592 S.W.3d 205
Tex. App.2019Background
- Michael Brown was a long‑time employee of LTR (later Gravity) and received unit option agreements in 2016 and 2017 containing nondisclosure, noncompete, and nonsolicitation covenants enforceable by the issuer or its subsidiaries.
- Corporate restructurings converted Brown’s 2016 LTRGH option into an LTRI Holdings option; Gravity alleges it is a successor/subsidiary entitled to enforce the covenants.
- Brown resigned in November 2018 and joined Stallion to develop a competing natural‑gas generator rental division; Stallion reviewed Brown’s agreement before hiring him.
- Shortly after Brown’s hire, Stallion purchased identical generators from Gravity’s vendors and solicited some of Gravity’s customers; Gravity lost at least one customer to Stallion.
- Gravity sued Brown for breach of the 2016 and 2017 agreements and sued Stallion for tortious interference; Appellants moved to dismiss under the Texas Citizens Participation Act (TCPA).
- The trial court denied the TCPA motion, found the motion frivolous and intended to delay, and awarded Gravity attorney’s fees; the court of appeals affirmed denial of dismissal but reversed the award of attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of TCPA / Motion to dismiss | Gravity: TCPA does not defeat its claims (or is preempted by CNCA) | Appellants: Claims are based on free‑speech/association so TCPA applies and mandates dismissal | Court assumed without deciding TCPA applies, denied dismissal because Gravity met prima facie burden |
| Right to enforce the agreements | Gravity: As successor/subsidiary it was intended beneficiary and may enforce covenants | Appellants: Gravity is not a signatory and lacks enforcement rights | Gravity produced clear/specific evidence to support a prima facie inference it may enforce both agreements |
| Breach of restrictive covenants / confidential information | Gravity: Brown acquired and used confidential info to help Stallion compete, breaching NDAs and covenants | Appellants: Covenants tolled/expired or overbroad; alleged information was public | Court: Evidence sufficed to infer Brown learned and used confidential info and breached the agreements (prima facie met) |
| Award of attorney’s fees under TCPA | Gravity: Trial court properly awarded fees for frivolous/delay motion | Appellants: Motion had a legal and factual basis; fee award improper | Court reversed fee award: motion had basis in law and fact and trial court did not find it was "solely intended to delay," so fee award under §27.009(b) was improper |
Key Cases Cited
- Dallas Morning News, Inc. v. Hall, 579 S.W.3d 370 (Tex. 2019) (purpose and construction of TCPA)
- In re Lipsky, 460 S.W.3d 579 (Tex. 2015) (orig. proceeding) (TCPA burdens and "clear and specific evidence")
- Youngkin v. Hines, 546 S.W.3d 675 (Tex. 2018) (TCPA burden‑shifting framework)
- Tawes v. Barnes, 340 S.W.3d 419 (Tex. 2011) (third‑party beneficiary/enforcement of unsigned contract)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (contract construction rules)
- USAA Texas Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018) (elements of breach of contract)
- Prudential Ins. Co. of Am. v. Financial Review Servs., Inc., 29 S.W.3d 74 (Tex. 2000) (elements of tortious interference)