553 S.W.3d 17
Tex. App.2018Background
- Orbison worked for Ma-Tex (2011–Aug. 12, 2016) and signed an employment agreement with non‑compete, non‑disclosure, and non‑solicit provisions; he became recertification coordinator in 2013.
- While still employed, Orbison communicated with and assisted API (a competitor) in forming a wireline recertification division, recruited Ma‑Tex employees, and after leaving was hired by API.
- Orbison downloaded Ma‑Tex customer contacts, solicited Ma‑Tex customers for API, and API performed two jobs that otherwise would have gone to Ma‑Tex.
- Ma‑Tex sued Orbison and API, obtained TRO, and after bench trial the court entered a permanent injunction, awarded Ma‑Tex damages of $126,494.83 and attorney fees; damages included lost profits ($2,321) and lost goodwill ($120,000).
- On appeal, defendants challenged evidentiary sufficiency of lost profits and goodwill, scope and clarity of the injunction, sanctions denial, attorney‑fee award, discovery supplementation, and preservation of an argument that the employment agreement was terminated.
- The court affirmed the injunction, attorney fees, sanctions ruling, and equitable forfeiture/disgorgement awards but reversed and rendered as to lost profits and lost goodwill (deleting those two items) and reduced actual damages to $4,173.83.
Issues
| Issue | Plaintiff's Argument (Ma‑Tex) | Defendant's Argument (Orbison/API) | Held |
|---|---|---|---|
| Legal sufficiency of lost profits award | Ma‑Tex: lost profits can be proven by company president's estimate tied to invoices | Orbison/API: testimony lacked objective method/data; mere opinion insufficient | Court: Insufficient evidence of methodology; reverse lost profits award |
| Legal sufficiency of goodwill damages | Ma‑Tex: president's estimate ($10k/month ×12) reflects reasonable minimum to restore goodwill | Orbison/API: no objective basis, speculative | Court: Opinion unsupported by objective facts; reverse goodwill award |
| Forfeiture / disgorgement and unjust enrichment remedies | Ma‑Tex: equitable remedies proper for fiduciary breach and misappropriation | Orbison: as a salaried employee, fee forfeiture/disgorgement inappropriate | Court: Employee fiduciary breach can justify forfeiture/disgorgement; awards upheld |
| Scope and clarity of permanent injunction | Ma‑Tex: injunction necessary to protect trade secrets, confidential customer info, and prevent competition | Orbison/API: injunction overly broad, unclear re: identifying customers and geographic/work scope | Court: Injunction sufficiently definite; enjoining use of tracking software and customer info appropriate; no abuse of discretion |
| Sanctions motions denial | Ma‑Tex: pleadings made in good faith; no bad faith shown | API: Pleadings were groundless/bad faith; sought Rule 13 / §10.001 sanctions | Court: No evidentiary hearing or proof of bad faith; trial court did not abuse discretion in denying sanctions |
| Award of attorney fees | Ma‑Tex: entitled to fees for misappropriation (willful/malicious) and breach of contract claims | Orbison/API: no privity between API and Ma‑Tex for contract fees; misappropriation not willful/malicious | Court: Trial court found misappropriation willful/malicious (treating conclusion as fact); fees for trade‑secret claim allowable; preserved objections limited—fee award affirmed |
| Discovery supplementation / admission of late damage evidence | Ma‑Tex: supplemented damages before trial; evidence admissible | Orbison/API: late disclosures prejudiced defense; evidence should be excluded | Court: Trial court offered continuance; defendants refused—thus they waived complaint about late disclosures |
| Preservation of termination argument re: covenants | Ma‑Tex: post‑employment restrictions remain enforceable | Orbison/API: employment agreement terminated (no saving clause) so covenants expired | Court: Defendants failed to brief/cite authority or preserve argument; waived |
Key Cases Cited
- ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867 (Tex. 2010) (lost‑profits proof must be based on objective facts, figures, or data)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal‑sufficiency review standard)
- Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80 (Tex. 1992) (opinions of lost profit must show method and calculation)
- Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) (equitable forfeiture/disgorgement available for agent fiduciary breaches)
- Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193 (Tex. 2002) (disgorgement for usurpation of principal's opportunity)
- Kinzbach Tool Co. v. Corbett‑Wallace Corp., 160 S.W.2d 509 (Tex. 1942) (fiduciary duty and remedies)
- Jelinek v. Casas, 328 S.W.3d 526 (Tex. 2010) (scintilla/no‑evidence standards)
- Low v. Henry, 221 S.W.3d 609 (Tex. 2007) (presumption of good faith in pleadings; standards for sanctions)