Earl Harper v. Credito Real Business Capital

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION

No. 04-21-00212-CV

Earl HARPER,
Appellant

v.

CREDITO REAL BUSINESS CAPITAL,
Appellee

From the 438th Judicial District Court, Bexar County, Texas
Trial Court No. 2020CI23243
Honorable Laura Salinas, Judge Presiding

Opinion by: Luz Elena D. Chapa, Justice

Sitting: Rebeca C. Martinez, Chief Justice
Luz Elena D. Chapa, Justice
Beth Watkins, Justice

Delivered and Filed: July 20, 2022

AFFIRMED

This is an interlocutory appeal from the trial court’s order denying appellant Earl Harper’s

motion to dismiss pursuant to the Texas Citizens Participation Act (TCPA). Harper argues the

trial court erred because the claim he sought to dismiss implicated his right of free speech under

the TCPA, and appellee Credito Real Business Capital (CRBC) failed to carry its burden to show

a prima facie case of this claim by clear and specific evidence. We affirm the trial court’s order.
 04-21-00212-CV

BACKGROUND

This case involves two limited liability companies, CR-FED, LLC and CR-FED Leasing,

LLC. These companies provide specialized financing services to businesses in the construction

industry and operate under the same assumed name, CRBC. Through these companies, CRBC

provides factoring services and leases equipment to other businesses. Harper worked for CRBC

as its Executive Vice President and as a consultant. Among his duties, Harper worked directly

with CRBC customers who either sold outstanding invoices or accounts receivables to CR-FED

under factoring service agreements 1 or leased equipment from CR-FED Leasing. Harper’s duties

required CRBC to share confidential business information about its practices with him. As a result,

it asked Harper to sign a Confidentiality Agreement, wherein Harper promised he would not

disclose CRBC’s confidential information with third parties. The Confidentiality Agreement was

by and between CR-FED and Harper.

Ontrack Site Services, LLC is a site grading contractor and was one of CRBC’s customers

with whom Harper worked. CRBC advanced money and leased equipment to Ontrack. CRBC

revealed to Harper how much money Ontrack owed CRBC, its prospect for repayment, when it

would be willing to extend additional factoring services or equipment leases to Ontrack, what

security for repayment it would require, and its plans, budgets, and projections for its future

relationship with Ontrack. According to CRBC, Harper used this confidential information to

benefit Ontrack at CRBC’s expense by guiding Ontrack how to negotiate with CRBC for lower

lease rates and additional funding. CRBC ultimately terminated Harper’s services. When CRBC

terminated Harper’s services, Ontrack owed CRBC millions of dollars, and CRBC and Ontrack

were actively engaged in negotiations to restructure Ontrack’s debt. According to CRBC, Harper

1
Under these agreements, CRBC became the owner of the purchased invoices or accounts receivable and could collect
on them.

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instructed Ontrack not to commit to CRBC and instead obtain financing from Southwest Capital,

a company Harper recently had joined.

CRBC ultimately sued Harper for breach of fiduciary duty and breach of contract, alleging

he breached his duties of loyalty and candor and the Confidentiality Agreement by

misappropriating CRBC’s trade secrets. 2 In its original petition, CRBC indicated it is an assumed

name for CR-FED. It later amended its petition, clarifying CRBC is an assumed name for CR-

FED and CR-FED Leasing. Harper ultimately filed a motion to dismiss CRBC’s breach of contract

claim pursuant to the TCPA. The trial court held a hearing on Harper’s motion, and after hearing

argument, it took the matter under advisement. Thereafter, the trial court denied the motion.

Harper now appeals.

ANALYSIS

Standard of Review

“We review a trial court’s denial of a TCPA motion to dismiss de novo.” Segundo Navarro

Drilling, Ltd. v. San Roman Ranch Mineral Partners, Ltd., 612 S.W.3d 489, 492 (Tex. App.—San

Antonio 2020, pet. denied). In conducting our review, “[w]e view the pleadings and evidence in

the light most favorable to the nonmovant.” Id. (alteration in original and internal quotations

omitted).

Applicable Law

The TCPA “protects citizens who petition or speak on matters of public concern from

retaliatory lawsuits that seek to intimidate or silence them.” In re Lipsky, 460 S.W.3d 579, 584

(Tex. 2015) (orig. proceeding). Under the Act, a party may file a motion to dismiss if a “legal

action is based on or is in response to a party’s exercise of the right of free speech, right to petition,

2
CRBC also sued Southwest Capital Group, who is not a party to this appeal.

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or right of association.” TEX. CIV. PRAC. & REM. CODE § 27.003(a). The filing of a motion to

dismiss triggers a three-step burden shifting mechanism. See id. § 27.005(b)–(d); Lipsky, 460

S.W.3d at 586–87. The movant bears the initial burden to demonstrate the legal action is based

on or in response to the movant’s exercise of the right to free speech, the right to petition, or the

right of association. TEX. CIV. PRAC. & REM. CODE § 27.005(b). If the movant meets its initial

burden, the burden shifts to the nonmovant to establish by clear and specific evidence a prima facie

case for each essential element of its claim. Id. § 27.005(c). If the nonmovant fails to meet its

burden, the trial court must dismiss the legal action. See id. § 27.005(b)-(c). If the nonmovant

satisfies its burden, the trial court must nevertheless dismiss the legal action if the movant

establishes an affirmative defense or other grounds on which the moving party is entitled to

judgment as a matter of law. Id. § 27.005(d). To determine whether the nonmovant’s claim should

be dismissed, the trial court considers the pleadings, evidence a court could consider under Texas

Rule of Civil Procedure 166a, and any supporting and opposing affidavits stating the facts on

which the claim or defense is based. Id. § 27.006(a); see TEX. R. CIV. P. 166a.

Application

According to Harper, the trial court erred when it denied his motion to dismiss because

CRBC’s breach of contract claim against him relates to his exercise of free speech, and CRBC did

not establish a prima facie case of this claim by clear and specific evidence. As part of his

argument, Harper asserts the trial court improperly considered CRBC’s first amended petition.

We begin by determining whether the trial court could have considered CRBC’s amended

petition when it made its ruling on Harper’s motion to dismiss. 3 Texas Rule of Civil Procedure 63

3
We note before addressing the merits of Harper’s argument, CRBC argues Harper waived his challenges because of
inadequate briefing. According to CRBC, Harper’s brief violates Texas Rule of Appellate Procedure 38.1 because it
lacks a summary of the argument section, a standard of review section, and an appendix with a copy of the challenged
order. A review of the brief, however, shows it includes an introduction section summarizing the argument and

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allows a party to amend its pleadings so as not to surprise the opposing party. TEX. R. CIV. P. 63.

The rule further provides any pleadings offered within seven days of trial shall be filed only after

obtaining leave of court. Id. However, “a party may file an amended pleading outside seven days

of the trial date freely, without leave of court.” Mensa-Wilmot v. Smith Intern, Inc., 312 S.W.3d

771, 778 (Tex. App.—Houston [1st Dist.] 2009, no pet.). Here, CRBC filed its amended petition

on March 16, 2021, and the hearing occurred on April 30, 2021. Accordingly, CRBC filed its

amended pleading well before seven days of the hearing date. And while Harper argues the

amended petition added CR-FED Leasing as a party, the amended petition did not change CRBC’s

party status as a plaintiff seeking to establish a breach of contract claim against Harper. We

therefore conclude the amended pleading did not include any element of surprise, and we reject

Harper’s contention the trial court improperly considered CRBC’s amended petition when making

its ruling. See Atlas Survival Shelters, LLC v. Scott, No. 12-20-00054-CV, 2020 WL 6788714, at

*4 (Tex. App.—Tyler Nov. 18, 2020, no pet.) (mem. op.) (explaining appellant failed to show

surprise when amended petition did not include new causes of action); see also TEX. CIV. PRAC. &

REM. CODE § 27.006 (allowing trial court to consider pleadings in its determination).

We now turn to Harper’s primary assertion in which he argues the trial court erred by

denying his motion to dismiss. We do not need to resolve Harper’s contention asserting CRBC’s

breach of contract claim implicates his exercise of free speech because even presuming it does and

the TCPA applies, we conclude CRBC established by clear and specific evidence a prima facie

case for its breach of contract claim. See Meat Supply, LLC v. 510 S. Good Latimer, LLC, No. 04-

21-00095-CV, 2022 WL 689071, at *3 (Tex. App.—San Antonio Mar. 9, 2022, no pet.) (mem.

contains an adequate explanation of Harper’s argument. Accordingly, we conclude Harper’s brief sufficiently
complies, and we will address his arguments. See TEX. R. APP. P. 2, 38.1; see also St. John Missionary Baptist Church
v. Flakes, 595 S.W.3d 211 (Tex. 2020) (“We have often held that a party sufficiently preserves an issue for review by
arguing the issue’s substance.”).

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op.) (assuming TCPA applies and determining whether nonmovant established prima facie case to

dispose of appeal). A party establishes a “prima facie case” when it provides legally sufficient

evidence showing a claim as factually true if it is not countered. Lipsky, 460 S.W.3d at 590. It is

“the ‘minimum quantum of evidence necessary to support a rational inference that the allegation

of fact is true.’” KBMT Operating Co. v. Toledo, 492 S.W.3d 710, 721 (Tex. 2016) (quoting

Lipsky, 460 S.W.3d at 590). To meet its prima facie burden, “a plaintiff must provide enough

detail to show the factual basis for its claim.” Lipsky, 460 S.W.3d at 591. However, “the [TCPA]

does not impose an elevated evidentiary standard or categorically reject circumstantial evidence.”

Id. To establish a claim for breach of contract, CRBC must prove the following elements: (1) a

valid contract; (2) the plaintiff performed or tendered performance; (3) the defendant breached the

contract; and (4) the plaintiff was damaged as a result of the breach. BoRain Cap., LLC v. Hashmi,

533 S.W.3d 32, 36 (Tex. App.—San Antonio 2017, pet. denied).

Here, the only element Harper disputes is breach. According to Harper, CRBC “produced

no evidence of anything Harper did in 2020 to support the claims made in the Petition.” However,

CRBC’s breach of contract claim is not limited to actions Harper took in 2020. Instead, in its

amended petition, CRBC generally contends Harper “breached his contractual obligations to

CRBC under the Confidentiality Agreement.” To support its contention, CRBC produced a copy

of the Confidentiality Agreement, which required Harper not to disclose certain confidential and

proprietary information, including business plans, financing information and pricing, and business

strategies, to third parties.

To establish Harper disclosed such information, CRBC produced affidavits from three of

its managers. Leonardo Rajunov, a CRBC manager (both of CR-FED and CR-FED Leasing),

attested CRBC shared with Harper how CRBC priced its factoring services and equipment leases

with customers. Harper also knew CRBC did not want to advance additional money to Ontrack

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until it could determine how much money it would collect from certain outstanding invoices.

Rajunov further attested despite this confidential knowledge, Harper emailed Ontrack and told

Ontrack he would work with Ontrack to press CRBC to advance more money to Ontrack. Rajunov

further attested Harper drafted an email on behalf of Ontrack to CRBC, inducing CRBC to provide

additional funding it would not have otherwise advanced to Ontrack. Copies of the emails were

attached to Rajunov’s affidavit. Another CR-FED manager, Fermin Rajunov, attested an Ontrack

employee specifically told him Harper instructed Ontrack not to sign additional lease agreements

with CRBC because it could get cheaper rates. And lastly, Nim Meishar, the operations manager

for CR-FED, attested CRBC’s cost of capital and lease rates were confidential information, and

he told Harper how CRBC calculated monthly lease rates based on its cost of capital. This

evidence supports a rational inference Harper disclosed CRBC’s confidential business plans and

strategies as well as internal pricing to Ontrack, leading Ontrack to obtain additional funding under

factoring service agreements and cheaper lease rates at CRBC’s expense.

In his reply brief, Harper contends CRBC “conflate[s] the causes of action between the two

entities and selectively cherry pick[s] facts from each entity to manufacture one whole claim.”

According to Harper, CRBC is improperly attempting to establish he breached the Confidentiality

Agreement he signed with CR-FED by disclosing trade secrets belonging to CR-FED Leasing.

We recognize the Confidentiality Agreement is by and between Harper and CR-FED; nevertheless,

the evidence shows Harper was aware of CR-FED’s business plans and strategies with respect to

Ontrack and advised Ontrack how to pursue further advances of funds under factoring service

agreements and cheaper lease agreements. This evidence supports a rational inference Harper

disclosed CR-FED’s confidential information to Ontrack. We therefore conclude CRBC provided

clear and specific legally sufficient evidence to establish Harper breached the Confidentiality

Agreement. Accordingly, because we conclude CRBC satisfied its burden and there is nothing in

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the record showing Harper established an affirmative defense or other ground on which he would

be entitled to judgment as a matter of law, we hold the trial court did not err by denying Harper’s

motion to dismiss under the TCPA.

CONCLUSION

We affirm the trial court’s order denying Harper’s motion to dismiss. 4

Luz Elena D. Chapa, Justice

4
Based on our resolution of this appeal, appellee’s “Motion to Strike and Dismiss Appellant’s Reply Brief” is moot.
In re Guardianship of Herron, No. 02-13-00317-CV, 2014 WL 4463104, at *4 n.11 (Tex. App.—Fort Worth Sept.
11, 2014, no pet.) (mem. op.).

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