West Fork Advisors, LLC v. Sungard Consulting Services, LLC and Sungard Investement Systems, LLC
437 S.W.3d 917
Tex. App.2014Background
- West Fork developed an investment system called MAAP and engaged SunGard to develop phase-one software; SunGard later contracted with Privity (a company formed by Smith) for phase two.
- Dispute arose between West Fork founder Gunderson and Smith; Smith purportedly controlled Privity and informed SunGard that Privity (not West Fork) was the customer; SunGard stopped work after nonpayment.
- West Fork sued Privity and Smith (then nonsuited), later settled with Privity such that both had rights to develop MAAP; Privity later filed bankruptcy.
- West Fork sued SunGard alleging SunGard knew MAAP belonged to West Fork and aided Smith/Privity in torts (misappropriation of trade secrets, conversion, unfair competition, breach of fiduciary duty) and pleaded conspiracy and aiding-and-abetting derivative claims; West Fork later nonsuited its Theft Liability Act claim.
- SunGard moved for both traditional and no-evidence summary judgment; the trial court granted summary judgment dismissing West Fork’s claims and (apparently) SunGard sought attorney’s fees under the Theft Liability Act, but any motion to modify the judgment awarding fees was overruled by operation of law for lack of a signed order within 75 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of civil conspiracy claims | West Fork: SunGard conspired with Smith/Privity to commit underlying torts | SunGard: Conspiracy is derivative and fails because no named defendant was adjudicated liable for an underlying tort | Affirmed — conspiracy fails as a matter of law because no named defendant was liable for the underlying torts |
| Validity of aiding-and-abetting claims | West Fork: SunGard aided and abetted Smith/Privity in torts against West Fork | SunGard: Aiding-and-abetting is derivative and fails without an underlying tort; even if recognized, it is limited to highly dangerous/antisocial conduct | Affirmed — aiding-and-abetting fails for lack of underlying tort and is inapplicable to this non-antisocial misconduct |
| Proper basis for summary judgment (no-evidence/traditional) | West Fork: disputed material facts precluded summary judgment on derivative claims | SunGard: entitled to summary judgment because derivative claims cannot survive without underlying liability of a named defendant | Affirmed — summary judgment proper on this dispositive ground; review de novo |
| Award of attorney’s fees under the Theft Liability Act | West Fork: trial court erred in awarding fees to SunGard | SunGard: entitled to fees as prevailing party; nonsuit taken to avoid adverse ruling justified fee award | Moot/No award — motion to modify seeking fees was overruled by operation of law for lack of signed order within 75 days, so no fee award exists for appeal |
Key Cases Cited
- Timpte Indus., Inc. v. Gish, 286 S.W.3d 306 (Tex. 2009) (summary judgment standards)
- Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985) (traditional summary judgment burden)
- Tilton v. Marshall, 925 S.W.2d 672 (Tex. 1996) (civil conspiracy is derivative)
- Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573 (Tex. 2001) (derivative nature of conspiracy/aiding-and-abetting claims)
- Juhl v. Airington, 936 S.W.2d 640 (Tex. 1996) (narrow scope of aiding-and-abetting/Restatement § 876(b))
- Epps v. Fowler, 351 S.W.3d 862 (Tex. 2011) (defendant may be prevailing party when plaintiff nonsuits to avoid adverse ruling and fees may be awarded on motion)
- Travelers Ins. Co. v. Joachim, 315 S.W.3d 860 (Tex. 2010) (de novo review of summary judgment)