Barry Brooks, Heston C. King, Stefen Douglas Brooks, Johanna Barton, and Jesse Rodriguez Benavides v. Excellence Mortgage, Ltd. LADTD-1, LLC Grothues Financial, Ltd. Grothues Brothers Management I, LLC And Georgetown Mortgage, L.L.C. , 486 S.W.3d 29 ( 2015 )

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-13-00106-CV
Barry BROOKS, Heston C. King, Stefen Douglas Brooks, Johanna Barton,
and Jesse Rodriguez Benavides,
Appellants
v.
EXCELLENCE MORTGAGE, LTD.; LADTD-1, LLC; Grothues Financial, Ltd.; Grothues
Brothers Management I, LLC; and Georgetown Mortgage, L.L.C.
Appellees
From the 224th Judicial District Court, Bexar County, Texas
Trial Court No. 2013-CI-01173
Honorable Cathleen M. Stryker, Judge Presiding 1
OPINION ON MOTIONS FOR REHEARING
Opinion by: Patricia O. Alvarez, Justice
Sitting: Catherine Stone, Chief Justice, retired (not participating)
Marialyn Barnard, Justice
Patricia O. Alvarez, Justice
Delivered and Filed: December 9, 2015
REVERSED AND REMANDED
On April 1, 2015, we granted Appellants’ motion for rehearing, withdrew our May 30,
2014 opinion and judgment, and issued a substitute opinion and judgment in this appeal.
Thereafter, Appellants Barry Brooks, Heston C. King, Stefen Douglas Brooks, and Jesse
1
The Honorable Cathleen Stryker signed the July 18, 2012 order granting in part Excellence’s traditional motion for
summary judgment. The Honorable Peter Sakai, Presiding Judge of the 225th Judicial District Court, signed the
severance order which made the July 18, 2012 order final.
04-13-00106-CV
Rodriguez Benavides (collectively Brooks Appellants), and Appellant Johanna Barton, filed a
motion for rehearing. Appellees Excellence Mortgage, Ltd.; LADTD-1, LLC; Grothues Financial,
Ltd.; Grothues Brothers Management I, LLC; and Georgetown Mortgage, L.L.C. also filed a
motion for rehearing. We grant the motions for rehearing, withdraw our opinion and judgment of
April 1, 2015, and substitute this opinion and judgment in their stead.
We reverse the trial court’s order granting Appellees’ traditional motion for summary
judgment on Appellants’ breach of contract, antitrust, and interference with prospective business
relations claims. We remand this cause to the trial court for further proceedings consistent with
this opinion.
BACKGROUND
Appellants worked as loan officers for Excellence during 2010. In September 2010,
Excellence’s owners began restructuring the company. The restructuring included discussions
with Georgetown Mortgage, LLC and, ultimately, the creation of a new entity, MG Mortgage.
During the last week of September 2010, Excellence’s loan officers were trained by a
corporate trainer from Georgetown. The loan officers were asked to sign employment applications
for Georgetown. The Brooks Appellants contend the terms of their possible employment at
Georgetown were much less favorable than the terms under which they were employed at
Excellence. The Brooks Appellants each decided not to accept employment at Georgetown.
A. Appellants Leave Excellence
Appellant Johanna Barton was terminated from her employment with Excellence not later
than September 28, 2010. On October 1, 2010, the Brooks Appellants each tendered signed letters
of resignation to Excellence. By October 4, 2010, Appellants had accepted employment as loan
officers at Premier Nationwide Lending. When Appellants left their employment with Excellence,
a “pipeline” of ninety-one interim and permanent residential mortgage loan transactions, in varying
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stages of development, had not yet been finalized. None of the ninety-one loans about which
Appellants complain closed and funded on or before October 1, 2010.
Appellants notified at least some of the Excellence pipeline loan customers, with whom
they had been working, of their move to Premier. Appellants contend that each pipeline customer
chose to transfer their files from Excellence to Premier so the customer could work with the same
loan officers to complete their transactions. Some pipeline customers asked in writing for their
files to be transferred to Premier.
B. Procedural Background
On October 7, 2010, Excellence filed suit for a temporary restraining order, injunction, and
damages against Premier and each appellant. The trial court granted a temporary restraining order
enjoining Appellants and Premier from, among other things, using Excellence’s allegedly
confidential information to contact any of Excellence’s customers served by Appellants while
employed by Excellence. Shortly thereafter, Excellence settled its claims against Premier.
Premier returned the transferred pipeline loan files and agreed not to accept further transfers from
Excellence. Appellants assert Appellees’ actions prevented them from earning commissions on
the pipeline loans and they suffered severe financial losses.
In March 2011, Appellants filed a counterclaim 2 against Excellence asserting various
causes including breach of contract, unlawful restraint of trade, and interference with prospective
business relations. Excellence moved for traditional and no-evidence summary judgment against
Appellants’ breach of contract, interference, and antitrust claims, and Robin Morton’s 3 unjust
enrichment claim. The trial court granted a motion to consolidate Appellants’ separate suit against
2
In their first amended counterclaim, Appellants added LADTD-1, LLC; Grothues Financial, Ltd.; Grothues Brothers
Management I, LLC; and Georgetown Mortgage, LLC as defendants.
3
Robin C. Morton was the former president of, and mortgage broker for, Excellence Mortgage Ltd.
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LADTD-1, LLC, Grothues Financial, Ltd., and Grothues Brothers Management I, LLC into the
suit underlying this appeal. Thereafter, Georgetown Mortgage, L.L.C., LADTD-1, LLC, Grothues
Financial, Ltd., and Grothues Brothers Management I, LLC filed answers and counterclaims
against Appellants. Appellees moved for traditional and no-evidence summary judgment against
Appellants’ claims. Appellants filed a response and moved for traditional and no-evidence partial
summary judgment against Appellees’ claims.
After a hearing, on July 18, 2012, 4 the trial court granted summary judgment for Appellees
against Appellants’ claims of (1) breach of contract for loans closed and funded after October 1,
2010, (2) antitrust, and (3) interference with prospective business relations claims. It denied
Appellees’ motion against Morton’s unjust enrichment claim and each point in Appellants’
traditional and no-evidence summary judgment motions. Thereafter, the trial court severed all the
issues disposed of by its July 18, 2012 order into the suit underlying this appeal.
SCOPE OF REVIEW
The first issue we address is whether this court may review the denial of Appellants’
motions for summary judgment.
Appellants argue that because both sides moved for summary judgment, this court “should
review both sides’ summary judgment evidence and determine all questions presented.” FM
Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000) (reviewing a final
judgment based on competing motions for summary judgment). Appellees argue that the only
issues in this appeal are those disposed of by the trial court’s July 18, 2012 order. On this question,
we agree with Appellees.
4
In a Rule 11 agreement, the parties agreed the trial court would consider only Excellence’s traditional motion; it
would not consider Excellence’s no-evidence motion.
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A. Summary Judgment Order
In its July 18, 2012 order, the trial court ruled on Appellees’ traditional motion and
Appellants’ traditional and no-evidence motions.
1. Appellees’ Traditional Motion
As counter-defendants, Appellees moved for traditional summary judgment against
Appellants’ claims for (1) breach of contract for loans closed and funded after October 1, 2010,
(2) antitrust violations, and (3) interference with prospective business relations, and against
Morton’s claim for unjust enrichment.
2. Appellants’ Traditional, No-Evidence Motions
As defendants, Appellants moved for traditional and no-evidence summary judgment on
Appellees’ claims of (1) breach of fiduciary duty, (2) breach of contract as to “confidential
information,” (3) tortious interference with prospective contractual relations, (4) misappropriation
of trade secrets, (5) breach of settlement agreement, (6) fraud by nondisclosure (credit card use),
and (7) breach of fiduciary duty (credit card use).
3. Trial Court’s Decisions
The trial court granted Appellees’ motion against Appellants’ claims but denied Appellees’
motion against Morton’s claim. It denied Appellants’ motions against each of Appellees’ claims.
B. Severance Order
After the trial court ruled on the summary judgment motions, Appellants moved to “sever
the claims dismissed by the [July 18, 2012] Order” so they could seek appellate review. The trial
court granted the motion. In its order, the trial court severed “all the issues disposed of” by its July
18, 2012 order “so as to allow the summary judgment to become final and appealable.”
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C. Severed Issues
In its express language, the order severed only “the issues disposed of by the [July 18, 2012
Summary Judgment] Order.” The summary judgment order granted Appellees’ motion against
Appellants’ breach of contract, antitrust, and interference with prospective business relations
claims. By definition, the trial court adjudicated those claims as a matter of law—and disposed of
them. See TEX. R. CIV. P. 166a(c); Lehmann v. Har-Con Corp., 39 S.W.3d 191, 205 (Tex. 2001).
On the other hand, when it denied (1) Appellees’ motion for summary judgment on
Morton’s claim and (2) Appellants’ motions for summary judgment against Appellees’ seven
claims, the trial court did not adjudicate the merits of those claims; it merely denied any immediate
disposition of those claims based on the parties’ then-pending motions. See Lehmann, 39 S.W.3d
at 205 (“An order that adjudicates only the plaintiff’s claims against the defendant does not
adjudicate a counterclaim, cross-claim, or third party claim, nor does an order adjudicating claims
like the latter dispose of the plaintiff’s claims.”). Thus, Morton’s unjust enrichment claim against
Appellees and Appellees’ seven claims against Appellants were not disposed of by the July 18,
2012 order. See id.
D. Issues to Review
Because they were disposed of by the summary judgment order, Appellants’ breach of
contract, antitrust, and interference with prospective business relations claims were severed into
the underlying cause in this appeal. Morton’s unjust enrichment claim against Appellees and
Appellees’ seven claims against Appellants were not severed into the underlying cause. They
remain in cause number 2010-CI-16915, and they are not before us. Thus, we may not review the
trial court’s denial of Appellants’ traditional and no-evidence motions for summary judgment.
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STANDARD OF REVIEW—TRADITIONAL MOTION
To prevail on a traditional motion for summary judgment, the movant must show “there is
no genuine issue as to any material fact and the [movant] is entitled to judgment as a matter of
law.” TEX. R. CIV. P. 166a(c); accord Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.
1985). A defendant movant may make that showing by conclusively disproving at least one
essential element of the plaintiff’s claim. Elliott–Williams Co. v. Diaz, 9 S.W.3d 801, 803 (Tex.
1999); Doe v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 476–77 (Tex. 1995).
To determine whether the defendant movant met its burden, we examine “the evidence
presented in the motion and response in the light most favorable to the party against whom the
summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors
could, and disregarding contrary evidence unless reasonable jurors could not.” Mann Frankfort
Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009) (citing City of Keller v.
Wilson, 168 S.W.3d 802, 827 (Tex. 2005)). “We indulge every reasonable inference and resolve
any doubts in the nonmovant’s favor.” Rhȏne-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.
1999); accord Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007) (per
curiam).
If the evidence shows there are genuine issues of material fact on each essential element
the movant asserts it has conclusively disproved, the motion must be denied. See Elliott–Williams,
9 S.W.3d at 803; Doe, 907 S.W.2d at 476–77.
APPELLEES’ TRADITIONAL MOTION
In their traditional summary judgment motion, Appellees moved for summary judgment
against Appellants’ claims for breach of contract for loans closed and funded after October 1, 2010,
anti-trust violations, tortious interference with prospective business relations, and Morton’s claim
of unjust enrichment. We begin our analysis with the breach of contract claims.
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E. Brooks Appellants’ Breach of Contract Claims against Appellees
The trial court granted Appellees’ traditional motion for summary judgment against the
Brooks Appellants’ breach of contract claims for commissions earned on the pipeline loans—those
loans that closed and funded after October 1, 2010. The trial court did not grant summary judgment
on the Brooks Appellants’ breach of contract claims for loans closed and funded on or before
October 1, 2010; those claims are not before us. On the Brooks Appellants’ breach of contract
claims that are before us, the parties disagree on the voluntariness of the Brooks Appellants’
terminations, the effective dates of their terminations, and what compensation, if any, Appellees
owe the Brooks Appellants.
1. Arguments of the Parties
Each of the Brooks Appellants concedes they submitted a letter of resignation effective
October 1, 2010. They insist that it was not until after their resignations were submitted that they
came to understand Excellence had ceased operations on September 22, 2010—nine days before
their resignations otherwise became effective. The Brooks Appellants argue that when Excellence
ceased operations, their employment with Excellence was involuntarily terminated. They argue
their resignation letters had no effect because they could not have resigned from a company that
did not exist. They also asserted they were “forced out of employment by [the] sudden radical
reduction in their benefits and overall compensation.” Thus, they contend, Excellence breached
their employment contracts by failing to pay commissions they earned, including those associated
with approximately ninety-one pipeline loans.
Excellence counters it did not breach the employment agreements because the Brooks
Appellants were not entitled to commissions on loans that closed and funded on or after the date
they resigned. Excellence asserts the Brooks Appellants were paid for employment through
September 30, 2010, and they were properly compensated in accordance with the company’s
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Production Personnel Compensation Plan. Excellence contends the Brooks Appellants voluntarily
terminated or resigned and were therefore bound by the compensation provisions for voluntary
termination. Appellees moved for summary judgment on the Brooks Appellants’ breach of
contract claims.
2. Summary Judgment Evidence
In their traditional motion for summary judgment, Appellees proffered the following
summary judgment evidence.
a. Kevin Sullivan Deposition
In his deposition, Sullivan testified that for the period in question, he was the Chief
Financial Officer of Excellence Mortgage. Excellence compensated its loan officers in accordance
with the Production Personnel Compensation Plan. The Plan applied to all of its loan officers
including each of the Brooks Appellants.
b. Letters of Resignation
The Brooks Appellants submitted letters of resignation dated October 1, 2010. In their
virtually identical letters, each asked to be paid their “commissions due for August and September
2010 closed loan files” “per my executed compensation plan with Excellence Mortgage.”
c. Employment Contract Documents
Excellence proffered copies of Employment Agreements for Robin C. Morton, Heston C.
King, Barry A. Brooks, and Stefen Brooks; Confidentiality Agreements for January M. Goette and
Johanna Barton; and a Production Personnel Compensation Plan for Heston King.
3. Brooks Appellants’ Breach of Contract Claims
We begin our review by determining whether Appellees met their burden to conclusively
disprove any essential element of the Brooks Appellants’ breach of contract claims. See Elliott-
Williams, 9 S.W.3d at 803.
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a. Elements of Breach of Contract
The elements of a breach of contract claim are “‘(1) a valid contract; (2) the plaintiff
performed or tendered performance; (3) the defendant breached the contract; and (4) the plaintiff
was damaged as a result of the breach.’” McLaughlin, Inc. v. Northstar Drilling Techs., Inc., 138
S.W.3d 24, 27 (Tex. App.—San Antonio 2004, no pet.) (quoting Richter v. Wagner Oil Co., 90
S.W.3d 890, 898 (Tex. App.—San Antonio 2002, no pet.)). Appellees moved for summary
judgment asserting the Plan is a valid contract which defines its obligations to the Brooks
Appellants, and it did not breach the Plan.
We turn to the applicability and provisions of the Plan.
b. Production Personnel Compensation Plan Applies to Loan Officers
The summary judgment evidence contains a Plan signed by Heston King; no other Plans
were submitted. In the Brooks Appellants’ letters of resignation, each asked for payment in
accordance with “my executed compensation plan with Excellence Mortgage, Ltd.” Consistent
with the letters of resignation, Sullivan’s affidavit states that all the loan officers signed a
Production Personnel Compensation Plan with the same terms as those in Heston King’s plan.
Sullivan’s statement was uncontroverted, “clear, positive and direct, otherwise credible and
free from contradictions and inconsistencies, and could have been readily controverted.” See TEX.
R. CIV. P. 166a(c); Casso v. Brand, 776 S.W.2d 551, 558 (Tex. 1989); Trico Techs. Corp. v.
Montiel, 949 S.W.2d 308, 310 (Tex. 1997).
Therefore, we conclude that each Brooks Appellant signed a Plan with the same terms as
shown in Heston King’s Plan, and the Plan’s provisions apply to each of the Brooks Appellants.
c. Loan Officers were Involuntarily Terminated
In their affidavits, the Brooks Appellants state they were involuntarily terminated because
(1) Excellence ceased operations sometime before October 1, 2010, and thus their letters of
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resignation were ineffective as a matter of law, and (2) their benefits and compensation were
radically reduced. In Stefen D. Brooks’s affidavit, he stated the Georgetown employment
agreements the loan officers were told to sign “were blank as to the commissions to be paid.” He
also added the following:
In response to our repeated questions about compensation, we were told by Roy
Jones, president of Georgetown, and Kevin Sullivan, CFO of all the Grothues
companies, that we would no longer have a draw available against pending
commissions; we would no longer have a 401(k); we would no longer be provided
a company credit card for expense account; and they needed more time to determine
what our commissions would be. Additionally, the health insurance offered would
cost much more than the Excellence plan; and we would be required to use our
personal credit cards for company expenses.
Although Kevin Sullivan stated that the Brooks Appellants resigned voluntarily, under the
applicable standard of review, we take as true the Brooks Appellants’ affidavits and conclude they
raised a genuine issue of material fact on whether they were involuntarily terminated. See TEX. R.
CIV. P. 166a(c); Nixon, 690 S.W.2d at 548–49.
We next examine the Plan to determine which of its provisions apply to the Brooks
Appellants’ terminations.
d. Production Personnel Compensation Plan
Plan Section VII, Termination of Employment, addresses a loan officer’s termination.
(1) Voluntary Terminations
Section VII.A. provides terms applicable “[i]n the event of voluntary termination.” For
voluntary terminations, the Plan requires Excellence to pay commissions the loan officer earned
“on any loan closed and funded (as provided above in Section IV) up to and including the effective
date of termination.” The Plan also states the “Production Manager has the discretion to pay all,
or a portion of, the commissions on loans that close and fund after the effective date of the Loan
Officer’s termination.”
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(2) Terminations for Cause
Section VII.B. provides terms applicable “[i]n the event a Loan Officer is terminated by
the Company for cause.” In such a case, the Plan states “[n]o further commissions will be paid to
the Loan Officer.”
(3) Involuntary Terminations by Excellence
Section VII states compensation terms for voluntary terminations and terminations for
cause. But the Brooks Appellants assert, and we agree, the Plan is silent on what terms apply if a
loan officer’s at-will employment is involuntarily terminated by Excellence “for any reason or no
reason at all,” including for Excellence’s convenience. 5 See City of Midland v. O’Bryant, 18
S.W.3d 209, 216 (Tex. 2000) (addressing at-will employment doctrine).
e. Appellees Failed to Conclusively Disprove Breach
Appellees moved for traditional summary judgment against the Brooks Appellants’ breach
of contract claims on the ground that their employment was voluntarily terminated on or before
October 1, 2010, and under the Plan terms, Excellence did not owe the Brooks Appellants any
commissions for loans closed and funded after October 1, 2010.
But Appellees did not conclusively establish that the Plan’s voluntary termination
provision applies to the Brooks Appellants. Therefore, Appellees failed to conclusively prove they
do not owe the Brooks Appellants any compensation for loans closed and funded after October 1,
2010. Because Appellees failed to conclusively disprove the essential element of breach, they
were not entitled to judgment as a matter of law against the Brooks Appellants’ breach of contract
5
We use the term convenience as a substitute for “any reason or no reason at all,” see O’Bryant, 18 S.W.3d at 216
(addressing at-will employment doctrine), and to distinguish an involuntary termination for Excellence’s convenience
from an involuntary termination for cause.
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claims for commissions on loans closed and funded after October 1, 2010. See TEX. R. CIV. P.
166a(c); Elliott-Williams, 9 S.W.3d at 803; Doe, 907 S.W.2d at 476–77.
F. Johanna Barton’s Breach of Contract Claim against Appellees
Unlike the Brooks Appellants, Johanna Barton did not submit a letter of resignation. But
like the Brooks Appellants, Barton also sued Appellees for, inter alia, breach of contract. 6 She
alleged Excellence failed to pay her commissions she earned on loans closed and funded before,
on, and after the effective date of her termination. The trial court granted summary judgment
against Barton’s breach of contract claim for commissions earned on loans closed and funded after
October 1, 2010. 7
In Sullivan’s affidavit, he avers Barton was terminated on September 28, 2010. Under the
Plan, if a loan officer is terminated for cause, she is not entitled to any further commissions. But
Sullivan’s affidavit does not say Barton was terminated for cause, and Sullivan’s deposition
comment that Barton’s termination was related to her attitude does not conclusively prove she was
terminated for cause. The Plan is silent on what compensation Excellence would owe Barton if
Excellence involuntarily terminated her employment for Excellence’s convenience.
Making all reasonable inferences and resolving doubts in Barton’s favor, see Nixon, 690
S.W.2d at 548–49, we conclude Appellees did not conclusively disprove that Barton was entitled
to any further commissions, Elliott-Williams, 9 S.W.3d at 803. Thus, Appellees failed to
conclusively disprove the element they challenged—that they breached the Production Personnel
Compensation Plan—and they were not entitled to judgment as a matter of law against Barton’s
6
Barton’s interference and antitrust claims are addressed with the other appellants’ similar claims.
7
The trial court did not grant summary judgment on Barton’s claim for loans closed and funded on or before October
1, 2010, and that claim is not before us.
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breach of contract claim for commissions on loans closed and funded after October 1, 2010. See
TEX. R. CIV. P. 166a(c); Elliott-Williams, 9 S.W.3d at 803; Doe, 907 S.W.2d at 476–77.
G. Appellants’ Antitrust Claims against Appellees
After Excellence sought an injunction to prevent Appellants from contacting pipeline loan
customers, Appellants countersued Excellence. In their third amended original counterclaim,
Appellants claimed that Appellees engaged in a “contract, combination, or conspiracy in restraint
of trade as prohibited by [section] 15.05.” See TEX. BUS. & COM. CODE ANN. § 15.05 (West 2011).
Specifically, Appellants alleged Appellees used “knowingly false allegations made under oath” in
its lawsuit against them and used the lawsuit “as a justification for their unlawful refusal to transfer
the [pipeline] loans as requested by the prospective borrowers.” Appellees moved for summary
judgment against Appellants’ antitrust claims on the basis that, as a matter of law, the employee
nondisclosure and confidentiality provisions in Appellants’ employment and confidentiality
agreements were not non-compete covenants and could not unlawfully restrain trade. The trial
court granted Appellees’ motion against Appellants’ antitrust claims.
1. Summary Judgment Burdens
To be entitled to summary judgment, Appellees had to conclusively disprove at least one
essential element of Appellants’ claims. See Elliott-Williams, 9 S.W.3d at 803; see also G & H
Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011) (per curiam). Appellees had to show
there were no genuine issues of material fact and they were entitled to judgment as a matter of law.
See TEX. R. CIV. P. 166a(c); Elliott-Williams, 9 S.W.3d at 803. Appellees were not entitled to
judgment against Appellants’ antitrust claims if, for each essential element Appellees asserted they
conclusively disproved, the summary judgment evidence shows a genuine issue of material fact
exists. See Elliott-Williams, 9 S.W.3d at 803.
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2. Summary Judgment Evidence Requirements
Appellants provided summary judgment evidence in their own motion and in response to
Appellees’ motion for summary judgment. We review all the summary judgment evidence “in the
light most favorable to the party against whom the summary judgment was rendered.” See Mann
Frankfort, 289 S.W.3d at 848 (citing Comm’rs Court of Titus Cnty. v. Agan, 940 S.W.2d 77, 81
(Tex. 1997)); see also Gilbert Tex. Const., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d
118, 124 (Tex. 2010).
Appellants’ evidence included affidavits showing Appellees’ actions caused an adverse
effect on competition. Although Appellants are interested witnesses, their affidavits—when
examined to determine whether they raise a fact issue sufficient to defeat Appellees’ traditional
motion—are not required to be “clear, positive and direct, otherwise credible and free from
contradictions and inconsistencies.” See TEX. R. CIV. P. 166a(c); Fieldtech Avionics &
Instruments, Inc. v. Component Control.Com, Inc., 262 S.W.3d 813, 827 (Tex. App.—Fort Worth
2008, no pet.); TIMOTHY PATTON, SUMMARY JUDGMENTS IN TEXAS: PRACTICE, PROCEDURE AND
REVIEW § 6.03[9][a] (3d ed. 2015).
In reviewing Appellants’ affidavits, unless an affiant’s statement is entirely conclusory, see
Wadewitz v. Montgomery, 951 S.W.2d 464, 466 (Tex. 1997), we take the statement as true, and
resolve all doubts and make every reasonable inference in the nonmovant’s favor, Nixon, 690
S.W.2d at 548–49.
Before we examine the evidence, we review the elements of an antitrust claim.
3. Texas Antitrust Act
The Texas Free Enterprise and Antitrust Act of 1983 prohibits “[e]very contract,
combination, or conspiracy in restraint of trade or commerce.” TEX. BUS. & COM. CODE ANN.
§ 15.05(a); DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 686 (Tex. 1990); see TEX. BUS. &
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COM. CODE ANN. § 15.01 (Title of Act). “To establish that a defendant contracted, combined, or
conspired in restraint of trade in violation of section 15.05(a), a plaintiff must show that the alleged
contract, combination, or conspiracy is unreasonable and has an adverse effect on competition in
the relevant market.” Marlin v. Robertson, 307 S.W.3d 418, 427 (Tex. App.—San Antonio 2009,
no pet.).
4. Evidence of an Antitrust Violation
Appellants’ summary judgment evidence of Appellees’ alleged antitrust violations
includes affidavits from Robin C. Morton, John H.P. Hudson, and Stefen D. Brooks. To determine
whether Appellees conclusively disproved any essential element of Appellants’ antitrust claims,
we review the summary judgment evidence for each essential element. See Elliott-Williams, 9
S.W.3d at 803; see also G & H Towing Co., 347 S.W.3d at 297.
a. Unreasonable Practice
The first element is an unreasonable practice. Marlin, 307 S.W.3d at 427. To evaluate
reasonableness, courts divide practices into two categories; the first category is those that are
illegal per se. Id. (citing Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 692 (1978)).
The second category comprises those “whose competitive effect can only be evaluated by
analyzing the facts peculiar to the business, the history of the restraint, and the reasons for its
imposition.” Id. To this second category, “courts apply the ‘rule of reason’ under which the fact-
finder weighs all the circumstances of a case in deciding whether a restrictive practice should be
prohibited as imposing an unreasonable restraint on competition.” Id. (citing Cont’l T. V., Inc. v.
GTE Sylvania Inc., 433 U.S. 36, 49 (1977)).
(1) Robin Morton’s Affidavit
Appellant Robin C. Morton was the former president and mortgage broker of Excellence.
In her affidavit, she stated the following. As Excellence’s president, she oversaw all facets of
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Excellence’s operations for approximately nine years. She was responsible to ensure “that all
loans were property and legally handled as per state and federal regulations.” She noted a loan
customer may ask the originating mortgage company to transfer their loan file to another mortgage
company, and the transferring company is legally obligated to transfer the file. Until the
transferring company receives the customer’s signed request, it may not “share, release or disclose
the information contained in a loan file in any way with the transferee mortgage company.” She
insisted Georgetown acquired the pipeline loan customer files from Excellence “without any type
of transfer letter.” When Excellence turned over the pipeline loan customer files to Georgetown,
“Georgetown immediately filed an assumed name certificate and continued to do business under
the name of Excellence Mortgage so as to represent to pipeline customers that their mortgage
company had not changed.” The pipeline loan customers, and others, “were intentionally misled
to believe that they were still working with the same originating mortgage company, Excellence
Mortgage, [Ltd.]” Excellence “falsely claimed [it] had the sole right to serve the pipeline
customers,” and it unlawfully compelled Premier to not accept any loan transfers for pipeline
customers. By their actions to prevent Appellants from competing with Georgetown for the
pipeline loan customers, Appellees had an adverse effect on the construction-to-permanent loan
market in the greater San Antonio area.
(2) John H.P. Hudson’s Affidavit
In John H.P. Hudson’s affidavit, he stated the following. He is the Area Manager with
Premier Nationwide Lending, and he has over ten-years’ experience in the mortgage business. A
prospective borrower is not obligated to remain with the original mortgage company. The
customer may transfer their file at any time, but the transferring mortgage company may not
transfer the file without the prospective borrower’s written request.
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(3) Stefen D. Brooks’s Affidavit
In Stefen D. Brooks’s affidavit, he stated the following. Georgetown transferred all the
pipeline loan customer files from Excellence “to its own computer system without obtaining a file
transfer request from any of the loan customers.” Excellence and Georgetown’s attorneys sent
letters to Appellants “telling us we could not serve [the pipeline] customers” to prevent Appellants
from servicing the loans.
(4) Kevin Sullivan’s Affidavit, Deposition
In Kevin Sullivan’s deposition and affidavit, he stated that Appellants had violated the
nondisclosure and confidentiality provisions of their employment agreements by taking and using
Excellence’s confidential information to solicit pipeline customers. Excellence provided copies
of an Employment Agreement and Confidentiality Agreement, and Sullivan stated each Appellant
signed these documents.
(5) Appellees Failed to Meet Their Burden
Considering all the summary judgment evidence, see Mann Frankfort, 289 S.W.3d at 848,
and taking as true the evidence favorable to Appellants, see Nixon, 690 S.W.2dd at 548–49, we
conclude there is some evidence that Excellence transferred files to Georgetown without first
obtaining the pipeline loan customers’ written requests, such transfers are prohibited under state
or federal regulations, Georgetown and Excellence worked together to effect the transfers, and
Appellees sought to prevent Appellants from competing for the pipeline loan customers. Thus,
the summary judgment evidence raises a genuine issue of material fact on whether the complained
of actions amount to an unreasonable practice. See Marlin, 307 S.W.3d at 427. Although
Appellees argued and proffered summary judgment evidence that Excellence was merely
protecting its confidential information under valid nondisclosure and confidentiality agreements,
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we conclude Appellees failed to conclusively disprove the essential element of unreasonable
practice. See id.
b. Adverse Effect on Competition in the Market
“To establish a violation under the rule of reason, a plaintiff must prove the restrictive
practice has an adverse effect on competition in the relevant market.” Id. at 429. The plaintiff
must “prove what market it contends was restrained,” prove “that the defendants played a
significant role in the relevant market,” and proffer “evidence of ‘demonstrable economic effect.’”
Id.
(1) Market Restrained, Defendant’s Role
In Morton’s affidavit, she identified the restrained market as the construction-to-permanent
loan market in the greater San Antonio area, and she stated Excellence had about fifty percent of
that market. In Hudson’s affidavit, he similarly described Excellence’s niche market as arranging
interim and permanent financing for new home builders. He stated that Excellence had a
“substantial share” of this niche market in the Bexar County area.
(2) Evidence of Demonstrable Economic Effect
Morton and Hudson stated that Excellence’s actions had an adverse effect on Excellence’s
portion of the residential mortgage market in the San Antonio area. Both affiants had many years’
experience as senior officers for mortgage companies operating in the greater San Antonio area.
Morton identified “loan products offerings, interest rate options, [and] closing cost packages” as
items affected by competition. Accepting as true all the evidence favoring Appellants, we may
reasonably infer that Appellees’ actions to prevent competition for pipeline loan customers in the
greater San Antonio area would result in a demonstrable economic effect. Although “an inference
of possible effect” is not enough to establish a violation, Coca-Cola Co., 218 S.W.3d at 689, a
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reasonable inference of demonstrable economic effect is sufficient to raise a fact issue, see
Humphrey v. Balli, 61 S.W.3d 519, 523 (Tex. App.—San Antonio 2001, no pet.).
c. Fact Issue Raised
Excellence argued and proffered evidence to attempt to conclusively disprove any
unreasonable practice on its part. See Elliott-Williams, 9 S.W.3d at 803 (conclusively disprove
element burden); see Marlin, 307 S.W.3d at 429 (antitrust elements). However, taking as true the
evidence favoring Appellants and making reasonable inferences in their favor, we conclude the
evidence raises a genuine issue of material fact on each element of the antitrust claims. See Nixon,
690 S.W.2d at 548–49. Thus, Appellees were not entitled to summary judgment on Appellants’
antitrust claims. See Elliott-Williams, 9 S.W.3d at 803; Nixon, 690 S.W.2d at 548–49.
H. Appellants’ Claims of Interference with Prospective Business Relations
Appellants also sued Appellees for tortious or unlawful interference with prospective
business relations.
1. Appellants’ Live Pleadings
In their third amended original counterclaim, Appellants claimed
[Appellees] have intentionally interfered with [the pipeline loan customer]
relationships by unlawful conduct, including the sending of threatening letters,
making false statements to prospective borrowers, and the filing of this groundless
injunction suit against [Appellants] . . . [and] misrepresented . . . to Premier and to
the prospective borrowers that the prospective borrowers legally could not do
business with Premier. Such intentional tortious conduct was relied on by the
prospective borrowers to their detriment.
2. Appellees’ Arguments
Appellees moved for summary judgment against Appellants’ tortious interference claims;
they argued Excellence’s “conduct of using the legal process to prevent the loan officers from
taking [the pipeline loan] customers is neither unlawful nor tortious.” Appellees argue the trial
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court properly granted their traditional motion for summary judgment against Appellants’ tortious
interference with prospective business relations claims.
3. Elements of Tortious Interference with Prospective Business Relations
A tortious or unlawful interference with prospective business relations claim has multiple
elements. Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013)
(listing five elements); Plotkin v. Joekel, 304 S.W.3d 455, 487 (Tex. App.—Houston [1st Dist.]
2009, pet. denied) (same). One of the essential elements is that “the defendant’s conduct was
independently tortious or unlawful.” Coinmach Corp., 417 S.W.3d at 923; accord Plotkin, 304
S.W.3d at 487; see also Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001). A
defendant’s conduct may comprise tortious interference if the defendant makes fraudulent
statements about a plaintiff to a third person to affect a prospective business relationship. See
Sturges, 52 S.W.3d at 726.
4. Pleadings Raise Underlying Tort of Fraud
Appellants’ pleadings allege Appellees committed tortious or unlawful interference with
prospective business relations. To support their claim of underlying independently tortious or
unlawful conduct, Appellants alleged, inter alia, (1) Appellees’ injunction lawsuit was groundless
and brought in bad faith, and (2) Appellees intentionally made false statements to pipeline loan
customers, misrepresented to Premier and the pipeline loan customers that the pipeline loan
customers could not legally do business with Premier, and the pipeline loan customers relied on
Appellees’ false statements.
We construe pleadings liberally in favor of the pleader unless a party specially excepts to
the pleadings. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex. 2000). The
record does not show that Appellees specially excepted to Appellants’ pleadings regarding their
interference claims. See id. Thus, Appellants’ pleadings gave Appellees fair notice of the
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underlying tort of fraud. See TEX. R. CIV. P. 47(a) (fair notice pleadings); Italian Cowboy Partners,
Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011) (elements of fraud);
Horizon/CMS Healthcare, 34 S.W.3d at 896–97 (fair notice, construe pleadings liberally).
5. Appellees Failed to Meet Their Burden
In their motion for summary judgment, Appellees argued that Excellence’s injunction
lawsuit allegedly enforcing its rights was—as a matter of law—“neither unlawful nor tortious.” 8
But Appellees’ summary judgment burden was to conclusively disprove any underlying tort or
unlawful conduct raised by Appellants’ pleadings. See Elliott-Williams, 9 S.W.3d at 803.
Appellees argued Excellence’s injunction lawsuit could not be the underlying tort or unlawful
conduct, but it did not address the alleged fraud or provide evidence to conclusively disprove fraud.
Having reviewed the evidence under the appropriate standard, we conclude the summary judgment
evidence does not conclusively disprove fraud. See id.
Because Appellees did not meet their burden to conclusively disprove the essential element
on which they moved for summary judgment, summary judgment on Appellants’ tortious
interference with prospective business relations claims was not proper. See id.
CONCLUSION
When the trial court granted Appellees’ traditional motion for summary judgment against
Appellants’ breach of contract, antitrust, and interference with prospective business relations
claims, the trial court disposed of those issues. When the trial court severed the issues disposed of
by its summary judgment order, only Appellants’ three claims were severed, and we review only
those issues.
8
Because Excellence failed to address Appellants’ claim of fraud as the underlying tort in the tortious interference
claim, we do not reach the question of whether Excellence’s injunction lawsuit was groundless or brought in bad faith.
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Because Appellees failed to conclusively disprove any essential element of Appellants’
claims, they were not entitled to judgment, and the trial court erred by granting Appellees’ motion
on those issues. Accordingly, we reverse the trial court’s order granting Appellees’ motion for
summary judgment on Appellants’ breach of contract, antitrust, and interference with prospective
business relations claims, and we remand this cause to the trial court for further proceedings
consistent with this opinion.
Patricia O. Alvarez, Justice
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