HB Turbo, L.P. v. Turbonetics Engineering and Services ( 2007 )

NUMBER 13-06-083-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

HB TURBO, L.P., Appellant,

v.

TURBONETICS ENGINEERING

AND SERVICES, Appellee.

On appeal from the 94th District Court

of Nueces County, Texas.

MEMORANDUM OPINION

Before Justices Yañez, Rodriguez, and Garza Memorandum Opinion by Justice Garza   

  HB Turbo, L.P., ("HB") appeals the trial court's summary judgment in favor of appellee, Turbonetics Engineering and Services, Inc ("Turbonetics"). By two issues, HB contends the trial court erred in granting Turbonetics' no-evidence motion for summary judgment because more than a scintilla of evidence exists as to its causes of action for trade secret misappropriation and non-trade secret misappropriation (more appropriately referred to as unfair competition). ⁽¹⁾ By a third issue, HB contends the trial court erred in granting Turbonetics' traditional motion for summary judgment because material fact questions exist as to its non-trade secret misappropriation claim. We affirm.

I. Factual and Procedural Background

HB is a rotating equipment service and turbomachinery repair company. The underlying suit involves HB's drawings of component parts for Elliott steam turbines and whether those drawings are trade secrets. HB sued Turbonetics and HB's former general manager, David Hickham, Jr., who is now the president of Turbonetics, for alleged trade secret misappropriation, non-trade secret misappropriation (unfair competition), civil theft, conversion and tortious interference. ⁽²⁾ Turbonetics filed a no-evidence and traditional motion for summary judgment. In its no-evidence motion, Turbonetics asserted there was no evidence (1) of standing or capacity, (2) that a trade secret existed, (2) of civil theft, (3) of breach of contract, (4) of a viable cause of action for non-trade secret misappropriation, or, in the alternative, of any evidence of non-trade secret misappropriation (unfair competition), (5) of breach of fiduciary duty, (6) of conversion, (7) of tortious interference, and (8) of damages. In its traditional motion for summary judgment, Turbonetics argued (1) that no trade secret exists, and (2) that all of HB's claims were barred by limitations. HB filed a response, and after a hearing, the trial court granted Turbonetics' summary judgment. HB subsequently filed a motion for reconsideration. This appeal ensued.

II. Summary Judgment

On January 11, 2006, at the conclusion of the hearing on Turbonetics' motions for summary judgment, the trial court orally pronounced that it was granting both the no-evidence and traditional motions for summary judgment on the grounds of "capacity, limitations and the trade secret." On February 16, 2006, at a hearing on HB's motion for reconsideration, the trial court orally pronounced that it was going to "grant the motion to reconsider regarding capacity and limitation; however, Turbonetics, the Court is going to deny the motion to reconsideration [sic] regarding the other issues." Then, on February 21, 2006, the trial court entered a final order granting Turbonetics' motions for summary judgment. The order does not state the specific ground(s) for granting the summary judgments; instead, it merely states, "the Court finds that Turbonetics' Motions for Summary Judgment are well taken and should be and they are hereby GRANTED as to Plaintiff HB Turbo L.P.'s ("HB Turbo") claims for trade secret misappropriation and non-trade secret misappropriation." We are constrained to look only to the order granting summary judgment to determine the trial court's reasons for ruling. See Sharpe v. Roman Catholic Diocese of Dallas, 97 S.W.3d 791, 796 (Tex. App.-Dallas 2003, pet. denied); Strather v. Dolgencorp of Texas, Inc., 96 S.W.3d 420, 426 (Tex. App.-Texarkana 2002, no pet.); Simmons v. Healthcare Ctrs. of Texas., Inc., 55 S.W.3d 674, 680 (Tex. App.-Texarkana 2001, no pet.); see also Cherokee Water Co. v. Gregg County Appraisal Dist., 801 S.W.2d 872, 878 (Tex. 1990); In re K.M.B., 148 S.W.3d 618, 622 (Tex. App.-Houston [14th Dist.] 2004, no pet.); Nine Greenway Ltd. v. Heard, Goggan, Blair & Williams, 875 S.W.2d 784, 787 (Tex. App.-Houston [1st Dist.] 1994, writ denied) (stating that written judgment controls over the court's oral pronouncements).

Thus, because the trial court's order does not specify the ground(s) on which the summary judgment was granted, and because there are multiple grounds on which summary judgment may have been granted, HB is required to negate all grounds on appeal. See Star-Telegram, Inc., v. Doe, 915 S.W.2d 471, 474 (Tex. 1995); State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 381 (Tex. 1993); Lewis v. Adams, 979 S.W.2d 831, 833 (Tex. App.-Houston [14th Dist.] 1998, no pet.) (holding that summary judgment must be affirmed where multiple grounds are asserted and the appellant does not attack all grounds on appeal); Evans v. First Nat'l Bank of Bellville, 946 S.W.2d 367, 377 (Tex. App.-Houston [14th Dist.] 1997, writ denied). If an appellant fails to negate each ground upon which the judgment may have been granted, the appellate court must uphold the summary judgment. See Star-Telegram, Inc., 915 S.W.2d at 474; State Farm Fire & Cas. Co., 858 S.W.2d at 381; Lewis, 979 S.W.2d at 833; Evans, 946 S.W.2d at 377.

On appeal, HB specifically challenges whether the trial court erred in granting Turbonetics' no-evidence and traditional motions for summary judgment on grounds that a trade secret did not exist, and in granting Turbonetics' no-evidence motion for summary judgment on grounds that a viable cause of action for non-trade secret misappropriation did not exist, or, in the alternative, on grounds that there was no evidence of non-trade secret misappropriation (unfair competition). However, HB failed to negate or even challenge the other possible grounds for summary judgment. See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970) (when an appellant uses specific points of error or issues on appeal to attack a summary judgment and fails to attack one of the possible grounds on which the judgment was granted, the summary judgment must be affirmed). Because HB failed to attack all possible grounds upon which summary judgment may have been granted, whether properly or improperly, we uphold the summary judgment. See Star-Telegram, Inc., 915 S.W.2d at 474; State Farm Fire & Cas. Co., 858 S.W.2d at 381; Lewis, 979 S.W.2d at 833; Evans, 946 S.W.2d at 377.

Were we to remove HB's burden of attacking each of the possible grounds for granting summary judgment by simply referencing the trial court's oral pronouncements at the summary judgment hearing and the hearing on HB's motion for reconsideration, and assume that the trial court could not have granted summary judgment on the other grounds, "we would effectively be placing ourselves in the role of the trial court in ruling on the motion for summary judgment." See Strather, 96 S.W.3d at 426. We would be assuming that issuing the order without specifying the grounds was not a result of the trial court exercising its discretion to issue a written order that is modified from its oral ruling. We decline to engage in any assumptions, "especially because the burden of attacking each possible ground alleged in the summary judgment is relatively light." Id.

We join our sister court in acknowledging that:

At times, the consequences of requiring the appellant to attack on appeal each ground alleged in the motion for summary judgment can seem unfair. The consequences seem even more unfair when (1) the appellant fails to attack on appeal an apparently unmeritorious ground for granting summary judgment, and (2) the record (but not the order) discloses that the trial court appears not to have based its decision to grant summary judgment on the unchallenged, suspect ground.

Id. Both of those unfair conditions exist in the present case. However, we are constrained to look only to the order granting summary judgment to determine the trial court's reasons for ruling. Id. (citing Simmons, 55 S.W.3d at 680).

That rule has a fairly sound policy basis in that it gives litigants and appellate courts a single place to look to determine why the trial court granted summary judgment. We thus are not forced to parse statements made in letters to the parties, at hearings on motions for summary judgment, on docket notations, and/or in other places in the record.

Id.

We note that HB ultimately challenged the propriety of summary judgment on the grounds of capacity and limitations; however, it was only after Turbonetics raised these issues in its responsive brief that HB belatedly addressed them in its reply brief. Texas Rule of Appellate Procedure 38.3 permits an appellant to address "any matter in the appellee's brief." See Tex. R. App. P. 38.3. However, the rules of appellate procedure do not allow an appellant to include in a reply brief a new issue in response to some matter pointed out in the appellee's brief but not raised by the appellant's original brief. See id.; Dallas Co. v. Gonzales, 183 S.W.3d 94, 104 (Tex. App.-Dallas 2006, pet. denied); Lopez v. Montemayor, 131 S.W.3d 54, 61 (Tex. App.-San Antonio 2003, pet. denied); Barrios v. State, 27 S.W.3d 313, 322 (Tex. App.-Houston [1st Dist.] 2000, pet. ref'd) ("Pointing out the absence of an appellant's argument does not raise the argument or entitle appellant to assert that argument for the first time in his reply brief. If the rule were construed otherwise, an appellee could never point out matters not raised by an appellant for fear of reopening the door.").

Because HB did not challenge the other possible grounds for summary judgment in its original brief and could not raise new challenges in its reply brief, we conclude HB waived any issues regarding the propriety of summary judgment as to those grounds. See Tex. R. App. P. 38.1, 38.3; Barrios, 27 S.W.3d at 322; In re A.M., 101 S.W.3d 480, 486 (Tex. App.-Corpus Christi 2002, rev'd on other grounds, 192 S.W.3d 570 (Tex. 2006)); JHC Ventures, L.P. v. Fast Trucking, Inc., 94 S.W.3d 762, 773 n.9 (Tex. App.-San Antonio 2002, no pet.) ("Appellants, however, failed to urge the issue in their brief on the merits; by urging it for the first time in their reply brief, they waived this issue on appeal."). Because summary judgment may have been granted, properly or improperly, on a ground not properly challenged on appeal, we affirm the summary judgment. See Star-Telegram, Inc., 915 S.W.2d at 474; State Farm Fire & Cas. Co., 858 S.W.2d at 381; Malooly Bros., Inc., 461 S.W.2d at 121.

III. Conclusion

The judgment of the trial court is affirmed.

DORI CONTRERAS GARZA,

Justice

Memorandum Opinion delivered

and filed this the 7th day of June, 2007.

1. Under Texas law, a plaintiff can recover for misappropriation of a trade secret by establishing that (1) a trade secret existed, (2) the trade secret was acquired through a breach of a confidential relationship or was discovered by improper means, (3) the defendant used the trade secret without the plaintiff's authorization, and (4) the plaintiff suffered damages as a result. IAC, Ltd. v. Bell Helicopter Textron, Inc., 160 S.W.3d 191, 197 (Tex. App.-Fort Worth 2005, no pet.); Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452, 463 (Tex. App.-Austin 2004, pet. denied).

The elements of unfair competition or common law misappropriation have been defined as (1) the creation of plaintiff's product (i.e., the trade secret information) through extensive time, labor, skill, and money; (2) the defendant's use of that product in competition with the plaintiff, thereby gaining a special advantage in that competition (i.e., a "free ride") because defendant is burdened with little or none of the expense incurred by the plaintiff; and (3) commercial damage to the plaintiff. United States Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865 S.W.2d 214, 218 (Tex. App.-Waco 1993, writ denied).

2.

HB eventually non-suited its claims against Turbonetics for civil theft, conversion, tortious interference and breach of contract. In addition, HB's claims against Turbonetics were severed from the proceedings against David Hickman, Jr., for purposes of making the summary judgment favoring Turbonetics final. Therefore, the instant appeal concerns only the trial court's granting of summary judgment in favor of Turbonetics on HB's claims for trade secret misappropriation and non-trade secret misappropriation.