in Re: Petition of Krause Landscape Contractors, Inc. ( 2020 )

In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-19-00182-CV
IN RE: PETITION OF KRAUSE LANDSCAPE CONTRACTORS, INC.
On Appeal from the 251st District Court
Potter County, Texas
Trial Court No. 108,515-CV, Honorable Ana Estevez, Presiding
January 2, 2020
OPINION
Before QUINN, C.J., and PIRTLE and PARKER, JJ.
After appellee, Krause Landscape Contractors, Inc., filed a “petition requesting
depositions to investigate potential claim or suit,” see TEX. R. CIV. P. 202, appellants,
Pasqual Perez and Shannon Hughes, moved to dismiss the petition under the Texas
Citizens Participation Act (TCPA). See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001-.011
(West 2015). The trial court denied the motion to dismiss and authorized Krause’s pre-
suit depositions. Perez and Hughes filed this interlocutory appeal. See id.
§ 51.014(a)(12) (West Supp. 2018) (authorizing interlocutory appeal of denial of TCPA
motion to dismiss). Concluding that pre-suit depositions under Rule 202 are legal actions
within the scope of the TCPA and that Krause failed to establish its prima facie case by
clear and convincing evidence, we reverse the judgment of the trial court and remand for
further proceedings.
Factual and Procedural Background
Perez and Hughes are both former employees of Krause. In early 2019, Perez, a
maintenance foreman, and Hughes, Director of Human Resources, called in sick to work.
On that same day, Krause was informed by an existing customer that Perez had
approached him about acquiring his landscaping services from Perez’s newly formed
landscaping company. After learning of this information, Krause contacted other
customers, many of whom indicated that they had been approached by Perez about
moving their business from Krause to Perez’s new company. Krause attempted to
contact Perez but was unsuccessful.
Upon discovering that Perez had started his own landscaping company, Krause
sent employees to recover the work vehicle assigned to Perez. When Krause’s
employees arrived at Perez’s residence and acquired the truck, they found that it was
emptied of tools and personal property belonging to Krause. Upon this discovery, Krause
employed an attorney to send a letter to Perez demanding the return of Krause’s property.
After receiving the letter, Perez returned a portion of the property. However, Krause
contends that its records reflect that Perez maintains possession of certain equipment
and items purchased by Perez using his Krause company credit card.
Hughes went multiple consecutive days without attending her job with Krause at
the same time that Perez left his. She did not return any of Krause’s numerous attempts
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to contact her. As a result, Krause determined that Hughes had abandoned her job. After
discovering that certain information was missing from Hughes’s computer, Krause had
her computer analyzed to determine whether Hughes had deleted any information from
her company computer before abandoning her position. The analysis revealed that
Hughes had deleted numerous files and other data from her work computer in the days
leading up to the abandonment of her job.
On April 4, 2019, Krause filed its petition requesting depositions of Perez and
Hughes to investigate potential claims or suit. Appellants responded by filing a motion to
dismiss under the TCPA. After holding a hearing, the trial court denied appellants’ motion
to dismiss and granted Krause’s petition to depose Perez and Hughes. It is from this
order that appellants timely filed their interlocutory appeal.
Perez and Hughes present three issues by their appeal. In their first issue,
appellants contend that the trial court committed reversible error by concluding that
Krause’s Rule 202 petition is not a “petition” under the TCPA. By their second issue,
appellants contend that the trial court committed reversible error by failing to apply the
TCPA’s procedures to Krause’s Rule 202 petition. By their third issue, appellants contend
that, even if the TCPA does not apply, the trial court erred in granting Krause’s petition
under the standards of Rule 202.
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Law and Analysis
Does the TCPA Apply to Krause’s Rule 202 Petition?
By their first issue, appellants argue that the trial court committed reversible error
when it concluded that Krause’s Rule 202 petition is not a “petition” under the TCPA. This
is an issue of first impression in this Court.
The TCPA is “sometimes referred to as an anti-SLAPP law—the acronym standing
for strategic lawsuit against public participation.” Hughes v. Giammanco, 579 S.W.3d
672, 676-77 (Tex. App.—Houston [1st Dist.] 2019), reh’g granted and appeal dism’d as
moot by, No. 01-18-00771-CV, 2019 Tex. App. LEXIS 6395 (Tex. App.—Houston [1st
Dist.] July 25, 2019) (quoting KBMT Operating Co. v. Toledo, 492 S.W.3d 710, 713 n.6
(Tex. 2016)). The TCPA was designed “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; see In re Lipsky, 460 S.W.3d 579, 586-87 (Tex. 2015). To
effectuate this purpose, the Act establishes a procedure that enables a party to seek an
expeditious dismissal of frivolous claims and recover attorney’s fees and sanctions. TEX.
CIV. PRAC. & REM. CODE ANN. § 27.003; Dow Jones & Co. v. Highland Capital Mgmt., L.P.,
564 S.W.3d 852, 855 (Tex. App.—Dallas 2018, pet. denied).
The process established by the TCPA involves a shifting burden. The first step
requires the party moving for dismissal to show, by a preponderance of the evidence, that
the non-movant’s “‘legal action’ is ‘based on, relates to, or is in response to [the movant’s]
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exercise of the right of free speech, right to petition, or right of association,’ as those rights
are statutorily defined.” Hughes, 579 S.W.3d at 677 (citing TEX. CIV. PRAC. & REM. CODE
ANN. §§ 27.001(2)-(4), .003(a), .005(b)). If the movant meets this initial burden, the
burden shifts to the non-movant to 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); DeAngelis v. Protective Parents Coal., 556 S.W.3d 836, 848 (Tex.
App.—Fort Worth 2018, no pet.). When assessing a motion to dismiss under the TCPA,
the court must consider pleadings, evidence, and supporting and opposing affidavits that
state the facts upon which the liability or defense is based. TEX. CIV. PRAC. & REM. CODE
ANN. § 27.006(a). If the court dismisses the legal action, it is required to award court
costs and reasonable attorney’s fees to the movant and may award sanctions against the
party who filed the legal action. Id. § 27.009(a); DeAngelis, 564 S.W.3d at 848.
In the present case, the threshold inquiry is whether a Rule 202 petition is a “legal
action” subject to the TCPA. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b). In
making this determination, we must construe the statute. We review issues of statutory
construction de novo. Hughes, 579 S.W.3d at 677; In re Elliott, 504 S.W.3d 455, 463
(Tex. App.—Austin 2016, orig. proceeding). As a reviewing court, we must enforce the
statute “as written” and “refrain from rewriting text that lawmakers chose.” Dow Jones &
Co., 564 S.W.3d at 854 (quoting Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433,
443 (Tex. 2009)). The plain meaning of the text used in a statute is the best expression
of legislative intent, unless a different meaning is provided by legislative definition or is
apparent from the context, or the plain meaning would lead to an absurd result. Hughes,
579 S.W.3d at 677; In re Elliott, 504 S.W.3d at 463. The TCPA itself instructs courts to
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construe the Act “liberally to effectuate its purpose and intent fully.” TEX. CIV. PRAC. &
REM. CODE ANN. § 27.011(b).
Under the TCPA, a “legal action” includes 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) (emphasis added). Texas Rule of Civil
Procedure 202.1 states, “A person may petition the court for an order authorizing the
taking of a deposition . . . .” TEX. R. CIV. P. 202.1 (emphasis added). Thus, on its face, a
Rule 202 petition falls within the description of a “legal action” covered by the TCPA. In
re Elliott, 504 S.W.3d at 463. A petition for pre-suit discovery filed under Rule 202 is a
petition or other judicial pleading or filing that requests legal or equitable relief and, as
such, falls into the definition of a “legal action” under the TCPA. DeAngelis, 556 S.W.3d
at 849; In re Elliott, 504 S.W.3d at 464-65. Consequently, we conclude that Krause’s
Rule 202 petition is a legal action that is subject to the dismissal procedure under the
TCPA.
Appellants point out that the Legislature has amended the TCPA in a manner that
appears to exclude Krause’s Rule 202 petition from the definition of a legal action covered
by the TCPA. Act of June 2, 2019, 86th Leg., R.S., ch. 378, § 1, 2019 Tex. Gen. Laws
378. However, this amendment did not take effect until September 1, 2019. Id. The
amendment of this provision of the TCPA does not affect the operation of the prior version
of the statute. TEX. GOV’T CODE ANN. § 311.031(a)(1) (West 2013). This intent is made
especially clear when the Legislature expressly states that the amendment “applies only
to an action filed on or after the effective date” of the amendment. Act of June 2, 2019,
86th Leg., R.S., ch. 378, §§ 11, 12, 2019 Tex. Gen. Laws 378. Consequently, we are not
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called upon in this appeal to construe the effect of the definition of “legal action” under
the amended version of the statute. Rather, this appeal requires us to construe the
definition of “legal action” as it was defined in the pre-amended version of the statute and
we conclude that, under that definition, a Rule 202 petition falls within the class of legal
actions covered by the Act.
Krause contends that a Rule 202 petition is not a legal action, in spite of it being
initiated by a petition, because it seeks depositions and not legal remedies. While a Rule
202 petition does not seek legal remedies in the traditional sense, it does seek an
equitable remedy that falls within the ambit of a TCPA legal action. In re Elliott, 504
S.W.3d at 464-65.
In relation to its first issue, Krause contends that appellants have not met their
initial burden to show that the claims which underlie Krause’s Rule 202 petition are based
on, relate to, or are in response to appellants’ exercise of the right of free speech, petition,
or association. Specifically, Krause contends that appellants have not shown how
Krause’s claims of conversion and theft are based on, related to, or in response to
appellants’ exercise of their constitutional rights. Krause also contends that the legislative
amendment to the TCPA referenced above expressly excludes actions arising from
employer-employee relationships that seek recovery for misappropriation of trade secrets
or corporate opportunities. Act of June 2, 2019, 86th Leg., R.S., ch. 378, § 9, 2019 Tex.
Gen. Laws 378. While we acknowledge these contentions as being valid, we reiterate
that the 2019 amendments to the TCPA did not take effect until September 1, 2019, long
after this case accrued and was filed. See TEX. GOV’T CODE ANN. § 311.031(a)(1)
(amendment of statute does not affect operation of prior version). Since a Rule 202
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petition seeks a deposition that will address all of the potential claims that might be
brought by the petitioner, we conclude that a Rule 202 petition is covered by the TCPA if
any of the potential claims underlying the request are based on or relates to the opposing
party’s exercise of the enumerated constitutional rights. See TEX. CIV. PRAC. & REM. CODE
ANN. § 27.003(a). We conclude that Krause’s Rule 202 petition seeks the depositions of
Perez and Hughes based on or related to their exercise of their free speech, concerning
their discussions with current Krause clients, and association, concerning their
association with current Krause clients and employees, rights.
Because we conclude that a Rule 202 petition is a legal action under the TCPA,
we conclude a Rule 202 petition is subject to the TCPA’s dismissal process. As such, we
sustain appellants’ first issue.
Did Krause Prove its Prima Facie Case by Clear and Specific Evidence?
Because we have concluded that Krause’s Rule 202 petition is a legal action
covered by the TCPA and that Krause’s claims relate to appellants’ exercise of their free
speech and association rights, we must now consider whether the trial court erred in
concluding that Krause met its burden to show by clear and specific evidence a prima
facie case for “each essential element of the claim in question.” Id. § 27.005(c).
As stated above, when the TCPA applies to a claim, the nonmovant may avoid
dismissal by providing clear and specific evidence that establishes a prima facie case for
each element of the claim in question. Id.; DeAngelis, 556 S.W.3d at 853. In making this
determination, we must determine what are the essential elements of a Rule 202 petition.
Rule 202 permits a person to petition the court for authorization to take a deposition before
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filing a suit to perpetuate or obtain the person’s testimony or that of another for use in an
anticipated suit or to investigate a potential claim or suit. TEX. R. CIV. P. 202.1. Rule 202
does not require a petitioner to plead a specific cause of action; rather, it requires only
that the petitioner state the subject matter of the anticipated action, if any, and the
petitioner’s interest therein. DeAngelis, 556 S.W.3d at 853. Ultimately, we agree with
our sister court’s analysis in DeAngelis that,
Rule 202’s purpose and words compel us, in the context of a TCPA
challenge to a request for Rule 202 pre-suit discovery, to hold that the
applicant must establish by clear and specific evidence a prima facie case
for the elements of obtaining a pre-suit deposition, namely that:
(1) allowing the petitioner to take the requested deposition may prevent
a failure or delay of justice in an anticipated suit[;] or
(2) the likely benefit of allowing the petitioner to take the requested
deposition to investigate a potential claim outweighs the burden or
expense of the procedure.
Id. at 854 (citing TEX. R. CIV. P. 202.4(a), and In re Jorden, 249 S.W.3d 416, 423 (Tex.
2008) (orig. proceeding)).
Having concluded what essential elements are involved with a Rule 202 petition,
we must now determine whether Krause established, by clear and specific evidence, the
prima facie elements that entitle it to pre-suit discovery under Rule 202. TEX. CIV. PRAC.
& REM. CODE ANN. § 27.005(c). A prima facie case is established by “evidence sufficient
as a matter of law to establish a given fact if it is not rebutted or contradicted.” In re
Lipsky, 460 S.W.3d at 590. In other words, a prima facie case is established by the
minimum quantum of evidence necessary to support a rational inference that the
allegation of fact is true. Grant v. Pivot Tech. Solutions, Inc., 556 S.W.3d 865, 882 (Tex.
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App.—Austin 2018, pet. filed). The TCPA requires that a prima facie case be established
by “evidence which is ‘clear and specific’—‘clear’ meaning ‘unambiguous,’ ‘sure or free
from doubt,’ and ‘specific’ meaning ‘explicit’ or ‘referring to a particular named thing.’” Id.
Taken together, these elements require that a party “provide enough detail to show the
factual basis for its claim, and thus effectively abrogate the utility of mere notice pleading
as evidence to that end. Id. (internal quotation marks omitted).
Courts are directed to strictly limit pre-suit discovery under Rule 202 to prevent
abuse. In re Wolfe, 341 S.W.3d 932, 933 (Tex. 2011) (orig. proceeding) (per curiam).
Such cases may not be used as a license for forced interrogations or to circumvent
discovery limitations that would apply in the anticipated suit. Id.
In the present case, Krause indicated in its petition that it wanted to depose Perez
and Hughes to “determine whether to file suit against either or both deponents,” and “to
discover certain facts forming the basis of any potential suit . . . .” Nothing in Krause’s
petition or evidence indicates that Krause needs to take appellants’ depositions to prevent
a failure or delay of justice in its potential suit. Thus, to overcome appellants’ motion to
dismiss, Krause must establish, by clear and specific evidence, that the likely benefit of
allowing Krause to take the depositions to investigate its potential claims outweighs the
burden or expense of the procedure. DeAngelis, 556 S.W.3d at 854. A Rule 202
petitioner cannot generally rely on its verified pleadings to prove the facts asserted in its
petition. Id. at 855.
Krause’s petition alleges that the depositions are needed to determine whether a
suit should be filed against appellants. Its response to appellants’ motion to dismiss
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alleges that it satisfied its burden by meeting the pleading requirements of Rule 202 and
that its attached evidence gives rise to the possibility that Krause could possess claims
of conversion, theft of property, theft of trade secrets, and other potential claims against
appellants. However, the allegations contained in the petition and the response, as well
as the evidence provided, does not clearly and specifically demonstrate the need for
Krause to obtain the pre-suit discovery.
Krause’s petition and response merely indicate that it desires to investigate
potential claims and that the “burden and expense of sitting for depositions is small and
inconsequential as compared to the cost of litigation.” Such conclusory statements
merely reflect the language of Rule 202, which, without including any explanatory facts,
is insufficient to meet the burden to establish a prima facie case by clear and specific
evidence. Id. at 856; In re East, 476 S.W.3d 61, 69 (Tex. App.—Corpus Christi 2014,
orig. proceeding). Of most importance, other than simply concluding that it would be true,
Krause fails to clearly and specifically identify how the benefit of the pre-suit depositions
would outweigh their costs. Without more, this is insufficient to meet Krause’s burden
under the TCPA dismissal procedure. DeAngelis, 556 S.W.3d at 856-58. This was the
conclusion in DeAngelis even though the petitioner in that case agreed to bear the
financial costs of the deposition. Id. at 842. Here, Krause did not agree to bear this
burden. Further, the record reflects that Krause has amassed significant evidence that it
possesses claims against appellants, which leaves the impression that Krause is
attempting to use the Rule 202 pre-suit deposition process as a license for forced
interrogation of Perez and Hughes. Id. at 855 (citing In re Wolfe, 341 S.W.3d at 933). On
the other hand, the burden of pre-suit depositions is high because discovery demands
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are made on individuals or entities before the issues have been identified. In re Cauley,
437 S.W.3d 650, 657 (Tex. App.—Tyler 2014, orig. proceeding) (mem. op.).
Because we have concluded that the TCPA applies to a Rule 202 petition and as
Krause failed to discharge its burden to establish a prima facie case for its Rule 202
petition by clear and specific evidence, we conclude that the trial court erred in denying
appellants’ motion to dismiss. We sustain appellants’ second issue.
Did Trial Court Err in Granting Petition Under Rule 202?
Because we have concluded that the trial court erred in denying appellants’ motion
to dismiss under the TCPA, we need not address appellants’ conditional third issue. See
TEX. R. APP. P. 47.1.
Conclusion
Having sustained appellants’ first two issues, we reverse the trial court’s order
denying appellants’ motion to dismiss and authorizing pre-suit depositions and remand to
the trial court with direction that the trial court enter an order granting appellants’ motion
to dismiss and conduct further proceedings consistent with this opinion.
Judy C. Parker
Justice
Pirtle, J., dissenting.
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