acadia-healthcare-company-inc-psychiatric-resource-partners-inc-michael ( 2015 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00339-CV
ACADIA HEALTHCARE COMPANY, APPELLANTS/APPELLEES
INC.; PSYCHIATRIC RESOURCE
PARTNERS, INC.; MICHAEL A.
SAUL; TIMOTHY J. PALUS; PETER
D. ULASEWICZ; BARBARA H.
BAYMA; AND JOHN M. PIECHOCKI
V.
HORIZON HEALTH APPELLEE/APPELLANT
CORPORATION
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FROM THE 16TH DISTRICT COURT OF DENTON COUNTY
TRIAL COURT NO. 2011-10846-16
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MEMORANDUM OPINION 1
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This appeal raises multiple questions involving a trial court’s judgment
based on the jury’s answers to a 55-page charge. We are asked to review
1
See Tex. R. App. P. 47.4.
alleged jury-charge error, the sufficiency of the evidence to support the jury’s
findings, exemplary damages, attorneys’ fees, and how preservation of error or
lack thereof can affect our review of all of these issues. Because we conclude
the evidence is legally insufficient to support lost-profits damages and because
exemplary damages may not be awarded jointly and severally under the facts of
this case, we reverse those portions of the trial court’s judgment. Because we
also substantially reduce the exemplary-damages award based on the reduction
of compensatory damages upon a suggestion of remittitur, we reverse the issue
of attorneys’ fees and remand that issue for a new trial. Otherwise, we will affirm
the remainder of the trial court’s judgment subject to our suggestion of a remittitur
regarding exemplary damages.
I. BACKGROUND
A. HORIZON AND PROJECT SHAMROCK
Horizon Mental Health Management, Inc. was formed in 1981 to manage
mental-health programs for healthcare entities such as hospitals. In 2007,
Horizon Mental Health Management, Inc. became Horizon Health Corporation
(Horizon) and was acquired by Psychiatric Solutions, Inc. (PSI). PSI’s chief
executive officer at the time was Joey Jacobs.
In early 2010, PSI considered going private and, thus, no longer being
publicly traded. Several members of Horizon’s executive-management team met
shortly thereafter to discuss the possibility of buying Horizon from PSI. These
team members, who called themselves “Project Shamrock,” were Mike Saul (the
2
president of Horizon), Barbara Bayma (the chief clinical officer for Horizon), Peter
Ulasewicz (a senior vice-president of business development for Horizon), Cory
Thomas (Horizon’s chief financial officer), Jack DeVaney (a senior vice-president
of operations for Horizon), and Tim Palus (also a senior vice-president of
operations for Horizon). Saul approached Jacobs to express Project Shamrock’s
interest in buying Horizon if PSI went private. Jacobs told Saul that “certain
things would remain exactly as they were and that PSI, instead of being a
publicly traded company, would just be a privately held company.”
Contrary to Jacobs’s belief, however, PSI ultimately was acquired by
Universal Health Services (UHS), a large, publicly-traded company. Project
Shamrock then tried to negotiate buying Horizon from UHS. In late 2010, UHS
rejected Project Shamrock’s proposal and kept Horizon under UHS’s ownership
umbrella. The members of Project Shamrock remained employed by Horizon
after UHS rejected their buy-out offer.
B. ACADIA FORMS SUBSIDIARY AND HIRES HORIZON EMPLOYEES
In May 2011, Saul approached Acadia Healthcare Company 2 “about the
possibility of . . . going over to Acadia.” Acadia owned “freestanding psychiatric,
child and adolescent, residential, chemical dependency treatment” facilities. Saul
presented a business plan to Acadia’s president, Brent Turner, on May 18, 2011,
proposing that Acadia establish a subsidiary to manage mental-health programs
2
At some point after UHS bought PSI, Jacobs became the chief executive
officer of Acadia.
3
for hospitals and other mental-health providers. In his presentation, Saul
identified several companies that would be “competition” for the proposed
subsidiary, including Horizon, which Saul indicated was “lost in UHS
bureaucracy” and would lose customers “due to relationships.” Acadia decided
to “move forward” with the proposal, and Saul forwarded his resume and the
resumes of Ulasewicz, Palus, and Bayma to Turner as a “proposed management
team.” Saul also told Turner that they “would go hard” after John Piechocki, a
member of Ulasewicz’s sales team, based on his successful sales record at
Horizon. Indeed, Ulasewicz and Saul began to recruit Piechocki to work for
Acadia shortly after Acadia approved Saul’s proposal.
In June 2011, Saul, Ulasewicz, Palus, and Bayma met to discuss their
anticipated move to Acadia and “their plans for [the planned Acadia subsidiary].” 3
In August and September 2011, Saul, Palus, Bayma, Piechocki, and Ulasewicz
resigned from Horizon. Each began working for Psychiatric Resource Partners
(PRP), which was a recently formed subsidiary of Acadia borne from Saul’s May
2011 presentation. Saul began as the president of PRP. Piechocki told
DeVaney, who stayed at Horizon, 4 that PRP would “directly compete” with
Horizon.
3
Horizon reimbursed Palus, Ulasewicz, and Bayma for their travel
expenses related to these meetings with Saul.
4
DeVaney eventually became the president of Horizon.
4
C. HORIZON INVESTIGATES
Based on these close-in-time resignations, Horizon conducted a forensic
investigation of its computer system and discovered that all except Piechocki
“had conferred with one another in reaching their individual decisions to leave,
and in making preparations to leave,” including discussing strategy regarding
their move to Acadia, planning the exact timing of their resignations, and noting
when their employment benefits with Acadia would begin. Indeed, shortly before
Saul’s presentation to Acadia, Ulasewicz e-mailed Saul and told him that several
of their possible new clients would come “out of Horizon’s hide,” their departures
would leave Horizon “dead,” their business strategy at Acadia should be “hurting
Horizon early and often,” and “the real Horizon—Jacobs, Saul, Ulasewicz,
Bayma, Palus, Piechocki”—would “need to gut punch [Horizon]” as they left.
It is undisputed that Saul, Palus, Ulasewicz, Bayma, and Piechocki
(collectively, the individual defendants) accessed their work files and made
copies of several Horizon documents before they left to work for PRP. In
particular, Saul bought an external hard drive for his work computer in late 2010
and placed “a massive, massive amount” of Horizon documents on it such as
policies and procedures, “non-standard” contract language, financial models,
monthly account listings, sales presentations, orientation materials, and legal
files. Basically, Saul copied onto his external hard drive “everything that was
non-financial on [Horizon’s] server.”
5
Additionally, during a routine human-resources audit, it was discovered
that Saul, Bayma, Palus, and Ulasewicz had signed employment agreements
while employed at Horizon, mandating confidentiality and restricting solicitation
and competition (collectively, the restrictive covenants). The agreements
specifically mentioned the positions each had held at the time the agreements
were signed, which were not the same positions each had held at the time of
their resignations. The covenants not to compete barred the employees from
seeking employment in or independently establishing “a psychiatric contract
management company that is in direct competition with [Horizon].” They were
further prohibited from soliciting “any employee of [Horizon].” The confidentiality
covenants barred the employees from disclosing or using Horizon’s trade
secrets, confidential information, or proprietary information. Although the
employees signed the agreements between 1997 and 2005, the agreements
applied “for a period of one (1) year” after their respective employments with
Horizon ended.
In September 2011, shortly after the individual defendants left their jobs
with Horizon, Horizon notified Bayma, Jacobs, Palus, Piechocki, Saul, and
Ulasewicz that their resignations and subsequent employments with Acadia were
in violation of their employment agreements and the restrictive covenants
entered into “at the inception of [their] employment” and of their common-law
6
duties of good faith and loyalty. 5 Horizon demanded that they end their
employment with Acadia and return all documents to Horizon.
D. PRP’S SALES EFFORTS
Piechocki, using a list of Horizon sales leads he had copied before
resigning, was able to secure a consulting contract for PRP with Southwest
Regional Medical Center, which was an active Horizon lead noted on its list of
sales leads. Although Piechocki marked some of the leads on the list “DEAD”
before he resigned from Horizon, those leads were added to PRP’s “master
contact list” after Piechocki joined Acadia. In January 2012, Piechocki ultimately
signed Westlake Regional Hospital (Westlake) to a contract with PRP over “direct
competition” from Horizon. Piechocki used Horizon’s financial models to
“crunch[] numbers” to win the Westlake contract.
After joining PRP, Ulasewicz set up a meeting with Cottage Hospital, which
was a potential client he had met with while employed by Horizon. Ulasewicz
previously had learned while still employed by Horizon that Cottage Hospital’s
impediment to using contract-management services such as those offered by
Horizon and PRP possibly would be removed; however, Ulasewicz did not share
this information with anyone at Horizon. PRP also began pursuing several of
Horizon’s existing clients after the individual defendants left Horizon.
5
Piechocki did not sign an employment agreement but, like all the other
individual defendants, he acknowledged when he was initially hired that he had
reviewed Horizon’s employee handbook, which restricted any use of Horizon’s
confidential information and prohibited direct competition with Horizon.
7
E. HORIZON FILES SUIT
In October 2011, Horizon filed suit against the individual defendants for
breach of fiduciary duty; misappropriation of trade secrets; conversion; accessing
proprietary information in violation of the Harmful Access by Computer Act;
appropriating proprietary information in violation of the Theft Liability Act, i.e.,
theft of trade secrets; tortious interference with existing contracts; tortious
interference with prospective business relationships; and conspiracy. Against
Saul, Palus, Ulasewicz, and Bayma, Horizon additionally raised claims for breach
of the restrictive covenants not to compete, fraud, and breach of contract.
Horizon alleged Acadia and PRP were liable for all of these acts and omissions
either because they were directly involved or under the doctrines of ratification
and vicarious liability. Horizon alleged as a separate claim that Acadia and PRP
“aided and abetted and provided substantial assistance” to the individual
defendants “in breaching their fiduciary duties.” Horizon sought exemplary
damages, attorneys’ fees, the imposition of a constructive trust, compensation
forfeiture, and injunctive relief.
F. PRETRIAL PROCEDURE
Horizon filed a traditional motion for partial summary judgment, mainly
seeking a determination that the employment agreements were valid and
enforceable under Texas law; that Saul, Palus, Ulasewicz, and Bayma had
breached the restrictive covenants; and that Saul and Ulasewicz had breached
the nonsolicitation provisions. See Tex. R. Civ. P. 166a(c). Acadia, PRP, and
8
the individual defendants (collectively, the Acadia defendants) also moved for
summary judgment, under both traditional and no-evidence standards, based on
the absence of any genuine issues of material fact on each claim raised by
Horizon and because the employment agreements were unenforceable as a
matter of law. See Tex. R. Civ. P. 166a(c), (i).
The trial court granted Horizon a partial summary judgment and concluded
that “the noncompetition agreements entered into by Horizon with . . . Saul,
Palus, Ulasewicz, and Bayma were valid and enforceable covenants not to
compete under Texas law at the time of their respective terminations of Horizon
employment, without modification.” See Tex. Bus. & Com. Code Ann. § 15.51(c)
(West 2011) (directing trial court to modify unreasonable limitations in otherwise
enforceable covenant). The trial court denied the Acadia defendants’ motion for
summary judgment.
Horizon also sought the imposition of sanctions against the Acadia
defendants for failure to comply with the trial court’s discovery order. See Tex.
R. Civ. P. 215.2(b). The trial court granted the motion but ordered only Saul to
pay Horizon $41,740.80 for his “failure to timely produce all relevant documents
and tangible things, and . . . refusal to cooperate with his discovery obligations.”
See Tex. R. Civ. P. 215.2(b)(2), 215.3. The trial court specifically saved for trial
the issue of whether a spoliation instruction should be given to the jury.
9
G. TRIAL PROCEDURE
After a lengthy trial, the Acadia defendants orally moved for an instructed
verdict on all of Horizon’s claims and on Horizon’s request for attorneys’ fees
because Horizon’s evidence regarding attorneys’ fees did not “apportion[] the
fees between the causes of action on which attorney’s fees are recoverable” or
delineate what factors were considered to establish reasonableness. See Tex.
R. Civ. P. 268. The trial court denied the motion. At the charge conference, the
trial court determined that a spoliation instruction allowing the jury to draw an
adverse inference against Saul based on his discovery abuse would be included
in the charge.
On December 21, 2012, the jury rendered the following unanimous
verdicts on Horizon’s claims:
● Breach of covenants not to compete: Saul, Palus, Ulasewicz, and
Bayma “continuously and persistently” breached the terms of their
covenants not to compete.
● Breach of nonsolicitaiton covenants: Saul and Ulasewicz breached
the terms of their covenants not to solicit.
● Breach of fiduciary duties: The individual defendants, while acting
within the scope of their employment with Acadia and PRP, failed to
comply with their fiduciary duties to Horizon. Acadia and PRP ratified this
conduct and will earn future profits as a result. 6
● Intentional interference with noncompetition covenants: The
individual defendants, while acting in the scope of their employment with
6
The jury found, however, that Acadia did not ratify any breach of fiduciary
duty by Saul, Palus, Ulasewicz, or Bayma when they sought reimbursement for
their June 2011 travel expenses.
10
Acadia and PRP, intentionally interfered with the noncompetition
covenants. Acadia and PRP ratified this conduct.
● Misappropiration of trade secrets: The individual defendants, while
acting in the scope of their employment with Acadia and PRP,
misappropriated Horizon’s trade secrets. Acadia and PRP ratified this
conduct and will earn future profits as a result.
● Conversion: The individual defendants, while acting in the scope of
their employment with Acadia and PRP, converted Horizon’s proprietary
information. Acadia and PRP ratified this conduct and will earn future
profits as a result.
● Theft of trade secrets: The individual defendants intentionally
committed theft of Horizon’s property and trade secrets, which were worth
at least $20,000. Acadia and PRP ratified this conduct and will earn future
profits as a result.
● Harmful computer access: The individual defendants, while acting in
the scope of their employment with Acadia and PRP, knowingly accessed
Horizon’s computers, computer network, or computer system without
Horizon’s consent and with the intent to harm Horizon. Acadia and PRP
ratified this conduct.
● Fraud: Saul, Palus, Ulasewicz, and Bayma committed fraud and
fraud by nondisclosure by submitting expense reports for trips taken in
June 2011. Acadia and PRP did not benefit from this fraud or ratify it.
● Conspiracy: The Acadia defendants participated in a conspiracy
that damaged Horizon.
● Aiding and abetting: Acadia and PRP intentionally aided and
abetted the individual defendants in breaching some of their fiduciary
duties, intentionally interfering with the noncompetition covenants,
misappropriating trade secrets, and converting Horizon’s proprietary
information. Only PRP aided and abetted the theft of Horizon’s property or
trade secrets and the harmful computer access.
● Malice: The damage sustained by Horizon as a result of the
individual defendants’ breach of fiduciary duties, intentional interference
with the noncompetition covenants, misappropriation of trade secrets,
conversion of Horizon’s proprietary information, and theft was attributable
to the malice of the individual defendants, Acadia, and PRP. The
11
individual defendants, without Horizon’s consent, intentionally solicited,
accepted, or agreed to accept any benefit from another person on the
agreement that the benefit would influence his or her conduct in relation to
Horizon’s affairs.
The jury awarded Horizon $898,000 in future lost profits from the Westlake
contract based on Saul’s, Palus’s, Ulasewicz’s, and Bayma’s failures to comply
with their covenants not to compete and $3,300,000 in future lost profits based
on Saul’s and Ulasewicz’s failures to comply with their covenants not to solicit.
The jury found that Horizon suffered no past lost profits based on these failures
to comply. Regarding Horizon’s claims for breach of fiduciary duty, intentional
interference with the employment agreements, misappropriation of Horizon’s
trade secrets, conversion of proprietary information, intentional theft of trade
secrets, knowing access of Horizon’s computer system, and fraud, the jury
awarded Horizon $6,003,049.24:
● $898,000 in future lost profits from the Westlake contract and $3.3
million in future lost profits from Piechocki’s sales production. 7
● $50,000 as the fair market value of the stolen property or trade
secrets. 8
● $5,049.24 in expenses charged to Horizon by Ulasewicz, Palus, and
Bayma that were not associated with Horizon’s business. 9
7
As they did regarding the individual defendants’ failure to comply with the
restrictive covenants, the jury found that Horizon suffered no past lost profits from
the Westlake contract or Piechocki’s sales production.
8
The jury found that the trade secrets misappropriated and the proprietary
information converted had no value.
9
The jury found that Saul charged no expenses to Horizon that were
unassociated with Horizon business.
12
● $1.75 million in exemplary damages.
The jury also awarded Horizon $900,000 in attorneys’ fees for representation
costs incurred through the conclusion of trial. The jury declined to award any
appellate attorneys’ fees.
H. POST-TRIAL PROCEDURE
Saul, Palus, Ulasewicz, and Bayma filed a motion to reconsider the partial
summary judgment granted in favor of Horizon, and Saul sought reconsideration
of the pretrial sanctions order. Acadia and PRP filed a motion to disregard the
jury’s findings and an alternative motion for judgment notwithstanding the verdict
based on legally insufficient supporting evidence. See Tex. R. Civ. P. 301. The
individual defendants also filed a motion to disregard the jury’s findings. See id.
The individual defendants adopted the “reasons . . . set forth” in Acadia and
PRP’s motion to disregard and alternative motion for judgment notwithstanding
the verdict. 10 Horizon filed a motion for entry of judgment on the verdict and a
motion for judgment notwithstanding the verdict regarding the jury’s finding on
appellate attorneys’ fees. See Tex. R. Civ. P. 301, 305.
The trial court granted in part and denied in part Horizon’s motion,
awarding Horizon most of the damages awarded by the jury. The trial court
denied the Acadia defendants’ motion to disregard the jury’s findings, their
10
Because of this adoption language, we will refer collectively to the two
motions to disregard as the Acadia defendants’ motion to disregard.
13
motion to reconsider the partial summary judgment granted in favor of Horizon,
and Saul’s motion to reconsider the sanctions. The trial court entered final
judgment on July 1, 2013. 11 The final judgment awarded Horizon the full amount
of damages as found by the jury and entered $41,740 in sanctions against Saul
based on the pretrial discovery-abuse ruling. The trial court, however, reduced
Horizon’s trial attorneys’ fees from $900,000 to $769,432, disregarded the jury’s
zero award of appellate attorneys’ fees, and awarded Horizon $97,500 for
appellate attorneys’ fees.
I. POST-JUDGMENT PROCEEDINGS
Horizon requested findings of fact and conclusions of law regarding,
among other issues, the attorneys’ fees awards in the judgment. See Tex. R.
Civ. P. 296. The Acadia defendants filed a motion to modify, correct, or reform
the judgment to “resolve [an] inconsistency in the final judgment . . . [and] award
actual past and future damages of $4,203,049.24.” See Tex. R. Civ. P. 316,
329b. They also filed a motion for new trial, arguing that the jury’s findings were
supported by factually insufficient evidence. 12 See Tex. R. Civ. P. 329b.
11
The trial judge who denied the post-trial motions and entered final
judgment was not the trial judge who presided over the trial. The trial judge who
presided over the trial retired at the end of 2012 shortly after the conclusion of
the trial at issue.
12
The vast majority of their argument focused on the factual insufficiency of
the evidence to support the jury’s lost-profit findings.
14
On August 8, 2013, the trial court entered findings of fact and conclusions
of law, clarifying that Horizon’s submitted evidence on attorneys’ fees
“segregated 25% of its total fees . . . and identified this 25% as fees that were not
incurred in connection with a claim for which fees may be awarded.” Therefore,
the trial court “discounted” the requested attorneys’ fees “by 25%.” The motion
for new trial and the motion to modify, correct, or reform the judgment were
overruled by operation of law. See Tex. R. Civ. P. 329b(c). All parties filed
notices of appeal from the trial court’s judgment. See Tex. R. App. P. 25.1(c).
The Acadia defendants raise seven issues in their appeal challenging
(1) the trial court’s partial summary judgment and (2) the jury’s findings and
damages awards, mainly on the basis of insufficient evidentiary support. Horizon
raises three issues in its appeal and argues that the trial court erred by reducing
its attorneys’ fees awards by 25% based on the admitted evidence establishing
the full amount requested as a matter of law.
II. DISCUSSION
A. INSUFFICIENT EVIDENCE TO SUPPORT LOST-PROFITS FINDINGS
In their third issue, the Acadia defendants argue that the evidence is
legally insufficient to support the jury’s award of $4,198,000 for future lost-profits
damages. The majority of the Acadia defendants’ post-trial, post-judgment, and
appellate arguments focused on this issue, but their appellate brief contains an
accurate summary statement of their contention regarding lost-profits damages:
“Texas law does not authorize a business to recover awards of significant
15
damages for alleged future lost profits, when that business has lost no contracts
or customers, and its only evidence of damages consists of statistics generated
by an expert witness.” For the following reasons, we sustain issue three.
1. Preservation
The Acadia defendants assert that the opinion by Horizon’s expert, Jeff D.
Balcombe, relating to lost profits was unreliable, speculative, and conclusory;
thus, it was no evidence of lost profits suffered by Horizon. 13 The Acadia
defendants are attacking Balcombe’s methodology based on the lack of
foundational data and are asserting that the opinion, therefore, was unreliable
and inadmissible based on analytical gaps in the evaluation leading to his
opinion. 14 See Tex. R. Evid. 702, 705(c).
A party complaining about the reliability of expert testimony must object to
the evidence before trial or when the evidence is offered to preserve a complaint
13
Because the jury found that Horizon suffered no damages for past lost
profits, our references in the remainder of this opinion to “lost profits” or “lost-
profit damages” refer only to future lost profits.
14
Horizon asserts that the Acadia defendants do not attack Balcombe’s
methodology but only attack the reliability of his opinion. A lack of reliability is
necessarily an attack on an expert’s methodology based on some sort of
analytical gap. See Houston Unlimited, Inc. Metal Processing v. Mel Acres
Ranch, 443 S.W.3d 820, 835–38 (Tex. 2014); TXI Transp. Co. v. Hughes, 306
S.W.3d 230, 235 (Tex. 2010). Thus, these arguments, at least in this case, are
two sides of the same coin—an opinion is unreliable and, thus, without
evidentiary value if there is a flaw in the expert’s methodology. See, e.g., Merrell
Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 714 (Tex. 1997) (“[A]n expert’s
testimony is unreliable even when the underlying data are sound if the expert
draws conclusions from that data based on flawed methodology.”), cert. denied,
523 U.S. 1119 (1998).
16
on appeal that the evidence is unreliable. 15 Maritime Overseas Corp. v. Ellis,
971 S.W.2d 402, 409 (Tex.), cert. denied, 525 U.S. 1017 (1998); Faust v. BNSF
Ry. Co., 337 S.W.3d 325, 332–33 (Tex. App.—Fort Worth 2011, pet. denied). If
the trial court overrules an objection to expert testimony, the opposing party then
may complain on appeal that the evidence was legally insufficient to support the
jury’s finding because the expert evidence was unreliable and, thus, constituted
no evidence. Faust, 337 S.W.3d at 332–33. The Acadia defendants objected to
Balcombe’s testimony on the ground that his opinion was based on insufficient
facts and later specified that Balcombe’s opinion was impermissibly based on the
unsupported assumption that Westlake was a Horizon lead. The trial court
overruled the Acadia defendants’ objections and allowed Balcombe to testify
regarding Horizon’s future lost profits. Additionally, the Acadia defendants
argued in their motion to disregard the jury’s findings that the evidence of lost
profits was legally insufficient because Balcombe’s opinion suffered from “fatal
infirmities: no alternate causes were considered or ruled out by the damages
expert, an analytical gap exists between the alleged wrongful conduct and the
damages claimed, and the expert failed to prove that the profits were net profits
after all business expenses were considered.” The Acadia defendants preserved
their argument that Balcombe’s testimony was unreliable based on an analytical
15
No objection is required to argue on appeal that, on the face of the
record, the testimony is conclusory and speculative and therefore lacks probative
value. Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227,
232–33 (Tex. 2004); see Tex. R. Evid. 401.
17
gap in his methodology and, therefore, was no evidence of lost-profit damages.
See, e.g., City of Dallas v. Redbird Dev. Corp., 143 S.W.3d 375, 385 (Tex.
App.—Dallas 2004, no pet.) (recognizing distinction in preservation requirements
between attacks to expert’s methodology and legal-sufficiency complaint).
2. Standard of Review
In a legal-sufficiency review, we determine whether more than a scintilla of
evidence supports the jury’s finding by considering evidence favorable to the
finding if a reasonable fact-finder could and disregarding evidence contrary to the
finding unless a reasonable fact-finder could not. Cent. Ready Mix Concrete Co.
v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); Cont’l Coffee Prods. Co. v. Cazarez,
937 S.W.2d 444, 450 (Tex. 1996).
Lost profits must be proven with reasonable certainty, and whether lost-
profits evidence is reasonably certain is a fact-intensive inquiry. Holt Atherton
Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992); Fraud-Tech, Inc. v.
Choicepoint, Inc., 102 S.W.3d 366, 381 (Tex. App.—Fort Worth 2003, pet.
denied). We are to focus on the experience of the persons involved in the
enterprise, the nature of the business activity, the relevant market, the nature of
the client base, the sales force, the marketing plan, and the company’s track
record of sales. Carter v. Steverson & Co., 106 S.W.3d 161, 166 (Tex. App.—
Houston [1st Dist.] 2003, pet. denied); Fraud-Tech, 102 S.W.3d at 381. The
amount of loss need not be subject to exact calculation but need only be shown
by competent evidence based on objective facts, figures, or data from which the
18
amount may be ascertained with reasonable certainty. Hunter Bldgs. & Mfg.,
L.P. v. MBI Global, L.L.C., 436 S.W.3d 9, 17–18 (Tex. App.—Houston [14th Dist.]
2014, pet. filed). At a minimum, however, “opinions or estimates of lost profits
must be based on objective facts, figures, or data from which the amount of lost
profits can be ascertained.” Heine, 835 S.W.2d at 84. A bare assertion that
contracts were lost does not show lost profits with reasonable certainty. Id. at 85.
As the Texas Supreme Court has instructed, we need not distinguish
between Horizon’s different theories of recovery because its lost-profits damages
were recoverable under several of the theories. ERI Consulting Eng’rs, Inc. v.
Swinnea, 318 S.W.3d 867, 876 n.3 (Tex. 2010). Indeed, the Acadia defendants
do not so parse their argument. 16
3. Application
As previously stated, the jury based its lost-profit awards on two measures
of recovery: (1) lost profits from the Westlake contract that Horizon, in
reasonable probability, would sustain in the future and (2) lost profits from
Piechocki’s production that Horizon, in reasonable probability, would sustain in
the future. For the first measure, the jury uniformly awarded $898,000 and for
the second measure, the jury awarded $3,300,000. The first measure was tied to
16
In their reply, the Acadia defendants argue that the evidence was
insufficient to support the award of future lost profits “with respect to each of the
tort liability findings.” But the Acadia defendants then state that they will “stand
on their arguments in their opening brief concerning these redundant tort
theories.” The Acadia defendants did not include a claim-by-claim analysis of the
sufficiency of the evidence to show future lost profits in their opening brief.
19
Saul’s, Bayma’s, Ulasewicz’s, and Palus’s failure to comply with the
noncompetition covenants, breaches of fiduciary duties, intentional interference
with the employment agreements, misappropriation of trade secrets, conversion
of proprietary information, theft of trade secrets, knowing access of Horizon’s
computer system, and fraud. The second measure was tied to these same
claims (with the exception of breach of the covenants not to compete) and Saul’s
and Ulasewicz’s breaches of their covenants not to solicit. Balcombe testified as
to both measures of lost-profit damages.
Balcombe testified as to the “lost production” damages Horizon suffered as
a result of the individual defendants’ wrongful actions. In doing so, he attempted
to determine what would have happened but for the wrongful actions—as
opposed to what actually happened 17—by considering (1) how long Piechocki
would have remained an employee of Horizon but for the alleged wrongful
conduct, (2) how many contracts Piechocki would have sold “but for being an
employee of Horizon,” and (3) what the average profit for each of those contracts
would have been had he remained with Horizon.
To determine the first consideration, Balcombe analyzed the average
amount of time Horizon retained its higher-level employees and “assume[d]” that
Piechocki would have stayed at Horizon two or four more years but for the
alleged wrongful conduct. The four-year tenure was assumed because
17
Indeed, Balcombe admitted that his analysis did not account for any
contracts that Horizon actually lost to PRP.
20
Piechocki presumably would have been promoted after two years and “senior
vice presidents stayed longer.” After reviewing e-mails and “deposition
testimony,” Balcombe concluded that Piechocki “sold more contracts, closed
more deals”—50% more than other Horizon salespeople. Thus, Balcombe
opined regarding the second consideration that Piechocki would have sold six
contracts in each year he stayed, up to four years, but for the wrongful conduct
because other Horizon salespeople sold four contracts per year. He affirmed
that he included reductions for “normal business losses that would have
occurred.” Balcombe’s third consideration involved a compilation of “data over
the period from 2001 through 2011 or ’12 regarding the profit per contract . . . to
see if there were trends and how to use the data that [was] reliable in [his]
calculation.” He concluded that $247,000 per year for each contract was “a
conservative and reliable figure for a mature contract price.” In arriving at this
number, Balcombe considered the Westlake contract with PRP and its profit
margin of $247,000. These three considerations allowed Balcombe to estimate
the amount of Horizon’s lost profits at years five ($2,237,000), ten ($3,249,000),
and fifteen ($3,378,000) following Piechocki’s resignation, assuming an 80% rate
of contract retention by Horizon. Balcombe testified that Horizon’s contracts
were retained for seven years on average.
Balcombe also testified as to the lost profits attributable to the Westlake
contract. He reviewed PRP’s contract with Westlake “along with other financial
documents about that contract.” He concluded that the “lost profit or cumulative
21
economic damages” arising from the Westlake contract was $668,220 after five
years, $871,500 after ten years, and $898,200 after fifteen years. Balcombe
knew that Westlake was not a customer of Horizon but believed Westlake was a
lead of Horizon’s after the individual defendants left Horizon.
An expert’s opinion is not reliable if “there is simply too great an analytical
gap between the data and the opinion proffered.” Gammill v. Jack Williams
Chevrolet, Inc., 972 S.W.2d 713, 726 (Tex. 1998). Further, an expert’s opinion is
not reliable if the foundational data is unreliable or if the expert draws
conclusions from sound data based on flawed methodology. Havner, 953
S.W.2d at 714. “In sum, case law shows expert testimony on lost profits
damages cannot be reliable, and therefore is not admissible, if the expert bases
his opinion and calculations on nothing more than assumptions, hearsay,
speculation, and his credentials.” Jeff Patterson & Giovanna Tarantino, Is the
Bar Really Lower for Nonscientific Expert Testimony?, 33 The Advoc. (Tex.) 65,
67 (2005). See generally Robert M. Lloyd, The Reasonable Certainty
Requirement in Lost Profits Litigation: What it Really Means, 12 Transactions:
Tenn. J. Bus. L. 11, 17–28 (2010) (collecting cases and discussing factors courts
consider in determining reasonable certainty, including the court’s confidence
that the estimate is accurate).
We conclude that Balcombe’s opinion was too speculative based on an
analytical gap between the data and his opinion; thus, it was no evidence of
future lost profits suffered by Horizon. The timeframes Balcombe relied on were
22
based on nothing more than speculation that Piechocki, an at-will employee,
would have stayed employed by Horizon, that Horizon would have won the
Westlake contract, and that hypothetical contracts signed by Piechocki during his
hypothetical tenure with Horizon would have been profitable until 2026—fifteen
years after Piechocki’s 2011 resignation from Horizon even though the average
contract-retention period was seven years. Further, the profitability of these
hypothetical contracts was based on “the value of a single contract that [PRP]
signed.” This evidence was not competent to show with reasonable certainty that
Horizon suffered future lost profits as a direct result of the individual defendants’
actions. See, e.g., McBeth v. Carpenter, 565 F.3d 171, 176–77 (5th Cir. 2009)
(holding evidence that “later transaction” was profitable no evidence of lost profits
because later transaction was “markedly different” from transaction plaintiffs
alleged was lost due to defendants’ actions); Blase Indus. Corp. v. Anorad Corp.,
442 F.3d 235, 239 (5th Cir.) (holding employer could not recover damages for
lost profits based on at-will employee’s “speculative future earnings” because
employee “could have left . . . at any point during the year in question”), cert.
denied, 549 U.S. 817 (2006); Szczepanik v. First S. Trust Co., 883 S.W.2d 648,
649–50 (Tex. 1994) (holding evidence that company “expected to make a profit”
legally insufficient because expectation based on “pure speculation” and record
did not support conclusion that amount of lost profits resulted from defendant’s
actions); Ramco Oil & Gas Ltd. v. Anglo-Dutch (Tenge) L.L.C., 207 S.W.3d 801,
824–25 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) (op. on reh’g)
23
(concluding evidence of lost profits legally insufficient because “Plaintiffs’ proof of
lost profits is largely speculative, dependent on uncertain and changing market
conditions, and based on risky business opportunities and the success of an
unproven enterprise”); Atlas Copco Tools, Inc. v. Air Power Tool & Hoist, Inc.,
131 S.W.3d 203, 209 (Tex. App.—Fort Worth 2004, pet. denied) (holding
manufacturer’s evidence of lost profits insufficient because manufacturer
included customers not part of distributor’s customer base and because numbers
for six-year period were based on “one record year”); SBC Operations, Inc. v.
Business Equation, Inc., 75 S.W.3d 462, 468–69 (Tex. App.—San Antonio 2001,
pet. denied) (concluding evidence of lost profits insufficient because based on
“assumptions” of increased business that “had no basis in fact”); Aquila Sw.
Pipeline, Inc. v. Harmony Exploration, Inc., 48 S.W.3d 225, 245–46 (Tex. App.—
San Antonio 2001, pet. denied) (although expert used standard methodology to
determine lost profits, evidence of lost profits insufficient because underlying
facts were “merely speculative”); accord Saks Fifth Ave., Inc. v. James, Ltd., 630
S.E.2d 304, 307–08, 311–12 (Va. 2006) (holding similar expert evidence of future
lost profits attributable to departure of at-will employee insufficient because
calculation “focused solely on a ‘but-for’ model of what [employer’s] profits would
have been had [employee] remained employed there”). Because this was the
only evidence of Horizon’s damages for future lost profits, the evidence was
legally insufficient to support these damage findings.
24
Because we have concluded the evidence was legally insufficient to
support the jury’s lost-profits findings under any liability theory, we need not
address the Acadia defendants’ issues attacking the sufficiency of the evidence
supporting those liability findings or the manner in which those liability theories
were submitted in the jury charge. 18 It is also not necessary for us to address the
Acadia defendants’ assertion that the trial court erred to conclude as a matter of
law that the restrictive covenants were enforceable without modification. Thus,
we do not address issue one, issue two, or portions of issue four raised by the
Acadia defendants.
18
We recognize that typically a finding that the evidence was insufficient to
support an award of actual damages results in an automatic reversal of the
awards of exemplary damages and attorneys’ fees based on those
unrecoverable actual damages. See Mustang Pipeline Co. v. Driver Pipeline
Co., 134 S.W.3d 195, 201 (Tex. 2004); Twin City Fire Ins. Co. v. Davis, 904
S.W.2d 663, 665 (Tex. 1995). We address exemplary damages and attorneys’
fees later in this opinion because there were liability findings upon which Horizon
recovered actual damages other than lost-profits damages.
25
B. DENIAL OF MOTION TO DISREGARD JURY’S
FINDINGS AND MOTION FOR NEW TRIAL 19
1. Insufficient Evidence to Support Jury’s Liability Findings
In part of issue four, the Acadia defendants assert that the evidence was
legally insufficient to support the jury’s findings that (1) the individual defendants
breached their fiduciary duties; (2) the individual defendants misappropriated
Horizon’s trade secrets; (3) the individual defendants converted Horizon’s
proprietary information; (4) the individual defendants knowingly accessed
Horizon’s computer system without Horizon’s consent and with the intent to harm
Horizon; (5) Saul, Palus, Bayma, and Ulasewicz committed fraud and fraud by
nondisclosure; (6) the individual defendants intentionally solicited, accepted, or
agreed to accept a benefit from another knowing that the benefit would influence
his or her conduct in relation to Horizon’s business affairs; and (7) the Acadia
defendants were liable for civil conspiracy. 20 Because we have concluded that
19
Although the Acadia defendants do not specifically attack the trial court’s
denial of their motion to disregard the jury’s findings and motion for new trial,
their legal-sufficiency issues were preserved through these procedural devices;
thus, their appellate issue necessarily attacks the trial court’s denials as well.
See T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 220–21 (Tex.
1992); cf. Galaznik v. Galaznik, 685 S.W.2d 379, 384 (Tex. App.—San Antonio
1984, no writ) (“When the overruling of a motion for judgment notwithstanding the
verdict is attacked, the appellate court reviews this as a ‘no evidence’ point.”).
20
Many of the Acadia defendants’ sufficiency contentions are summarily
briefed such that the entirety of their appellate contention consists of nothing
more than the statement of what the jury’s finding was with no further argument.
Indeed, the Acadia defendants seem to assert that their sufficiency attacks on
each theory of liability are nothing more than further support for their issue that
the evidence of lost profits was legally insufficient. To the extent we can divine
26
the evidence of lost profits was legally insufficient, we will review the sufficiency
of the evidence of Horizon’s theories of liability that would allow for recovery for
the trade-secret and business-expenses damages found by the jury—theft of
trade secrets, fraud, and fraud by nondisclosure—and that are raised by the
Acadia defendants on appeal.
We may sustain a legal sufficiency challenge only when (1) the record
discloses a complete absence of evidence of a vital fact; (2) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to
prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a
mere scintilla; or (4) the evidence establishes conclusively the opposite of a vital
fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998),
cert. denied, 526 U.S. 1040 (1999). Anything more than a scintilla of evidence is
legally sufficient to support the finding. Cont’l Coffee, 937 S.W.2d at 450. More
than a scintilla of evidence exists if the evidence, even if circumstantial, furnishes
some reasonable basis for differing conclusions by reasonable minds about the
existence of a vital fact. Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d
253, 262 (Tex. 2002); Russell v. Russell, 865 S.W.2d 929, 933 (Tex. 1993).
what their specific appellate assertion is, we will address it. See Tex. R. App. P.
38.9.
27
a. Theft of trade secrets
The Acadia defendants attempt to challenge the jury’s findings that the
individual defendants intentionally committed theft of Horizon’s property or trade
secrets. 21 Their argument seems to be that after answering “yes” that the
individual defendants did so steal, misappropriate, and convert Horizon’s
property or trade secrets, the jury found that the value of the misappropriated
trade secrets was zero, the value of the converted proprietary information was
zero, but the fair market value of the stolen property or trade secrets was
$50,000, which is an insupportable conflict. 22 Although given time to review the
jury verdict for any “inconsistency,” the Acadia defendants raised no objection to
this alleged conflict in the jury’s answers before the jury was discharged. A
complaint of conflicting jury findings must be raised before the jury is discharged
to preserve any error for our review. Kitchen v. Frusher, 181 S.W.3d 467, 473
(Tex. App.—Fort Worth 2005, no pet.) (op. on reh’g); see also Tex. R. Civ. P.
295. The Acadia defendants failed to preserve this error, and we overrule this
portion of issue four.
21
At oral argument, counsel for the Acadia defendants seemed to concede
that they were not attacking the jury’s damages finding regarding the fair market
value of the trade-secret items that the individual defendants stole.
22
To the extent the Acadia defendants are arguing anything other than this
conflict, we will not address it as inadequately briefed. Even a liberal
construction of their one-sentence argument in their appellate brief is insufficient
to determine what their contentions or supporting facts and authorities are. See
Tex. R. App. P. 38.1(i), 38.9(b).
28
b. Fraud and fraud by nondisclosure
The Acadia defendants next attempt to challenge the jury’s findings that
Saul, Palus, Ulasewicz, and Bayma committed fraud and fraud by nondisclosure
and the jury’s attendant damages findings regarding Palus, Ulasewicz, and
Bayma. The entirety of their argument focuses on the record facts surrounding
these findings:
[T]he jury found that Saul, Palus, Ulasewicz, and Bayma had
committed fraud and fraud by non-disclosure in connection with
expense reports for trips on June 8 and June 29, 2011. ([cite to jury
charge in the clerk’s record]) These are the trips during which the
four admit they met to discuss their plans for PRP. The jury
awarded damages of $2,601.41 against Palus, $1,398.45 against
Ulasewicz, and $1,049.38 against Bayma. ([cite to jury charge in the
clerk’s record])
Although we are unsure what the Acadia defendants specifically are attacking, if
they are challenging the sufficiency of the evidence to support each of these
findings, the above-quoted statement is insufficient to appropriately raise such an
evidentiary argument. See, e.g., McCullough v. Scarbrough, Medlin & Assocs.,
Inc., 435 S.W.3d 871, 912 (Tex. App.—Dallas 2014, pet. denied). We overrule
this portion of issue four.
C. EXEMPLARY DAMAGES
1. Sufficiency of the Evidence
The Acadia defendants argue as part of their fifth issue that the evidence
was legally insufficient to support the jury’s malice finding against the individual
defendants because there was no evidence that the individual defendants
29
specifically intended to cause a substantial injury that would support exemplary
damages. 23 The jury was asked in question 21 whether it found “by clear and
convincing evidence that the harm to Horizon from [the individual defendants’
breach of fiduciary duty, intentional interference with the noncompetition
covenants, misappropriation of trade secrets, conversion of proprietary
information, theft of trade secrets or property, and knowing access of Horizon’s
computer system] resulted from malice by Saul, Palus, Ulasewicz, Bayma, or
Piechocki.” Similarly, the jury was asked in question 22 whether clear and
convincing evidence showed that the harm to Horizon was a result of Saul’s,
Palus’s, Ulasewicz’s, and Bayma’s fraud and fraud by nondisclosure in
submitting expense reports for reimbursement for the June 2011 meetings. 24
The jury answered “yes” for each named individual defendant in question 21 and
question 22. In response to question 23, the jury awarded Horizon $1,750,000 in
exemplary damages against the individual defendants: $500,000 against Saul;
23
In their opening brief, the Acadia defendants contended that there was
no evidence that they specifically intended that Horizon would suffer any injury
different from its economic damages for “lost profits, diminished market value,
and a minor amount of expenses.” In other words, they seemed to raise the
independent-injury rule as a bar to exemplary damages in this case. Indeed,
Horizon addressed the independent-injury rule in its response brief. But in their
reply, the Acadia defendants assert the independent-injury rule has no
application because recovery was not based on breach of contract and contend
that “none of the parties have previously argued the economic loss rule in this
case.” To the extent the Acadia defendants attempted to raise the independent-
injury rule in their opening brief, we will not address it.
24
The Acadia defendants do not attack question 22 in their arguments
regarding exemplary damages.
30
$500,000 against Ulasewicz; $250,000 against Palus; $250,000 against Bayma;
and $250,000 against Piechocki. The jury was not asked specifically to award
exemplary damages against either PRP or Acadia.
In their reply brief, the Acadia defendants expound on their legal-
insufficiency argument raised in their opening brief:
[I]nsufficient evidence establishes the defendants engaged in
“aggravated” conduct of the type that warrants [exemplary]
damages. The defendants were competitive and eager to break into
the expanding market for contract-based management services in a
unique sector of the health care industry. Their enthusiasm for
accessing this market did not come at Horizon’s expense, as
Horizon agreed the defendants did not lure any of its existing
customers away when they formed PRP. Rather, the defendant
tapped new leads and customers unknown to Horizon. This very
activity—competing by tapping into new market share and utilizing
Horizon’s forms—was the basis for Horizon’s underlying tort claims
for misappropriation of trade secrets, fraud, harmful access by
computer and civil theft. Horizon did not establish, by clear and
convincing evidence, “aggravated” conduct independently or
qualitatively different from Horizon’s tort claims for lost profits,
diminished market value, and a minor amount of expenses.
The Acadia defendants did not include any record references or citations to legal
authorities to support these factual statements and legal precepts.
In any event, exemplary damages may be awarded if Horizon produced
clear and convincing evidence that its harm resulted from the individual
defendants’ fraud or malice. See Tex. Civ. Prac. & Rem. Code Ann.
§ 41.003(a)–(b) (West 2015). Clear and convincing evidence is “the measure or
degree of proof that will produce in the mind of the trier of fact a firm belief or
conviction as to the truth of the allegations sought to be established.” Id. §
31
41.001(2) (West 2015). As the jury was charged, malice is “a specific intent by
the defendant to cause substantial injury or harm to the claimant.” Id.
§ 41.002(7) (West 2015). In their opening brief, the Acadia defendants focus
solely on the sufficiency of the evidence to show malice and do not sufficiently
address fraud. 25 We will do likewise and will also determine if the exemplary
damages are reasonable and proportionate to the actual damages recovered,
given that we have concluded the lost-profit award must be vacated. See id.
§ 41.013(a) (West 2015) (requiring intermediate appellate courts to detail
reasons and specific facts in reviewing exemplary-damage awards); Bunton v.
Bentley, 153 S.W.3d 50, 51 (Tex. 2004) (requiring appellate court to address
whether exemplary damages are excessive when compared to actual damages
even if not raised on appeal).
In reviewing the legal sufficiency of the evidence to support an actual
malice finding, which must be proven by clear and convincing evidence, we must
consider all the evidence in the light most favorable to the finding to determine
25
Although this basis for exemplary damages alone is sufficient to justify an
exemplary-damage award against Saul, Palus, Ulasewicz, and Bayma, see Tex.
Civ. Prac. & Rem. Code Ann. § 41.003(a); Alahmad v. Abukhdair, No. 02-12-
00084-CV, 2014 WL 2538740, at *13 (Tex. App.—Fort Worth June 5, 2014, pet.
denied) (mem. op. on reh’g), we will address the Acadia defendants’ lack-of-
malice contention in an abundance of caution. Such caution especially is
warranted in this case when the Acadia defendants’ counsel candidly admitted
during oral argument that he did not know which of the Acadia defendants’ issues
were dispositive and which issues need not be addressed based on favorable
determinations of related issues. Further, the fraud found by the jury to justify
exemplary damages did not extend to Piechocki.
32
whether a reasonable trier of fact could have formed a firm belief or conviction
that the defendant acted with actual malice. Romero v. KPH Consol., Inc., 166
S.W.3d 212, 220–21 (Tex. 2005); Sw. Bell Tel. Co. v. Garza, 164 S.W.3d 607,
609, 627 (Tex. 2004). Malice may be shown through direct or circumstantial
evidence. See Soon Phat, L.P. v. Alvarado, 396 S.W.3d 78, 110 (Tex. App.—
Houston [14th Dist.] 2013, pet. denied).
We conclude that the evidence was legally sufficient to support the jury’s
finding that the individual defendants acted with malice. Each of the individual
defendants were highly-placed employees at Horizon. Part of the business plan
that Saul presented to Acadia regarding the idea of forming an Acadia subsidiary
recognized that Horizon’s customers would have to be targeted. Saul cautioned
Acadia’s president, Turner, that any attempt to “orchestrate a management team
‘lift-out’” while the individual defendants were employed by Horizon carried “risk,”
specifically a “claim [of] tortious interference.” One e-mail from Ulasewicz to
Saul, which was sent while both were employed by Horizon and three days
before Saul made his presentation to Acadia, was particularly damning:
Here are my thoughts on a 12 – 24 month [strategy] relative to
positioning. This time frame is critical to us in terms of success.
Based on our preliminary sales plan as presented, we are in fact
saying that we are going to take [a] certain number of agreements
out of Horizon’s hide, both new deals but also terming contracts. . . .
I would also recommend you begin to group the contracts we know
are coming up over the next two years and place them in maybe
three categories from In Play to Unlikely to Switch. . . . We also
need to know not only the termination dates but much more
importantly any rollover dates, this is critical.
33
. . . The more members of our senior management we bring
over the greater our ability to shape and hone a message to
potential clients that is based implicitly and explicitly on our
knowledge that [their] Horizon exists in name only. . . . I do
advocate we get either Palus or [Piechocki] and . . . we should bring
in Bayma. Hurting Horizon early and often is a business [strategy]
and a good one. . . .
. . . I cannot think of a bigger body blow relative to impacting
future new sales for Horizon than to get Piechocki out of there.
. . . The message to potential clients is Pedigree – we need to
convey this is not a startup, this is a logical continuation of the
undeniably established Leadership, Experience and Expertise that
maintained Horizon in its number one position for the last ten years.
....
. . . [T]ransition timing is very important I believe. We need to
gut punch them as we leave, to me that means having all of our
ducks in a row so we can move quickly into the market. Let’s make
sure we talk around timelines before you commit, I know you are
anxious to leave but if you wait for the right time, it will be all the
sweeter. Business first – success is the best r[e]venge – trust me on
this.
Once Acadia decided to proceed with Saul’s plan, Saul forwarded
Ulasewicz’s, Palus’s, and Bayma’s resumes to Turner. Bayma questioned Saul
extensively about the benefits she would receive as an Acadia executive. Bayma
further recommended “bring[ing] more technology” to Acadia clients than that
provided by Horizon and “integrating clinical policies, systems with the Acadia
hospitals.” Saul told Turner that Acadia should “go hard” after Piechocki, which
would “put a real hurt on the competition.” Ulasewicz and Saul discussed how to
convince Horizon customers to use PRP’s services. Saul requested an external
34
hard drive for his Horizon computer, which Horizon paid for, and downloaded
“everything that was non-financial on [Horizon’s] server.” He instructed his
secretary to disable any encryption on the computer and to not re-enable it. Saul
also e-mailed many Horizon confidential documents to himself before resigning.
Before leaving Horizon, Saul, Ulasewicz, Bayma, and Palus met away
from Horizon offices to discuss their plans for the subsidiary. Palus, Ulasewicz,
and Bayma sought and received reimbursement from Horizon for the costs of this
trip. Saul cautioned the group to keep their “plans discrete [sic]” and described
their planned, orchestrated resignations. In addition, Saul checked out the
individual defendants’ personnel files in April 2011, shortly before his
presentation to Acadia, and kept them until August 15, 2011, shortly before he
resigned.
Before resigning to work for PRP, Piechocki e-mailed many Horizon
documents to his personal e-mail address, including Horizon’s lead list.
Piechocki and Ulasewicz later used this list to create a lead list for PRP.
Ulasewicz told Saul, Palus, Piechocki, and Bayma that the disclosure of the
newly-formed PRP lead list “or any related strategy” would “be viewed as an act
of treason against the group.” Piechocki later used Horizon’s confidential
contract form and merely substituted “PRP” everywhere it provided “Horizon.”
While he was still employed by Horizon, Ulasewicz found out that a potential
Horizon client, which previously had been unable to contract with Horizon, had
35
determined it could use Horizon’s services. Ulasewicz told no one at Horizon
and contacted the company after he joined PRP.
This legally sufficient evidence supports the jury’s finding of malice by the
individual defendants. See, e.g., Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d
867, 883–84 (5th Cir. 2013); Nova Consulting Grp., Inc. v. Eng’g Consulting
Servs., Ltd., 290 F. App’x 727, 740–41 (5th Cir. 2008); Lundy v. Masson, 260
S.W.3d 482, 496–97 (Tex. App.—Houston [14th Dist.] 2008, pet. denied). We
overrule this portion of issue five.
2. Excessiveness
Although not raised by the Acadia defendants, we must also address
whether the exemplary-damage awards were excessive in light of the sustainable
awards for actual damages and, thus, unconstitutional. 26 See Bunton, 153
S.W.3d at 51, 54; see also Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299,
308 (Tex. 2006) (“We review not whether the exemplary damage award is
exorbitant . . ., but whether it is constitutional.”). We have concluded that
26
Of course, the Acadia defendants also do not assert that the statutory
cap on exemplary damages applies to reduce the jury’s exemplary-damage
awards as a matter of law. See Tex. Civ. Prac. & Rem. Code Ann. § 41.008(b)
(West 2015). But because the jury specifically found that the individual
defendants committed theft of trade secrets as defined in the penal code, the cap
would not apply. See id. § 41.008(c)(13); Tex. Penal Code Ann. § 31.05 (West
2011); cf. O’Hare v. Graham, 455 F. App’x 377, 383 (5th Cir. 2011) (holding
because jury made no specific findings regarding exceptions to application of
statutory damages cap, cap applied to reduce awarded exemplary damages).
36
$55,049.24 of actual damages are recoverable: $50,000 for the fair market value
of the trade-secret items that the individual defendants misappropriated and
$5,049.24 for the fraudulent reimbursements Palus, Ulasewicz, and Bayma
requested from Horizon for their pre-resignation trip to meet about their plans for
PRP. The jury awarded a total of $1,750,000 in exemplary damages against the
individual defendants.
Although exemplary damages are imposed to punish a defendant, they
may not be grossly disproportionate to the gravity of the defendant’s conduct.
See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 426, 123 S. Ct.
1513, 1524 (2003). In determining whether the jury’s award is grossly excessive
or disproportionate we consider (1) the degree of reprehensibility of the
defendant’s misconduct, (2) the disparity between the actual or potential harm
suffered by the plaintiff and the exemplary-damages award, and (3) the
difference between the exemplary damages awarded by the jury and the
penalties authorized or imposed in comparable cases. Id. at 418, 123 S. Ct. at
1520.
The most important of the three considerations is the degree of
reprehensibility of the defendant’s conduct. Id. at 419, 123 S. Ct. at 1521.
Reprehensibility, in turn, considers whether the harm caused was physical as
opposed to economic, the tortious conduct evinced a reckless disregard of the
health or safety of others, the target of the conduct had financial vulnerability, the
conduct involved repeated actions or was an isolated incident, and the harm was
37
the result of intentional malice, trickery, deceit, or mere accident. Id. Here, there
was no physical injury to Horizon, Horizon did not allege that the individual
defendants exhibited reckless disregard for others’ health or safety, and Horizon
was not financially vulnerable. However, the individual defendants’ conduct was
repeated and intentional. See Bennett v. Reynolds, 315 S.W.3d 867, 874–75
(Tex. 2010) (considering surrounding circumstances beyond the underlying tort in
determining reprehensibility). The disparity between the exemplary damages
and the compensatory damages after our reduction of Horizon’s compensatory
damages is a more than thirty-to-one ratio. Finally, the criminal penalties
authorized for theft of trade secrets are imprisonment for two to ten years and a
maximum $10,000 fine. See Tex. Penal Code Ann. § 12.34 (West 2011),
§ 31.05(c).
Few awards that exceed a single-digit ratio will satisfy due process, and
the Supreme Court has suggested that a four-to-one ratio perhaps is the limit of
what the constitution will allow. Campbell, 538 U.S. at 425, 123 S. Ct. at 1524.
While the individual defendants’ conduct may be categorized as reprehensible,
the degree of reprehensibility is mitigated by the lack of physical harm and
Horizon’s financial status. Finally, the maximum criminal fine for theft of trade
secrets is $10,000. We conclude that the jury’s award of exemplary damages,
given the lack of legally sufficient evidence of lost profits, was excessive and
unconstitutional.
38
The remedy for excessive punitive damages is to suggest a remittitur, if
possible, or remand for a new trial. Guevara v. Ferrer, 247 S.W.3d 662, 670
(Tex. 2007). Here, we believe four times the actual damages awarded 27 in the
proportion awarded by the jury would be an appropriate remittitur. The jury
determined that Saul was liable for 29%, Palus for 14%, Ulasewicz for 29%,
Bayma for 14%, and Piechocki for 14% of the $1,750,000 awarded. Applying
these percentages to four times the actual damages awarded results in the
following exemplary-damage award against each individual defendant: Saul–
$63,857.13; Palus–$30,827.57; Ulasewicz–$63,857.12; Bayma–$30,827.57; and
Piechocki–$30,827.57. In sum, we suggest a remittitur of $1,529,803.04. If
Horizon files this remittitur with the trial-court clerk within thirty days of this
opinion and notifies this court of such, we will reform this portion of the trial
court’s judgment and, as reformed, affirm the exemplary-damage award.
Otherwise, we will reverse portions of the trial court’s judgment and remand for a
new trial on limited issues. See Tex. R. App. P. 46.3; Tex. R. Civ. P. 315; see
also Bennett v. Reynolds, No. 03-05-00034-CV, 2010 WL 4670270, at *5 (Tex.
App.—Austin Nov. 18, 2010) (mem. op. on remand), supplemental opinion after
remittitur, 440 S.W.3d 660, 660–61 (Tex. App.—Austin 2011, no pet.).
27
This results in a total exemplary-damage award of $220,196.96, i.e.,
$55,049.24 x 4.
39
3. Jury-Charge Error
a. Question 23
As part of their fifth issue, the Acadia defendants assert that question 23—
inquiring as to the appropriate amount of exemplary damages to be awarded to
Horizon—was fatally defective and improperly submitted. 28 They contend that
the broad-form question “impermissibly combined numerous legal theories in a
way that makes it impossible for this Court to determine the basis for the jury’s
answers.”
Horizon argues that the Acadia defendants waived this argument because
they did not object to question 23 at trial on the basis that the question failed to
segregate between theories of liability. At trial, the Acadia defendants objected
to question 23 because “there [was] not a separate question for each Defendant.
It is a Casteel problem.” Now on appeal, the Acadia defendants argue that each
legal theory should have been submitted in a separate question. By referencing
“Casteel,” the Acadia defendants were necessarily raising the issue that the
question erroneously comingled valid and invalid liability theories. See Crown
Life Ins. Co. v. Casteel, 22 S.W.3d 378, 388–89 (Tex. 2000) (op. on reh’g). We
disagree with Horizon and conclude that the Acadia defendants sufficiently raised
this argument in the trial court. See, e.g., Tex. Comm’n on Human Rights v.
28
We previously concluded that the evidence was legally sufficient to
support the jury’s findings that the individual defendants acted with malice in
response to question 21. The individual defendants did not attack the sufficiency
of the evidence to support the jury’s findings regarding fraud in question 22.
40
Morrison, 381 S.W.3d 533, 536 (Tex. 2012); Kelley & Witherspoon, LLP v.
Hooper, 401 S.W.3d 841, 854 (Tex. App.—Dallas 2013, no pet.).
The jury was asked in question 23 “[w]hat sum of money, if any, if paid
now in cash, should be assessed against Saul, Palus, Ulasewicz, Bayma, and
Piechocki and awarded to Horizon as exemplary damages, if any, for the conduct
found in Question No. 21 [malice by the individual defendants] or Question
No. 22 [Saul’s, Palus’s, Ulasewicz’s, and Bayma’s fraud].” Broad-form questions
are the preferred method of submitting issues to the jury. See Tex. R. Civ. P.
277. But a broad-form question cannot be used to “put before the jury issues
that have no basis in the law or the evidence.” Romero, 166 S.W.3d at 215.
Here, there was evidence to support the submission of both fraud and malice as
a basis for exemplary damages—neither was an invalid theory of recovery. Cf.
Morrison, 381 S.W.3d at 537 (holding broad-form liability question harmful
because included whether employer took adverse employment action against
employee because employee’s claim she was denied promotion was an invalid
theory given that she had not included claim in her EEOC complaint). Because
there is a presumption in favor of broad-form submissions and because question
23 did not put an invalid theory before the jury, we conclude that the trial court
did not abuse its discretion in submitting both malice and fraud as theories of
liability supporting exemplary damages. See Cimarron Country Prop. Owners
Ass’n v. Keen, 117 S.W.3d 509, 511 (Tex. App.—Beaumont 2003, no pet.).
41
b. Question 24
The Acadia defendants also attack the question that asked whether
Horizon’s harm was attributable to any malice by Acadia or PRP—question 24—
because it did not allow this court to specify “what conduct the jury determined
was the basis for a finding of malice” and because the question did “not allow the
Court to determine that the same twelve jurors found the malice resulted from the
conduct or ratification of the same individual defendants.” At trial, the Acadia
defendants objected to question 24 because it (1) improperly allowed a
ratification or approval finding through a vice-principal with no evidence that any
individual defendant was a corporate officer and (2) failed to “differentiate
between the dates of occurrence for the various causes of action.” The Acadia
defendants’ appellate arguments are substantively different from the objections
raised to the trial court, and they failed to submit a substantially correct question
resolving their appellate arguments. Thus, the Acadia defendants’ arguments
directed to question 24 were not preserved for our review. 29 See Tex. R. Civ. P.
272, 274, 278.
We overrule these portions of issue five.
29
Because any defective submission of question 24 has not been
preserved, we need not address the Acadia defendants’ arguments regarding
“course and scope and ratification,” which are contingent on the defective
submission of question 24.
42
3. Joint and Several Liability
The Acadia defendants argue that the trial court’s judgment awarding
exemplary damages against Acadia and PRP jointly and severally was in error.
In awarding exemplary damages, the trial court provided that each award was
“jointly and severally from” each individual defendant, Acadia, and PRP. In
actions against multiple defendants, “an award of exemplary damages must be
specific as to a defendant, and each defendant is liable only for the amount of the
award made against that defendant.” Tex. Civ. Prac. & Rem. Code Ann.
§ 41.006 (West 2015). Thus, the Acadia defendants assert that the lack of a
specific amount of exemplary damages awarded against Acadia and PRP by the
jury renders the joint and several exemplary-damage award improper under
section 41.006.
In question 24, the jury found that the harm arising from the individual
defendants’ theft of trade secrets “resulted from malice attributable to” Acadia
and PRP. The jury previously concluded that the individual defendants were
acting in the course and scope of their employment with Acadia or PRP when
they stole Horizon’s property or trade-secret information and that Acadia and
PRP ratified this conduct. But contrary to Horizon’s contention, these findings do
not allow a joint and several award of exemplary damages. See Computek
Computer & Office Supplies, Inc. v. Walton, 156 S.W.3d 217, 223–24 (Tex.
App.—Dallas 2005, no pet.). Thus, the trial court’s judgment awarding
43
exemplary damages jointly and severally was improper. We sustain this portion
of issue five.
Although we agree that the joint-and-several nature of the award against
Acadia and PRP was error as a matter of law, the remedy for such error is not as
clear. Two appellate courts have remanded the issue to the trial court for a
determination of the amount of exemplary damages to be awarded against each
individual defendant. Andress v. Meah Invs. No. 2, Ltd., No. 01-07-00792-CV,
2009 WL 2882930, at *9–10 (Tex. App.—Houston [1st Dist.] Sept. 10, 2009, no
pet.) (mem. op.); Computek, 156 S.W.3d at 224. However, both appeals were
from bench trials, and the trial courts solely awarded exemplary damages jointly
and severally, i.e., there were not individual awards of exemplary damages.
Here however, Horizon proposed the jury questions regarding exemplary
damages and specifically requested that the jury be asked to assign a specific
dollar amount against each individual defendant but did not ask for a specific
dollar amount against either Acadia or PRP. Because the jury charge, at
Horizon’s request, specifically asked for dollar amounts for exemplary damages
to be awarded only against each individual defendant, we need not remand to
the trial court “to determine whether to award exemplary damages as to any
specific defendant.” Computek, 156 S.W.3d 224; see O’Hare, 455 F. App’x at
382–83 (refusing to reverse joint award of exemplary damages because
proposed jury question invited the joint assessment). The error in the form of the
exemplary-damages award is its joint and several nature, not that it wholly failed
44
to award exemplary damages against any defendant individually; thus, we are
able to render an award that is not joint and several and appropriately awards
amounts only against individual parties as the jury was charged and as allowed
by section 41.006. See Tex. R. App. P. 43.3.
D. ATTORNEYS’ FEES
In their sixth issue, the Acadia defendants assert that Horizon is not
entitled to recover attorneys’ fees on its claims, Horizon failed to segregate its
trial attorneys’ fees, the evidence was insufficient to support the trial attorneys’
fees, and the trial court erred by awarding appellate attorneys’ fees after the jury
found no appellate attorneys’ fees were recoverable by Horizon. In its appeal,
Horizon asserts in three issues that the trial court improperly reduced their trial
and appellate attorneys’ fees.
1. Relevant Facts
At trial, Horizon’s trial counsel, Victor Vital, testified as to the amount,
reasonableness, and necessity of Horizon’s attorneys’ fees and costs incurred
through trial. The Acadia defendants objected to Vital’s testimony regarding
attorneys’ fees, including the amount and the segregation percentage, because
Horizon had not timely disclosed these details before trial. The trial court
overruled this objection. Vital then testified that Horizon had incurred
$875,789.50 in attorneys’ fees and $156,291.18 in expenses “up to [the] date of
trial.” Vital opined that Horizon would incur between $100,000 and $150,000 in
additional attorneys’ fees and expenses through the conclusion of the trial. He
45
testified that he excluded 25% of the attorneys’ fees Horizon incurred because
that percentage related to claims that did not support the award of attorneys’
fees. To reach 25%, Vital reviewed the billing records and tried to determine
which of the billing entries applied to each claim, some of which were
“inextricably covered.” See generally Tony Gullo, 212 S.W.3d at 313 (holding
attorneys’ fees are not necessarily recoverable for all claims on basis of
inseparability even if underlying facts are the same for different claims and even
if attorney spent only nominal time on claim not entitled to attorneys’ fees). He
also testified that, in the event of appeal, Horizon would incur a total of $130,000
in appellate attorney’s fees through appeal to the Texas Supreme Court. Vital
did not segregate the appellate attorneys’ fees.
After all parties closed, the Acadia defendants orally moved for an
instructed verdict “on attorney’s fees” based on the failure to segregate and on
the absence of evidence regarding reasonableness. The trial court denied the
motion. During closing jury arguments, Vital stated without objection that the
total amount of trial attorneys’ fees Horizon requested—$904,342.12 30—had
already been reduced by 25%.
30
The record does not clearly show what this number represents because
Vital’s testimony was that Horizon had incurred $875,789.50 in attorneys’ fees up
to the date of trial with an additional $100,000–$150,000 through trial. We
believe the number Vital used during closing jury argument reflects a 25%
reduction of $1,205,789.50, which appears to be an inaccuracy of the amount of
Horizon’s attorneys’ fees to the date of trial plus attorneys’ fees for the duration of
the trial: $875,789.50 + $150,000 = $1,025,789.50. Of course, Vital’s closing
jury argument was not evidence.
46
The jury charge inquired as to attorneys’ fees: “What is a reasonable fee
for the necessary services of Horizon’s attorney, stated in dollars and cents?”
The question then specifically asked for a dollar amount for each phase of the
case from trial through “the completion of proceedings in the Supreme Court of
Texas.” The Acadia defendants did not object to the submission of the attorney-
fees question in the charge on the basis of nonsegregation. The jury awarded
Horizon $900,000 “for representation in the trial court” but awarded no damages
for appellate attorneys’ fees.
Horizon filed a motion for entry of judgment on the jury’s findings,
requesting an award of $900,000 in trial attorneys’ fees, and a motion to
disregard the jury’s finding on the issue of appellate attorneys’ fees based on
Vital’s uncontradicted testimony. In the Acadia defendants’ motions to disregard
the jury’s findings, they asserted that Vital’s segregation testimony was
conclusory and, thus, was insufficient to show appropriate segregation. The
Acadia defendants alternatively argued that the award of trial attorneys’ fees
should be “$656,842.12 ($875,789.50 x 25%), not the $900,000 requested.” The
trial court entered final judgment awarding Horizon $769,342 31 in trial attorneys’
fees and a total of $97,500 in appellate attorneys’ fees.
31
It appears this amount is a 25% discount of the correct amount of
attorneys’ fees Horizon incurred through the end of the trial—$1,025,789.50.
47
The Acadia defendants summarily challenged the awarded attorneys’ fees
in their motion for new trial. 32 In its subsequent findings, the trial court explained
its calculation of attorneys’ fees: “Based on the trial testimony segregating
recoverable attorneys’ fees from fees that were not incurred in connection with a
claim for which fees may be awarded, the Court concludes that Plaintiff is entitled
to attorneys’ fees that are discounted by 25% and those discounted amounts are
stated in the Final Judgment.”
2. Entitlement
The Acadia defendants first contend in their sixth issue that Horizon cannot
recover attorneys’ fees on its breach-of-contract claims because the authorizing
statute relied on by Horizon in seeking attorneys’ fees—section 38.001 of the civil
practice and remedies code—is preempted by the more specific Covenants not
to Compete Act. Compare Tex. Bus. & Com. Code Ann. §§ 15.51–.52 (West
2011), with Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (West 2015).
We have concluded that the jury’s damage awards for breach of contract
were supported by legally insufficient evidence of future lost profits; therefore,
section 38.001(8) cannot support Horizon’s recovery of attorneys’ fees. See
Mustang Pipeline, 134 S.W.3d at 201 (holding plaintiff may recover attorneys’
fees only if plaintiff prevailed on cause of action authorizing such fees and
32
In a boilerplate section entitled “Points required by Rule 324(b)” in which
they raised one-sentence challenges to each jury finding, the Acadia defendants
stated that the trial attorneys’ fees award was “excessive” with no further
argument. See Tex. R. Civ. P. 322.
48
recovered damages). However, Horizon recovered under the Texas Theft
Liability Act based on the jury’s findings that the individual defendants
intentionally stole Horizon’s property or trade secrets as prohibited by penal code
section 31.05 during the course and scope of their employment with Horizon,
which Acadia and PRP ratified. See Act of May 26, 1999, 76th Leg., R.S.,
ch. 858, § 4, 1999 Tex. Gen. Laws 3537, 3539 (amended 2013 to remove
section 31.05 from purview of Theft Liability Act upon adoption of Uniform Trade
Secrets Act) (current version at Tex. Civ. Prac. & Rem. Code Ann. § 134.002(2)
(West Supp. 2014)). The Theft Liability Act provides for the recovery of
attorneys’ fees. Tex. Civ. Prac. & Rem. Code Ann. § 134.005(b) (West 2011).
The Acadia defendants do not assert that Horizon could not recover attorneys’
fees under the Theft Liability Act. Accordingly, Horizon was entitled to recover its
attorneys’ fees. We overrule this portion of the Acadia defendants’ sixth issue.
3. Alleged Errors in Amounts Awarded
for Trial and Appellate Attorneys’ Fees
The Acadia defendants argue in the remaining portion of their sixth issue
that the trial and appellate attorney-fees awards were erroneous for multiple
reasons. Similarly, Horizon asserts in the three issues of their cross appeal that
their attorney-fees awards were improperly reduced. Because we have
significantly reduced Horizon’s compensatory damages based on insufficient
evidence of lost profits and concomitantly reduced the awarded exemplary
damages upon a suggestion of remittitur, we need not consider these arguments.
49
The correct remedy in such a situation is to reverse the trial court’s award and
remand for a new trial on the issue of attorneys’ fees. See Barker v. Eckman,
213 S.W.3d 306, 313–15 (Tex. 2006); see also Bossier Chrysler-Dodge II, Inc. v.
Rauschenberg, 238 S.W.3d 376, 376 (Tex. 2007); Young v. Qualls, 223 S.W.3d
312, 314–15 (Tex. 2007).
E. SANCTIONS ORDER
In their seventh issue, the Acadia defendants argue that the trial court
abused its discretion by ordering Saul to pay sanctions for pretrial discovery
abuse. 33 As previously stated, the trial court entered a pretrial order sanctioning
Saul for pretrial discovery abuse and ordered him to pay Horizon $41,780.80.
See Tex. R. Civ. P. 215.2(b)(2), 215.3. The trial court further denied Saul’s
motion to reconsider the sanctions order and included the award in its final
judgment. See Tex. R. Civ. P. 215.3.
The Acadia defendants argue that the sanctions order was based on
Saul’s breach of fiduciary duty as alleged by Horizon; thus, the failure of that
theory of recovery on appeal (as also urged by the Acadia defendants in their
appeal) results in “the same relief on the issue of discovery sanctions.” But the
trial court’s sanctions against Saul were based on the breach of his duty as a
party to preserve relevant evidence after Horizon filed suit against Acadia, PRP,
and the individual defendants. See Trevino v. Ortega, 969 S.W.2d 950, 954–57
33
The Acadia defendants do not challenge the trial court’s inclusion of a
spoliation instruction in the jury charge.
50
(Tex. 1998). The sanctions were not related to Horizon’s ultimate success on its
claim for breach of fiduciary duty against Saul. We overrule Horizon’s seventh
issue.
F. POSTSUBMISSION BRIEF
The Acadia defendants seek leave to file a postsubmission brief to provide
“additional record references, case authority, and analysis relevant to . . . three
questions” posed by the panel at oral argument. Oral argument in this appeal
was heard on November 4, 2014; however, the panel did not request
postsubmission briefing. The Acadia defendants filed their motion for leave to file
their postsubmission brief on December 1, 2014, which Horizon opposes. See
2d Tex. App. (Fort Worth) Loc. R. 1.C.
In their postsubmission brief, the Acadia defendants raise new issues and
provide new record references and cases to support their previously-briefed
arguments. Although some of the Acadia defendants’ assertions in the post-
submission brief are in response to the panel members’ questions at oral
argument, their postsubmission brief goes beyond merely answering those
questions and strays into the impermissible territory of adding new issues to its
appeal and shoring up issues that they did not brief as fully as they might have
preferred. Further, the Acadia defendants already have filed approximately 125
pages of briefing—29,942 words—in this appeal. We recognize this is a
complicated appeal but briefing must end at some point. This end point may
certainly be set at oral argument. For these reasons, we deny the Acadia
51
defendants’ motion for leave and did not consider their postsubmission brief in
our determination of this appeal. See Black v. Shor, 443 S.W.3d 154, 161 n.2
(Tex. App.—Corpus Christi 2013, pet. denied); see also Tex. R. App. P. 38.7;
Standard Fruit & Vegetable Co. v. Johnson, 985 S.W.2d 62, 65 (Tex. 1998).
III. CONCLUSION
We conclude that the evidence of future lost profits was legally insufficient
and the judgment for those amounts must be vacated. Although the evidence of
theft of trade secrets, fraud, and fraud by nondisclosure was sufficient to support
the actual damages tied to those claims, the exemplary-damage award was
excessive in light of the vacatur of the lost-profit damages. Therefore, we
reverse in part the judgment of the trial court awarding Horizon lost-profit
damages and render a take-nothing judgment on Horizon’s claims upon which
the jury awarded damages for lost profits. We reverse that portion of the trial
court’s judgment awarding exemplary damages jointly and severally against
Acadia and PRP and render judgment that the exemplary damages are not
awarded jointly and severally. We also reverse the trial court’s judgment
regarding attorneys’ fees and remand for a new trial on attorneys’ fees. See Tex.
R. App. P. 43.2(a), (c), (d), 43.3.
We affirm the remainder of the trial court’s judgment conditioned on the
remittitur by Horizon of $1,529,803.04 in exemplary damages. See Tex. R. App.
P. 46.3. Upon timely remittitur, we will reform the amount of exemplary damages
awarded in the trial court’s judgment and affirm the remaining portions of the
52
judgment as reformed. If Horizon does not timely file the remittitur, we will
reverse the trial court’s judgment for a new trial on Horizon’s claims upon which
Horizon prevailed and was awarded damages that were supported by sufficient
evidence. Soon Phat, 396 S.W.3d at 95 (recognizing remand for new trial cannot
be had solely on issue of exemplary damages).
/s/ Lee Gabriel
LEE GABRIEL
JUSTICE
PANEL: LIVINGSTON, C.J.; WALKER and GABRIEL, JJ.
DELIVERED: February 26, 2015
53