Atlas Survival Shelters, LLC v. Clyde Scott and Rising S Company, LLC ( 2020 )

NO. 12-20-00054-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
ATLAS SURVIVAL SHELTERS, LLC, § APPEAL FROM THE 294TH
APPELLANT
V. § JUDICIAL DISTRICT COURT
CLYDE SCOTT AND RISING S
COMPANY, LLC, § VAN ZANDT COUNTY, TEXAS
APPELLEES
MEMORANDUM OPINION
This is an accelerated interlocutory appeal brought pursuant to the Texas Citizens
Participation Act (TCPA). 1 Atlas Survival Shelters, LLC appeals the denial of its motion to
dismiss the libel suit brought by Clyde Scott and Rising S Company, LLC (collectively Scott).
In four issues, Atlas contends the trial court erroneously denied its motion to dismiss. Because
we conclude that Scott’s suit is exempt from the TCPA, we affirm the trial court’s order denying
the motion to dismiss.
BACKGROUND
Scott and Atlas are competitors in the survival shelter industry. Atlas’s owner, Ron
Hubbard, posted two videos to Atlas’s YouTube channel in April 2019 in which Hubbard made
statements about Scott and Rising S Company. One video, entitled “Texas Man Spends 33
Months in Prison After Buying Shelter From Rising S Bunkers,” featured Hubbard interviewing
a man who believed his incarceration was a direct result of his interactions with Clyde Scott
when he purchased a Rising S shelter. Another video, entitled “Lady in Minnesota and Her
Horrible Bomb Shelter,” featured Hubbard touring and critiquing a shelter installed by Rising S.
1
See TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001-.011 (West 2020).
1
Scott sued Atlas for libel and business disparagement based on these two videos.
Hubbard posted a third video on June 23, 2019, after Scott filed this suit, entitled “World Expert
Visits a Badly Engineered $500,000 Bomb Shelter,” in which Hubbard allegedly referred to
Scott disparagingly. Atlas answered and moved to dismiss the suit pursuant to the TCPA. Atlas
also counterclaimed for libel, slander, business disparagement, negligent misrepresentation, and
breach of contract. Scott filed an amended petition adding claims for breach of contract and
fraudulent misrepresentation. On August 22, 2019, Scott filed a second amended petition to
which it attached additional exhibits. A hearing on the motion to dismiss was held on August 26,
2019. At the conclusion of the hearing, the court did not rule on the motion and stated it was
taking the motion under advisement to review the pleadings and evidence, including the videos
in question. On October 15, 2019, the court signed an order denying the motion to dismiss.
There is nothing in the record explaining why the court did not rule sooner, though he advised
the parties at the August 26 hearing he would try to rule on the motion by week’s end. Atlas
filed its notice of appeal on October 22, 2019.
After Atlas filed its notice of appeal in this court, Scott moved to dismiss the appeal for
want of jurisdiction because the notice of appeal was filed more than twenty days after the
motion to dismiss was denied by operation of law. Atlas filed a response asserting the October
15 ruling modified the denial of its motion to dismiss pursuant to Rule of Civil Procedure 329b,
and the time for appealing runs from the October 15 ruling. This court overruled Scott’s motion
and set the case for submission. 2
JURISDICTION
Before proceeding with the substantive issues in this appeal, we first address Scott’s
claim this court lacks jurisdiction to hear Atlas’s appeal. Our initial inquiry is always whether
we have jurisdiction over an appeal. Laster v. Thomas, 487 S.W.3d 772, 773 (Tex. App.—
Dallas 2016, no pet.) (citing Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443
(Tex. 1993)). In its brief, Scott asserts that the trial court lacked authority to issue its October 15
order, and therefore that order is void and unappealable. Scott argues that the TCPA requires the
trial court to rule no later than the thirtieth day after the hearing on the motion. Because it did
not, the argument continues, the motion was overruled by operation of law on September 25, and
2
On any party’s motion, an appellate court may dismiss the appeal if it is subject to dismissal for want of
jurisdiction. TEX. R. APP. P. 42.3(a).
2
any order entered after that date is void. The record is clear that the hearing on Atlas’s motion to
dismiss was held and concluded on August 26 and that an order denying the motion was
rendered on October 15. Scott’s argument implicates the question of timeliness of Atlas’s notice
of appeal.
The applicable version of Section 27.005(a) required the trial court to rule on a TCPA
dismissal motion not later than the thirtieth day following the date of the hearing on the motion.
Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended
2019) (current version at TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(a)). If the trial court
does not issue a timely ruling, the motion is considered to have been denied by operation of law
and the moving party may appeal. TEX. CIV. PRAC. & REM. CODE ANN. § 27.008(a).
The TCPA further provides that the appellate court shall expedite an appeal from a trial
court order on a motion to dismiss under Section 27.003 or from a trial court’s failure to rule on
that motion in the time prescribed by Section 27.005. Id. at 27.008(b). The rules of appellate
procedure provide that, in an accelerated appeal, the notice of appeal must be filed within twenty
days after the judgment or order is signed. TEX. R. APP. P. 26.1(b). In appeals from a Section
27.003 motion to dismiss, where there is no order rendered within the thirty-day time period,
courts have determined that the twenty-day timeframe to file the notice of appeal begins when
the motion is denied by operation of law. See Montiel v. Lechin, No. 01-18-00781-CV, 2019
WL 1186695, at *3 (Tex. App.―Houston [1st Dist.] March 14, 2019, no pet.) (per curiam)
(mem. op.); Clewis v. Harris Cty., No. 14-15-00424-CV, 2015 WL 5935825, at *1 (Tex.
App.―Houston [14th Dist.] Oct. 13, 2015, pet. denied) (per curiam) (mem. op.).
Atlas counters that the trial court retained plenary jurisdiction after the September 25
denial of the motion to dismiss by operation of law. Therefore, it argues, the October 15 order is
not void and if not void, the notice of appeal filed on October 22 is certainly timely. We first
note that the TCPA does not address whether the trial court may rule on a motion to dismiss after
it has been denied by operation of law. While Section 27.005(a) requires a timely ruling on a
motion to dismiss, it says nothing about a trial court’s plenary power outside the statute’s thirty-
day deadline. See In re Panchakarla, 602 S.W.3d 536, 540 (Tex. 2020). We need not
specifically answer whether the trial court retained plenary power as to Atlas’s motion to dismiss
after it was denied by operation of law, or whether the September 25 or October 15 date controls
the appellate timeline. Even if we assume without deciding that September 25 is the correct date,
3
our analysis turns on the fact that Atlas filed its notice of appeal during the fifteen-day time
period for extensions applicable to the September 25 denial.
Texas Rule of Appellate Procedure 26.3 allows a party to move to extend the time to
perfect an appeal if he acts within fifteen days after expiration of the deadline for filing the
notice. See TEX. R. APP. P. 26.3. The Texas Supreme Court has made it clear that appellate
courts should not dismiss an appeal for a procedural defect whenever any arguable interpretation
of the rules of appellate procedure would preserve the appeal. See Verburgt v. Dorner, 959
S.W.2d 615, 616 (Tex. 1997).
Even if the appeal deadline was on October 15, which was twenty days after the motion
to dismiss was denied by operation of law, Atlas’s October 22 notice of appeal was filed within
fifteen days of that date. Although Atlas did not file a motion to extend time to file the notice of
appeal pursuant to Rule 26.3, because it tendered a notice of appeal within that fifteen-day time
period beginning October 15, we imply that it filed a motion to extend. See Jones v. City of
Houston, 976 S.W.2d 676, 677 (Tex. 1998); Verburgt, 959 S.W.2d at 617. Further, Atlas filed a
response to Scott’s motion to dismiss. In that response, Atlas provided a reasonable explanation
why its appeal was not timely perfected as required by Rule 10.5(b)(1)(C). See TEX. R. APP. P.
10.5(b)(1)(C). Atlas explained its belief that the October 15 written order modified the earlier
denial of its motion by operation of law thereby beginning the time to file a notice of appeal on
that date, making the notice of appeal timely filed well within the requisite twenty-day period.
Regardless of the accuracy of Atlas’s legal interpretation of the controlling date, it
indicates the failure to file within twenty days of the date the motion was overruled by operation
of law was not deliberate or intentional, but was the result of inadvertence or mistake, and
satisfies the requirement for a reasonable explanation to justify the need for an extension. See
Hone v. Hanafin, 104 S.W.3d 884, 886 (Tex. 2003) (per curiam). Atlas made a bona fide
attempt to invoke the appellate jurisdiction of this court by offering a reasonable explanation for
failing to timely file its notice of appeal by October 15, if that was the controlling date.
Accordingly, based on the liberal standard for considering untimely appeals, we find this court
has jurisdiction to hear Atlas’s appeal. See id. at 888.
4
 MOTION TO STRIKE
In its third issue, Atlas contends the trial court erred in denying its motion to strike
Scott’s response to his motion to dismiss as untimely. Appellate courts have jurisdiction over
interlocutory orders only when that authority is explicitly granted by statute. See Tex. A & M
Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007). There is no statutory authority for
this court to review the denial of Atlas’s motion to strike. See Morrison v. Profanchik, 578
S.W.3d 676, 681 n.2 (Tex. App.―Austin 2019, no pet.). We overrule Atlas’s third issue.
DISMISSAL ORDER
In its second issue, Atlas asserts that the trial court failed to apply the appropriate
standard in its October 15 ruling, and the ruling contradicts itself. Specifically, it complains that
the court responded to only three of four criteria that should be addressed, and the court
contradicted itself by stating that the commercial speech exemption is established but that Atlas
failed to show by a preponderance of the evidence that Scott’s claim is based on, relates to, or is
responsive to a protected right of Atlas.
The trial court’s order denying Atlas’s motion to dismiss consists of a paragraph
containing the court’s findings and a second paragraph, the decretal paragraph, containing the
court’s ruling. “Decretal” means the granting or denying of the remedy sought. Redwine v.
Peckinpaugh, 535 S.W.3d 44, 49 (Tex. App.―Tyler 2017, no pet.). The factual recitations
preceding the decretal portion of a judgment form no part of the judgment itself. See Nelson v.
Britt, 241 S.W.3d 672, 676 (Tex. App.―Dallas 2007, no pet.). Where there appears to be a
discrepancy between the judgment’s recital and decretal paragraphs, a trial court’s recitals, which
precede the decretal portion of the judgment, do not determine the rights and interests of the
parties. Id. Rather, the decretal provisions of the judgment control. Id.
The decretal portion of the order provides as follows: “IT IS THEREFORE ORDERED,
ADJUDGED, and DECREED that the Defendant’s MOTION TO DISMISS is hereby
DENIED.” Even assuming the errors complained of by Atlas exist, the factual recitations in the
order do not affect the ruling. Further, regardless of whether the motion was denied by operation
of law or by the October 15 order, our review of the denial will be de novo such that any factual
recitations would be irrelevant in our analysis. We overrule Atlas’s second issue.
5
EVIDENCE
In its fourth issue, Atlas contends the trial court erred by improperly allowing Scott’s
second amended petition and affidavit, the complained-of videos, and live testimony to be
considered at the hearing on its motion to dismiss. In support of this argument, Atlas relies only
on the version of Section 27.006(a) that went into effect on September 1, 2019, four months after
Scott file this suit against Atlas. Based on the new version’s reference to rule of civil procedure
166a, Atlas argues that Scott’s affidavit and second amended petition were not timely. It further
asserts that Hubbard’s live testimony given at the hearing is inadmissible because Rule 166a
prohibits oral testimony. Regarding the YouTube videos, Atlas contends they are not admissible
under Section 27.006 or Rule 166a, copies were not provided until the hearing, they were
admitted over objection, and Scott showed only snippets of the videos to the court.
The TCPA endorses a summary process, requiring judicial review of the pleadings and
limited evidence. In re Lipsky, 460 S.W.3d 579, 589 (Tex. 2015). The statute contemplates that
the amount and quality of evidence available at the time the motion is filed will be less than that
available at trial on the merits or even at the summary-judgment stage. Hawkins v. Fox Corp.
Hous., LLC, 606 S.W.3d 41, 45 (Tex. App.―Houston [1st Dist.] 2020, no pet.).
Atlas’s arguments are based in large part on the current version of Section 27.006(a)
which provides that, in considering whether a legal action is subject to or should be dismissed
under Chapter 27, the trial court shall consider the pleadings, evidence a court could consider
under Texas Rule of Civil Procedure 166a, and supporting and opposing affidavits. TEX. CIV.
PRAC. & REM. CODE ANN. § 27.006(a). However, the amendment containing this change became
effective September 1, 2019. See Act of May 17, 2019, 86th Leg., R.S., ch. 378, § 12, 2019 Tex.
Gen. Laws. Because the suit was filed before the effective date of that amendment, this case is
governed by the statute as it existed before the amendment. See id. § 11. Therefore, Atlas’s
Rule 166a arguments are inapplicable.
The applicable version of Section 27.006 provided that the court shall consider the
pleadings and supporting and opposing affidavits. See Act of May 21, 2011, 82nd Leg., R.S., ch.
341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended 2019) (current version at TEX. CIV. PRAC. &
REM. CODE ANN. § 27.006(a)). The statute in effect at the time this suit was filed did not provide
a deadline for filing evidence. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(a) (current
statute provides that the party responding to motion to dismiss shall file the response not later
6
than seven days before the hearing unless otherwise provided by agreement of the parties or
order of the court).
Regarding the videos, their admission was within the trial court’s discretion. See Brown
Sims P.C. v. L.W. Matteson, Inc., 594 S.W.3d 573, 588-89 (Tex. App.―San Antonio 2019, no
pet.). All three videos were created by Atlas and were previously named as exhibits to Scott’s
earlier pleadings. These videos constitute the heart of the lawsuit and were vital to the questions
before the trial court. We discern no abuse of discretion in the trial court’s consideration of the
videos.
Atlas complains that the second amended petition and affidavit were untimely. The rules
of civil procedure allow parties to amend pleadings within seven days of trial with leave of court,
which is to be granted unless there is a showing of surprise to the opposite party. See TEX. R.
CIV. P. 63. Here, the record does not show whether Scott obtained leave of court. However, the
petition did not include new causes of action, and the affidavit addressed issues raised in prior
pleadings. Atlas has not shown surprise. In the absence of a sufficient showing of surprise by
the opposing party, the failure to obtain leave of court when filing a late pleading may be cured
by the court’s action in considering the amended pleading. See Goswami v. Metro. Sav. & Loan
Ass’n, 751 S.W.2d 487, 490 (Tex. 1988). At the hearing, counsel for Atlas asked the court to
take judicial notice of the pleadings. In response, the court stated that it would take judicial
notice of all pleadings on file by both the plaintiff and the defendant. Therefore, leave of court is
presumed. Id.
Regarding the live testimony, the trial court may, but is not required to, hear live
testimony when determining whether to grant or deny a TCPA motion to dismiss. Batra v.
Covenant Health Sys., 562 S.W.3d 696, 707 (Tex. App.―Amarillo 2018, pet. denied).
Moreover, we need not consider the live testimony to determine if the trial court’s ruling was
appropriate because the allegations in the petition and the videos themselves are sufficient for
our review. See Hawkins, 606 S.W.3d at 44 n.2. We overrule Atlas’s fourth issue.
COMMERCIAL SPEECH EXEMPTION
In Atlas’s first issue, it contends the commercial speech exemption to the TCPA does not
apply. It argues that the complained-of statements were unrelated to its capacity as a seller of
underground bunkers. Rather, Atlas asserts, the videos sought to shed light on business practices
7
that could endanger the public, establish the credibility of Atlas as an expert in the field, show
the proper means to construct bunkers, and serve as a demonstration of how a subterranean
survival shelter should operate. Atlas also contends there is no nexus between the statements and
a commercial transaction. Rather, Atlas contends that the videos were communications of
consumer complaints and reviews involving Scott’s business, and the statements arose from
Scott’s products, not Atlas’s products. Finally, Atlas asserts that neither its actual or potential
customers were the intended audience.
Standard of Review
We review de novo a trial court’s ruling on a TCPA motion to dismiss. Schmidt v.
Crawford, 584 S.W.3d 640, 646 (Tex. App.―Houston [1st Dist.] 2019, no pet.). In reviewing a
trial court’s ruling, we consider the pleadings and affidavits of the parties. See Act of May 21,
2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended 2019).
Applicable Law
Under the applicable version of the TCPA, a defendant may move to dismiss 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. See Act of May 21, 2011, 82nd Leg., R.S., ch.
341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended 2019) (current version at TEX. CIV. PRAC. &
REM. CODE ANN. § 27.003(a)). The TCPA defines “exercise of the right of free speech” as a
communication made in connection with a matter of public concern.” TEX. CIV. PRAC. & REM.
CODE ANN. § 27.001(3). The term “communication” is defined as “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). At the time this suit was filed, “a matter of public concern” was
defined as an issue related to health or safety, environmental, economic, or community well-
being, the government, a public official or public figure, or a good, product, or service in the
marketplace. See Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960,
961 (amended 2019) (current version at TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(7)).
The defendant-movant bears the initial burden of showing that the conduct that forms the
basis of the claim against it is protected by the TCPA, that is, that the suit is based on, relates to,
or is in response to the movant’s exercise of its right to free speech, association, or petition. See
Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011 Tex. Gen. Laws 960, 962 (amended
2019) (current version at TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b)); Castleman v.
8
Internet Money Ltd., 546 S.W.3d 684, 691 (Tex. 2018) (per curiam). If the defendant meets this
burden, then the burden shifts to the plaintiff-nonmovant 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); Castleman, 546 S.W.3d at 691. If the nonmovant fails to
satisfy its burden to present a prima facie case, the trial court must dismiss the action.
Castleman, 546 S.W.3d at 691. However, if the nonmovant satisfies its burden, the movant may
still obtain a dismissal if it establishes each essential element of a valid defense to the
nonmovant’s claim. See Act of May 24, 2013, 83rd Leg., R.S., ch. 1042, § 2, Tex. Gen. Laws
2501, 2501 (amended 2019) (current version at TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.005(d)); Castleman, 546 S.W.3d at 691.
Intertwined with and overlying this multi-step dismissal process is the TCPA provision
exempting certain actions from the TCPA’s application. See TEX. CIV. PRAC. & REM. CODE
ANN. § 27.010; Morrison, 578 S.W.3d at 680. The exemption at issue here, the commercial
speech exemption, provides that the TCPA, and its dismissal provisions, does not apply to a legal
action brought against a person primarily engaged in the business of selling or leasing goods or
services, if the statement or conduct arises out of the sale or lease of goods, services, or an
insurance product, insurance services, or a commercial transaction in which the intended
audience is an actual or potential buyer or customer. TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.010(a)(2). When invoked, the trial court must consider an exemption’s applicability after
and in the context of the movant having met its initial burden under the first step of the dismissal
process. See Castleman, 546 S.W.3d at 688; Morrison, 578 S.W.3d at 680. The party asserting
the commercial speech exemption bears the burden of proving its applicability by a
preponderance of the evidence. Hieber v. Percheron Holdings, LLC, 591 S.W.3d 208, 211
(Tex. App.―Houston [14th Dist.] 2019, pet. denied); Grant v. Pivot Tech. Sols., Ltd., 556
S.W.3d 865, 887 (Tex. App.―Austin 2018, pet. denied). In deciding whether the nonmovant
has satisfied that burden, the scope of our review includes the pleadings and any supporting
affidavits, both of which are taken as evidence in the TCPA context. See TEX. CIV. PRAC. &
REM. CODE ANN. § 27.006; Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017); Hieber, 591
S.W.3d at 211. If an action falls under a TCPA exemption, the TCPA does not apply and may
not be used to dismiss the action. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.010; Best v.
Harper, 562 S.W.3d 1, 11-12 (Tex. 2018). Accordingly, application of an exemption means the
9
nonmovant need not make its prima facie case. See Round Table Physicians Group, PLLC v.
Kilgore, 607 S.W.3d 878, 883 (Tex. App.―Houston [14th Dist.] 2020, pet. filed).
Freedom of Speech
We first address whether Atlas met its burden to show this suit is based on or is a
response to the exercise of free speech. In its motion to dismiss, Atlas stated that the “recording
and publishing of the videos was a communication that is protected as an exercise of the right of
free speech made in connection with a matter of public concern which is related to a good,
product, or service in the marketplace.” We agree the videos constitute a communication. One
purpose of the videos was to warn the public about an inferior product that could harm the
public, a matter of public concern under the TCPA. See Act of May 21, 2011, 82nd Leg., R.S.,
ch. 341, § 2, 2011 Tex. Gen. Laws 960, 961 (amended 2019); Epperson v. Mueller, No. 01-15-
00231-CV, 2016 WL 4253978, at *10 (Tex. App.―Houston [1st Dist.] August 11, 2016, no pet.)
(mem. op.) (held that statements regarded a matter of public concern because they relate to the
quality of plaintiff’s goods). We conclude Atlas’s videos are an exercise of the right of free
speech. See TEX. CIV. PRAC. & REM. CODE ANN. § 21.001(3).
Scott complained in its petition of two videos posted by Atlas in April 2019 and one
posted June 23, after the onset of litigation. The third video is allegedly in violation of the
parties’ Rule 11 agreement and is the basis of Scott’s breach of contract claim. Scott alleged that
the videos posted on the internet by Atlas contain numerous false statements of fact concerning
Clyde Scott and Rising S Company. Scott asserted that Atlas did not make reasonable efforts to
verify its claims, knew the claims were false, or recklessly disregarded the truth when making
the statements. Scott further alleged that Atlas made the comments for the malicious purpose of
injuring Rising S’s business reputation. We conclude that Scott’s claims for libel, business
disparagement, and breach of contract are based on, related to, or were in response to Atlas’s
exercise of its right of free speech. See Act of May 21, 2011, 82nd Leg., R.S., ch. 341, § 2, 2011
Tex. Gen. Laws 960, 961-62 (amended 2019); TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(1),
(3); Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894-95 (Tex. 2018).
However, Scott’s cause of action for fraudulent misrepresentation concerns a phone call
made by Ron Hubbard to Scott’s attorney in which Hubbard claimed to be an attorney and
discussed settlement of the case. Because this claim is not based on Atlas’s exercise of the right
10
of free speech, right to petition, or right of association, this claim cannot be dismissed pursuant
to the TCPA. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b).
Commercial Speech Exemption
We now address Scott’s contention that the motion to dismiss was properly denied
because the libel, business disparagement, and breach of contract claims fall under the TCPA’s
commercial speech exemption. The supreme court has determined that this exemption applies
when the nonmovant proves each of the following elements:
(1) The defendant was primarily engaged in the business of selling or leasing goods;
(2) The defendant made the statement or engaged in the conduct on which the claim is based in
the defendant’s capacity as a seller or lessor of those goods or services;
(3) The statement or conduct at issue arose out of a commercial transaction involving the kind of
goods or services the defendant provides; and
(4) The intended audience of the statement or conduct were actual or potential customers of the
defendant for the kind of goods or services the defendant provides.
Castleman, 546 S.W.3d at 688. Atlas does not challenge the first element, that it was primarily
engaged in the business of selling survival shelters. We consider the evidence to determine if
Scott met its burden as to the remaining three elements.
Atlas’s Capacity
Regarding the second element, we review the context of the statements to determine
whether the challenged statements propose a commercial transaction, as they would if made in
the capacity as a seller. See Hawkins, 606 S.W.3d at 47. Atlas argues that its statements were
unrelated to its capacity as a seller of its bunkers. Instead, it asserts, the statements are a review
of products in the marketplace rather than an attempt by Atlas to sell its own products. Atlas
does not dispute that the communications include certain references to its products but argues
that the videos seek to shed light on business practices that could endanger the public. It further
argues that the comparisons made between Scott’s products and Atlas’s products help to
establish Atlas’s and Hubbard’s credibility as an expert in the field of disaster preparedness,
show the proper means to construct bunkers to avoid certain issues, and serve as a demonstration
of how a subterranean survival shelter should operate if properly constructed and installed.
Thus, it argues, the statements were made to address matters relating to health, safety,
environmental well-being, economic well-being, community well-being, or relating to a public
figure, or concerning a product in the marketplace. Finally, Atlas points to the 2019 amendment
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to Section 27.010, which states that the commercial speech exemption does not apply to
consumer opinions, commentary, complaints, or review of businesses, to argue that legislative
intent is to prevent filing lawsuits as a means to limit consumer reviews such as those Scott now
complains of.
In its petition, Scott alleged that Atlas used the videos to advertise its products and,
because they are direct competitors, the audience of the videos is comprised of Scott’s potential
clients. At the time the “Texas Man” video was published, Atlas had more than 68,000
subscribers. More than 21,000 viewers watched “Texas Man,” and more than 47,000 individuals
watched “Lady in Minnesota.” Attached to the petition is a printout of online comments made
by viewers of the videos. Some of those commentators state they will not purchase from Scott
and some say they will purchase from Atlas after watching the “Texas Man” video. Scott also
alleged that, “[a]t all times in the Original Videos, Mr. Hubbard is acting in his capacity as owner
and representative of Defendant.” The videos were posted to Atlas’s YouTube account which
Atlas uses to advertise its products and services. The “Lady in Minnesota” video opens and ends
with the Atlas logo. In both videos, Mr. Hubbard opens by saying “welcome back to another
episode of Atlas Survival Shelters” and states that Rising S is a competitor of his. In the “Lady
in Minnesota” video, Hubbard references, shows, and advertises Atlas’s products and services in
comparison to Scott’s products and services. Scott also alleges that the “Lady in Minnesota”
video asks viewers to subscribe to Atlas’s YouTube channel. Scott’s petition alleges that, in the
“Texas Man” video, Atlas “advertises the ease of installing Defendant’s bunkers and asks
viewers to email or call him if they are interested in one of Defendant’s bunkers.”
While Atlas’s statements in the videos are undoubtedly “reviews” of Scott’s products,
those reviews are a part of Atlas’s advertising scheme. Hubbard is not just an “expert” in his
field purportedly warning the public of a dangerous individual who sells inferior products. He
owns a company admittedly in competition with Scott. By encouraging viewers to compare
products offered by the two companies, Hubbard not only reviewed Scott’s products but,
simultaneously offered up Atlas’s products as the superior alternative. Even if we agree with
Atlas’s interpretation and applicability of the legislature’s intent as shown by the 2019
amendment, the fact remains that its “reviews” are immersed in and interconnected with Atlas’s
role as a seller of underground survival shelters. We conclude that Scott has shown that Atlas
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was acting in the capacity of seller of underground bunkers and bunker services when it
published the videos, satisfying the second Castleman element.
Commercial Transaction
Regarding the third element, Atlas asserts there is no nexus between the statements and a
specific commercial transaction. Atlas contends that it does not sell the same product as Scott.
It also explains that, because the videos involved Scott’s prior customers discussing Scott’s
products, the statements do not arise from a commercial transaction involving goods Atlas
provided. Atlas contends the statements cannot be barred merely because they have a connection
to a commercial competitor. Asserting that the videos were communications of consumer
complaints and reviews involving Scott’s business, Atlas claims this is the exact sort of
communication the TCPA was designed to protect.
In its petition, Scott alleges it and Atlas are direct competitors. Hubbard admits the two
companies are competitors and, in the videos, compares the products of the respective
companies. The videos described commercial transactions in which two different customers
purchased an underground bunker from Scott. Neither the TCPA nor Castleman requires the
commercial transaction referenced in the third element be one conducted by the defendant, only
that it involve the kinds of goods or services the defendant provides. The third Castleman
element examines whether “the statement or conduct at issue arose out of a commercial
transaction involving the kind of goods or services the defendant provides.” Novosad v. LSG
Vodka LLC, No. 03-18-00804-CV, 2020 WL 4726599, at *6 (Tex. App.―Austin July 31, 2020,
no pet.) (mem. op.). This element can be restated as asking whether the statement or conduct at
issue arose from the sale of services that the defendant provides. Id.; see also Martin v. Walker,
606 S.W.3d 565, 570 (Tex. App.―Waco 2020, pet. filed). Here, although there are differences
in how Scott’s and Atlas’s shelters are built, they each sell the same kind of good, underground
survival shelters, in the market place to a common customer base. See Morrison, 578 S.W.3d at
683 (“A defendant’s online review of a competitor’s sale and installation of the same product
sold and installed by the defendant is a statement that meets” the third element of the commercial
speech exemption.). Scott met its burden to prove the third Castleman element.
Intended Audience
Regarding the fourth element, Atlas contends the intended audience was neither actual
nor potential Atlas customers. Atlas asserts that the parties sell similar, but not identical,
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products, apparently insinuating the two companies would have a different customer base. Atlas
contends its “reviews” were recorded videos with former Scott customers explaining the issues
they had with Scott’s business, and not attempts to encourage customers to do business with
Atlas.
The evidence shows that Atlas and Scott are competitors in the same industry. The
videos were posted on the internet channel Atlas used to advertise its products, and Hubbard
invited viewers to contact him regarding his survival shelters. Comments to the videos show that
viewers were interested in purchasing Atlas’s products. Again, the fact that there are differences
in the products made by Scott and Atlas does not lead to the conclusion that wholly different
groups constitute the actual or potential customers of each company. We conclude that the
intended audience of the videos was comprised of actual or potential buyers or customers of
Atlas’s products. See Epperson, 2016 WL 4253978, at *11.
Scott met its burden to show the commercial speech exemption applies. Therefore, the
TCPA does not apply to this suit, and the trial court did not err in denying Atlas’s motion to
dismiss. See Best, 562 S.W.3d at 12. Because the commercial speech exemption is dispositive
of this case, we need not address whether Scott met its burden to prove a prima facie case. See
TEX. R. APP. P. 47.1; Hieber, 591 S.W.3d at 213. We overrule Atlas’s first issue.
DISPOSITION
Because Atlas has not shown trial court error, we affirm the trial court’s order denying
Atlas’s motion to dismiss.
GREG NEELEY
Justice
Opinion delivered November 18, 2020.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
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COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
NOVEMBER 18, 2020
NO. 12-20-00054-CV
ATLAS SURVIVAL SHELTERS, LLC,
Appellant
V.
CLYDE SCOTT AND RISING S COMPANY, LLC,
Appellees
Appeal from the 294th District Court
of Van Zandt County, Texas (Tr.Ct.No. 19-00111)
THIS CAUSE came to be heard on the appellate record and briefs filed
herein, and the same being considered, it is the opinion of this Court that there was no error in
the trial court’s order.
It is therefore ORDERED, ADJUDGED and DECREED that the order of the
court below be in all things affirmed, and that all costs of this appeal are hereby adjudged
against the appellant, ATLAS SURVIVAL SHELTERS, LLC, for which execution may issue,
and that this decision be certified to the court below for observance.
Greg Neeley, Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
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