appellants, Clinton W. Pike Sr., Daniel L. Walker, W. Tobin Wilson, VHSC Cement, LLC, and Few Ready Mix Concrete, challenge a judgment in favor of appellees, Texas EMC Management, LLC, Texas EMC Products, LP, and EMC Cement, BV, stemming from the breakup of a partnership and the subsequent purchase of the partnership's assets at a foreclosure sale. In a cross-appeal, EMC Management, EMC Products, and EMC Cement complain about the trial court's denial of their request for a permanent injunction in favor of cross-appellees, Pike, Walker, Wilson, VHSC, and Few Ready Mix.[1] After review, we modify the Amended Final Judgment to delete Pike's liability for breach of his Management Agreement with EMC Products and affirm the judgment in all other respects. We also reverse the trial court's denial of the permanent injunction and remand for proceedings consistent with this opinion.

         I. Sufficiency of the Evidence

         Here, appellants raise sufficiency challenges with regard to aspects of the Amended Final Judgment. In a legal-sufficiency review, we consider the evidence in the light most favorable to the verdict, indulging every reasonable inference in favor of the verdict. Autozone, Inc. v. Reyes, 272 S.W.3d 588, 592 (Tex. 2008) (per curiam); Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 286 (Tex. 1998). To determine whether legally-sufficient evidence supports a challenged finding of fact, we credit evidence that supports the finding if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. See Kroger Tex. Ltd. P'ship v. Suberu, 216 S.W.3d 788, 793 (Tex. 2006); see also City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). The factfinder is the sole judge of the credibility of the witnesses and the weight to be assigned to their testimony. See City of Keller, 168 S.W.3d at 819. The factfinder is free to believe one witness and disbelieve another, and reviewing courts may not impose their own opinions to the contrary. Id. As such, reviewing courts must assume that the factfinder decided all credibility questions in the favor of the findings and chose what testimony to disregard in a way that was in favor of the findings, if a reasonable person could do so. Id. at 819-20.

         Additionally, it is within the factfinder's province to resolve conflicts in the evidence. Id. at 820. Consequently, we must assume that, where reasonable, the factfinder resolved all conflicts in the evidence in a manner consistent with the findings. Id. Where conflicting inferences can be drawn from the evidence, it is within the province of the factfinder to choose which inference to draw, so long as more than one inference can reasonably be drawn. Id. at 821. Thus, we must assume that the factfinder made all inferences in favor of the findings if a reasonable person could do so. Id. As stated in City of Keller, the final test for legal sufficiency must always be "whether the evidence at trial would entitle reasonable and fair-minded people to reach the verdict under review." Id. at 827. Anything more than a scintilla of evidence is legally sufficient to support the finding. See Cont'l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996).

         In a factual-sufficiency challenge, an appellate court must consider and weigh all of the evidence. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam). The verdict should be set aside only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id. We may not pass upon the witnesses' credibility or substitute our judgment for that of the factfinder, even if the evidence would support a different result. 2900 Smith, Ltd. v. Constellation New Energy, Inc., 301 S.W.3d 741, 746 (Tex. App.-Houston [14th Dist.] 2009, no pet.). If we determine the evidence is factually insufficient, we must detail the evidence relevant to the issue and state in what regard the contrary evidence greatly outweighs the evidence supporting the trial court's judgment; we need not do so when affirming the judgment. Id.

         II. Breach-of-Contract Claims Against Walker and Wilson

         In their second issue, Walker, Wilson, and Few Ready Mix argue that appellees' breach-of-contract claim against Walker and Wilson is invalid as a matter of law, arguing, among other things, that: (1) the failure to provide an infinite amount of money was not a breach of the Partnership Agreement; and (2) appellees breached the Partnership Agreement first. Walker, Wilson, and Few Ready Mix also contend that EMC Cement lacks standing to recover for diminished value of the partnership; that the attorney's fees award is improper; and that the amount awarded to Walker and Wilson for appellees' breach of the Partnership Agreement was incorrect.

         A. Standing

         Because it is a threshold matter, we will first consider the standing argument. "Standing is a constitutional prerequisite to maintaining suit in either federal or state court." Williams v. Lara, 52 S.W.3d 171, 178 (Tex. 2001) (citing Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993)). Standing "focuses on whether a party has a sufficient relationship with the lawsuit so as to have a 'justiciable interest' in its outcome." Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). Essentially, parties have standing when they are personally aggrieved, regardless of whether they are acting with legal authority. See Nootsie, Ltd. v. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996).

         On appeal, Walker, Wilson, and Few Ready Mix assert that EMC Cement lacks standing to bring a claim against Walker and Wilson for breach of the Partnership Agreement because the cause of action belongs to the partnership, not the individual partners. Appellees counter that this argument involves capacity and, as such, has been waived by a failure to file a verified denial under Texas Rule of Civil Procedure 93. See Tex. R. Civ. P. 93.

         Capacity is a procedural issue dealing with the personal qualifications of a party to litigate. See Lovato, 171 S.W.3d at 848; see also Hubbard v. Rosenthal, No. 10-10-00267-CV, 2012 Tex.App. LEXIS 4391, at *9 (Tex. App.-Waco May 30, 2012, pet. denied) (mem. op.). "[A] party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy." Lovato, 171 S.W.3d at 848-49; see El T. Mexican Rests. v. Bacon, 921 S.W.2d 247, 250 (Tex. App.-Houston [1st Dist.] 1995, no writ) (stating that capacity is a party's legal authority to go to court to prosecute or defend a suit). While standing may be raised for the first time on appeal, capacity must be raised by verified plea in the trial court or else it is deemed waived. See Lovato, 171 S.W.3d at 849; see also Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 56 (Tex. 2003).

         We characterize the standing argument as a challenge to EMC Cement's right to recover in the capacity in which it filed suit.[2] In other words, we conclude that Walker, Wilson, and Few Ready Mix's argument that EMC Cement did not have authority to prosecute this lawsuit because that authority belonged to the partnership involves capacity, not standing. See Pledger v. Schoellkopf, 762 S.W.2d 145, 145-46 (Tex. 1988) (per curiam) (holding that the question whether claims brought by shareholders belonged to the corporation involved capacity); see also Baker v. City of Robinson, 305 S.W.3d 783, 788 (Tex. App.-Waco 2009, pet. denied) (concluding that an individual's alleged lack of standing to recover lost profits suffered by a partnership was really an issue of capacity); WHM Props. v. Dallas County, 119 S.W.3d 325, 330-31 (Tex. App.-Waco 2003, no pet.) (holding that an issue presented as a "standing" challenge pertaining to corporate status actually involved "capacity"). And because the record does not contain a verified plea filed in the trial court under Texas Rule of Civil Procedure 93, we conclude that this argument has been waived. See Tex. R. Civ. P. 93; see also Lovato, 171 S.W.3d at 849; Sixth RMA Partners, L.P., 111 S.W.3d at 56.

         B. The Partnership Agreement

         Next, we will address Walker, Wilson, and Few Ready Mix's arguments regarding the Partnership Agreement.

         The partners in EMC Products, a Texas limited partnership, are EMC Management, EMC Cement, Walker and certain members of his family, and Wilson. EMC Management is a general partner with a 1% share in the partnership. EMC Cement is a Class A limited partner with a 49.5% ownership stake. Walker and his family and Wilson are Class B limited partners with a collective 49.5% ownership share in the partnership. Under the Partnership Agreement, the following was required of Class B limited partners Walker and Wilson:

Section 2.5. Financing Assistance by Class B Limited Partners. The Class B Limited Partners shall loan funds to and/or obtain financing for the Partnership to meet the Primary Objective until such time as the Partnership has the financial ability to obtain such financing on its own resources. The General Partner and the Class A Limited Partner shall have no obligation to make loans to and/or obtain financing for the Partnership.

Section 1.5 of the Partnership Agreement outlines the primary objective of the Partnership as follows: "The Partners agree that the primary objective of the partnership will be to maximize the degree and speed of market penetration for the Products in the State of Texas, in accordance with market demand and potential, respecting sound business principals."

         The usage of the term "shall" in Section 2.5 of the Partnership Agreement imposed a mandatory duty on Walker and Wilson to loan funds and/or obtain financing. See Lesikar v. Moon, 237 S.W.3d 361, 367 (Tex. App.-Houston [14th Dist.] 2007, pet. denied) ("The word 'shall' as used in contracts is generally mandatory, operating to impose a duty." (internal citations omitted)); In re J.L.W., 919 S.W.2d 841, 842 (Tex. App.-El Paso 1996, no writ) (stating that the term "shall" is generally construed to be mandatory and may also be considered as directory). However, despite this language, Walker, Wilson, and Few Ready Mix assert that their duty to loan or obtain funds was limited by the "sound business principals" language of the primary objective, and thus, the failure to provide an infinite amount of money did not constitute a breach of the agreement.

         We do not agree with Walker, Wilson, and Few Ready Mix's interpretation of the Partnership Agreement. The "sound business principles" language modifies the language about the partnership's goal of maximizing market penetration, not Walker and Wilson's obligation to loan funds and/or obtain financing for the partnership. The interpretation advanced on appeal by Walker, Wilson, and Few Ready Mix would require us to rewrite the agreement to move the "sound business principles" language from Section 1.5 to Section 2.5 of the Partnership Agreement-something we cannot do. See Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003) ("But we may neither rewrite the parties' contract nor add to its language.").

         And to the extent that Walker, Wilson, and Few Ready Mix contend that they did not have to provide further financing because the partnership was unable to meet the primary objective, we note that such a contention raises the affirmative defense of excuse-something that Walker and Wilson had to plead and prove in the trial court. See Tex. R. Civ. P. 94; see also Trencor, Inc. v. Cornech Mach. Co., 115 S.W.3d 145, 153 (Tex. App.-Fort Worth 2003, pet. denied). A review of the record reveals that they did neither. As such, Walker and Wilson waived any excuse argument brought on appeal. See AMS Const. Co. v. K.H.K. Scaffolding Houston, Inc., 357 S.W.3d 30, 43 (Tex. App.-Houston [1st Dist.] 2011, pet. dism'd); see also RE/MAX of Tex., Inc. v. Katar Corp., 961 S.W.2d 324, 327 (Tex. App.-Houston [1st Dist.] 1997, writ denied) (noting that excuse is an affirmative defense and thus is waived if not pleaded or tried by consent).

         Additionally, Walker, Wilson, and Few Ready Mix argue that Walker and Wilson's breach of the Partnership Agreement was excused because of the jury's finding that EMC Products also breached the agreement. Irrespective of the excuse affirmative defense that was not pleaded in the trial court, the jury concluded that Walker and Wilson were the first to breach the Partnership Agreement. However, whether EMC Products or Walker and Wilson breached first is immaterial because of the well-settled rule that when a party materially breaches an agreement, the non-breaching party can elect to either rescind the agreement or affirm and seek damages, but not both. See Texana Oil Co. v. Stephenson, 521 S.W.2d 104, 106-07 (Tex. App.-El Paso 1975, no writ). Therefore, "[t]reating a contract as continuing, after a breach, deprives the non-breaching party of any excuse for terminating their own performance." Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877, 888 (Tex. App.-San Antonio 1996, writ denied) (citing W. Irrigation Co. v. Reeves County Land Co., 233 S.W.2d 599, 602 (Tex. Civ. App.-El Paso 1950, no writ)).

         Here, Walker and Wilson continued to perform under the Partnership Agreement, despite the purported breach by EMC Products and then sought damages. See id. ("Seeking to recover damages under the contract, as Pate did, is evidence that Pate considered the contract as continuing." (citing Cox, Colton, Stoner, Starr and Co., P.C. v. Deloitte, Haskins & Sells, 672 S.W.2d 282, 286-87 (Tex. App.-El Paso 1984, no writ))). At the point in time that Walker and Wilson believed that EMC Products breached the agreement, they were faced with one of two mutually-exclusive courses of action: (1) discontinue their performance, rescind the contract, and sue for material breach; or (2) continue performing and lose the other party's material breach as an excuse for its own non-performance. Id. (citing W. Irrigation Co., 233 S.W.2d at 602). Therefore, because Walker and Wilson chose to continue performing their duties under the Partnership Agreement after they believed EMC Products breached the agreement, Wilson and Walker forfeited any excuse for their own breach. See id. ("By its actions, Pate chose the latter. Because Pate treated the contract as continuing after Chilton's material breach, Pate forfeited any excuse for its own breach.").

         Having rejected Walker, Wilson, and Few Ready Mix's complaints about the jury's breach-of-contract finding, we therefore overrule their second issue.[3]

         III. Civil Conspiracy & Joint and Several Liability

         In their third issue, Walker, Wilson, and Few Ready Mix argue that appellees' joint-and-several liability theories fail as a matter of law for a number of reasons: (1) the evidence supporting underlying tort liability is lacking; (2) that the "knowingly participated" theory cannot be a valid basis for joint-and-several liability; and (3) the conspiracy theory is flawed.

         A. Applicable Law

         The elements of civil conspiracy are (1) two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages as a proximate result. Tri v. J.T.T., 162 S.W.3d 552, 556 (Tex. 2005); see BP Auto., L.P. v. RML Waxahachie Dodge, LLC, 448 S.W.3d 562, 573 (Tex. App.-Houston [1st Dist.] 2014, no pet.). Civil conspiracy "'requires specific intent' to agree 'to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means.'" Juhl v. Airington, 936 S.W.2d 640, 644 (Tex. 1996) (quoting Triplex Comm'cns, Inc. v. Riley, 900 S.W.2d 716, 719 (Tex. 1995)).

         "[O]nce a civil conspiracy is found, each co-conspirator is responsible for the action of any of the co-conspirators which is in furtherance of the unlawful combination." Akin v. Dahl, 661 S.W.2d 917, 921 (Tex. 1983) (citing Carroll v. Timmers Chevrolet, Inc., 592 S.W.2d 922, 926 (Tex. 1979)). "A finding of civil conspiracy imposes joint and several liability on all conspirators for actual damages resulting from acts in furtherance of the conspiracy." Energy Maint. Servs. Group, LLC v. Sandt, 401 S.W.3d 204, 220 (Tex. App.- Houston [14th Dist.] 2012, pet. denied) (citing Carroll, 592 S.W.2d at 925-26; Greenberg Traurig of N.Y., P.C. v. Moody, 161 S.W.3d 56, 90 (Tex. App.-Houston [14th Dist.] 2004, no pet.)).

         B. Discussion

         Ronin and Lygren both testified that, in 2008 and 2009, they began negotiating with C-Change in California about financing, developing, and commercializing EMC Cement's intellectual property. According to Ronin and Lygren, John Preston, a managing partner of C-Change, and Alan Quasha, the president of Quadrant Management, were involved in the negotiations. Lygren noted that Walker and Wilson were aware of the C-Change negotiations, though Wilson's testimony implied that he was unaware of the negotiations. Nevertheless, as a result of the negotiations, Ronin, Lygren, and C-Change executed a letter of intent calling "for C-Change to commit to contribute a maximum investment of 50 million dollars to . . . California, 49 million to the company and a million to the idea" in exchange for a 51% equity interest in a holding company formed to develop and commercialize EMC Cement technology in California. Beginning in 2010, Quasha and Preston spoke with Walker and Wilson several times. Apparently, Quasha and Preston told Walker and Wilson that they wanted to buy EMC Products' business but did not want to enter into an agreement with Lygren. Both Ronin and Lygren testified that they were unaware that Quasha and Preston were communicating with Walker and Wilson. In any event, in December 2010, EMC Cement called off negotiations with C-Change.

         In January 2011, Walker and Wilson, frustrated with the actions of Lygren and Ronin, decided to stop making the monthly $25, 000 payments on EMC Products' loan with Texas Capital Bank, thereby causing the partnership to default on an underlying loan. Phillip Wood, Texas Capital Bank's Executive Vice President, testified that Walker and Wilson had stated that their goal was to end their relationship with Lygren and allow Quasha and Preston to buy EMC Products' assets at a foreclosure sale following the default. These plans were subsequently relayed to Quasha and Preston, according to the testimony.

         Lygren recounted that, in February 2011, Wilson told Wood that a group represented by Quasha was interested in EMC Products-a sentiment that Quasha confirmed to Wood. On April 12, 2011, Texas Capital Bank noticed the foreclosure of EMC Products' assets for May 3, 2011.

         VHSC formed on April 28, 2011. The company is owned by INEA International, Limited, a company purportedly closely associated with Quasha and Preston. According to Wood, Wilson put together the potential sale of the loan to INEA, which led to Quasha entering into discussions with the bank. These discussions allegedly resulted in a draft agreement that designated Quasha as the sole primary contact for purposes of the agreement.

         Also in April 2011, Lygren informed the bank that EMC Products' license from EMC Cement was "neither assignable nor transferable" and that the foreclosure proceedings would result in the disclosure of intellectual property belonging to EMC Cement. Lygren also noted that the bank had no right to foreclose and that legal action would be taken if the foreclosure was to proceed. Lygren then notified Walker a couple of days before May 3, 2011, that EMC Cement had terminated the license agreement with EMC Products.

         Upon receiving Lygren's notices, the bank decided not to conduct the foreclosure sale. However, Walker and Wilson coordinated the purported sale of the loan to Few Ready Mix, Walker's company, so that Few Ready Mix could foreclose on EMC Products' assets on May 3, 2011. To facilitate the purported sale of the loan, Walker and Wilson both wired over $1.9 million to the bank on behalf of Few Ready Mix. Thereafter, Few Ready Mix sold EMC Products' assets to VHSC at the May 3, 2011 foreclosure sale. Wilson served as the trustee, and Preston was the bidder at the foreclosure sale.

         VHSC bought EMC Products' assets for $3, 126, 090; however, the winning bid left an approximate $800, 000 deficiency on the loan. In any event, Walker testified that he and Wilson equally shared the proceeds from the sale. A day later, Few Ready Mix sold the loan agreement to VHSC for $300, 000. Walker and Wilson once again equally split the proceeds from the sale. And within days of the sale, VHSC began selling products produced by EMC Cement's purported trade secrets.

         Based on the evidence outlined above, and viewing the evidence in the light most favorable to the jury's verdict, we conclude that a rational factfinder could determine that Walker, Wilson, and Few Ready Mix worked together to achieve the common goal of delivering EMC Cement's trade secrets to Quasha and Preston at VHSC by breaching the Partnership Agreement, defaulting on the loan, and ensuring that EMC Products' assets were sold to VHSC at the foreclosure sale-acts that resulted in damage to EMC Cement. See Tri, 162 S.W.3d at 556; Juhl, 936 S.W.2d at 644; Riley, 900 S.W.2d at 719; BP Auto., L.P., 448 S.W.3d at 573; see also Reyes, 272 S.W.3d at 592; City of Keller, 168 S.W.3d at 822. Furthermore, we cannot say that the jury's verdict as to the civil-conspiracy claim is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. See Cain, 709 S.W.2d at 176. Accordingly, we conclude that the evidence supporting the jury's finding of civil conspiracy against Walker, Wilson, and Few Ready Mix is supported by legally- and factually-sufficient evidence. We overrule their third issue.[4]

         IV. Cumulative Error

         In their fourth issue, Walker, Wilson, and Few Ready Mix assert that the trial court's alleged cumulative errors "probably led to the rendition of an improper result." We disagree.

         A. Applicable Law

          "A reviewing court may reverse a lower-court judgment under the cumulative-error doctrine when the record shows a number of instances or error, no one instance being sufficient to call for reversal, yet all instances taken together may do so." Rhey v. Redic, 408 S.W.3d 440, 462 (Tex. App.-El Paso 2013, no pet.) (citing Sproles Motor Freight Lines, Inc. v. Long, 140 Tex. 494, 168 S.W.2d 642, 645 (1943); Univ. of Tex. at Austin v. Hinton, 822 S.W.2d 197');">822 S.W.2d 197, 205 (Tex. App.-Austin 1991, no writ)). "To show cumulative error, an appellant must show that, based on the record as a whole, but for the alleged errors, the jury would have rendered a verdict favorable to it." Id. (citing Hinton, 822 S.W.2d at 205).

         B. Discussion

         In this issue, Walker, Wilson, and Few Ready Mix point to several instances that they assert demonstrate cumulative error. Specifically, they complain that the trial court improperly: (1) included fiduciary-duty questions in the charge; (2) admitted Plaintiff's Exhibit 129 into evidence over their objection; (3) overruled their motion for directed verdict on several claims; and (4) allowed questioning about the failure to disclose discussions surrounding the purchase of the EMC Products note. Based on our review of the record and our analysis of prior issues, there is sufficient evidence to support the jury's liability findings against Walker, Wilson, and Few Ready Mix. And as such, we cannot say that, based on the record as a whole, but for the alleged errors, the jury would have rendered a verdict in favor of Walker, Wilson and Few Ready Mix. See Long, 168 S.W.2d at 645; see also Rhey, 408 S.W.3d at 462; Hinton, 822 S.W.2d at 205. Accordingly, Walker, Wilson, and Few Ready Mix have not satisfied their burden in this issue. See Long, 168 S.W.2d at 645; see also Rhey, 408 S.W.3d at 462; Hinton, 822 S.W.2d at 205. We overrule Walker, Wilson, and Few Ready Mix's fourth issue.

         V. Trade-Secret Misappropriation

         In their first issue, VHSC and Pike assert that EMC Cement's trade-secret claim fails as a matter of law.

         A. Applicable Law

         A trade secret is "any formula, pattern, device or compilation of information which is used in one's business and presents an opportunity to obtain an advantage over competitors who do not know or use it." In re Bass, 113 S.W.3d 735, 739 (Tex. 2003). "There must be a substantial amount of attendant secrecy for information to be a trade secret." Sw. Energy Prod. Co. v. Berry-Helfand, 411 S.W.3d 581, 597 (Tex. App.-Tyler 2013, pet. granted) (citing Rugen v. Interactive Bus. Sys., Inc., 864 S.W.2d 548, 552 (Tex. App.- Dallas 1993, no writ)). "[A] trade secret can exist in a combination of characteristics and components[, ] each of which, by itself, is in the public domain, but the unified process, [the] design and operation of which in unique combination[] affords a competitive advantage, is a protected trade secret." Id. (citing Metallurgical Indus. v. Fourtek, Inc., 790 F.2d 1195, 1202 (5th Cir. 1986)). "A trade secret is not necessarily destroyed by a disclosure, but, in disclosing a trade secret, the owner must establish a confidential relationship with the other party, by contract or otherwise, or the secret will be lost by the disclosure." Id. (citing Furr's, Inc. v. United Specialty Adver. Co., 385 S.W.2d 456, 459 (Tex. App.-El Paso 1964, writ ref'd n.r.e.). With respect to "use, " Texas law has adopted the Restatement definition:

Any exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant is a "use" under this Section. Thus, marketing goods that embody the trade secret, employing the trade secret in manufacturing or production, relying on the trade secret to assist or accelerate research or development, or soliciting customers through the use of information that is a trade secret . . . all constitute "use."

Bohnsack v. Varco, L.P., 668 F.3d 262, 279 (5th Cir. 2012) (quoting Restatement (Third) of Unfair Competition § 40 cmt. c (1995)); see Sw. Energy Prod. Co., 411 S.W.3d at 597.

         Under Texas law, trade-secret misappropriation requires: (1) the existence of a trade secret; (2) a breach of a confidential relationship or improper discovery of the trade secret; (3) use of the trade secret; and (4) damages. See Bohnsack, 668 F.3d at 279; see also Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452, 463 (Tex. App.-Austin 2004, pet. denied); IBP, Inc. v. Klumpe, 101 S.W.3d 461, 476 (Tex. App.-Amarillo 2001, pet. denied). Proof of trade-secret misappropriation often depends upon circumstantial evidence. Sw. Energy Prod. Co., 411 S.W.3d at 598 (citing SI Handling Sys., Inc. v. Heisley, 753 F.2d 1244, 1261 (3d Cir. 1985)).

         B. Discussion

         At trial, Ronin testified about the information that EMC Cement maintained as trade secrets and about specific documents that contained trade-secret information. Specifically, Ronin described confidential Mill Records and test reports from 2010 that contain specific details about EMC Cement processes. Ronin explained that the records show the test results of processing materials through high-energy vibratory-ball mills ("VBM") under different conditions. According to Ronin, the tests show that changing the speed at which fly ash is fed through the mill affects the final product. Additionally, the tests indicate the effects of varying the size and weight of the grinding media, the particle size of the fly ash, and the configuration of the openings on the mill wall. Ronin testified that these test results and records were not intended to be disclosed to the public because they were trade secrets.

         Ronin also explained the he did fill out a patent application for the VBMs, but that he purposely excluded certain information to prevent it from being released to the public. Ronin noted that: "We didn't include information related to an exact positioning of the openings, an exact configuration of the openings, an exact size of the openings related to different rates, through capacities of the mill. So this whole element you always keep it out like the trade secret-know how." He denied including the aforementioned Mill Records and reports from 2010 in the patent application.

         In later testimony, Ronin stated that EMC Cement maintained information as trade secrets about the grinding media-i.e., the ceramic balls-within the mills, the frequency and amplitude of the mill's vibrations, data regarding the alteration of fly ash in the mill, and the results of performance tests on two EMC products, CemPozz and PozzoSlag. Ronin also testified that these trade secrets gave EMC Cement a competitive advantage over its competitors in the cement industry because EMC Cement was the "one company who's doing this" and that EMC Cement had always taken measures to protect and guard the secrecy of the trade-secret information.

         The record reflects that Pike, the former general manager of EMC Products who eventually became President of VHSC, included the Mill Records in the patent application he filed on May 6, 2011, just three days after VHSC acquired the EMC assets at the foreclosure. With regard to the Mill Records, Pike testified that "[t]he data belonged to Texas EMC but what we did with that data and how we modified that mill, particularly the mill, I felt like it was the mill modification nothing to do with the process." Nevertheless, Pike admitted that this information was EMC's trade secrets and that it contained highly-sensitive information.

         Based on our review of the evidence, a rational factfinder could conclude that EMC Cement identified its trade secrets at trial; that Pike used his position at EMC Products to obtain the trade-secret information that ultimately benefitted his new employer, VHSC- a competitor of EMC Products; that Pike used the information in his patent application and VHSC used the information to produce cement subsequent to the foreclosure sale; and that the use of the trade-secret information caused EMC Cement damage. See Bohnsack, 668 F.3d at 279; Sw. Energy Prod. Co., 411 S.W.3d at 598; Trilogy Software, Inc., 143 S.W.3d at 463; Klumpe, 101 S.W.3d at 476. Therefore, viewing the evidence in the light most favorable to the jury's verdict, we conclude that the trade-secret-misappropriation finding is supported by legally-sufficient evidence. See Reyes, 272 S.W.3d at 592; City of Keller, 168 S.W.3d at 822; see also Bohnsack, 668 F.3d at 279; Sw. Energy Prod. Co., 411 S.W.3d at 598; Trilogy Software, Inc., 143 S.W.3d at 463; Klumpe, 101 S.W.3d at 476. Additionally, we cannot say that the jury's verdict as to this claim is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. See Cain, 709 S.W.2d at 176. Thus, we further conclude that the jury's finding as to this claim is supported by factually-sufficient evidence. See id.

         However, despite our conclusion that the jury's finding on the trade-secret-misappropriation claim is supported by legally- and factually-sufficient evidence, VHSC and Pike contend that EMC Cement consistently disclosed its "secret" technology in patent applications and public materials; therefore, there was no trade secret to misappropriate. In addition, VHSC and Pike allege that they were authorized to use any trade secrets that EMC Cement might have had based on licenses acquired in the foreclosure sale.

         The record includes testimony from Ronin, the inventor of the process, about the methods and tools he developed over time for activating fly ash and the data collected from years of experimentation. And as outlined above, information related to the unique configuration, use, and maintenance of the VBMs used to produce CemPozz and PozzoSlag were kept as trade secrets within the company and were not disclosed to the public in advertising materials or in a patent application filed by Ronin. In fact, Ronin testified that he purposefully excluded certain trade-secret information from his patent application to protect it from disclosure to the public. Ronin also noted that PozzoSlag, for example, could not be reproduced using only the information contained in the patent application. The disputed trade-secret information was needed to replicate PozzoSlag. Moreover, the record reveals that it was Pike, not Ronin, who disclosed EMC Cement trade-secret information to the public via his patent application.

         In addition, we are not persuaded by VHSC and Pike's contention that they were authorized to use EMC Cement's trade secrets by virtue of the licenses acquired in the foreclosure sale. The Deed of Trust acquired after the foreclosure sale provided the following definition for "Contracts": [A]ll of the right, title and interest of [EMC Products], including equitable rights, in, to, and under any and all . . . contracts, licenses, or permits which are directly or indirectly related to, or connected with, the development, ownership, maintenance or operation of the [cement plant]." Despite this language, Lygren testified that EMC Cement terminated the License Agreement before the foreclosure sale. To corroborate Lygren's testimony, appellees included an email dated April 20, 2011, notifying Walker that EMC Products' rights under the License Agreement with EMC Cement had been cancelled. Therefore, at the time of the foreclosure sale, EMC Products had no license to convey to VHSC, and thus, VHSC could not have acquired use of EMC Cement's trade secrets by virtue of the License Agreement. Accordingly, we reject VHSC and Pike's arguments with regard to the trade-secret-misappropriation finding and overrule their first issue.

         VI. Breach of Contract, Tortious Interference With an Existing Contract, & Conspiracy

         In their second issue, VHSC and Pike argue that appellees' tortious-interference, breach-of-contract, and conspiracy claims fail as a matter of law.

         A. Applicable Law

         The elements of a breach-of-contract claim are: (1) the existence of a valid contract between plaintiff and defendant; (2) the plaintiff's performance or tender of performance; (3)the defendant's breach of the contract; and (4) the plaintiff's damage as a result of the breach. Runge v. Raytheon E-Systems, Inc., 57 S.W.3d 562, 565 (Tex. App.-Waco 2001, no pet.). On the other hand, the elements for a cause of action for tortious interference with a contract are: (1) an existing contract subject to interference; (2) a willful and intentional act of interference with the contract; (3) that proximately caused the plaintiff's injury; and (4)caused actual damage or loss. Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000).

         B. Discussion

         In 2006, appellees hired Pike as the general manager to oversee day-to-day operations for EMC Products. As a condition of his employment, Pike signed a Management Agreement, which provided that, among other things, he agreed to be bound by the confidentiality provisions of EMC Products' License ...


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