ACCEPTED
04-13-00106-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
6/2/2015 4:36:48 PM
KEITH HOTTLE
CLERK
FILED IN
4th COURT OF APPEALS
SAN ANTONIO, TEXAS
6/2/2015 4:36:48 PM
KEITH E. HOTTLE
Clerk
DARBYRILEY
BOARDCERTIFIED/CIVIL TRIALLAW CHRISRILEY,M A
TEXASBOARDOF LEGALSPECIALIZATION LEGALASSISTANT
darbyriley@rileylawfirm
com
C H A R L E S AR I L E Y , P C
charlesriley@rileylalvfirmcom
June2, 2015
FourlhCourtof Appeals
300 Dolorosa,Suite3200
San Antonio.Texas 78205-3037
Re. Barry Brooks et al. v. ExcellenceMortgage,Ltd. et al.,
CauseNo. 04-13-00106-CV
JU S T IC ESBARNARDANdALVAREZ:
T O T H E H ON OR A B L E
The appellantloan officersrespectfullysubmit this letter,containingadditional
citationsand succinctcomment,with respectto Appellees'Motionfor Rehearing.
1. A N T IT R U S TC L A IMS
Motion for SummaryJudgmentlimited to grounds asserfedby the Motion.
Attached hereto are peftinent excerpts from the mortgage company parties'
Motionfor SummaryJudgment.The Motionat CR 126-128showsthe grounds
traditional
assertedon the loan officers'tortious interferenceand antitrustclaims against the
mortgagecompanyparties.
"Whena motionfor summary judgmentassertsgroundsA and B, it
cannotbe upheldon groundsC andD,whichwerenotasserted, evenif the
summary judgment proofsupports
themandthe responding partydid not
exceptto the motion."
3 2 0 L e x i n g t o nA v e . S a nA n t o n i o ,T X 7 8 2 1 5 - 1 9 1T3e l : ( 2 1 0 )2 2 5 - 1 2 3 6 F a x :( 2 l 0 ) 2 2 1 - 7 9 0 7
FourthCourtof Appeals
June2, 2015
Page:2
Roberfsv. SouthwestIexas MethodistHospital,Sl 1 S.W.2d 141,146 (Tex.App-
San Antonio 1991,writ denied),quoted in McConnellv. SouthsidelndependentSchool
District,858S.W.2d 337, 342 (fex. 1993);T. Pnnoru,Suuunnv Juoctuerurs
tNTexns:
PnRcrce, PRoceouRE, (3d ed. 2013).
ANDRrvrew,53.06t21
The mortgagecompanypartiesonly soughtsummaryjudgmenton the antitrust
claim on the ground that their action "merely enforced reasonablenon-disclosure
agreements."(CR 128-129).The Court'sopinionon Motionfor Rehearingfinds a fact
issueon whether"Excellencefalselyclaimedit had the sole rightto servethe pipeline
c u s t o m e rs."Op i n i o np, . 1 8 . T h u s ,havingfoundthatthe mor tgagecompanypar ti esdi
' d
agreementsgave them exclusiverightto
provethat the non-disclosure
not conclusively
serve the pipelinecustomers,the Court properlydenied summaryjudgment on the
antitrustclaims.
B. The Appel/ees'New Argument on Causation
The mortgagecompanypartiesgo beyondtheirMotionfor SummaryJudgmentin
arguingthat the panel'sOpinionon Motionfor Rehearing"is inconsistent
with appellants
pleadedcausationtheory"on the antitrustclaim. (Appellees'Motionfor Rehearing,p. 7).
They point out that the loan officerspleadedthat the injunctionsuit by Excellence
Mortgage,Ltd. was groundless.(ThirdAmendedOriginalCounterclaim,
CR 269-270).
(The loan officersalso pleadedthat the moftgagecompanyparties"unlawfully"
refused
to transferthe loansas requestedby the pipelineborrowers).ld.
FourthCourlof Appeals
June2, 2015
Page:3
The mortgagecompany parties cite Houston Mercantile change Corp. v. Dailey
PetroleumServicesCorp., 1993 WL 322901(Tex. App.-Houston [14thDist.] 1993, no
writ) for the propositionthat a personwho initiatesa lawsuitis generallyimmunefrom
exceptionis where the suit is groundlessand/or
antitrustliability.The well-recognized
broughtfor an anticompetitivepurpose,as allegedhere. See /n re BurlingtonNofthern,
822 F.2d 518,527,529 (sthCir. 1987). (Evena successfullitigantmay be foundto have
abusedthe litigationprocessin orderto effectuatean antitrustviolation).
Thus,to succeedon this issue,the mortgagecompanypartieshad to first,move
provethat the suitwas
for summaryjudgmenton that ground,and second,conclusively
purpose. The mortgage
not groundlessand was not broughtfor an anticompetitive
companypartiesdid neither. The Courthas properlydeniedsummaryjudgmenton the
antitrustclaim.
2. T OR T IOU SIN T E R FERENCE
A. As the Courtfoundin its Opinionon Motionfor Rehearing,page22, the sole
groundassertedby the mortgagecompanypartiesfor summaryjudgmenton the tortious
claimis the contentionthatthey"engagedin no tortiousor wrongfulconduct"
interference
that preventedthe pipelinecustomersfromdealingwith the loan officers. CR 126-127.
The Court had previouslyfound that the loan officershad raisedfact issueson each
elementof an antitrustclaim;it thus properlyheldthe antitrustviolationwas an unlawful
act to supportthe tortiousinterferenceclaim. ld.
FourthCourtof Appeals
June2, 2015
Page:4
B. The mortgagecompanypartiescontend(Appellees'Motionfor Rehearing,
pp. 9-10)that "appellants'
pleadingsdid not basethe tortiousinterference
claimuponan
antitrustviolation. See CR 265-66." However,the loan officers'Responseto the
mortgage company parties' Motion for Summary Judgment clarifiesthe "unlaMul
conduct"complainedof in the ThirdAmendedOriginalCounterclaim.ld. A|CR 281-82,
the loanofficerslaidout the extensiveunlaMulconduct,includingthe antitrustviolations,
and citedthe TexasAntitrustStatute. Where,as here,therewas no objectionto the lack
of a supportingpleading,"[a] movantmay . try by consentan issueraisedby the non-
movantin its summaryjudgmentresponsewhich is not pled in its petition." Pnrrorl,
supra,S 3.06[1],citingGoodyearTireand RubberCo. v. Mayes,236S.W.3d754,756n.
1 (Tex. 2007).
C. The mortgagecompanypartiescontend(Appellees'Motionfor Rehearing,
pp 6-7)that the Courtshouldnot haveacceptedthe opinionsof the loanofficers'expert
witnessesthat the pipelinecustomers'privacyrightswere violatedwhen theirfileswere
to GeorgetownMortgagewithouttheirknowledgeor consent.This objection
transferred
was not preservedfor appellatereview. Moreover,such rightsare spelledout in detailin
t h e F T C ' sS a fe g u a rdasn d P ri va cyRules,16 C.F.R.S 313.1, et seq. See also 15 U .S.C .
$ 6801(a):
"Privacyobligationpolicy. lt is the policyof the Congressthat each
financialinstitutionhas an affirmativeand continuingobligationto respect
the privacyof its customersand to protectthe securityand confidentiality
of
thosecustomers'nonpublicpersonalinformation."
FourthCourtof Appeals
June2, 2015
Page:5
The mortgagecompanypartieshave not contendedthat they compliedwith this
federalpolicyor the regulations.The affidavitsfrom the two expertsput forth by the loan
officers establishedunlaMul conduct by the mortgage company parties, both in
transferringthe pipelineloan files to Georgetownwithouftransferletters,and in refusing
to transferthe files to Premierwith transferletters.
Respectfullysubmitted,
/D%
^lJ V'0
T
DarbyRiley
Attorneysfor Appellants
cc. Samuel V. Houston,
lll
WilliamH. Ford
GregoryA. Scrivener
(viae-serve)
Page 1 of 46,
20 10cI 16e15 -P00067
NO. zoro-Cl-r6915
EXCELLENCE
MORTGAGE,LTD. F
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NATIONWIDE LENDING, ROBIN C. A
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MORTON, BARRY BROOKS,HESTON 5 * /'l
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C. KING, STEFENDOUGI.d.SBROOKS, 5 -9 -rr1
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JANUARY MAY GOETTE, JOHANNA 5 , - r l - v
BARTON,JESSERODRIGUEZ !t$r.h
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BENAVIDES,AND SANTEX, LTD. J
GROTIIIIES FINANCIAL. LTD.. GROTHUES BROTHERS MANAGEMENT I.
LLC. AND GEORGETOWN MORTGAGE. LLC'S
MOTION FOR SUMMARY JUDGMENT
TO THE HONORABLEJUDGE OF THE COURT:
Counter-Defendants,Excelience Mortgage Ltd., LADTD-r, LLC, Grothues
Financial, Ltd., Grothues Brothers ManagementI, LLC, and GeorgetownMortgage,
LLC, file this Motion for Summary Judgment on Counter-Plaintiffs'Counter-Claims,
and in support thereof, wouid show the Court the following:
I. Introduction and Statement of Factst
This lawsuit arises from a dispute between an employer, Excellence,and its
former employees,the Counter-Plaintiffs.,Excellenceis in the mortgage business.
Robin Morton was the Presidentof Excellenceuntil her termination on September24,
' This recitation of facts is intended to give the Court an overview of the lawsuit and the issues in this
motion. Material facts relied upon as summary judgment evidenceare specifically cited in the relevant
sectionof the motion below.
2 There are no separate affirmative claims against LATD-r, LLC, Grothues Financial, Ltd., Grothues
Brothers Management I, LLC and GeorgetownMortgage. Ostensibly,the basis for liability against these
Counter-Defendantsis some agency or participatory theory, but the exact nature of such is unclear jn
Counter-Plaintiffs'pleading.As such, if Excellenceis not liable, neither are the other Counter-Defendants.
Some pages may not be legible as
per original document.
sr6eog.r
9 9 0 0 6 1 - 11 g r 6 9 l I f , O I O Z
Clerklnitiats:) "
lllllffiffiffi,ffillil ou,"'f-h-,1
(Page 8 of 46)
The Counter-Plaintiffs' breach of contract claim seeks commissions they are
allegedly owed. Counter-Plaintiffs are not contractually entitled to any commissions.The
Production PersonnelCompensation Policy unambiguously provides that a voluntarily
terminated employee is not entitled to a commission that closed cnd funded after
October 1, 2olo.r2 An employee who is terrninated by Excellence is entitled to "no
further commissions."t3 The potential loans at issue are those 9r which were in
Excellence's"pipeline."rq Of the 9r pipeline loans, none closed and funded before
October1, 2oto.ls
Moreover, the documents are extraordinarily clear about whom the customers
belong to: Excellence.Counter-Plaintiffshave no right to leave an employer and attempt
to strip that employer of its business.There is no basis upon which Counter-plaintiffs
couid be legitimately entitled to any commissionsfor work they are not entitled to.
The unambiguous language of the Production Personnel Compensation policy
provides that the loan officer Counter-Plaintiffs are not entitled to any commission on
any loans' Summary judgment for Counter-Defendantsis therefore proper on Counter-
Plaintiffs' breach of contract claims.
C. Counter-Plaintiffs' Interference with Prospective Business Relations
Claim
To establisha causeof action for tortious interferencewith prospectivebusiness
relationships,a plaintiff must show that (r) there was a reasonableprobability that the
., Exhibit E.
's Id.
'+ Those are loans that are in some stage of the process
starting from initial customer contact but which
have not yet closed.The 9r loans are tlose which Counter-Plaiitiffs sought to take with them when they
left but which Counter-Defendantsenjoined. They are tle basesof Coun-ter-P1aintiffs' breach of contract
and interferenceclaims.
ts Exhibit A. Counter-Defendantshave produced
to Counter-Plaintiffs settlement statements for those
which have closed;but in the interest of maintaining borrower privacy, have not anached th"*.
5r6zo3.r
126
(Page 9 of 46)
partieswouid have entered into a businessrelationship; (2) the defendant committed an
independentlytortious or unlararfulact that preventedthe relationship from occurring;
(3) the defendant either acted with a consciousdesire to prevent the relationship from
occurring or knew the interference was certain or substantially certain to occur as a
result of the conduct; and (+) the plaintiff sufferedactual harm or damagesas a result of
the defendant's interference. Rtchardson-Eagle,Inc. u. Willfam M. Mercer, Inc., 2tg
S.W'gd 469, 475 (Tex, App.-Houston frst Dist.] z0o6, pet. denied). Independently
tortious meansthat the Counter-Plaintiffsmust prove that Counter-Defendants'conduct
would be actionable under a recognized tort. WalMaft Stores, Inc. u. Sturges, 5z
S.W.gdTLL,T26(Tex. zoor).
The agreementsbetween the parties clearly define who the customersbelong to:
Excellence.There is absolutelynothing unlawful or tortious about Excellenceseekingto
retain its customers by enforcing its lawful agreementspreventing Counter-Plaintiffs
from taking them. The conduct of using the legal process to prevent the loan officers
from taking those customers is neither unlawful nor tortious.r6As is explained below,
Counter-Plaintiffs confuse legitimate protection of confidential information contractual
provisionswith covenantsnot to compete,
BecauseCounter-Defendants engaged in no tortious or wrongful conduct, it
cannot be liable for tortious interference. Summary judgrnent is appropriate for
Excellenceon Counter-Plaintiffs' tortious interferenceclaims,
'6 Indeed, the Employment Agreement (Exhibit C) has a provision
allowing for injunctive relief for failure
to return company information, including customerinformation, after leaving employment.
5r6eo3,r
127
(Paqe 10 of 46)
D. Counter-Plaintiffs'Anti-Trustclaims.
Counter-Plaintiffs allege unfair trade restrictions under Tpx. Bus. & Corrru.CooE
$ rS'oS.To establishthat a defendantcontracted,combined, or conspired in restraint of
trade in violation of section 1S.oS,a plaintiff must show that the alleged contract,
combination, or conspiracyis unreasonableand has an adverseeffect on competition in
the relevant market. winston u. Am. Med. Int'L,93o s.w.z d g4s, gsr-s2 (Tex. App.-
Houston [rst Dist.] 1996, writ denied). The Texas Antitrust Act does not prohibit all
restraints of trade; instead, it prohibits only those that restrain trade unreasonably,
DeSanhsu. WackenhutCorp., zgg S.w.zd 67o,687 (Tex. 1990). counter-Defendants
did not restrain trade at all, but merely enforcedreasonablenon-disclosureagreemenrs.
"Non-disclosure agreements are different than non-compete covenants."
shoreline Gcs, rnc. u. McGaughev, g-o7-964-cv, zooS wL t747624 (Tex, App.-
corpus christi Apr. 17, zoo8, no pet.); citing zep Mfg. c,o. u. Harthcock, gz4 s.w.ed
654, 663 (Tex. App.-Dallas rgg2, no writ) (affirming the trial court's summary
judgment enforcing a non-disclosure clause despite being accompanied by an
unenforceablenon-competecovenant);see also CRC-EuansFipeline Int'I,Inc. v. Myers,
927 S.W.zde59, e65 (Tex.App.-Houston [rst Dist.] 7996,no writ) (affirming the trial
court's denial of temporary injunction enforcing non-disclosureatreement, ,clespitethe
fact that such agreements do not restrain trade, because trial court could have
reasonably found that former employees did not learn any trade secrets during the
courseof their employment). While non-competecovenantsare consideredrestraints of
trade, non-disclosure agreements are not. McGaughey at it; citing CRC-Euans,g2T
S.W.zdat e65; Zep,8z4 S.W.edat 66g. Non-disclosureagreementsdo not necessarily
restrict a former employee'sability to compete with the former employer, nor do they
5r6ao3.r r.o
128
(Page 11 af 46)
prohibit the former employeefrom using, in competition with the forrner employer,the
generalknowledge, skill, and experienceacquired in the former employrnent.Zep,8z4
S.W.edat 663. Rather, such agreementsprevent only the disclosureof trade secretsand
confidentialinformation acquiredby the former employee.fd,
The agreementsdo not provide, and Excellencehas not asserted,that Counter-
Plaintiffs cannot work in the mortgagebusiness.There is no restriction on where, when
and for whom that Counter-Plaintiffs can work. There is nothing preventing Counter-
Plaintiffs from using their general knowledge, skill, and experience acquired at
Excellence.Indeed, Counter-Plaintiffs are using their knowledge and skill and working
with a competitor in the same market. What Counter-Plaintiffs cannot d.o is steal
Excellence'sexisting customers.Excellence'sefforts to prevent them from doing so are
not a restraint of trade. As such, surnmaryjudgment is proper for Counter-Defendants
on Counter-Plaintiffs'anti-trust claim,
E. Counter-PlaintiffMorton'sClaim
Counter-Plaintiff Morton pleads some ill-defined claim to alleged entitlement to
brokerage fees. Without stating any specific cause of action, counter-piaintiff Morton
allegesunlessthe 9r pipeline loans were transferred to a licensedbroker after Morton's
termination, she is entitled to a brokerage fee.'z There is no authority cited for this
position' Summary judgment is proper for Counter-Defendantsfor at least tvvoreasons:
1) there is no recognizable cause of action for the alleged harm and z) nothing
in
Morton's ErnploymentAgreemententitles her to compensationafter termination.
'z This appears to be what Counter-Plaintiff
is contending although it is difficult to ascertain.
S162o3.1 11
Barry Brooks, Heston C. King, Stefen Douglas Brooks, Johanna Barton, and Jesse Rodriguez Benavides v. Excellence Mortgage, Ltd. LADTD-1, LLC Grothues Financial, Ltd. Grothues Brothers Management I, LLC And Georgetown Mortgage, L.L.C.
Combined Opinion