United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
F. ATLAS SENIOR JUDGE
case is before the Court on the Motion to Dismiss or in the
Alternative for Summary Judgment (“Motion”) [Doc.
# 27] filed by Defendants Organizational Strategies, Inc.
(“OSI”), Nicolette Hendricks, William Hendricks,
Integration Casualty Corp., System Casualty Corp., and
Optimal Casualty Corp., to which Plaintiffs Capstone
Associated Services, Ltd. and Capstone Associated Services
(Wyoming), Limited Partnership (collectively,
“Capstone”) filed a Response [Doc. # 35].
Defendants filed a Reply [Doc. # 37].
stay pending arbitration of other claims in the lawsuit, the
case was reinstated on the Court's active docket and
Defendants filed a Supplemental Brief [Doc. # 62] in support
of their Motion. Plaintiffs filed a Supplemental Response
[Doc. # 63], and Defendants filed a Supplemental Reply [Doc.
# 64]. On August 6, 2019, the parties presented oral argument
to the Court in support of their respective positions.
Court has carefully reviewed the full record and applicable
legal authorities. Based on that review, the Court
grants the Motion as to the common law trade
secret misappropriation claim and the Texas Uniform Trade
Secrets Act (“TUTSA”) claim, and
denies the Motion as to the breach of
captive insurance company is a property and casualty
insurance company specifically established to insure the
risks of an associated business. Plaintiffs and their
affiliates offer comprehensive captive management plans,
including “Captive Planning” services.
entered into a Services Agreement [Doc. # 21-1] with
Defendants to provide services in connection with the
formation and administration of three captive insurance
companies - Integration Casualty Corp., System Casualty
Corp., and Optimal Casualty Corp. (collectively, the
“Captives”). The Services Agreement included a
limited license for Defendants to receive and use
Capstone's “Documents, ” defined in the
Services Agreement to mean “documents prepared by or at
the direction of Capstone for the Companies,  including but not
limited to insurance policies, insurance contracts, insurance
coverage agreements, reinsurance agreements and treaties, and
loan agreements.” See Services Agreement, Art.
V. The Services Agreement provided that the license would
expire upon the termination of the agreement.
2012, Defendants expressed concern regarding the
Captives' insurance polices and potential tax
implications. In connection with those concerns, Mrs.
Hendricks requested certain policy and pricing information
from Capstone. Capstone alleges that it provided the
documents and information to Defendants to address these
concerns, having been assured by Mrs. Hendricks that the
information would not be redistributed, copied, or provided
to any party other than Defendants and their accounting firm.
Capstone alleges that Defendants did not intend to keep the
information confidential and, instead, intended to share the
information “with an unauthorized third party that is
one of Plaintiffs' competitors” - specifically
Intuitive Captive Solutions, LLC (“Intuitive”).
See Amended Complaint [Doc. # 21], ¶ 23.
Capstone did not, in the Amended Complaint, in its briefing,
or during oral argument, identify any documents it provided
to Defendants in 2012 that Defendants were not entitled to
receive under the terms of the Services Agreement.
alleges that the Services Agreement terminated effective
December 31, 2012. Capstone further alleges that, at that
point, Defendants were contractually obligated to return
Plaintiffs' documents to Capstone. Capstone alleges that
Defendants failed to return the documents and, instead,
disseminated copies of the documents to a second competitor.
filed this lawsuit in Texas state court, asserting causes of
action for trade secret misappropriation, violation of TUTSA,
and breach of contract. Defendants removed the case to
federal court, then filed their Motion to Dismiss. The Court
granted the Motion to Dismiss the trade secret
misappropriation and TUTSA claims, with leave to replead.
See Memorandum and Order [Doc. # 18]. Plaintiffs
then filed an Amended Complaint, again asserting each of the
three claims. Defendants filed the pending Motion.
Plaintiffs sought and obtained an order from this Court
compelling arbitration pursuant to the arbitration provision
in the parties' Engagement Letter. See
Memorandum and Order [Doc. # 42]. The Engagement Letter
required arbitration of disputes relating to or arising out
of services provided by the Feldman Law Firm LLP and its
principal attorney Stewart Feldman (collectively,
“Feldman”), who were the attorneys for Capstone
in connection with its business of providing planning
services for captive insurance companies. The Final
Arbitration Award [Doc. # 49-1] was issued February 25, 2019,
and resolved issues not asserted in this lawsuit.
entry of the Final Arbitration Award, this case was
reinstated on the Court's active docket. The parties
filed supplemental briefing on the pending Motion, and
presented oral argument in support of their respective
positions. The Motion is now ripe for decision.
APPLICABLE LEGAL STANDARDS
Standard for Rule 12(b)(6) Motion to
motion to dismiss under Rule 12(b)(6) of the Federal Rules of
Civil Procedure is viewed with disfavor and is rarely
granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th
Cir. 2011) (citing Harrington v. State Farm Fire &
Cas. Co., 41');">563 F.3d 141, 147 (5th Cir. 2009)). The
complaint must be liberally construed in favor of the
plaintiff, and all facts pleaded in the complaint must be
taken as true. Harrington, 563 F.3d at 147. The
complaint must, however, contain sufficient factual
allegations, as opposed to legal conclusions, to state a
claim for relief that is “plausible on its face.”
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
Patrick v. Wal-Mart, Inc., 4');">681 F.3d 614, 617 (5th
Cir. 2012). When there are ...