Horizon Health Corporation v. Acadia Healthcare Company, Inc. Psychiatric Resource Partners, Inc. Michael A. Saul Timothy J. Palus Peter D. Ulasewicz Barbara H. Bayma And John M. Piechocki
520 S.W.3d 848
| Tex. | 2017Background
- Horizon Health lost multiple senior employees (Saul, Ulasewicz, Bayma, Palus, Piechocki) who joined Acadia/PRP and used Horizon documents to compete; Horizon sued for breach of fiduciary duty, misappropriation of trade secrets, theft, interference, conversion, fraud, breach of NCAs, and conspiracy.
- Jury found for Horizon on many claims, awarded $4,198,000 in future lost profits, $55,049.24 in other compensatory damages, $1,750,000 in exemplary (punitive) damages against individuals, and attorney’s fees; trial court entered judgment and assessed sanctions against Saul.
- Court of appeals held lost-profits evidence legally insufficient, rendered take-nothing on most claims except $50,000 (theft of trade secrets) and $5,049.24 (fraudulent expenses), suggested remittitur of exemplary damages, and reversed joint-and-several exemplary liability against Acadia/PRP.
- Supreme Court reviewed: held evidence legally insufficient to support any future lost-profits award; agreed exemplary damages had factual support but held the remitted award still constitutionally excessive and required defendant-specific analysis; held Acadia/PRP cannot be held jointly and severally liable for exemplary damages assessed only against individuals.
- Court remanded to court of appeals to reconsider remittitur of exemplary damages, affirmed remand for new trial on attorney’s fees (insufficient segregation), and affirmed sanctions against Saul.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for future lost profits | Horizon: expert testimony (Balcombe) reasonably established lost profits from Westlake contract and Piechocki’s future sales | Defendants: expert assumptions were speculative; no proof Horizon would have won Westlake or profitability of Piechocki’s prospective contracts | Court: Evidence legally insufficient — Horizon failed to prove fact of damages with reasonable certainty for both Westlake and Piechocki-based claims |
| Exemplary damages: factual basis (malice) | Horizon: clear-and-convincing evidence of malice and fraud supporting punitive awards | Defendants: lack of malice; punitive award excessive relative to compensatory damages | Court: Evidence supports malice as to each individual defendant, so exemplary damages have factual basis, but remitted award remained constitutionally excessive and must be recalculated defendant-by-defendant |
| Exemplary damages: constitutionality / remittitur method | Horizon: remittitur may be assessed per-defendant using joint-and-several compensatory denominator | Defendants: ratio should be assessed per-judgment or per-defendant based on harm actually caused (not joint-and-several aggregate) | Court: Ratio must be defendant-specific and based on the harm each defendant actually caused (not joint-and-several aggregate); remittitur proposed by court of appeals was excessive; remand to reassess |
| Exemplary damages against Acadia & PRP (entities) | Horizon: entities liable via ratification/vicarious liability; trial court properly entered joint-and-several exemplary judgment | Acadia/PRP: exemplary damages must be specific to each defendant under §41.006; joint-and-several exemplary award improper | Court: Acadia/PRP preserved error; exemplary damages cannot be imposed jointly and severally on entities when jury did not specifically assess punitive damages against them — reverse that portion of judgment |
| Attorney’s fees and discovery sanctions | Horizon: seeks fees based on contract and TTLA claims; sanctions against Saul justified | Defendants: challenge fees award and sanctions | Court: Remand for new trial on attorney’s fees because expert did not segregate fees by claim; sanctions against Saul affirmed (no abuse of discretion) |
Key Cases Cited
- ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867 (Tex. 2010) (standards for proof and certainty of lost-profits damages)
- Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80 (Tex. 1992) (lost profits require reasonable certainty; bare assertions insufficient)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency review principles)
- Miga v. Jensen, 96 S.W.3d 207 (Tex. 2002) (lost profits measure is net income; must tie to employee performance when claiming lost profits from lost employee)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003) (three guideposts for due-process review of punitive damages)
- BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (U.S. 1996) (limitations on grossly excessive punitive awards; fair notice principle)
- Transp. Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994) (exemplary damages require independent, qualitatively different malice)