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American Mortgage & Equity Consultants, Inc. v. Bowersock

United States District Court, W.D. Texas, Austin Division

May 24, 2019




         Before the Court is Plaintiff American Mortgage & Equity Consultants, Inc.'s (“AMEC”) motion for entry of a temporary restraining order and preliminary injunction, (Dkt. 8), and responsive briefing from Defendants Arien Bowersock (“Bowersock”) and The Home Loan Expert (collectively, “Defendants”), (Dkt. 13). On May 16, 2019, the parties participated in a hearing on AMEC's motion. The hearing was continued on May 23, 2019. After considering the motion, the supporting evidence, and the relevant law, the Court finds that the motion should be denied.

         I. BACKGROUND

         AMEC is a full service mortgage lender incorporated in Minnesota, where it also has its headquarters and principal place of business. (Compl., Dkt. 1, at ¶ 1). Bowersock is a Texas resident who was employed by AMEC as a Loan Officer in its Austin office. (Id. ¶ 2). Bowersock serviced AMEC customers throughout the Austin area. (Id.). The Home Loan Expert is another full service mortgage lender, incorporated in Missouri and with its headquarters and principle place of business there. (Id. ¶ 3). Bowersock now works for The Home Loan Expert out of its Austin office. (Id. ¶ 2).

         AMEC alleges that on the morning of March 8, 2019, Bowersock suddenly resigned. (Id. ¶ 11). When her coworkers began to arrive at the office that morning, they found that the locks on the doors had been changed. According to AMEC, Bowersock had hired a locksmith to change the locks while she “hijacked” the office. (Id.). With her coworkers locked out, Bowersock “downloaded and took her AMEC Outlook email database and customer and vendor contact information, and other stored customer information” including dozens of hard copy files. (Id.). AMEC further alleges that for weeks prior to her resignation, Bowersock had been transitioning business over to The Home Loan Expert. She had allegedly (1) told her assistant that she was already transferring AMEC customer loan information to The Home Loan Expert; (2) used her AMEC email and computer to conduct business for The Home Loan Expert; (3) consulted with an IT expert about how to take information from AMEC's computer databases undetected; (4) forwarded information about AMEC customers and their loans from her AMEC email address to her personal email address; (5) set up a Dropbox in violation of AMEC policy to store information about the AMEC customers with whom she worked; (6) marked files in the Dropbox as “HLE” for The Home Loan Expert and provided The Home Loan Expert with access to those files; and (7) intentionally delayed completing pending loans so that she could close them for The Home Loan Expert. (Id.). Bowersock also allegedly solicited an AMEC support staff member to leave AMEC to work for Defendants. (Id. ¶ 13; Schneider Decl., Dkt. 8-1, ¶ 7). According to AMEC, the information taken by Bowersock is all that was needed for The Home Loan Expert to “set up shop” in Austin and start competing with AMEC. (Id. ¶ 12).

         On the basis of these allegations, AMEC asserts causes of action against Defendants for (1) breach of contract; (2) misappropriation of trade secrets under the Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq. (“DTSA”); (3) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (“CFAA”); (4) breach of fiduciary duty; (5) tortious interference with a contact; (6) misappropriation of trade secrets under the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code §§ 134A.001 et seq. (“TUTSA”); (7) civil conspiracy; (8) unjust enrichment; and (9) conversion. (Id. at 10-18).

         A week after filing its complaint, AMEC filed the instant motion for a temporary restraining order (“TRO”).[1] (Mot., Dkt. 3, at 2-4). AMEC bases its request for a TRO on its breach of contract, misappropriation of trade secrets, and tortious interference claims. (Mot., Dkt. 8, at 2-7).


         The party moving for a TRO must establish that: “(1) there is a substantial likelihood that the movant will prevail on the merits; (2) there is a substantial threat that irreparable harm will result if the injunction is not granted; (3) the threatened injury outweighs the threatened harm to the defendant; and (4) the granting of the [TRO] will not disserve the public interest.” Clark v. Prichard, 812 F.2d 991, 993 (5th Cir. 1987). “A [TRO] is an extraordinary remedy and should only be granted if the plaintiffs have clearly carried the burden of persuasion on all four requirements.” Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008) (citation and quotation marks). Upon reviewing AMEC's motion, the Court concludes that AMEC has failed to demonstrate (1) a substantial likelihood that it will prevail on the merits of its breach of contract claims or (2) that irreparable harm will likely result if an injunction is not granted on the basis of its trade secret claims. AMEC's tortious interference claims are preempted by the TUTSA, or alternatively, waived and abandoned. Accordingly, AMEC has failed to show that it is entitled to the extraordinary relief of a temporary restraining order with respect to any of the claims on which it bases its request for such relief.


         A. Breach of Contract

         As a condition of her employment with AMEC, Bowersock signed a Loan Officer Employment Agreement (the “Agreement”). (Compl., Dkt. 1, ¶ 5). Relevant here, the Agreement includes restrictive covenants preventing Bowersock from competing with AMEC for a 12-month period over “certain customers and loans about which she had confidential information and/or for which she was responsible at AMEC, and from using or disclosing its confidential and proprietary information.” (Mot., Dkt. 8, ¶ 6; Compl., Dkt. 1, ¶¶ 5-7). The parties dispute whether the Agreement is enforceable. AMEC argues that the above limitations make the Agreement reasonable. Defendants argue that the Agreement is not reasonable because it (1) lacks a geographical limitation, (2) applies to customers with whom Bowersock never had any contact while at AMEC, and (3) contains an unreasonable non-solicitation provision. (Resp., Dkt. 13, at 4-9).[2]

         In Texas, “[e]very contract . . . in restraint of trade or commerce is unlawful.” Tex. Bus. & Com. Code § 15.05(a). “An agreement not to compete is in restraint of trade and therefore unenforceable . . . unless it is reasonable.” DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 681 (Tex. 1990). “By statute, covenants not to compete are reasonable-and therefore enforceable-only to the extent that they contain ‘limitations as to time, geographical area, and scope of activity to be restrained that are reasonable and do not impose a greater restraint than is necessary to protect the goodwill or other business interest of the promisee.'” TFC Partners, Inc. v. Stratton Amenities, LLC, No. 1:19-CV-58-RP, 2019 WL 369152, at *5 (W.D. Tex. Jan. 30, 2019) (quoting Tex. Bus. & Com. Code § 15.50(a)). The court may “dispense[ ] with one or more” of these limitations “when the totality of circumstances indicate[ ] that the covenant not to compete [is] reasonably narrow to protect a company's business interest or goodwill.” M-I LLC v. Stelly, 733 F.Supp.2d 759, 799 (S.D. Tex. 2010).

         The lack of several limitations is relevant here. First, “[g]enerally, a reasonable area for purposes of a covenant not to compete is considered to be the territory in which the employee worked while in the employment of his employer.” Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787, 793 (Tex. App.-Houston [1st Dist.] 2001, no pet.). Because the Agreement contains no limitation as to geographic scope, Defendants argue that it purports to prevent Bowersock from working for any AMEC competitor anywhere in the country, even if ...

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