ATLAS SURVIVAL SHELTERS, LLC, APPELLANT V. CLYDE SCOTT AND RISING S COMPANY, LLC, APPELLEES
NO. 12-20-00054-CV
IN THE COURT OF APPEALS TWELFTH COURT OF APPEALS DISTRICT TYLER, TEXAS
NOVEMBER 18, 2020
GREG NEELEY, Justice
APPEAL FROM THE 294TH JUDICIAL DISTRICT COURT VAN ZANDT COUNTY, TEXAS
This is an accelerated interlocutory appeal brought pursuant to the
BACKGROUND
Scott and Atlas are competitors in the survival shelter industry. Atlas‘s owner, Ron Hubbard, posted two videos to Atlas‘s YouTube channel in April 2019 in which Hubbard made statements about Scott and Rising S Company. One video, entitled “Texas Man Spends 33 Months in Prison After Buying Shelter From Rising S Bunkers,” featured Hubbard interviewing a man who believed his incarceration was a direct result of his interactions with Clyde Scott when he purchased a Rising S shelter. Another video, entitled “Lady in Minnesota and Her Horrible Bomb Shelter,” featured Hubbard touring and critiquing a shelter installed by Rising S.
After Atlas filed its notice of appeal in this court, Scott moved to dismiss the appeal for want of jurisdiction because the notice of appeal was filed more than twenty days after the motion to dismiss was denied by operation of law. Atlas filed a response asserting the October 15 ruling modified the denial of its motion to dismiss pursuant to
JURISDICTION
Before proceeding with the substantive issues in this appeal, we first address Scott‘s claim this court lacks jurisdiction to hear Atlas‘s appeal. Our initial inquiry is always whether we have jurisdiction over an appeal. Laster v. Thomas, 487 S.W.3d 772, 773 (Tex. App.—Dallas 2016, no pet.) (citing Tex. Ass‘n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993)). In its brief, Scott asserts that the trial court lacked authority to issue its October 15 order, and therefore that order is void and unappealable. Scott argues that the TCPA requires the trial court to rule no later than the thirtieth day after the hearing on the motion. Because it did not, the argument continues, the motion was overruled by operation of law on September 25, and
The applicable version of
The TCPA further provides that the appellate court shall expedite an appeal from a trial court order on a motion to dismiss under Section 27.003 or from a trial court‘s failure to rule on that motion in the time prescribed by Section 27.005.
Atlas counters that the trial court retained plenary jurisdiction after the September 25 denial of the motion to dismiss by operation of law. Therefore, it argues, the October 15 order is not void and if not void, the notice of appeal filed on October 22 is certainly timely. We first note that the TCPA does not address whether the trial court may rule on a motion to dismiss after it has been denied by operation of law. While
Even if the appeal deadline was on October 15, which was twenty days after the motion to dismiss was denied by operation of law, Atlas‘s October 22 notice of appeal was filed within fifteen days of that date. Although Atlas did not file a motion to extend time to file the notice of appeal pursuant to Rule 26.3, because it tendered a notice of appeal within that fifteen-day time period beginning October 15, we imply that it filed a motion to extend. See Jones v. City of Houston, 976 S.W.2d 676, 677 (Tex. 1998); Verburgt, 959 S.W.2d at 617. Further, Atlas filed a response to Scott‘s motion to dismiss. In that response, Atlas provided a reasonable explanation why its appeal was not timely perfected as required by
Regardless of the accuracy of Atlas‘s legal interpretation of the controlling date, it indicates the failure to file within twenty days of the date the motion was overruled by operation of law was not deliberate or intentional, but was the result of inadvertence or mistake, and satisfies the requirement for a reasonable explanation to justify the need for an extension. See Hone v. Hanafin, 104 S.W.3d 884, 886 (Tex. 2003) (per curiam). Atlas made a bona fide attempt to invoke the appellate jurisdiction of this court by offering a reasonable explanation for failing to timely file its notice of appeal by October 15, if that was the controlling date. Accordingly, based on the liberal standard for considering untimely appeals, we find this court has jurisdiction to hear Atlas‘s appeal. See id. 888.
In its third issue, Atlas contends the trial court erred in denying its motion to strike Scott‘s response to his motion to dismiss as untimely. Appellate courts have jurisdiction over interlocutory orders only when that authority is explicitly granted by statute. See Tex. A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007). There is no statutory authority for this court to review the denial of Atlas‘s motion to strike. See Morrison v. Profanchik, 578 S.W.3d 676, 681 n.2 (Tex. App.—Austin 2019, no pet.). We overrule Atlas‘s third issue.
DISMISSAL ORDER
In its second issue, Atlas asserts that the trial court failed to apply the appropriate standard in its October 15 ruling, and the ruling contradicts itself. Specifically, it complains that the court responded to only three of four criteria that should be addressed, and the court contradicted itself by stating that the commercial speech exemption is established but that Atlas failed to show by a preponderance of the evidence that Scott‘s claim is based on, relates to, or is responsive to a protected right of Atlas.
The trial court‘s order denying Atlas‘s motion to dismiss consists of a paragraph containing the court‘s findings and a second paragraph, the decretal paragraph, containing the court‘s ruling. “Decretal” means the granting or denying of the remedy sought. Redwine v. Peckinpaugh, 535 S.W.3d 44, 49 (Tex. App.—Tyler 2017, no pet.). The factual recitations preceding the decretal portion of a judgment form no part of the judgment itself. See Nelson v. Britt, 241 S.W.3d 672, 676 (Tex. App.—Dallas 2007, no pet.). Where there appears to be a discrepancy between the judgment‘s recital and decretal paragraphs, a trial court‘s recitals, which precede the decretal portion of the judgment, do not determine the rights and interests of the parties. Id. Rather, the decretal provisions of the judgment control. Id.
The decretal portion of the order provides as follows: “IT IS THEREFORE ORDERED, ADJUDGED, and DECREED that the Defendant‘s MOTION TO DISMISS is hereby DENIED.” Even assuming the errors complained of by Atlas exist, the factual recitations in the order do not affect the ruling. Further, regardless of whether the motion was denied by operation of law or by the October 15 order, our review of the denial will be de novo such that any factual recitations would be irrelevant in our analysis. We overrule Atlas‘s second issue.
In its fourth issue, Atlas contends the trial court erred by improperly allowing Scott‘s second amended petition and affidavit, the complained-of videos, and live testimony to be considered at the hearing on its motion to dismiss. In support of this argument, Atlas relies only on the version of
The TCPA endorses a summary process, requiring judicial review of the pleadings and limited evidence. In re Lipsky, 460 S.W.3d 579, 589 (Tex. 2015). The statute contemplates that the amount and quality of evidence available at the time the motion is filed will be less than that available at trial on the merits or even at the summary-judgment stage. Hawkins v. Fox Corp. Hous., LLC, 606 S.W.3d 41, 45 (Tex. App.—Houston [1st Dist.] 2020, no pet.).
Atlas‘s arguments are based in large part on the current version of
The applicable version of
Regarding the videos, their admission was within the trial court‘s discretion. See Brown Sims P.C. v. L.W. Matteson, Inc., 594 S.W.3d 573, 588-89 (Tex. App.—San Antonio 2019, no pet.). All three videos were created by Atlas and were previously named as exhibits to Scott‘s earlier pleadings. These videos constitute the heart of the lawsuit and were vital to the questions before the trial court. We discern no abuse of discretion in the trial court‘s consideration of the videos.
Atlas complains that the second amended petition and affidavit were untimely. The rules of civil procedure allow parties to amend pleadings within seven days of trial with leave of court, which is to be granted unless there is a showing of surprise to the opposite party. See
Regarding the live testimony, the trial court may, but is not required to, hear live testimony when determining whether to grant or deny a TCPA motion to dismiss. Batra v. Covenant Health Sys., 562 S.W.3d 696, 707 (Tex. App.—Amarillo 2018, pet. denied). Moreover, we need not consider the live testimony to determine if the trial court‘s ruling was appropriate because the allegations in the petition and the videos themselves are sufficient for our review. See Hawkins, 606 S.W.3d at 44 n.2. We overrule Atlas‘s fourth issue.
COMMERCIAL SPEECH EXEMPTION
In Atlas‘s first issue, it contends the commercial speech exemption to the TCPA does not apply. It argues that the complained-of statements were unrelated to its capacity as a seller of underground bunkers. Rather, Atlas asserts, the videos sought to shed light on business practices
Standard of Review
We review de novo a trial court‘s ruling on a TCPA motion to dismiss. Schmidt v. Crawford, 584 S.W.3d 640, 646 (Tex. App.—Houston [1st Dist.] 2019, no pet.). In reviewing a trial court‘s ruling, we consider the pleadings and affidavits of the parties. See Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended 2019).
Applicable Law
Under the applicable version of the TCPA, a defendant may move to dismiss a legal action that is based on, relates to, or is in response to a party‘s exercise of the right of free speech, right to petition, or right of association. See Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended 2019) (current version at
The defendant-movant bears the initial burden of showing that the conduct that forms the basis of the claim against it is protected by the TCPA, that is, that the suit is based on, relates to, or is in response to the movant‘s exercise of its right to free speech, association, or petition. See Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended 2019) (current version at
Intertwined with and overlying this multi-step dismissal process is the TCPA provision exempting certain actions from the TCPA‘s application. See
Freedom of Speech
We first address whether Atlas met its burden to show this suit is based on or is a response to the exercise of free speech. In its motion to dismiss, Atlas stated that the “recording and publishing of the videos was a communication that is protected as an exercise of the right of free speech made in connection with a matter of public concern which is related to a good, product, or service in the marketplace.” We agree the videos constitute a communication. One purpose of the videos was to warn the public about an inferior product that could harm the public, a matter of public concern under the TCPA. See Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 961 (amended 2019); Epperson v. Mueller, No. 01-15-00231-CV, 2016 WL 4253978, at *10 (Tex. App.—Houston [1st Dist.] August 11, 2016, no pet.) (mem. op.) (held that statements regarded a matter of public concern because they relate to the quality of plaintiff‘s goods). We conclude Atlas‘s videos are an exercise of the right of free speech. See
Scott complained in its petition of two videos posted by Atlas in April 2019 and one posted June 23, after the onset of litigation. The third video is allegedly in violation of the parties’ Rule 11 agreement and is the basis of Scott‘s breach of contract claim. Scott alleged that the videos posted on the internet by Atlas contain numerous false statements of fact concerning Clyde Scott and Rising S Company. Scott asserted that Atlas did not make reasonable efforts to verify its claims, knew the claims were false, or recklessly disregarded the truth when making the statements. Scott further alleged that Atlas made the comments for the malicious purpose of injuring Rising S‘s business reputation. We conclude that Scott‘s claims for libel, business disparagement, and breach of contract are based on, related to, or were in response to Atlas‘s exercise of its right of free speech. See Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 961-62 (amended 2019);
However, Scott‘s cause of action for fraudulent misrepresentation concerns a phone call made by Ron Hubbard to Scott‘s attorney in which Hubbard claimed to be an attorney and discussed settlement of the case. Because this claim is not based on Atlas‘s exercise of the right
Commercial Speech Exemption
We now address Scott‘s contention that the motion to dismiss was properly denied because the libel, business disparagement, and breach of contract claims fall under the TCPA‘s commercial speech exemption. The supreme court has determined that this exemption applies when the nonmovant proves each of the following elements:
- The defendant was primarily engaged in the business of selling or leasing goods;
- The defendant made the statement or engaged in the conduct on which the claim is based in the defendant‘s capacity as a seller or lessor of those goods or services;
- The statement or conduct at issue arose out of a commercial transaction involving the kind of goods or services the defendant provides; and
- The intended audience of the statement or conduct were actual or potential customers of the defendant for the kind of goods or services the defendant provides.
Castleman, 546 S.W.3d at 688. Atlas does not challenge the first element, that it was primarily engaged in the business of selling survival shelters. We consider the evidence to determine if Scott met its burden as to the remaining three elements.
Atlas‘s Capacity
Regarding the second element, we review the context of the statements to determine whether the challenged statements propose a commercial transaction, as they would if made in the capacity as a seller. See Hawkins, 606 S.W.3d at 47. Atlas argues that its statements were unrelated to its capacity as a seller of its bunkers. Instead, it asserts, the statements are a review of products in the marketplace rather than an attempt by Atlas to sell its own products. Atlas does not dispute that the communications include certain references to its products but argues that the videos seek to shed light on business practices that could endanger the public. It further argues that the comparisons made between Scott‘s products and Atlas‘s products help to establish Atlas‘s and Hubbard‘s credibility as an expert in the field of disaster preparedness, show the proper means to construct bunkers to avoid certain issues, and serve as a demonstration of how a subterranean survival shelter should operate if properly constructed and installed. Thus, it argues, the statements were made to address matters relating to health, safety, environmental well-being, economic well-being, community well-being, or relating to a public figure, or concerning a product in the marketplace. Finally, Atlas points to the 2019 amendment
In its petition, Scott alleged that Atlas used the videos to advertise its products and, because they are direct competitors, the audience of the videos is comprised of Scott‘s potential clients. At the time the “Texas Man” video was published, Atlas had more than 68,000 subscribers. More than 21,000 viewers watched “Texas Man,” and more than 47,000 individuals watched “Lady in Minnesota.” Attached to the petition is a printout of online comments made by viewers of the videos. Some of those commentators state they will not purchase from Scott and some say they will purchase from Atlas after watching the “Texas Man” video. Scott also alleged that, “[a]t all times in the Original Videos, Mr. Hubbard is acting in his capacity as owner and representative of Defendant.” The videos were posted to Atlas‘s YouTube account which Atlas uses to advertise its products and services. The “Lady in Minnesota” video opens and ends with the Atlas logo. In both videos, Mr. Hubbard opens by saying “welcome back to another episode of Atlas Survival Shelters” and states that Rising S is a competitor of his. In the “Lady in Minnesota” video, Hubbard references, shows, and advertises Atlas‘s products and services in comparison to Scott‘s products and services. Scott also alleges that the “Lady in Minnesota” video asks viewers to subscribe to Atlas‘s YouTube channel. Scott‘s petition alleges that, in the “Texas Man” video, Atlas “advertises the ease of installing Defendant‘s bunkers and asks viewers to email or call him if they are interested in one of Defendant‘s bunkers.”
While Atlas‘s statements in the videos are undoubtedly “reviews” of Scott‘s products, those reviews are a part of Atlas‘s advertising scheme. Hubbard is not just an “expert” in his field purportedly warning the public of a dangerous individual who sells inferior products. He owns a company admittedly in competition with Scott. By encouraging viewers to compare products offered by the two companies, Hubbard not only reviewed Scott‘s products but, simultaneously offered up Atlas‘s products as the superior alternative. Even if we agree with Atlas‘s interpretation and applicability of the legislature‘s intent as shown by the 2019 amendment, the fact remains that its “reviews” are immersed in and interconnected with Atlas‘s role as a seller of underground survival shelters. We conclude that Scott has shown that Atlas
Commercial Transaction
Regarding the third element, Atlas asserts there is no nexus between the statements and a specific commercial transaction. Atlas contends that it does not sell the same product as Scott. It also explains that, because the videos involved Scott‘s prior customers discussing Scott‘s products, the statements do not arise from a commercial transaction involving goods Atlas provided. Atlas contends the statements cannot be barred merely because they have a connection to a commercial competitor. Asserting that the videos were communications of consumer complaints and reviews involving Scott‘s business, Atlas claims this is the exact sort of communication the TCPA was designed to protect.
In its petition, Scott alleges it and Atlas are direct competitors. Hubbard admits the two companies are competitors and, in the videos, compares the products of the respective companies. The videos described commercial transactions in which two different customers purchased an underground bunker from Scott. Neither the TCPA nor Castleman requires the commercial transaction referenced in the third element be one conducted by the defendant, only that it involve the kinds of goods or services the defendant provides. The third Castleman element examines whether “the statement or conduct at issue arose out of a commercial transaction involving the kind of goods or services the defendant provides.” Novosad v. LSG Vodka LLC, No. 03-18-00804-CV, 2020 WL 4726599, at *6 (Tex. App.—Austin July 31, 2020, no pet.) (mem. op.). This element can be restated as asking whether the statement or conduct at issue arose from the sale of services that the defendant provides. Id.; see also Martin v. Walker, 606 S.W.3d 565, 570 (Tex. App.—Waco 2020, pet. filed). Here, although there are differences in how Scott‘s and Atlas‘s shelters are built, they each sell the same kind of good, underground survival shelters, in the market place to a common customer base. See Morrison, 578 S.W.3d at 683 (“A defendant‘s online review of a competitor‘s sale and installation of the same product sold and installed by the defendant is a statement that meets” the third element of the commercial speech exemption.). Scott met its burden to prove the third Castleman element.
Intended Audience
Regarding the fourth element, Atlas contends the intended audience was neither actual nor potential Atlas customers. Atlas asserts that the parties sell similar, but not identical,
The evidence shows that Atlas and Scott are competitors in the same industry. The videos were posted on the internet channel Atlas used to advertise its products, and Hubbard invited viewers to contact him regarding his survival shelters. Comments to the videos show that viewers were interested in purchasing Atlas‘s products. Again, the fact that there are differences in the products made by Scott and Atlas does not lead to the conclusion that wholly different groups constitute the actual or potential customers of each company. We conclude that the intended audience of the videos was comprised of actual or potential buyers or customers of Atlas‘s products. See Epperson, 2016 WL 4253978, at *11.
Scott met its burden to show the commercial speech exemption applies. Therefore, the TCPA does not apply to this suit, and the trial court did not err in denying Atlas‘s motion to dismiss. See Best, 562 S.W.3d at 12. Because the commercial speech exemption is dispositive of this case, we need not address whether Scott met its burden to prove a prima facie case. See
DISPOSITION
Because Atlas has not shown trial court error, we affirm the trial court‘s order denying Atlas‘s motion to dismiss.
GREG NEELEY
Justice
Opinion delivered November 18, 2020.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
NOVEMBER 18, 2020
NO. 12-20-00054-CV
ATLAS SURVIVAL SHELTERS, LLC,
Appellant
V.
CLYDE SCOTT AND RISING S COMPANY, LLC,
Appellees
Appeal from the 294th District Court
of Van Zandt County, Texas (Tr.Ct.No. 19-00111)
THIS CAUSE came to be heard on the appellate record and briefs filed herein, and the same being considered, it is the opinion of this Court that there was no error in the trial court‘s order.
It is therefore ORDERED, ADJUDGED and DECREED that the order of the court below be in all things affirmed, and that all costs of this appeal are hereby adjudged against the appellant, ATLAS SURVIVAL SHELTERS, LLC, for which execution may issue, and that this decision be certified to the court below for observance.
Greg Neeley, Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.