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=== Opinion ===
ACCEPTED
03-15-00025-CV
7932171
THIRD COURT OF APPEALS
AUSTIN, TEXAS
11/20/2015 3:24:06 PM
JEFFREY D. KYLE
CLERK
No. 03-15-00025-CV
Texas Court of Appeals FILED IN
3rd COURT OF APPEALS
Third District AUSTIN, TEXAS
Austin, Texas 11/20/2015 3:24:06 PM
JEFFREY D. KYLE
Clerk
APPELLANTS, LAKEWAY REGIONAL MEDICAL CENTER, LLC AND SURGICAL DEVELOPMENT
PARTNERS, LLC// CROSS-APPELLANT, LAKE TRAVIS TRANSITIONAL LTCH, LLC N/K/A LAKE
TRAVIS SPECIALTY HOSPITAL, LLC
v.
APPELLEES, LAKE TRAVIS TRANSITIONAL LTCH, LLC N/K/A LAKE TRAVIS SPECIALTY
HOSPITAL, LLC// CROSS-APPELLEES, LAKEWAY REGIONAL MEDICAL CENTER, LLC,
SURGICAL DEVELOPMENT PARTNERS, LLC, BRENNAN, MANNA, & DIAMOND, LLC AND
FRANK T. SOSSI
FROM THE 345TH JUDICIAL DISTRICT COURT, TRAVIS COUNTY, TEXAS
CAUSE NO. D-1-GN-12-000983
APPELLANTS LAKEWAY REGIONAL MEDICAL CENTER, LLCâS AND
SURGICAL DEVELOPMENT PARTNERS, LLCâS
CROSS-APPELLEESâ BRIEF
NORTON ROSE FULBRIGHT US LLP NORTON ROSE FULBRIGHT US LLP
Jeff Cody Joy M. Soloway
State Bar No. 04468960 State Bar No. 18838700
jeff.cody@nortonrosefulbright.com joy.soloway@nortonrosefulbright.com
Barton W. Cox 1301 McKinney, Suite 5100
State Bar No. 2406508 Houston, TX 77010-3095
beau.cox@nortonrosefulbright.com Telephone: (713) 651-5151
James V. Leito IV Telecopier: (713) 651-5246
State Bar No. 24054950
james.leito@nortonrosefulbright.com WRIGHT & CLOSE, LLP
2200 Ross Avenue, Suite 3600 Jessica Z. Barger
Dallas, TX 75201-7932 State Bar No. 24032706
Telephone: (214) 855-8000 barger@wrightclose.com
Telecopier: (214) 855-8200 Raffi O. Melkonian
State Bar No. 24090587
melkonian@wrightclose.com
One Riverway, Suite 2200
Houston, TX 77056
Counsel for Appellants/Cross-Appellees Telephone: (713) 572-4321
Telecopier: (713) 572-4320
ORAL ARGUMENT REQUESTED
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ....................................................................................v
STATEMENT OF THE CASE .................................................................................x
STATEMENT OF ISSUES AND CROSS-POINTS ..............................................xi
STATEMENT OF FACTS .......................................................................................1
I. Facts relevant to LTTâs cross-appeal relating to Section 2 of the
Letter of Intent. .....................................................................................1
II. Facts relevant to LTTâs cross-appeal on its alleged
misappropriation claim. ........................................................................3
III. Procedural history.................................................................................5
SUMMARY OF ARGUMENT ................................................................................6
STANDARD OF REVIEW ......................................................................................8
ARGUMENT ............................................................................................................9
I. The Trial Court Correctly Granted Summary Judgment in
Lakeway Regionalâs and SDPâs Favor on LTTâs
Misappropriation Claim. ......................................................................9
A. LTT failed to prove the existence of a trade secret that is
at issue. .....................................................................................11
1. Because the Project File is a collection of
documents assembled by LTTâs trial counsel after
the lawsuit was filed, it is not a trade secret. .................12
2. It remains unclear which purported trade secrets
LTT believes are at issue. ..............................................16
B. There is no evidence that Lakeway Regional or SDP used
or disclosed LTTâs purported trade secrets, and the
evidence conclusively establishes that there was no use
or disclosure. ............................................................................19
1. There is no evidence of use of a trade secret. ................19
54151498 ii
2. The evidence conclusively establishes that there
was no use of a trade secret. ..........................................24
3. There is no evidence of disclosure of a trade
secret. .............................................................................24
4. The evidence conclusively establishes that there
was no disclosure of a trade secret. ...............................26
C. There is no evidence that a purported disclosure or use
caused LTT any damages, and the evidence conclusively
negates causation......................................................................26
1. There is no evidence of causation. ................................27
2. The evidence conclusively negates causation. ..............29
II. The Trial Court Correctly Granted Summary Judgment in
Lakeway Regionalâs and SDPâs Favor on LTTâs Claim for
Breach of Section 2 of the Letter of Intent.........................................31
A. Section 2 of the Letter of Intent is an unenforceable
agreement to agree, foreclosing a claim for its breach. ...........31
1. The Letter of Intent contains several provisions
showing that Section 2 is an unenforceable
agreement to agree. ........................................................32
2. Essential terms are lacking. ...........................................35
3. Section 2 is unenforceable for the separate reason
that Section 3âs best efforts provision is
prohibitively vague. .......................................................39
4. LTTâs remaining appellate arguments do not
withstand scrutiny. .........................................................40
B. Unfulfilled conditions precedent foreclosed LTTâs
Section 2 claim. ........................................................................41
C. SDP cannot be liable under Section 2 because it was not
a party to the Letter of Intent. ..................................................44
III. The Trial Court Correctly Sustained Lakeway Regionalâs and
SDPâs Objections to LTTâs Summary Judgment Evidence. ..............45
A. The trial court did not abuse its discretion in sustaining
Objection 2. ..............................................................................46
54151498 iii
B. The trial court did not abuse its discretion in sustaining
Objection 4. ..............................................................................47
PRAYER .................................................................................................................49
CERTIFICATE OF WORD COMPLIANCE.........................................................51
CERTIFICATE OF SERVICE ...............................................................................52
54151498 iv
TABLE OF AUTHORITIES
Page(s)
Cases
Bishop v. Miller,
412 S.W.3d 758 (Tex. App.âHouston [14th Dist.] 2013, no pet.) .............13, 23
Bryant v. Clark,
358 S.W.2d 614 (Tex. 1962) ..............................................................................40
CKB & Assocs., Inc. v. Moore McCormack Petroleum, Inc.,
809 S.W.2d 577 (Tex. App.âDallas 1991, writ denied) ...................................39
Clear Lake City Water Auth. v. Friendswood Development Co.,
344 S.W.3d 514 (Tex. App.âHouston [14th Dist.] 2011, pet.
denied)...........................................................................................................42, 43
Cortez v. Weatherford Indep. Sch. Dist.,
925 S.W.2d 144 (Tex. App.âFort Worth 1996, no writ) ..................................15
Cudd Pressure Control, Inc. v. Roles,
328 F. Appâx 961 (5th Cir. 2009) .................................................................22, 23
DKH Homes, LP v. Kilgo,
03-10-00656-CV, 2011 WL 1811435 (Tex. App.âAustin May 11,
2011, no pet.) (mem. op.)..................................................................32, 33, 36, 40
Fid. Fin. Servs. of the Sw., Inc. v. Corilant Fin., L.P.,
376 S.W.3d 253 (Tex. App.âDallas 2012, pet. denied)....................................41
FM Props. Operating Co. v. City of Austin,
22 S.W.3d 868 (Tex. 2000).................................................................................45
Ford Motor Co. v. Ridgway,
135 S.W.3d 598 (Tex. 2004) ........................................................................25, 26
Fort Worth Indep. Sch. Dist. v. City of Fort Worth,
22 S.W.3d 831 (Tex. 2000).................................................................................31
Fuqua v. Fuqua,
750 S.W.2d 238 (Tex. App.âDallas 1988, writ denied) ...................................36
54151498 v
Game Sys., Inc. v. Forbes Hutton Leasing, Inc.,
02-09-00051-CV, 2011 WL 2119672 (Tex. App.âFort Worth
May 26, 2011, no pet.) (mem. op.) .....................................................................49
Gillis v. Provost & Umphrey Law Firm, LLP,
No. 05-13-00892-CV, 2015 WL 170240 (Tex. App.âDallas
Jan. 14, 2015, no pet.) .........................................................................................25
Hancock v. Variyam,
400 S.W.3d 59 (Tex. 2013).................................................................................28
Hinojosa v. Columbia/St. Davidâs Healthcare Sys., L.P.,
106 S.W.3d 380 (Tex. App.âAustin 2003, no pet.) ..........................................47
HK Partners, Inc. v. Power Computing Corp.,
No. 03-98-00124-CV, 1999 Tex. App. LEXIS 3981
(Tex. App.âAustin May 27, 1999, no pet.).................................................46, 47
Houston Mercantile Exch. Corp. v. Dailey Petroleum, Corp.,
930 S.W.2d 242 (Tex. App.âHouston [14th Dist.] 1996, no writ) .............26, 27
Hunter Bldgs. & Mfg., L.P. v. MBI Global, L.L.C.,
436 S.W.3d 9 (Tex. App.âHouston [14th Dist.] 2014, pet. denied) .................27
II Deerfield Ltd. P'ship v. Henry Building, Inc.,
41 S.W.3d 259 (Tex. App.âSan Antonio 2001, pet. denied)............................44
In re Bass,
113 S.W.3d 735 (Tex. 2003) ..................................................................11, 12, 19
Jacobs v. Satterwhite,
65 S.W.3d 653 (Tex. 2001) (per curiam).............................................................. 6
Kachina Pipeline Co. v. Lillis,
No. 13-0596, 2015 Tex. LEXIS 914 (Tex. Oct. 9, 2015) ...................................34
Karns v. Jalapeno Tree Holdings, L.L.C.,
459 S.W.3d 683 (Tex. App.âEl Paso 2015, pet. denied) ......................37, 38, 40
Kevin M. Ehringer Enters., Inc. v. McData Servs. Corp.,
646 F.3d 321 (5th Cir. 2011) ..............................................................................39
54151498 vi
King Ranch, Inc. v. Chapman,
118 S.W.3d 742 (Tex. 2003) ................................................................................ 9
Lamont v. Vaquillas Energy Lopeno Ltd., LLP,
421 S.W.3d 198 (Tex. App.âSan Antonio 2013, pet. denied)..........................26
Leal v. McDonaldâs Corp.,
No. 03-05-00500-CV, 2009 Tex. App. LEXIS 6151
(Tex. App.âAustin Aug. 5, 2009, no pet.) (mem. op.) .....................................21
Lopez v. Munoz, Hockema & Reed, LLP,
22 S.W.3d 857 (Tex. 2000).................................................................................14
Martin v. Beitler,
No. 03-13-00605, 2015 Tex. App. LEXIS 6894
(Tex. App.âAustin July 7, 2015, no pet.) (mem. op.)...........................31, 32, 36
McCalla v. Bakerâs Campground, Inc.,
416 S.W.3d 416 (Tex. 2013) (per curiam) ...................................................36, 37
Mendoza v. Fid. & Guar. Ins. Underwriters, Inc.,
606 S.W.2d 692 (Tex. 1980) ..............................................................................14
Moayedi v. Interstate 35/Chisam Rd., L.P.,
438 S.W.3d 1 (Tex. 2014)...................................................................................34
Nguyen v. Allstate Ins. Co.,
404 S.W.3d 770 (Tex. App.âDallas 2013, pet. denied)..................16, 18, 46, 47
Pickett v. Tex. Mut. Ins. Co.,
239 S.W.3d 826 (Tex. App.âAustin 2007, no pet.) ............................................ 8
Precision Plating & Metal Finishing, Inc. v. Martin-Marietta Corp.,
435 F.2d 1262 (5th Cir. 1970) (per curiam) .......................................................24
Ramco Oil & Gas Ltd. v. Anglo-Dutch (Tenge) L.L.C.,
207 S.W.3d 801 (Tex. App.âHouston [14th Dist.] 2006, pet.
denied).................................................................................................................45
Ramirez v. Colonial Freight Warehouse Co.,
434 S.W.3d 244 (Tex. App.âHouston [1st Dist.] 2014, pet.
denied).................................................................................................................47
54151498 vii
Rustyâs Weigh Scales & Serv., Inc. v. N. Tex. Scales, Inc.,
314 S.W.3d 105 (Tex. App.âEl Paso 2010, no pet.) ..................................27, 30
Ryland Group, Inc. v. Hood,
924 S.W.2d 120 (Tex. 1996) (per curiam) .............................................17, 18, 20
Sharifi v. Steen Automotive, L.L.C.,
370 S.W.3d 126 (Tex. App.âDallas 2012, no pet.) ..........................................44
Star-Telegram, Inc. v. Doe,
915 S.W.2d 471 (Tex. 1995) ....................................................................8, 26, 45
Stewart & Stevenson Servs., Inc. v. Serv-Tech, Inc.,
879 S.W.2d 89 (Tex. App.âHouston [14th Dist.] 1994, writ
denied)...........................................................................................................11, 17
Sw. Energy Prod. Co. v. Berry-Helfand,
411 S.W.3d 581 (Tex. App.âTyler 2013, pet. granted) ....................................14
T.O. Stanley Boot Co. v. Bank of El Paso,
847 S.W.2d 218 (Tex. 1992) ..............................................................................31
Trilogy Software, Inc. v. Callidus Software, Inc.,
143 S.W.3d 452 (Tex. App.âAustin 2004, pet. denied) ............................passim
United Blood Servs. v. Longoria,
938 S.W.2d 29 (Tex. 1997) (per curiam).............................................................. 9
Valence Operating Co. v. Dorsett,
164 S.W.3d 656 (Tex. 2005) ................................................................................ 9
Wellogix, Inc. v. Accenture, L.L.P.,
716 F.3d 867 (5th Cir. 2013) ..............................................................................23
York Grp., Inc. v. York S., Inc.,
No. H-06-0262, 2006 WL 2883363 (S.D. Tex. Oct. 10, 2006)..........................39
Rules
Tex. R. Civ. P. 193.6 ................................................................................................29
Other Authorities
Blackâs Law Dictionary 562 (10th ed.) ...................................................................24
54151498 viii
Restatement of Torts § 757 cmt. b. ..........................................................................19
Restatement of Torts § 757 cmt. c ...........................................................................24
54151498 ix
Lakeway Regional and SDP follow the same naming conventions used in
their Opening Appellantsâ Brief.
STATEMENT OF THE CASE
Nature of the Case: This case arises from a September 15, 2009 Letter
of Intent between Robert Berry and Keith
McDonald, the principals of LTT, and Lakeway
Regional. CR5697. The stated purpose of the
Letter of Intent was to establish âground rulesâ for
exchanging information so that Lakeway Regional
could decide whether to acquire a Lease for a
hospital in Lakeway, Texas, which was then under
construction. Id.
Lakeway Regional ultimately decided not to
acquire the Lease, and this lawsuit ensued. LTT,
as assignee of the rights of Berry and McDonald,
asserted claims for breach of contract,
misappropriation of trade secrets, and negligent
misrepresentation against Lakeway Regional and
its agent, SDP. CR4, 81. LTT later added the
Attorney Defendants. CR122, 158.
Trial Court: 345th Judicial District Court, Travis County,
Texas.
Course of Proceedings: This case was resolved partially on summary
judgment and partially by a jury trial. The trial
court granted summary judgment against LTT on
its claims for trade secret misappropriation and
breach of Section 2 of the Letter of Intent. The
jury returned a verdict favorable to LTT on its
breach of contract claim. LTT appeals the
summary judgment order, while Lakeway
Regional and SDP appeal from the judgment on
the juryâs verdict. CR12266, 12997; SCR3.
54151498 x
STATEMENT OF ISSUES AND CROSS-POINTS
1. Did the trial court correctly determine that Lakeway Regional and
SDP were entitled to summary judgment on LTTâs claim for misappropriation of
trade secrets?
2. Did the trial court correctly determine that Lakeway Regional and
SDP were entitled to summary judgment on LTTâs claim for breach of Section 2 of
the Letter of Intent either because (A) Section 2 is an unenforceable agreement to
agree, or (B) the summary judgment evidence conclusively established that at least
two conditions precedent to Lakeway Regionalâs obligations to perform under
Section 2 were not satisfied and LTT had no evidence that either was satisfied?
Also, did LTT waive error as to SDP because it failed to challenge all bases for the
trial courtâs summary judgment on its Section 2 claimânamely that SDP was not a
party to the Letter of Intent?
3. Did the trial court properly exercise its discretion in sustaining
Lakeway Regionalâs and SDPâs objections to LTTâs summary judgment evidence?
54151498 xi
STATEMENT OF FACTS
Lakeway Regional and SDP provided a comprehensive statement of
background facts in their Opening Appellantsâ Brief. The facts below are limited
to those relevant to LTTâs cross-appeal.
I. Facts relevant to LTTâs cross-appeal relating to Section 2 of the Letter
of Intent.
The Letter of Intent is dated September 15, 2009. CR5697. It addresses 11
separate topics, which generally fall into two categories.
The first category of topics concerns the acquisition of the Lease. Section 1,
titled âDiscussions and Negotiation of the Project,â sets forth the time period
during which the parties would have negotiations regarding the project, which time
period could be extended. Section 2, titled âThe Proposed Outline of the Terms of
the Project,â sets forth some of the terms and conditions that would be included in
a full and complete agreement if Lakeway Regional decided to acquire LTTâs
Lease, including that Lakeway Regional would reimburse Berry and McDonald
reasonable and documented costs advanced by them plus pay them $1.5 million.
Section 3, titled âRequired Approvals for the Project,â sets forth five conditions
precedent to Lakeway Regionalâs obligations under Section 2 and a âbest effortsâ
obligation to satisfy each condition precedent. Section 4, titled âEarnest Money,â
provides that Lakeway Regional would deposit earnest money with an escrow
agent and that if Lakeway Regional terminated the Letter of Intent for any reason,
54151498 1
the earnest money would be paid to Berry and McDonald. Section 5, titled
âTerm,â states that the âLetter of Intent may be terminated by either Party, for any
reason.â (Emphasis added.) Nowhere does the Letter of Intent impose any
affirmative obligation on Lakeway Regional to consummate the transaction
âoutlinedâ in Section 2.
The second category of topics sets out the ground rules for how the parties
would conduct further due diligence and negotiations related to the potential
transaction addressed in Section 2. Section 6 contains a standstill and non-
circumvention provision, providing that Lakeway Regional would not share any
information with third parties gained in the negotiation and development process or
independently use any proprietary information. Section 9, titled âConfidentiality,â
has numerous subsections. For example, Section 9.1, titled âProprietary
Information,â provides that âall information disclosed by any Party or its
Representatives at any time to any other Party or its Representatives . . . shall be
deemed âProprietary Information.ââ And Section 9.7 restricts the type of
information that could qualify for protection by making clear that certain
information was not proprietary, including information that was in the public
domain as of the date of the Letter of Intent or was received from a third party with
no restriction on further disclosure.
54151498 2
Following the execution of the Letter of Intent, Lakeway Regional
conducted due diligence on the project and ultimately determined that acquiring
the Lease did not make economic sense. CR5709, 5840, 5857, 5859, 6031, 6264.
On March 22, 2010, Lakeway Regional notified LTT of its decision. CR5709,
5878, 6131. At that time, LTT did not claim that it believed Lakeway Regionalâs
decision was a breach of Section 2. This is consistent with the fact that Section 2
was not a binding obligation, but only a âProposed Outline of the Termsâ for the
proposed Lease acquisition. LTT raised Section 2 for the first time in its breach of
contract lawsuit, filed in April 2012. CR4.
II. Facts relevant to LTTâs cross-appeal on its alleged misappropriation
claim.
Sossi obtains LTT-related information months before any discussions
between Lakeway Regional and LTT. More than a year before there were any
discussions about the Letter of Intent, and as part of the process of developing
Lakeway Regional, Lakeway Regionalâs attorney, Frank Sossi, learned information
about LTTâs Lake Travis Hospital from Health Care REIT and publicly-available
documents. CR6013-14, 6435-36. The information Sossi learned from Health
Care REIT about Lake Travis Hospital included financial information.
Information that would have been publicly available to Sossi included a set of
architectural plans for Lake Travis Hospital. Id.; see also CR5803, 6272.
54151498 3
Lakeway Regional seeks financial support from HUD. As described in the
opening briefs, part of Lakeway Regionalâs strategy for funding its hospital was to
obtain loan insurance from HUD. On March 17, 2010, following a lengthy
application and review process, HUD issued its initial commitment for loan
insurance to Lakeway Regional, indicating that it intended to insure Lakeway
Regionalâs loan. CR5884, 6014. On May 8, 2010, six weeks after issuing the
commitment, HUD received a complaint from the CEO of another area hospital,
questioning whether Lakeway Regional was in an underserved area because of the
Lake Travis Hospital project, which was under construction. CR5614, 5719, 6141.
In response to this complaint, HUD posed eight general questions about Lake
Travis Hospital to Lakeway Regionalâs lender. Id. Lakeway Regionalâs lender
forwarded HUDâs questions to Sossi. CR5718, 6140. In a two-page email dated
May 10, 2010 (the âMay 10 emailâ), Sossi answered those questions for Lakeway
Regional. CR5716-17, 6138-39. The May 10 email had no attachments.
On May 21, 2010, the HUD-insured loan closed. CR6308. After the loan
closed, Sossi had some further communication with HUD regarding LTTâs facility,
including a June 21, 2010 letter (the âJune 21 letterâ) that Sossi sent to HUDâs
Office of Litigation. CR8108-10.
LTT accuses Lakeway Regional and SDP of misappropriating its trade
secrets to convince HUD to issue loan insurance. LTTâs misappropriation claims
54151498 4
hinge on Sossiâs communications with HUD, particularly the May 10 email.
According to LTT, Lakeway Regional and SDP used and disclosed LTTâs trade
secrets to HUD to convince HUD that Lake Travis Hospital was not a competitive
facility. CR158, 172-74. But LTT has never articulated what LTT trade secrets
were allegedly used or disclosed in the May 10 email or during any other
communication between Lakeway Regional or SDP and HUD. Instead, below and
now, LTT appears to claim that its so-called Project File is itself a trade secret.
Cross-App. Br. 13-15. As explained below, the Project File cannot be a âtrade
secretâ because it was actually created by LTTâs trial counsel, with Berryâs input,
two years after this litigation commenced, and LTTâs trial counsel stated on the
record that the Project File is not a trade secret that was misappropriated. CR7598-
600, 11494-500, 11506-07.
III. Procedural history.
Two years after this case was filed, Lakeway Regional and SDP moved for
summary judgment on LTTâs claims for breach of Section 2 of the Letter of Intent
and trade secret misappropriation. CR4, 5602 (Lakeway Regionalâs motion), 6020
(SDPâs motion). The trial court, without specifying the bases, granted both
motions. CR12266; see also CR12251 (Judge Yelonoskyâs letter ruling states:
âReasons given are not exclusive of other reasons I may have, will not be
54151498 5
incorporated in any order, and do not limit the bases of support for any order.â).1
The trial court also sustained in part Lakeway Regionalâs and SDPâs objections to
LTTâs summary judgment evidence. CR11486, 12261. LTTâs remaining claims
were tried to a jury, which returned a verdict partially in its favor. CR12997.2
SUMMARY OF ARGUMENT
Summary judgment on LTTâs misappropriation claim was proper.
Throughout this lawsuit, LTT has struggled to patch together evidentiary support
for its trade secrets misappropriation claim. After two years of discovery, LTT
mustered only superficial and conclusory responses to Lakeway Regionalâs and
SDPâs motions for summary judgment.
LTT was unable to identify any specific information that qualified as a trade
secret under Texas law, and so its trial counsel, with Berryâs input, created a
purported trade secret just for this litigation and called it the âProject File,â hoping
that the sheer volume of paper in the Project File would obscure the lack of any
trade secret.
1
As discussed in Lakeway Regionalâs and SDPâs Opening Appellantsâ Brief, although Judge
Yelenosky granted summary judgment on LTTâs Section 2 breach claim, Judge Livingston (who
presided over the case during trial) submitted LTTâs breach of contract claim in broad form,
meaning that Section 2 was impermissibly before the jury. See Appellantsâ Opening Br. 49-57.
2
LTT also alleged a claim for negligent misrepresentation. CR174. It lost part of this claim on
summary judgment and the remainder at trial. CR12266-67, 13003. Because LTT has not
appealed either the summary judgment order or the final judgment as to the negligent
misrepresentation claim, the claim is abandoned. Jacobs v. Satterwhite, 65 S.W.3d 653, 655-56
(Tex. 2001) (per curiam) (ââgrounds of error not asserted by points of error or argument in the
court of appeals are waivedââ).
54151498 6
LTT was unable to present any evidence demonstrating how Lakeway
Regional and SDP used or disclosed such information, and so it generally pointed
to a few communications with HUD, hoping that speculation about the
communications would overcome the lack of actual evidence of use or disclosure.
LTT was unable to present evidence demonstrating how the alleged use or
disclosure caused LTT any injury or damage, and so it presents a new damage
theory on appeal, hoping to avoid the absence of causation evidence, all the while
ignoring the uncontroverted evidence from HUD that knowing earlier about Lake
Travis Hospital would not have effected its decision to provide insurance.
LTT similarly failed to controvert Lakeway Regionalâs and SDPâs evidence
that they neither used nor disclosed LTTâs alleged trade secrets.
Summary judgment on LTTâs breach of Section 2 claim was proper. By
its terms, Section 2 memorializes only an agreement to agreeâlacking essential
terms and being terminable by any party for any reasonâand so is unenforceable
as a matter of law. Also, the enforceability of Section 2 was dependent upon the
satisfaction of five condition precedents set out in Section 3. Lakeway Regional
and SDP conclusively established that two of the five were not met, and LTT failed
to submit evidence that the conditions were satisfied or excused. Finally, SDP
moved for summary judgment on the basis that as a non-party to the Letter of
Intent, it had no duty or obligation under Section 2. LTT failed to challenge this
54151498 7
independent basis for summary judgment, requiring that the summary judgment for
SDP be affirmed.
Objections to LTTâs summary judgment evidence were properly sustained.
The problems with LTTâs misappropriation case manifested themselves in LTTâs
summary judgment evidence, which relied on the voluminous, created-for-
litigation âProject Fileâ as the purported trade secret. Yet no LTT witness ever
identified which portions of the Project File constituted a trade secret. For these
and other reasons, the trial court properly sustained Lakeway Regionalâs and
SDPâs evidentiary objections.
STANDARD OF REVIEW
The standard for review of a traditional summary judgment is well
established. When the trial court does not state the basis for its decision in its
order, this Court will affirm on any meritorious ground asserted in the motion.
Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995); Pickett v. Tex. Mut.
Ins. Co., 239 S.W.3d 826, 840 (Tex. App.âAustin 2007, no pet.). Thus, LTT was
required to challenge every ground asserted in the motions in its brief. Star-
Telegram, 915 S.W.2d at 473.
The standard of review of a no-evidence summary judgment is also well
established. A no-evidence summary judgment is essentially a directed verdict
54151498 8
granted before trial, to which a legal sufficiency standard of review applies. King
Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003).
Because the propriety of a summary judgment is a question of law, review is
de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
Rulings on objections to summary judgment evidence are reviewed for an
abuse of discretion. United Blood Servs. v. Longoria, 938 S.W.2d 29, 30-31 (Tex.
1997) (per curiam).
ARGUMENT
I. The Trial Court Correctly Granted Summary Judgment in Lakeway
Regionalâs and SDPâs Favor on LTTâs Misappropriation Claim.
To recover for trade secret misappropriation, a plaintiff must establish: (1) a
trade secret existed; (2) the trade secret was acquired through a breach of a
confidential relationship or was discovered by improper means; (3) the defendant
used or disclosed the trade secret without the plaintiffâs authorization; and (4) the
plaintiff suffered damages as a result. Trilogy Software, Inc. v. Callidus Software,
Inc., 143 S.W.3d 452, 463 (Tex. App.âAustin 2004, pet. denied).
Lakeway Regional and SDP filed a hybrid motion for summary judgment on
LTTâs misappropriation claim. They moved on traditional grounds on elements
three (disclosure/use) and four (causation). CR5609, 5625-31, 6027, 6046-52.
They moved on no-evidence grounds on elements one (existence of a trade secret),
54151498 9
three (disclosure/use), and four (causation). See id.3 Thus, LTT had the burden to
come forward with evidence, and raise a fact issue, that it has specific trade
secrets, that it gave those specific trade secrets to Lakeway Regional and SDP,
that Lakeway Regional and SDP disclosed or used those specific trade secrets, and
that disclosure or use of those specific trade secrets caused LTT injury. None of
this was shown below or now on appeal.4
First, LTT claims that its Project Fileâa collection of materials exceeding
2,000 pagesâqualifies as a trade secret. But it cannot be a trade secret because it
was created two years after LTT initiated this litigation by LTTâs trial counsel for
this litigation, and it includes correspondence among SDP and third parties.
Second, there is no evidence of use or disclosure of any alleged LTT trade
secret. LTT claims that Lakeway Regional and SDP used or disclosed LTTâs trade
secrets in two ways: (1) in writing, through the May 10 email or the June 21 letter
or (2) orally, during various meetings. CR11801-06, 11905-11; Cross-App.
Br. 23-27. LTT never, however, connected any specific alleged trade secret to
anything in these communications. In fact, Lakeway Regionalâs and SDPâs
3
Contrary to LTTâs assertion (Cross-App. Br. 9-10), Lakeway Regional and SDP made no-
evidence points on the element of existence of a trade secret. CR5628 (Lakeway Regionalâs
motion: â[T]here is no evidence that the information that LTT claims is Protected Information
actually qualifies as a trade secret under Texas law.â); CR6049 (stating same in SDPâs motion).
4
LTTâs amended summary judgment responses can be found at CR11790 (to SDPâs motion) and
CR11899 (to Lakeway Regionalâs motion).
54151498 10
summary judgment evidence conclusively established that there was no use or
disclosure of any alleged trade secret.
Third, LTT failed to bring forth legally sufficient evidence of causationâ
that it was injured from some alleged disclosure or use of a trade secret. Lakeway
Regional and SDP meanwhile presented uncontroverted evidence that negated the
element of causation.
Thus, as detailed below, summary judgment was proper on LTTâs
misappropriation claim for these reasons.
A. LTT failed to prove the existence of a trade secret that is at issue.
To qualify as a trade secret, the information or documents must be used in
the plaintiffâs business, and it must provide the plaintiff with the ââopportunity to
obtain an advantage over competitors.ââ In re Bass, 113 S.W.3d 735, 739 (Tex.
2003) (citation omitted); see also Trilogy, 143 S.W.3d at 463 (concluding that a
trade secret is âfor continuous use in the operation of the businessâ). LTT had the
burden to show the existence of a âtrade secret.â See Stewart & Stevenson Servs.,
Inc. v. Serv-Tech, Inc., 879 S.W.2d 89, 96-98 (Tex. App.âHouston [14th Dist.]
1994, writ denied) (if the subject matter appropriated is not a trade secret, there is
no liability for misappropriation).
The big question is âWhat is the secret that was used or disclosed?â
Frankly, if LTT had a valid claim, answering this question should have been an
54151498 11
easy task. But that has not been the case. Despite a lengthy discovery process
lasting two years, multiple rounds of briefing in the trial court (e.g., CR9627,
11899), and briefing before this Court, it remains a mystery which purported trade
secrets LTT claims were misappropriated.
1. Because the Project File is a collection of documents
assembled by LTTâs trial counsel after the lawsuit was filed,
it is not a trade secret.
The focus of LTTâs argument for the existence of trade secrets has been the
so-called âProject File,â which is a 2,033-page collection of documents. Cross-
App. Br. 13 n.4, 42 n.15. Fatal to LTTâs misappropriation claim is that the Project
File was not used in its business. There is no evidenceâand Berry certainly never
swore in his declarationâthat the Project File, as a âcompilation,â was used in
LTTâs business. Nor could it have been. As Lakeway Regional and SDP pointed
out in support of their objections to LTTâs summary judgment evidence
(CR11486), the Project File was assembled by LTTâs trial counsel with
subsequent input from Berry, more than two years after the litigation was filed.
CR11494-500. Thus, the timing of the Project Fileâs creation makes it impossible
under the law to satisfy the âused in oneâs businessâ requirement. In re Bass, 113
S.W.3d at 739. Similarly, since the Project File as a compilation was not used in
LTTâs business, it could not have given LTT a competitive advantage over others.
Id.
54151498 12
Further, the Project File contains documents that were not owned by LTT.
When constructing the Project File, LTTâs trial counsel included emails produced
by SDP during the litigation for which no one at LTT was a recipient. Indeed, the
third document in the Project File (CR8682) is an email from Scott Brinker (of
Health Care REIT, a third party) to Eddie Alexander (SDPâs CEO) and Sossi that
was sent before SDP and Lakeway Regional signed any confidentiality agreement,
and that email contains no information that could possibly be construed as a trade
secret. It merely states that LTTâs principals were willing to have a discussion
about the project.5
LTTâs cases also fail to advance its argument. In those cases, the alleged
trade secret was information compiled to create a competitive advantage, not
compiled at a later date for litigation purposes. See, e.g., Bishop v. Miller, 412
S.W.3d 758, 764-71 (Tex. App.âHouston [14th Dist.] 2013, no pet.) (describing
the evidence that supported the juryâs finding that a compilation of 13 items
constituted a trade secret). Indeed, in one cited case, the compilation trade secret is
exactly what you might expect: a person used some ingenuity to mine public- and
semi-public raw production data to identify sweet spots for oil and gas exploration
5
The Project File includes many other documents which clearly do not contain trade secrets,
such as the Confidentiality Agreement between SDP and LTT (CR8686), emails regarding
revisions to the draft of the Letter of Intent (CR8709), the Letter of Intent (CR8721), the Escrow
Agreement (CR8737), drafts of a lease assignment (CR8786), correspondence between counsel
(CR8797), transmittal emails (CR8824, 8833), and the Lease (CR8858).
54151498 13
that had not yet been identified. See Sw. Energy Prod. Co. v. Berry-Helfand, 411
S.W.3d 581, 597-98 (Tex. App.âTyler 2013, pet. granted). LTT did nothing of
the sort here, and instead relies on its lawyer-created compilation.
Moreover, as Lakeway Regional and SDP pointed out in their objections to
LTTâs summary judgment evidence (CR11488), LTTâs counsel stated during the
deposition of LTTâs trade secrets expert that LTT was not claiming that the Project
File was a trade secret that was misappropriated:
MR. COX: Letâs go back on the record. Counsel, I understand you
have a statement youâd like to make on the record.
MR. WINGARD: Sure. Because I think it will help short-circuit
testimony today, I want to state that LTT does not contend that the
Project File, which is Bates labeled 7875 through 9907 and was
labeled Exhibit 324 in Mr. Berryâs deposition, that that document in
its entirety constitutes a trade secret that was misappropriated in its
entirety. However, LTT does contend that information contained
within the Project File discreetly or in combination with other
information is misappropriated.
CR11506-07 (emphasis added). Because LTT unequivocally stated that it was not
asserting that the Project File constituted a trade secret, it is now foreclosed from
claiming otherwise. See Lopez v. Munoz, Hockema & Reed, LLP, 22 S.W.3d 857,
864 (Tex. 2000) (âQuasi-estoppel precludes a party from asserting, to anotherâs
disadvantage, a right inconsistent with a position previously taken.â); Mendoza v.
Fid. & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980)
(identifying circumstances where testimony will constitute a binding judicial
54151498 14
admission and recognizing that âit would be unjust to permit a party to recover
after he has sworn himself out of court by clear, unequivocal testimonyâ); Cortez v.
Weatherford Indep. Sch. Dist., 925 S.W.2d 144, 150-51 (Tex. App.âFort Worth
1996, no writ) (partyâs deposition testimony acted as a conclusive judicial
admission supporting summary judgment against that party).
It should be noted that throughout the case, LTT has gone back and forth on
whether the Project File itself is a trade secret, sometimes claiming that it is and
sometimes claiming that parts of it contain trade secrets. That volley continues
here. On the one hand, LTT cites cases for the proposition that âa compilation of
distinct information may be protected as a trade secret.â Cross-App. Br. 11-13.
But on the other hand, LTT never outright says the Project File is such a
âcompilation,â instead noting that it is âa compilation of all the documentary
evidence reflectingâ not just LTTâs trade secrets but also its âproprietary
information.â Id. at 13 (emphasis added); see also id. (âmaterials contained in the
Project File constitute LTTâs trade secretsâ); id. (referring to âtrade secrets
included in that compilationâ).
LTT made similar statements below without ever exactly contending that the
Project File itself was a trade secret. E.g., CR11921 (referring to âtrade secrets
contained in the Project Fileâ); CR11922 (referring to Project File as âcontaining
and reflecting the trade secretsâ). And, most importantly, in his declaration
54151498 15
supporting LTTâs summary judgment response, Berry never says the Project File
itself is a trade secret, noting instead that â[m]uch of the information in the Project
File is or reflects confidential and proprietary information that provided LTT with
a competitive advantage, and LTT considered this information a trade secret.â
CR7607 (emphasis added).
LTTâs inabilityâseveral years into this litigationâto simply state, in clear
terms, that the created-for-litigation Project File is a trade secret should tell the
Court all it needs to know about the strength of LTTâs trade secret arguments.
2. It remains unclear which purported trade secrets LTT
believes are at issue.
What pieces of the alleged âProject Fileâ are a trade secret? LTT has yet to
establish this fact.
Components of the Project File have yet to be identified as trade secrets.
In his declaration, Berry broadly identified certain categories of information in the
Project File as alleged trade secrets (e.g., current state of construction, physician
support, and sources and uses of funds). CR7607. But he never identified where
that information can be found in the voluminous, 2,033-page Project File. Berry
cited to the entirety of the Project File. CR7606 (referencing the âBates range of
the Project Fileâ). This is insufficient. See, e.g., Nguyen v. Allstate Ins. Co., 404
S.W.3d 770, 776-77 (Tex. App.âDallas 2013, pet. denied) (trial courts are âânot
54151498 16
required to sift through voluminousââ evidence to see if a fact issue exists (citation
omitted)).
To remedy this deficiency, LTT filed amended summary judgment
responsesâweeks after Berry submitted his declaration and after Lakeway
Regional and SDP had objected to the Project File. CR11486, 11790, 11899. In
doing so, LTTâs trial counsel purported to identify certain âconfidential,
proprietary and trade secret informationâ within the Project File by category and
Bates number. See CR11814, 11919; Cross-App. Br. 14-15. The documents
identified by LTTâs lawyers amount to 786 pages of the Project File. But no
witness testified that any of these documents were actual trade secrets. That is,
Berry never supplemented his declaration to confirm that the specific documents
identified by LTTâs trial counsel were, in his view, trade secrets, as opposed to
being simply âconfidentialâ or âproprietaryâ under the Letter of Intent. See
Stewart & Stevenson, 879 S.W.2d at 99 (â[T]here is no cause of action for
misappropriation of confidential information that is not either secret or, at least
substantially secret.â). Instead, LTT relied on Berryâs prior declaration, which
generally claimed that the âtrade secrets in the Project File were not generally
known or readily available to the public,â without identifying the specific material
or information. See CR7608. Berryâs statement, however, is conclusory and
lacking any probative value. See Ryland Group, Inc. v. Hood, 924 S.W.2d 120,
54151498 17
122 (Tex. 1996) (per curiam) (âConclusory affidavits are not enough to raise fact
issues.â); see also infra at Section III.
Notably, LTTâs amended responses did not even reference many of the
categories of trade secrets that Berry identified (e.g., the three examples given at
the beginning of this section). In other words, the trial court was required to
review the 2,033-page Project File (some of which LTT acknowledges is not a
trade secret), and on its own, specifically identify which documents or information
in the Project File were actual trade secrets. Nguyen, 404 S.W.3d at 776-77.
No document or information outside of the Project File has been identified
as a trade secret either. LTT makes a passing reference to âother thingsâ besides
the Project File as âsubstantial evidence of the existence of LTTâs trade secrets.â
Cross-App. Br. 13 (âIn its response to Defendantsâ motions, LTT included (among
other things) the Project File . . . .â). However, LTT never identified any trade
secret that exists outside of the Project File. And Berryâs declaration only vaguely
refers to information that was âconveyed to Defendants verballyâ without
identifying what that information was. CR7606.
In sum, the failure of Berry (or any other witness) to identify which specific
LTT documents or information allegedly constitute a trade secret is fatal to LTTâs
claim. That LTTâs trial counsel submitted argument purporting to identify LTTâs
trade secrets is no evidence of LTTâs trade secrets. As a result, neither the parties
54151498 18
nor the Court can even begin to analyze the six-factor test for evaluating the
existence of a trade secret. In re Bass, 113 S.W.3d at 739 (quoting factors from
Restatement of Torts § 757 cmt. b (1939)).
Although this Court can affirm summary judgment on this ground alone,
Lakeway Regional and SDP will address the other elements of LTTâs
misappropriation claim.
B. There is no evidence that Lakeway Regional or SDP used or
disclosed LTTâs purported trade secrets, and the evidence
conclusively establishes that there was no use or disclosure.
Having failed to show the existence of a trade secret, LTT unsurprisingly
cannot show that Lakeway Regional or SDP actually disclosed or used any trade
secret. While the focus of this element has been the May 10 email and other
communications with HUD, the shortcomings are the same whether one looks at
use or disclosure. There is no evidence of what trade secret was used/disclosed or
how it was used/disclosed (e.g., what specific aspect of the HUD communications
actually used/disclosed a trade secret). Indeed, the uncontroverted evidence
established that Sossi did not use/disclose any LTT trade secret when
communicating with HUD about LTTâs facility.
1. There is no evidence of use of a trade secret.
ââUseâ of a trade secret means commercial use, by which a person seeks to
profit from the use of the secret.â Trilogy, 143 S.W.3d at 464. The evidence of
54151498 19
use or disclosure must be tethered to an identified trade secret. Id. at 463 (referring
to use of âtheâ trade secret found to be in existence).
As with much of this case, the May 10 email is the focal point of LTTâs use
argument. According to LTT, Lakeway Regional and SDP used LTTâs trade
secrets in the May 10 email to convince HUD that Lake Travis Hospital was not a
competitive facility. Cross-App. Br. 24-25. This argument fails.
First, LTT never says what trade secrets were used in the May 10 email and
which specific portion of the email purportedly used them.6 The two-page May 10
email contains many statements that relate to LTTâs Lake Travis Hospital,
including its location, its size, and bed count. CR5716-17. Rather than identify
how this email âusedâ a trade secret, LTTâs entire argument on use is one sentence:
âTo convince HUD that LTT was not a competitive facility, and thereby fund
LRMCâs $166.9 mortgage, Defendants used LTTâs trade secrets in the May 10th
Email and subsequent correspondence with HUD.â Cross-App. Br. 25. This
conclusory statement is not legally sufficient evidence of âuseâ of some alleged
trade secret. See Ryland, 924 S.W.2d at 122. Likewise, the unspecified
âsubsequent correspondence with HUDâ cannot support âuseâ of any alleged trade
secret. Id.
6
LTTâs misappropriation argument section spans 23 pages. Only five and one-half of those
pages address the elements of use/disclosure. Cross-App. Br. 22-27. Nowhere in those five and
one-half pages does LTT clearly state what or how a trade secret was used or disclosed.
54151498 20
Second, LTT speculates that because it provided Lakeway Regional and
SDP with site- and building-related information, they, in turn, must have used that
exact (allegedly secret) information to determine that it would be very costly to
convert LTTâs facility from a long-term health care facility to a general acute care
facility, as Sossi stated in the May 10 email. Cross-App. Br. 24-25. But an equally
likely inference is that Sossi reached that conclusion based on information obtained
from Heath Care REIT or publically-available information. CR5886, 6013-14,
6435-36. LTTâs speculation that Lakeway Regionalâs determination of conversion
costs was based on use of LTTâs trade secrets rather than other information
independently available to Lakeway Regional is not probative evidence. Leal v.
McDonaldâs Corp., No. 03-05-00500-CV, 2009 Tex. App. LEXIS 6151, at *8-9
(Tex. App.âAustin Aug. 5, 2009, no pet.) (mem. op.) (affirming no evidence
summary judgment based on equal inference rule).
Third, LTTâs inability to identify how its purported trade secrets were used
is compounded by its admission that the information conveyed in the May 10 email
was false. Berry testified that many of Sossiâs statements in the May 10 email
were in fact false. In particular, Berry admitted that the following statements from
the May 10 email were not true:
⢠LTT missed the deadline to qualify as an LTAC;
⢠The Lake Travis facility, in the fall of â09 and the spring of â10, had
numerous code violations;
54151498 21
⢠Conversion of Lake Travis Hospital to a true general acute care hospital
would cost a great deal of money;
⢠It would be difficult to expand Lake Travis Hospital in the future;
⢠LTT had no physician support;
⢠The lease was structured as a 100% interest-only lease;
⢠Lake Travis Hospital would not open in the summer of 2010;
⢠Lake Travis Hospital did not have an operator;
⢠Lake Travis Hospital did not have an operational staff;
⢠Lake Travis Hospital did not have a medical staff;
⢠Lake Travis Hospital did not have a list of interested physicians; and
⢠The City of Lakeway would need to approve any physical conversion
changes from an LTCH to a general acute care hospital.
CR5809-12, 6231-34.
LTT is left to argue that evidence that a defendant conveyed false
information to a third party that relates to or is similar to the plaintiffâs purported
trade secrets raises a fact issue of use. Cross-App. Br. 22-25. But none of LTTâs
cases support its unrecognized argument.
For example, in Cudd Pressure Control, Inc. v. Roles, 328 F. Appâx 961 (5th
Cir. 2009), the defendants, who were former employees of the plaintiff and the
company that they joined to compete with the plaintiff, âshowedâ the plaintiffâs
confidential financial data to their investors to validate that what they were telling
the investors about the opportunity âwas true.â Id. at 962-63, 966 (emphasis
added). The Fifth Circuit found that such evidence raised a fact issue on the
element of commercial use and reversed a summary judgment in defendantsâ favor.
54151498 22
Id. at 966. Had Lakeway Regional and SDP shown LTTâs confidential financial
information to HUD, Cudd might be relevant.
In Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867 (5th Cir. 2013), the
court found that where a defendantâs document stated, â[u]se Wellogix content,â a
jury could find that the defendant relied on the plaintiffâs software developed for
oil and gas companies to develop its own software. Id. at 877. And in Bishop, the
evidence showed that the defendantâs operating plan incorporated 15 of the
plaintiffâs 21 component parts. 412 S.W.3d at 774. LTT has not presented facts
here that evidence use and instead offers its speculation that use occurred. Stated
differently, in a typical trade secret misappropriation case, as LTT points out in its
brief at page 12, the defendant is alleged to have used the plaintiffâs information
either by copying it or taking advantage of it to achieve a competitive advantage of
some kind. E.g., Trilogy (use of plaintiffâs software); Serv-Tech (use of plaintiffâs
bid forms, business plans, job cost control and progress tracking methods); Bishop
(use of plaintiffâs potash mining process for acreage in Utah). There is no
evidence here of use in that way, which by itself was dispositive of LTTâs trade
secret claim, as the trial court found. CR12252 (âNothing that could qualify as a
trade secret was âusedâ as that word is defined in the case law.â).
54151498 23
2. The evidence conclusively establishes that there was no use
of a trade secret.
Lakeway Regionalâs and SDPâs summary judgment evidence conclusively
established that Sossi did not use any LTT trade secret in drafting the May 10
email. CR6013-14, 6435-36. Sossi confirmed that â[a]ny information conveyed to
HUD about LTT or Lake Travis Hospital on May 10, 2010, and afterward resulted
from information obtained from Health Care REIT and from publicly available
sources.â Id. at 6014, 6436. Sossi had been communicating with Health Care
REIT since March 2008 about LTT and Lake Travis Hospital (id.), well before the
Letter of Intent was signed in September 2009. This evidence is uncontroverted.
3. There is no evidence of disclosure of a trade secret.
To establish disclosure, LTT must show that Lakeway Regional and SDP
made an LTT trade secret known to the public. See, e.g., Precision Plating &
Metal Finishing, Inc. v. Martin-Marietta Corp., 435 F.2d 1262, 1263 (5th Cir.
1970) (per curiam) (noting that plaintiff had developed a âsecret processâ and that
defendant âmade such public disclosure of the processâ so as to destroy the value
of the process); see also Restatement of Torts § 757 cmt. c (discussing difference
between âmere disclosureâ and use); Blackâs Law Dictionary 562 (10th ed.)
(defining âdisclosureâ as â[t]he act or process of making known something that
was previously unknownâ).
54151498 24
Nowhere in LTTâs page-and-a-half discussion of disclosure (Cross-App.
Br. 26-27) does LTT identify a specific alleged trade secret that Lakeway Regional
or SDP actually disclosed. For example, LTT recounts that Sossi shepherded
Lakeway Regionalâs application through the HUD process. Id. But this is not
evidence that Sossi disclosed LTTâs trade secrets during that process.
LTT next points to the June 21 letter where Sossi (i) stated that he discussed
LTTâs facility in detail with HUD, (ii) referenced a prior discussion he had with
HUDâs client service team about LTTâs facility, and (iii) stated his expectation that
HUD would defend its loan commitment. But nothing in the June 21 letter
(CR8108-10) suggests that non-public information concerning Lake Travis
Hospital was part of that discussion, and no specific trade secret has been
identified in this letter either. As with the May 10 email and the use claim, LTT
never identifies a âtrade secretâ disclosed in the June 21 letter.7
Speculation that Sossi might have disclosed an LTT trade secret to HUD
during any discussion is no evidence. Ford Motor Co. v. Ridgway, 135 S.W.3d
598, 601 (Tex. 2004) (evidence must transcend mere suspicion); Gillis v. Provost
& Umphrey Law Firm, LLP, No. 05-13-00892-CV, 2015 WL 170240, at *14 (Tex.
App.âDallas Jan. 14, 2015, no pet.) (applying rule on facts analogous to those
here).
7
LTT also includes an obligatory mention of the May 10 email in its disclosure argument but
points to no particular statement in the email that discloses a trade secret. Cross-App. Br. 26-27.
54151498 25
LTTâs reliance on Lamont v. Vaquillas Energy Lopeno Ltd., LLP, 421
S.W.3d 198 (Tex. App.âSan Antonio 2013, pet. denied) is, therefore, misplaced.
In Lamont, it was unnecessary for the jury to speculate whether the defendant used
the plaintiffâs seismic data in deciding to acquire a gas prospect because the only
seismic data that existed concerning the prospect had been developed by the
plaintiff. Id. at 213-16. Here, LTT wants this Court to reverse the trial courtâs
judgment by speculating that Sossi disclosed LTTâs alleged trade secrets during
discussions with HUD, even though there were several sources of his information
about LTTâs Lake Travis Hospital, as noted above. That would be improper. Ford
Motor Co., 135 S.W.3d at 601.
4. The evidence conclusively establishes that there was no
disclosure of a trade secret.
Lakeway Regional and SDP conclusively established that neither disclosed
trade secrets to HUD. CR6013-14, 6435-36. That evidence stands uncontroverted
and serves as an independent basis for affirming the summary judgment. Star-
Telegram, 915 S.W.2d at 473; see also supra at Section I.B.2-3.
C. There is no evidence that a purported disclosure or use caused
LTT any damages, and the evidence conclusively negates
causation.
To recover any type of damages, there must be âa direct causal link between
the damages awarded, the actions of the defendant and the injury suffered.â
Houston Mercantile Exch. Corp. v. Dailey Petroleum, Corp., 930 S.W.2d 242, 248
54151498 26
(Tex. App.âHouston [14th Dist.] 1996, no writ) (applying rule of law in
misappropriation case); see also Hunter Bldgs. & Mfg., L.P. v. MBI Global, L.L.C.,
436 S.W.3d 9, 20-22 (Tex. App.âHouston [14th Dist.] 2014, pet. denied) (same);
Rustyâs Weigh Scales & Serv., Inc. v. N. Tex. Scales, Inc., 314 S.W.3d 105, 111
(Tex. App.âEl Paso 2010, no pet.) (same).
1. There is no evidence of causation.8
Lakeway Regional and SDP moved for summary judgment on the basis that
LTT had no evidence that it sustained damages resulting from the alleged
misappropriation of its trade secrets. CR5629-31, 6050-52. Specifically, Lakeway
Regional and SDP pointed out that LTT had no evidence that HUDâs decision to
amend, close, or fund was based upon any information HUD had obtained in
connection with LTTâs proposed facility. Id.
LTT failed to raise legally sufficient evidence of causation. Instead, Berry
generally testified that as âa result of Defendantsâ misconduct,â LTT lost nearly all
of its market value. CR7614-15. But Berry never connected LTTâs alleged loss in
value to misappropriation, as distinct from other alleged misconduct.
LTT attempts to avoid the element of causation by arguing that it was not
required to show reliance by HUD. The sole basis for this argument is that LTT
8
This argument also runs through Lakeway Regionalâs and SDPâs Appellantsâ Brief and upon
examination, the summary judgment evidentiary and trial records are virtually identical.
Meaning, there is no evidence of causation to support any of LTTâs causes of action.
54151498 27
claims to seek reasonable royalty damages that are ânot dependent upon proof that
HUD relied onâ any improper disclosure or use of its trade secrets. Cross-App.
Br. 31. This argument fails on many accounts.
First, the decisions made by HUD were to issue the commitment, to agree to
the amendment of terms requested by Lakeway Regional, and to close. HUD
issued the commitment on March 17, 2010. CR5884, 6306. Prior to that time,
HUDâs representative testified that no âperson associated with Lakeway Regional
or SDP disclose[d] any information to HUD regarding LTT.â Id. Thus, Lakeway
Regional could not have provided HUD with any of LTTâs trade secret information
as of that date, and HUD could not have relied upon any such information in
issuing the commitment. HUD agreed to the amendment on May 20, 2010, and the
closing occurred the following day. CR5886, 6308. Because there is no evidence
that HUDâs decision to amend or close was based upon or influenced in any way
by any of the information provided by Sossi or what information was relied on, no-
evidence summary judgment was proper. See Hancock v. Variyam, 400 S.W.3d
59, 70-71 (Tex. 2013) (holding there was no evidence of why a particular decision
was made when there are multiple possible inferences for why the decision was
made).
54151498 28
Second, LTT presented no evidence of the amount of a reasonable royalty,
and the idea of a reasonable royalty is found nowhere in Berryâs declaration.
CR7604-17.
Third, the concept of a reasonable royalty is absent from LTTâs evidence
because it never disclosed that measure of damages in its disclosure responses.
CR5958. LTT amended or supplemented its disclosures numerous times9 and
disclosed three damage models for its misappropriation claim.10 Yet there was no
mention of a reasonable royalty, barring that measure from being considered. Tex.
R. Civ. P. 193.6.
2. The evidence conclusively negates causation.
Lakeway Regional and SDP also moved for summary judgment on the basis
that any communication with HUD did not cause LTT injury as a matter of law.
CR5602, 5609, 5629-31, 6020, 6046, 6051-52. Their argument was twofold.
First, the sole HUD witness deposed in this matter testified that prior to the
issuance of the commitment on March 17, 2010, no âperson associated with
9
The version in effect was served two months before the summary judgment responses.
CR5950-63.
10
The three separate damages models for its misappropriation claim were as follows: (1) its lost
value to itself and to its trade secrets; (2) Lakeway Regionalâs savings and profits; and (3) the
monies LTT would have been paid had the deal closed. CR5958. This last measure is
necessarily irrelevant to LTTâs misappropriation claim because (1) Lakeway Regional decided in
March 2010 not to acquire the Lease (CR5709, 6131), two months before Sossi sent the May 10
email and (2) there was no claim, and no evidence, that Lakeway Regional made that decision as
a result of any alleged misappropriation of LTTâs alleged trade secrets.
54151498 29
LRMC or SDP disclose[d] any information to HUD regarding LTT.â CR5884,
6306. Therefore, neither Lakeway Regional nor SDP could have provided HUD
with any LTT alleged trade secret information before that date.
Second, HUD has stated that even if it had considered Lake Travis Hospital,
it still would have recommended insuring Lakeway Regional. CR5980, 6403.
Accordingly, even if some alleged trade secret was used or disclosed, it would not
have mattered given this evidence. Rustyâs, 314 S.W.3d at 111 (requiring
causative link).11
* * *
The bottom line is that LTTâs argumentâboth below and now on appealâ
amounts to nothing more than, âWe have some trade secrets (though we have not
specifically identified them), and we gave a bunch of information to Lakeway
Regional and SDP, so they must have improperly used our trade secrets when
obtaining HUD insurance, thus causing LTT harm.â That kind of vague claim,
following two years of discovery, was properly found wanting. Summary
judgment was properly granted.
11
LTTâs expertâs opinion that HUD would have been negligent not to consider Lake Travis
Hospital (Cross-App. Br. 31-32) is not relevant in light of the HUD representativeâs
unchallenged statement.
54151498 30
II. The Trial Court Correctly Granted Summary Judgment in Lakeway
Regionalâs and SDPâs Favor on LTTâs Claim for Breach of Section 2 of
the Letter of Intent.
Lakeway Regional moved for summary judgment on LTTâs Section 2 claim
for two independent reasons: (1) Section 2 is an unenforceable agreement to agree,
and (2) two of the five conditions precedent to Lakeway Regionalâs obligations
under Section 2 (which conditions are set forth in Section 3) were not satisfied.
CR5608-09, 5618, 5622. SDP moved for summary judgment on the same grounds
and on the additional ground that, as a non-party to the Letter of Intent, it could not
be liable for its breach. CR6020, 6035-45. Both motions were properly granted.
CR12266.
A. Section 2 of the Letter of Intent is an unenforceable agreement to
agree, foreclosing a claim for its breach.
An agreement which leaves material or essential terms open for future
adjustment and agreement is unenforceable. Fort Worth Indep. Sch. Dist. v. City of
Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). Failure to agree on even one
essential term is fatal. T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218,
221 (Tex. 1992).
This Court recently enforced these bedrock principles and held that a letter
agreement providing that the plaintiff would be the general contractor on the
defendantâs project, a commercial development, lacked essential terms, thus
rendering it an unenforceable agreement to agree as a matter of law. Martin v.
54151498 31
Beitler, No. 03-13-00605, 2015 Tex. App. LEXIS 6894, at *24-28 (Tex. App.â
Austin July 7, 2015, no pet.) (mem. op.) (whether agreement âhas all the essential
terms to be legally enforceable is a question of lawâ); see also DKH Homes, LP v.
Kilgo, 03-10-00656-CV, 2011 WL 1811435, at *3 (Tex. App.âAustin May 11,
2011, no pet.) (mem. op.) (âTo be enforceable, an agreement to enter into a future
contract must specify all its material and essential terms, leaving none to be agreed
on as the result of future negotiations.â).
These same foundational principles apply here.
1. The Letter of Intent contains several provisions showing
that Section 2 is an unenforceable agreement to agree.
First, the Letter of Intentâs opening paragraph demonstrates that the purpose
of the agreement was to set forth a process for evaluating a possible transaction,
but there was not yet an agreement to the actual transaction outlined in Section 2
and there might never be. See CR5697 (âThe objective of this Binding Letter of
Intent is to indicate SDPâs interest in the Project and to establish the ground rules
for the ongoing exchange of information between the Parties to facilitate the
development of the Project and the exchange of information required for such a
process to succeed.â).
Second, other portions of the Letter of Intent confirm that the assignment of
the Lease as outlined in Section 2 may never occur. Section 1, for example,
identifies a 45-day period during which the parties would have discussions and
54151498 32
negotiations âwith regards to evaluating and implementing the proposed
Project,ââi.e., whether the parties would proceed forward under the outline of
terms in Section 2. Id. (emphasis added). Section 3 addresses a âreasonable due
diligence process,â which would precede any decision by Lakeway Regional
whether to acquire the Lease under Section 2. What would be the purpose of a
negotiation period or a reasonable due diligence process if the parties were already
obligated to close under Section 2?
Sections 3 and 4 further provide that if the negotiations were successful, then
âdefinitiveâ agreements would be executed. LTT nonetheless claims that
references to a definitive agreement is no problem because the parties also agreed
that the definitive documents would âfully reflect the intention of the Parties
expressed in this Letter of Intent.â Cross-App. Br. 35. LTTâs argument might
have force if the Letter of Intent actually contained all essential terms, but it did
not. The concept that a later agreement would reflect the intent of the Letter of
Intent is simply a means of saying that any terms in the Letter of Intent would be
reflected in the final agreement, not that the terms in the Letter of Intent were a
complete and final expression of all material and essential terms.
Section 5 alone topples LTTâs argument. Section 5 provides that âthis Letter
of Intent may be terminated by either Party, for any reason, with written notice to
the other Party.â The Letter of Intent cannot have both required LTT and Lakeway
54151498 33
Regional to proceed with the Lease assignment as outlined in Section 2 but have
allowed either to terminate the Letter of Intent for any reason. Indeed, the only
reasonable construction of the Letter of Intent, when each of its provisions is
considered (not just those on which LTT now focuses) is that, up until the time at
which the Lease would be assigned, either side could terminate the Letter of Intent,
with certain obligations (e.g., confidentiality) surviving the termination. See
Sections 5, 10.7. Violating settled rules of contract construction, LTT would have
this Court delete both Sections 5 and 10.7. Indeed, a basic rule of contract
construction is that a court determines the partiesâ intentions by considering the
entire contract as a whole, harmonizing and giving effect to all the contract
provisions so that none will be rendered meaningless. Moayedi v. Interstate
35/Chisam Rd., L.P., 438 S.W.3d 1, 7 (Tex. 2014); see also Kachina Pipeline Co.
v. Lillis, No. 13-0596, 2015 Tex. LEXIS 914, at *9 (Tex. Oct. 9, 2015) (courts
must give effect to each contract provision).
Further evidencing the partiesâ intent that Lakeway Regional would not be
obligated to close is the standstill provision in Section 6. That Section preserves
Berryâs and McDonaldâs rights to continue working on their plans for operating the
facility, and continue recruiting investors for equity positions in Lake Travis
Hospital or other operational matters. If Lakeway Regional was committed to the
54151498 34
Lease assignment under Section 2, then why would Berry and McDonald need
those rights?
Multiple sections of the Letter of Intent thus establish that there was no
enforceable agreement, only an agreement to agree. The Letter of Intent makes
clear that there was merely a possible transaction with no obligation to close, that
definitive agreements would still need to be drafted, and that the parties could back
out at any time.
2. Essential terms are lacking.
And then there is the insurmountable problem of missing essential terms
from the Letter of Intent, including the following:
⢠Scope of Development of the Project. The stated objective of the
Letter of Intent was âto indicate SDPâs interest in the Project and to
establish the ground rules for the ongoing exchange of information
between the Parties to facilitate the development of the Project
[defined as Lake Travis Hospital serving as the initial campus for
Lakeway Regional and later as a satellite campus] and the exchange
of information required for such a process to succeed.â CR5697. The
Letter of Intent contains no terms concerning the âdevelopmentâ of
either facility at issueâLake Travis Hospital and Lakeway Regional.
Nor does it contain terms related to the âprocessâ for such
development.
⢠Compensation or Severance Costs. Section 2.2 refers to offering
compensation or severance to certain executives affiliated with Lake
Travis Hospital. The Letter of Intent contains no amounts for either
the compensation or the severance.
⢠Reimbursement Amount. The Letter of Intent refers to a
reimbursement of âreasonable and documented costsâ incurred by
LTTâs principals, âincluding, without limitationâ three types of
54151498 35
expenses (employee benefits, planning/construction expenses, and
interest expenses). The Letter of Intent does not name all the costs,
list the amounts of any costs, or provide guidelines for determining
what is a âreasonableâ cost.12
⢠Appropriate Funding. A condition precedent under the Letter of
Intent is Lakeway Regional being able to âobtain appropriate funding
to allow for this expansion of the operation plans for LRMC.â The
Letter of Intent does not define what amount of funding would be
considered appropriate. Nor does it describe, in any way, the type of
funding to be obtained. For example, if the transaction was to be
owner-financed, there are no terms describing the financing to be
provided by LTT.
Without these essential terms, there is no enforceable agreement. See Martin;
DKH Homes.
LTTâs authorities are inapposite. McCalla v. Bakerâs Campground, Inc.,
416 S.W.3d 416 (Tex. 2013) (per curiam) stands for the unremarkable proposition
that â[a]greements to enter into future contracts are enforceable if they contain all
material terms.â Id. at 418. Applying that principle, McCalla held that the partiesâ
post-verdict settlement agreement did in fact contain all the essential terms.
McCalla put it like this: â[i]f a court was trying to enforce the settlement
agreement, it could find all the terms necessary for its enforcementâ in the
agreement. Id.
12
LTTâs reliance on Fuqua v. Fuqua, 750 S.W.2d 238 (Tex. App.âDallas 1988, writ denied),
for the proposition that an agreement is enforceable even if a specific dollar amount is missing is
misplaced. Id. at 245-46. Here, it was not just the amount of the costs that was uncertain, but
also the types of costs that would be recoverable.
54151498 36
That hurdle is one LTT cannot clear. Unlike the settlement agreement in
McCalla, a court here could not find all necessary terms in Section 2 for its
enforcement. For example, it cannot be determinedâfrom the face of the
documentâhow much to order Lakeway Regional to refund to Berry and
McDonald at the closing, or to whom Lakeway Regional was to offer employment.
McCalla is also distinguishable because it did not contain a mutual termination
provision as Section 5 does here.
Nor does Karns v. Jalapeno Tree Holdings, L.L.C., 459 S.W.3d 683 (Tex.
App.âEl Paso 2015, pet. denied) advance LTTâs argument. As LTT notes, Karns
held that âif the LOI contains all essential terms as contemplated by the parties and
the only remaining issue is formalization of the agreement or negotiation of
ancillary terms, then the LOI may be an enforceable contract if the parties intended
to be bound.ââ Id. at 692. LTT again misses the issue. The issue is not what is
required for an enforceable contract. Everyone agrees that a contract must contain
all essential terms to be enforceable. The issue is whether the Letter of Intent
contains all the essential terms. As explained above, it does not.
Notably, LTT does not expand on its discussion of Karns beyond reciting its
holding, and with good reason: Karns reinforces that summary judgment against
LTT on its Section 2 claim was required. Karns entered into a letter of intent to
purchase the defendantâs Mexican restaurant chain. The Karns letter of intent had
54151498 37
many of the same provisions as does the one here, including a provision indicating
the mechanics and structure of the proposed transaction, an outline of the due
diligence procedure, a remedies provision in the event of a breach, and a
termination provision. Id. at 687-88. After the defendant terminated, Karns filed
suit for breach of contract. Id. at 688.
The trial courtâs determination that the letter of intentâs term for sale was not
legally enforceable was affirmed on appeal. Id. at 694. The appellate court began
by noting that the letter of intent contained two types of covenants: those relating
to the negotiation process and those relating to the anticipated sale. Id. at 692. It
then held that the agreement contained an enforceable set of rules pertaining to the
negotiation process, but not as to sale. Id. at 693-94. This is consistent with the
order granting summary judgment on LTTâs Section 2 claim as the trial court held
some terms enforceable (those that survived termination as set forth in Section
10.7, concerning the negotiation process, and were the subject of the jury trial), and
others unenforceable (those that outlined the terms for the potential Lease
acquisition).13
13
Karns also rejected LTTâs argument (Cross-App. Br. 36) that a remedies provision renders
every term of a letter of intent enforceable. 459 S.W.3d at 692.
54151498 38
3. Section 2 is unenforceable for the separate reason that
Section 3âs best efforts provision is prohibitively vague.
Yet another reason that Section 2 is unenforceable is found in Section 3,
which contains a vague and unenforceable âbest effortsâ provision for satisfying
the conditions precedent. The âbest effortsâ provision contains no guidelines by
which to measure best efforts (nor is there evidence by which to measure the
quality of any efforts). As courts have recognized, a âbest effortsâ provision is a
ânebulous standard,â and to be enforceable, the provision must set a guideline
against which best efforts can be measured. CKB & Assocs., Inc. v. Moore
McCormack Petroleum, Inc., 809 S.W.2d 577, 581 (Tex. App.âDallas 1991, writ
denied) (a best efforts provision untethered to guidelines is unenforceable); see
also Kevin M. Ehringer Enters., Inc. v. McData Servs. Corp., 646 F.3d 321, 327
(5th Cir. 2011) (holding best efforts provision unenforceable for lack of
guidelines); York Grp., Inc. v. York S., Inc., No. H-06-0262, 2006 WL 2883363, at
*3 (S.D. Tex. Oct. 10, 2006) (holding best efforts provision unenforceable because
there were no guidelines to satisfy the CKB standard).
LTT touches on best efforts (Cross-App. Br. 33), but only to recite the
divide between enforceable and unenforceable best efforts provisions and then to
conclude with the non-sequitur that Lakeway Regional and SDP have
acknowledged that the noncircumvision and confidentiality sections of the Letter
54151498 39
of Intent are binding. Id. at n.9. But nothing in either Section 6 or 9 provides
guidelines for measuring compliance with a best efforts provision.
4. LTTâs remaining appellate arguments do not withstand
scrutiny.
Equally unavailing is LTTâs effort to show that Section 2 is enforceable by
identifying those terms that set forth Lakeway Regionalâs obligations. Cross-App.
Br. 35 n.10, 37-38 (collecting the terms regarding Lakeway Regionalâs obligations
to assume the Lease and to make certain payments). The inquiry is not whether the
writing contains some terms or even some material terms but is instead whether the
writing contains âall . . . material terms.â DKH Homes, at *2 (emphasis added).
This principle is a corollary to the settled rule that courts are not in the contract-
writing business. Bryant v. Clark, 358 S.W.2d 614, 616 (Tex. 1962) (affirming
order denying request for specific performance where contract lacked essential
terms).
Similarly, LTTâs contention that the Letter of Intent reflects the partiesâ
intent to be bound (Cross-App. Br. 35) begs the question: bound to what? The
answer, found in the Letter of Intent itself, is that the parties intended to be bound
only to the agreed-to ground rules for negotiating a possible assignment of the
Lease that would protect their respective interests during and after the Negotiation
Period (i.e., certain confidential and standstill covenants). Sections 6, 9, 10.7.
Those terms are binding. Karns, 459 S.W.3d at 692-93.
54151498 40
But the Letter of Intent contains no binding agreement requiring Lakeway
Regional to become the tenant under the Lease. Stating that it is binding does not
make it so. Fid. Fin. Servs. of the Sw., Inc. v. Corilant Fin., L.P., 376 S.W.3d 253,
255-58 (Tex. App.âDallas 2012, pet. denied) (holding unenforceable a letter of
intent even though it stated: âTHIS LETTER OF INTENT IS A LEGALLY
BINDING AND ENFORCEABLE AGREEMENT.â).
B. Unfulfilled conditions precedent foreclosed LTTâs Section 2 claim.
Section 3 of the Letter of Intent, titled Required Approvals for the Project,
lists five separate conditions precedent to Lakeway Regionalâs Section 2 obligation
to acquire the Lease. Lakeway Regional and SDP moved for summary judgment
on the basis that the evidence conclusively established that two conditions
precedent were not satisfied and that LTT had no evidence to the contrary.
CR5622-24, 6043-45.
Lakeway Regionalâs Board of Managers disapproved of the project. A
condition precedent to Section 2 was âfull and formal approval by the Board of
Managers of LRMC.â CR5699. The summary judgment evidence conclusively
established that a majority of Lakeway Regionalâs Board of Managers disfavored
the transaction. CR5840-42, 7721. LTT does not dispute that the required number
of votes for âfull and formal approvalâ were not there. Cross-App. Br. 41.
Instead, LTT argues that the absence of required favorable votes does not matter
54151498 41
because Lakeway Regional did not hold a formal vote on the transaction, or that
there was at least a fact issue on whether defendants prevented the condition from
occurring. Id. In so arguing, LTT attempts to transform a condition precedent that
required Board approval into a provision that required a Board vote. That is
simply not what the contract says.
LTTâs case, Clear Lake City Water Authority v. Friendswood Development
Co., 344 S.W.3d 514 (Tex. App.âHouston [14th Dist.] 2011, pet. denied), does
not advance its position. In Clear Lake, the defendant governmental entity agreed
to buy water and sewer facilities from the plaintiff residential developer if voters
approved a bond measure and the government agreed to include the bond measure
on every bond election held subsequent to the partiesâ agreement. Id. at 517.
However, the government did not include the bond measure in each subsequent
election. When the developer sued for breach of contract, the government
defended on the basis that its obligation to buy the facilities was conditioned on
voter approval, which had not occurred and alternatively, there was no breach
because it could prove that the voters would have rejected the bonds. Id. at 518.
The appellate court held that the government âcannot rely on a projected failure of
voter approval, which it prevented or made impossible by breaching its agreement
to include the bond measure on every bond election held subsequent to the
54151498 42
agreements, to escape its liability to purchase the Developersâ facilities.â Id. at
520 (emphasis added).
Clear Lake is not analogous to this case. First, in Clear Lake, the agreement
required placing the bond measure on the ballot for an actual vote, whereas the
Letter of Intent does not require a formal vote. Second, here, unlike Clear Lake,
there was no projected voter disapproval but instead actual voter disapproval.
CR5840-42, 6262-65.
The evidence conclusively proved the absence of HCNâs approval.
Another condition precedent to Section 2 was âapproval of HCN as landlord under
the Lease to the assignment thereof.â CR5698. The summary judgment evidence
conclusively established that HCN did not agree to the assignment of the Lease
(and LTT presented no evidence that it had), a separate condition precedent to
Lakeway Regionalâs obligation under Section 2. CR5623, 5821, 5876-77, 6044.
LTTâs argument that Lakeway Regional and SDP âmade no effortâ to obtain
HCNâs approval for the assignment of the existing Lease (Cross-App. Br. 40) is
factually incorrect and beside the point. HCNâs representative testified that
Lakeway Regional attempted to negotiate in good faith the replacement lease but
the parties were nonetheless unable to come to an agreement. CR5874, 6296.
HCNâs representative also testified that the LTT lease âwould have been replaced
by a new leaseâ between the landlord and Lakeway Regional. Id.
54151498 43
LTT also relies on Sharifi v. Steen Automotive, L.L.C., 370 S.W.3d 126, 146
(Tex. App.âDallas 2012, no pet.) and II Deerfield Limited Partnership v. Henry
Building, Inc., 41 S.W.3d 259, 265 (Tex. App.âSan Antonio 2001, pet. denied),
which hold that where a defendant makes a choice that prevents the condition
precedent from being satisfied or interferes with performance of a condition
precedent, it cannot avail itself of its own nonperformance. These cases do not
apply here. It was not because of Lakeway Regionalâs âchoiceâ that HCN did not
agree to the new lease and it did not interfere. As noted above, HCNâs testimony
stands uncontroverted that Lakeway Regional acted in good faith in attempting to
reach an agreement on terms of a new lease. CR5623, 5821, 5876-77, 6044.
Simply put, summary judgment was proper because LTT failed to satisfy
these conditions precedent, and further failed to present probative evidence that
these conditions were satisfied or that it was excused from satisfying them.
C. SDP cannot be liable under Section 2 because it was not a party to
the Letter of Intent.
In addition to moving for summary judgment on the same grounds as
Lakeway Regional, SDP also moved for summary judgment on LTTâs Section 2
claim on the basis that, as a non-party to the Letter of Intent, it could not be held
liable for breach. CR6027, 6035-38.14
14
This argument was styled as, âThe Court should grant summary judgment on LTTâs claim for
breach of the LOI because as a disclosed agent, SDP has no liability under the LOI.â CR6035.
54151498 44
The trial court granted summary judgment for SDP on LTTâs Section 2
claim, stating simply, âThe Court hereby GRANTS the Motions only with respect
to Plaintiffâs claim that LRMC and SDP breached Section 2 of the Letter of
Intent.â CR12266. Because the trial courtâs order did not identify a particular
basis, to defeat the summary judgment on appeal, LTT must overcome each
independent basis supporting the granting of summary judgment. FM Props.
Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000); Star-Telegram,
915 S.W.2d at 473; see also Ramco Oil & Gas Ltd. v. Anglo-Dutch (Tenge) L.L.C.,
207 S.W.3d 801, 826-27 (Tex. App.âHouston [14th Dist.] 2006, pet. denied).
However, in its brief, LTT did not address the independent basis for summary
judgment in SDPâs favorâthat SDP is not a party to the Letter of Intent. Because
LTT did not address this independent basis, the summary judgment as to SDP on
LTTâs Section 2 claim must be affirmed. Star-Telegram, 915 S.W.2d at 473.
Summary judgment on LTTâs Section 2 claim should be affirmed.
III. The Trial Court Correctly Sustained Lakeway Regionalâs and SDPâs
Objections to LTTâs Summary Judgment Evidence.
The trial court did not abuse its discretion in sustaining certain objections to
LTTâs summary judgment evidence. But even if the Court were to find otherwise,
the reintroduction of the excluded evidence would not impact the arguments raised
above.
54151498 45
A. The trial court did not abuse its discretion in sustaining
Objection 2.
Lakeway Regional and SDP objected to LTTâs summary judgment evidence
on the basis that LTT cited only 189 pages of the 2,033-page Project File among
numerous other general references to the entire Project File, which is improper
when responding to a no-evidence summary judgment motion. CR11487
(objecting on the basis that â[g]eneral references to voluminous records are not
proper responses to a no-evidence motion for summary judgmentâ). The trial court
properly exercised its discretion when it sustained this objection. CR12261; HK
Partners, Inc. v. Power Computing Corp., No. 03-98-00124-CV, 1999 Tex. App.
LEXIS 3981, at *6 (Tex. App.âAustin May 27, 1999, no pet.) (non-movant failed
to raise a fact issue where it attached over 900 pages of material to its responses
but failed to direct the trial court to specific evidence); see also Nguyen, 404
S.W.3d at 776-77.
LTT claims that the trial court erred because its amended summary judgment
responses cited about 775 individual pages within the Project File, but again, those
references directed the trial court to where it might find evidence of âconfidential,
proprietary and trade secret informationâ (CR11813-14, 11919-20 (emphasis
added)), requiring the trial court to sift through those pages to see which, if any, of
54151498 46
those pages contained information about a trade secret as distinct from information
that qualified as confidential or proprietary under the terms of the Letter of Intent.15
LTT next claims that the trial court could have looked to Berryâs declaration
because he âprovided detailed testimony on the contents of the Project File.â But
as noted above, Berry referenced the entire Bates range of the Project File,
CR7606, so he too failed to direct the trial court to specific portions in the Project
File that constituted a trade secret. (As noted supra, Berry did not supplement his
declaration in support of LTTâs amended summary judgment responses.) Thus,
even assuming the trial court was required to look to one exhibit to find its way to
another exhibit, which it was not required to do, the trial court would still not have
gotten to the evidence that would have created a fact issue that a trade secret exists
(even assuming it exists). See supra at Section I.16
15
Because Lakeway Regional and SDP moved for summary judgment on LTTâs claim that they
had breached the Letter of Intent by disclosing confidential and proprietary information as
defined in the Letter of Intent and LTTâs separate misappropriation claim, it was incumbent upon
LTT to identify which documents and information were confidential and proprietary under the
Letter of Intent as distinct from a trade secret under the common law. CR171-72, 5608, 6027.
16
LTTâs reliance on Hinojosa v. Columbia/St. Davidâs Healthcare Sys., L.P., 106 S.W.3d 380
(Tex. App.âAustin 2003, no pet.), is misplaced as that case did not involve voluminous
exhibits, a distinction courts have found important. E.g., Ramirez v. Colonial Freight
Warehouse Co., 434 S.W.3d 244, 250-51 (Tex. App.âHouston [1st Dist.] 2014, pet. denied);
Nguyen, 404 S.W.3d 777 n.4; HK Partners, 1999 Tex. App. LEXIS 3981, at *6.
54151498 47
B. The trial court did not abuse its discretion in sustaining
Objection 4.
Lakeway Regional and SDP objected to two sentences in paragraph 5 of
Berryâs Declaration on the basis that they were conclusory. The two sentences
were that LTT âowned the confidential, proprietary and trade secret information
coAdditional Information
- source
- CourtListener
- subject
- Civil Procedure
- cluster id
- 4298433
- match confidence
- likely