Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-18-00438-CV
SHOPOFF ADVISORS, LP,
Appellant
v.
ATRIUM CIRCLE, GP, Atrium Winn, LLC, Atrium Kavoian, LLC, Copperfield Square,
Copperfield Winn, LLC, Copperfield Kavoian, LLC, Imperial Airport, Imperial Winn, LLC,
Imperial Kavoian, LLC, Crystal Springs Partners, LLC, Commerce Office Park – One LP,
and Universal Square, LP,
Appellees
From the 408th Judicial District Court, Bexar County, Texas
Trial Court No. 2018-CI-00676
Honorable Antonia Arteaga, Judge Presiding 1
Opinion by: Liza A. Rodriguez, Justice
Sitting: Patricia O. Alvarez, Justice
Luz Elena D. Chapa, Justice
Liza A. Rodriguez, Justice
Delivered and Filed: July 10, 2019
AFFIRMED IN PART; REVERSED AND RENDERED IN PART
Shopoff Advisors, LP (“Shopoff”) appeals from the trial court’s interlocutory order
denying its motion to dismiss filed pursuant to the Texas Citizens Participation Act (“TCPA”),
also known as Texas’s anti-SLAPP statute. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001-
.011. Shopoff contends the trial court erred in denying its motion because the claims brought by
1
The Honorable Antonia Arteaga signed the trial court’s order denying the motion to dismiss pursuant to the TCPA.
The Honorable Peter Sakai presided over the hearing on the motion to dismiss.
04-18-00438-CV
appellees (collectively referred to as “Atrium”) related to the exercise of Shopoff’s right to petition.
We affirm in part and reverse in part.
BACKGROUND
The dispute between Shopoff and Atrium is complicated and relates to multiple legal
proceedings. It began in February 2016 when Shopoff failed to close on a real estate transaction.
Shopoff had agreed to buy six properties from Atrium for $35,600,000.00 and had placed $2.5
million into an escrow account at First American Title Co. (“First American”). After Shopoff did
not close on the transaction, Atrium argued that Shopoff had breached their agreement and
forfeited the escrow money. The next month, March 2016, Shopoff was ready to close and sued
Atrium for specific performance, demanding Atrium sell the properties to Shopoff. Shopoff also
filed lis pendens 2 on the properties. Atrium counterclaimed, and the case was referred to
arbitration.
On March 29, 2017, a year later, the arbitrators issued their final award, determining that
$2,006,100.00 of the $2.5 million on deposit with First American would be distributed to Atrium.
The rest would be distributed to Shopoff. The arbitrators further ordered the parties to “promptly
execute all documents required by First American Title Company to cause the release of such $2.5
million in accordance with this Award (and in no event more than three business days following
receipt from the title company of such documents).” Shopoff was also ordered to “release all
Notices of Lis Pendens from the real property records where such notices were filed for record
within seven (7) calendar days from the date of this Award.”
2
The filing of a lis pendens in the real property records notifies all persons that the real property is the subject matter
of litigation and that any interests acquired during the pendency of the suit are subject to its outcome. See BLACK’S
LAW DICTIONARY 950 (Bryan Garner, West 8th ed. 2004).
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On April 3, 2017, Atrium’s attorney sent a letter via email to the escrow officer at First
American demanding $2,006,100.00 of the escrow money be released to Atrium. Attached to the
email was the arbitrators’ final award. On April 4, 2017, Shopoff’s counsel sent an email to the
escrow officer stating that the “award will be challenged in Stare [sic] District Court.” Shopoff’s
counsel instructed the escrow officer to “not release any funds until you have a final, nonappealable
judgment from a court of last resort.” The escrow officer then emailed Atrium’s attorney the
following:
We have been advised by counsel for Shopoff that the arbitration award will be
challenged and, as such, we are not in a position to release the funds at this time.
On April 12, 2017, the trial court signed a final judgment confirming the arbitration award.
The final judgment ordered the parties to provide a copy of the judgment to First American within
three days. It also ordered the parties to “promptly execute all documents required by First
American Title Company to cause the release of such $2.5 million in accordance with the Final
Award and this Final Judgment, and to return such documents to First American” within fifteen
business days of receiving the documents from First American. With respect to the lis pendens
filed by Shopoff, the final judgment ordered that lis pendens “are hereby cancelled, released, and
vacated.”
On April 14, 2017, Shopoff filed a “Motion to Approve Deposit in Lieu of Supersedeas
Bond,” requesting that the trial court set the amount of cash Shopoff needed to deposit to supersede
the final judgment. On April 17, 2017, Shopoff filed its notice of appeal, stating that it intended to
appeal the trial court’s final judgment. Shopoff’s appeal of the trial court’s final judgment was
assigned Appeal No. 04-17-00241-CV in this Court.
Six months later, on October 5, 2017, Atrium filed a “Motion to Enforce and Collect
Judgment, for Turnover Order, Motion for Sanctions, and Motion to Require Supersedeas or Cash
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Deposit in Lieu of Supersedeas.” According to Atrium, Shopoff had never set its motion to approve
deposit in lieu of supersedeas bond for a hearing; thus, Shopoff had never superseded the judgment.
Atrium also complained that Shopoff had not released the lis pendens on Atrium’s properties or
executed the documents necessary to release the funds in escrow. Thus, Atrium argued it was
entitled to enforcement and collection of the judgment.
On November 28, 2017, Shopoff filed a “Notice of Filing Deposit in Lieu of Supersedeas
Bond,” explaining that it had filed a “Net Worth Affidavit.” The affidavit affirmed its net worth to
be $218,630.00; thus, pursuant to Texas Rule of Appellate Procedure 24.1(a)(3), Shopoff deposited
with the trial court clerk the sum of $109,315.00, or one-half of its net worth.
The next day, the trial court heard Atrium’s motion to enforce the judgment. After hearing
testimony, the trial court took the matter under advisement. On December 22, 2017, the trial court
signed an order granting Atrium’s motion to the extent it ordered Shopoff to execute a release of
each of the lis pendens previously filed. Five days later, Atrium filed a motion for contempt,
arguing Shopoff had not complied with the trial court’s order. That same day, the trial court issued
a show cause order, ordering Shopoff to appear on January 9, 2018. 3
On January 2, 2018, Shopoff filed an original mandamus proceeding in this Court (Appeal
No. 04-18-00001-CV), seeking a writ of injunction and requesting this Court to determine whether
Shopoff’s filing of its net worth affidavit and a cash deposit was sufficient to stay execution of the
judgment pending determination of the adequacy of the supersedeas deposit.
The next day, on January 3, 2018, in Appeal No. 04-17-00241-CV (Shopoff’s appeal from
the trial court’s judgment), this Court issued an opinion concluding that $900 of the escrow money
on deposit with First American should have been distributed to Shopoff. Thus, this Court modified
3
Shopoff complied with the trial court’s December 22, 2017 order by filing releases of the lis pendens on January 4,
2018.
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the trial court’s judgment to include $900 that was erroneously not distributed to Shopoff and
affirmed the judgment as modified. Pursuant to this modified judgment, Atrium remained entitled
to $2,006,100.00 of the $2.5 million on deposit with First American. On January 18, 2018, in
Appeal No. 04-17-00241-CV (Shopoff’s appeal from the trial court’s judgment), Shopoff filed a
motion for rehearing. On January 22, 2018, this Court denied the motion for rehearing.
On February 7, 2018, in the mandamus proceeding filed in this court (Appeal No. 04-18-
00001-CV), this Court issued an opinion, explaining that Shopoff’s cash deposit, even if
insufficient, superseded the trial court’s judgment. Thus, this Court conditionally granted
Shopoff’s petition for writ of mandamus. The trial court then vacated its December 22, 2017 order.
On February 14, 2018, Shopoff’s attorney sent a letter to Atrium’s attorney and attached a
“Tender,” along with a proposed Agreed Order directing the trial court clerk to pay Atrium the
sum contemplated by this Court’s modified judgment in Appeal No. 04-17-00241-CV. On March
5, 2018, Atrium filed in the trial court a “Motion to Reconvene Hearing on Motion to Require
Supersedeas, and Motion to Set, Increase, or Modify Supersedeas.” In its motion, Atrium
complained that Shopoff would not indicate whether it intended to appeal this Court’s decision in
Appeal No. 04-17-00241-CV to the Supreme Court and argued it was harmed by Shopoff’s
appeals. In fact, Shopoff did not file a petition for discretionary review with the Texas Supreme
Court; thus, the mandate in Appeal No. 04-17-00241-CV issued on April 4, 2018.
Meanwhile, on January 12, 2018, days after this Court’s opinion in Appeal No. 04-17-
00241-CV (Shopoff’s appeal from the trial court’s judgment) was issued, First American filed an
interpleader action in the trial court, alleging that it was holding funds in escrow that were in
dispute. First American alleged that “[a]s an innocent stakeholder,” it was entitled “to interplead
those funds into the registry of the court.” Naming Shopoff and Atrium as defendants, First
American asked the trial court to sign an order (1) accepting the tender of $2.5 million into the
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registry of the court, (2) discharging First American from all liability to the defendants with regard
to the Purchase and Sale Agreement, and (3) dismissing First American from the suit.
On March 4, 2018, Atrium filed a counter-claim against First American and a cross-claim
against Shopoff. 4 Atrium alleged that Shopoff, together with First American, had refused to
comply with the trial court’s judgment during the period of time it had not been superseded (i.e.,
from April 3, 2017 to November 28, 2017), which caused substantial damage to Atrium. Atrium
further alleged that Shopoff had actually solicited, encouraged, directed, aided and attempted to
aid First American to breach its fiduciary duties to Atrium. Atrium also alleged that Shopoff had
engaged in a conspiracy with First American to breach First American’s fiduciary duties.
Alternatively, Atrium alleged that Shopoff was vicariously liable for First American’s conduct by
aiding and abetting First American.
In response to the lawsuit, on May 4, 2018, Shopoff filed an “Anti-SLAPP Motion to
Dismiss” pursuant to the TCPA. Shopoff argued Atrium’s theory of participatory liability was
based on an email Shopoff’s attorney had sent to First American, informing First American that
the arbitration award would be “challenged in Sta[t]e District Court” and directing First American
to “not release any funds until you have a final, nonappealable [judgment] from a court of last
resort.” Thus, Shopoff argued the TCPA applied because Atrium’s claims against it related to
Shopoff’s right to petition. Further, Shopoff argued that Atrium cannot meet its burden of showing
a prima facie case on the element of damages because its claims are barred by the economic loss
4
Atrium filed an amended pleading immediately before the hearing on Shopoff’s motion to dismiss. Both parties
agree that this amended pleading is not relevant to the instant appeal.
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rule. 5 On July 18, 2018, the trial court denied Shopoff’s motion to dismiss pursuant to the TCPA.
Shopoff then filed this accelerated appeal.
MOTION TO DISMISS UNDER THE TEXAS CITIZENS PARTICIPATION ACT
The TCPA’s stated purpose is to “encourage and safeguard the constitutional rights of
persons to petition, speak freely, associate freely, and otherwise participate in government to the
maximum extent permitted by law and, at the same time, protect the rights of a person to file
meritorious lawsuits for demonstrable injury.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.002. In
an aim to fulfill this purpose, the TCPA provides for dismissal of a “legal action” that “is based
on, relates to, or is in response to a party’s exercise of the right of free speech, right to petition, or
right of association” unless the plaintiff establishes “by clear and specific evidence a prima facie
case for each essential element of the claim in question.” Id. §§ 27.003(a), 27.005(c). “Legal
action” is defined as “a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim
or any other judicial pleading or filing that requests legal or equitable relief.” Id. § 27.001(6). “This
undeniably broad definition appears to encompass any procedural vehicle for the vindication of a
legal claim.” State ex rel. Best v. Harper, 562 S.W.3d 1, 8 (Tex. 2018) (citation omitted).
A party moving for dismissal under the TCPA has the initial burden of showing by a
preponderance of the evidence that the legal action “is based on, relates to, or is in response to the
party’s exercise of: (1) the right of free speech; (2) the right to petition; or (3) the right of
association.” TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.003(a), 27.005(b); see S & S Emergency
Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 847 (Tex. 2018). If the movant makes this showing,
the burden shifts to the respondent. See S & S, 564 S.W.3d at 847. The respondent’s claims against
5
As explained fully later, the “economic loss rule generally precludes recovery in tort for economic losses resulting
from a party’s failure to perform under a contract when harm consists only of the economic loss of a contractual
expectancy.” Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716, 718 (Tex. 2014).
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the movant will be dismissed unless the respondent can “establish[] by clear and specific evidence
a prima facie case for each essential element of the claim in question.” TEX. CIV. PRAC. & REM.
CODE ANN. § 27.005(c); see S & S, 564 S.W.3d at 847. The supreme court has explained that “a
prima facie case is the ‘minimum quantum of evidence necessary to support a rational inference
that the allegation of fact is true.’” S & S, 564 S.W.3d at 847 (quoting In re Lipsky, 460 S.W.3d
579, 590 (Tex. 2015)). “A finding that [the respondent] has met his TCPA burden does not
establish that his allegations are true.” West v. Quintanilla, No. 17-0454, 2019 WL 1495093, at *4
n.9 (Tex. Apr. 5, 2019).
If the respondent satisfies his burden, then the burden shifts back to the movant to establish
“by a preponderance of the evidence each essential element of a valid defense” to the respondent’s
claim. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(d). If the movant satisfies this burden, then
the trial court must dismiss the legal action. Id.
In determining whether the parties have met their respective burdens, the trial court does
not hear live testimony; the TCPA directs courts to “consider the pleadings and supporting and
opposing affidavits stating the facts on which the liability or defense is based.” TEX. CIV. PRAC. &
REM. CODE ANN. § 27.006(a). The supreme court has “recently observed that the pleadings are
‘the best and all-sufficient evidence of the nature of the action.’” West, 2019 WL 1495093, at *4
n.8 (quoting Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017)).
An appellate court reviews issues regarding interpretation of the TCPA de novo. S & S,
564 S.W.3d at 847.
A. Does the TPCA apply?
The parties dispute whether the TPCA applies to the underlying claims brought by Atrium
against Shopoff. Shopoff emphasizes that pursuant to the TPCA, the legal action need merely to
“relate[] to . . . a party’s exercise of the . . . right to petition.” TEX. CIV. PRAC. & REM. CODE ANN.
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§ 27.003(a). And, the TPCA defines the “exercise of the right to petition” to include “a
communication in or pertaining to . . . a judicial proceeding.” Id. § 27.001(4)(A)(i) (emphasis
added). “‘Communication’ includes the making or submitting of a statement or document in any
form or medium, including oral, visual, written, audiovisual or electronic.” Id. § 27.001(1).
Shopoff points to the allegations in Atrium’s cross-claim regarding the email sent by
Shopoff’s counsel to the escrow officer. Shopoff argues this email is one of the alleged wrongful
acts that form the basis of Atrium’s lawsuit against Shopoff, and because the email was a
communication relating to a judicial proceeding, the TCPA applies to Atrium’s claims. In
response, Atrium argues the email does not relate to the exercise of Shopoff’s right to petition
because (1) it was a communication made “to a stranger to the suit”; (2) it was “not a part of taking
an appeal or superseding the judgment” and was “not otherwise pertinent to seeking any relief by
Shopoff”; and (3) it was not the sole basis for Atrium’s claims.
In reviewing Atrium’s cross-claim, Atrium alleges two wrongful acts allegedly committed
by Shopoff. One is the email sent by Shopoff’s attorney, which directed First American not to
release the escrow funds. The second is Shopoff not releasing the lis pendens even though it had
not superseded the trial court’s judgment.
For example, with respect to the email sent by Shopoff’s attorney, Atrium’s cross-claim
alleged the following facts:
1. On April 3, 2017, days after the arbitrators issued their award, Atrium’s counsel, David
Conoly, wrote to Ryan Hahn, an escrow officer with First American, and asked that
First American immediately comply with the arbitrators’ award by transferring
$2,006,100 to Atrium’s bank account.
2. On April 4, 2017, George Slade, an attorney for Shopoff, emailed Ryan Hahn the
following: “Ryan, that award will be challenged in Sta[t]e District Court. Do not release
any funds until you have a final, nonappealable judgment from a court of last resort.”
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3. “Moments later, Ryan Hahn wrote to David Conoly” the following: “We have been
advised by counsel for Shopoff that the arbitration award will be challenged and, as
such, we are not in a position to release the funds at this time.”
4. “Unquestionably Mr. Hahn did not consult with counsel for [First American] before
making this determination minutes after Slade’s email.”
5. First American and Shopoff “did not intend that their conduct be limited only to the
legal and had no need for legal advice.” First American “obeyed Shopoff, intentionally
and recklessly, regardless of what is legal.”
6. Shopoff and First American “engaged in a concerted effort to frustrate [Atrium]’s
efforts to obtain the escrow funds to which it is entitled under the final unsuperseded
judgment in order to be of financial assistance to Shopoff.”
7. “Shopoff asked [First American] not to release the funds in escrow as ordered by the
Court, and [First American] obliged in violation of a legal duty to [Atrium], ostensibly
because the judgment was on appeal, though it had not even been superseded.”
(emphasis in original). “However, [First American] was obligated to pay the funds to
[Atrium], and Shopoff was obligated to comply with the award and judgment at all
times when the judgment was not superseded.” “The judgment was never even arguably
superseded until” November 29, 2017.
8. “As a result of Shopoff’s and [First American]’s refusals to comply with the final
judgment, [Atrium] has suffered tremendous damages.” “Specifically, as Shopoff and
[First American] knew, the Copperfield Square property’s loan was going to mature on
June 1, 2016.”
Regarding Shopoff’s failure to release the lis pendens, Atrium’s cross-claim alleged the
following facts:
1. “By filing a lis pendens on [Atrium’s] properties in March 2016, Shopoff ensured”
Atrium “would be driven into a default and foreclosure position on Copperfield once
the loan matured.” “By failing to comply with the agreement and the unsuperseded
award, [First American] ensured Shopoff would be successful in driving the loan into
default. This is exactly what happened.”
2. As “a direct consequence of the refusal to release the lis pendens on [the Copperfield
property] following entry of the final judgment on” April 12, 2017, Atrium accrued
hundreds of thousands of dollars in damages in the process of refinancing the
Copperfield property.
3. As a result of Shopoff refusing to release the lis pendens, “at least one sale of Imperial
Square for $8.1 million–$2.5 million more than offered by Shopoff–was lost.”
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4. “[W]hile there have been many potential buyers for the properties since this case was
initiated, the continued existence of the lis pendens and the pending appeal has
frightened off all buyers and [Atrium has] thus lost all potential sales, and the income
and profits and reduction of interest expense therefrom. This also was directly caused
by Shopoff’s and [First American]’s refusals to comply with the unsuperseded final
judgment.”
Atrium’s counterclaim then alleged that First American breached its contract with Atrium
to act as a proper escrow agent and breached its fiduciary duty by refusing to release the escrow
funds during the period of time the judgment was not superseded. Thus, Atrium alleged First
American misapplied fiduciary property. According to the counterclaim, First American
“knowingly participat[ed] in Shopoff’s scheme to keep the escrow money tied up for as long as
possible, with the intention of financially harming [Atrium].” The counterclaim alleged First
American “has acceded to Shopoff’s every request, even though it owe[d] a fiduciary obligation
to” Atrium.
With regard to Shopoff, Atrium alleged Shopoff had “participatory liability”:
1. “Shopoff, acting with the kind of intent required for the offense of misapplication of
fiduciary property, is responsible for the conduct of [First American] because with such
intent it actually solicited, encouraged, directed, aided, or attempted to aid [First
American] to commit the offense.”
2. First American “aided and abetted the conduct of Shopoff, and complied with the
request of Shopoff, for its own financial gain, and for the financial gain and to render
assistance to Shopoff, without legal justification and in violation of its fiduciary duty.”
(emphasis added).
3. “Shopoff and [First American] engaged in a conspiracy to commit the conduct
described herein.”
4. “Alternatively, Shopoff aided and abetted [First American] and is vicariously liable for
[First American]’s conduct.”
In arguing that the TCPA does not apply to its claims, Atrium contends that
communications or actions taken outside of litigation do not implicate the right to petition. Atrium
then cites Tervita, LLC v. Sutterfield, 482 S.W.3d 280 (Tex. App.—Dallas 2015, pet. denied), as
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an example. In Tervita, the Dallas Court of Appeals considered whether an injured employee’s
lawsuit was related to his employer’s right to petition. Id. at 282. After prevailing at the workers’
compensation commission on his workers’ compensation claim, the employee sued his employer,
the workers’ compensation insurance carrier, and two individual adjusters for violations of the
Texas Labor Code, negligent misrepresentation, and conspiracy. Id. In response, his employer filed
a motion to dismiss under the TCPA, arguing his suit was based on the employer’s constitutional
rights to associate with the insurance carrier and to petition the workers’ compensation
commission. Id.
The employee’s claims under the Labor Code alleged that the employer had discriminated
against him by (1) creating a hostile work environment; (2) representing to him that he was “not
entitled to pursue” workers’ compensation benefits; (3) presenting false testimony during the claim
process; and (4) terminating his employment. Id. at 283. With regard to his negligent
misrepresentation claim, the employee alleged that his employer’s “above described
representations” were “false and intended for the guidance of [the employee] in his business,
namely his decision to secure” workers’ compensation benefits. Id. The employee alleged he
suffered pecuniary loss as a result of his reliance on his employer’s representations. Id. As for the
employee’s conspiracy claim, he alleged his employer and the insurance carrier “combined to have
a meeting of the minds for the purpose of providing testimony and evidence against [the employee]
for the unlawful purpose of denying” workers’ compensation benefits. Id. The employee alleged
that his employer “provided testimony in the process of [his] claim and at the contested case
hearing under oath that [the employer and insurance carrier] knew at the time was false.” Id. The
employee alleged he suffered injury and damages as a result of this conspiracy. Id.
The court of appeals held that although the employer moved to dismiss all of the
employee’s claims under the TCPA, only the employee’s conspiracy claim and one of his claims
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for unemployment discrimination were based on the employer’s participation in the contested case
hearing before the workers’ compensation commission. Id. The court held those two claims related
to the employer’s exercise of its right to petition because the employee’s allegations related to
alleged false testimony from the employer’s representative at a hearing. Id. at 284. The court
reasoned that although the employee had not sought damages relating from the representative’s
testimony alone, the employee did claim his employer discriminated against him by, among other
acts, presenting the representative’s testimony at the hearing. Id. The court of appeals concluded
the representative’s testimony was a “communication” “in or pertaining to” a proceeding before
the workers’ compensation commission. Id. (quoting TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.001(1), (4)). Therefore, the employee’s employment discrimination claim based on his
employer presenting false testimony and his conspiracy claim of knowingly providing false
testimony were in part “based on, relate[d] to, or [were] in response to” this communication. Id.
(quoting TEX. CIV. PRAC. & REM. CODE ANN. § 27.003). The TCPA was applicable to these claims.
Id.
However, the court of appeals concluded the employer had not established by a
preponderance of the evidence that the employee’s remaining employment discrimination claims,
which were based on the employer creating a hostile work environment, misrepresenting to him
the availability of workers’ compensation benefits, and terminating his employment, were related
to the exercise of the employer’s right to petition. Id. at 286-87. In making this conclusion, the
court noted that the employee’s allegations were based on the employer’s “actions and statements
outside of the [workers’ compensation] proceeding.” Id. at 287. Atrium relies on this statement for
the proposition that any “communications or actions taken outside of actual litigation” “do not
implicate the right to petition.” We do not believe Tervita and other cases relied on by Atrium can
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be read this broadly. Instead, we construe Tervita to stand for the proposition that alleged conduct
having no relation to a party’s right to petition does not implicate the TCPA.
Here, as in Tervita, Shopoff’s alleged failure to release the lis pendens did not relate to the
exercise of its right to petition.6 See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b)(2) (TCPA
applies to a legal action “based on, relate[d] to, or [was] in response to the party’s exercise” of the
right to petition). We recognize that courts have held the filing of a notice of lis pendens is a
communication pertaining to a judicial proceeding and thus an exercise of the right to petition
under the TCPA. See James v. Calkins, 446 S.W.3d 135, 147-48 (Tex. App.—Houston [1st Dist.]
2014, pet. denied) (holding TCPA applied to appellee’s claims relating to appellant filing a notice
of lis pendens because appellant’s filing of a notice of lis pendens was a communication giving
the county clerk notice of her claims against appellee in a judicial proceeding and thus an exercise
of his right to petition); see also Martin v. Bravenec, No. 04-14-00483-CV, 2015 WL 2255139, at
*6 (Tex. App.—San Antonio 2015, pet. denied) (holding TCPA applied because appellees’
tortious interference claims related to appellant’s history of filing notices of lis pendens with the
district court, which was an exercise of appellant’s right to petition). However, here, Atrium does
not allege the wrongful act committed by Shopoff was the filing of a notice of lis pendens. Atrium
alleges that Shopoff wrongfully failed to release the lis pendens during the time the trial court’s
judgment was not superseded. The failure to release the lis pendens is not a communication. See
TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(4) (defining the exercise of the right to petition to
6
In its brief, Shopoff argues that Atrium’s “complaint about the lis pendens notices is a diversion because it has no
bearing on Atrium’s actual legal claims.” Shopoff’s argument seems better suited for the filing of a special exceptions
to Atrium’s cross-claim or a motion for summary judgment. However, it does not relate to whether the TCPA applies
to any claims brought based on this alleged wrongful conduct. Cf. Elite Auto Body LLC v. Autocraft Bodywerks, Inc.,
520 S.W.3d 191, 204-05 (Tex. App.—Austin 2017, pet. dism’d) (explaining that in case involving motion to dismiss
under the TCPA relating to the exercise of free speech, the issue of whether the communication is constitutionally
protected speech under the First Amendment, and thus can be brought by the respondent, is immaterial in determining
whether the TCPA is applicable to the respondent’s claims).
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include “a communication in or pertaining to” “a judicial proceeding”). Thus, any of Atrium’s
claims based on Shopoff’s failure to release the lis pendens do not implicate the TCPA.
However, the email sent by Shopoff’s attorney to the escrow agent at First American was
a communication directly related to the pending litigation between Shopoff and Atrium. Through
the email, Shopoff communicated to First American that it should not release the escrow funds
because Shopoff was going to invoke its right to petition by filing an appeal. Under the TCPA,
Shopoff’s email fits under the definition of exercising the right to petition. See TEX. CIV. PRAC. &
REM. CODE ANN. § 27.001(4) (“‘Exercise of the right to petition’ means . . . a communication in
or pertaining to . . . a judicial proceeding . . . .”) (emphasis added); id. § 27.001(1)
(“‘Communication’ includes the making or submitting of a statement or document in any form or
medium, including oral, visual, written, audiovisual, or electronic.”) (emphasis added). Atrium
then sued Shopoff and, as a basis for its claims, alleged that because Shopoff emailed First
American and communicated to First American that it should not release the funds because
Shopoff was going to appeal, Atrium was harmed. Further, although Atrium argues that the email
in question was a “communication to a stranger to the suit, not ‘in’ the suit,” First American was
not a “stranger” to the litigation, but an interested party. It was the entity holding the escrow money
directly at issue in the litigation. Thus, we conclude that Atrium’s claims based on the email sent
by Shopoff’s attorney to the escrow agent at First American relate to Shopoff’s exercise of its right
to petition. 7 See Ghrist v. MBH Real Estate LLC, No. 02-17-00411-CV, 2018 WL 3060331, at *4
7
We note that Atrium argues the email was “made without legal right because Shopoff has no right to avoid
enforcement of the judgment or to direct [First American] to assist it to avoid compliance with the mandatory orders
in the judgment.” According to Atrium, “[b]y definition, the right to petition does not include acts that are tortious or
illegal, or solicitations to avoid compliance with a mandatory injunction in an enforceable final judgment. Such
tortious and illegal acts are therefore not subject to the TCPA’s protections.” Atrium cites no authority for this
proposition. See TEX. R. APP. P. 38.1(i) (requiring appellate brief to “contain a clear and concise argument for the
contentions made, with appropriate citations to authorities and to the record”). The TCPA, however, does specifically
define “exercise of the right to petition,” and its definition does not mention illegal or tortious actions being excluded
from the definition. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(4).
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(Tex. App.—Fort Worth 2018, no pet.) (holding that because the face of the letter that was the
basis of the appellee’s suit was, on its face, written about a matter connected with a lawsuit pending
in the district court in Tarrant County, appellants met their burden of showing appellees’ claim
related to appellant’s right to petition).
Finally, we note that Atrium has also argued that Shopoff’s email was “baseless and a
sham.” Atrium contends that “[r]egarding the underlying first lawsuit, no reasonable litigant could
have reasonably expected success on the merits.” Atrium then admits that the “TPCA does not
explicitly exclude lawsuits that constitute sham petitioning from the ‘exercise of the right to
petition’ definition,” but argues for the creation of such a limitation. We decline to do so.
The United States Supreme Court has held that the right to petition government for redress
of grievances under the First Amendment encompasses a right to access the courts. Bill Johnson’s
Rests., Inc. v. Nat’l Labor Relations Bd., 461 U.S. 731, 741 (1983). However, in certain contexts,
the Supreme Court has limited this right to petition to exclude “sham” petitioning—that is,
petitioning “not genuinely aimed at procuring favorable governmental action at all” but instead
aimed at using “the governmental process, as opposed to the outcome of that process, as an
anticompetitive weapon” by, for example, harassing, increasing costs for, or otherwise harming
the opposing party as an end in itself. City of Columbia v. Omni Outdoor Advert., Inc., 499 U.S.
365, 380 (1991) (emphasis in original) (citations omitted). In determining whether a lawsuit
amounts to sham petitioning, the Supreme Court has applied a two-part analysis: (1) the court
considers whether the lawsuit is “objectively baseless in the sense that no reasonable litigant could
realistically expect success on the merits”; and (2) if the lawsuit is objectively baseless, then the
court determines whether the baseless lawsuit conceals an attempt to harm a rival directly through
the process itself as opposed to the outcome. Prof’l Real Estate Inv’rs, Inc. v. Columbia Pictures
Indus., Inc., 508 U.S. 49, 60-61 (1993).
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While the right to petition under the United States Constitution has been interpreted
through longstanding jurisprudence, the Texas Legislature, in enacting the TCPA, did not refer to
this jurisprudence and made no explicit mention of sham petitioning. See TEX. CIV. PRAC. & REM.
CODE ANN. §§ 27.001-27.011. Instead, the Legislature specifically defined the “[e]xercise of the
right to petition” in the TCPA to mean any of the following:
(A) a communication in or pertaining to:
(i) a judicial proceeding;
(ii) an official proceeding, other than a judicial proceeding, to administer the
law;
(iii) an executive or other proceeding before a department of the state or federal
government or a subdivision of the state or federal government;
(iv) a legislative proceeding, including a proceeding of a legislative committee;
(v) a proceeding before an entity that requires by rule that public notice be given
before proceedings of that entity;
(vi) a proceeding in or before a managing board of an educational or
eleemosynary institution supported directly or indirectly from public
revenue;
(vii) a proceeding of the governing body of any political subdivision of this
state;
(viii) a report of or debate and statements made in a proceeding described by
Subparagraph (iii), (iv), (v), (vi), or (vii); or
(ix) a public meeting dealing with a public purpose, including statements and
discussions at the meeting or other matters of public concern occurring at
the meeting;
(B) a communication in connection with an issue under consideration or review by
a legislative, executive, judicial, or other governmental body or in another
governmental or official proceeding;
(C) a communication that is reasonably likely to encourage consideration or review
of an issue by a legislative, executive, judicial, or other governmental body or in
another governmental or official proceeding;
(D) a communication reasonably likely to enlist public participation in an effort to
effect consideration of an issue by a legislative, executive, judicial, or other
governmental body or in another governmental or official proceeding; and
(E) any other communication that falls within the protection of the right to petition
government under the Constitution of the United States or the constitution of
this state.
TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(4).
The Texas Supreme Court has repeatedly instructed that “[w]hen construing a statute, [a
court’s] primary objective is to ascertain and given effect to the Legislature’s intent.” TGS-NOPEC
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Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011). “To discern that intent, [a court]
begin[s] with the statute’s words.” Id. Thus, “[i]f a statute uses a term with a particular meaning
or assigns a particular meaning to a term, [a court is] bound by the statutory usage.” Id.
Given that the Legislature explicitly defined the “exercise of the right to petition” and did not
see fit to include an exception for sham petitioning, we decline to hold that such an exception
exists.
B. Did Atrium establish by clear and specific evidence a prima facie case for each essential
element of its claims relating to Shopoff’s email?
Having determined that Shopoff met its burden of showing the TCPA applies to any of
Atrium’s claims based on Shopoff’s email, we must now consider whether Atrium established by
clear and specific evidence a prima facie case for each essential element of its claims relating to
Shopoff’s email. Shopoff argues that Atrium cannot make this showing because all of its claims
are derivative of its claims against First American. That is, Atrium alleged Shopoff (1) conspired
with First American and (2) “aided and abetted” 8 First American to breach its fiduciary duties to
Atrium and misapply fiduciary property. 9 Atrium does not contend that Shopoff owed its own
fiduciary duty to Atrium. Shopoff emphasizes that because a suit for conspiracy cannot proceed
without an underlying tort, Atrium had to show (1) the underlying fiduciary breach by First
American, and (2) a basis on which Shopoff could be held liable as a participant or conspirator.
Shopoff argues Atrium cannot meet this burden because “its contract claims and its tort claims
8
It is not clear whether Texas recognizes the theory of participatory liability of “aiding and abetting” separately from
a theory of civil conspiracy. See Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 583 n. 7 (Tex.
2001); Rio Grande H2O Guardian v. Robert Muller Family P’ship, No. 04-13-00441-CV, 2014 WL 309776, at *4
n.3 (Tex. App.—San Antonio 2014, no pet.), disapproved on other grounds by In re Lipsky, 460 S.W.3d 579 (Tex.
2015). Even if aiding and abetting is a separate theory of liability, it does not matter for purposes of our analysis
because aiding and abetting would also be purely derivative and would require proof of the underlying tort.
9
Misapplication of fiduciary property is a form of breach of fiduciary duty that permits exemplary damages under
certain circumstances. See TEX. CIV. PRAC. & REM. CODE ANN. § 41.008(c)(10).
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against First American all derive from the same alleged breach: the failure to make timely
disbursement of the previously-disputed escrow funds.” According to Shopoff, because Atrium
has not shown an independent injury outside of the alleged untimely payment, it cannot prove
damages under the economic loss rule.
“[C]ivil conspiracy is not an independent tort.” Agar Corp. v. Electro Circuits Int’l, LLC,
No. 17-0630, 2019 WL 1495211, at *4 (Tex. Apr. 5, 2019). It “is a theory of vicarious liability”;
“a lawsuit alleging a civil conspiracy that committed some intentional tort is still a ‘suit for’ that
tort.” Id. at *5. Thus, a party must prove the underlying tort. See id. Additionally, to hold a party
vicariously liable under a theory of civil conspiracy, a party must show the following: “(1) two or
more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of
action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result.” Id. at *4
(quoting Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983)) (emphasis added).
With respect to the element of damages, the economic loss rule is not an affirmative
defense; it “is a consideration in measuring damages.” Equistar Chems., L.P. v. Dresser-Rand Co.,
240 S.W.3d 864, 868 (Tex. 2007) (emphasis added); see also Jim Wren, Applying the Economic
Loss Rule in Texas, 64 BAYLOR L. REV. 204, 208 (2012) (explaining that the economic loss rule
“is not an affirmative defense that must be pleaded” but is “instead, a statement or legal
consideration of what is and is not to be considered as part of the proper measure of damages in a
case to which it applies”). Thus, “the economic loss rule may be raised by the defendant to simply
point out a deficiency in the plaintiff’s proof of damages, without the necessity of prior pleading.”
Jim Wren, Applying the Economic Loss Rule in Texas, 64 BAYLOR L. REV. 204, 208 (2012)
(emphasis added); see Equistar, 240 S.W.3d at 868. Furthermore, as the economic loss rule is a
legal consideration of what should and should not be part of the proper measure of damages, the
rule is applicable to whether Atrium has met its prima facie case on the element of damages with
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respect to its claims against Shopoff for conspiracy to breach the fiduciary duty owed to Atrium
and for conspiracy to breach the escrow contract. See Equistar, 240 S.W.3d at 868.
“The economic loss rule generally precludes recovery in tort for economic losses resulting
from a party’s failure to perform under a contract when the harm consists only of the economic
loss of a contractual expectancy.” Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445
S.W.3d 716, 718 (Tex. 2014); see also LAN/STV v. Martin K. Eby Constr. Co., 435 S.W.3d 234,
241-42 (Tex. 2014); Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 418 (Tex.
2011). However, it does not prevent economic losses from being “recoverable under a variety of
intentional tort theories absent a contractual obligation.” Eagle Oil & Gas Co. v. Shale
Exploration, LLC, 549 S.W.3d 256, 268 (Tex. App.—Houston [1st Dist.] 2018, pet. dism’d)
(emphasis added). Further, “[e]ven if the matter in dispute is the subject of a contract, a party may
elect a recovery in tort if the duty breached stands independent from the contractual undertaking,
and the alleged damages are not solely the result of a bargained-for contractual benefit.” Id. (citing
Chapman, 445 S.W.3d at 718) (emphasis added). Thus, in deciding whether the economic loss rule
applies to Atrium’s claims, we look to the source of the alleged duty and the nature of the claimed
injury. See id.; see also Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986)
(explaining that “[t]he acts of a party may breach duties in tort or contract alone or simultaneously
in both” and courts look to the “nature of the injury” in determining “which duty or duties are
breached” and whether the cause of action “sounds in contract alone”).
In making this determination, we do not look to “the manner in which” a cause of action
was pled, but instead “look to the substance of the cause of action.” Jim Walter Homes, 711 S.W.2d
at 617-18 (emphasis added). Here, the underlying claims brought by Atrium are breach of fiduciary
duty and misapplication of fiduciary property. Atrium generally alleged First American owed the
following duties: (1) “the duty of loyalty”; (2) “the duty to make full disclosure”; and (3) “the duty
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to exercise a high degree of care to conserve the money and pay it only to the people entitled to
receive it in accordance with the agreement.” The substance of the alleged breach by First
American in relation to those duties was First American “refusing to release the funds required
during periods when the judgment was not superseded.” This alone might show a breach of a
contractual duty, but it is insufficient to raise breach of fiduciary duty or misapplication of
fiduciary funds. Further, nothing in Atrium’s response to Shopoff’s motion to dismiss shows a
breach of a duty separate from the alleged failure to comply with the contractual agreement. See
Stauffacher v. Coadum Capital Fund 1, LLC, 344 S.W.3d 584, 591 (Tex. App.—Houston [14th
Dist.] 2011, pet. denied) (holding economic loss rule applied to actions brought by investment
fund against joint venturer for breach of joint venture agreement and breach of fiduciary duty
because even though there was evidence to show a breach of fiduciary duty, there was no evidence
to show how the investment fund was damaged “specifically by” the joint venturer’s breach of
fiduciary duty separate from his failure to comply with the joint-venture agreement); Fish v. Tex.
Legislative Serv., No. 03–10–00358–CV, 2012 WL 254613, at *14-*15 (Tex. App.—Austin 2012,
no pet.) (“Although we cannot say that the economic loss rule never allows recovery of tort
damages under a breach-of-fiduciary-duty theory solely because there is contractual relationship
between the parties, in this case we believe that the economic loss rule applies because the damages
alleged arise only from the nonperformance of duties governed by the partnership agreement . . .
[and] “the nature of the injury in this case emanates from nonperformance of the partnership
agreement itself and is thus more appropriately characterized as a breach-of-contract claim.”);
Villanueva v. Gonzalez, 123 S.W.3d 461, 467 (Tex. App.—San Antonio 2003, no pet.) (holding
economic loss rule applies to breach of fiduciary claims brought by property owner, who entered
into an agreement to allow an attorney to use the owner’s real property as collateral for attorney to
write bail bonds, because “the duties allegedly breached” were created by the unenforceable
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contract and the alleged injury stemmed from the unenforceable contract). Thus, under the facts
presented by the record in this appeal, we conclude the economic loss rule applies to Atrium’s
claims and is a consideration in how Atrium can show proof of the element of damages. See
Equistar, 240 S.W.3d at 868 (explaining that the economic loss rule is not an affirmative defense
but “is a consideration in measuring damages”) (emphasis added); see also Jim Wren, Applying
the Economic Loss Rule in Texas, 64 BAYLOR L. REV. 204, 208 (2012) (explaining that the
economic loss rule is “a statement or legal consideration of what is and is not to be considered as
part of the proper measure of damages in a case to which it applies”).
Because Atrium has not met its burden of establishing by clear and specific evidence a
prima facie case for the element of damages with respect to its claims based on the email sent by
Shopoff’s attorney, we conclude the trial court erred in denying Shopoff’s motion to dismiss
pursuant to the TCPA.
WAIVER
Finally, Atrium argues that Shopoff waived its right to assert its motion to dismiss under
the TCPA because it was not timely filed. The TCPA provides that a motion to dismiss must be
filed “not later than the 60th day after the date of service of the legal action.” TEX. CIV. PRAC. &
REM. CODE ANN. § 27.003. Atrium does not dispute that Shopoff filed its motion to dismiss within
sixty days after the date of service in the underlying lawsuit. Instead, Atrium argues that the
underlying legal action “arises out of and is based on identical facts, actions and communications”
as a former lawsuit (the post-judgment legal action for sanctions and contempt asserted in the
original lawsuit). Thus, Atrium claims a motion to dismiss under the TCPA had to be filed within
sixty days from the date of service in that original action. Atrium cites no legal authority for this
argument. See TEX. R. APP. P. 38.1(i). And, in considering the plain language of section 27.003,
we find no support for the assertion that the sixty-day deadline for filing a motion to dismiss under
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the TCPA would apply to an earlier-filed lawsuit. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.003.
CONCLUSION
For the foregoing reasons, we conclude any of Atrium’s claims based on Shopoff’s failure
to release the lis pendens do not implicate the TCPA. Therefore, we affirm in part the trial court’s
order denying Shopoff’s motion to dismiss. However, with respect to Atrium’s claims based on
the email sent by Shopoff’s attorney, we hold the TCPA applies because Atrium’s legal action is
related to Shopoff’s exercise of its right to petition. Thus, with respect to Atrium’s claims related
to the email sent by Shopoff, the burden shifted to Atrium to establish by clear and specific
evidence a prima facie case for the element of damages. However, because the economic loss rule
applies to these claims, Atrium has not established a prima facie case for damages, and the trial
court erred in denying Shopoff’s motion to dismiss. Therefore, with respect to Atrium’s claims
based on the email sent by Shopoff’s attorney, we reverse in part the trial court’s order and render
that the following claims brought by Atrium against Shopoff are dismissed: (1) conspiracy to
breach a fiduciary duty owed by First American to Atrium; (2) conspiracy to misapply fiduciary
property; (3) aiding and abetting First American to breach its fiduciary duty; and (4) aiding and
abetting misapplication of fiduciary property.
Liza A. Rodriguez, Justice
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