Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Global Supply Chain Solutions, LLC v. Riverwood Solutions, Inc.

Court of Appeals of Texas, Fifth District, Dallas

August 16, 2019

GLOBAL SUPPLY CHAIN SOLUTIONS, LLC, Appellant
v.
RIVERWOOD SOLUTIONS, INC. AND LORI AUSTIN, Appellees

          On Appeal from the 416th Judicial District Court Collin County, Texas Trial Court Cause No. 416-04054-2015

          Before Justices Schenck, Osborne, and Reichek

          MEMORANDUM OPINION

          LESLIE OSBORNE JUSTICE

         After merger talks between appellant Global Supply Chain Solutions, LLC and appellee Riverwood Solutions, Inc. fell through, Global Supply sued Riverwood alleging claims including breach of contract, misappropriation of trade secrets, and tortious interference with contract. Global Supply also sought injunctive relief against appellee Lori Austin. The trial court granted summary judgment for Riverwood and Austin. In nine issues, Global Supply alleges the trial court erred by granting summary judgment, striking its expert witnesses, and granting Austin her attorney's fees. For the reasons we discuss, we affirm the trial court's judgment.

         Background

         Global Supply and Riverwood are competitors in the supply chain management industry. In its petition, Global Supply described the industry as "the business of helping companies manage both their relationships with suppliers and inventory on their behalf." At the time of their merger discussions in 2014, their business models were different. Global Supply's president, Philip Odette, explained that Global Supply purchased and sold component parts to its customers and also provided services to customers for a monthly service fee. One of the services Global Supply provided was implementing a product data management ("PDM") solution, using a centralized software system to store all of the information related to a customer's product.

         Riverwood, in turn, was "exclusively a pay-for-services business," according to its then- CEO Ronald C. Keith. Riverwood had a consulting business and a managed service business, charging clients a fee for each service. Keith contrasted Riverwood's business with Global Supply's: "And so [Global Supply] was a product or what people in the industry would call a buy/sell business, and ours was purely a services business." But like Global Supply, Riverwood offered PDM services. Keith explained that Riverwood began offering PDM services in 2008:

It was always a business that was accidentally pretty good. You know, the people that are normally our customers are the small to midsize companies that probably have not really thought about what they need to manage this thing as they get bigger, and so we would help them with various things, and we'd say, you know, your data is kind of a mess. There are a number of off-the-shelf programs. Maybe you should look at, you know, implementing one of them. Quite often they would say, you know, we don't have the time or the resources. And we would say, you know, that is something that, you know, we can do for you if you'd like.

         Austin came to work at Global Supply in 2010 as an independent contractor on a specific project. That year, the company had undergone a change in both ownership and management. Leon Backes became the owner of the company, and Paul Peck became its president. Peck knew Austin and recommended her to Global Supply. Under a written agreement dated January 4, 2011 (the "Austin Agreement"), Global Supply "retain[ed] [Austin] as an independent contractor to perform consulting services for the Company." Two provisions of the Austin Agreement are at issue in this lawsuit:

• Paragraph 2(b), providing that Austin "will not, during or subsequent to the term of this Agreement, use the Company's Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of the Company or disclose the Company's Confidential Information to any third party," and
• Paragraph 8, "Independent Contractor," stating the parties' "express intention" that Austin "is an independent contractor." "Nothing in this Agreement shall in any way be construed to constitute the Consultant as an agent, employee or representative of the Company, but the Consultant shall perform the Services hereunder as an independent contractor. . . ."

         Peck implemented a proprietary PDM service for Global Supply and trained Austin in using it. Peck left Global Supply in 2012, and Odette succeeded him as Global Supply's president.

         In 2014, Global Supply began sourcing building supplies for another of Backes's companies, Provident Realty Advisers, Inc. ("PRA"), a property development firm. Global Supply's principals formed an entity called Integris, described by Odette as "a building supply company that sells lighting, plumbing, flooring, hardware and other material to multi-family, hospitality, and other building construction entities," to undertake this work.

         In early 2014, Keith approached Backes at PRA. In a February 20, 2014 email, Keith introduced himself as Riverwood's CEO. He asked Backes if they might discuss Backes's plans for Global Supply to see "if there might be some kind of synergies between our two firms." Backes replied that he had "certainly heard of Riverwood" and "would be happy to chat." Backes referred Keith to Odette, and on March 25, 2014, Keith and Odette signed an agreement (the "Letter Agreement") to facilitate their discussions. Three Letter Agreement provisions are at issue here:

• Riverwood's promise in paragraph 2 to use "Evaluation Material" (broadly defined as "all information, in whatever form or medium, disclosed or provided to you") "solely for the purpose of evaluating a possible Transaction" between the companies;
• Riverwood's promise in paragraph 9(a) not to "solicit for employment or consulting services, employ, or otherwise contract for the services of any employee of Global Supply; and
• Riverwood's promise in paragraph 9(b) not to "interfere with or otherwise disrupt the business relations between [Global Supply] and any of its current or prospective customers or suppliers" "as a result of knowledge or information obtained from the Evaluation Material or in connection with a possible Transaction."

         After Odette and Keith signed the Letter Agreement on behalf of Global Supply and Riverwood, respectively, Global Supply provided Riverwood with a seven-page Power Point presentation containing financial information about Global Supply. Global Supply did not provide any other written material to Riverwood. Odette and Keith soon abandoned their discussions. No merger occurred.

         Three subsequent events gave rise to this lawsuit:

         1. September 15, 2014 solicitation of Global Supply customer PRA

         On September 15, 2014, Tom David of Riverwood contacted Backes by email. David wrote:

. . . Wanted to let you know that Riverwood Solutions has begun sourcing building materials at the request of one of our larger clients.
We have successfully sourced:
interior and exterior lighting products (including parking lot lighting)
kitchen and bath plumbing fixtures
sinks
doors
lumber
Although the savings by product family may vary, the cumulative average landed costs of all of these products is 35% less than current client reported costs.
Sourcing of other commodities is underway and more to come soon.
We are very interested in expanding our offering to a select group of property development firms. If you are interested in exploring this opportunity further, please let me know a good time to call. . . .

         Backes did not respond to the email. PRA did not do any business with Riverwood.

         2.March 24, 2015 second solicitation of Global Supply customer PRA

         Riverwood again contacted Backes about Riverwood's building supply sourcing business. In an email dated March 24, 2015, Keith wrote:

Leon,
My team at Riverwood Solutions has been spending a lot of time sourcing building materials over the last 6 or 7 months.
Based on the work our team has done on some 300 different items looking across sources in China, Vietnam and Thailand, one of the larger multi-family developers in the U.S. and some friends of our firm have started a company specifically to address off-shore sourcing of building material as well as other supply chain and logistics related issues related to multi-family projects. They threw in a very significant amount of start-up capital.
I know that you had [Global Supply] doing some of this work for you 9 or 10 months ago specifically to help you out at Provident. Perhaps this is something that we should chat about. We've got 11 people in 4 countries working on this initiative full time. Some of the numbers are pretty attention getting.
Let me know if you like [sic] to discuss this and see if there is some play here for either Provident or [Global Supply].
Best regards,
Ron Keith

         Again, there is no evidence of any response from Backes or PRA.

         3. Austin's resignation from Global Supply to begin employment at Riverwood

         In a summary judgment affidavit, Austin testified that on July 16, 2015, she received a call from Frank McConahey, a former Global Supply project manager who was then working at Riverwood. McConahey asked if Austin would be interested in coming to Riverwood "to grow its product data management consulting business." Austin met with David and accepted an offer to become Riverwood's director of PDM services. As required under the Austin Agreement, Austin gave Global Supply written notice of her resignation on August 19, 2015, stating that her last day at Global Supply would be September 9, 2015.

         Upon receiving Austin's notice letter, Odette contacted Keith, reminding him of "the non-solicitation we had in place" and stating that Austin's hiring was a violation of it. In a follow-up conversation, Keith told Odette that Riverwood had discussed the matter with counsel and was going to proceed with hiring Austin. Keith testified that in the follow-up call, he apologized for not recalling that the Letter Agreement was still in effect. But he continued:

Having said that, the contract has no validity over what we're doing here. We're hiring someone who is not an employee of yours, and the contract between our firms says that I can't hire your employees, and so I'm not doing that. [Odette] said something to the effect that although she's not an employee, we've always considered her one. I said: I don't know what to do with that information, Phil. You know, the contract says we can't hire your employees and we're not. At the same time, I've made an offer to someone. I think rescinding it puts me in a very precarious position, and so I'm unwilling to do that.

         Global Supply brought this suit against Riverwood and Austin on September 30, 2015, asserting claims for breach of contract, violations of the Texas Uniform Trade Secrets Act, tortious interference with existing contract, and "aiding, abetting, assisting and encouraging" against Riverwood and pleading for injunctive relief against Austin. Global Supply alleged that its "rights are threatened with irreparable injury by the loss of its Vice President of Operations, who has detailed knowledge of Plaintiff's confidential proprietary information and trade secrets, to a direct competitor that has engaged in a repeated pattern of attempting to steal customers, employees, and such proprietary trade secrets." Austin filed a counterclaim against Global Supply, requesting a declaration that "she has not breached the Austin Agreement and that her employment by Riverwood does not violate any statute or contract."

         Global Supply never attempted to establish its right to injunctive relief by setting the matter for hearing or offering evidence of the irreparable injury it claimed. The Letter Agreement's three-year term expired in March 2017, but the Austin Agreement's nondisclosure provisions continued "subsequent to the term of this Agreement."

         The parties proceeded with discovery and entered into an agreed scheduling order that included provisions about designating experts. The parties submitted the order to the trial court, and the trial court signed it on May 15, 2017. Regarding experts, the parties agreed:

         6. Designations of experts: the party seeking affirmative relief on an issue shall provide a designation of its testifying experts by August 31, 2017; the party not seeking affirmative relief on an issue shall provide a designation of its testifying experts by September 29, 2017

         7. Other terms: Expert reports must be served with designations Global Supply designated three expert witnesses by the agreed deadline, but did not provide reports for any of them. On the date for designating rebuttal experts, Global Supply designated Peck and provided a report. On Riverwood's and Austin's motions, the trial court struck these designations.

         In November 2017, Riverwood moved for summary judgment on Global Supply's claims. Austin filed a separate motion for summary judgment on her request for declaratory relief. Global Supply filed a motion for partial summary judgment on its claim for breach of contract on the ground that Austin was either its "employee" or its "supplier" as a matter of law, so that Riverwood breached paragraph 9(a) or paragraph 9(b) of the Letter Agreement as a matter of law. The trial court granted Riverwood's and Austin's motions and denied Global Supply's.

         This appeal followed.

         Discussion

         I. Standards of Review

         We review a trial court's summary judgment de novo. Dallas Nat'l Ins. Co. v. Calitex Corp., 458 S.W.3d 210, 221 (Tex. App.-Dallas 2015, no pet.). The movant for a traditional summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). Evidence favorable to the non-movant is taken as true, and every reasonable inference is indulged in the non-movant's favor. Id. at 548-49. When both parties have moved for summary judgment and the trial court has granted one party's motion and denied the other, we review the summary judgment evidence presented by both sides and determine all questions presented. Calitex Corp., 458 S.W.3d at 221. If we conclude the trial court committed reversible error, we render the judgment the trial court should have rendered. Id.

         We review a trial court's enforcement of a scheduling order for an abuse of discretion. Esty v. Beal Bank, S.S.B., 298 S.W.3d 280, 295-96 (Tex. App.-Dallas 2009, no pet.). We also review the trial court's determination regarding the admission of expert testimony for abuse of discretion. Transcontinental Realty Investors, Inc. v. Wicks, 442 S.W.3d 676, 680-81 (Tex. App.-Dallas 2014, pet. denied). A trial court abuses its discretion if it acts without reference to guiding rules and principles. Gunn v. McCoy, 554 S.W.3d 645, 666 (Tex. 2018). "To reverse a trial court's judgment based on the exclusion of evidence, we must find that the trial court did in fact commit error, and that the error was harmful." Id. We may reverse the trial court's judgment only if the erroneous exclusion of evidence probably caused the rendition of an improper judgment, id. at 668, or "probably prevented the appellant from properly presenting the case to the court of appeals." Tex.R.App.P. 44.1(a).

         II. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.