STALLION OILFIELD SERVICES LTD. AND MICHAEL BROWN, Appellants
GRAVITY OILFIELD SERVICES, LLC, Appellee
Appeal from the 385th District Court Midland County, Texas
Trial Court Cause No. CV55423
consists of: Bailey, C.J., Stretcher, J., and Wright, S.C.J.
M. BAILEY CHIEF JUSTICE.
suit arises from Michael Brown's decision to resign from
his employment with Gravity Oilfield Services, LLC and accept
employment with Stallion Oilfield Services Ltd., one of
Gravity's direct competitors. Gravity sued and alleged
that Brown breached a noncompete, nondisclosure, and
nonsolicitation agreement and that Stallion tortiously
interfered with that agreement when it hired Brown.
Appellants filed a motion to dismiss Gravity's claims
pursuant to the Texas Citizens Participation Act, Tex. Civ.
Prac. & Rem. Code Ann. §§ 27.001-.011 (West
2015) (the TCPA). The trial court denied the motion to
dismiss, found that the motion was frivolous and intended to
delay, and awarded Gravity the reasonable attorney's fees
that it incurred to respond to the motion.
their first two issues, Appellants assert that the trial
court erred when it denied the motion to dismiss (1) because
Appellants established that the TCPA applies to Gravity's
claims and (2) because Gravity failed to establish by clear
and specific evidence a prima facie case for each essential
element of the claims. In two additional issues, Appellants
challenge the trial court's award of attorney's fees
to Gravity and failure to award attorney's fees and
sanctions to them. We affirm that portion of the trial
court's order in which it denied Appellants' motion
to dismiss, but reverse that portion of the trial court's
order in which it awarded attorney's fees to Gravity.
is an oilfield service company that assists its customers
"in running their oil wells continuously." Among
other services, Gravity's Power Generation and Rental
Solutions division rents natural gas power generators to
customers. According to Chad Wolf, Vice President, Power
Generation and Rental Solutions, Gravity "pioneered the
natural gas power generator rental market in the Permian
[B]asin" and spent six years and over $120 million to
develop the specifications and "add on products"
for its natural gas power generators as well as the market
for the generators.
Gravity's predecessor, Light Tower Rentals, Ltd., hired
Brown in March 2007. Light Tower Rentals, Ltd. became Light
Tower Rentals, Inc. in January 2008 and, in turn, Light Tower
Rentals, Inc. became Light Tower Rentals, LLC in February
2017 (the three Light Tower Rentals entities are referred to
collectively as LTR). While employed by LTR, Brown was
promoted from Shop Foreman, to Regional Manager Northeast, to
Corporate Maintenance Manager, and finally to Product Line
Manager of Contracted Generation Services.
Brown was involved in writing the policy governing the
maintenance of engine-driven equipment. Brown interfaced with
customers about the rental of the generators and worked with
vendors and other employees of LTR to develop and improve the
line of natural gas power generators that LTR rented to its
customers. Brown also contributed to the development of an
electrical maintenance panel that allowed a generator to be
taken out of service without interrupting the operation of
other generators that were attached to it.
2016, LTR Group Holdings LLC (LTRGH) was the indirect
corporate parent of LTR. Through a December 23, 2016 Unit Option
Agreement (the 2016 Agreement), LTRGH awarded Brown an option
to acquire Class C Units in LTRGH. The 2016 Agreement was
subject to LTRGH's 2016 Incentive Equity Plan (the 2016
Plan) and incorporated the definitions in the 2016 Plan. As
relevant here, the 2016 Plan defined a "subsidiary"
of LTRGH as an entity that was owned or controlled, directly
or indirectly, by LTRGH, one or more of LTRGH's
subsidiaries, or a combination thereof.
2016 Agreement, Brown agreed to certain nondisclosure,
noncompete, and nonsolicitation provisions. As relevant here,
Brown generally agreed (1) that he would not disclose or use
for his or another person's benefit the confidential
information of LTRGH, its subsidiaries, or its affiliates;
(2) that he would not work for a competitor of LTRGH, its
subsidiaries, or its affiliates for a period of one year
after the termination of his employment; and (3) that, for a
period of one year after the termination of his employment,
he would not solicit suppliers, customers, or "other
business relation[s]" of LTRGH, its subsidiaries, or its
affiliates to cease doing business with those companies.
Brown also agreed that, if he breached the 2016 Agreement,
"[LTRGH] or any of its Subsidiaries shall have the right
to enforce" the restrictive covenants. Brown and
LTRGH's Chief Financial Officer, Keith Muncy, signed the
in 2016, LTR was part of a major corporate restructuring. In
"early" 2017, LTRI Holdings, LP and LTRGH merged,
and LTRI Holdings acquired a majority of the voting equity
securities in LTRGH, such that LTR became a subsidiary of
LTRI Holdings. The merger plan provided that any outstanding
option issued pursuant to the 2016 Plan would be converted
into an option to purchase units in LTRI Holdings without any
action by the holder of the option. Therefore, Brown's
option to purchase common units of LTRGH was converted into
an option to purchase common units in LTRI Holdings.
January 30, 2017, Brown signed a "[LTRGH] 2016 Incentive
Equity Plan Participant Acknowledgment and Consent."
Brown "acknowledge[d] and agree[d]" that, pursuant
to the merger plan, his option to purchase units in LTRGH
issued pursuant to the 2016 Plan would be converted into an
option to purchase units in LTRI Holdings pursuant to LTRI
Holdings' 2017 Incentive Equity Plan (the 2017 Plan). The
acknowledgement and consent provided that "[t]he LTRI
Holdings Option shall be subject to the same terms and
conditions, including as to vesting, as were applicable
to" the LTRGH option. Brown "consent[ed] to the
foregoing terms and accept[ed]" the LTRI Holdings
Attached to the Acknowledgement and Consent was a Unit Option
Agreement Pursuant to the 2017 Plan (the 2017 Agreement). The
2017 Agreement acknowledges that Brown's option to
purchase units in LTRGH had been converted into an option to
purchase units in LTRI Holdings and that the option to
purchase units of LTRI Holdings was subject to "the
following terms and conditions." Those "terms and
conditions" include the same restrictive covenants as in
the 2016 Agreement. The 2017 Agreement was subject to the
2017 Plan and incorporated the definitions in the 2017 Plan.
The definition of "subsidiary" in the 2017 Plan is
identical to the definition in the 2016 Plan.
March 2018, LTR and other entities merged with Globe Energy
Services, LLC. The surviving entity was renamed Gravity
Oilfield Services, LLC. After March 26, 2018, Brown was
employed by Gravity as the Director of Power Services for its
Power Generation and Rental Solutions division. Brown had the
same responsibilities at Gravity as he had had as the Product
Line Manager of Contracted Generation Services at LTR.
August 2018, Stallion approached Brown about possible
employment in a new division that would rent natural gas
power generators to oil and gas customers. Stallion wanted
Brown to develop a division that would provide the same
services within the same industry for the same types of
customers as Gravity did. Because Brown believed that the
2017 Agreement contained restrictions on his activities if he
terminated his employment with Gravity, he provided a copy of
that agreement to Stallion. Stallion forwarded the 2017
Agreement to its counsel for review.
subsequently questioned Gravity's in-house counsel about
whether Gravity had "actively pursued" any employee
who had left the company and, based on that discussion,
informed Stallion that Gravity did not have a history of
enforcing covenants not to compete. Brown also informed
Stallion that he did not believe that Stallion would
"take enough market share during the 1st year to
constitute any action against Stallion." Based on that
information, Stallion "reevaluate[d] the risk
assessment" of hiring Brown. Stallion ultimately offered
Brown the position of Director of Power Solutions.
November 16, 2018, Brown submitted his resignation to
Gravity. Even though he specifically represented to Gravity
that he had not made a decision about his future employment,
Brown had already accepted employment with Stallion. Brown
began working for Stallion in early December. In January
2019, Stallion purchased ten of the same model of natural gas
power generators used by Gravity from one of Gravity's
vendors. Stallion also ordered additional generators from
another of Gravity's vendors and requested that the
vendor install a control panel on the generators that was
very similar to the panel that Brown helped develop at
the next several months, Brown had discussions with potential
customers for Stallion's natural gas power generators.
Some of these companies were Gravity's customers. In
April 2019, one of Gravity's customers replaced two
natural gas power generators rented from Gravity with two
natural gas power generators rented from Stallion.
it learned that Brown was involved in starting a division at
Stallion to rent natural gas power generators, Gravity
advised Stallion of Brown's noncompete agreement and
asked that Stallion "cease utilizing" Brown in any
manner that violated the terms of the noncompete agreement.
After Stallion failed to respond, Gravity sued Brown for
breach of the 2016 Agreement and Stallion for tortiously
interfering with that agreement. Appellants filed a motion to
dismiss Gravity's claims pursuant to the TCPA. Gravity
amended its petition and alleged that Brown breached both the
2016 and the 2017 Agreements and that Stallion tortiously
interfered with both agreements. Gravity also filed a lengthy
response to the motion to dismiss.
trial court denied Appellants' motion to dismiss without
specifying the basis for its ruling. It also found that the
motion was frivolous and intended for delay, awarded Gravity
the attorney's fees and costs that it incurred to respond
to the motion, and ordered Gravity's attorney to file an
affidavit of the attorney's fees incurred.
TCPA protects citizens from retaliatory lawsuits meant to
intimidate or silence them on matters of public concern.
Dallas Morning News, Inc. v. Hall, 579 S.W.3d 370,
376 (Tex. 2019); In re Lipsky, 460 S.W.3d 579, 584
(Tex. 2015) (orig. proceeding). The stated purpose of the
TCPA 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." Civ. Prac. & Rem. §
27.002; see also ExxonMobil Pipeline Co. v. Coleman,
512 S.W.3d 895, 898 (Tex. 2017) (per curiam). We construe the
TCPA "liberally to effectuate its purpose and intent
fully." Civ. Prac. & Rem. § 27.011(b); see
also State ex rel. Best v. Harper, 562 S.W.3d 1, 11
TCPA provides a procedure to expedite the dismissal of a
"legal action" that appears to stifle the
nonmovant's exercise of the rights protected by the
statute. Youngkin v. Hines, 546 S.W.3d 675, 679
(Tex. 2018); see also Civ. Prac. & Rem.
§§ 27.003(a), .005(b). The movant bears the initial
burden to show by a preponderance of the evidence that the
legal action is based on, related to, or in response to the
movant's exercise of the right of free speech, the right
of association, or the right to petition. Civ. Prac. &
Rem. §§ 27.003(a), .005(b); Youngkin, 546
S.W.3d at 679. If the movant makes this showing, the burden
shifts to the nonmovant to establish by clear and specific
evidence a prima facie case for each essential element of the
claim in question. Civ. Prac. & Rem. § 27.005(c);
Youngkin, 546 S.W.3d at 679. Even when the nonmovant
satisfies this burden, the trial 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
nonmovant's claim." Civ. Prac. & Rem. §
27.005(d); see also Youngkin, 546 S.W.3d at 679-80.
review de novo whether the parties satisfied their respective
burdens as set out in the TCPA. Hall, 579 S.W.3d at
377. When we conduct this review, we consider the pleadings
and the supporting evidence in the light most favorable to
the nonmovant. ETC Tex. Pipeline, Ltd. v. Addison
Exploration & Dev., LLC, 582 S.W.3d 823, 832 (Tex.
App.-Eastland 2019, pet. filed); Robert B. James, DDS,
Inc. v. Elkins, 553 ...