Court of Appeals of Texas, Third District, Austin
THE 425TH JUDICIAL DISTRICT COURT OF WILLIAMSON COUNTY NO.
18-0635-C425, THE HONORABLE BETSY F. LAMBETH, JUDGE PRESIDING
Justices Goodwin, Baker, and Smith
an appeal from an order denying a motion to dismiss under the
Texas Citizens Participation Act (TCPA), Tex. Civ. Prac.
& Rem. Code § 27.003. We will affirm the district
Homes III, LLC, is a Texas company that constructs custom
homes and other residential facilities. Woodhull Ventures
2015, L.P., is a Delaware partnership that "develops
real estate for use in building homes." In February of
2017, Woodhull and Megatel executed a contract under which
Woodhull would sell Megatel certain real estate for a
"master planned community being developed." As part
of that contract, Woodhull agreed to provide a "soil
report for the Property or Subdivision signed by
[Woodhull's] geotechnical engineer" or to advise
Megatel if such a report was not feasible. In requesting this
report, Megatel apparently wanted to ensure that
"applicable lots ha[d] been completed, at
[Woodhull's] expense, in accordance with Lot Construction
Plans and Block Grading Plans." According to Megatel,
Woodhull had agreed to provide lot-by-lot soil analysis.
Woodhull, however, ultimately provided a report that included
street-specific-but not lot-specific-soil analysis. While
Megatel asserts that this report was contractually
inadequate, Woodhull maintains that the report satisfied its
the parties were unable to resolve their disagreement over
the soil analysis, Megatel sued Woodhull for breach of
contract and fraud and sought declaratory relief regarding
its rights under the contract. Woodhull responded with a
general denial and a motion to dismiss under the TCPA,
see id. § 27.003, arguing that all claims arose
from its constitutionally afforded right to freedom of
speech. The trial court denied the motion and Woodhull timely
appealed to this Court. See id. § 27.008
(affording right to accelerated interlocutory appeal).
TCPA allows a party to move for dismissal of any "legal
action that is based on, related to, or in response to [that]
party's exercise of the right of free speech, right to
petition, or right of association." See id.
§ 27.003. Its purpose is to "encourage and
safeguard the constitutional rights of persons to petition,
speak freely, associate freely, and otherwise participate in
government," while still "protect[ing] the rights
of a person to file meritorious lawsuits for demonstrable
injury." See id. § 27.002. "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 these First Amendment rights."
ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895,
898 (Tex. 2017) (citing Tex. Civ. Prac. & Rem. Code
§ 27.003). "Under the first step, a movant seeking
to prevail on a motion to dismiss under the TCPA has the
burden to 'show[ ] by a preponderance of the evidence
that the [non-movant'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.'" Grant v. Pivot Tech.
Sols., Ltd., 556 S.W.3d 865, 872 (Tex. App.-Austin 2018,
pet. filed) (quoting Tex. Civ. Prac. & Rem. Code §
27.005(b)). In the second step, if the court "determines
that the movant has met his burden to show that the TCPA
applies, the burden shifts to the non[-]movant to establish
'by clear and specific evidence a prima facie case for
each essential element of the claim in question.'"
Id. (quoting Tex. Civ. Prac. & Rem. Code §
27.005(c)). Even where the non-movant can do so, the court
must dismiss the legal action "'if the [movant]
establishes by a preponderance of the evidence each essential
element of a valid defense to the non[-]movant's
claim.'" Id. (quoting Tex. Civ. Prac. &
Rem. Code § 27.005(c)). We review the disposition of a
motion to dismiss under the TCPA under a de novo standard of
review. Serafine v. Blunt, 466 S.W.3d, 352, 357
(Tex. App.-Austin 2015, no pet.).
contends the district court erred by denying the motion to
dismiss, raising alternative arguments: (1) that the TCPA
applies to Megatel's claims; (2) that Megatel cannot make
out a prima facie case for the elements of its claims; and
(3) that the claims do not fall into any statutory exception.
Megatel argues that even if the statute applies to its
claims-a point it does not concede-it can make out a prima
facie case for each element of the claims and the claims fall
into the TCPA's exception for commercial speech.
See Tex. Civ. Prac. & Rem. Code §
is no genuine dispute that Megatel's claims are
"legal actions" as that phrase is defined by the
TCPA, and the parties do not argue otherwise. See
id. § 27.001(6) (defining "legal action"
to include any "cause of action");
Porter-Garcia v. Travis Law Firm, P.C., 564 S.W.3d
75, 85 (Tex. App.-Houston [1st Dist.] 2018, pet. denied)
(holding claims of breach and fraud within purview of TCPA
before holding that plaintiff would prevail on second prong
of analysis); Craig v. Tejas Promotions, LLC, 550
S.W.3d 287, 298, 303 (Tex. App.- Austin 2018, pet. filed)
(declaratory judgment). These legal actions arise from
Woodhull's exercise of its right to free speech. The
"exercise of the right of free speech" includes any
"communication made in connection with a matter of
public concern." Tex. Civ. Prac. & Rem. Code §
27.001(7). "Matters of public concern" include
issues related to "community well-being" or
"goods products or services in the market."
Id. § 27.001(3). As the Supreme Court of Texas
has explained, "[I]n the context of a small residential
community . . . any allegation of malfeasance and criminality
by the developer . . . likely concerns the well-being of the
community as a whole." See Adams v Starside Custom
Builders, LLC, 547 S.W.3d 890, 896 (Tex. 2018). In this
case, Megatel's claims of breach and fraud relate to
Woodhull's street-by-street soil report and its alleged
refusal to provide lot-specific soil analysis, which Megatel
contends undermine its ability to construct safe, stable
housing. Thus, because Woodhull's report and related
communications affect the well-being of the community as a
whole, these claims and the related claim for declaratory
relief fall within the purview of the TCPA. See id.
at 896-97; Craig, 550 S.W.3d at 303.
Woodhull satisfied its burden to show the TCPA applies to
Megatel's claim, Megatel must make a prima facie case for
each element of its claims or must demonstrate that its
claims fall into a statutory exception to avoid dismissal.
Tex. Civ. Prac. & Rem. Code §§ 27.005(c), .010;
Grant, 556 S.W.3d at 872-73. As the latter question
is dispositive of this appeal, we will analyze the
applicability of the commercial-speech exception, Tex. Civ.
Prac. & Rem. Code § 27.010(b), on the assumption
that Megatel can meet its burden to establish a prima facie
case for its claims. See Tex. R. App. P. 47.1
(requiring courts of appeals to render opinions "as
brief as practicable").
commercial-speech exception provides that the TCPA "does
not apply to a legal action brought against a person
primarily engaged in the business of selling or leasing . . .
services, if the statement or conduct arises out of the sale
or lease of goods, services . . . or a commercial transaction
in which the intended audience is an actual or potential
buyer or customer." Tex. Civ. Prac. & Rem. Code
§ 27.010(b). A claim falls into an exception when four
conditions are met. See Castleman v. Internet Money
Ltd., 546 S.W.3d 684, 688 (Tex. 2018). First, the
non-movant must have been "primarily engaged in the
business of selling or leasing goods" or services at the
time the disputed statement was made. Id. Second,
that party must have "made the statement or engaged in
the conduct on which the claim is based in the
defendant's capacity as a seller or lessor of those goods
or services." Id. Third, this statement must
have "[arisen] out of a commercial transaction involving
the kind of goods or services the defendant provides."
Id. Fourth, the "intended audience of the
statement or conduct" must have been the "actual or
potential customers of the defendant for the kind of goods or
services the defendant provides." Id.
record before this Court confirms that each element of the
exception is satisfied here. Woodhull is primarily engaged in
the business of selling services-specifically, and as
attested by one of Woodhull's own partners, Woodhull
"develops real estate for the use in building homes
within the area of Austin, Texas." In the capacity of
providing those services to Megatel and as part of a
commercial transaction-i.e., the contract-for that service,
Woodhull agreed to provide soil analysis. And finally, it is
undisputed that Megatel is an actual customer ...