Lakeway Regional Medical Center, LLC and Surgical Development Partners, LLC// Lake Travis Transitional LTCH, LLC N/K/A Lake Travis Specialty Hospital, LLC v. Lake Travis Transitional LTCH, LLC N/K/A Lake Travis Specialty Hospital, LLC// Lakeway Regional Medical Center, LLC Surgical Development Partners, LLC Brennan, Manna, & Diamond, LLC And Frank T. Sossi
03-15-00025-CV
| Tex. App. | Nov 20, 2015Background
- Parties: LTT (plaintiff/assignee of Berry & McDonald) sued Lakeway Regional Medical Center, LLC and its agent Surgical Development Partners (SDP) asserting trade-secret misappropriation and breach of Section 2 of a September 15, 2009 Letter of Intent (LOI); later added attorney defendants.
- LOI: Expressly described as setting "ground rules" for negotiations and due diligence; Section 2 provided a "proposed outline" of terms for a potential lease acquisition, Section 3 listed five conditions precedent and a "best efforts" obligation, and Section 5 allowed either party to terminate the LOI for any reason.
- Allegations: LTT claimed defendants used/disclosed its trade secrets (the so‑called "Project File" and other information) in communications with HUD (notably a May 10, 2010 email) to secure HUD loan insurance for Lakeway Regional, harming LTT; LTT also sued for breach of Section 2 of the LOI when Lakeway Regional declined to acquire the lease.
- Procedural posture: Trial court granted summary judgment for Lakeway Regional and SDP on LTT’s trade-secret and Section 2 breach claims and sustained objections to LTT’s summary-evidence; remaining claims went to jury with mixed results; LTT cross-appeals the summary-judgment rulings.
- Key evidentiary facts: The 2,033-page "Project File" was assembled by LTT’s trial counsel more than two years after suit began; defendants produced evidence that Sossi (Lakeway Regional’s counsel) obtained the HUD-related information from Health Care REIT and public sources and that HUD would have insured Lakeway Regional regardless.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LTT proved existence of trade secrets | LTT contends the Project File (and information within it) contains proprietary trade secrets used by defendants | Project File was assembled by LTT’s counsel after suit, contains third-party materials, and LTT never identified specific trade-secret items | Summary judgment affirmed: no legally sufficient evidence identifying particular trade secrets |
| Whether defendants used or disclosed LTT’s trade secrets to HUD | LTT argues Sossi’s May 10 email and other HUD communications used/disclosed LTT’s secret information to obtain HUD insurance | Defendants produced uncontroverted evidence Sossi relied on Health Care REIT and public sources; no linkage between any identified trade secret and HUD communications | Summary judgment affirmed: no evidence of use or disclosure; defendants conclusively negated use/disclosure |
| Whether LTT proved causation/damages from alleged misappropriation | LTT claims damages (lost value, royalties) from defendants’ conduct | Defendants showed HUD’s commitment predated contact and HUD testified it would have insured Lakeway Regional even if aware of Lake Travis Hospital; LTT did not disclose reasonable-royalty theory timely or support causation | Summary judgment affirmed: no evidence and evidence negates causation/damages |
| Whether Section 2 of the LOI is enforceable | LTT says Section 2 reflects binding terms and intent to be bound; remedies clause supports enforcement | Defendants argue LOI is an agreement-to-agree: essential terms are missing, Section 5 allows termination for any reason, Section 3 conditions precedent unmet, and Section 3’s "best efforts" is too vague; SDP not a party to LOI | Summary judgment affirmed: Section 2 unenforceable as agreement-to-agree, conditions precedent not satisfied, and SDP entitled to judgment as non‑party |
Key Cases Cited
- Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452 (Tex. App.—Austin 2004) (elements of trade-secret misappropriation and need to tie use/disclosure to an identified secret)
- In re Bass, 113 S.W.3d 735 (Tex. 2003) (compilation treated as trade secret must have been used in plaintiff’s business and afford competitive advantage)
- Star-Telegram, Inc. v. Doe, 915 S.W.2d 471 (Tex. 1995) (when trial court’s summary-judgment order does not state basis, appellate court may affirm on any meritorious ground raised below)
- Ryland Group, Inc. v. Hood, 924 S.W.2d 120 (Tex. 1996) (conclusory affidavits are legally insufficient to create fact issues on summary judgment)
- King Ranch, Inc. v. Chapman, 118 S.W.3d 742 (Tex. 2003) (no-evidence summary judgment is reviewed under legal‑sufficiency standards)