ACCEPTED
05-15-00123-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
9/22/2015 1:38:37 PM
LISA MATZ
CLERK
No. 05-15-00123-CV
_____________________________________________________
FILED IN
In the Fifth Court of Appeals 5th COURT OF APPEALS
DALLAS, TEXAS
Dallas, Texas 9/22/2015 1:38:37 PM
_____________________________________________________
LISA MATZ
Clerk
BRINSON BENEFITS, INC.,
Appellant,
vs.
LINDA HOOPER, SEAN SENDELBACH AND
HOLMES MURPHY & ASSOCIATES, INC.,
Appellees.
_____________________________________________________
Appeal from the 101st Judicial District Court
Dallas County, Texas
_____________________________________________________
Brief of Appellee Linda Hooper
_____________________________________________________
James C. Scott
Texas Bar No. 24056287
Gardere Wynne Sewell LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Tel: 214-999-3000
Fax: 214-999-4667
jscott@gardere.com
ATTORNEYS FOR APPELLEE
LINDA HOOPER
ORAL ARGUMENT REQUESTED
List of Parties and Counsel
Appellant: Counsel:
Brinson Benefits, Inc. Lu Pham
David Speed
Cantey Hanger LLP
Fort Worth, Texas
(Trial Counsel)
Lyndon F. Bittle
Monica Latin
Carrington, Coleman, Sloman &
Blumenthal, L.L.P.
Dallas, Texas
(Appellate Counsel)
Appellees: Counsel:
Linda Hooper James C. Scott
Gardere Wynne Sewell LLP
Dallas, Texas
(Trial and Appellate Counsel)
Sean Sendelbach and Cody L. Towns
Holmes Murphy & Associates, Inc. The Rodriguez Firm
Dallas, Texas
(Trial and Appellate Counsel)
i
Table of Contents
List of Parties and Counsel ................................................................................................................. i
Statement of the Case ......................................................................................................................viii
Statement of Issues ............................................................................................................................ix
Statement of Facts...............................................................................................................................1
Summary of the Argument.................................................................................................................8
Argument............................................................................................................................................10
I. Standard of Review ..................................................................................................10
II. Hooper Prevailed on the Theft of Confidential Information Claim.................11
A. A defendant that successfully defends a TTLA claim is entitled
to attorney’s fees ..........................................................................................12
B. Brinson did not prevail on the theft of confidential information
claim...............................................................................................................17
1. The trial court allowed Brinson to submit a
separate theft claim to the jury ......................................................17
2. Brinson did not prevail on the TTLA claim
concerning confidential and proprietary information ................20
C. The trial court did not commit reversible error in excluding
damages for theft of confidential information.........................................23
1. Brinson’s lost profits damages regarding Door Control
were too speculative ........................................................................24
2. Brinson did not disclose the alternative measure of damages...27
III. The Trial Court Awarded a Proper Amount in Attorney’s Fees .......................29
A. Brinson suffered no injury from the trial court’s failure to make
factual findings .............................................................................................29
B. Hooper segregated fees unless legal services advanced both
recoverable and unrecoverable claims.......................................................31
Prayer .................................................................................................................................................35
ii
Certificate of Compliance.................................................................................................................36
Certificate of Service .........................................................................................................................36
Appendix ............................................................................................................................................37
iii
Table of Authorities
Page(s)
CASES
7979 Airport Garage, L.L.C. v. Dollar Rent A Car Sys., Inc.,
245 S.W.3d 488 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) ......................32
A&L Eng’g and Consulting, Inc. v. Shiloh Apollo Plaza, Inc.,
315 S.W.3d 928 (Tex. App.—Dallas 2010, no pet.).......................................................32
Air Routing Int’l Corp. (Canada) v. Britannia Airways, Ltd.,
150 S.W.3d 682 (Tex. App.—Houston [14th Dist.] 2004, no pet.) ............................12
Alcatel USA, Inc. v. Cisco Systems, Inc.,
239 F.Supp.2d 660 (E.D. Tex. 2002) ..........................................................................21, 28
Arrow Marble, LLC v. Killion,
No. 01-12-01133-CV, 441 S.W.3d 702 (Tex. App.—Houston [1st Dist.]
2014, no pet.)...................................................................................................................14, 16
Healthcare Grp., Ltd. v. McShane,
239 S.W.3d 231 (Tex. 2007) .........................................................................................10, 23
BBP Sub I LP v. Di Tucci,
No. 05-12-01523-CV, 2014 WL 3743669 at *4 (Tex. App.—Dallas July 29,
2014, no pet.).........................................................................................................................14
Bostrom Seating, Inc. v. Crane Carrier Co.,
140 S.W.3d 681 (Tex. 2004) ...............................................................................................10
Bowie Mem’l Hosp. v. Wright,
79 S.W.3d 48 (Tex. 2002) ....................................................................................................23
Brown v. Kleerekoper,
No. 01-11-00972-CV, 2013 WL 816393, at *12-14 (Tex. App.—Houston
[1st Dist.] March 5, 2013, pet denied) ...............................................................................16
City of Keller v. Wilson,
168 S.W.3d 802 (Tex. 2005) ...............................................................................................10
Cricket Communications, Inc. v. Trillium Indus., Inc.,
235 S.W.3d 298 (Tex. App.—Dallas 2007, no pet.).......................................................13
iv
Edlund v. Bounds,
842 S.W.2d 719 (Tex. App.—Dallas 1992, writ denied) ...............................................11
El Apple I, Ltd. v. Olivas,
370 S.W.3d 757 (Tex. 2012) ...............................................................................................10
Epps v. Fowler,
351 S.W.3d 862 (Tex. 2011) ...................................................................................12, 14, 15
ERI Consulting Eng’rs, Inc. v. Swinnea,
318 S.W.3d 867 (Tex. 2010) ...............................................................................................25
Formosa Plastics Corp. v. Presidio Eng’rs and Contractors,
960 S.W.2d 41 (Tex. 1998)..................................................................................................25
Gee v. Liberty Mut. Fire Ins. Co.,
765 S.W.2d 394 (Tex. 1989) ...............................................................................................24
Gharda USA, Inc. v. Control Solutions, Inc.,
464 S.W.3d 338 (Tex. 2015) ...............................................................................................26
Glattly v. Air Starter Components, Inc.,
332 S.W.3d 620, 641 (Tex. App.—Houston [1st Dist.] 2010, pet. denied) ................21
Hawkins v. Walker,
233 S.W.3d 380 (Tex. App.—Fort Worth 2007, no pet.) .............................................22
Holland v. Wal-Mart Stores, Inc.,
1 S.W.3d 91 (Tex. 1999) ................................................................................................10, 11
Holt Atherton Indus., Inc. v. Heine,
835 S.W.2d 80 (Tex. 1992)..................................................................................................25
Intercontinental Group Partnership v. KB Home Lone Star L.P.,
295 S.W.3d 650 (Tex. 2009) ...............................................................................................21
Interstate Northborough P’ship v. State,
66 S.W.3d 213 (Tex. 2001)............................................................................................23, 24
Jones v. Frank Kent Motor Co.,
No. 02-14-00216-CV, 2015 WL 4965798 (Tex. App.—Fort Worth Aug. 20,
2015, no pet. hist.) ................................................................................................................14
v
Kellmann v. Workstation Integrations, Inc.,
332 S.W.3d 679 (Tex. App.—Houston [14th Dist.] 2010, no pet.) .............................21
King Ranch, Inc. v. Chapman,
118 S.W.3d 742 (Tex. 2003) ...............................................................................................25
Kroger Tex., Ltd. P’ship v. Suberu,
216 S.W.3d 788 (Tex. 2006) ...............................................................................................25
Larry F. Smith, Inc. v. The Weber Co., Inc.,
110 S.W.3d 611 (Tex. App.—Dallas 2003, pet. denied) ...............................................30
Moak v. Huff,
No. 04-11-00184-CV, 2012 WL 566140 (Tex. App.—San Antonio Feb. 15,
2012, no pet.)...................................................................................................................12, 15
Morgan v. Compugraphic Corp.,
675 S.W.2d 729 (Tex. 1984) ...............................................................................................26
Owen Elec. Supply, Inc. v. Brite Day Constr., Inc.,
821 S.W.2d 283 (Tex. App.—Houston [1st Dist.] 1991, writ denied) .......................31
Owens-Corning Fiberglas Corp. v. Malone,
972 S.W.2d 35 (Tex. 1998)..................................................................................................23
Peoples v. Genco Fed. Credit Union,
No. 10-09-00032-CV, 2010 WL 1797266 (Tex. App.—Waco May 5, 2010,
no pet). (mem. op.)...............................................................................................................12
Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc.,
29 S.W.3d 74 (Tex. 2000) ....................................................................................................11
Santiago v. Central Mtg. Co.,
No. 05-14-00552-CV, 2015 WL 1805048 (Tex. App.—Dallas June 16, 2015,
no pet. h.) .........................................................................................................................29, 31
Southwestern Energy Production Co. v. Berry-Helfand,
411 S.W.3d 581 (Tex. App.—Tyler 2013, pet. granted)................................................13
Spector, Gadon & Rosen, P.C. v. Sw. Securities, Inc.,
372 S.W.3d 244 (Tex. App.—Dallas 2012, no pet.).......................................................11
Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299 (Tex. 2006) ...............................................................................................31
vi
Travel Music of San Antonio, Inc. v. Douglas,
2002 WL 1058527 (Tex. App.—San Antonio May 29, 2002, pet. denied) ...............13
STATUTES
TEX. CIV. PRAC. & REM. CODE § 134.002(2) ........................................................................19
TEX. CIV. PRAC. & REM. CODE § 134.003(a).........................................................................21
TEX. CIV. PRAC. & REM. CODE § 134.005(a).........................................................................28
TEX. CIV. PRAC. & REM. CODE § 134.005(b) ........................................................................12
Tex. Pen. Code § 31.01(5)(B) ...................................................................................................19
Tex. Pen. Code § 31.01(5)(C) ...................................................................................................19
OTHER AUTHORITIES
TEX. R. APP. P. 44.1(a)(1) ...........................................................................................................23
vii
Statement of the Case
Nature of the case: Brinson Benefits, Inc. (“Brinson”) sued its former employee
Linda Hooper (“Hooper”) for misappropriation of trade
secrets, breach of fiduciary duty, conversion, tortious
interference, and violation of the Texas Theft Liability Act.
Brinson amended its petition to add another former
employee Sean Sendelbach (“Sendelbach”) and a competitor
Holmes Murphy & Associates, Inc. (“Holmes Murphy”) on
claims of tortious interference and conspiracy.
Course of proceedings: In July 2012, Brinson obtained a TRO and then a temporary
injunction against Hooper to protect its confidential
information and to prevent Hooper from contacting certain
clients until December 1, 2012, at which time the injunction
expired. The parties conducted extensive discovery and
filed two sets of summary judgment briefing, which were
denied by the trial court. The parties tried the case to a jury
in September 2014.
Disposition below: The trial court granted direct verdict to the defendants on
Brinson’s theft of confidential and proprietary information
claim. Brinson withdrew its claims for misappropriation of
trade secrets and conversion. The jury found Hooper
breached her fiduciary duty and committed theft of
commissions. The jury awarded Brinson $37,660.01 in
actual damages and $500 in statutory damages.
The parties agreed to submit their claims for attorneys’ fees
under the Texas Theft Liability Act to the trial court. The
court entered judgment on November 6, 2014 awarding
Brinson damages found by the jury, plus $100,277.90 in
attorney’s fees for prevailing on its theft of outside
commissions claim. The court also awarded Hooper
$388,970.30 in attorneys’ fees, and Sendelbach and Holmes
Murphy $372,519.76 in attorney’s fees for successfully
defending Brinson’s theft of confidential information claim.
viii
Statement of Issues
Brinson complains of the trial court’s judgment awarding Hooper attorney’s
fees as the prevailing party on Brinson’s claim for theft of confidential and proprietary
information under the Texas Theft Liability Act. Brinson’s appeal raises the following
issues:
1. Was Hooper entitled to her attorney’s fees for successfully defending
herself in two plus years of litigation when the trial court granted directed verdict in
her favor at trial as the prevailing party on Brinson’s theft of confidential information
claim under the Texas Theft Liability Act?
2. Did the trial court abuse its discretion in excluding evidence of lost
profit damages regarding Door Control Services, Inc. when (i) neither Brinson,
Hooper or Holmes Murphy had ever secured Door Control Services as a client and
(ii) Brinson never presented any evidence that, but for Hooper’s alleged theft of
confidential information, Door Control Services’ owner (and ultimate decision maker)
would have decided to leave its insurance broker of eight years to use Brinson?
3. Did the trial court commit reversible error in failing to issue findings of
fact and conclusions of law regarding its award of attorney’s fees to Hooper when (i)
the only ground to recover those fees was under the theft claim, (ii) the trial court
stated in its judgment that the fees were reasonable and necessary, and (iii) Brinson
has not shown that it was injured by the error?
4. Did the trial court abuse its discretion in awarding Hooper her attorney’s
fees for defending Brinson’s theft of confidential information claim when the
evidence showed that (i) the fees were reasonable and necessary, (ii) the time
associated with the fees advanced Hooper’s defense as to all the claims seeking lost
profit damages, and (iii) the fees were segregated from the fees associated with
Brinson’s claim for outside commissions and Hooper’s counterclaim for breach of
contract?
ix
Statement of Facts
Brinson hires Hooper
Brinson is an insurance agency owned by Dawn Brinson that provides
employee benefits advisory services, insurance brokerage, insurance advice, and
insurance program management. (16 RR 86-87). On or about May 2006, Brinson
hired Hooper as an insurance broker (or producer). (14 RR 79; 15 RR 93; 16 RR 88).
Brinson allowed Hooper to choose which clients she wanted to bring to
Brinson when she started. (15 RR 90-97). Brinson also allowed Hooper to work out
of the office and on her personal laptop – which she did over the next six years. (15
RR 100-101). Hooper did not have a non-compete or non-solicit agreement with
Brinson. (14 RR 96). Brinson paid Hooper straight commission based only on the
clients that she developed and brought to Brinson. (14 RR 86, 15 RR 98-100).
Hooper brought her larger clients with her to Brinson but chose not to run two
smaller clients through Brinson. (15 RR 97-98). Hooper received commissions
directly from the carrier on these two clients and certain individuals. (15 RR 90-91; 14
RR 99).
Hooper wants a life change
In October 2011, Hooper lost her husband to a tragic accident. (15 RR 102-
103). Hooper decided to make a life change and pursue other employment options
that would allow her to not work as much as she was at Brinson. (15 RR 103-105).
Thus, in March 2012, she reached out to and met with her friend and former Brinson
1
colleague Sendelbach who was working at Holmes Murphy (another insurance
agency). (15 RR 110-111).
In May 2012, Brinson informed Hooper that it was pulling her “get out of jail
free card” and that she needed to start producing again. (14 RR 162; 15 RR 111; Pl’s.
Ex. 15). Around that same time, Hooper asked Dawn Brinson for an alternative
employment option that allowed her to cut back at work and provided her a residual
compensation from her clients if she decided to retire. (15 RR 109-110). Dawn
Brinson promised to deliver Hooper such a plan. (15 RR 110).
Door Control seeks fully funded insurance quotes
In late May, early June 2012, David Evans, the HR Director for Door Control
Services, Inc. (“Door Control”) – a prospective client, reached out to Hooper
regarding quotes for fully-funded health insurance (as opposed to self-insured). (14
RR 136, 138; 15 RR 114). Mr. Evans, who had only been with Door Control for a
couple of months, told Hooper that he did not expect Door Control would leave its
current broker of eight years and that the likelihood of a change was small because the
current broker and owner were good friends. (17 RR 97).
Nevertheless, Mr. Evans provided Hooper with the necessary private health
information regarding Door Control’s employees to allow Hooper to seek health
insurance quotes from the carriers. (14 RR 140-143).
On June 29, 2012, Hooper met with Mr. Evans, the CFO and the COO
regarding Door Control’s health insurance. (14 RR 150-151). However, Hooper had
2
no fully-funded health insurance options to provide because the carriers pulled the
quotes prior to the meeting. (15 RR 122-123; 17 RR 93).
Hooper receives an alternative employment option
On July 2, 2012, Hooper received an email from Holmes Murphy offering an
independent contractor relationship that allowed Hooper to cut back on working and
to receive a commission on any clients referred to Holmes Murphy. (15 RR 120-121).
That same day, Hooper met with Dawn Brinson to discuss alternative
employment options. (15 RR 17-18; 122). Ms. Brinson provided Hooper with an
employment agreement containing a non-compete and a residual compensation plan
broken down into different categories. (15 RR 123-125; Dfs.’ Ex. 36). Ms. Brinson,
however, could not tell Hooper which category she would fit into and Brinson had
the ability to unilaterally change the plan at any time. (15 RR 124-125).
At that meeting, Hooper informed Ms. Brinson that she was working on Door
Control but that the carriers had pulled the fully-funded insurance quotes and thus
there was nothing to present. (15 RR 122-123).
After the meeting, Hooper decided for sure she was leaving Brinson. (15 RR
126).
Hooper resigns and Door Control decides to explore self-funded quotes
On July 3, 2012, at roughly 9:00 a.m., Hooper resigned from Brinson. (15 RR
126).
On July 5, 2012, David Evans of Door Control emailed Hooper seeking self-
3
insured health insurance options instead of fully-funded ones. (15 RR 136; Pl’s Ex.
26A). That same day, Door Control gave Hooper a letter of authorization to obtain
its private health information regarding its employees. (17 RR 102-103, Pl’s Ex. 26B).
Door Control remains with current broker
Door Control, however, remained with its current broker of eight years. (17
RR 95). Hooper never met Door Control’s owner and ultimate decision maker
regarding any health insurance options. (15 RR 114; 17 RR 108).
The Lawsuit
On July 9, 2012, Brinson sued Hooper for misappropriation of trade secrets
and breach of fiduciary duty, among other claims, and obtained a TRO alleging that
Hooper misappropriated Brinson’s “trade secrets and confidential/proprietary
information.” (1 CR 15-29). Brinson’s theft claim under the TTLA asserted the
following:
Defendant’s conduct constitutes theft of Brinson Benefits’ proprietary
and confidential information and property. Defendant unlawfully took
Brinson Benefits’ proprietary and confidential information and property
with the intent to deprive Brinson Benefits of it. Brinson Benefits has
formally demanded that Defendant return the confidential information
and property, but to no avail. As a result, Brinson Benefits has suffered
injury.
(1 CR 25).
Brinson requested and obtained a temporary injunction until December 1, 2012
enjoining Hooper from using or disclosing Brinson’s alleged confidential, proprietary,
and/or trade secret information and from contacting certain clients. (1 CR 53-61). At
4
the hearing, Brinson’s counsel stated:
What we are asking the Court to do today, Your Honor, is to enjoin Ms.
Hooper from using Brinson Benefits’ confidential and proprietary
information or their trade secrets that she possessed and took with her
after she left the company. Particularly, Your Honor, the client data
sheets.
(3 RR 24).
On August 27, 2012, Brinson filed its amended petition wherein it alleged for
the first time in passing that Hooper serviced clients for her own benefit and received
commissions outside the company. (1 CR 168). However, Brinson’s theft claim
under the TTLA did not change – it still concerned confidential and proprietary
information. (1 CR 173).
On October 17, 2012, Brinson filed its motion for continuance and extension
of the temporary injunction. (1 CR 372-379). Brinson asked the trial court “to extend
the Temporary Injunction because it is apparent that Defendants have used, and will
continue using, Plaintiff’s trade secret/confidential/proprietary information in their
attempts to usurp Plaintiff’s clients.” (1 CR 372). The trial court denied Brinson’s
motion.
In October 2012 and again in December 2013, the parties filed summary
judgment briefing that overwhelmingly discussed and argued the alleged
misappropriation of confidential/proprietary and trade secret information and
whether there was ever any intent to deprive, any use or disclosure, or any causation
and damages resulting therefrom. (1 CR 651, 850, 1693; 2 CR 2260, 2445; 3 CR
5
2687). The trial court denied those motions. (1 CR 1768, 1901; 11 RR 64).
On December 20, 2013, Brinson filed its fifth amended petition and its theft
claim remained the same from the beginning – theft of Brinson’s proprietary and
confidential information and property. (3 CR 2775).
Hooper filed a counterclaim for attorney’s fees under the Texas Theft Liability
Act. (2 CR 1964).
Pre-trial and Trial
On December 26, 2013, Hooper filed a motion to strike Dawn Brinson as an
expert on lost business calculation and valuations extending into the future (allegedly
resulting from misappropriation of confidential and trade secret information). (3 CR
2887). The trial court agreed that Dawn Brinson was not an expert on future lost
profits. (12 RR 11).
In September 2014, the parties tried the case to a jury. After the parties rested
their case, the trial court granted Hooper’s motion for directed verdict on Brinson’s
theft claim concerning confidential and proprietary information. (17 RR 249). The
trial court, however, suggested to Brinson and allowed Brinson to submit a separate
claim for theft of outside commissions over Hooper’s objection that it was never pled
as a theft claim. Id.
Brinson withdrew its misappropriation of trade secrets and conversion claims.
(18 RR 4-5, 19-20).
On September 10, 2014, the jury entered its verdict and awarded Brinson
6
roughly $31,000 for its theft claim concerning outside commissions. (4 CR 4327).
However, Hooper prevailed on Brinson’s theft claim concerning confidential and
proprietary information whereby Brinson sought hundreds of thousands of dollars in
damages against Hooper.
Post-Trial
After trial, the parties agreed to submit the determination of attorney’s fees to
the trial court for decision. (4 CR 4349). On November 6, 2014, the trial court
entered judgment and awarded Hooper, Sendelbach and Holmes Murphy reasonable
and necessary attorney’s fees for successfully defending Brinson’s theft of confidential
information claim. (Appendix 1). The trial court also awarded Brinson, in addition to
the jury award, its attorney’s fees in successfully prosecuting it theft of outside
commissions claim. Id.
7
Summary of the Argument
This is an attorney’s fees case arising under the Texas Theft Liability Act
(“TTLA”). As relevant here, Brinson sued Hooper for theft of confidential and
proprietary information under the TTLA. Brinson claimed that the alleged theft of its
trade secrets somehow caused it to lose a prospect known as Door Control and thus
Brinson sought hundreds of thousands of dollars in lost profit damages. Because
there was absolutely no evidence of causation (i.e. that Brinson would have secured
Door Control as a client), the trial court excluded any evidence associated with Door
Control and eventually granted Hooper directed verdict on the theft claim at trial after
both sides rested.
Hooper successfully defended Brinson’s theft of confidential information claim
in over two years of litigation whereby Brinson relentlessly pursued the unfounded
belief that it lost over $650,000.00 in lost profits. Thus, pursuant to the TTLA,
Hooper is entitled to recover her attorney’s fees as the prevailing party. Even though
Brinson won on the separate theft claim concerning outside commissions, it
unquestionably lost on the theft claim concerning confidential information. Brinson
did not suffer actual damages resulting from the alleged theft of confidential
information and thus was not the prevailing party.
Brinson’s alleged damages for not securing Door Control as a client was
speculative and resulted in no evidence. Brinson offered no evidence whatsoever that
Door Control’s owner and final decision maker would have decided to leave Door
8
Control’s insurance broker of eight years and move to Brinson but for Hooper’s
alleged theft of confidential information. Because of this, and because Brinson
offered no expert testimony regarding lost profit damages based on reliable data, the
trial court properly excluded the evidence.
The trial court awarded Hooper her attorney’s fees under the TTLA for
successfully defending the theft of confidential information claim. The trial court,
however, failed to issue findings of fact and conclusions of law on the attorney’s fees.
Nevertheless, Brinson has not shown that it was injured by the trial court’s failure. In
fact, Brinson is not injured because no one has to guess why the trial court awarded
fees to Hooper. There was only one ground for recovery of attorney’s fees and that
was under the TTLA, as outlined in Hooper’s post-trial motion for attorney’s fees.
Moreover, the trial court specifically stated that based on the directed verdict and his
review and consideration of the motion for attorney’s fees, he awarded “reasonable
and necessary attorneys’ fees” to Hooper. Thus, the trial court found and concluded
that $388,970.30 in attorney’s fees were reasonable and necessary.
Hooper properly segregated recoverable fees from fees associated with
defending Brinson’s theft of outside commissions claim and prosecuting her breach
of contract counterclaim. The remaining fees were so intertwined that they could not
be segregated because they related to defending against Brinson’s overarching
allegation that it had confidential and trade secret information and that taking that
information somehow caused it to lose almost a million dollars in lost profit damage.
9
Hooper’s attorney’s fees were incurred defending these allegations and thus advanced
both recoverable and unrecoverable claims.
Hooper asks this court to affirm the trial court’s final judgment.
Argument
I. Standard of Review.
The availability of attorney’s fees under a particular statute is a question of law
for the court that is reviewed de novo. Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94
(Tex. 1999). An appellate court reviews a trial court’s decision to award attorney’s
fees for an abuse of discretion. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 761 (Tex.
2012). The court also reviews whether the trial court properly excluded evidence
under an abuse of discretion standard. Bay Area Healthcare Grp., Ltd. v. McShane, 239
S.W.3d 231, 234 (Tex. 2007).
In reviewing the grant of a directed verdict, an appellate court follows the
standards for assessing the legal sufficiency of the evidence. City of Keller v. Wilson, 168
S.W.3d 802, 809-828 (Tex. 2005). When reviewing a directed verdict, an appellate
court must credit the favorable evidence if reasonable jurors could and disregard the
contrary evidence unless reasonable jurors could not. Id. at 827. An appellate court
must determine whether there is any evidence of probative force to raise a fact issue
on the question presented. See Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681,
684 (Tex. 2004).
A directed verdict is warranted when the evidence is such that no other verdict
10
can be rendered and the moving party is entitled, as a matter of law, to a judgment.
Edlund v. Bounds, 842 S.W.2d 719, 724 (Tex. App.—Dallas 1992, writ denied). A trial
court may order a directed verdict in favor of a defendant when: (1) a plaintiff fails to
present evidence raising a fact issue essential to the plaintiff’s right of recovery; or (2)
the plaintiff admits or the evidence conclusively establishes a defense to the plaintiff’s
cause of action. See Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77
(Tex. 2000). A trial court may properly direct a verdict if no evidence of probative
force raises a fact issue on the material questions in the lawsuit. Id.
With the above standard of review as the setting, Hooper addresses Brinson’s
arguments in the order that they were presented to this Court. Brinson’s appeal
concerns the following general issues: (1) whether Hooper is entitled to her attorney’s
fees as the prevailing party under the TTLA and (2) whether the trial court awarded
Hooper a proper amount of attorney’s fees.
II. Hooper Prevailed on the Theft of Confidential Information Claim.
Brinson argues that the trial court erred by awarding Hooper attorney’s fees
pursuant to section 134.005(b) of the TTLA because Hooper was not a “person who
prevail[ed]” under the statute. Whether a party is entitled to recover attorney’s fees
under a particular statute is a question of law. Holland, 1 S.W.3d at 94. Thus, this
court reviews the issue de novo. Spector, Gadon & Rosen, P.C. v. Sw. Securities, Inc., 372
S.W.3d 244, 248 (Tex. App.—Dallas 2012, no pet.). As shown below, Hooper
prevailed in successfully defending Brinson’s theft of confidential information claim
11
and is thus entitled to her attorney’s fees in defending that claim.
A. A defendant that successfully defends a TTLA claim is
entitled to attorney’s fees.
The TTLA provides that “[e]ach person who prevails in a suit under this
chapter shall be awarded court costs and reasonable and necessary attorney’s fees.”
TEX. CIV. PRAC. & REM. CODE § 134.005(b). The award of fees to a prevailing party
in a TTLA action is mandatory. Moak v. Huff, No. 04-11-00184-CV, 2012 WL
566140, at *11 (Tex. App.—San Antonio Feb. 15, 2012, no pet.). A defendant who
successfully defends a TTLA suit is entitled to recover his fees. See Air Routing Int’l
Corp. (Canada) v. Britannia Airways, Ltd., 150 S.W.3d 682, 684 (Tex. App.—Houston
[14th Dist.] 2004, no pet.); Peoples v. Genco Fed. Credit Union, No. 10-09-00032-CV,
2010 WL 1797266, at *7 (Tex. App.—Waco May 5, 2010, no pet). (mem. op.). A
prevailing defendant is entitled to attorney’s fees “without any prerequisite that the
claim is found to be groundless, frivolous, or brought in bad faith.” Air Routing Int’l
Corp., 150 S.W.3d at 686.
The phrase “person who prevails,” as used in section 134.005(b) of the TTLA,
is not defined in the TTLA, and no other provision of the Act sheds light on the
meaning of the phrase. See TEX. CIV. PRAC. & REM. CODE § 134.005(b). Courts have
looked to the term “prevails” ordinary meaning to determine its scope for both
statutory and contractual claims. See e.g., Epps v. Fowler, 351 S.W.3d 862, 866 (Tex.
2011) (construing written contract to give meaning to undefined term “prevailed”
12
while noting the phrase “prevailing party” is given its ordinary meaning and has been
explicated through statutory interpretation by many courts).
Brinson’s position is that Hooper cannot be a prevailing party until the case is
fully litigated on the merits and she establishes that she did not commit theft.
(Brinson’s Br., pp. 20, 23). Brinson relies on an unreported San Antonio court of
appeals’ opinion wherein the plaintiff dismissed its TTLA claim without prejudice
nine months before trial. See Travel Music of San Antonio, Inc. v. Douglas, 2002 WL
1058527 at *3 (Tex. App.—San Antonio May 29, 2002, pet. denied). The court in that
case reversed the trial court’s award of attorney’s fees to the defendants because the
case was not fully litigated. Id.; see also Cricket Communications, Inc. v. Trillium Indus., Inc.,
235 S.W.3d 298, 310-311 (Tex. App.—Dallas 2007, no pet.) (plaintiff nonsuited
TTLA claim without prejudice and defendants did not plead for attorney’s fees under
the TTLA).
Here, Brinson prosecuted its theft of confidential information claim all the way
through trial and the trial court granted directed verdict in favor of Hooper on that
claim after both sides rested. The theft of confidential information claim was fully
litigated and Hooper prevailed by successfully defending the claim. See Southwestern
Energy Production Co. v. Berry-Helfand, 411 S.W.3d 581, 614 (Tex. App.—Tyler 2013, pet.
granted) (appellate court reversed the jury’s finding in favor of the plaintiff on the
theft claim due to no evidence and remanded the case to the trial court for the
determination and award of attorney’s fees to the defendant as the prevailing party
13
under the TTLA); see also Jones v. Frank Kent Motor Co., No. 02-14-00216-CV, 2015 WL
4965798 at *3 (Tex. App.—Fort Worth Aug. 20, 2015, no pet. hist.) (counter-
defendant successfully defended against counter-plaintiff’s theft claim and was
therefore the prevailing party).
Regardless, other cases show that the TTLA claim does not have to be fully
litigated, nor does the defendant have to establish that she did not commit theft. For
example, in BBP Sub I LP v. Di Tucci, this Court affirmed the trial court’s award of
attorney’s fees to the defendant as the prevailing party even though the plaintiff
nonsuited its TTLA claim without prejudice. No. 05-12-01523-CV, 2014 WL
3743669 at *4 (Tex. App.—Dallas July 29, 2014, no pet.) (mem. op.). This Court
relied on Epps, 351 S.W.3d at 869 in holding that a defendant is entitled to attorney’s
fees under the TTLA as a “person who prevails” after a plaintiff voluntarily nonsuits
without prejudice, if the trial court determines that the nonsuit was taken to avoid an
unfavorable ruling on the merits. Di Tucci, 2014 WL 3743669 at *4. In Di Tucci, the
record reflected that the plaintiff voluntarily dismissed the TTLA claim to avoid an
unfavorable judgment on the merits. Id.
Further, a TTLA claim dismissed with prejudice for want of prosecution
permits the defendant to qualify as a prevailing party under the TTLA statute. See
Arrow Marble, LLC v. Killion, No. 01-12-01133-CV, 441 S.W.3d 702, 708 (Tex. App.—
Houston [1st Dist.] 2014, no pet.). In Arrow Marble, the court determined that res
judicata attaches to a dismissal with prejudice even though the plaintiff’s claims have
14
not been fully litigated at trial. Id. at 707. Thus, the legal relationship between a
plaintiff and defendant changes because res judicata prohibits the plaintiff from re-
asserting his claims against that defendant in a later suit. Id.; see also Epps, 351 S.W.3d
at 867.
Here, Brinson’s theft of confidential information claim was dismissed on
directed verdict after it was fully litigated. Such a ruling altered the parties’ legal
relationship to Hooper’s benefit. Hooper can never again be sued by Brinson for
theft of confidential information. Thus, Hooper prevailed on that claim.
Brinson also argues that since Hooper did not prevail on the entire suit, she
should not be entitled to attorney’s fees under the TTLA as the prevailing party.
(Brinson’s Br., p. 18-19). Brinson’s assertion is wrong. In Moak v. Huff, the defendant
lost on the plaintiff’s DTPA claim but successfully defended against the plaintiff’s
TTLA claim. 2012 WL 566140, at *1. The defendant sought an award of attorney’s
fees under the TTLA. Id., at *9. The plaintiff resisted, arguing that a person does not
“prevail in a suit” unless he is the “party in whose favor a judgment is rendered” and
is “vindicated by the judgment.” Id., at *10. The plaintiff maintained that the
defendant had to prevail on the entire suit to recover attorney’s fees under the TTLA.
Id.
The court of appeals disagreed, holding that “a person who prevails in a TTLA
cause of action is entitled to recover the reasonable fees necessarily incurred
prosecuting or defending the cause of action, even if the party is unsuccessful on
15
other claims and counterclaims litigated in the same suit.” Id., at *11; see also Arrow
Marble, LLC, 2014 WL 2958278, at *3-4 (defendant was prevailing party on theft
claim dismissed with prejudice even though it failed to obtain judgment on its breach
of contract claim).
Moreover, in Brown v. Kleerekoper, the defendant was considered the prevailing
party under the TTLA when she prevailed on one TTLA claim, lost on another TTLA
claim, and lost on a breach of contract claim. No. 01-11-00972-CV, 2013 WL
816393, at *12-14 (Tex. App.—Houston [1st Dist.] March 5, 2013, pet denied). In that
case, the plaintiff argued that by successfully prosecuting two claims out of three, he
prevailed on the main issue, even though not to the extent of his original contention.
Id. at *12. The court of appeals rejected the plaintiff’s argument and stated “[w]e
agree with the San Antonio court that a party who prevails on a TTLA cause of action
is entitled to recover attorney’s fees, even though that party may not have prevailed
on other causes of action asserted in the suit.” Id. at *14. Thus, the court of appeals
upheld the award of attorney’s fees to the defendant for successfully defending herself
on the theft of property claim under the TTLA. Id.
The trial court granted Hooper a directed verdict on Brinson’s theft of
confidential and proprietary information claim. Hooper, not Brinson, prevailed on
that particular claim, as discussed further below.
16
B. Brinson did not prevail on the theft of confidential
information claim.
Brinson argues that it actually prevailed on the TTLA claim because (1) it
asserted only one theft claim for which the jury returned a verdict in its favor or (2) it
received some relief on the merits of its theft of confidential information claim
through the temporary injunction. (Brinson’s Br. pp. 21-25). Brinson’s arguments fail
for the reasons stated below.
1. The trial court allowed Brinson to submit a separate theft claim
to the jury.
Brinson alleges that it asserted only one TTLA claim and that it prevailed on
that claim. (Brinson’s Br. pp. 21-22). The fact of the matter is that Brinson pled only
one TTLA claim – theft of confidential and proprietary information and property –
and it was dismissed on directed verdict in favor of Hooper as the prevailing party.
(17 RR 249). The trial court, however, allowed Brinson to submit to the jury a
separate TTLA claim for theft of outside commissions. Id. Hooper objected to the
newly created TTLA claim, but the court overruled the objection. (18 RR 14-15).
Hooper does not appeal the court’s ruling on her objection. Thus, there ended up
being two separate theft claims, one for theft of confidential and proprietary
information and property (i.e. trade secrets) and another for theft of outside
commissions (i.e. money received by Hooper directly from carriers). Hooper
prevailed on the first one, and Brinson prevailed on the second one. The first one –
theft of confidential information – is at issue in this appeal in determining whether
17
Hooper is entitled to her attorney’s fees for successfully defending the claim.
Brinson tries to confuse this Court by merging the later created TTLA claim
concerning outside commissions into its originally pled TTLA claim concerning
confidential information. Brinson’s original petition only asserted a TTLA claim for
theft of “proprietary and confidential information and property.” (1 CR 25). At that
point, outside commissions was not even an issue in the case. Instead, the case
concerned the alleged misappropriation and theft of trade secrets and confidential
information regarding Brinson’s clients, vendors, and data. (1 CR 15-29). Brinson
sought and obtained temporary injunctive relief on the allegation that Hooper
misappropriated “confidential, proprietary and/or trade secret information.” (1 CR
26, 53-61, 97-101).
It was not until Brinson’s first amended petition that it alleged for the first time
in passing in the facts section that Hooper serviced clients for her own benefit and
received commissions outside the company. (1 CR 168). However, Brinson’s theft
claim never changed, it was always theft of “proprietary and confidential information
and property.” (1 CR 173, 428, 1915; 2 CR 2179; 3 CR 2775).
At trial (and throughout the case), Brinson testified to the confidential and
trade secret nature of its information (i.e. client data and hot sheets) and how Hooper
allegedly stole the information through a “bulk update” from Brinson’s server to her
laptop before she resigned. (16 RR 129-132, 150-172, 295-297; see also 15 RR 60-61,
75). When the trial court asked Brinson’s counsel what property do you contend
18
Brinson was deprived of in regards to its theft claim, Brinson’s counsel answered “it is
the bulk update of the data would be the property, and that data included the Pinnacle
data.” (17 RR 248). In fact, Brinson’s proposed jury charge concerning damages for
theft did not ask for disgorgement of the outside commissions. (4 CR 4130-4131).
The TTLA claim had nothing to do with outside commissions, and instead
concerned only confidential and proprietary information. It was not until both sides
rested and the trial court granted Hooper directed verdict on the theft of confidential
and proprietary information claim that a new and separate claim for theft of outside
commissions was allowed by the court. (17 RR 249). The new theft claim came in
and was submitted to the jury over Hooper’s objection. (18 RR 14-16). Thus, the
case ended up with two different theft claims.
Brinson argues that the claims are one in the same. However, theft of
proprietary and confidential information is completely different than theft of outside
commissions (or money). The theft of confidential information is identified under
Tex. Pen. Code § 31.01(5)(B) and the theft of outside commissions is identified under
Tex. Pen. Code § 31.01(5)(C). See TEX. CIV. PRAC. & REM. CODE § 134.002(2).
Further, the two theft claims involved different sets of facts. Brinson’s theft of
confidential information claim involved proving (i) the trade secret nature of its client
data and hot sheets and other client information, (ii) that the information was part of
the alleged “bulk update” from Brinson’s server, (iii) that Brinson was deprived of its
information, and (iv) that the alleged theft of the information caused it to lose clients
19
(or a prospect) resulting in lost profits damages. Brinson’s theft of outside
commissions claim, on the other hand, involved commissions (or money) that
Hooper received directly from the carrier on other clients she personally serviced,
without running those commissions through Brinson, and that Brinson sought to
disgorge.
Moreover, the two theft claims involved different measure of damages.
Brinson’s damage model sought $658,616.00 in lost profits for theft and
misappropriation of confidential information, whereas it sought $82,882.69 in
disgorgement for outside commissions. (3 CR 2911; 4 CR 4369-4370). At trial,
Brinson sought $306,596.71 in lost profits for its theft and misappropriation of
confidential information claims (16 RR 318-327) compared to $79,882.69 in
disgorgement for outside commissions (16 RR 227-231). The lost profits calculation
allegedly dealt with historical data and retention rates of clients to determine the
damage number associated with losing clients and a prospect (i.e. Door Control). (16
RR 318-327). The disgorgement calculation simply dealt with the return of money
Hooper received directly from servicing other clients. (16 RR 227-231).
The two TTLA claims are completely different – they were asserted at different
times, involved different facts and sought different measures of damages.
2. Brinson did not prevail on the TTLA claim concerning
confidential and proprietary information.
Brinson next argues that it prevailed on the theft of confidential information
20
claim because it received some relief through the temporary injunction. (Brinson’s Br.
pp. 23-25). Brinson, however, refuses to acknowledge that it suffered a dismissal of
its theft of confidential information claim at trial on directed verdict and thus received
nothing by way of damages. Thus, Brinson did not prevail on that claim – Hooper
did.
The TTLA provides that a person “who commits theft is liable for the damages
resulting from the theft.” TEX. CIV. PRAC. & REM. CODE § 134.003(a). In addition,
under the TTLA a person “who has sustained damages” may recover the amount of
actual damages found by the trier of fact. Id. § 134.005(a)(1). In Glattly v. Air Starter
Components, Inc., the court held that the plaintiff was not a prevailing party because the
jury found no damages for the violations of the TTLA. 332 S.W.3d 620, 641 (Tex.
App.—Houston [1st Dist.] 2010, pet. denied); see also Intercontinental Group Partnership v.
KB Home Lone Star L.P., 295 S.W.3d 650, 654-55 (Tex. 2009) (a party does not prevail
on a breach of contract claim when the jury finds a breach of contract but answers
“0” for damages); Kellmann v. Workstation Integrations, Inc., 332 S.W.3d 679, 686 (Tex.
App.—Houston [14th Dist.] 2010, no pet.) (holding that no damages precluded an
award of attorney’s fees because plaintiff was not a prevailing party); Alcatel USA, Inc.
v. Cisco Systems, Inc., 239 F.Supp.2d 660, 676 (E.D. Tex. 2002) (when no damages in
any form are recoverable, the plaintiff is not a prevailing party).
Also, the Glattly court noted in response to the plaintiff’s argument that it was
the prevailing party because it received injunctive relief, that the TTLA does not
21
authorize injunctive relief. Glattly, 332 S.W.3d at 641. The court went on to state that
the only relief provided for by the TTLA is actual damages and that is the only relief
the plaintiff requested from the jury, which the jury denied by finding “0” for actual
damages. Id.; see also Hawkins v. Walker, 233 S.W.3d 380, 400 & n. 73 (Tex. App.—
Fort Worth 2007, no pet.) (stating, “[C]ourts have construed this phrase [‘prevailing
party’] to mean that the party must recover at least some of the relief sought by its
claim.”).
Brinson did not seek injunctive relief at trial. Brinson sought lost profit
damages on its theft of confidential information claim, and it lost. Brinson cannot
claim prevailing party status through a temporary injunction whereby the court
concluded that Brinson “will likely succeed” on the merits of its claims at trial
concerning misappropriation of trade secrets. (1 CR 97). As we know now, Brinson
did not succeed on its theft of confidential information claim. Moreover, Brinson
withdrew its claims for misappropriation of trade secrets and conversion. The TTLA
provides relief for only actual damages and Brinson sought only actual damages in the
form of lost profits on its theft of confidential information claim at trial and it lost on
directed verdict. Brinson had two years to form a logical damage model supported by
competent evidence and it never did. Thus, Hooper successfully defended the theft
of confidential information claim and is the prevailing party on that claim.
22
C. The trial court did not commit reversible error in excluding
damages for theft of confidential information.
Brinson argues that the trial court erred in excluding damages for the alleged
theft of confidential information related to Door Control because (1) there was some
evidence that Brinson “could have secured” Door Control as a client and thus obtain
lost profit damages or (2) there was some evidence of alternative measure of damages
beyond lost profits. (Brinson’s Br., pp. 25-34). Brinson’s arguments, however, fail
because there was no competent evidence that, but for Hooper’s alleged theft,
Brinson would have secured Door Control as a client. Aside from the speculation
that Brinson could have obtained Door Control as a client, there was also substantial
uncertainty as to the amount of damages Brinson actually suffered. Thus, the trial
court properly excluded any damages regarding Door Control.
The decision to admit or exclude evidence lies within the trial court’s sound
discretion. Bay Area Healthcare Grp., Ltd., 239 S.W.3d at 234. A trial court abuses its
discretion if it acts in an arbitrary or unreasonable manner or without reference to
guiding rules or principles. See Bowie Mem’l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex.
2002). An appellate court must sustain the trial court’s ruling if there is any legitimate
basis for the ruling. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex.
1998).
To obtain reversal of a judgment based on the trial court’s error in excluding or
admitting evidence, the complaining party must show that the error probably resulted
23
in an improper judgment. Interstate Northborough P’ship v. State, 66 S.W.3d 213, 220
(Tex. 2001); TEX. R. APP. P. 44.1(a)(1). An appellate court must review the entire
record to determine whether the excluded evidence resulted in the rendition of an
improper judgment. Interstate Northborough P’ship, 66 S.W.3d at 220. The trial court’s
error in the exclusion of evidence generally will not be reversible unless the excluded
proof is “controlling on a material issue.” Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d
394, 396 (Tex. 1989).
Here, the trial court had a legitimate basis for excluding evidence regarding
damages for Door Control because the fact of the matter is Brinson was never going
to secure Door Control as a client once Hooper left. (15 RR 6-7; 17 RR 150). Even
if there was any evidence that Brinson could have obtained Door Control as a client
(which there was not), Brinson’s alleged damages for lost profits were too speculative
and not based on expert opinion.
1. Brinson’s lost profits damages regarding Door Control were too
speculative.
Brinson sought lost profit damages related to Door Control on its claims,
including theft of confidential information. (4 CR 4369). The trial court, however,
excluded evidence of damages concerning Door Control because it was an undisputed
fact that Door Control never moved its business from its broker of eight years to
Brinson, Hooper or Holmes Murphy. (12 RR 12; 16 RR 327-328). Moreover, the
trial court struck Dawn Brinson as an expert on lost profit damages because she did
24
not have the expertise or training to calculate future lost profits. (12 RR 11; 16 RR
321-322). The trial court acted within his discretion in excluding the evidence of lost
profits damages regarding Door Control and had a legitimate basis for doing so as
discussed below.
Lost profit estimates or opinions must be based on objective facts, figures, or
data from which the lost profits amount may be ascertained. ERI Consulting Eng’rs,
Inc. v. Swinnea, 318 S.W.3d 867, 876 (Tex. 2010). When a review of the surrounding
circumstances establishes that the profits are not reasonably certain, there is no
evidence to support the lost profits. Formosa Plastics Corp. v. Presidio Eng’rs and
Contractors, 960 S.W.2d 41, 50 n.3 (Tex. 1998). “[T]he bare assertion that contracts
were lost does not demonstrate a reasonably certain objective determination of lost
profits.” Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 85 (Tex. 1992).
A no-evidence point will be sustained when (a) there is a complete absence of
evidence of a vital fact, (b) the court is barred by rules of law or evidence from giving
weight to the only evidence offered to prove a vital fact, (c) the evidence offered to
prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively
establishes the opposite of the vital fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742,
751 (Tex. 2003). Evidence that is “‘so weak as to do no more than create a mere
surmise or suspicion’ that the fact exists” is less than a scintilla. Kroger Tex., Ltd. P’ship
v. Suberu, 216 S.W.3d 788, 793 (Tex. 2006) (quoting Ford Motor Co. v. Ridgway, 135
S.W.3d 598, 601 (Tex. 2004)).
25
Brinson’s belief that it could have obtained Door Control as a client even if
Hooper left on good terms was complete speculation and did not rise above surmise
or suspicion. David Evans, Door Control’s HR Director, testified that the company
owner was the ultimate decision maker regarding insurance brokers and no one knows
if the owner would have approved a different insurance broker. (17 RR 110).
Brinson never deposed Door Control’s owner and thus offered no evidence
whatsoever from the owner as to whether he would have changed brokers to go with
Brinson. There was simply no evidence to establish the causal nexus between the
alleged wrongful act and the alleged damages. See Morgan v. Compugraphic Corp., 675
S.W.2d 729, 732 (Tex. 1984) (the causal nexus between the event sued on and the
plaintiff’s injuries must be shown by competent evidence).
David Evans testified that the likelihood of Door Control changing brokers
was small and he did not expect that Door Control would leave its current broker.
(17 RR 97). Mr. Evans further stated that he himself had no desire to deal with
anyone at Brinson besides Hooper and once she left he did not want to use Brinson.
(17 RR 100, 107). In fact, after Hooper left, Brinson never even tried to contact Door
Control to earn its business. (17 RR 146). Brinson was never going to secure Door
Control as a client once Hooper left. (16 RR 327-328).
Furthermore, even if the alleged evidence of Door Control damages was
allowed in the trial, the evidence was insufficient to show any amount of reasonably
certain lost profits, based on objective facts, figures, or data. The trial court struck
26
Dawn Brinson as an expert. (12 RR 11). Thus, there was no expert analysis or
opinion on the alleged lost profits associated with Door Control. See Gharda USA,
Inc. v. Control Solutions, Inc., 464 S.W.3d 338, 348 (Tex. 2015) (proof other than expert
testimony will support a jury finding only when the jurors’ common understanding
and experience will allow them to make that finding with reasonable probability).
Brinson’s only evidence on lost profits was from Ms. Brinson’s conclusory
testimony that Door Control would have generated revenue of $60,000 a year. (16
RR 323-327). However, that number was based on an assumed estimation from
Hooper. (17 RR 148-149). Brinson did not do any independent work to verify the
reasonableness or reliability of the estimated revenue number, nor did Brinson offer
any other evidence in support of its assumptions regarding the revenue associated
with Door Control.
Brinson offered no competent evidence to establish with reasonably probability
that it would have secured Door Control as a client. Moreover, Brinson’s evidence on
damages was unreliable and mere speculation. Thus, the trial court did not commit
reversible error in excluding any damages associated with Door Control.
2. Brinson did not disclose the alternative measure of damages.
Brinson argues that it should have been allowed to present alternative measure
of damages attributable to Hooper’s alleged conduct. (Brinson’s Br. pp. 28-34).
Brinson, however, never disclosed its alleged alternative measure of damages prior to
trial and only did so once it realized its lost profit damages were too speculative.
27
Thus, for this reason (and others), the court’s exclusion of the evidence was proper.
At trial, Brinson tried to submit evidence regarding the alleged value of the
Door Control file by calculating the time Hooper spent on the file. (16 RR 238-239;
17 RR 64, 139-146). The trial court excluded the evidence because (i) it was never
disclosed as a damage model to Hooper or Holmes Murphy and (ii) Brinson did not
pay Hooper for any time spent on the Door Control file – Hooper was only paid a
commission if she secured a client. (17 RR 143-146). As we know, Door Control
never became a client of any party in this case.
Brinson also tried to submit evidence regarding fees incurred to assess the risk
of a possible HIPPA violation. (16 RR 147, 206-214). The trial court excluded the
evidence because there was no evidence to suggest that there was ever any improper
dissemination of HIPPA information. (16 RR 208, 213-214). Moreover, Brinson
never claimed that there was a HIPPA violation. Also, Brinson never asserted the
alleged fees as a damage model in its disclosures. (16 RR 147; 4 CR 4369-4370).
Thus, the trial court did not abuse its discretion in excluding these alternative
measures of damages.
Brinson also argues that statutory damages are available under the TTLA, and
thus the jury should have been allowed to consider such damages for the alleged theft
of confidential information. (Brinson’s Brief, p. 29). However, an award of statutory
damages is contingent upon an award of actual damages. See Alcatel USA, Inc. v. Cisco
Systems, Inc., 239 F.Supp.2d 660, 674 (E.D. Tex. 2002) (citing Rodgers v. RAB
28
Investments, Ltd., 816 S.W.2d 543, 551 (Tex. App.—Dallas 1991, no writ)); TEX. CIV.
PRAC. & REM. CODE § 134.005(a). Brinson’s inability to recover actual damages thus
precludes its recovery of statutory damages pursuant to the express language of
section 134.005(a).
The trial court properly excluded evidence regarding damages related to Door
Control because it was complete speculation that Brinson could have secured Door
Control as a client. There was never any causation evidence to connect the dots
between the alleged theft of confidential information and damages associated with the
belief that Brinson could secure Door Control as a client – which it did not, and never
has. Accordingly, Hooper prevailed on directed verdict and is entitled to her
attorney’s fees for defending the claim for over 2 years.
III. The Trial Court Awarded a Proper Amount in Attorney’s Fees.
Brinson argues that the attorney’s fees awarded to Hooper must be vacated and
remanded because the trial court failed to make factual findings and Hooper allegedly
failed to segregate recoverable from unrecoverable fees. (Brinson’s Br. p. 39).
Brinson’s arguments are discussed in turn below.
A. Brinson suffered no injury from the trial court’s failure to
make factual findings.
Brinson contends the trial court erred by failing to file findings of fact and
conclusions of law, despite timely requests to do so. (Brinson’s Br., pp. 39-41).
29
Brinson, however, does not explain how it was injured or prevented from properly
presenting its case to this Court. The trial court’s error was harmless.
When properly requested, the trial court has a mandatory duty to file findings
of fact and conclusions of law. Santiago v. Central Mtg. Co., No. 05-14-00552-CV, 2015
WL 1805048 at *4 (Tex. App.—Dallas June 16, 2015, no pet. h.) (mem. op.). If the
trial court fails to file findings of fact and conclusions of law after a proper request,
the failure is presumed harmful unless the record affirmatively shows the complaining
party suffered no injury. Id.
The general rule is that an appellant has been harmed if, under the
circumstances of the case, it has to guess at the reason the trial court ruled against it.
Larry F. Smith, Inc. v. The Weber Co., Inc., 110 S.W.3d 611, 614 (Tex. App.—Dallas
2003, pet. denied). If there is only a single ground of recovery or a single defense, an
appellant does not usually have to guess at the reasons for the trial court’s judgment.
Id. When there are two or more possible grounds of recovery or defense, an appellant
is forced to guess what the trial court found unless the trial court’s findings are
provided to it. Id.
Here, as Brinson admits, the only claim that Hooper could have recovered
attorney’s fees on is theft of confidential information. No one has to guess as to why
the trial court awarded Hooper attorney’s fees. Hooper’s motion for attorney’s fees
discussed in detail why she should be awarded fees and all parties know why she was
awarded fees – she prevailed on the theft of confidential information claim. (4 CR
30
4350-4359) (Appendix Tab 2). The trial court specifically stated in the Judgment that
based on his “ruling on directed verdict” and “review and consideration of the parties’
motions for attorneys’ fees and accompanying affidavits,” the trial court awarded
Hooper “reasonable and necessary attorneys’ fees of $388,970.30.” (Appendix Tab
1). As Brinson acknowledged in its proposed jury charge, the only factual finding
needed is “[w]hat is a reasonable fee for the necessary services . . .” (4 CR 4163). The
trial court expressly found and concluded that $388,970.30 in attorney’s fees was
reasonable and necessary in successfully defending Brinson’s theft of confidential
information claim. Thus, based on the record, findings of fact were not necessary and
any error by the trial court in failing to file findings of fact and conclusions of law was
harmless. See Santiago, 2015 WL 1805048, at *4. Moreover, Brinson does not explain
and the record does not show how Brinson was prevented from properly presenting
its case to this Court or how it otherwise suffered injury from the alleged error.
B. Hooper segregated fees unless legal services advanced both
recoverable and unrecoverable claims.
Brinson argues that Hooper’s counsel failed to segregate fees between claims
for which they are recoverable and claims for which they are not. (Brinson’s Br. pp.
41-44). Hooper’s counsel, however, submitted a six-page affidavit describing why the
fees were reasonable and necessary and how he segregated the fees. (4 CR 4383-4388)
(Appendix Tab 3). Brinson does not explain why the segregation was wrong.
31
The amount of an award of attorney’s fees rests in the sound discretion of the
trial court, and its judgment will not be reversed on appeal without a clear showing of
abuse of discretion. Owen Elec. Supply, Inc. v. Brite Day Constr., Inc., 821 S.W.2d 283, 288
(Tex. App.—Houston [1st Dist.] 1991, writ denied). A prevailing party generally has a
duty to segregate recoverable from unrecoverable attorney’s fees. Tony Gullo Motors I,
L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006). However, a party is not required to
segregate attorney’s fees if “discrete legal services advance both a recoverable and
unrecoverable claim,” thus causing the fees to become “so intertwined that they
cannot be segregated.” Id. at 313-14; A&L Eng’g and Consulting, Inc. v. Shiloh Apollo
Plaza, Inc., 315 S.W.3d 928, 931 (Tex. App.—Dallas 2010, no pet.). If any task relates
solely to a claim for which legal fees are not recoverable, the claimant must segregate
the fees. 7979 Airport Garage, L.L.C. v. Dollar Rent A Car Sys., Inc., 245 S.W.3d 488,
509 (Tex. App.—Houston [14th Dist.] 2007, pet. denied).
As explained to the trial court, and as further discussed here, Brinson filed this
lawsuit and aggressively prosecuted it for over two years on the premise that Hooper
stole Brinson’s confidential and trade secret information, deprived Brinson of it, and
then used or disclosed it causing Brinson to lose over $650,000.00 in profits. (4 CR
4350-4359) (Appendix Tab 2). All of Brinson’s claims, except for outside
commissions, revolved around this premise and/or sought lost profits for the alleged
conduct. (3 CR 2760-2781). Brinson referred to the “bulk update” throughout the
litigation and alleged that Hooper stole its trade secret and confidential information
32
(i.e. client data and hot sheets). (3 RR 14-17, 14 RR 18; 15 RR 57, 61, 75-76). Brinson
sought only lost profit damages based on clients lost or a prospect that it did not
obtain. (4 CR 4369). The legal tasks performed in this case advanced Hooper’s
defense on these claims that there was simply no causal nexus between the alleged
conduct and the alleged injury for lost profits.
Hooper’s counsel’s affidavit regarding attorney’s fees described in detail how he
determined the reasonable and necessary attorney’s fees for defending against the
allegation that Hooper’s conduct somehow caused Brinson to lose hundreds of
thousands of dollars in lost profits. (4 CR 4383-4388) (Appendix Tab 3). Hooper’s
counsel attached all of the billing records to the affidavit and explained how he
segregated the fees. (4 CR 4389-4471).
First, counsel determined that fees for defending the theft of confidential,
proprietary and/or trade secret information on specific tasks that had nothing to do
with outside commissions was $102,978.00. (4 CR 4386-4387) (Appendix Tab 3). As
explained, these tasks and services in attending certain hearings and depositions, and
the related motions and responses, concerned Brinson’s claims seeking lost profits
damages and thus advanced Hooper’s causation defense on both recoverable and
unrecoverable claims. Id. These tasks did not relate solely to a claim for which legal
fees were not recoverable.
Second, counsel determined that the remaining fees concerned a mix of time
spent on (i) the alleged theft of confidential/proprietary/trade secret information, (ii)
33
nonpayment of outside commissions claim, and (iii) the breach of contract
counterclaim. After reviewing the billing records, counsel determined that 75% of the
time was spent on the first category, 20% spent on the second, and 5% spent on the
last category. (4 CR 4387-4388) (Appendix Tab 3). Based on the percentage
breakdown, counsel determined that $311,736.75 in fees was reasonable and necessary
in defending the theft of confidential information claim.
Counsel then added the two sets of fees to reach the requested amount of
$414,714.75 in attorney’s fees for defending the theft of confidential information
claim. (4 CR 4388). As explained in the affidavit, the time spent defending the theft
of confidential information claim was inextricably intertwined with the time spent on
the other claims, except for time regarding outside commissions. (4 CR 4387). In
other words, the legal services advanced both recoverable and unrecoverable claims
and thus additional segregation was not required. The trial court properly considered
the evidence and determined in his discretion the “reasonable and necessary”
attorney’s fees.
Hooper’s counsel adequately segregated the attorney’s fees where he could and
stated that the remaining fees were so intertwined because they advanced the overall
defense that Brinson did not suffer any lost profit damages due to Hooper’s alleged
conduct. The trial court considered the evidence and properly awarded Hooper her
attorney’s fees for successfully defending the allegation that she stole confidential and
trade secret information.
34
Prayer
Hooper asks this court to affirm the trial court’s final judgment and to award
Hooper her attorney’s fees and costs on appeal.
Respectfully submitted,
/s/ James C. Scott
James C. Scott
Texas Bar No. 24056287
Gardere Wynne Sewell LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Tel: 214-999-3000
Fax: 214-999-4667
jscott@gardere.com
ATTORNEYS FOR APPELLEE
LINDA HOOPER
35
Certificate of Compliance
I certify that, in accordance with Texas Rule of Appellate Procedure 9.4, the
number of words contained in this document is 9,101 according to the computer
program used to prepare this document.
/s/ James C. Scott
James C. Scott
Certificate of Service
I certify that a copy of this brief was served by ECF Notice and email to the
following on September 22, 2015:
Lyndon F. Bittle
Monica W. Latin
Carrington, Coleman, Sloman & Blumenthal, L.L.P.
901 Main Street, Suite 5500
Dallas, Texas 75202
Cody L. Towns
The Rodriguez Firm
1700 Pacific, Suite 3850
Dallas, Texas 75201
/s/ James C. Scott
James C. Scott
36
Appendix
1. Final Judgment, November 6, 2014
2. Defendant Linda Hooper’s Motion for Attorneys’ Fees, October 17, 2014
3. Affidavit of James C. Scott, October 16, 2014
37
APPENDIX 1
Final Judgment — November 6, 2014
Lf6iF
100289
No, DC-12-07520-E
BRINSON BENEFITS, INC, IN THE DISTRICT COURT OF
Plaintiff,
V.
DALLAS COUNTY, TEXAS
LINDA HOOPER, SEAN SENDELBACH,
AND HOLMES MURPHY &
ASSOCIATES, INC.,
Defendants. 101ST JUDICIAL DISTRICT
FINAL JUDGMENT
On September 2, 2014, this case was called for trial, Brinson Benefits, Inc. ("Plaintiff')
appeared through its attorney and announced ready for trial. Linda Hooper ("Defendant
Hooper"), Sean Sendelbach ("Defendant Sendelbach"), and Holmes Murphy & Associates, Inc.
("Defendant Holmes Murphy") appeared through their respective attorneys and announced ready
for trial.
After a jury was impaneled and sworn, it heard the evidence and arguments of counsel.
In response to the jury charge, the jury made findings that the Court received, filed, and entered
of record. Based on (i) the jury's verdict, (ii) the Court's ruling on directed verdict, and (iii) the
Court's review and consideration of the parties' motions for attorneys' fees and accompanying
affidavits, the Court had determined that judgment should be rendered as set forth below. It is,
therefore,
ORDERED, ADJUDGED AND DECREED that Plaintiff have and recover from
Defendant Hooper the following amounts:
FINAL JUDGMENT PAGE 1
4939
a) actual damages in the amount of $38,160.01;
b) pre-judgment interest at the rate of 5% per annum from the date of suit through
November 5, 2014, in the amount of $4,438.06;
c) reasonable and necessary attorneys' fees of $100,277.90, plus contingent
attorneys' fees in the following amounts: an additional $50,000 in the event this judgment is
appealed to by Defendant Hooper to the Court of Appeals and this portion of this judgment is
affirmed by the Court of Appeals; an additional $15,000 in the event a petition for review of this
case is filed in the Supreme Court of Texas by Defendant Hooper and such petition is denied;
and, an additional $35,000 in the event a petition for review of this case is granted by the
Supreme Court of Texas by Defendant Hooper and this portion of this Judgment is affirmed; and,
IT IS FURTHER ORDER, ADJUDGED AND DECREED that Defendant Hooper
have and recover from Plaintiff reasonable and necessary attorneys' fees of $388,970.30, plus
contingent attorneys' fees in the following amounts: an additional $50,000 in the event this
judgment is appealed to by Plaintiff to the Court of Appeals and this portion of this judgment is
affirmed by the Court of Appeals; an additional $15,000 in the event a petition for review of this
case is filed in the Supreme Court of Texas by Plaintiff and such petition is denied; and, an
additional $35,000 in the event a petition for review of this case is granted by the Supreme Court
of Texas and this portion of this Judgment is affirmed.
IT IS FURTHER ORDER, ADJUDGED AND DECREED that Defendants
Sendelbach and Holmes Murphy have and recover from Plaintiff reasonable and necessary
attorneys' fees of $372,519.76, plus contingent attorneys' fees in the following amounts: an
additional $50,000 in the event this judgment is appealed to by Plaintiff to the Court of Appeals
and this portion of this judgment is affirmed by the Court of Appeals; an additional $15,000 in
the event a petition for review of this case is filed in the Supreme Court of Texas by Plaintiff and
FINAL JUDGMENT PAGE 2
4940
such petition is denied; and, an additional $35,000 in the event a petition for review of this case
is granted by the Supreme Court of Texas and this portion of this Judgment is affirmed.
Costs of Court borne by Plaintiff and Defendant Hooper shall be taxed against the party
by whom incurred. Costs of court incurred by Defendants Sendelbach and Holmes Murphy shall
be taxed to the Plaintiff.
All sums awarded herein shall bear post-judgment interest at the rate of 5% per annum
from the date of this Judgment until paid.
All relief requested and not expressly granted herein is denied. The Court intends this
judgment to dispose of all parties and all claims, and to be final and appealable.
SIGNED this 6th day of November, 2014.
JUDGE PRESIDING
FINAL JUDGMENT PAGE 3
4941
APPENDIX 2
Defendant Linda Hooper's Motion for
Attorneys' Fees - October 17, 2014
FILED
DALLAS COUNTY
10/17/2014 1:54:17 PM
GARY FITZSIMMONS
DISTRICT CLERK
CAUSE No. 12-07520
BRINSON BENEFITS, INC., IN THE DISTRICT COURT
PLAINTIFF,
ST
V. 101 JUDICIAL DISTRICT
LINDA HOOPER, SEAN SENDELBACH,
AND HOLMES MURPHY & ASSOCIATES,
INC.,
DEFENDANTS. DALLAS COUNTY, TEXAS
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES
I. REQUESTED RELIEF
Defendant Linda Hooper ("Ms. Hooper") requests her attorneys' fees for successfully
defending Plaintiff Brinson Benefits, Inc.'s ("Brinson") theft claim under the Texas Theft
Liability Act ("TTLA") concerning confidential, proprietary and trade secret information.
II. INTRODUCTION
Brinson sued Ms. Hooper for civil theft, among other claims, alleging that Ms. Hooper
sto16 Brinson's confidential and proprietary information with the intent to deprive Brinson of that
infotmation and allegedly caused Brinson to lose a prospect and several clients resulting in
hundreds of thousands of dollars in damages to Brinson. From the beginning of the lawsuit until
trial; Brinson referred to this claim (in addition to the misappropriation of trade secrets and
conversion claims) as the "bulk update" of information from Brinson's server before Ms. Hooper
resigned. Brinson alleged throughout two-plus years of litigation that Ms. Hooper used or
disclbsed Brinson's client data sheets or hot sheets that caused Brinson damages. Ms. Hooper
incurred hundreds of thousands of dollars in attorneys' fees in defending Brinson's theft of
confidential information claim, including without limitation fees spent on two temporary
injunction hearings concerning theft of confidential information, discovery concerning
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 1
Gardere01 - 6498488v.2
4350
confidential information, forensic analysis on Ms. Hooper's laptop concerning confidential
information, motion to seal confidential information, summary judgment briefing regarding
confidential information, and defending Brinson's lost profits analysis related to the alleged theft
of such confidential information. Ms. Hooper prevailed on that theft claim when the Court
granted directed verdict as to theft of confidential and proprietary information. Then, at the jury
charge conference, Brinson withdrew its claims for misappropriation of trade secrets and
conversion — which concerned the alleged misappropriation of Brinson's confidential
information. Ms. Hooper seeks her attorneys' fees and costs for prevailing on Brinson's civil
theft claim regarding confidential and proprietary information.
III. PROCEDURAL BACKGROUND
1. The procedural timeline below shows the pleadings and hearings concerning the
alleged theft, use, disclosure and protection of confidential, proprietary and/or trade secret
information.
2. On July 9, 2012, Brinson sued Ms. Hooper for misappropriation of trade secrets
and breach of fiduciary duty, among other claims, alleging that Ms. Hooper misappropriated
Brinson's "trade secrets and confidential/proprietary information."' Brinson's theft claim under
the TTLA asserted the following:
Defendant's conduct constitutes theft of Brinson Benefits' proprietary and
confidential information and property. Defendant unlawfully took Brinson
Benefits' proprietary and confidential information and property with the intent to
deprive Brinson Benefits of it. Brinson Benefits has formally demanded that
Defendant return the confidential information and property, but to no avail. As a
result, Brinson Benefits has suffered injury.
3. On July 23, 2012, the Court held a temporary injunction hearing wherein Brinson
requested the Court to prevent and enjoin Ms. Hooper from using or disclosing Brinson's alleged
I See Brinson's original petition filed on July 9, 2012 on the Court's docket.
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 2
Gardere01 -6498488v.2 4351
confidential, proprietary, and/or trade secret information. In particular, Brinson's counsel stated:
What we are asking the Court to do today, Your Honor, is to enjoin Ms. Hooper
from using Brinson Benefits' confidential and proprietary information or their
trade secrets that she possessed and took with her after she left the company.
Particularly, Your Honor, the client data sheets.2
4. On that same day, Brinson filed a motion to temporarily seal confidential and
proprietary information.3 Thereafter, the parties exchanged several phone calls and
correspondence and held a hearing regarding what information to seal and whether certain
information could be redacted to prevent the unnecessary burden of sealing the whole record.
5. In July 2012, the Court requested a forensic examination of Ms. Hooper's laptop.
The parties retained an expert to review and provide analysis on Ms. Hooper's laptop. After
August 2012 and up until the time of trial in September 2014, Ms. Hooper incurred additional
attorneys' fees in analyzing and responding to Brinson's continued requests for additional
computer forensics on Ms. Hooper's laptop, carbonite account, emails, etc. Brinson never even
called or used the forensic expert at the September 2014 trial.
6. On August 7, 2012, the Court entered a temporary injunction stating that Ms.
Hooper was enjoined from using or disclosing Brinson's confidential, proprietary, and/or trade
secret information.4 After Ms. Hooper's motion to modify and a hearing on the same, the Court
entered a modified temporary injunction to (i) specifically identify the clients that Ms. Hooper
was enjoined from contacting for a period of time, and (ii) require Ms. Hooper to turn over
external devices regarding confidential and proprietary information.5
7. On August 27, 2012, Brinson filed its amended petition wherein it alleged for the
first time in passing that Ms. Hooper serviced clients for her own benefit (and for Holmes
2 See July 23, 2012 hearing transcript, p. 24, attached hereto as Exhibit "A."
3 See Brinson's motion to seal court records filed July 23, 2012 on the Court's docket.
See temporary injunction dated August 7, 2012 on the Court's docket.
5 See modified temporary injunction dated September 10, 2012.
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 3
Gardere01 - 6498488v.2
4352
Murphy's benefit).6 However, Brinson's theft claim under the TTLA did not change — it still
concerned confidential and proprietary information.
8. On September 10, 2012, the Court entered an order on Brinson's motion to seal
court records that Brinson considered confidential and proprietary.7
9. On October 17, 2012, Brinson filed its motion for continuance and extension of
the temporary injunction.8 Brinson asked the Court "to extend the Temporary Injunction because
it is apparent that Defendants have used, and will continue using, Plaintiff's trade
secret/confidential/proprietary information in their attempts to usurp Plaintiffs clients." The
Court denied Brinson's motion.
10. On October 26, 2012, Brinson filed its second amended petition and its theft
claim remained the same — theft of Brinson's proprietary and confidential information and
property.9
11. In October 2012 and again in December 2013, the parties filed summary
judgment briefing that overwhelmingly discussed and argued the alleged misappropriation of
confidential/proprietary and trade secret information and whether there was ever any intent to
deprive, any use or disclosure, or any causation and damages resulting from that information.
The Court denied those motions.
12. On March 1, 2013, Brinson filed its third amended petition and its theft claim
remained the same — theft of Brinson's proprietary and confidential information and property.th
13. On June 10, 2013, Brinson filed its fourth amended petition and its theft claim
6 See Brinson's first amended petition filed August 27, 2012 on the Court's docket.
7 See Order on Motion to Seal Court Records dated September 10, 2012 on the Court's docket.
See motion for continuance and extension of temporary injunction filed October 17, 2012 on the Court's docket.
9 See Brinson's second amended petition filed on October 26, 2012 on the Court's docket.
i° See Brinson's third amended petition filed on March 1, 2013 on the Court's docket,
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 4
Ciardere01 - 64984R8v.2
4353
remained the same — theft of Brinson's proprietary and confidential information and property."
14. On December 20, 2013, Brinson filed its fifth amended petition and its theft claim
remained the same — theft of Brinson's proprietary and confidential information and property. 12
15. On December 26, 2013, Ms. Hooper filed a motion to strike Dawn Brinson as an
expert on lost business calculation and valuations extending into the future (allegedly resulting
from misappropriation of confidential and trade secret information)," On that same day,
Brinson filed a motion to limit Ms. Hooper's expert's testimony regarding future lost profits.I4
The Court agreed that Dawn Brinson was not an expert on future lost profits.
16. In September 2014, the parties tried the case to a jury. After Brinson rested its
case, the Court granted Ms. Hooper's motion for directed verdict on Brinson's theft claim
concerning confidential and proprietary information. Thereafter, Brinson withdrew its
misappropriation of trade secrets and conversion claims.
17. On September 10, 2014, the jury entered its verdict and awarded Brinson roughly
$31,000 for its theft claim concerning outside commissions (which Ms. Hooper objected to
because such claim was not pled in the petition under the TTLA). However, Hooper prevailed
on Brinson's theft claim concerning confidential and proprietary information whereby Brinson
sought hundreds of thousands of dollars in damages against Ms. Hooper. I5
IV. ARGUMENTS AND AUTHORITIES
The TTLA provides that "[e]ach person who prevails in a suit under this chapter shall be
awarded court costs and reasonable and necessary attorney's fees." TEX. Civ. PRAC. & REM.
CODE ANN. § 134.005(b). The award of fees to a prevailing party in a TTLA action is
11 See Brinson's fourth amended petition filed on June 10, 2013 on the Court's docket.
12 See Brinson's fifth amended petition filed on December 20, 2013 on the Court's docket.
13 See Hooper's motion to strike filed on December 26, 2013 on the Court's docket.
14 See Brinson's motion to limit filed on December 26, 2013 on the Court's docket.
15 See Brinson's second amended disclosures attached hereto as Exhibit "B" wherein it sought over $550,000.00
plus an additional $100,000.00+ in actual damages and $3,000,000.00 in punitive damages.
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 5
narder:01 - 64984F8v 4354
mandatory. Brown v. Kleerekoper, No. 01-11-00972-CV, 2013 WL 816393 at *5 (Tex. App.—
Houston [1.s' Dist.] Mar. 5, 2013, pet. filed) (mem. op.). The TTLA requires the court to award
attorney's fees to a prevailing defendant "without any prerequisite that the claim is found to be
groundless, frivolous, or brought in bad faith." Air Routing Intl Corp. (Canada) v. Britannia
Airways, Ltd., 150 S.W.3d 682, 686 (Tex. App.—Houston [14th Dist.] 2004, no pet.).
In Moak v. Huff, No, 04-11-00184-CV, 2012 WL 566140, at *11 (Tex. App.—San
Antonio, Feb. 15, 2012, no pet.) (mem. op.), the defendant lost on the plaintiffs DTPA claim but
successfully defended against the plaintiffs TTLA claim. Id., 2012 WL 566140, at *1. The
defendant then sought an award of attorney's fees under the TTLA. Id., at *9. The plaintiff
resisted, arguing that a person does not "prevail in a suit" unless he is the "party in whose favor a
judgment is rendered" and is "vindicated by the judgment." Id., at *10. The plaintiff maintained
that the defendant had to prevail on the entire suit to recover attorney's fees under the TTLA. Id
The court of appeals disagreed, holding that "a person who prevails in a TTLA cause of
action is entitled to recover the reasonable fees necessarily incurred prosecuting or defending the
cause of action, even if the party is unsuccessful on other claims and counterclaims litigated in
the same suit." Id., at *11; see also Arrow Marble, LLC v. Killion, No. 01-12-01133-CV, 2014
WL 2958278, at *3-4 (Tex. App.—Houston [1st Dist.] July 1, 2014, no pet.) (defendant was
prevailing party on theft claim dismissed with prejudice).
Similarly, in Brown v. Kleerekoper, the defendant was considered the prevailing party
under the TTLA when she prevailed on one TTLA claim, lost on another TTLA claim, and lost
on a breach of contract claim. Kleerekoper, 2013 WL 816393, at *5. The court of appeals stated
"[w]e agree with the San Antonio court that a party who prevails on a TTLA cause of action is
entitled to recover attorney's fees, even though that party may not have prevailed on other causes
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 6
neffiere01 - 6495ustRy.1 4355
of action asserted in the suit. Id. Thus, the court of appeals upheld the award of attorney's fees
to the defendant for successfully defending herself on the theft of property claim under the
TTLA. Id.
Here, Ms. Hooper successfully defended herself on the theft of confidential and
proprietary information claim under the TTLA. The Court granted directed verdict on that claim
and dismissed it as a matter of law. Thereafter, Brinson withdrew all of its claims concerning
misappropriation of confidential information or trade secrets (i.e. misappropriation of trade
secrets and conversion). Brinson filed this lawsuit on the grounds that Ms. Hooper stole all of its
confidential, proprietary, and/or trade secret information and used or intended to use it. Ms.
Hooper spent close to $100,000 in attorneys' fees defending herself on these claims before
Brinson ever alleged non-payment of outside commissions — which Brinson only alleged in
passing in its second amended petition. As shown in the procedural timeline above, Brinson
focused most of its case on the alleged theft, use, disclosure and protection of confidential,
proprietary and/or trade secret information. The procedural timeline shown above has nothing to
do with the theft of outside commissions. Moreover, Brinson sought over $650,000.00 in actual
damages and $3,000,000.00 in punitive damages against Ms. Hooper for the alleged use and
disclosure of confidential/proprietary/trade secret information that allegedly caused Brinson to
lose a prospect and 9 clients. After this lawsuit had been on file for nearly two months, Brinson
asserted a claim for outside commissions for the first time which it only sought roughly $82,000
for. The outside commission number was small in comparison to Brinson's lost profit claims for
confidential and proprietary information of over $650,000.00.
Further, the massive amount of discovery conducted on gathering and producing the
alleged confidential, proprietary and/or trade secret information took considerable attorney time.
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 7
Carden:II - 6198188v.2 4356
Moreover, Brinson took the following depositions concerning the potential use or disclosure of
confidential, proprietary and/or trade secret information: two depositions of Sean Sendelbach,
two depositions of Den Bishop (Holmes Murphy), deposition of Oni Blodgett (Holmes Murphy),
deposition of Steve Gwinn (Holmes Murphy), deposition of Ellen Willadsen (Holmes Murphy),
deposition of Jacki Crain Power (Northwestern Benefits), deposition of David Evans (Door
Control Services), deposition of Mary McMillan (Plano Sports Authority), and Gary Durham
(Hooper's future lost profits expert). None of these depositions (11 of them) concerned outside
commissions; instead, they concerned the alleged use and disclosure of confidential information.
Ms. Hooper defended herself on the theft claim of confidential information because she never
used or disclosed any information and/or there was never any causation or damages to Brinson.
Also, there was never any intent to deprive because all of the information was on Brinson's
server. Nevertheless, Brinson was relentless in pursuing those claims and sought close to
$700,000.00 in damages from Ms. Hooper up and until the Court granted directed verdict on the
theft claim and Brinson withdrew its misappropriation of trade secrets and conversion claims.
These are the claims that made up the majority of the case and that Brinson argued time and time
again — alleging that Ms. Hooper had Brinson's client data sheets, hot sheets and other
confidential information that she allegedly used to cause Brinson to lose a prospect and several
clients.
Even though Ms. Hooper did not prevail on the nonpayment of outside commissions
(which was not plead as a theft claim) or breach of fiduciary duty regarding Pinnacle, she did
prevail on the theft of confidential, proprietary and/or trade secret information — which is the
theory that Brinson brought this suit on (i.e. alleging that Ms. Hooper had Brinson's confidential
and trade secret information and intended to use it) and required Ms. Hooper to incur hundreds
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 8
Craniere0i - (5498418v.2 4357
of thousands of dollars in attorneys' fees to defend herself. Ms. Hooper is entitled to recover her
attorneys' fees for prevailing on the theft of confidential information.
As shown in James C. Scott's affidavit attached hereto as Exhibit "C," Ms. Hooper seeks
$414,714.75 in attorneys' fees and $18,886.86 in costs for successfully defending the theft of
confidential/proprietary/trade secret information claim.
V. CONCLUSION
Ms. Hooper successfully defended herself after over two years of fighting Brinson's theft
of confidential, proprietary, and/or trade secret information claim. Thus, Ms. Hooper requests
the Court to award her the attorneys' fees for defending the theft claim. Ms. Hooper further
requests any relief, at law or in equity, to which she is justly entitled.
Respectfully submitted,
/s/ James C. Scott
James C. Scott
Texas State Bar No. 24056287
GARDERE WYNNE SEWELL LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Telephone: (214) 999-3000
Facsimile: (214) 999-4667
ATTORNEYS FOR LINDA HOOPER
DEFENDANT LINDA HOOPER'S monoN FOR ATTORNEYS' FEES Page 9
8488
Gal deft01 -6498 8v.2 4358
CERTIFICATE OF CONFERENCE
On October 16, 2014, I conferred with the plaintiff's counsel by email regarding the relief
requested in this motion. Plaintiff's counsel is opposed to the relief requested in this motion.
Thus, this motion is presented to the Court for decision.
Is/ James C. Scott
James C. Scott
CERTIFICATE OF SERVICE
I hereby certify that on October 17, 2014, a true and correct copy of the foregoing
document was served upon all counsel of record pursuant to the Texas Rules of Civil Procedure.
Lu Pham Via Email
David Speed
Cantey Hanger LLP
600 W. 6th Sreet, Suite 300
Fort Worth, Texas 76102
Facsimile: (817) 877-2807
Email: 1pham@canteyhanger.com
dspeed@canteyhanger.com
Cody L. Towns Via Email
The Rodriguez Law Firm
1700 Pacific Ave., Suite 3850
Dallas, Texas 75201
Facsimile: (214) 220-2920
Email: CTowns@TheRodriguezFirm.com
/s/ James C. Scott
James C. Scott
DEFENDANT LINDA HOOPER'S MOTION FOR ATTORNEYS' FEES Page 10
Gardere0 - 6498488v.2 4359
APPENDIX 3
Affidavit of James C. Scott - October 16, 2014
CAUSE NO. 12-07520
BRINSON BENEFITS, INC., IN THE DISTRICT COURT OF
Plaintiff
DALLAS COUNTY, TEXAS
V.
LINDA HOOPER, et al.,
Defend ants. 101sT JUDICIAL DISTRICT
AFFIDAVIT OF JAMES C. SCOTT
BEFORE ME, the undersigned notary public, on this date personally appeared James C.
Scott, who known to me to be the person whose name is subscribed below, being duly sworn,
deposed and said:
1. "My name is James C. Scott. I am over the age of twenty-one (21) years, am fully
competent to provide this affidavit and have personal knowledge of the facts stated herein, facts
which are true and correct.
2. I am an attorney with the law firm of Gardere Wynne Sewell LLP ("Gardere")
and have served as lead legal counsel for Linda Hooper ("Ms. Hooper") in this case. I am
familiar with the usual and customary work performed in representing parties in business
litigation, and a significant amount of my practice has been devoted to such disputes.
3. Ms. Hooper retained my services and those of Gardere to represent her in
connection with the defense of Plaintiffs claims against her. In this connection, Ms. Hooper
agreed to pay reasonable and necessary attorneys' fees for Gardere's services. Ms. Hooper's
most recent amended pleading in this case and her Motion for Attorneys' Fees filed herewith
articulates the basis for her claim for attorneys' fees, which are recoverable under the applicable
law — the successful defense of Plaintiffs theft claim under the Texas Theft Liability Act
concerning confidential/proprietary/trade secret information.
4. I graduated from the South Texas College of Law in 2006, and have been
admitted to practice in the State of Texas since November 2006. From the date of my admittance
before the State Bar of Texas to the present, I have practiced law within the state of Texas and
with Gardere in Dallas, Texas, A large part of my legal experience has been representing clients
in litigation in state and federal courts throughout Texas. As a result, I am familiar with the
reasonable and necessary attorneys' fees charged in Texas for legal services.
5. I am also familiar with the legal services rendered in connection with this case,
the necessity of such services and the reasonable charge for those services. In determining the
reasonableness of the fees for the services Gardere rendered herein, I have considered the
following standards set forth in TEXAS DISCIPLINARY R. PROF. CONDUCT 1.04, reprinted in TEX.
EXHIBIT
AFFIDAVIT OF JAMES C. SCOTT PAGE 1
I 4383
Gov'T CODE, tit. 2 subtit. G app. (State Bar Rules, Art. 10 § 9) and Arthur Andersen v. Perry
Equipment Corp., 945 S.W.2d 812 (Tex. 1997): (1) the time and labor required; (2) the novelty
and difficulty of the questions presented; (3) the skill required to perform the legal services
properly; (4) the preclusion of other employment due to acceptance of the case; (5) the
customary fee charged in the locality for similar legal services; (6) whether the fee is fixed or
contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount
involved and the results obtained; (9) the experience, reputation and ability of the attorneys; and
(10) the nature and length of the professional relationship with the client.
6. Having considered the nature and extent of the services supplied by Gardere, the
value of the services according to the customary fee and quality of the legal work and the other
Arthur Anderson factors as described below, Ms. Hooper simply asks for reimbursement of the
costs, fees and expenses incurred in connection with defending Plaintiff's theft claim under the
Texas Theft Liability Act ("TTLA") concerning confidential, proprietary and/or trade secret
information that the Court granted directed verdict on.
7. The costs, fees and expenses incurred by Ms. Hooper in defending the theft claim
in this case are commensurate with a case of this size.
a. The time and labor required. The Plaintiff's counsel relentlessly
prosecuted this case which had the result of (at least) imposing time and
expense burdens on Ms. Hooper's counsel to defend the theft claim
concerning confidential and proprietary information as follows:
i. Attending two hearings regarding Plaintiff's application for a
temporary injunction, one hearing regarding a motion to modify
the temporary injunction, and one hearing regarding Plaintiff's
request to extend the temporary injunction. The temporary
injunction concerned enjoining Ms. Hooper from using or
disclosing confidential, proprietary and/or trade secret information
that Plaintiff's sought millions of dollars in damages against Ms.
Hooper for;
ii. Attending to computer forensic analysis of Ms. Hooper's laptop to
determine the extent of confidential information and whether there
was any use or disclosure of same. After the temporary injunction
hearing, Plaintiff continued to seek computer forensics on Ms.
Hooper's laptop, carbonite account, and emails for confidential
information that required additional attorney time;
iii. Attending to the sealing of court records that Plaintiff asserted as
confidential, proprietary and/or trade secret;
iv. Drafting on two different occasions motions for partial summary
judgment and responses to motions for partial summary judgment
that overwhelmingly concerned theft or misappropriation of
AFFIDAVIT OF JAMES C. SCOTT PAGE 2
4384
confidential, proprietary and/or trade secret information, and
arguing the same at one hearing;
v. Drafting and arguing a motion to strike Plaintiff's expert on future
lost profits resulting from the alleged use or disclosure of
confidential, proprietary or trade secret information;
vi. Attending to numerous depositions concerning Plaintiff s
allegations of use or disclosure of confidential, proprietary and/or
trade secret information;
vii. Collecting and responding to Plaintiff's discovery requests for
confidential, proprietary and/or trade secret information, and use
and disclosure of same; and
viii. Trying the case to a jury that mainly concerned misappropriation
and theft of confidential, proprietary, and/or trade secret
information that Ms. Hooper allegedly used to take a prospect (i.e.
Door Control Services) and several clients.
Each of these services is typical in a case of this type.
b. The novelty and difficulty of the questions. Defense of the theft claim
concerning confidential information did not involve any particularly
difficult issues, but did involve learning the employee benefits advisory
business and how confidential information is kept, as well as Plaintiffs
alleged trade secrets. The defense also involved responding to discovery
and attending numerous depositions wherein Plaintiff tried to prove
(unsuccessfully) that Ms. Hooper used or disclosed Plaintiff's confidential,
proprietary and/or trade secret information and/or that having such
information cause Plaintiff millions of dollars in damages.
c. The skill requisite to perform the legal services properly. This case
required standard legal services: preparing pleadings, drafting several
motions and responses (including summary judgment), preparing
discovery and responding to discovery, taking several depositions, arguing
several hearings regarding modifying, extending, and/or violating the
temporary injunction, discovery issues, sealing court records, arguing two
temporary injunction hearings, and trying the case to a jury. A review of
the record demonstrates an appropriate level of competence and
expenditure of time and effort by Ms. Hooper's counsel. No unusual skill
was required.
d. The preclusion of employment by the attorney due to his or her acceptance
of the case. I was not precluded from other employment in any significant
way.
AFFIDAVIT OF JAMES C. SCOTT PACE 3
4385
e. The customary fees. For this case, Gardere charged Ms. Hooper a
customary fee for my services that ranged from $380.00, to $395.00 to
$405.00 per hour for attorney time over a twenty-six month period. I used
a junior associate to assist me for much of the case and his rate per hour
ranged from $290.00 to $320.00, I also utilized paralegals where
appropriate whose rates per hour ranged from $210.00 to $235.00. These
amounts are customary and appropriate fees for the services rendered, and
are reflected in the attached invoices.
f. Whether the fees are fixed or contingent. The fee is a fixed hourly rate
fee.
g. Time limitations imposed by the client or the circumstances. The client
did not impose any unusual time limits.
h. The amount involved and the results obtained. Plaintiff sought
approximately $700,000.00 in actual damages and $3,000,000.00 in
punitive damages from Ms. Hooper. Ms. Hooper successfully defended
Plaintiff's theft of confidential information claim on directed verdict.
Plaintiff obtained approximately $38,000 from the jury on its other claims.
i. The experience, reputation and ability of the attorneys. I have eight years
of litigation experience. I have argued before the Texas Supreme Court,
tried cases, and argued numerous summary judgment motions and several
temporary injunction hearings. I have been recognized as a Texas Rising
Star in business litigation by Texas Monthly magazine the last two years.
I am well respected within my firm. I like to believe I have a good
reputation and have good ability.
The "undesirability" of the case. Ms. Hooper is a good and desirable
client.
k. The nature and length of the professional relationship with the client.
This is the first matter I have been retained on to represent Ms. Hooper.
8. Ms. Hooper has incurred $414,714.75 in attorneys' fees, plus court costs and
other legal expenses totaling $18,886.86 for services rendered in connection with successfully
defending Plaintiff's theft of confidential and proprietary information claim under the TTLA. I
determined the fees by reviewing the legal invoices and costs attached hereto and segregating the
fees into three parts as follows:
a. First, I determined which fees related to time spent on the case (i.e.
discovery, pleadings, or hearings) that had nothing to do with Plaintiff's
claim concerning Ms. Hooper's non-payment of outside commissions.
For instance, Plaintiff's original petition, the first temporary injunction
hearing, the motion to modify the temporary injunction, the motion to
extend the temporary injunction, the motion to seal court records, the
motion to strike Dawn Brinson as an expert on lost profits, the computer
AFFIDAVIT OF JAMES C. SCOTT PAGE 4
4386
forensics on Ms. Hooper's laptop, the depositions of all the Holmes
Murphy & Associates people, the depositions of Door Control Services
and Plano Sports Authority, the deposition of Gary Durham (Ms. Hooper's
lost profits expert), etc. had nothing to do with outside commissions and
instead related to the misappropriation and theft of confidential,
proprietary, and trade secret information that Plaintiff attempted to prove
Ms. Hooper used and/or disclosed that allegedly caused it to lose a
prospect and several clients that Plaintiff sought future lost profits for.
The time spent to defend the theft of such information, in addition to
misappropriation of trade secrets, conversion of such information, and
breach of fiduciary duty regarding such information (i.e. allegedly using
such information to try and obtain Door Control Services as a client) is
inextricably intertwined and difficult, if not impossible, to segregate. I
determined that the reasonable and necessary attorneys' fees for defending
the theft of this alleged confidential, proprietary and/or trade secret
information on specific tasks that had nothing to do with outside
commissions is $102,978.00. The cost associated with the depositions
identified above, and expert fees and court reporter costs, is $18,886.86.
The fees segregated from each invoice that are recoverable as attorneys'
fees that have nothing to do with outside commissions are as follows:'
Invoice #1082257 $56,383.00
Invoice #1085277 $15,627.00
Invoice #1088314 $1,921.00
Invoice #1092207 $1,711.00
Invoice #1100688 $3,222.00
Invoice #1103063 $0
Invoice #1106706 $1,640.00
Invoice #1109091 $1,056.00
Invoice #1112287 $4,824.00
Invoice #1115930 $1,600.00
Invoice #1122003 $4,127.00
Invoice #1130727 $2,370.00
Invoice #1141317 $6,715.00
Invoice #1162635 $1,782.00
Invoice #1164002 $0
Total $102,978.00
b. Second, I determined that the remaining fees in this case concerned a mix
of time spent on (i) Plaintiffs confidential/proprietary/trade secret and
fiduciary duty claims concerning lost profits, (ii) Plaintiffs nonpayment of
outside commission claims, and (iii) Ms. Hooper's breach of contract
The first invoice has the highest recoverable amount of fees of all invoices because non-payment of outside
commissions was not an issue at that time. The other invoices show fees for time spent on specific tasks that had
nothing to do with outside commissions.
AFFIDAVIT OF JAMES C. SCOTT PAGE 5
4387
counterclaim. The time spent on the joint tasks concerning the first two
items is difficult to segregate but I determined that 75% of the time was
spent on the confidential/proprietary/trade secret and fiduciary duty claims
concerning lost profits and 20% of the time was spent on the non-payment
of outside commission claims (see below regarding remaining 5%). Thus,
I determined that based on that percentage, the reasonable and necessary
attorneys' fees for defending the theft of the alleged confidential,
proprietary and/or trade secret information is $311,736.75.
c. Finally, I determined that 5% of this case related to Ms. Hooper's
counterclaim for breach of contract for which no fees are recoverable and
segregated that time out.
The work done (and to be done) was both reasonable and necessary for this case's needs.
And, the rates charged are reasonable rates in Texas for this type of case and counsel of this
caliber. Plaintiff sought approximately $4,000,000.00 in damages from Ms. Hooper, thus
$414,714.75 ($102,978 + $311,736.75) in attorneys' fees is reasonable. All of this work relates
to a claim for which attorneys fees are recoverable.
9. Based upon a consideration of the Arthur Anderson factors, including the nature
of this case, my experience, as well as my familiarity with the work performed in this case,
including the review of all the pleadings, exhibits, records and Gardere's invoices, my
knowledge of similar type cases, and the hourly billable rates charged by Gardere for its services,
it is my opinion that attorneys' fees totaling $414,714.75, plus court costs and other legal
expenses totaling $18,886.86 are fair, reasonable and necessary fees and costs for the legal
services rendered in successfully defending Plaintiff's theft of confidential and proprietary
information claim under the TTLA.
10. Further, I am familiar with the reasonable and customary charges for appeals to
the Court of Appeals and writs of error to the Supreme Court of Texas. In my opinion a
reasonable and customary charge for the services to be performed by the Gardere law firm in the
event of an appeal to the Court of Appeals is $15,000.00. Furthermore, in my opinion a
reasonable and customary charge for the services to be performed by the Gardere law firm in the
event that a writ of error in the Supreme Court of Texas is filed is $10,000.00.
Further, Affiant sayeth not.
SUBSCRIBED AND SWORN TO BEFORE ME on this (P day of October, 2014, to
certify which witness my hand and official seal of office.
ABBE HOLZMEISTER
Notary Public
a.
State of Texas Notary Public in and for (he State of Texas
My Comm. Expires 06-24-2017
AFFIDAVIT OF JAMES C. SCOTT PAGE 6
4388