Court of Appeals of Texas, Fifth District, Dallas
Original Proceeding from the 68th Judicial District Court
Dallas County, Texas Trial Court Cause No. 12-04005
Justices Francis, Brown, and Whitehill
underlying proceeding involves a contentious business dispute
between relator Patrick Daugherty and his former employer,
Highland Capital. Daugherty seeks a writ of habeas corpus
vacating a criminal contempt order. This Court stayed the
contempt order and requested a response to the petition.
After reviewing the petition, Highland Capital's
response, Daugherty's reply, and the record, we conclude
Daugherty is entitled to the relief requested and we grant
the writ of habeas corpus.
permanent injunction was entered in 2014 that prohibits
[R]etaining, using, disclosing, publishing or disseminating
Highland's (or its affiliates') confidential,
proprietary, and/or privileged information concerning
Highland's customers, clients, marketing, business and
operational methods, contracts, financial data, technical
data, e-mail, pricing, management methods, finances,
strategies, systems, research, plans, reports,
recommendations and conclusions, tear sheets, industry
comparative analysis, Collateralized Loan Obligation (CLO)
and other structured products, and names, arrangements with,
or other information relating to Highland's (or its
affiliates') customers, clients, suppliers, financiers,
owners, and business prospects.
20, 2017, Highland filed a "Supplemental Motion to Show
Cause" in which Highland sought to hold Daugherty in
contempt for violating the permanent injunction. The
allegations focused on Daugherty's engaging in three
conversations with another former Highland Capital employee,
Joshua Terry, about Highland Capital. In addition to being a
former employee, Terry is a party to an ongoing arbitration
proceeding involving the management of a Highland-affiliated
fund, Acis Capital Management, L.P.
trial court "found, beyond a reasonable doubt, that
Daugherty violated the Permanent Injunction" on the
following three occasions "during conversations
with" Terry (1) "on July 4, 2016, " (2)
"during December 2016, " and (3) "in February
or March 2017." The trial court found that Daugherty had
violated the permanent injunction during each of those
conversations by doing the following:
Daugherty used and/or disclosed information regarding
Highland and/or its affiliates (including Highland Employee
Retention Assets, LLC, NexBank Capital, Inc., and Acis
Capital Management, L.P.), and the operational and tax
strategies employed by such entities.
trial court sentenced Daugherty to 38 days' confinement
and a $1, 500 fine "for using, disclosing, and
disseminating Highland's and its affiliates'
confidential, proprietary, and/or privileged information, as
defined in the Permanent Injunction." The punishment was
broken down as follows:
• $500 for each violation.
• Three days' confinement in the Dallas County jail
for the July 4, 2016 communication with Terry.
• Two weeks' confinement (14 days) for the
communications with Terry in December 2016.
• Three weeks' confinement (21 days) for the
communications with Terry in February or March 2017.
Three Conversations with Terry
conceded at the August 28, 2017 contempt hearing that
Highland sought the contempt order solely on the three
conversations between Terry and Daugherty:
While we do think that Mr. Daugherty violated the injunction
with respect to the Wall Street Journal, that was not the
basis of the supplemental show cause motion and that's
not the basis we're here today. Actually I'll point
out that Mr. York in his objection to the show cause order
said, although factually incorrectly, that there was no
notice of the communications between Daugherty and Terry,
shows exactly that he knows what we're here for today.
That is exactly what we're here for ...