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Abatecola v. 2 Savages Concrete Pumping, LLC

Court of Appeals of Texas, Fourteenth District

June 26, 2018

ANNA ABATECOLA, ROBERT ABATECOLA, HI-TECH CONCRETE PUMPING SERVICES PCD, LLC AND ABATECOLA LEASING, Appellants
v.
2 SAVAGES CONCRETE PUMPING, LLC AND JOSEPH LOWRY, INDIVIDUALLY, Appellees

          On Appeal from the 212th District Court Galveston County, Texas Trial Court Cause No. 17-CV-0186

          Panel consists of Justices Brett Busby, Brown, and Jewell.

          MEMORANDUM OPINION

          Marc W. Brown Justice

         This is an interlocutory appeal from the trial court's order denying a motion to dismiss based on the Texas Citizens' Participation Act ("TCPA"). Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001-.011 (West 2017). We affirm the trial court's denial of the motion to dismiss with regard to tortious interference claims based on continued employment and interference with customers. We conclude the trial court erred by denying the motion to dismiss 2 Savages' tortious interference claim based on hiring, by denying the motion to dismiss as moot with regard to nonsuited claims, and by ordering an award of attorney's fees and costs.

         I. Background[1]

         Joseph Lowry and Chad MacDonald created a concrete pumping company known as 2 Savages Concrete Pumping LLC ("2 Savages") in August 2016. In October 2016, MacDonald entered into a Company Agreement with Lowry which contained non-competition, non-solicitation, and non-disclosure provisions. 2 Savages and Lowry broadly refer to these restrictive covenants collectively as "the Non-Compete Contract" or "the Non-Compete Agreement."

         In early February 2017, the business relationship between Lowry and MacDonald "unraveled," and on February 14, 2017, Lowry and 2 Savages filed suit against MacDonald. In the original petition, Lowry and 2 Savages asserted claims against MacDonald for breach of fiduciary duty, breach of contract, libel, theft, and negligent misrepresentation.

         On March 13, 2017, Hi-Tech Concrete Pumping Services PCD, LLC ("HiTech") hired Chad MacDonald as a pump operator. Soon thereafter, Lowry noticed that "several of 2 Savages usual customers began having their jobs handled by HiTech." 2 Savages and Lowry amended their petition to include tortious interference causes of action against Hi-Tech; its owners, Anna and Robert Abatecola; and Abatecola Leasing, an entity that buys equipment and leases it to Hi-Tech (collectively, "the Hi-Tech Parties"). 2 Savages and Lowry asserted the Hi-Tech Parties tortiously interfered with the restrictive covenants in the Company Agreement and 2 Savages' agreements with its customers. The allegations against the Hi-Tech Parties were limited to four paragraphs. After referencing and quoting some of the restrictive covenants, the first amended petition stated:

On or about March 14, 2017, the undersigned sent a Cease and Desist letter to Defendant, Hi-Tech Concrete Pumping Company, Inc. advising them of the "Non-Compete" contract between Plaintiffs and Defendant, Chad MacDonald. [The Hi-Tech Parties] were warned about their interference with Plaintiffs [sic] customers and contracts and that they were encouraging, abetting and enabling the violation of the Non-Compete Agreement.
Upon information and belief, [the Hi-Tech Parties] hired Defendant, Chad MacDonald to work for them after being informed of the Non-Compete Agreement they continued to employ Chad MacDonald in violation of the Agreement and to enrich themselves. In doing so, [the Hi-Tech Parties] interfered with 2 Savages [sic] contractual agreement with Chad MacDonald (i.e. Non-Compete contract) and interfered with 2 Savages [sic] contractual agreement with its customers.
Specifically, [the Hi-Tech Parties] have conspired with Defendant Chad MacDonald to violate and interfere with the Non-Compete Contract between himself and 2 Savages. As a result, Plaintiffs have lost business income and will continue to lose business income until the Court orders all Defendants to cease from such activity.

         The Hi-Tech Parties filed a motion to dismiss the claims against them under the TCPA. The motion asserted that the TCPA applied to the tortious interference claims because the claims were based on, related to, or were in response to the HiTech Parties' exercise of their right to association and right to free speech. The motion argued that 2 Savages and Lowry could not meet their burden under the TCPA, and therefore, the tortious interference claims should be dismissed with prejudice, and the Hi-Tech Parties should recover attorney's fees, court costs, and expenses. The affidavit of Robert Abatecola was attached in support of the motion.

         In his affidavit, Robert described Hi-Tech as a "family owned concrete pumping company," "one of the largest concrete pumping services in the greater Houston area," and a competitor of 2 Savages. With regard to Chad MacDonald, Robert admitted, "We communicated with MacDonald as a potential employee and as an employee in furtherance of Hi-Tech's concrete pumping business." With regard to customers, Robert admitted, "We communicated with customers on jobs that MacDonald worked in furtherance of Hi-Tech's services of providing concrete pumping and pumping operators." Robert also pointed out, "MacDonald resigned two-weeks [after his hire] on March 29, 2017."

         On July 3, 2017, 2 Savages and Lowry amended their petition a second time, [2]removing the Abatecolas and Abatecola Leasing as defendants. In addition to removing these defendants, the second amended petition slightly clarified the middle paragraph of the tortious interference allegations quoted above:

Upon information and belief, Defendant Hi-Tech hired Defendant MacDonald to work for it and--after being informed of the Non-Compete Agreement--they continued to employ Chad MacDonald in violation of the Agreement and to enrich themselves. In doing so, Defendant Hi-Tech has interfered with 2 Savages [sic] contractual agreement with its customers.

         On the same day, 2 Savages and Lowry filed a nonsuit, dismissing their claims against the Abatecolas and Abatecola Leasing without prejudice. Also on the same day, 2 Savages and Lowry filed their response to the Hi-Tech Parties' motion to dismiss. As the claims against the Abatecolas and Abatecola Leasing had been nonsuited, the response only asked the trial court to deny Hi-Tech's motion to dismiss.

          The response argued that the TCPA did not apply to proprietary information, trade secrets, non-compete agreements, or commercial activity. The response alternatively argued that 2 Savages and Lowry could meet their burden under the TCPA. The response requested recovery of attorney's fees and costs. Joseph Lowry's affidavit was attached in support of the response.

         In his affidavit, Lowry identified Hi-Tech as a "direct competitor of 2 Savages." Lowry asserted that even after he had informed the Abatecolas and HiTech of MacDonald's restrictive covenants, Hi-Tech continued to employ MacDonald, "steal" 2 Savages' customers, use 2 Savages' proprietary data against it, and "attack" 2 Savages' business. Lowry described 2 Savages' business losses:

Immediately after Chad MacDonald was hired [by Hi-Tech], I noticed that several of 2 Savages [sic] usual customers began having their jobs handled by Hi-Tech after Chad MacDonald went over there. Customers (and job values) that I believe were now having their concrete poured by Hi-Tech were: KWM Houston ($2, 000.00), Lamson Construction ($1, 800.00), Merryland Houston ($2, 500.000 [sic] and Olivan Construction ($11, 500.00). I personally spoke with the franchise owner of the Galveston Double Tree Hospitality Hotel who informed me that Hi-Tech poured their concrete job, which I had valued at $5, 000.00.
2 Savages lost tens of thousands of dollars in jobs over the next few weeks. Those customers have not returned and may never return. 2 Savages has been severely damaged by Hi-Tech's interference with the valid, binding Agreement.
. . .
The effect of Hi-Tech's misappropriation of 2 Savages' data was so immediate and strong that I knew about Chad MacDonald's hiring and damage to the business, literally, within 24 hours.

         Lowry also averred in his affidavit that Hi-Tech tortiously interfered by using its relationship with MacDonald to approach and hire away other 2 Savages personnel in violation of MacDonald's restrictive covenants. Further, while MacDonald was employed by Hi-Tech, "it had him going online and attacking my business, approaching my customers, disparaging my business." Lowry contends, "Hi-Tech pumped [MacDonald] for confidential proprietary information about my customers, pricing, and jobs" and "[e]ven though Hi-Tech has terminated Chad MacDonald, it is still damaging 2 Savages' business by using the proprietary information it stole."

         On July 5, 2017, Lowry filed a nonsuit on his claims against Hi-Tech. The only remaining claims asserted against the Hi-Tech Parties in the second amended petition were 2 Savages' tortious interference claims against Hi-Tech.

         On July 6, 2017, the Hi-Tech Parties filed a reply in support of their motion to dismiss. The Hi-Tech Parties argued that the nonsuited parties maintained a right to recover attorney's fees and a dismissal with prejudice pursuant to the TCPA.

         On July 7, 2017, the trial court signed two orders nonsuiting, without prejudice, the claims asserted against the Abatecolas and Abatecola Leasing, as well as Lowry's claim against Hi-Tech.

         After some additional briefing and hearings, the trial court signed an order denying the Hi-Tech Parties' motion to dismiss on August 4, 2017. In the order, the court found that the Abatecolas and Abatecola Leasing "have been non-suited and dismissed without prejudice from this case, and that Defendant [Hi-Tech] is the sole moving defendant in this motion to dismiss under the Texas Citizens Participation Act." Consequently, the court only ruled on the merits of the motion to dismiss as it pertained to claims against Hi-Tech. In support of its denial, the court made the following findings:

The Court . . . finds Plaintiff sued Defendant Chad MacDonald for violating, and Defendant [Hi-Tech] for tortuously [sic] interfering with, a written Non-Disclosure, Trade Secrets, and Non-Competition Agreement.

The Court further finds that the allegations in Plaintiff's live pleadings are for contractual protection of proprietary information and trade secrets, and are therefore not subject to TCPA application.

The Court further finds that the Non-Disclosure, Trade Secrets, and Non-Competition Agreement sued upon by Plaintiffs herein is not subject to TCPA application.
The Court further finds that the [TCPA] does not apply to commercial activity, as described in Tex. Civ. Prac. & Rem. Code § 27.010(b), which states it does not apply to: "a legal action brought against a person primarily engaged in the business of selling . . . goods or services, if the statement or conduct arises out of the sale of goods or services, . . . or a commercial transaction in which the intended audience is an actual or potential buyer of customer."
The Court further finds that the Defendant, [Hi-Tech], knew or should have known of the exclusion under the TCPA (described herein), and awards attorney fees, expenses and court costs to Plaintiffs for their defense of this motion.
Plaintiffs are ORDERED to submit evidence of reasonable attorney fees, expenses and court costs by affidavit within days from the date of this order.

         After 2 Savages and Lowry's attorney submitted an affidavit and request for attorney's fees, the Hi-Tech Parties objected to the request for attorney's fees, arguing, among other things, that there had been no finding that the motion to dismiss had been frivolous or solely intended for delay. This interlocutory appeal followed.

         II. Analysis

         The Hi-Tech Parties bring five issues on appeal. They assert the trial court erred by: (1) finding that the TCPA did not apply; (2) denying the motion to dismiss "on the basis that [2 Savages] met [its] burden to prove that the commercial speech exemption applied"; (3) holding Hi-Tech liable for attorney's fees and costs based on an incorrect standard; (4) denying the motion to dismiss because 2 Savages did not prove a prima facie case of the elements of its claims, as required by the TCPA; and (5) denying, by operation of law, the motion to dismiss as it applied to nonsuited claims.

         A. TCPA Framework and Standard of Review

         The TCPA, codified in chapter 27 of the Civil Practice and Remedies Code, protects citizens from retaliatory lawsuits that seek to silence or intimidate them on matters of public concern. In re Lipsky, 460 S.W.3d 579, 586 (Tex. 2015) (orig. proceeding); see generally Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001-.011. The statute is an anti-SLAPP law, with "SLAPP" being the acronym for "Strategic Lawsuits Against Public Participation." See Fawcett v. Grosu, 498 S.W.3d 650, 654 (Tex. App.-Houston [14th Dist.] 2016, pet. denied). The purpose of the statute is to identify and summarily dispose of lawsuits designed only to chill First Amendment rights, not to dismiss meritorious lawsuits. In re Lipsky, 460 S.W.3d at 589; see also Tex. Civ. Prac. & Rem. Code Ann. § 27.002. However, the TCPA is broadly worded, and as a result, it has been very broadly applied.

Texas courts' brief history of applying the broadly worded TCPA has not limited application of the Act's protections to weighty issues of great public concern. The dismissal mechanism of the statute has been applied in cases for fraud and barratry, a suit for contamination of a water well, a dispute between neighbors over a fence, defamation claims arising from an employment dispute, a snarl of competing claims arising from discussions among horse breeders on social media, and a host of other types of claims.

Long Canyon Phase II & III Homeowners Assoc., Inc. v. Cashion, 517 S.W.3d 212, 216-17 (Tex. App.-Austin 2017, no pet.) (citations omitted).

         The TCPA provides a two-step process to expedite the dismissal of a "legal action" that is "based on, relates to, or is in response to a party's exercise of the right of free speech, right to petition, or right of association." Tex. Civ. Prac. & Rem. Code Ann. § 27.003(a). First, the movant seeking dismissal under the TCPA must "show[ ] by a preponderance of the evidence that the [nonmovant's] legal action is based on, relates to, or is in response to the [movant]'s exercise of: (1) the right of free speech; (2) the right to petition; or (3) the right of association." Id. § 27.005(b). Second, if the movant makes that showing, the burden shifts to the nonmovant to "establish[ ] by clear and specific evidence a prima facie case for each essential element of the claim in question" to avoid dismissal.[3] Id. § 27.005(c).

         The TCPA exempts certain types of legal actions from its application. See id. § 27.010. In this case, the only pertinent exemption is the "commercial speech" exemption found in section 27.010(b). Section 27.010(b) provides:

This chapter does not apply to a legal action brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product, insurance services, or a commercial transaction in which the intended audience is an actual or potential buyer or customer.

Id. The nonmovant bears the burden of proving the statutory exemption. Deaver v. Desai, 483 S.W.3d 668, 673 (Tex. App.-Houston [14th Dist.] 2015, no pet.).

         The "evidence" the trial court "shall consider" in "determining whether a legal action should be dismissed" under the TCPA expressly includes "the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based." Tex. Civ. Prac. & Rem. Code Ann. § 27.006(a). "The TCPA contemplates primary reliance on such proof." Lona Hills Ranch, LLC v. Creative Oil & Gas Operating, LLC, __ S.W.3d __, No. 03-17-00743-CV, 2018 WL 1868054, at *3 (Tex. App.-Austin Apr. 19, 2018, no pet.) (citing Tex. Civ. Prac. & Rem. Code Ann. § 27.006(a) and Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017) ("The basis of a legal action is not determined by the defendant's admissions or denials but by the plaintiff's allegations . . . . When it is clear from the plaintiff's pleadings that the action is covered by the Act, the defendant need show no more.") (internal footnotes omitted)).

         We review de novo whether claims are covered by the TCPA. Deaver, 483 S.W.3d at 672. We also review de novo issues of statutory construction. ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 899 (Tex. 2017) (per curiam).

         B. ...


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