Court of Appeals of Texas, Sixth District, Texarkana
SAMUEL D. ORBISON AND AMERICAN PIPING INSPECTION, INC., Appellants
MA-TEX ROPE COMPANY, INC., Appellee
Submitted: April 26, 2018
Appeal from the County Court at Law No. 2 Gregg County, Texas
Trial Court No. 2016-1631-CCL2
Morriss, C.J., Moseley and Burgess, JJ.
R. Morriss III, Chief Justice
start of the almost five years that Samuel D. Orbison worked
for Ma-Tex Rope Company, Inc. (Ma-Tex), he signed an
employment agreement containing a non-competition agreement,
a non-disclosure agreement, and a non-solicitation agreement.
During his tenure, he learned various things about
Ma-Tex's business and customers and became the
coordinator of Ma-Tex's recertification department.
Orbison continued in that position until he resigned from
Ma-Tex, went to work for Ma-Tex's competitor, American
Pipe Inspections, Inc. (API), as the coordinator of its
recertification department, and began soliciting work for API
from Ma-Tex's customers. This lawsuit arose from that
series of events and centers on Orbison's
non-competition, non-disclosure, and non-solicitation
fabricates and services equipment used in the oil and gas
industry. As part of its services, Ma-Tex recertifies
wireline equipment for companies throughout the
continental United States. Orbison began working for Ma-Tex
in September 2011, at which time he executed the employment
agreement that is at the center of this action. In July 2013,
Orbison became the coordinator of Ma-Tex's
recertification department. He resigned from Ma-Tex August
after Orbison left its employ, Ma-Tex discovered that Orbison
was working for API in the same position he had filled with
Ma-Tex and that he was soliciting recertification work from
Ma-Tex's customers. When Ma-Tex failed to receive a
satisfactory response to its cease-and-desist letter sent to
Orbison and API, Ma-Tex sued them and obtained a temporary
restraining order barring Orbison and API from disclosing or
using Ma-Tex's trade secrets and confidential
information, from soliciting or serving Ma-Tex's
customers, and from competing with Ma-Tex in the servicing
and recertification of wireline equipment in nineteen states.
After a bench trial on the merits, the trial court granted
Ma-Tex a permanent injunction against Orbison and API and
awarded Ma-Tex actual damages and attorney fees against
Orbison and API.
appeal, Orbison and API (Appellants) assert that the trial
court erred in admitting evidence of damages, in awarding
damages, in enforcing the post-employment restrictions
contained in the employment agreement, in issuing the
permanent injunction, in denying Appellants' motion for
sanctions, and in awarding attorney fees against them.
we find that (1) there is insufficient evidence in this
record to support the award of damages for lost profits and
lost good will, we also conclude that (2) there was no abuse
of discretion in issuing the permanent injunction, (3) there
was no abuse of discretion in denying API's motion for
sanctions, (4) there was no abuse of discretion in awarding
attorney fees, (5) Appellants waived any objection to
late-disclosed evidence by refusing the offered continuance,
and (6) Appellants failed to preserve their complaint
regarding termination of the employment contract. Therefore,
we reverse the award of damages for lost profits and good
will, delete the award of just those two elements of damages,
and affirm the trial court's judgment in all other
There Is Insufficient Evidence in this Record to Support
the Award of Damages for Lost Profits and Lost Good Will
challenge the legal sufficiency of the evidence to support
the award of damages for lost profits, lost good will, fee
forfeiture, and profit disgorgement. In its findings of fact,
trial court found that, but for Orbison's solicitation on
behalf of API, Ma-Tex would have secured the two
recertification orders of Halliburton Pinnacle and Arklatex
and that it would have made a net profit of $2, 321.00 on
these orders. The trial court also found that Orbison's
and API's actions in soliciting its customers caused
Ma-Tex to lose good will of the value of $120, 000.00. In
addition, the trial court found that Orbison spent at least
10% of his working time between April 11, 2016, and August
12, 2016, assisting API in setting up its recertification
division to the detriment of Ma-Tex. The trial court also
entered conclusions of law that Ma-Tex should recover unjust
enrichment damages as a result of Orbison's
misappropriation of trade secrets, and for his breach of
fiduciary duties, in the amount of $1, 866.15 (10% of the
salary paid to Orbison by Ma-Tex from April 16 through August
12, 2016), and $2, 307.68 (the amount paid to Orbison by API
from August 15 through August 31, 2016). Appellants challenge
the legal sufficiency of the evidence to support these
reviewing a legal sufficiency complaint of an adverse finding
on which the appellant did not have the burden of proof, the
appellant must demonstrate on appeal that no evidence
supports the adverse finding." Great N. Energy, Inc.
v. Circle Ridge Prod., Inc., 528 S.W.3d 644, 669 (Tex.
App.-Texarkana 2017, pet. denied) (quoting Monasco v.
Gilmer Boating & Fishing Club, 339 S.W.3d
828, 830 (Tex. App.-Texarkana 2011, no pet.) (citing
Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.
1983))). We will find the evidence legally insufficient only
when the record shows
(1) a complete absence of evidence of a vital fact; (2) the
court is barred by rules of law or evidence from giving
weight to the only evidence offered to prove a vital fact;
(3) the evidence offered to prove a vital fact is no more
than a mere scintilla of evidence; or (4) the evidence
established conclusively the opposite of a vital fact.
Id. (quoting Monasco, 339 S.W.3d at 830)
(citing Merrell Dow Pharms. v. Havner, 953 S.W.2d
706, 711 (Tex. 1997)). "When the evidence offered to
prove a vital fact is so weak as to do no more than create a
mere surmise or suspicion of its existence, the evidence is
no more than a scintilla and, in legal effect, is no
evidence." Jelinek v. Casas, 328 S.W.3d 526,
532 (Tex. 2010) (quoting Kindred v. Con/Chem, Inc.,
650 S.W.2d 61, 63 (Tex. 1983)). In considering legal
sufficiency of evidence, we determine "whether the
evidence at trial would enable reasonable and fair-minded
people to reach the verdict under review."
E.R.C., 496 S.W.3d at 284 (quoting City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)).
challenging the trial court's damage award of $2, 321.00
for lost profits, Appellants challenge the legal sufficiency
of the evidence supporting the trial court's findings (1)
that without Orbison's solicitation on behalf of API,
Ma-Tex would have secured the two recertification orders of
Halliburton Pinnacle and Arklatex and (2) that Ma-Tex would
have made a net profit of $2, 321.00 on those orders.
Assuming, without deciding, that sufficient evidence supports
the trial court's finding that Ma-Tex would have secured
the two recertification orders, we find that insufficient
evidence supports its finding that Ma-Tex would have made a
net profit of $2, 321.00 on those orders.
evidence at trial showed that Orbison's solicitation for
API resulted in API securing one recertification job each
from Halliburton Pinnacle and Arklatex. API's invoice to
Halliburton Pinnacle showed charges for recertification of
four 32" WTI sheaves, a load test and visual inspection
of two chain slings and two wire rope slings, and a
½" Loc-a-loy, for total charges of $2, 455.00.
Its invoice to Arklatex showed charges for recertification of
two 17" WTI sheaves, a break test on one prototype tool,
and a line retention pin, for total charges of $885.00.
Testimony regarding Ma-Tex's lost profits from these two
lost sales came from Matthews, its president. Matthews
testified as follows:
Q. [By counsel for Ma-Tex] Would you please just
assume for me I've done the math correctly, and that [the
Halliburton Pinnacle and the Arklatex invoices] total $3,
A. That's correct.
Q. And then based on that number, has Ma-Tex then
attempted to determine how much profit would be derived if
they had done those two sales?
A. Yes, it was close to $2300.
. . . .
Q. (BY MR. SMITH) Make sure that our record
is clear, how much was the amount that you just said?
. . . .
A. It was 23 -- $2321 is your net profits on that -- on those
Texas, what constitutes sufficient evidence of lost profit
damages is well-established:
Recovery for lost profits does not require that the loss be
susceptible of exact calculation. However, the injured party
must do more than show that they suffered some lost profits.
The amount of the loss must be shown by competent evidence
with reasonable certainty. What constitutes reasonably
certain evidence of lost profits is a fact intensive
determination. As a minimum, opinions or estimates of lost
profits must be based on objective facts, figures, or data
from which the amount of lost profits can be ascertained.
Although supporting documentation may affect the weight of
the evidence, it is not necessary to produce in court the
documents supporting the opinions or estimates.
ERI Consulting Eng'rs, Inc. v. Swinnea, 318
S.W.3d 867, 876 (Tex. 2010) (quoting Holt Atherton
Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992)
(citations omitted)). However, "[a] plaintiff 'must
do more than show they suffered some lost profits.'"
Lamont v. Vaquillas Energy Lopeno Ltd.,
LLP, 421 S.W.3d 198, 224 (Tex. App.-San Antonio 2013,
pets. denied) (quoting Houston Mercantile Exch.
Corp. v. Dailey Petrol. Corp., 930 S.W.2d 242, 248 (Tex.
App.-Houston [14th Dist.] 1996, no writ) (citing
Szczepanik v. First S. Trust Co., 883 S.W.2d 648,
649 (Tex. 1994) (per curiam))). Although there may be more
than one method of calculating lost profits, once a method
has been chosen, there must be a complete calculation
provided. Holt Atherton Indus., Inc. v. Heine, 835
S.W.2d 80, 85 (Tex. 1992).
testifying as to the amount of claimed lost profits without
providing any indication of how the lost profits were
determined is legally insufficient evidence of lost profits.
Id. at 84; see Columbia Med. Ctr. of Denton
Subsidiary, L.P. v. DFW Super Grp. II, L.L.C., No.
02-12-00507-CV, 2013 WL 5658185, at *2 (Tex. App.-Fort Worth
Oct. 17, 2013, pet. denied) (mem. op.) (testimony as to
amount of lost profits without evidence indicating how they
were determined is legally insufficient); Village Square,
Ltd. v. Barton, 660 S.W.2d 556, 559-60 (Tex. App.- San
Antonio 1983, writ ref'd n.r.e.) (same); Frank B.
Hall & Co. v. Beach, Inc., 733 S.W.2d 251, 258 (Tex.
App.-Corpus Christi 1987, writ ref'd n.r.e.) (same).
case, Matthews testified that Ma-Tex had lost profits of $2,
321.00 based on the total amount API charged Halliburton
Pinnacle and Arklatex. He provided no explanation of how
these lost profits were determined, and Ma-Tex points to no
other evidence in the record that provided an explanation of
how the lost profits were determined. Rather, Ma-Tex points
only to the API invoices and Matthews' testimony set
forth above and claims that Matthews identified the goods and
services involved, then "computed the incremental profit
that Ma-Tex would have made on these projects."
Even if we were to accept Ma-Tex's rather generous
interpretation of Matthews' testimony, his testimony
still does not provide this Court with the objective facts,
figures, or data from which the amount of lost profits were
calculated, nor the method he used to calculate them.
Consequently, the evidence is legally insufficient to support
the finding of $2, 321.00 in lost profits. We sustain this
appellate issue insofar as it relates to lost profits and
reverse the trial court's award of damages for lost
also challenge the legal sufficiency of the evidence
supporting the trial court's finding that Ma-Tex suffered
$120, 000.00 in damages to its good will. Appellants argue
that Ma-Tex offered no evidence of the value of its good will
before Orbison's actions and offered no evidence showing
how it reached its calculation of its damages. Ma-Tex
responds that there is no set formula in determining good
will damages and that Matthews' testimony shows he
calculated the minimum loss based on his and Drew's time
and the expenditure of company funds to repair its good will.
Both parties point to the following testimony of Matthews as
the only testimony regarding the amount of good will
Q. [By Counsel for Ma-Tex] Has -- has Ma-Tex
undertaken to try to restore its good will it believes it has
lost as a result of Mr. Orbison's conduct?
A. It's going to be very difficult to do so; it's
going to take years to do that.
Q. Do you believe that Ma-Tex has actually suffered
damage to its good will as a result of Mr. Orbison's
. . . .
A. Are you talking about an amount for the good will?
Q. . . . . That is correct.
A. It's $120, 000; 10, 000 a month.
Q. And for how long? That 10, 000 a month is for how
A. Twelve months.
Q. And for how much?
A. 120, 000 total.
will is generally understood to mean the advantages that
accrue to a business on account of its name, location,
reputation and success." Taormina v. Culicchia,
355 S.W.2d 569, 574 (Tex. Civ. App.-El Paso 1962, writ
ref'd n.r.e.). Although good will is intangible, it is an
integral part of a business, and damages may be recovered for
its injury. Tex. & P. Ry. Co. v. Mercer, 90
S.W.2d 557, 560 (Tex. 1936); see Marsh USA, Inc. v.
Cook, 354 S.W.3d 764, 777 (Tex. 2011). The value of good
will is based on "the fixed and favorable consideration
of customers arising from an established and well-known and
well-conducted business." Taormina, 355 S.W.2d
at 574. The rule for measuring damage to good will "is
the same as that for measuring damages to any other
property." Mercer, 90 S.W.2d at 560. However,
the nature of good will "preclude[s] a fixed standard by
which its value might be determined in every case."
Taormina, 355 S.W.2d at 575. Nevertheless, opinions
as to the amount of good will damages must at least "be
based on objective facts, figures or data from which the loss
of goodwill may be ascertained." Auburn Invs.,
Inc. v. Lyda Swinerton Builder, Inc., No.
04-08-00067-CV, 2008 WL 2923643, at *4 (Tex. App.- San
Antonio July 30, 2008, no pet.) (mem. op.); see Ingram v.
Deere, 288 S.W.3d 886, 903 (Tex. 2009) (unsupported
opinion testimony insufficient evidence of value of good
will). Although damages to good will may not be subject to
precise calculation, an opinion as to its estimated value may
not be based on speculation. Sw. Energy Prod. Co. v.
Berry-Helfand, 491 S.W.3d 699, 712 (Tex. 2016).
proper case, damages to good will may be shown by evidence of
the percentage of the salaries of employees required to
forego regular duties, and of other expenses incurred, to
repair the damage to the company's good will, in support
of an opinion estimating the amount of damage to good will.
See, e.g., Dozor Agency, Inc. v. Rosenberg,
218 A.2d 583, 585-86 (Pa. 1966). However, no such evidence
was offered in this case. Matthews merely testified that the
damage to Ma-Tex's good will would be $10, 000.00 a month
for twelve months, totaling $120, 000.00. Matthews never
testified how he determined these estimates. Ma-Tex does not
point to any testimony, and we have found none, that provides
any objective facts, figures, or data in support of his
opinion. See Auburn Invs., Inc., 2008 WL 2923643, at
*4. Consequently, we find the evidence is legally
insufficient to support the trial court's finding of
$120, 000.00 in good will damages. We sustain Appellants'
second issue insofar as it relates to good will damages, and
we reverse the trial court's award of damages for good
also challenge the trial court's conclusions that Orbison
was liable for unjust enrichment damages for his
misappropriation of Ma-Tex's trade secrets, and for fee
forfeiture and profit disgorgement for the breach of his
fiduciary duties to Ma-Tex. They argue that, since Orbison
was an employee of Ma-Tex, he is not subject to a "fee
forfeiture" and that he was not subject to "profit
disgorgement" since there was no evidence that he was
paid a commission on the two recertification jobs performed
by API. The question is, then, whether these remedies are
available against an employee who merely receives a salary.
the term fiduciary "applies to any person who occupies a
position of peculiar confidence towards another" and
"contemplates fair dealing and good faith."
Kinzbach Tool Co. v. Corbett-Wallace Corp., 160
S.W.2d 509, 512 (Tex. 1942). It is well established in Texas
that an employee may be in a fiduciary relationship with his
or her employer. See id. at 513; Wooters v.
Unitech Int'l, Inc., 513 S.W.3d 754, 762-63 (Tex.
App.-Houston [1st Dist.] 2017, pet. denied). An employee may
not, without breaching his fiduciary duties, "(1)
appropriate the company's trade secrets, (2) solicit the
former employer's customers while still working for his
employer, (3) solicit the departure of other employees while
still working for his employer; or (4) carry away
confidential information." Wooters, 513 S.W.3d
at 763 (citing Abetter Trucking Co. v. Arizpe, 113
S.W.3d 503, 512 (Tex. App.-Houston [1st Dist.] 2003, no
pet.)); see Johnson v. Brewer & Pritchard, P.C.,
73 S.W.3d 193, 202 (Tex. 2002). In an unchallenged conclusion
of law, which is supported by the evidence, the trial court
found Orbison breached his fiduciary duties in each of these
the court finds a breach of fiduciary duty, it may fashion an
appropriate equitable remedy, including forfeiture of fees
and disgorgement of any profit made at the expense of the
employer. Swinnea, 318 S.W.3d at 873; Burrow v.
Arce, 997 S.W.2d 229, 245-46 (Tex. 1999); Kinzbach
Tool Co., 160 S.W.2d at 514. As the Texas Supreme Court
noted, when an agent breaches his fiduciary duty, he is
entitled to no compensation for conduct related to the
breach, and if his breach is willful, "he is not
entitled to compensation even for properly performed
services." Burrow, 997 S.W.2d at 244
(quoting Restatement (Second) of Agency § 469 (1958)).
The main purpose of these equitable remedies "is not to
compensate an injured principal, " but rather "to
protect relationships of trust by discouraging agents'
disloyalty." Swinnea, 318 S.W.3d at 872-73
(quoting Burrow, 997 S.W.2d at 238). Thus, a court
"may disgorge all ill-gotten profits from a fiduciary
when a fiduciary . . . usurps an opportunity properly
belonging to a principal, or competes with a principal."
Id. (citing Johnson, 73 S.W.3d at 200). It
may also require the fiduciary to forfeit any compensation
for his work paid by the principal. Id.
the trial court found that Orbison breached his fiduciary
duties to Ma-Tex, it had discretion to impose appropriate
equitable remedies for the breach. Here, it elected to
require forfeiture of a portion of the compensation paid by
Ma-Tex to Orbison during the period of time that Orbison was
assisting API to set up its recertification shop and was
soliciting two of Ma-Tex's employee's to work for
API. In addition, the trial court required disgorgement of an
amount equal to the compensation paid by API to Orbison
during the time that Orbison was actively competing with
Ma-Tex by using Ma-Tex's confidential information to
solicit its customers. Under Swinnea and the cases
cited therein, we see no essential distinction between
forfeiting a fee paid to an attorney or trustee who breaches
his fiduciary duty and forfeiting the salary paid to an
employee who does the same. In each instance the breaching
fiduciary received compensation from the principal while
breaching his trust. Neither do we see an essential
distinction between disgorging a fee paid to, or the profit
made by, an agent who usurps his principal's business
opportunity and disgorging an amount equal to the salary paid
to a former employee by his new employer when the former
employee uses confidential information and trade secrets to
solicit the customers of his former employer. In each
instance, the breaching fiduciary profited by, or received
compensation for, breaching the trust of his principal. The
same principles apply to each of these circumstances, and the
remedies of forfeiture and disgorgement are "necessary
to prevent such abuses of trust." Id. at 874.
we find that, under the circumstances of this case, Orbison
was subject to the forfeiture of his salary paid by Ma-Tex
and to the disgorgement of the salary paid to him by API
while he was actively using Ma-Tex's confidential
information to solicit its customers. We overrule
Appellants' second issue insofar as it relates to damages
based on forfeiture and disgorgement.
There Was No Abuse of Discretion in Issuing the Permanent
challenge certain aspects of the restrictions contained in
the permanent injunction. A trial court's grant or
denial of a permanent injunction is reviewed for an abuse of
discretion. In re Epperson, 213 S.W.3d 541, 542-43
(Tex. App - Texarkana 2007, no pet.) (citing Operation
Rescue-Nat'l v. Planned Parenthood of Houston & Se.
Tex., Inc., 975 S.W.2d 546, 560 (Tex. 1998)). The trial
court abuses its discretion when it acts without reference to
any guiding rules and principles. Downer v. Aquamarine
Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985).
pertinent part, the permanent injunction provides that
Orbison and API desist and refrain from:
a. Directly or indirectly disclosing or using Ma-Tex's
trade secrets and confidential information, which shall
include Ma-Tex's (1) uniquely-developed tracking
software, and information derived therefrom; and (2) all
information about Ma-Tex's customers, including pricing
information, purchase and bid histories, needs and
requirements, and contact information of decision makers;
b. Directly or indirectly competing with Ma-Tex's niche
business, in which it sells, services, and recertifies
wireline equipment used in the upstream production of oil and
gas, in the following United States markets: Texas,
Louisiana, New Mexico, Oklahoma, Arkansas, Utah, Colorado,
California, Kansas, Kentucky, Pennsylvania, Illinois,