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Erdner v. Highland Park Emergency Center, LLC

Court of Appeals of Texas, Fifth District, Dallas

May 22, 2019

JEFFREY ERDNER, D.O. AND THE EMERGENCY CENTER AT WEST 7TH, LLC, Appellants
v.
HIGHLAND PARK EMERGENCY CENTER, LLC, Appellee

          On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-01059

          Before Justices Whitehill, Molberg, and Reichek

          OPINION

          KEN MOLBERG JUSTICE

         Highland Park Emergency Center, LLC (HPEC) sued Jeffrey Erdner, D.O. for breach of fiduciary duty. It sued The Emergency Center at West 7th, LLC (West 7th) for aiding and abetting the breach. Specifically, HPEC alleged that Erdner, one of its members, usurped an opportunity to expand HPEC's business operations for his own personal benefit, communicated with investors about forming West 7th to capitalize on the opportunity, and misled HPEC and its other members about his activities.

         Appellants filed a motion to dismiss HPEC's claims pursuant to the Texas Citizens Participation Act, Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001-.011 (the TCPA). Following a hearing, the trial court denied the motion. In two issues, appellants argue the trial court erred by denying the motion to dismiss because the TCPA applies to HPEC's claims and HPEC failed to establish by clear and specific evidence a prima facie case for each element of its claims.

         The TCPA applies only if HPEC's claims are based on, related to, or in response to appellants' exercise of one of the rights protected by the statute, each of which requires a "communication." Appellants assert they are entitled to the protection of the statute because Erdner's communications with other investors constituted the exercise of the right of association and the right of free speech, as defined by the TCPA.

         We conclude appellants failed to meet their burden of establishing the TCPA applies to HPEC's claims because Erdner's communications did not (1) involve the public or citizen's participation required for the exercise of the right of association or (2) relate to a matter of public concern as required for the exercise of the right of free speech. Accordingly, we affirm the trial court's order denying the motion to dismiss.

         Background

         HPEC, a member-managed limited liability company, operates a freestanding emergency room (FSER) in Dallas. In 2011, Erdner was admitted as a member of HPEC and named as one of its managers. Erdner was considered to be the chief financial officer of HPEC.

         On December 16, 2013, Perren Gasc of Centennial Retail Services sent an email to "admin" at HPEC about an "HP Emergency Care Site" in Fort Worth. Gasc indicated the location proposed for a new FSER was a mixed-use project similar to HPEC's location in Dallas. Gasc attached marketing information to the email and inquired as to who would be the best person to speak to regarding the opportunity.

         HPEC alleges that Erdner, the only member of HPEC who had access to the "admin" email, became aware of the opportunity but did not disclose it to the other members of HPEC. Instead Erdner contacted investors in Arizona about the opportunity and formed a number of limited liability companies, including West 7th, to hide his conduct. West 7th ultimately built an FSER in the same area as proposed by Gasc in his email.

         Erdner, on the other hand, contends the "front desk" at HPEC monitored the "admin" email, and he did not see the email from Gasc. Rather, he was approached in December 2013 by a neighbor and long-time friend who offered him an investment opportunity. The opportunity was available only to Erdner individually and not to the other members of HPEC. Erdner spoke with HPEC's attorney about the investment opportunity and was told the HPEC Company Agreement did not prevent him from taking advantage of the opportunity and he was not required to tell the other members of HPEC about the opportunity.

         Erdner claims that, because he wanted to be transparent, he disclosed his involvement in the investment opportunity to the other members of HPEC. In a July 20, 2014 email to one of the other members, Erdner stated he had been contacted by a start-up medical company, his work for that company would be from home on his own time, and there would be no shift-work. Erdner stated the new company "deals with a variety of aspects, including medical software, hospital management, ER physician contracts, ER physician management, and hospital/ER development." He represented that most of the new company's work "intends to be outside of Texas," but the company was interested in opening "a limited number of free standing ER's in Texas." Erdner stated the new company had agreed to abide by the non-compete clause in HPEC's Company Agreement, and the work would "by no means affect anything from the HPEC standpoint."

         On July 25, 2014, Erdner sent another email, this time to all the other members of HPEC. Erdner stated he was not joining a group of doctors whose "mission" was to open FSERs. Rather, the new company had a primary focus of "micro-hospitals" in states in which FSERs were not protected by law. Following its initial discussions with Erdner, the company expressed an interest in "a minimal FSER involvement in Texas and Colorado." Erdner stated that HPEC was his primary job and responsibility, his commitment and goals toward HPEC were "unwavering," and he would not share "insider information" with the new company.

         Erdner withdrew as a member of HPEC on May 2, 2015. West 7th opened an FSER in Fort Worth in June or July of 2016. HPEC alleged that Erdner and his partners subsequently opened an FSER in Arlington and had plans to open one in San Antonio and that Erdner also "parlayed" the initial opportunity for the Fort Worth FSER into four emergency centers in Arizona.

         HPEC sued Erdner for breach of fiduciary duty for usurping HPEC's opportunity to open an FSER in Fort Worth and West 7th for aiding and abetting Erdner's conduct. HPEC specifically alleged that Erdner failed to offer or advise HPEC or its members of the Fort Worth opportunity, used "corrupted business judgment" to withhold information about the opportunity from HPEC and its members, made misleading and materially false representations to HPEC and its members about the scope and nature of his separate business dealings, and misappropriated HPEC's confidential and proprietary information for his personal benefit.

         Appellants filed a motion to dismiss HPEC's claims pursuant to the TCPA. Appellants asserted that HPEC's claims were based on, related to, or in response to appellants' exercise of their right of association and right of free speech and that HPEC could not produce clear and specific evidence of a prima facie case for each claim. The trial court denied the motion to dismiss, and appellants filed this interlocutory appeal.

         Applicable Law and Standard of Review

         The TCPA "protects citizens . . . from retaliatory lawsuits that seek to intimidate or silence them." In re Lipsky, 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding). The stated purpose of the statute is to "encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury." Tex. Civ. Prac. & Rem. Code Ann. § 27.002; see also ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per curiam) (Coleman II). We construe the TCPA "liberally to effectuate its purpose and intent fully." Tex. Civ. Prac. & Rem. Code Ann. § 27.011(b); see also State ex rel. Best v. Harper, 562 S.W.3d 1, 11 (Tex. 2018).

         "To effectuate the statute's purpose, the Legislature has provided a two-step procedure to expedite the dismissal of claims brought to intimidate or to silence a defendant's exercise of [the] First Amendment Rights" protected by the statute. Coleman II, 512 S.W.3d at 898; see also Tex. Civ. Prac. & Rem. Code Ann. §§ 27.003(a), .005(b); Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018). The movant bears the initial burden of showing by a preponderance of the evidence that the legal action is based on, relates to, or is in response to the movant's exercise of the right of free speech, the right to petition, or the right of association. Tex. Civ. Prac. & Rem. Code Ann. § 27.005(b); see also S&S Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 847 (Tex. 2018). If the movant makes this showing, the burden shifts to the non-movant to establish by clear and specific evidence a prima facie case for each essential element of its claims. Tex. Civ. Prac. & Rem. Code Ann. § 27.005(c); see Elliott, 564 S.W.3d at 847.

         Whether the TCPA applies to HPEC's claims is an issue of statutory interpretation that we review de novo. See Youngkin, 546 S.W.3d at 680. In construing the statute, we "ascertain and give effect to the Legislature's intent as expressed in the language of the statute." Harper, 562 S.W.3d at 11; see also Travis Cent. Appraisal Dist. v. Norman, 342 S.W.3d 54, 58 (Tex. 2011) ("Legislative intent . . . remains the polestar of statutory construction." (internal citations omitted)). We consider both the specific statutory language at issue and the statute as a whole. In re Office of Att'y Gen., 422 S.W.3d 623, 629 (Tex. 2013) (orig. proceeding); see also Youngkin, 546 S.W.3d at 680 ("[L]egislative intent derives from an act as a whole rather than from isolated portions of it.").

         We endeavor to read the statute contextually, giving effect to every word, clause, and sentence. In re Office of Att'y Gen., 422 S.W.3d at 629; see also Norman, 342 S.W.3d at 58 (noting courts should "never" apply requirement that Legislature clearly and unambiguously express its intent to waive immunity "mechanically to defeat the law's purpose or the Legislature's intent"). We apply the statute's words according to their plain and common meaning, "unless a contrary intention is apparent from the context, or unless such a construction leads to absurd results." Youngkin, 546 S.W.3d at 680; see also Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011) ("The plain meaning of the text is the best expression of legislative intent unless a different meaning is apparent from the context or the plain meaning leads to absurd or nonsensical results."). Although we must adhere to the definitions supplied by the Legislature in the TCPA, Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex. 2018); Youngkin, 546 S.W.3d at 680, in the process of applying those "isolated" definitions, we are required to construe individual words and provisions in the context of the statute as a whole, Youngkin, 546 S.W.3d at 680-81.

         Analysis

         In their first issue, appellants assert they met their initial burden of showing the TCPA applies because HPEC's claims are based on, related to, or in response to appellants' exercise of the right of association or the right of free speech. See Tex. Civ. Prac. & Rem. Code Ann. § 27.005(b). Both the right of association and the right of free speech, as defined by the TCPA, require a "communication," see Tex. Civ. Prac. & Rem. Code Ann. ยง 27.001(2)-(3), which includes "the making or submitting of a ...


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