Kimberly Norwood A/K/A Kimberly Elliott and Executive Catering, Inc. v. Tracy Norwood and Nor Dubois, Inc. ( 2008 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-07-244-CV
KIMBERLY NORWOOD A/K/A APPELLANTS
KIMBERLY ELLIOTT AND
EXECUTIVE CATERING, INC.
V.
TRACY NORWOOD AND APPELLEES
NOR DUBOIS, INC.
------------
FROM THE 393RD DISTRICT COURT OF DENTON COUNTY
------------
MEMORANDUM OPINION 1
------------
This appeal involves a divorce that included litigation between not only
the husband and wife but also a closely-held corporation owned solely by the
husband and wife and a competing corporation for which the wife went to work
after the divorce proceedings began. In a single issue consisting of three
1
… See Tex. R. App. P. 47.4.
distinct complaints or subissues, appellant Kimberly Norwood a/k/a Kimberly
Elliott2 challenges the trial court’s granting of appellees Tracy Norwood and Nor
Dubois, Inc.’s motion for sanctions and the entry of a directed verdict in Nor
Dubois’s favor on its claims for breach of fiduciary duty, conspiracy to breach
fiduciary duty, and tortious interference with contracts. We affirm.
Factual and Procedural Background
Before marrying, Tracy and Kimberly formed Nor Dubois in March 2001
as a closely-held corporation for the purpose of operating a catering business
for corporate aircraft. Tracy owned sixty percent of the shares of Nor Dubois
and Kimberly owned forty percent. Each was an officer, director, and
employee. The couple married in February 2002.
Tracy filed for divorce in June 2004. Although the couple continued to
operate Nor Dubois’s business, they began negotiating with third parties to sell
the business during the summer and fall of 2004; Kimberly was involved in the
negotiation process and remained as an employee throughout 2004. She filed
a counterpetition for divorce in September 2004. The trial court entered an
2
… Although the notice of appeal was filed on behalf of both Kimberly and
Executive Catering, Inc. and both were listed as parties on the docket sheet,
Executive Catering is not listed as a party in the only appellant’s brief, which
does not request any relief on behalf of Executive Catering. We also note that
appellees elected not to file a brief.
2
Agreed Mutual Injunction later that month, which included a provision
prohibiting the parties from “harming or reducing the value of the property of
one or both of the parties.”
According to Tracy, on January 14, 2005, he was in a hangar near the
offices of Catering Art, a Nor Dubois competitor with whom Kimberly had
previously talked “about some sort of a business arrangement.” He saw Nor
Dubois “vehicles pull up in front . . . and start unloading everything from
products, lobster tail, packaging, coffee makers, . . . [and] everything that’s in
a catering kitchen from A to Z.” When he went inside the building, he saw a
room full of similar items, and one of the drivers told him “they had been doing
this for three days.” He called the police and had the activity stopped.
On January 19, 2005, Kimberly resigned as a Nor Dubois director and
employee. In her resignation letter, she said that Tracy asked her not to come
back to work on January 14 and refused her admittance to Nor Dubois’s
offices. Kimberly went to work for Executive Catering,3 a business she
incorporated with Tony Caterine, who also owned Catering Art.
On January 31, 2005, Tracy moved to enforce the parties’ agreed
injunction by contempt based on the January 14 incident. Tracy alleged that
3
… The evidence at trial showed that Executive Catering had been
incorporated on January 12, 2005, with Kimberly listed as a director.
3
Kimberly had interfered with the contractual and business relations between Nor
Dubois and its employees and customers. He further alleged that she had made
harassing phone calls to his cell phone and changed the passwords on his
private email accounts without authorization, making those accounts
temporarily unavailable to him. Kimberly responded with her own motion for
enforcement by contempt, alleging that Tracy had withdrawn $2,500 from an
account of Aircraft Outfitters, a business owned solely by Kimberly, and had
removed kitchen equipment and other assets belonging to Nor Dubois. The
record does not show whether the trial court ruled on these motions.
On March 18, 2005, Kimberly brought a motion to compel discovery and
for sanctions, asking the court to order Tracy to respond to requests for
production and disclosure that she had served on him in November 2004.
Tracy then filed his own motion to compel and for sanctions on March 21,
2005, asking the trial court to order Kimberly to respond to requests for
production and disclosure that he had likewise propounded in November 2004.
The record does not show whether the trial court ruled on these initial
discovery-related motions.
In February 2006, Tracy’s lawyer filed a subpoena to compel production
of numerous documents related to Executive Catering. Tracy then filed another
motion for sanctions, complaining of Kimberly’s failure to produce documents
4
in response to a second set of requests for production and her failure to appear
for a deposition. He also filed a motion to compel production of documents
from Executive Catering, which had responded to the subpoena with objections
and responses but no documents. After a hearing on March 21, 2006, the trial
court sustained Tracy’s motions and ordered the following: that Executive
Catering produce the documents described in the motion to compel; that
Kimberly appear for a deposition no later than April 11, 2006; and that Kimberly
pay Tracy’s attorney sanctions of $500.
Nor Dubois filed a petition in intervention on April 12, 2006. In the
petition, Nor Dubois alleged (1) that Kimberly misappropriated tangible personal
property from Nor Dubois and transferred it to Executive Catering, (2) that
Kimberly breached a fiduciary duty to Nor Dubois and tortiously interfered with
actual or prospective contracts between Nor Dubois and its customers to
persuade them to transfer their business to Executive Catering, and (3) that
Executive Catering is the alter ego of Tony and Linda Caterine, both directors
of Executive Catering along with Kimberly. It named Executive Catering as a
defendant, in addition to Kimberly.
Tracy filed a second motion for sanctions on May 4, 2006, contending
that Kimberly had failed to pay the $500 as previously ordered in March. He
also stated that the case was ready for mediation but only if the trial court
5
ordered one of the Caterines to attend. Although the record shows that the
trial court set the motion for a hearing on June 6, 2006, it does not show
whether the trial court ruled on the motion.
Tracy filed a third motion to compel on January 19, 2007, alleging that
at Kimberly’s deposition, she “refused to provide an address or a phone number
for Tony Caterine and gave vague, if not inconsistent, testimony about his
residence address.” Kimberly had previously responded to a request for
disclosure and an interrogatory with Tony’s business address only; according
to Tracy, attempts to serve Tony at that address were unsuccessful. Tracy
also alleged that he asked Kimberly’s counsel again for the information, but he
refused. The trial court ordered Executive Catering to provide all residence
addresses and phone numbers for Tony and imposed discovery sanctions of
$1,500 on Executive Catering, payable to Tracy’s counsel.
Appellees joined in a motion for sanctions filed February 22, 2007, six
days before trial. In it, they alleged that Kimberly’s November 8, 2006
responses to September 27, 2006 requests for disclosure and interrogatories
were deficient. Specifically, appellees claimed that the responses (a) were not
timely, (b) failed to state any legal theories or the factual bases for Kimberly’s
claims or defenses, and (c) failed to provide a brief statement of each identified
person’s connection with the case. They further claimed that they had notified
6
Kimberly’s counsel of the deficiencies, but he had failed to respond. A review
of Kimberly’s responses shows that she identified a list of around thirty persons
with “personal knowledge of the relationship” but failed to include a brief
statement about each of those witnesses’ connection with the case. She also
failed completely to answer the questions regarding the legal theories and
factual bases of her claims or defenses and the amount and method of
calculating economic damages. Appellees asked the trial court to prohibit
Kimberly from calling any witnesses at trial on Nor Dubois’s claims and from
offering evidence of any defenses. They also noted that Executive Catering had
failed to pay the $1500 sanctions and asked for additional monetary sanctions. 4
The trial court heard argument on the sanctions motion before beginning
a bench trial on February 28, 2007 5 and decided that the motion should be
granted. Accordingly, the trial court prohibited appellants from calling any
witnesses at trial on, or offering evidence of any defenses to, Nor Dubois’s
breach of fiduciary duty, conspiracy, and tortious interference claims. After
4
… Executive Catering paid these sanctions on the afternoon of February
22, 2007, after appellees had filed their motion.
5
… On the back page of the motion is a “Notice of Hearing” stating that
the motion was set for hearing “just prior to the inception of trial of this cause.”
7
appellees rested, the trial court granted Nor Dubois a directed verdict “[o]n all
the issues contained in . . . the amended [petition in] intervention.”
On April 10, 2007, the trial court signed a decree granting the divorce
and dividing the marital estate. The decree also ordered appellants, jointly and
severally, to pay Nor Dubois damages of $235,000. The trial court did not
specify which of Nor Dubois’s claims supported the damage award. Appellants
filed a motion for new trial, alleging that the sanctions imposed by the trial
court were excessive, that the directed verdict was improper, and that there is
no evidence supporting an award of damages to Nor Dubois, the same
complaints Kimberly raises on appeal. The motion was overruled by operation
of law.
Issue on Appeal
Kimberly claims that the directed verdict in Nor Dubois’s favor was
improper because the trial court’s sanctions order prohibiting appellants from
offering witnesses and evidence in defense of Nor Dubois’s claims, upon which
the directed verdict was based, was improper; and even if the sanctions order
was proper, Nor Dubois’s evidence was legally insufficient to support the trial
court’s judgment in Nor Dubois’s favor on both liability and damages.
8
Standards of Review
An appellate court reviews a trial court’s ruling on a motion for sanctions
for an abuse of discretion. Cire v. Cummings, 134 S.W .3d 835, 838 (Tex.
2004); Richmond Condominiums v. Skipworth Commercial Plumbing, Inc., 245
S.W.3d 646, 660 (Tex. App.—Fort Worth 2008, pet. denied); VingCard A.S.
v. Merrimac Hospitality Sys., 59 S.W.3d 847, 855 (Tex. App.—Fort Worth
2001, pet. denied). The abuse of discretion standard requires us to determine
whether the trial court acted without reference to any guiding rules or
principles; in other words, whether the act was arbitrary and unreasonable.
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985),
cert. denied, 476 U.S. 1159 (1986). Merely because an appellate court would
in a similar circumstance decide the matter differently does not demonstrate
that an abuse of discretion has occurred. Id.
A directed verdict is proper only under limited circumstances: (1) when
the evidence conclusively establishes the right of the movant to judgment or
negates the right of the opponent or (2) when the evidence is insufficient to
raise a material fact issue. See Prudential Ins. Co. v. Fin. Review Servs., Inc.,
29 S.W.3d 74, 77 (Tex. 2000); Ray v. McFarland, 97 S.W.3d 728, 730 (Tex.
App.—Fort Worth 2003, no pet.). In reviewing a directed verdict, we must
credit favorable evidence if reasonable jurors could and disregard contrary
9
evidence unless reasonable jurors could not. See City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex. 2005).
We may sustain a legal sufficiency challenge only when (1) the record
discloses a complete absence of evidence of a vital fact; (2) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered
to prove a vital fact; (3) the evidence offered to prove a vital fact is no more
than a mere scintilla; or (4) the evidence establishes conclusively the opposite
of a vital fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334
(Tex. 1998), cert. denied, 526 U.S. 1040 (1999); Robert W. Calvert, "No
Evidence" and "Insufficient Evidence" Points of Error, 38 Tex. L. Rev. 361,
362–63 (1960). In determining whether there is legally sufficient evidence to
support the finding under review, we must consider evidence favorable to the
finding if a reasonable factfinder could and disregard evidence contrary to the
finding unless a reasonable factfinder could not. City of Keller, 168 S.W.3d at
827.
Propriety of Sanctions Order
Texas Rule of Civil Procedure 215.2 allows a trial court to sanction a
party for failure to comply with a discovery order or request and lists the
sanctions a court may impose. Tex. R. Civ. P. 215.2; Cire, 134 S.W.3d at
839. These sanctions include refusing to allow the disobedient party to support
10
or oppose designated claims or defenses or prohibiting designated evidence
from being introduced into evidence. Tex. R. Civ. P. 215.2(b)(4); Cire, 134
S.W.3d at 839; see also Tex. R. Civ. P. 193.6(a) (providing that party who fails
to make, amend, or supplement discovery response in timely manner may not
introduce the untimely disclosed material into evidence and may not offer the
testimony of an untimely identified witness unless the trial court finds good
cause or absence of unfair surprise or prejudice).
A trial court’s ability to sanction is limited by the requirement that the
sanctions be just. See Tex. R. Civ. P. 215.2(b); Cire, 134 S.W.3d at 839;
Fethkenher v. Kroger Co., 139 S.W.3d 24, 35 (Tex. App.—Fort Worth 2004,
no pet.). To determine whether discovery sanctions are just, we engage in a
two-part inquiry. Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583
(Tex. 2006); Fethkenher, 139 S.W.3d at 35. First, a direct relationship must
exist between the complained-of conduct and the sanctions imposed; in other
words, just sanctions must be directed against the abuse and toward remedying
the prejudice caused the innocent party. Am. Flood Research, 192 S.W.3d at
583; Cire, 134 S.W.3d at 839; Fethkenher, 139 S.W.3d at 35. Second, the
sanctions must not be excessive; in other words, “[t]he punishment should fit
the crime,” and the trial court must consider the availability of less stringent
sanctions and whether any available lesser sanctions would fully promote
11
compliance. Am. Flood Research, 192 S.W.3d at 583; Cire, 134 S.W.3d at
839; Fethkenher, 139 S.W.3d at 35. A trial court may not impose a sanction
that is more severe than necessary to satisfy its legitimate purpose. Cire, 134
S.W.3d at 839; Hamill v. Level, 917 S.W.2d 15, 16 (Tex. 1996). In
considering whether sanctions are just, we review the entire record, including
the evidence, arguments of counsel, written discovery on file, and the
circumstances surrounding the parties' discovery abuse. Fethkenher, 139
S.W.3d at 35; Daniel v. Kelley Oil Corp., 981 S.W.2d 230, 234 (Tex.
App.—Houston [1st Dist.] 1998, pet. denied) (op. on reh’g).
Death penalty, or case-determinative sanctions, should be imposed only
in exceptional circumstances in which they are clearly justified and it is fully
apparent that no lesser sanction would promote compliance with the rules.
Cire, 134 S.W.3d at 840–41; Johnson ex rel. Johnson v. Chesnutt, 225
S.W.3d 737, 743 (Tex. App.—Dallas 2007, pet. denied). An exceptional case
exists when a party’s hindrance of the discovery process justifies a presumption
that its claims lack merit. Cire, 134 S.W.3d at 841; Johnson, 225 S.W.3d at
743.
12
Applicable Facts
Appellees served interrogatories and requests for disclosure on appellants
in late September 2006, to which each responded on November 8, 2006.
Neither Kimberly nor Executive Catering responded to the question asking for
“the legal theories and, in general, the factual bases of the responding party’s
claims or defenses.” In addition, each responded to a question inquiring about
“the name, address, and telephone number of persons having knowledge of
relevant facts, and a brief statement of each identified person’s connection with
the case,” with a list of the same thirty persons’ names, addresses, and some
phone numbers and the summary, “All of the above witnesses have personal
knowledge of the relationship.”
Appellees’ counsel sent appellants’ counsel a letter on December 11,
2006, noting that appellants had failed to state any legal theories or factual
bases for their claims or defenses and that the summary provided about the
witnesses’ knowledge of the case was “so vague and overbroad that it is
virtually meaningless.” Accordingly, counsel asked appellants to correct the
problems and send amended responses before December 27, 2006. Because
appellants did not do so, counsel filed the motion for sanctions in February one
week before trial.
13
At the sanctions hearing, which the trial court held immediately before
trial began, appellants did not offer any explanation as to why they had failed
to answer the question regarding claims and defenses other than to say that
Kimberly’s defense to the divorce was self-evident because she had filed a
counter-petition for divorce. As to the production of the names and addresses
of thirty witnesses who “had personal knowledge of the relationship between
the parties,” Kimberly’s counsel argued that appellants were going to call only
two witnesses: “the two women that were involved and aware and worked
with and around both people involved.” Counsel stated, “We don’t have
nothing more. We’re not talking about corporations of individuals. We’re
talking about the relationship between the parties, the parties being” Tracy and
Kimberly. He also explained that Executive Catering was late paying the $1500
due to a communication problem. As to Kimberly’s counterpetition for divorce,
counsel stated that “[t]he defensive posture . . . is they both want a divorce,
they both complain of the action and that’s self-apparent by the file that you
have before you.”
Counsel for Executive Catering argued that the discovery answers were
merely incomplete and that the trial court could not exclude evidence,
witnesses, or both unless it found unfair surprise or prejudice. According to
14
counsel, “[t]here is nothing in the responses that is new. There is nothing that
they aren’t already aware of.”
Appellees’ counsel responded that appellants’ discovery answers were
still insufficient because there were two corporations involved in the case as
well as Tracy and Kimberly and that Kimberly’s relationship with Executive
Catering was not related just to the divorce but also to Nor Dubois’s claims of
breach of fiduciary duty and tortious interference. Thus, he still could not tell
if appellants had defenses, or were going to call witnesses with respect to, Nor
Dubois’s claims in intervention. He also stated that he had not been provided
with a witness or exhibit list as required by the local rules for Denton County.
In its order granting appellees’ motion and prohibiting appellants from
calling any witnesses at trial or from offering any evidence of defenses to Nor
Dubois’s claims, the trial court noted that it had taken judicial notice of the file
in the case, “specifically, the prior orders of sanctions imposed on . . .
Kimberly . . . and . . . Executive Catering.” 6
Analysis
6
… These prior orders are (i) the March 21, 2006 order compelling
Executive Catering to produce documents, ordering Kimberly to attend a
deposition, and ordering Kimberly to pay Tracy’s attorney $500 and (ii) the
January 30, 2007 order compelling Executive Catering to produce Tony
Caterine’s address and telephone number and ordering Executive Catering to
pay Nor Dubois’s counsel $1500.
15
Kimberly claims that the trial court abused its discretion by imposing
sanctions prohibiting her from calling any witnesses or offering any evidence at
trial on Nor Dubois’s claims. Kimberly initially complains that appellees waived
their right to seek sanctions by filing their motion too late. She also points out
that the motion for sanctions was the first motion related to this particular set
of discovery.
Only a failure to obtain a ruling before trial actually begins will waive the
right to complain about the failure to answer discovery. Remington Arms Co.
v. Caldwell, 850 S.W.2d 167, 170 (Tex. 1993); Trahan v. Lone Star Title Co.
of El Paso, Inc., 247 S.W .3d 269, 282–83 (Tex. App.—El Paso 2007, pet.
denied); Adkins Servs., Inc. v. Tisdale Co., 56 S.W.3d 842, 844–45 (Tex.
App.—Texarkana 2001, no pet.). Likewise, rule 215.2 specifically
contemplates that a motion to compel need not be filed before a motion for
sanctions. Tex. R. Civ. P. 215.2(b); Adkins, 56 S.W.3d at 844. Thus, we
conclude and hold that appellees did not waive their right to sanctions.
16
Kimberly also claims that the sanctions were excessive. 7 The trial court
indicated in its order that it had taken judicial notice of the file, specifically the
prior sanctions orders, and it was aware of the past discovery abuses for which
it had sanctioned appellants. Specifically, the record shows a pattern of
Kimberly’s recalcitrance in providing information about Executive Catering (a
corporation for which she served as an initial director) and Tony Caterine, in
addition to a pattern of both Kimberly and Executive Catering paying monetary
sanctions imposed by the trial court only after Tracy and Nor Dubois had filed
additional sanctions motions. Neither counsel for Kimberly nor counsel for
Executive Catering told the trial court that appellants would be asserting any
defenses to Nor Dubois’s claims at the sanctions hearing; Kimberly’s counsel
told the trial court only that, as to the divorce, Kimberly wanted one as well as
Tracy. Out of thirty potential witnesses identified in the discovery, Kimberly’s
counsel stated that he planned to call only two, but he never explained
specifically what he thought those two would testify to other than Tracy and
Kimberly’s “relationship.” Additionally, even though Kimberly and Executive
7
… An order prohibiting a party from presenting evidence on, or calling
witnesses as to, claims or defenses for which the party failed to answer or
supplement discovery is limited to the direct consequences of the offensive
conduct; thus, the first TransAmerican prong is satisifed. Jackson v. Jackson,
No. 01-05-00194-CV, 2006 WL 3438703, at *9 (Tex. App.—Houston [1st
Dist.] Nov. 30, 2006, no pet.) (mem. op.).
17
Catering both failed to respond in any way to the discovery asking about the
legal theories and factual bases of any claims or defenses, they continued to
maintain to the trial court that they had only provided incomplete answers to
the discovery. Thus, in addition to considering their past behavior hindering
discovery, the trial court could have also concluded that lesser sanctions would
not have been adequate based on appellants’ refusal to acknowledge that they
had failed to adequately answer the discovery.8 Based on the foregoing, we
conclude and hold that the sanctions were not excessive and that the trial court
did not abuse its discretion by imposing sanctions under rule 215.2(b). See
Tex. R. Civ. P. 215.2(b); Cire, 134 S.W.3d at 840; Johnson, 225 S.W.3d at
743–44; Jackson, 2006 WL 3438703, at *9; see also Tex. R. Civ. P. 193.6.
8
… Included in Kimberly’s complaint about the sanctions is the allegation
that she did nothing wrong and that the trial court improperly imputed
Executive Catering’s discovery abuses to her. However, our review of the
record shows that the sanctioned behavior was not attributable solely to
Executive Catering. Moreover, Kimberly was not only an employee of Executive
Catering but also a director.
18
Sufficiency of the Evidence
19
Kimberly also challenges the legal sufficiency of the evidence to support
the $235,000 damage award under either a breach of fiduciary duty or tortious
interference theory. 9
Breach of Fiduciary Duty
The elements of a breach of fiduciary duty claim are as follows: (1) the
existence of a fiduciary relationship between the plaintiff and defendant; (2)
defendant’s breach of the duty imposed by the relationship; and (3) a resulting
injury to the plaintiff or benefit to the defendant. See Jones v. Blume, 196
S.W.3d 440, 447 (Tex. App.—Dallas 2006, pet. denied); Punts v. Wilson, 137
S.W.3d 889, 891 (Tex. App.— Texarkana 2004, no pet.). Based on Tracy’s
testimony that Nor Dubois obtained its prospective customers from a list
compiled by the National Business Aviation Association that is available to all
members of the Association, Kimberly contends that there is no evidence of
breach because she did not improperly use or share with Executive Catering any
confidential or proprietary information.10 Nor Dubois claimed that Kimberly took
9
… Kimberly’s brief appears to contain a challenge to the award of
damages based on conspiracy to breach fiduciary duty; however, this complaint
was not preserved because it is inadequately briefed. See Tex. R. App. P.
38.1; McClure v. Denham, 162 S.W.3d 346, 349 (Tex. App.—Fort Worth
2005, no pet.).
10
… Kimberly also states in the “Summary of the Argument” part of her
brief that “there is some question if [she] owed a fiduciary duty to Nor Dubois
20
not only its personal property with her to Executive Catering but also its pricing
structure, menu, chef, and customer list.
A former employee may use the general knowledge, skills, and experience
acquired in an employment relationship, even when competing with a former
employer. Sands v. Estate of Buys, 160 S.W.3d 684, 687 (Tex. App.—Fort
Worth 2005, no pet.); Am. Derringer Corp. v. Bond, 924 S.W.2d 773, 777
(Tex. App.—Waco 1996, no writ). But a former employee may not use
confidential or proprietary information or trade secrets the employee learned in
the course of employment for the employee’s own advantage and to the
detriment of the employer. Fox v. Tropical Warehouses, Inc., 121 S.W.3d 853,
858 (Tex. App.—Fort Worth 2003, no pet.); Rugen v. Interactive Bus. Sys.,
Inc., 864 S.W.2d 548, 551 (Tex. App.—Dallas 1993, no writ). To warrant
protection, the information must have a substantial element of secrecy and give
the employer a competitive advantage. Tom James of Dallas, Inc. v. Cobb, 109
S.W.3d 877, 888 (Tex. App.—Dallas 2003, no pet.); Rugen, 864 S.W.2d at
552. Secrecy implies the information is not generally known or readily
ascertainable. Tom James of Dallas, 109 S.W.3d at 888.
at all.” But she failed to brief this challenge; thus, it is waived. See Tex. R.
App. P. 38.1; McClure, 162 S.W.3d at 349.
21
Tracy testified that when Nor Dubois began doing business, he went to
potential customers individually, including those for whom he had performed
maintenance work, brought them samples, and held marketing parties. As the
business grew, Nor Dubois took advice from its customers as to its services.
The customer list was password protected and kept in a QuickBooks database;
Tracy claimed that before Kimberly resigned, she changed the password so that
he could not access the list, among other items. Additionally, the evidence
shows that one of the offers to purchase Nor Dubois specifically set the
purchase price for the customer list at $100,000, and the other included
“current and future client base” as part of the business assets to be purchased
for $225,000. According to Tracy, Executive Catering’s client list included
sixty of Nor Dubois’s former customers.
On cross-examination, Tracy testified that Nor Dubois and its four
competitors in the Dallas area were trying to reach at least one hundred
customers with about $5 million in sales. When asked whether a list of these
potential customers exists, Tracy answered that a member of the National
Business Aviation Association can obtain the list. However, Tracy made it clear
that this list is a “target” list and was not Nor Dubois’s client list.
We conclude and hold that there is legally sufficient evidence to show
that Kimberly and Executive Catering used proprietary information belonging to
22
Nor Dubois. The evidence shows that Nor Dubois developed its own client list,
that it was kept in a password-protected database available to Tracy, Kim, and
the office manager, and that at least two companies had specifically assigned
a part of the purchase price offered to Nor Dubois to obtaining its client list.
Accordingly, we address Kimberly’s next complaint that there is no evidence to
support the damage award to Nor Dubois.
Kimberly contends that the damage award is not supported by legally
sufficient evidence because it is based solely on the diminution in value of Nor
Dubois as a result of appellants’ actions. According to Kimberly, a plaintiff may
recover only out-of-pocket losses or lost profits for a breach of fiduciary duty.
She cites Texas Instruments Inc. v. Teletron Energy Mgmt., 877 S.W.2d 276
(Tex. 1994), and Duncan v. Lichtenberger, 671 S.W.2d 948 (Tex. App.—Fort
Worth 1984, writ ref’d n.r.e.), to support her argument. But these cases do
not stand for the proposition that these measures of damages are the exclusive
remedies for breach of fiduciary duty.
In Texas Instruments, the issue was whether the plaintiff proved lost
profits stemming from breach of express warranties and DTPA violations with
the required level of reasonable certainty. 877 S.W.2d at 277–80. And in
Duncan, this court held that the evidence was sufficient to support an out-of-
pocket expense damage award for breach of fiduciary duty as “the remedy
23
chosen by the appellees” in that case. 671 S.W.2d at 953. This court
supported its conclusion in part on the jury’s finding that the appellant’s breach
was a proximate cause of damage to the appellees. Id. Nothing in either of
these cases restricts the types of damages that can be awarded on a breach of
fiduciary duty claim. See Horton v. Robinson, 776 S.W.2d 260, 266 (Tex.
App.—El Paso 1989, no pet.) (reviewing propriety of damage award for breach
of fiduciary duty and civil conspiracy and noting that “[w]here the law furnishes
no legal measure of damages and they are unliquidated, the amount to be
awarded rests largely in the discretion of the jury.”); cf. Swank v. Sverdlin, 121
S.W.3d 785, 797–98 (Tex. App.—Houston [1st Dist.] 2003, pet. denied)
(holding that damages model based on diminution in value of corporation as a
result of breach of fiduciary duty was based on sound calculation but reversing
because no evidence supported jury’s award splitting total diminution in value
into four parts and attributing one quarter of the total to each tortfeasor), cert.
denied, 544 U.S. 1033 (2005).
Here, Tracy testified that after Kimberly left Nor Dubois—taking
customers, supplies, and all of the employees, including the chef, with her—he
was unable to continue operating the business on his own.11 Although he was
11
… He could not access the Nor Dubois client list and supplier list for
three days after Kimberly left because the password to the computer on which
24
able to sell the remaining equipment for $60,000 about a month after she left,
he had to use that money to pay off the company’s debts. A certified public
accountant, John Graves, testified that Nor Dubois was worth $236,773 as of
December 31, 2004 but $0 after Kimberly resigned in January 2005. A report
he drafted, which was entered into evidence, noted that, “[i]n summary, [he]
would value the business at $235,000, allowing for small fluctuations.” We
hold that this evidence is sufficient to support the $235,000 damage award to
Nor Dubois.12 See Goodin v. Joliff, 257 S.W.3d 341, 346 (Tex. App.—Fort
Worth 2008, no pet.).
Because we conclude that none of Kimberly’s subissues have merit, we
overrule her sole issue on appeal.
Conclusion
these were stored had been changed.
12
… Because we have determined that the award is supportable based on
Nor Dubois’s claims alleging Kimberly’s breach of fiduciary duty, we need not
address her complaint regarding whether the award is supportable based on Nor
Dubois’s claim for tortious interference. See Tex. R. App. P. 47.1; Horsley-
Layman v. Adventist Health Sys./Sunbelt, Inc., 221 S.W.3d 802, 809 (Tex.
App.—Fort Worth 2007, pet. denied).
25
Having determined that the trial court did not err by imposing sanctions
against appellants and that the damage award to Nor Dubois is supported by
the evidence, we overrule Kimberly’s sole issue and affirm the trial court’s
judgment.
TERRIE LIVINGSTON
JUSTICE
PANEL: LIVINGSTON, WALKER, and MCCOY, JJ.
DELIVERED: November 13, 2008
26