Ameripath, Inc. and DFW 5.01(a) Corporation v. Steven Hebert M.D.

AFFIRM in Part, and REVERSE and REMAND; Opinion Filed August 5, 2014.

S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-12-00321-CV

AMERIPATH, INC. AND DFW 5.01(A) CORPORATION, Appellants
V.
STEVEN HEBERT, Appellee

On Appeal from the 199th Judicial District Court
Collin County, Texas
Trial Court Cause No. 199-03680-2009

OPINION
Before Justices Bridges, Fillmore, and Lewis
Opinion by Justice Lewis
AmeriPath, Inc. (“AmeriPath”) and DFW 5.01(a) Corporation (“DFW”) appeal the trial

court’s judgment, which finalized a series of summary judgments and separate legal rulings, and

which awarded attorney’s fees to appellee Steven Hebert. In four issues, appellants contend the

trial court erred by (1) denying their motion to confirm an arbitration award, (2) granting

summary judgment on appellants’ contract counterclaims against Hebert, (3) granting summary

judgment on appellants’ tort counterclaims against Hebert, and (4) granting Hebert attorney’s

fees. We affirm the trial court’s judgment in part, and we reverse and remand the remainder of

the case for further proceedings consistent with this opinion.
 I.
BACKGROUND

Hebert is a pathologist. He began his employment relationship with appellants in

September 1998, when he contracted with DFW—a Texas nonprofit corporation that is wholly

owned by AmeriPath—to provide professional services on its behalf (the “1998 Agreement”). In

September 2002, Hebert and DFW amended the 1998 Agreement; the new contract was titled

Amendment to Employment Agreement (the “First Amendment”). The First Amendment

contained a recital that made specific reference to the 1998 Agreement and said the parties

wished to amend their agreement. In February 2005, Hebert signed a third contract, this one

titled Second Amendment to Employment Agreement (the “Second Amendment”), which again

contained recitals, this time referring specifically to both the 1998 Agreement and the First

Amendment. And finally, Hebert signed a fourth contract, titled simply Employment

Agreement, in January 2008 (the “2008 Agreement”), which contained recitals referring to the

1998 Agreement, the First Amendment, and the Second Amendment. In each of the four

agreements, Hebert was defined as the “Employee,” his employer was defined as the

“Company,” and the Company was consistently defined as “a Texas not for profit corporation

certified to practice medicine by the Texas Board of Medicine pursuant to Section 5.01(a) of the

Texas Medical Practices Act.” However, in the 1988 Agreement and the First Amendment, the

not for profit company is “DFW 5.01(a) Corporation,” and in the Second Amendment and the

2008 Agreement, the not for profit company is called “AmeriPath DFW 5.01(a) Corporation”

(“ADFW”). The record indicates neither party realized this name change had occurred until well

into the litigation at hand, but the change has shaped the litigation from the point of realization

forward.

During the period of his employment, Hebert became a director and an officer of DFW.

The record indicates that Hebert was appointed Vice President of nine Texas non-profit
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corporations, including DFW. 1 Hebert’s appointment was made in a 2004 joint resolution

approved by the three members of the AmeriPath Board of Directors—one of whom was

Hebert—and the “Sole Member,” AmeriPath. 2 In 2008, Hebert became the Managing Director

of DFW.

All of Hebert’s employment agreements contained covenants not to compete. The

covenant in the 2008 Agreement became relevant when—in 2009—Hebert resigned and went to

work for a competitor, ProPath Associates (“ProPath”). His move was facilitated by a contract

he signed in 2008 with an AmeriPath client, Columbia Medical Center of McKinney (the

“Hospital”), on behalf of DFW (the “Hospital PSA”). The Hospital PSA contained a key-man

provision, which essentially provided that if Hebert was no longer employed by DFW, then his

agreement not to compete was waived as to the Hospital. Thus, when Hebert resigned, the client

Hospital followed him to ProPath, and Hebert took the position he was not violating his 2008

Agreement. The parties have starkly different views of how the Hospital PSA was negotiated

and signed. It is undisputed that a second, different agreement was being negotiated at the same

time between AmeriPath and HCA, Inc., the Hospital’s parent company. This new agreement

would have governed DFW’s relationship with the Hospital. While both forms of the agreement

contained a key-man provision, the form Hebert signed was much more favorable to him if he

were to leave his employment as he did in 2009. Hebert contends he thought he was signing the

form of agreement AmeriPath had negotiated; AmeriPath contends Hebert negotiated his own

deal with the Hospital and signed that form of the agreement without authority from AmeriPath.

1
The other corporations for whom Hebert served as Vice President were Arlington Pathology Association 5.01(a) Corporation, AmeriPath
Lubbock 5.01(a) Corporation, NAPA 5.01(a) Corporation, AmeriPath PAT 5.01(a) Corporation, AmeriPath Severance 5.01(a) Corporation,
AmeriPath San Antonio 5.01(a) Corporation, Simpson Pathology 5.01(a) Corporation, and TXAR 5.01(a) Corporation.
2
It is unclear in the record when Hebert became a director of these corporations, except that it was sometime before the 2004 resolution.

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 AmeriPath opposed Hebert’s employment with ProPath, relying on the covenant not to

compete in his 2008 Agreement (the “Noncompete”). That agreement contained a legislatively

mandated provision allowing Hebert to buy out the Noncompete. It provided:

The Employee is entitled to buy out of these Non-Competition and Non-
Solicitation provisions at a reasonable price as agreed to by the Employee and the
Company, or, at the option of either party, as determined by a mutually agreed
upon arbitrator, or, in the case of an inability to agree, an arbitrator of the court
whose decision shall be binding on all parties.

The parties attempted to reach agreement on a “reasonable price,” but they were unsuccessful.

In September 2009, Hebert sued ADFW (using the employer’s name on his 2008

Agreement), seeking an injunction preventing ADFW from interfering with his employment with

the Hospital and a declaration that his Noncompete with ADFW was unenforceable; Hebert also

pleaded a claim for tortious interference with his employment relationship with the Hospital.

DFW answered (under the name ADFW) and filed counterclaims against Hebert for breach of

contract, unfair competition, misappropriation of trade secrets, breach of fiduciary duty, harmful

acts by computer, civil conspiracy, and tortious interference. DFW also sought injunctive and

declaratory relief of its own. Soon thereafter, DFW joined ProPath in the suit and pleaded a

crossclaim against ProPath for tortious interference and civil conspiracy.

In October 2009, the parties informed the trial court they had come to an agreement to

arbitrate the Noncompete buyout amount in accordance with the 2008 Agreement. The arbitrator

determined the reasonable buyout price was $2,580,175. But Hebert did not follow through with

the buyout. Instead, he continued to argue the Noncompete was unenforceable. The parties

returned to the trial court, and litigation continued over their various claims.

On September 7, 2010, Hebert filed his Third Amended Petition, re-captioning the

lawsuit with two defendants: AmeriPath and DFW. Almost immediately, appellants asked the

trial court to confirm the arbitration award; Hebert opposed confirmation.

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 Hebert also filed a motion for partial summary judgment, seeking a declaration that he

was not bound by the Noncompete. The trial court granted the motion, concluding the

employment contract was invalid because the named contracting entity, ADFW, did not exist

(the “First Summary Judgment”). At the same time, the trial court vacated the arbitration award.

DFW filed an interlocutory appeal, seeking to have this Court overturn the order to vacate.

Early in the litigation, the parties had entered into an agreed temporary injunction to

prevent Hebert’s competing. After prevailing in the summary judgment and confirmation

proceedings, Hebert moved to modify the injunction to remove any prohibition against

competition or solicitation, and the trial court granted the motion. DFW also filed an

interlocutory appeal on this ground. 3

The trial court went on to grant summary judgment in Hebert’s favor on all of appellants’

counterclaims and crossclaims (the “Second Summary Judgment”), and to award Hebert

attorney’s fees. Hebert moved to have his own tort claims severed; the trial court granted the

motion and signed a final judgment. Appellants then filed their third appeal. We consolidated

the three appeals.

II.
WAIVER OF ALL APPELLATE ISSUES

At the outset, we address Hebert’s contention that appellants have waived their issues on

appeal by requesting that the trial court enter the judgment it did, without specifically noting

their disagreement as to the substance of the judgment proposed. 4 Hebert acknowledges that he

tendered his own proposed final judgment to the trial court. However, he argues, appellants

3
The trial court’s final judgment in this case has rendered the appeal of the temporary injunction moot. Isuani v. Manske-Sheffield
Radiology Group, P.A., 802 S.W.2d 235, 236 (Tex. 1991) (“If, while on the appeal of the granting or denying of the temporary injunction, the
trial court renders final judgment, the case on appeal becomes moot.”). Accordingly, all previous orders pertaining to the temporary injunction
are set aside. Id.
4
This is the first of many waiver arguments made by Hebert throughout his briefing. We address all of Hebert’s waiver arguments that are
properly briefed and require discussion. Any waiver arguments not specifically addressed in this opinion are decided against him.

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responded by sending a letter to the trial court that “rejected” Hebert’s proposed judgment and

tendered their own proposed judgment. Hebert argues that because appellants’ proposed

judgment did not include the language “approved as to form only” or “any similar specific

reservation of the right to appeal,” appellants have waived all issues on appeal. We disagree.

During the trial court’s hearing on Hebert’s request for attorney’s fees, Hebert made a

proposal to the trial court and appellants to finalize the portion of the litigation that had already

been decided. Hebert’s counsel set forth the proposal stating:

[W]e were moving for attorneys’ fees now in order to get the Court’s ruling on
attorneys’ fees for this reason: That if Your Honor grants the attorneys’ fees that
we’re requesting, if you sign the order that we’re going to submit to you later, we
will, the next day, file a motion to sever the three torts, remaining claims for trial
from the claims on which you’ve granted summary judgment and made a ruling
on the attorneys’ fees.

We will then -- and again, assuming Your Honor grants that motion, assuming
opposing counsel doesn’t oppose it, we will then move to -- for a final judgment,
that you enter a final judgment in the -- on the claims as to which you granted
summary judgment and on the attorneys’ fees. That will permit opposing counsel
to take the appeal and obtain review of the rulings that they’ve been very much
wanting to do to this point.

You know, at the same time, Your Honor, or immediately after that point, we
would agree to move to continue trial of the three tort claims, the ones that are
now severed in a new cause of action and a new cause number, and, essentially,
leave those three claims pending while AmeriPath takes its appeal of the
underlying rulings, which they, obviously, believe very confidently they’re going
to get reversed on appeal.

Counsel for appellants declined Hebert’s proposal on behalf of his clients, and the hearing on

attorney’s fees proceeded. The court did not rule from the bench. Hebert’s counsel sent a letter

to the trial court several days later, repeating his promise—if the attorney’s fees were awarded—

to move (a) to sever his remaining claims, and (b) to enter judgment. And approximately two

weeks later, the trial court signed an order awarding fees to Hebert.

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 Hebert circulated a proposed judgment based on the trial court’s ruling. 5 Appellants’

counsel explained in a letter to the trial court that he could not agree with Hebert on the form of

the judgment. Appellants made two requests of the trial court: to exclude any recitation of facts

in the judgment pursuant to rule 299a 6 and to rule on two pending motions to compel “in order to

include them in [appellants’] appeal if necessary.” The trial court subsequently signed

appellants’ proposed form of the judgment.

Hebert argues that appellants have waived all issues on appeal because the trial court

signed appellants’ form of judgment, and that judgment did not state it was “approved as to form

only” or specifically reserve its right to appeal. Hebert relies on a series of cases declaring that if

a party moves the trial court to enter a particular judgment, the party cannot later complain of

that judgment. See, e.g., D/FW Commercial Roofing Co., Inc. v. Mehra, 854 S.W.2d 182, 190

(Tex. App.—Dallas 1993, no writ) (party who files motion for judgment, inducing court to

render a certain judgment, cannot later complain of that judgment); see also Litton Indus.

Products, Inc. v. Gammage, 668 S.W.2d 319, 321-22 (Tex. 1984); Henry Bldg., Inc. v. Milam,

No. 05-99-01400-CV, 2001 WL 246882, at *2 (Tex. App.—Dallas Mar. 14, 2001, pet. denied).

In this case, however, it is apparent that Hebert—not appellants—induced the trial court to

reduce its interlocutory rulings to a final judgment by severing out the remaining claims.

Moreover, the form of judgment appellants proffered to the trial court did not constitute

an argument that appellants later abandoned for a contrary position. Appellants did not argue

one thing in the trial court and a different thing in this Court. Litton Indus. Prods., Inc., 668

S.W.2d at 321–22 (“By filing its motion that the trial court render judgment on the verdict for the

actual damages found by the jury, Litton could not, on appeal, take a position inconsistent with

5
Hebert’s counsel also circulated a motion to continue the trial date and to sever Hebert’s remaining tort claims against AmeriPath as well
as proposed orders on each of those matters. Appellants’ counsel approved those orders as to form.
6
The rule directs: “Findings of fact shall not be recited in a judgment.” TEX. R. CIV. P. 299a.

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that part of the judgment.”). Instead, appellants participated in the routine task of proposing a

judgment that is in accord with the trial court’s rulings in preparation for appeal. “There must be

a method by which a party who desires to initiate the appellate process may move the trial court

to render judgment without being bound by its terms.” First Nat’l Bank of Beeville v. Fojtik, 775

S.W.2d 632, 633 (Tex. 1989). When a party merely provides a draft judgment to conform to

what the court has indicated its judgment would be, there is no waiver of the appeal. Glattly v.

Air Starter Components, Inc., 332 S.W.3d 620, 636 (Tex. App.—Houston [1st Dist.] 2010, pet.

denied). In this case, Hebert made a proposal to appellants and the trial court that the existing

rulings be finalized through severance and entry of a final judgment. Hebert more than once

stressed that his plan would allow appellants to take their appeal on those existing rulings. When

the trial court ruled on fees as Hebert had asked, Hebert proposed a judgment in line with the

court’s interlocutory rulings. Appellants corrected that proposed judgment to comply with the

rules of civil procedure. But appellants took no step that amounted to an abandonment of their

legal positions at trial or their stated desire to appeal the trial court’s rulings.

We conclude appellants have not waived any appellate issue that is otherwise preserved

for our review by responding to, and correcting, the judgment Hebert proposed to the trial court.

III.
HEBERT’S FIRST SUMMARY JUDGMENT:
VALIDITY OF THE EMPLOYMENT CONTRACT

Appellants seek our resolution of issues involving vacation of the arbitration award,

dismissal of appellants’ contract and tort claims, and the award of attorney’s fees to Hebert. As a

first step in resolving those specific issues, we must address the trial court’s preliminary rulings,

which formed the foundation for subsequent rulings as the litigation continued. The threshold

substantive issue in this appeal is whether Hebert was party to a valid employment contract.

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 Waiver

Again, Hebert argues waiver. This time he points to the trial court’s first partial summary

judgment ruling. In that ruling, on Hebert’s own declaratory judgment claim, the court stated:

It is further ORDERED AND ADJUDGED that [Hebert’s] motion for summary
judgment regarding Dr. Hebert’s asserted contractual non-compete obligation to
defendants is GRANTED on the ground that the entity with whom Dr. Hebert is
asserted to have had a written employment agreement containing the non-
competition provision—“AmeriPath DFW 5.01(a) Corporation”—did not exist at
the time that Dr. Hebert was tendered and signed the written agreement and no
contract can be made with or formed by a non-existent entity.

Hebert contends appellants failed to challenge this ruling on appeal. Again, we disagree.

Appellants’ brief contains no fewer than nine pages of legal arguments addressing why the trial

court was wrong in deciding that no valid employment agreement existed between Hebert and

DFW. Appellants brief these arguments as the preface to their contention that the trial court

incorrectly granted summary judgment on appellants’ contract claims against Hebert. Moreover,

in their summary of the brief’s argument, appellants point out how the trial court’s no-agreement

summary judgment ruling affected all the issues that followed, saying:

Dr. Hebert now seeks to void the Arbitration Award, his non-compete, and his
common law duties to DFW on the sole basis that the latest version of the parties’
employment agreement included the word “AmeriPath” before DFW’s full name.
. . . [T]he insertion of a single word before an employer’s legal name in an
employment contract does not preclude the employer from bringing suit, does not
invalidate the contract, and certainly does not provide a basis for denying
confirmation of an arbitration award or preventing the employer from seeking
remedies in tort. This fundamental error, which permeates nearly all of the issues
presented, is contrary to no less than four legal principles governing arbitration
agreements and 10 legal principles governing contracts. (Emphasis added.)

Faced with a similar waiver claim, the supreme court concluded that a party need not

identify a separate issue for each substantive matter that would be addressed on appeal. See

Perry v. Cohen, 272 S.W.3d 585, 588 (Tex. 2008) (party did not waive challenge to special

exceptions order when it addressed the merits of that order under an issue challenging dismissal

of its suit). “[W]e liberally construe issues presented to obtain a just, fair, and equitable

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adjudication of the rights of litigants.” Id. (quoting El Paso Natural. Gas v. Minco Oil & Gas,

Inc., 8 S.W.3d 309, 316 (Tex. 1999)). Our briefing rules provide that an appellant’s issue or

point will be treated as covering every subsidiary question that is fairly included within its

statement. TEX. R. APP. P. 38.1(f). We conclude appellants’ brief as a whole, and specifically

their second issue, fairly includes a challenge to the trial court’s summary judgment ruling that

Hebert was not subject to a valid employment contract. Appellants have not waived that

argument on appeal.

Misnomer

Hebert’s first motion for summary judgment sought a declaration that Hebert was not

subject to a contractual non-competition obligation because the entity with which he allegedly

had an employment agreement did not exist at the time the agreement was signed, and no

contract can be formed with an entity that does not exist. The trial court granted the motion on

that ground. We review the court’s summary judgment order de novo. Travelers Ins. Co. v.

Joachim, 315 S.W.3d 860, 862 (Tex. 2010). As movant, Hebert had the burden of showing that

no genuine issue of material fact existed and that he was entitled to judgment as a matter of law.

City of Dallas v. Dallas Morning News, LP, 281 S.W.3d 708, 712 (Tex. App.—Dallas 2009, no

pet.).

Our primary concern in reviewing Hebert’s first summary judgment motion is to

ascertain the true intentions of the parties to the contract. Coker v. Coker, 650 S.W.2d 391, 393

(Tex. 1983). “Written contracts will be construed according to the intention of the parties,

notwithstanding errors and omissions.” Am. 10–Minute Oil Change, Inc. v. Metro. Nat’l Bank–

Farmers Branch, 783 S.W.2d 598, 600 (Tex. App.—Dallas 1989, no writ). Unless the contract’s

language is ambiguous, contract interpretation is a legal question that we review de novo. Coker,

650 S.W.2d at 393.

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 Law of Misnomer

Appellants’ summary judgment response offered five legal arguments for the

enforceability of the 2008 Agreement, all centered on their contention that the actual employer

was DFW. 7 We conclude appellants’ theory of misnomer is dispositive and sufficient to

establish that Hebert’s First Summary Judgment must be reversed. “A misnomer occurs when a

party misnames itself or another party, but the correct parties are involved.” In re Greater

Houston Orthopaedic Specialists, Inc., 295 S.W.3d 323, 325 (Tex. 2009) (per curiam) (orig.

proceeding). 8 Courts will allow parties to correct a misnomer so long as no one was misled by

the mistake. Id. Misnomers have been corrected in pleadings, judgments, and contracts. See id.

(misnomer in non-suit); Hasty v. Keller HCP Partners, L.P., 260 S.W.3d 666, 670 (Tex. App.—

Dallas 2008, no pet.) (misnomer in lease guaranty); Chen v. Breckenridge Estates Homeowners

Ass’n, Inc., 227 S.W.3d 419, 420 (Tex. App.—Dallas 2007, no pet.) (misnomer in judgment).

The rule as to misnomers in contracts, even for a corporate party, is well settled:

Modern law has departed from the strict rules of the common law as to use of the
corporate name. As corporations are now able to contract almost as freely as
natural persons, it is held that a departure from the strict name of a corporation
will not avoid its contract if its identity substantially appears.

Houston Land & Loan Co. v. Danley, 131 S.W. 1143, 1144 (Tex. Civ. App. 1910, no writ); see

also W.B. Clarkson & Co. v. Gans S.S. Line, 187 S.W. 1106, 1110 (Tex. Civ. App.—Galveston

1916, writ ref’d) (“Thus, the general rule is that a misnomer of a corporation has the same effect

as the misnomer of an individual, and when the true name is to be collected from the instrument

involved, or is shown by proper averments, the contract is not invalidated thereby.”).

7
Appellants argued and offered summary judgment evidence on theories of misnomer, assumed name, ratification and partial performance,
ambiguity, and mutual mistake.
8
The supreme court has distinguished a misnomer from a misidentification, stating that the latter “arises when two separate legal entities
exist and a plaintiff mistakenly sues an entity with a name similar to that of the correct entity.” Greater Houston Orthopaedic Specialists, 295
S.W.3d at 325 (citing Chilkewitz v. Hyson, 22 S.W.3d 825, 828 (Tex. 1999)). This case cannot embody a misidentification; Hebert has
consistently acknowledged that ADFW never existed.

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Accordingly, our analysis centers on two questions: (1) was Hebert misled by the fact that the

2008 Agreement named his employer as ADFW rather than DFW, and (2) is DFW’s identity

substantially apparent from the 2008 Agreement. Finally, we look to the summary judgment

evidence to determine whether the parties intended and believed the contracting party to be

DFW. See Coker, 650 S.W.2d at 393 (our primary concern is to ascertain true intentions of

parties to contract).

Was Hebert Misled?

Hebert did not contend in his summary judgment motion that he was misled by the

naming of ADFW as his employer; he offered no argument or summary judgment evidence to

that effect. Appellants, however, offered summary judgment evidence that Hebert was not

misled or disadvantaged in any way by the incorrect name.

Appellants’ summary judgment evidence included all four of Hebert’s employment

agreements. Hebert’s Second Amendment contained the same misnomer as the 2008

Agreement: it identified ADFW as his employer rather than DFW. But the record indicates

Hebert worked through the term of the Second Amendment without incident or adverse effect

caused by the mistake. Likewise, none of the complaints that Hebert contends led to his

resignation under the 2008 Agreement bore any relationship to the name (or misnaming) of his

employer. Hebert narrates the following in his brief:

During the whole of 2008 and throughout 2009, AmeriPath was perpetually short
staffed in North Texas, resulting in unreasonable pressure on and diminished
morale among the physician ranks. AmeriPath’s failure to provide coverage and
support for Hebert resulted in him suffering stress, marital discord, family
turmoil, and mental anguish.

Likewise, Hebert’s resignation letter (which is included in appellants’ summary judgment

evidence) speaks of missing family summer vacations in both 2008 and 2009, and of his lack of

authority and time to address management issues in his role as Managing Director.

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 Our review of the summary judgment record indicates the parties were indifferent to the

correct name of the “Company” in Hebert’s agreements until mid-litigation. There is no

summary judgment evidence that Hebert was treated differently—or conducted himself

differently—than he would have had DFW been properly named in the 2008 Agreement. Nor is

there any summary judgment evidence that DFW has attempted to avoid its own contractual

obligations based on the misnomer. We cannot say Hebert was somehow misled to his detriment

by the misnaming of his employer.

Was DFW’s Identity Substantially Apparent?

Our second inquiry is whether DFW’s identity was substantially apparent from the 2008

Agreement and proper averments. See Clarkson, 187 S.W. at 1110. We look initially to the

language identifying the parties to the 2008 Agreement. In that agreement—and in all of the

previous three agreements—Hebert is defined as the “Employee,” his employer is defined as the

“Company,” and the Company is defined as “a Texas not for profit corporation certified to

practice medicine by the Texas Board of Medicine pursuant to section 5.01(A) of the Texas

Medical Practices Act.” Moreover, in the 2008 Agreement—just as in the 1998 Agreement and

the Second Amendment—the Company is acknowledged to be doing business as “AMERIPATH

DALLAS.” 9 The only true difference in the identification of the parties is the addition of the

single word “AmeriPath” before “DFW 5.01(a) Corporation” in the Second Amendment and the

2008 Agreement.

We also look to the 2008 Agreement’s recitals. As we described above, Hebert’s second

through fourth agreements contain recitals that refer back to earlier agreements. Thus, the 2008

9
The First Amendment makes no reference to any d/b/a for the Company. Thus it is not inconsistent with the other three agreements in
this respect.

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Agreement contains recitals referring to the 1998 Agreement, the First Amendment, and the

Second Amendment:

WHEREAS the Employee entered into an Employment Agreement dated
September 22, 1998 (the [1998 Agreement]); and

WHEREAS, the Company and the Employee entered into an Amendment to the
Employment Agreement dated October 16, 2002 (the [First] Amendment); and

WHEREAS, the Company and the Employee entered into an Amendment dated
January 1, 2005 [(the Second Amendment)].

A recital is “[a] preliminary statement in a contract or deed explaining the reasons for entering

into it or the background of the transaction, showing the existence of particular facts. . . .

Traditionally, each recital begins with the word whereas.” Furmanite Worldwide, Inc. v.

NextCorp, Ltd., 339 S.W.3d 326, 336 (Tex. App.—Dallas 2011, no pet.) (quoting BLACK’S LAW

DICTIONARY 1289 (8th ed. 2004)). We may look to recitals to determine proper construction of

the contract and the parties’ intent. All Metals Fabricating, Inc. v. Ramer Concrete, Inc., 338

S.W.3d 557, 561 (Tex. App.—El Paso 2009, no pet.). In this case, it is apparent the recitals

describe an unbroken course of dealing between the same parties, because each refers to the

parties to the preceding agreement by the same term. Thus, the recitals support the conclusion

that the parties to the 2008 Agreement were—for the fourth time—Hebert and DFW.

The summary judgment record establishes DFW’s identity was substantially apparent to

these parties in the 2008 Agreement.

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 Summary Judgment Evidence of the Parties’ Intent 10

Among the most significant evidence that the 2008 Agreement was intended to be

between Hebert and DFW is the fact that the fundamental promises made by the Company in that

agreement were performed by DFW. The Company promised to employ Hebert as a pathologist

and as Managing Director of Hospital Services, and appellants’ summary judgment evidence

establishes that DFW did employ him—and that Hebert acted—in those capacities. The

Company promised to pay Hebert a base salary “in accordance with the Company’s regular

payroll practices,” and appellants’ summary judgment evidence establishes that DFW did pay

Hebert that base salary according to its regular payroll practices. 11

Similarly, the summary judgment evidence of Hebert’s own conduct and status during the

term of the 2008 Agreement indicates he knew he was employed by DFW. The Hospital PSA

(on which Hebert relies to argue against enforcement of the Noncompete) is a contract between

the Hospital and DFW. Hebert himself signed the Hospital PSA specifically for DFW, and as

DFW’s Managing Director, the title given him in the 2008 Agreement. Hebert contends he was

authorized to sign the Hospital PSA; his contention of authority in this context underscores his

contractual relationship with DFW. 12

10
Hebert contends parol or extrinsic evidence is inadmissible to show misnomer. We disagree. See, e.g., Weeks v. San Angelo Nat’l
Bank, 65 S.W.2d 348, 350 (Tex. Civ. App.—Austin 1933, writ ref’d) (parol evidence admissible to determine identity of one intended to be
bound in misnomer case). The cases Hebert cites for exclusion under the parol evidence rule are not misnomer cases. Moreover. those cases
acknowledge exceptions to the parol exclusion for contracts dealing with clarification of mistake, ambiguity, or similar issues. See Cavaness v.
Gen. Corp., 155 Tex. 69, 74 (1955) (fraud or mutual mistake); Haobsh v. BeautiControl Cosmetics, Inc., No. 05-92-02218-CV, 1993 WL
209653, at *2 (Tex. App.—Dallas June 14, 1993, no writ) (not designated for publication) (mutual mistake; discussed substantively infra). We
conclude misnomer belongs in this category of exceptions because it employs extrinsic evidence not to vary the terms of the agreement, but to
determine the parties’ actual intent.
11
Appellants’ evidence also established DFW provided Hebert with his W-2 form for tax purposes.
12
We note as well that throughout the time period relevant to this lawsuit, Hebert was a Vice President of DFW. Hebert certainly can be
charged with knowledge of DFW’s employment decisions as to its Managing Director. Hebert offers no evidence that DFW intended to assign
employment of its Managing Director to an entity other than DFW.

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 Hebert’s Non-Existence Argument

Hebert argued, and prevailed below, on the ground that ADFW did not exist and,

therefore, could not enter into a binding contract. We do not quarrel with the settled rule that if

one of the parties does not exist, no contract can be formed. See, e.g., In re Hawthorne

Townhomes, L.P., 282 S.W.3d 131, 138 (Tex. App.—Dallas 2009, orig. proceeding). But the

application of that rule is not as simplistic as Hebert maintains.

Initially, Hebert cites generally to a list of cases reciting the rule that a non-existent entity

cannot form a binding contract. These cases all involve questions of timing. In some, the party-

entity’s status may have changed at a critical time in the contractual relationship. See id.

(argument involving timing of conversion of general partnership into limited partnership). In

others, the party-entity was not formed until after the time a contract was signed or liability

attached. See, e.g., HTS Servs., Inc. v. Hallwood Realty Partners, L.P., 190 S.W.3d 108, 113

(Tex. App.—Houston [1st Dist.] 2005, no pet.) (limited partner seeking to recover funds was not

formed until after consulting agreement was signed by other parties). In all these cases, the

“non-existent” entity actually did exist at some point in time; the issue is whether it existed at the

relevant time in each dispute. But ours is not a case in which the timing of ADFW’s “formation”

will resolve either party’s claims. Indeed, it is undisputed that no corporate entity named ADFW

ever existed. Therefore, these cases cannot resolve our inquiry.

Hebert next relies on an unpublished case from this Court, Haobsh v. BeautiControl

Cosmetics, Inc., 05-92-02218-CV, 1993 WL 209653 (Tex. App.—Dallas June 14, 1993, no

writ)(not designated for publication), which he contends is “indistinguishable” from this case. In

Haobsh, BeautiControl employed a letter agreement to appoint Cal Teck International Export,

Inc. (“Cal Teck”) its exclusive distributor of products in the Middle East for a six-month period.

Id. at *1. Haobsh represented himself to be the principal of Cal Teck, presented a business card

–16–
with that name on it, and conducted correspondence with BeautiControl on stationery bearing

that name. Id. Subsequently, Haobsh and an entity named Cal Tech International Export, Inc.

(“Cal Tech”) sued BeautiControl for breach of contract. Id. BeautiControl sought summary

judgment, arguing neither plaintiff was party to the agreement. The plaintiffs did not argue

misnomer; instead they sought reformation of the agreement based on a theory of mutual

mistake. Id. at *2. As the opinion points out, such a reformation requires proof of two elements:

(1) an original agreement, and (2) a mutual mistake, made after the original agreement, in

reducing the original agreement to writing. Id. (citing Cherokee Water Co. v. Forderhause, 741

S.W.2d 377, 379 (Tex. 1987)). Thus, the Haobsh plaintiffs could prove mutual mistake only if

BeautiControl and Cal Tech had intended to contract with each other, but “Cal Tech” was

misspelled as “Cal Teck” when the agreement was reduced to writing. Id. However, the

summary judgment evidence established BeautiControl was completely unaware of the existence

of Cal Tech; it believed it was contracting with Cal Teck. Id. at *3. According to this Court, the

plaintiffs failed to offer any evidence tending to show BeautiControl thought it was contracting

with Cal Tech. Id. Instead, we held that BeautiControl’s summary judgment evidence

established that it intended to contract with Cal Teck, disproving the existence of a mutual

mistake. Id.

In the case before us, the legal theory supporting our conclusion is not mutual mistake,

but misnomer. Likewise, the summary judgment evidence establishes a very different factual

scenario. DFW did not ever represent itself to Hebert as ADFW: there is absolutely no

reference to ADFW outside the Second Amendment and the 2008 Agreement. Instead, Hebert

and DFW shared a course of dealing that spanned many years before the 2008 Agreement was

signed. The summary judgment evidence establishes that Hebert believed he was contracting

–17–
with DFW, and DFW believed it was contracting with Hebert. Thus, Haobsh does not control

our disposition of this case.

In the end, we conclude this case does not fall within the ambit of cases addressing

contracts with non-existing business entities. Instead, the summary judgment evidence makes

clear that Hebert contracted with DFW, a corporation that existed at all relevant times in the

parties’ decade-long relationship. DFW proposed, Hebert accepted, and both of them performed

the terms of the 2008 Agreement until Hebert’s resignation. DFW was simply misnamed in that

contract.

Conclusion

In drafting the 2008 Agreement, DFW misnamed itself, but it is clear the parties to the

employment contract were Hebert and DFW, not a non-existent entity. The record indicates

Hebert was not misled, the identity of DFW was substantially apparent to Hebert, and the

summary judgment evidence supports the conclusion that the actual intent of the parties was an

employment agreement between Hebert and DFW. See Greater Houston Orthopaedic

Specialists, Inc., 295 S.W.3d at 325. Accordingly, we conclude Hebert failed to establish as a

matter of law that there was not a binding contract between him and DFW. We conclude the

trial court erred by granting Hebert’s First Summary Judgment on this ground.

IV.
VALIDITY OF THE COVENANT NOT TO COMPETE

The second threshold issue before us is the validity of the 2008 Agreement’s

Noncompete. We have concluded that the trial court erroneously granted the First Summary

Judgment on the ground that the named contracting party did not exist when the 2008 Agreement

was signed. Accordingly, we must next examine the covenant not to compete contained within

the 2008 Agreement to determine whether Hebert was bound by that covenant.

–18–
 [A] covenant not to compete is enforceable if [1] it is ancillary to or part of an
otherwise enforceable agreement at the time the agreement is made [2] to the
extent that it contains limitations as to time, geographical area, and scope of
activity to be restrained that are reasonable and do not impose a greater restraint
than is necessary to protect the goodwill or other business interest of the
promisee.

TEX. BUS. & COMM. CODE ANN. § 15.50(a) (West 2011). 13 The enforceability of a covenant not

to compete is a question of law we review de novo. Mann Frankfort Stein & Lipp Advisors, Inc.

v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

Statutory Requirements for Enforceability

As to the second requirement of the statute, Hebert challenged the geographical

restriction placed upon his employment in the Second Summary Judgment proceeding. There,

he contended that even if the 2008 Agreement were valid, the Noncompete would be

unenforceable against him because it lacks appropriate geographic scope. In relevant part, the

Noncompete provides:

[T]he Employee shall not, as a shareholder, principal, agent, consultant, manager,
advisor, director, officer, control person, operator, or in any other capacity or
manner whatsoever:

(1) directly or indirectly establish, become employed by or otherwise be
substantively involved with a pathology practice operating anywhere
within or in any county within fifty (50) miles of Dallas County, Texas
(the “Restricted Territory”);

(2) from any facility or location, whether within or without the Restricted
Territory, knowingly (x) perform pathology services for any patient,
medical facility, hospital, laboratory or health care provider located in the
Restricted Territory, or (y) perform pathology services for any patient,
medical facility, hospital, laboratory or health care provider who was or is
(within the last six months of the date in question) a customer, client or
patient of the Company.

13
When the covenant relates to the practice of medicine, it also must contain “a buy out of the covenant by the physician at a reasonable
price or, at the option of either party, as determined by a mutually agreed upon arbitrator or, in the case of an inability to agree, an arbitrator of
the court whose decision shall be binding on the parties.” Id. §15.50(b)(2). The 2008 Agreement did contain a buyout provision. We address
that provision infra, in our discussion of the arbitration award in this case.

–19–
Hebert argues that Texas law limits a covenant not to compete to the geographical area where the

employee worked, and he actually worked only in Dallas and Collin Counties. Hebert argues the

clause, as written, is really unlimited in its scope because he cannot work for a pathology

practice that operates within fifty miles of Dallas, even if he is working far from the Dallas area.

In response below, appellants stated the fifty-mile restriction was related “to the region where

[Hebert] was responsible for work” and was “necessary to protect appellants’ business interests.”

We have asserted that, as a general rule, a reasonable geographic restriction for covenants

not to compete is the territory in which the employee actually worked while in the contractual

employment. Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 660 (Tex. App.—Dallas 1992, no

writ). However, the breadth of enforceable geographical restrictions in covenants not to compete

must depend on the nature and extent of the employer’s business and the degree of the

employee’s involvement in that business. Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787,

793 (Tex. App.—Houston [1st Dist.] 2001, no pet.). Hebert’s arguments as to the appropriate

territorial restriction are focused solely on his work as a pathologist at two hospitals. However,

Hebert was also the Managing Director of DFW and an officer of nine different AmeriPath

entities. Accordingly, appellants’ interest in limiting Hebert’s competition grew out of not only

his employment as a pathologist, but also his service as a member of appellants’ highest level

management team. For this reason, we do not discern the Noncompete’s limitation as to

Hebert’s affiliation with pathology practices that operate in the Dallas area as overly broad

geographically: even if Hebert were working for such a company in New York, for example, his

management knowledge of and experience with appellants’ Dallas-area operations would be

valuable to his new employer. We conclude Hebert failed to establish as a matter of law that his

Noncompete was unreasonably broad in geographic scope.

–20–
 Accordingly, the trial court erred by granting Hebert’s First Summary Judgment on this

ground.

Release and Discharge of the Noncompete Through Hospital PSA

In the Second Summary Judgment proceeding, Hebert also argued that even if the 2008

Agreement were valid, and even if the Noncompete were enforceable, appellants released and

discharged him from the Noncompete as to the Hospital when it entered into the October 3, 2008

Hospital PSA. The parties to the Hospital PSA are identified in the agreement as Columbia

Medical Center of McKinney Subsidiary, L.P. d/b/a Medical Center of McKinney (defined for

purposes of the agreement as “Facility”) and DFW 501(a) Corporation d/b/a AmeriPath North

Texas (defined as “Contractor”). The agreement stated in relevant part:

This Agreement is entered into for the purpose of securing the personal services
of one or more individuals, namely: Steven Hebert, M.D. as well as others upon
prior consent of Facility. It is agreed that the continued service of said
individual(s) under this Agreement is a material obligation of Contractor. No
substitution for said individual(s) may be employed under this Agreement without
the prior consent of Facility. Any discontinuation of service by any of said
individual(s), or any attempted substitution for any of said individual(s) without
Facility’s consent, shall be deemed a material breach of Contactor’s obligations,
entitling Facility to terminate this Agreement immediately and, at Facility’s sole
discretion, to enter into an employment or professional services agreement with
said individual(s), any non-competition provisions of any agreement between the
said individual(s) and Contractor to the contrary notwithstanding.

The circumstances surrounding the Hospital PSA are rife with fact issues. It is undisputed

Hebert negotiated and signed the agreement on behalf of DFW. But the parties disagree as to

whether he was authorized to do so. Moreover, there is summary judgment evidence that DFW

and the Hospital’s parent corporation were negotiating a separate agreement at the same time that

would have included a very different key-man provision. Hebert has even testified he thought he

was signing that latter agreement when he signed the Hospital PSA. DFW ultimately terminated

the Hospital PSA, asserting that Hebert did not have authority to sign it and that his doing so

–21–
“represent[ed] an obvious conflict of interest.” It would appear that genuine issues of material

fact exist as to this basis for voiding the Noncompete.

But even if we were to assume, without deciding, that Hebert was authorized to sign the

Hospital PSA on behalf of DFW—so that the agreement was valid and enforceable against

DFW—Hebert has not shown he has a legal right to enforce the agreement for his own benefit.

To have standing to enforce a contract, one must either be a party to the contract or a third-party

beneficiary of the contract. See Allan v. Nersesova, 307 S.W.3d 564, 571 (Tex. App.—Dallas

2010, no pet.). “The fact that a person might receive an incidental benefit from a contract to

which he is not a party does not give that person a right of action to enforce the contract.” MCI

Telecomm. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999). Instead, a third

party may claim rights under a contract made between other parties only if the parties both

intended to secure a benefit to that third party and entered into the contract directly for the third

party’s benefit. Id.

Despite his argument to the contrary, Hebert is not a party to the Hospital PSA. The

parties are clearly identified as the Hospital and DFW. And Hebert acknowledges he is not a

third-party beneficiary of the Hospital PSA. Indeed, that document expressly states no such

beneficiaries exist. Accordingly, Hebert may not legally claim a right—specifically the right to

be released and discharged from his Noncompete—under the Hospital PSA. He simply lacks

standing to do so. See id.

We conclude that Hebert failed to establish as a matter of law that the Noncompete could

not be enforced against him.

V.
ARBITRATION AWARD

In their first issue, appellants contend the trial court erroneously denied their application

to confirm the arbitration award valuing a buyout of Hebert’s Noncompete. The arbitration
–22–
award was delivered on January 13, 2010. The arbitrator valued Hebert’s Noncompete at more

than $2.5 million. DFW filed an application to confirm the award. On September 29, 2010,

Hebert filed a response to the application to confirm the arbitration award, raising two grounds

for denial: (1) DFW was not a party to the arbitration or the award, and only a party may apply

for confirmation; and (2) the award was obtained by fraud or other undue means, namely

appellants “negligently misrepresented” to Hebert that ADFW was an existing entity. 14 The trial

court denied appellants’ application for confirmation. We review that ruling de novo. In re

Chestnut Energy Partners, Inc., 300 S.W.3d 386, 397 (Tex. App.—Dallas 2009, pet. denied).

Timeliness of Hebert’s Opposition to the Award

In this Court, appellants first contend Hebert’s objections to the arbitration award were

untimely, given that both the Federal Arbitration Act and the Texas General Arbitration Act

require a party to object to an arbitration award within approximately ninety days after the party

receives a copy of the award. See 9 U.S.C.A. § 12 (1947) (“Notice of a motion to vacate,

modify, or correct an award must be served upon the adverse party or his attorney within three

months after the award is filed or delivered.”); TEX. CIV. PRAC. & REM. CODE ANN. § 171.088(b)

(West 2011) (“A party must make an application under this section not later than the 90th day

after the date of delivery of a copy of the award to the applicant.”). Hebert’s response to

appellants’ request for confirmation was filed September 29, 2010, more than nine months after

the award was made. But Hebert argues that he is subject to a different deadline: the TGAA

provides that a party seeking to vacate an arbitration award on the grounds of fraud, corruption,

or undue means must make his objections “not later than the 90th day after the date the grounds

for the application are known or should have been known.” Id. Hebert’s second ground for

14
Hebert did not object to the amount of the arbitration award in the trial court. Nor did he make the argument he makes in this Court that
the process of determining the buyout amount was not a true arbitration and ought not to be governed by either the Texas or federal law of
arbitration. This argument was not preserved for our review.

–23–
opposing the arbitration award was his contention that the award was procured by fraud or undue

means based on the “negligent misrepresentation” that ADFW was “an existing entity capable of

contracting.” Hebert learned of this purported misrepresentation—at the latest—September 7,

2010, the date he filed his Third Amended Petition alleging ADFW did not exist. Because this

allegation forms the basis of one of Hebert’s grounds for opposing the award, Hebert would have

had ninety days (or three months) from September 7, 2010 to file his objections. We conclude

his September 29, 2010 objection to the award on that ground—that the award was procured by

fraud or undue means—was not untimely. See id. However, we conclude Hebert’s objection to

the award based on whether DFW was a party to the award has been waived because it was

untimely. 15 See id.

Undue Means

The TGAA provides only four circumstances that support vacating an arbitrator’s award;

one of these is that the award was obtained “by fraud, corruption, or other undue means.” Id.

§171.088(a)(1). As the party objecting to confirmation and moving to vacate, it was Hebert’s

burden to establish one of the exceptions. See Roehrs v. FSI Holdings, Inc., 246 S.W.3d 796,

804 (Tex. App.—Dallas 2008, pet. denied). Appellants challenge Hebert’s contention that he

demonstrated undue means in the trial court.16 Whether under the Texas or federal standard,

“undue means” connotes behavior that is immoral, illegal, or otherwise in bad faith. Good Times

Stores, Inc. v. Macias, 355 S.W.3d 240, 244 (Tex. App.—El Paso 2011, pet. denied); see also

Matter of Arbitration Between Trans Chem. Ltd. & China Nat’l Mach. Imp. & Exp. Corp., 978 F.

Supp. 266, 304 (S.D. Tex. 1997), aff’d Trans Chem. Ltd. v. China Nat. Mach. Imp. & Exp. Corp.,

15
Because his objection was untimely, we need not address Hebert’s argument that appellants waived a challenge to Hebert’s objection
that DFW was not a party to the arbitration award and, therefore, could not seek its confirmation.
16
Although Hebert includes the word fraud occasionally in his pleadings and arguments, we conclude Hebert never attempted to plead or
prove either fraud or corruption. If he had done so, those claims would fail for the same reason his undue-means argument fails: they require
intentional conduct (fraud) or immoral conduct (corruption), neither of which are alleged by Hebert.

–24–
161 F.3d 314 (5th Cir. 1998). The term describes conduct that is purposeful and directed against

another party. But Hebert has consistently identified the misnaming of DFW as negligent

misrepresentation or as a mistake. In his opposition to the confirmation of the award, Hebert

stated:

From at least March 15, 2005 through July 13, 2010, [appellants] believed and
represented to Dr. Hebert that a Texas non-profit corporation named [ADFW]
existed and that he had an employment agreement with that entity that contained a
non-competition provision.

Likewise, in his brief to this Court, Hebert refers to appellants’ “own mistaken belief in the

existence of ADFW.” Neither a mistake nor a negligent misrepresentation approaches a standard

that requires behavior that is immoral, illegal, or in bad faith. “[A] reviewing court is not

authorized to set aside an arbitration award for a mere mistake of fact or law.” Las Palmas Med.

Ctr. v. Moore, 349 S.W.3d 57, 64 (Tex. App.—El Paso 2010, pet. denied). As a matter of law,

Hebert did not establish that the arbitration award was obtained through undue means.

Mootness

Hebert makes one more argument concerning the arbitration award in this Court. He

contends that a ruling as to the viability of the award would be moot because he (Hebert) decided

not to “exercise his option” for the buyout. We express no opinion as to whether Hebert must

buy out his Noncompete or whether his earlier decision not to do so is binding upon him. Many

issues remain to be resolved when this case is remanded. The only one related to the arbitration

award that is before us at this time is appellants’ argument that the trial court erred by denying

the request to confirm the arbitration award. Hebert has not shown that our resolution of this

issue cannot have any impact on remand. We will, therefore, resolve the issue.

We have decided all of Hebert’s arguments in opposition to confirmation of the award

against him. We conclude the trial court erred by denying appellants’ application to confirm the

arbitration award. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.087 (in absence of grounds for
–25–
vacating, modifying, or correcting award, court—on application of party—shall confirm the

award). We sustain appellants’ first issue. We reverse the trial court’s denial of appellees’

motion to confirm the arbitrator’s award and remand this issue to the trial court for further

proceedings. 17

VI.
HEBERT’S SECOND SUMMARY JUDGMENT:
APPELLANTS’ COUNTERCLAIMS

After the trial court ruled the 2008 Agreement was not a valid agreement, concluded

Hebert was not subject to the Noncompete, and refused to confirm the arbitration award, Hebert

sought summary judgment on appellants’ counterclaims against him. 18 Hebert’s motion included

both traditional and no-evidence grounds. The trial court granted Hebert’s motion and dismissed

appellants’ contract and tort claims. 19

Again, we review the grant of summary judgment de novo. Joachim, 315 S.W.3d at 862.

We apply well-known standards in our review of traditional and no-evidence summary judgment

motions. See Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009); Nixon v. Mr. Prop.

Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). With respect to a traditional motion for summary

judgment, the movant has the burden to demonstrate that no genuine issue of material fact exists

and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Nixon, 690 S.W.2d at

548–49. We review a no-evidence summary judgment under the same legal sufficiency standard

used to review a directed verdict. TEX. R. CIV. P. 166a(i); Gish, 286 S.W.3d at 310. To defeat a

17
We agree with Hebert that the Noncompete provides for arbitration only to determine the reasonable price of the buyout. Our
confirmation is limited to that finding in the arbitrator’s award.
18
The motion also addressed appellants’ crossclaims against ProPath. Because ProPath is not a party to this appeal, we do not address its
claims or those made against it.
19
Hebert raised as one ground of his motion the legal argument that ADFW—the entity identified on the pleadings of the counterclaims—
did not exist and so had no standing to urge any of these counterclaims. However, Hebert correctly anticipated the substitution of the appellant
entities, and he made his summary judgment arguments separately against them. Accordingly, we address only the arguments made concerning
appellants. The issue of ADFW’s standing is moot; it is undisputed that appellants had standing to urge the counterclaims and to respond to
Hebert’s second motion for summary judgment.

–26–
no-evidence summary judgment, the nonmovant is required to produce evidence that raises a

genuine issue of material fact on each challenged element of its claim. Gish, 286 S.W.3d at 310;

see also TEX. R. CIV. P. 166a(i).

Contract Claim

In their second appellate issue, appellants contend the trial court erroneously granted the

Second Summary Judgment on their counterclaim for breach of the 2008 Agreement. 20 The

counterclaim alleges Hebert breached the Noncompete (including its covenants concerning both

competition and solicitation) of the 2008 Agreement. Hebert’s second motion depended upon

the First Summary Judgment’s determination that the 2008 Agreement was not a valid

employment agreement. The second motion did not address the merits of appellants’ breach of

contract claim.

Appellants’ response below argued (a) the 2008 Agreement was a valid agreement, and

(b) the Noncompete was valid and binding on Hebert. We have discussed those arguments—

raised again in this Court—in our threshold analyses. We have concluded that Hebert failed to

establish as a matter of law that the 2008 Agreement was invalidated by the misnaming of DFW:

DFW was the actual party to the 2008 Agreement, and it had standing to bring a counterclaim

against Hebert for an alleged breach of that contract. We have also concluded that Hebert failed

to establish as a matter of law that the Noncompete is unenforceable. Accordingly, we conclude

Hebert did not establish that he was entitled to judgment as a matter of law on appellants’

counterclaim for breach of the 2008 Agreement. The trial court erred by granting summary

judgment on that claim.

20
Hebert also moved for summary judgment on certain oral agreements he referred to as “alleged agreements made during litigation.”
Appellants have not challenged the summary judgment on those grounds. Therefore, to the extent the court granted judgment on those claims,
that portion of the judgment is affirmed.

–27–
 We sustain appellants’ second issue. We reverse the trial court’s judgment on appellants’

counterclaim for breach of the 2008 Agreement, and we remand that counterclaim for further

proceedings.

Tort Claims

In their third issue, appellants challenge the trial court’s summary judgment dismissing

their tort counterclaims against Hebert. The Second Summary Judgment dismissed appellants’

claims for misappropriation of trade secrets, breach of fiduciary duty, tortious interference with

existing and prospective contractual relationships, harmful acts by computer, and civil

conspiracy. On appeal, appellants challenge the court’s Second Summary Judgment on their

claims of breach of fiduciary duty, tortious interference, and civil conspiracy. 21

Breach of Fiduciary Duty

The elements of a breach of fiduciary duty claim are: (1) a fiduciary relationship between

the plaintiff and defendant; (2) a breach of the fiduciary duty to the plaintiff; and (3) injury to the

plaintiff (or benefit to the defendant) as a result of the breach. Jones v. Blume, 196 S.W.3d 440,

447 (Tex. App.—Dallas 2006, pet. denied). In his second summary judgment motion, Hebert

asserted that appellants lacked evidence of a duty and evidence of a breach. Appellants came

forward with summary judgment evidence attempting to raise a genuine fact issue on these

elements, but the trial court granted the motion.

The existence of a common law duty is a question of law. Humble Sand & Gravel, Inc. v.

Gomez, 146 S.W.3d 170, 181 (Tex. 2004). In this case, Hebert’s 2008 Agreement specifically

identifies him as a fiduciary in terms of his access to proprietary information in his role as

Managing Director of DFW. Moreover, the summary judgment evidence establishes that Hebert

21
Because appellants have not challenged the Second Summary Judgment’s dismissal of claims for misappropriation of trade secrets and
harmful acts by computer, we affirm the trial court’s summary judgment on those claims.

–28–
was both a member of the Board of Directors of DFW and Vice President of DFW, along with

eight other related entities. It is well-settled that corporation officers and directors are

fiduciaries. Int’l Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 576 (Tex. 1963). As such,

officers and directors owe a duty to act only in the best interest of the corporation and its

shareholders. Hughes v. Houston Nw. Med. Ctr., Inc., 680 S.W.2d 838, 843 (Tex. App.—

Houston [1st Dist.] 1984, writ ref’d n.r.e.). Specifically, a corporate fiduciary is under the

obligation not to usurp corporate opportunities for personal gain. Holloway, 368 S.W.2d at 577.

“If an agent, while employed by his principal, uses his position to gain a business opportunity

belonging to the employer, such conduct constitutes an actionable wrong.” Abetter Trucking

Co., Inc. v. Arizpe, 113 S.W.3d 503, 510 (Tex. App.—Houston [1st Dist.] 2003, no pet.). 22

Appellants offered summary judgment evidence that Hebert negotiated and signed the

Hospital PSA, ostensibly providing him the opportunity—by resigning from his employment

with DFW—to avoid the Noncompete. Appellants also offered summary judgment evidence that

they took the position that the Hospital PSA was unauthorized and represented “an obvious

conflict of interest,” and that they terminated the Hospital PSA for those reasons. Hebert’s own

deposition testimony relates communications and meetings he had with representatives of

ProPath while he was still employed by DFW. Hebert testified he intended to hold the same

position of Medical Director at the Hospital, although he would now be working for ProPath. He

also testified to informing ProPath of the contact information for his staff at DFW and of his

understanding that those persons would be working for ProPath as well.

22
We note that Hebert cites Abetter Trucking as authority for the propositions (1) that his resignation from DFW terminated any duty he
had not to compete with DFW, and (2) that his actions taken before resignation were “permissible preparation to compete.” However, the
employee in Abetter Trucking had not signed a covenant not to compete as Hebert had. Indeed, the opinion states expressly: “An employer who
wishes to restrict the post-employment competitive activities of a key employee may seek to accomplish that goal through a non-competition
agreement.” 113 S.W.3d at 510. This, of course, is precisely what appellants attempted to do in the Noncompete.

–29–
 We conclude the summary judgment evidence establishes conclusively that Hebert owed

fiduciary duties to appellants. We further conclude that appellants have raised material fact

questions as to whether Hebert breached those duties, for example, in the process of negotiating

his employment with ProPath, taking the business of the Hospital from appellants to ProPath,

and enabling the move of other employees of appellants to ProPath’s employ. 23 Accordingly, we

conclude the trial court erred in granting summary judgment on appellants’ counterclaim for

breach of his fiduciary duties.

We reverse the trial court’s judgment on appellants’ claim for breach of fiduciary duty

and remand that counterclaim for further proceedings.

Tortious Interference

Appellants pleaded counterclaims against Hebert for tortious interference with their

existing contract and prospective business relations with the Hospital. The elements of a claim

for tortious interference with an existing contract are: (1) an existing contract subject to

interference, (2) a willful and intentional act of interference with the contract, (3) that

proximately caused the plaintiff’s injury, and (4) caused actual damages or loss. Prudential Ins.

Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). “To establish liability for

interference with a prospective contractual or business relation the plaintiff must prove that it

was harmed by the defendant’s conduct that was either independently tortious or unlawful.”

Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 713 (Tex. 2001). The supreme court explained

that by “independently tortious,” it meant conduct that would violate some other recognized tort

duty. Id.

23
We do not address Hebert’s argument that his duties to his employer were “not paramount” because of purportedly higher duties to his
patients. Hebert did not include that argument in his motion for summary judgment.

–30–
 As a threshold matter, Hebert contended he was entitled to summary judgment on

appellants’ tortious interference with the existing contract claim because the Hospital PSA was

terminable at will. Appellants responded, and repeat here, that the terminable-at-will status of a

contract is no defense to a tortious interference cause of action. We agree. See Sterner v.

Marathon Oil Co., 767 S.W.2d 686, 688 (Tex. 1989) (“[A] cause of action exists for tortious

interference with a contract of employment terminable at will.”). Appellants complain, inter

alia, of conduct that occurred before termination of the Hospital PSA; as to that conduct,

appellants may urge a claim for tortious interference with an existing contract. See id.at 689

(“Until terminated, the contract is valid and subsisting, and third persons are not free to tortiously

interfere with it.”).

Hebert further contended he was entitled to summary judgment because (1) appellants

had no evidence of interference by Hebert, and (2) appellants had caused their own damages by

terminating the Hospital PSA. As to interference, we conclude the same conduct that raised

material fact issues concerning a breach of fiduciary duties also raises fact issues here. Summary

judgment evidence raises questions about Hebert’s authority to contract for DFW in a self-

dealing fashion, and that conduct took place while the Hospital PSA was in effect. There is also

summary judgment evidence that Hebert intended to move the Hospital’s business from

appellants to ProPath after termination of the Hospital PSA. Because we have already concluded

Hebert’s conduct raised a material fact issue on the issue of breach of fiduciary duty, appellants

have similarly raised a fact issue as to Hebert’s conduct being independently tortious. See

Sturges, 52 S.W.3d at 713. We conclude appellants raised a genuine issue of material fact on the

issue of interference by Herbert for both causes of action.

Finally, Hebert urged that appellants could not recover “for damages it did to itself,”

relying on Brown v. Lundell, 344 S.W.2d 863, 92 (Tex. 1961). See also Signal Oil & Gas Co. v.

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Universal Oil Prods., 572 S.W.2d 320, 328 (Tex. 1978) (plaintiff cannot recover for damages

proximately caused by his own negligence or fault). Hebert cast this ground as a traditional

summary judgment ground, rather than a no-evidence ground. Hebert pointed to evidence that

appellants terminated the Hospital PSA themselves. However, he contends, in their claims for

tortious interference they seek to recover the revenue that would have been earned from that

agreement’s continuation. Appellants did not respond to this argument in any fashion in their

response to the second motion. It is settled that a summary judgment must stand or fall on its

own merits. McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 343 (Tex. 1993). “If a

non-movant fails to present any issues in its response or answer, the movant’s right is not

established and the movant must still establish its entitlement to summary judgment.” Id.

Appellants were free to challenge the legal insufficiency of this argument on appeal, see id., but

their brief in this Court presents no more than an unsupported statement that Hebert’s argument

is “meritless,” that his interference resulted in (unspecified) damages to DFW, and that the

evidence in the record raises a fact issue on each element of the claims. Appellants cite no

contrary legal authority. And appellants have not identified any damages they have claimed that

are not foreclosed by Hebert’s legal authority. We conclude appellants failed to establish that

Hebert’s damages argument was legally insufficient.

In the absence of a material fact issue on recoverable damages, we affirm the trial court’s

Second Summary Judgment on appellants’ counterclaims for tortious interference with their

existing contract and prospective business relations with the Hospital.

Civil Conspiracy

Appellants pleaded a claim against Hebert and ProPath for civil conspiracy (a) to commit

breach of fiduciary duty, (b) to misappropriate confidential and proprietary information, and (c)

to interfere with DFW’s business relationships. The Second Summary Judgment included a

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ruling in favor of ProPath on this claim, but appellants did not perfect an appeal of the judgment

as to ProPath. “[A] civil conspiracy is a combination by two or more persons to accomplish an

unlawful purpose or to accomplish a lawful purpose by unlawful means.” Firestone Steel Prods.

Co. v. Barajas, 927 S.W.2d 608, 614 (Tex. 1996) (emphasis added). As a matter of law,

appellants cannot establish a conspiracy involving only Hebert. We affirm the trial court’s

Second Summary Judgment on appellants’ counterclaim for civil conspiracy.

Declaratory Judgments

Hebert’s second summary judgment motion contended appellants could not prevail on the

two declaratory judgments they sought below: (1) that the 2008 Agreement is valid, and (2) that

Hebert is not a third party beneficiary of the Hospital PSA. Appellants have not challenged the

dismissal of their declaratory judgment claims in this Court. Accordingly, we affirm the trial

court’s Second Summary Judgment on these counterclaims.

Appellants’ Attorney’s Fees

Hebert also sought summary judgment on appellants’ claims for attorney’s fees.

Appellants’ claims were based on two provisions of the Texas Civil Practice and Remedies Code

that allow recovery of fees in suits for breach of a written contract and suits for harmful access

by computer. See TEX. CIV. PRAC. & REM. CODE. ANN. §§ 38.001(8), 143.002(2). The trial

court granted summary judgment on these claims for attorney’s fees, but appellants have not

challenged that ruling in this Court. Accordingly, we affirm the trial court’s judgment on

appellants’ counterclaims for attorneys’ fees under these statutes.

We sustain appellants’ third issue in part and overrule it in part.

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 VII.
HEBERT’S ATTORNEY’S FEES

In their fourth issue, appellants argue the trial court erred in granting attorney’s fees to

Hebert. As we explained above, Hebert proposed to the trial court and appellants that if he were

granted his attorney’s fees, he would move to sever his remaining tort claims, allowing a final

judgment to be entered and allowing appellants to pursue their appeal. The trial court did award

Hebert fees in the amount of $ 681,928.20. At appellants’ request, the trial court issued Findings

of Fact and Conclusions of Law, which asserted the fees were awarded pursuant to the Texas

Civil Practice and Remedies Code (the Declaratory Judgment Act) and the Texas Business and

Commerce Code (Procedures and Remedies in Actions to Enforce Covenants Not to Compete),

both of the grounds on which Hebert had sought his fees.

Appellants contend the trial court’s decision to hear evidence on and award fees when it

did violated the parties’ Rule 11 agreement. A trial court has a duty to enforce the terms of a

valid Rule 11 agreement. Fortis Benefits v. Cantu, 234 S.W.3d 642, 651 (Tex. 2007). The

parties agree on the words that make up their agreement, but not on what those words meant.

Both point to the following statement, made on the record by counsel for Hebert:

[O]ur view of what is left following your Honor’s most recent ruling on the
summary judgment is that there -- we have, essentially, three tort claims by Dr.
Hebert, and then the issue of attorney’s fees, which the parties have agreed would
not -- would be submitted to the Court after a trial, not during the trial.
(Emphasis added.)

There is no dispute that the agreement intended the trial court—rather than the jury—to

determine the fee issue. But appellants argue the temporal element of the agreement was critical

to them as well. Appellants contend their agreement was “to address the issue of attorneys’ fees

after a trial, not after a summary judgment ruling.” Legally, we consider a summary judgment

proceeding to be a trial within the meaning of the rules of civil procedure. See Lincoln Prop. Co.

v. Kondos, 110 S.W.3d 712, 714 (Tex. App.—Dallas, 2003, no pet.). As to the circumstances
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surrounding the trial court’s decision, the parties were set for trial at the time the trial court heard

the attorney’s fee issue. However, the only issues remaining to be tried were Hebert’s tort

claims, for which no fees could be recovered. Moreover, once those tort claims were severed, no

issues remained to be resolved. Thus, even if appellants understood their agreement to mean that

attorney’s fees would be the final determination made in the case, that was effectively what

happened here. Appellants have not challenged the severance on appeal. Thus, we conclude any

error in the timing of the trial court’s decision to award fees was harmless.

Appellants also challenge the fee award substantively. And, as detailed above, appellants

challenged the underlying bases for the award of fees. Appellants challenged Hebert’s claim that

the Noncompete was overly broad; we have ruled in appellants’ favor on that issue as well.

Accordingly, Hebert was not entitled to an award of attorney’s fees under the statute that requires

attempted enforcement of a covenant that “did not contain limitations as to time, geographical

area, and scope of activity to be restrained that were reasonable.” TEX. BUS. & COMM. CODE

ANN. § 15.51(c).

Appellants also challenged—and we have reversed—Hebert’s First Summary Judgment,

which declared that Hebert was not subject to the Noncompete because ADFW, the employer

named on the 2008 Agreement, did not exist. In a declaratory judgment action, a court “may

award . . . reasonable and necessary attorney’s fees as are equitable and just.” TEX. CIV. PRAC. &

REM. CODE ANN. § 37.009. Appellants argue here, inter alia, that an award of fees under this

statute cannot be equitable and just given the evidence demonstrating Hebert violated his

Noncompete. Whether an attorney’s fee award is equitable and just is a question of law for the

trial court to decide. Ridge Oil Co., Inc. v. Guinn Inv., Inc., 148 S.W.3d 143, 161 (Tex. 2004).

However, our opinion in this case significantly changes the trial court’s final judgment, and we

cannot discern whether the trial court would still consider its award of fees to be equitable and

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just in light of those changes. See State Farm Lloyds v. C.M.W., 53 S.W.3d 877, 894–95 (Tex.

App.—Dallas 2001, pet. denied). Accordingly, we conclude the issue of attorney’s fees must be

reversed and remanded to the trial court for reconsideration following further proceedings. See

Wells Fargo Bank Nw., N.A. v. RPK Capital XVI, L.L.C., 360 S.W.3d 691, 712-13 (Tex. App.—

Dallas 2012, no pet.).

We sustain appellants’ fourth issue.

VIII.
PENDING MOTIONS

Hebert has filed a series of motions in this Court. We address those that remain pending.

Appellee’s Motion to Strike Supplemental Record Material

The record in this case is complex, containing documents filed with each of the two

interlocutory appeals as well as the appeal from the final judgment in the case below. In this

motion, Hebert asks us to strike the three volumes of supplemental clerk’s record filed on June

12, 2012 (the “June 12 Record”). These volumes include documents filed in the case severed

from the case appealed here. Specifically, the volumes include documents from appellants’

efforts to recuse the trial judge in the severed cause. Appellants requested these items be placed

in a supplemental record.

“If a relevant item has been omitted from the clerk’s record, the trial court, the appellate

court, or any party may by letter direct the trial court clerk to prepare, certify, and file in the

appellate court a supplement containing the omitted item.” TEX. R. APP. R. 34.5(c)(1).

However, the caption and dates on these documents establish on their face that they were filed in

the trial court (a) after the final judgment and notice of appeal in this cause, and (b) in the

severed cause. We will not consider documents that were not properly part of the trial court’s

record in this cause. See Mullins v. Mullins, 202 S.W.3d 869, 873 (Tex. App.—Dallas 2006, pet.

denied) (striking supplemental record including letters not included in trial court’s record); see
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also In re E.W., No. 05-01-01463-CV, 2002 WL 1265541, at *3 (Tex. App.—Dallas June 7,

2002, pet. denied) (not designated for publication) (rule does not “permit the clerk’s record in an

appeal to be supplemented unless it is clear that the item to be considered was on file when the

trial court rendered judgment”).

We grant Hebert’s motion to strike in part. The June 12 Record includes documents that

were on file with the trial court at the time of the severance at Volume 1, pages 1 through 100,

and pages 103 and 104. These documents will remain in the record for this appeal. The

remainder of the June 12 record is stricken.

Appellee’s Motion to Dismiss Appeal

Hebert filed a motion seeking to dismiss appellants’ interlocutory appeal of the trial

court’s order denying confirmation of the arbitration award. That interlocutory appeal has now

been consolidated into the appeal from the final judgment in this case, rendering the motion to

dismiss the interlocutory appeal moot. We overrule Appellee’s Motion to Dismiss Appeal.

Appellee’s Motion to Dismiss Second Appeal
Hebert also filed a motion to dismiss appellants’ interlocutory appeal of the modification

of the agreed temporary injunction. As noted above, the trial court’s final judgment rendered the

interlocutory appeal of the temporary injunction moot. See Isuani, 802 S.W.2d at 236. We

overrule Appellee’s Motion to Dismiss Second Appeal as moot.

Appellants’ Objection to Post-Argument Briefing

By letter dated October 16, 2013, counsel for appellants objected to supplemental

briefing offered by Hebert’s counsel after oral argument of this case. The Court does not

generally consider post-argument briefing that it has not requested unless that briefing is to

identify relevant opinions decided after the date of submission. We follow that procedure in this

case.

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 IX.
CONCLUSION

We affirm the trial court’s judgment in part and reverse in part. We affirm the trial

court’s judgment in favor of Hebert on the following counterclaims pleaded by appellants:

• breach of oral agreements made during litigation,

• misappropriation of trade secrets,

• harmful acts by computer,

• tortious interference with existing contract and prospective business relations,

• civil conspiracy,

• attorney’s fees, and

• declaratory judgment.

In all other respects, we reverse the trial court’s judgment and remand this case for

further proceedings consistent with this opinion.

/David Lewis/
DAVID LEWIS
JUSTICE

120321F.P05

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 S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT

AMERIPATH, INC. AND DFW 5.01(A) On Appeal from the 199th Judicial District
CORPORATION, Appellant Court, Collin County, Texas
Trial Court Cause No. 199-03680-2009.
No. 05-12-00321-CV V. Opinion delivered by Justice Lewis,
Justices Bridges and Fillmore participating.
STEVEN HEBERT, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED in part and REVERSED in part.

We AFFIRM the trial court’s judgment in favor of Steven Hebert on the following
counterclaims pleaded by AmeriPath Inc. and DFW 5.01(a) Corporation:

• breach of oral agreements made during litigation,

• misappropriation of trade secrets,

• harmful acts by computer,

• tortious interference with existing contract and prospective business relations,

• civil conspiracy,

• attorney’s fees, and

• declaratory judgment.

In all other respects, we REVERSE the trial court’s judgment and REMAND this case for
further proceedings consistent with this opinion.

It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 5th day of August, 2014.