Grand Parkline, LLC H Mart Companies Incorporated H Mart Austin LLC And IYK Texas Corporation v. Mama Fu's Lakeline, LLC ( 2020 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-19-00683-CV
Grand Parkline, LLC; H Mart Companies Incorporated;
H Mart Austin LLC; and IYK Texas Corporation, Appellants
v.
Mama Fu’s Lakeline, LLC, Appellee
FROM THE 353RD DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-18-006056, THE HONORABLE TODD A. BLOMERTH, JUDGE PRESIDING
MEMORANDUM OPINION
This is an interlocutory appeal from the trial court’s denial of a TCPA motion to
dismiss. See Tex. Civ. Prac. & Rem. Code §§ 27.003,1 51.014(a)(12). Appellee Mama Fu’s
Lakeline, LLC, sued several parties—including appellants Grand Parkline, LLC; H Mart
Companies Incorporated; H Mart Austin LLC; and IYK Texas Corporation—complaining of
actions related to a commercial-real-property lease. For the following reasons, we will reverse
the portion of the trial court’s order awarding Mama Fu’s its attorney’s fees and costs but
otherwise affirm the trial court’s order.
1
The legislature amended the TCPA in 2019, but those changes do not apply here
because this action was filed before the effective date of the amendments. See Act of May 17,
2019, 86th Leg., R.S., ch. 378, §§ 11–12, 2019 Tex. Sess. Law Serv. 684, 687 (specifying that
TCPA amendments apply only to action filed on or after September 1, 2019). All citations to the
TCPA in this opinion are to the version that applies to this dispute.
BACKGROUND
As alleged in its live petition, in early 2005 Mama Fu’s executed a ten-year lease
of commercial space in an Austin shopping center at 11301 Lakeline Boulevard (the Shopping
Center) to operate its “flagship” restaurant. Its landlord was 183 Parkline Shopping Center LP.
The lease contained: an option to extend the lease for an additional five years and an exclusivity
provision providing that “Landlord will not execute any lease for space within the Shopping
Center with a tenant whose primary business is the sale of Asian-fusion style food.” The lease
defined Asian-fusion style food as “Asian, Asian Fusion, wok cooked, noodle based, or oriental
food.” After executing the lease, Mama Fu’s “spent considerable funds building out its flagship
restaurant” and opened for business in February 2006. As the “exclusive purveyor of Asian-
fusion food in the Shopping Center, Mama Fu’s business boomed,” and it and 183 Parkline
executed a lease amendment in 2009 expanding the lease’s square footage. Thereafter, Mama
Fu’s “invested additional funds to expand its flagship store.”
In late 2015, “because business was good,” Mama Fu’s began negotiating the
extension option with its new landlord, 11301 Lakeline LP (Lakeline).2 One of the main
negotiating points for Mama Fu’s was to remain the exclusive purveyor of Asian-fusion style
food in the Shopping Center, and it “repeatedly asked [Lakeline] about competing prospective
tenants.” However, Lakeline allegedly “concealed its simultaneous negotiations to sell the
Shopping Center to one of the United States’ largest purveyors of Asian food [H Mart
Companies, Inc.].” In late March 2016, Mama Fu’s and Lakeline executed the lease extension,
retaining the exclusivity provision.
2
By this time, 183 Parkline had sold the Shopping Center to Lakeline, which is a
defendant in this lawsuit but not a party to this appeal.
2
Mama Fu’s contends that two weeks later, Lakeline executed an agreement to sell
the Shopping Center to appellant IYK, which immediately assigned its rights and interests in the
Shopping Center to appellant Grand Parkline. Mama Fu’s shortly thereafter received a letter
informing it of Grand Parkline’s new address: “H Mart Companies, Inc.,” in New Jersey.
In late 2017, Mama Fu’s learned that the Asian supermarket chain H Mart would
be opening a store in the Shopping Center and would be the chain’s “first [store] to feature a
food hall,” to be called “Market Eatery,” featuring “multiple food concepts under one roof.”
Each of the anticipated eateries would feature Asian food. Mama Fu’s alleges that appellants
IYK, Grand Parkline, and H Mart Austin LLC are “entities with the same owners and employees
as H Mart Companies Incorporated, which is one of the United States’ largest purveyors of
Asian food.”
Before the February 2018 grand opening of the H Mart store in the Shopping
Center, Mama Fu’s demanded that Grand Parkline cure its material breaches of the exclusivity
provision within sixty days, as provided in the lease. However, Grand Parkline “unequivocally
stated via letter that it would open [the H Mart store] in the Shopping Center and compete
with Mama Fu’s in violation of the [l]ease,” allegedly repudiating the lease. After the H Mart
store opened with ten Market Eatery tenants selling prepared Asian food, “Mama Fu’s revenue
steadily declined.” Mama Fu’s was eventually “forced to . . . vacate the premises” about a year
later due to appellants’ alleged breach of the exclusivity provision.
In its original petition, Mama Fu’s named as defendants 183 Parkline and its
management company (collectively, the prior landlords) and Grand Parkline, asserting causes
of action for breach of contract against Grand Parkline and fraud against the prior landlords.
Shortly thereafter, Mama Fu’s filed a first amended petition adding the two H Mart entities as
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defendants and asserting against them a claim for tortious interference with the lease. Mama
Fu’s also added a claim against all the defendants for conspiracy to commit fraud.
In its second amended, live petition, Mama Fu’s joined IYK as a defendant and
asserted new claims of alter ego3 and constructive eviction against all four appellants. Mama
Fu’s added a claim against the two H Mart entities and IYK for breach of contract and a claim
for conspiracy to commit fraud against IYK. Within sixty days of the filing of Mama Fu’s
second amended petition, appellants filed a TCPA motion to dismiss contending that the “newly
added claims . . . squarely implicate [their] right of free speech, association, and petition.”
Mama Fu’s responded, asserting that the motion was “untimely and barred as to all
claims/theories of recovery against Grand Parkline and [the two] H Mart [entities] except for
alter ego and constructive eviction, and should be denied on that basis.” Mama Fu’s also
contended that the TCPA does not apply, that the commercial-speech exception applies, and that
it had established a prima facie case for each of its claims.
The trial court denied appellants’ motion and awarded attorney’s fees and costs to
Mama Fu’s. This interlocutory appeal ensued.
DISCUSSION
TCPA dismissal procedure
The TCPA protects citizens from retaliatory lawsuits meant to intimidate or
silence them on matters of public concern. Dallas Morning News, Inc. v. Hall, 579 S.W.3d 370,
376 (Tex. 2019); In re Lipsky, 460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding). The stated
3
Mama Fu’s specifically alleged that the four appellants have “a unified existence” and
“want to use the corporate form to escape liability to Mama Fu’s [and that] . . . it would be unjust
to treat the . . . entities as separate.”
4
purpose of the Act is to “encourage and safeguard the constitutional rights of persons to petition,
speak freely, associate freely, and otherwise participate in government to the maximum extent
permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits
for demonstrable injury.” Tex. Civ. Prac. & Rem. Code § 27.002; see ExxonMobil Pipeline Co.
v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per curiam). To that end, the TCPA provides a
procedure to expedite the dismissal of a “legal action” brought to stifle the nonmovant’s exercise
of the rights protected by the statute. See Youngkin v. Hines, 546 S.W.3d 675, 679 (Tex. 2018);
see also Tex. Civ. Prac. & Rem. Code §§ 27.003(a), .005(b).
Under the TCPA, a party may file a motion to dismiss a “legal action” if it is
based on, relates to, or is in response to the party’s exercise of the right of free speech, right to
petition, or right of association. See Tex. Civ. Prac. & Rem. Code § 27.003(a). Courts review
TCPA motions using a three-step analysis. Youngkin, 546 S.W.3d at 679. First, the party
moving for dismissal must show by a preponderance of the evidence that the TCPA applies to
the legal action against it. Tex. Civ. Prac. & Rem. Code § 27.005(b). If the movant meets that
burden, the nonmovant must establish by clear and specific evidence a prima facie case for each
essential element of its claim. Id. § 27.005(c). If the nonmovant satisfies that requirement, the
burden shifts back to the movant to prove each essential element of any valid defenses by a
preponderance of the evidence. Id. § 27.005(d). “In determining whether a legal action should
be dismissed under [the TCPA], the court shall consider the pleadings and supporting and
opposing affidavits stating the facts on which the liability or defense is based.” Id. § 27.006(a).
We review de novo whether each party met its respective burden. See Long Canyon Phase II &
III Homeowners Ass’n v. Cashion, 517 S.W.3d 212, 218 (Tex. App.—Austin 2017, no pet.).
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Whether the TCPA applies
The applicable version of the TCPA defines the “exercise” of each of the rights
at issue—the right of free speech and of association4—as the making or submitting of a
“communication,” which is “a statement or document in any form or medium, including oral,
visual, written, audiovisual, or electronic.” Tex. Civ. Prac. & Rem. Code § 27.001(1). It defines
the “exercise of the right of association” as “a communication between individuals who join
together to collectively express, promote, pursue, or defend common interests,” and the “exercise
of the right of free speech” as “a communication made in connection with a matter of public
concern.” Id. § 27.001(2), (3). Thus, to meet their initial burden, appellants were required to
prove by a preponderance of the evidence that the claims at issue (a) are based on or related to
their communications that were either (b) made in connection with a matter of public concern or
(c) with one or more individuals with whom appellants had joined to collectively promote or
pursue common interests. See id. §§ 27.001, .005(b).
In determining whether appellants met their initial burden, we focus on
Mama Fu’s pleadings, which are the “best and all-sufficient evidence of the nature of the action.”
Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017) (“The basis of a legal action is not determined
by the defendant’s admissions or denials but by the plaintiff’s allegations.” (citations omitted)).
From Mama Fu’s pleadings we determine whether the factual bases of the challenged claims
constitute “expression” within the TCPA’s definitions. See Sloat v. Rathbun, 513 S.W.3d 500,
503 (Tex. App.—Austin 2015, pet. dism’d). In determining the factual bases for the challenged
claims, we consider the pleadings and other evidence in the light most favorable to the
4
While appellants asserted in their TCPA motion that Mama Fu’s live petition asserts
claims implicating their right to petition, they have abandoned that argument on appeal.
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nonmovant below, “favoring the conclusion that [the nonmovant’s] claims are not predicated on
protected expression.” Id. at 504; see Tex. Civ. Prac. & Rem. Code § 27.006(a).
“Communications” at issue
The parties dispute whether Mama Fu’s has alleged that appellants made any
“communications” at all (which would bring the TCPA into play) or merely took “actions”
(which would preclude application of the TCPA). See Bumjin Park v. Suk Baldwin Props., LLC,
No. 03-18-00025-CV, 2018 WL 4905717, at *3–4 (Tex. App.—Austin Oct. 10, 2018, no pet.)
(mem. op.) (concluding that TCPA did not apply to claims that were based solely on conduct
rather than communications). However, because the TCPA defines “communication” so broadly,
see Tex. Civ. Prac. & Rem. Code § 27.001(1); Adams v. Starside Custom Builders, LLC,
547 S.W.3d 890, 894 (Tex. 2018), we assume without deciding that the following allegations in
Mama Fu’s petition fit the TCPA’s definition of communications: the execution of the lease
extension and agreement to sell the Shopping Center; the sending of a letter informing
Mama Fu’s to direct all inquiries about the lease to H Mart Companies, Inc., with a New Jersey
mailing address and “hmart.com” email address; the requesting of a potential Market Eatery
tenant (Agu Ramen) to complete a lease application upon Agu Ramen’s inquiry about whether
Mama Fu’s had a right to exclusivity; the statement made to Mama Fu’s that the H Mart
store would open, in repudiation of the lease; and the conspiring to fraudulently conceal the
pending sale of the Shopping Center to appellants (which presumably “necessarily involved”
communications), see Abatecola v. 2 Savages Concrete Pumping, LLC, No. 14-17-00678-CV,
2018 WL 3118601, at *7–8 (Tex. App.—Houston [14th Dist.] June 26, 2018, pet. denied) (mem.
op.) (determining that conspiracy claims against defendant “would necessarily have required
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communications”). We therefore consider whether these alleged communications are the type
covered by the TCPA.
Exercise of the right of free speech
Appellants contend that the above-listed communications were “made in
connection with a matter of public concern.” See Tex. Civ. Prac. & Rem. Code § 27.001. The
applicable version of the Act defines a “matter of public concern” to include an issue related to
“a good, product, or service in the marketplace.” Id. § 27.001(7)(E). Appellants submit that the
subject communications were about Asian food (i.e., a “good” or “product”) and the lease of
commercial space (i.e., a “service”) in the marketplace and thus meet the statutory definition.
However, the Texas Supreme Court has recently determined that the former
version of the statute’s reference to goods, products, or services “in the marketplace” suggests
that the communication about goods or services “must have some relevance to a wider audience
of potential buyers or sellers in the marketplace, as opposed to communications of relevance
only to the parties to a particular transaction.” Creative Oil & Gas, LLC v. Lona Hills Ranch,
LLC, 591 S.W.3d 127, 134 (Tex. 2019) (in trespass lawsuit brought by oil-and-gas lessor against
lessee, concluding that TCPA did not apply to lessee’s counterclaim alleging that lessor falsely
communicated to third-party purchaser of lease production that lease had terminated and lessee
was not entitled to payments, because those communications were not made in connection with
“matter of public concern”); see Crossroads Cattle Co. v. AGEX Trading, LLC, 607 S.W.3d 98,
103 (Tex. App.—Austin 2020, no pet.) (following Creative Oil & Gas and holding that
communications “necessarily involved” in cattle sale that related to alleged tortious interference
with contract and conspiracy to commit breach of fiduciary duty did not have relevance to
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wider audience beyond parties to transaction and, thus, that TCPA did not apply). As the
supreme court further elaborated: “Given the ‘in the marketplace’ modifier, the TCPA’s
reference to ‘a good, product, or service’ does not swallow up every contract dispute arising
from a communication about the contract.” Creative Oil & Gas, 591 S.W.3d at 134 (referring to
former Tex. Civ. Prac. & Rem. Code § 27.001(7)(E)).
In light of this precedent, we cannot reasonably conclude that the challenged
communications appellants made to each other, to the prior landlords, or to Mama Fu’s had any
relevance to a “public audience of potential buyers and sellers” beyond the parties to the
particular private transactions at issue (i.e., the sale of the Shopping Center and negotiation,
execution, and performance of the lease). See Creative Oil and Gas, 591 S.W.3d at 134–35
(“The words ‘good, product, or service in the marketplace,’ however, do not paradoxically
enlarge the concept of ‘matters of public concern’ to include matters of purely private concern.”).
Furthermore, as in Creative Oil and Gas and Crossroads Cattle, the record here is devoid of
allegations or evidence that the dispute arising from appellants’ alleged communication to
third party Agu Ramen—asking it to fill out a rental application, which allegedly constituted a
breach of the exclusivity provision—had “any relevance to the broader marketplace or otherwise
could be reasonably characterized as involving public concerns.” Id. at 136 (“[T]he alleged
communications were made to two private [third] parties concerning modest production at a
single well. These communications, with a limited business audience concerning a private
contract dispute, do not relate to a matter of public concern under the TCPA.”); see Crossroads
Cattle, 607 S.W.3d at 103 (concluding that defendant’s communications with third party that
allegedly tortiously interfered with contract between plaintiff and third party were not covered by
TCPA because they had no relevance to wider audience of potential buyers and sellers beyond
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particular transaction at issue). Rather, the alleged Agu Ramen communication and dispute
arising therefrom “affect[] only the fortunes of the private parties involved and [are] simply not a
‘matter of public concern’ under any tenable understanding of those words.” Creative Oil &
Gas, 591 S.W.3d at 137. Accordingly, we conclude that Mama Fu’s claims are not based on,
related to, or in response to appellants’ exercise of their rights of free speech as defined in the
TCPA and that the Act does not apply on that basis. See Tex. Civ. Prac. & Rem. Code
§ 27.001(7)(E).
Exercise of the right of association
Appellants secondly contend that Mama Fu’s claims are related to
communications amongst themselves, with the former landlords, or with Agu Ramen—parties
with whom appellants had “joined to collectively pursue or promote common interests.”
See Tex. Civ. Prac. & Rem. Code § 27.001. The “common interests” appellants identified in
their TCPA motion are the (1) “negotiating, executing, and upholding” of the lease, and the
(2) operation of the H Mart store. However, as this Court recently held in Crossroads Cattle,
it is not sufficient for a TCPA movant to merely identify the so-called “common” interest of
consummating a particular transaction in the absence of a specific common interest beyond that
transaction. See 607 S.W.3d at 105.
To determine whether any of the alleged communications were among individuals
who had joined together to collectively pursue or promote the asserted common interests, we
must individually consider the particular communications at issue5:
5
We exclude from our consideration alleged communications that occurred among
appellants and Mama Fu’s, as appellants have not contended that they had joined together with
Mama Fu’s to collectively pursue or promote anything, much less “common interests.”
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1. The prior landlords’ and appellants’ execution of an agreement to sell the
Shopping Center;
2. The prior landlords’ and appellants’ communications necessarily involved
in allegedly conspiring to fraudulently conceal the pending sale of the
Shopping Center; and
3. Appellants’ request of Agu Ramen to complete a lease application for
Market Eatery space.
As to the first and second categories of communications, we find no evidence or
allegation in the record that the prior landlords and appellants had joined together to pursue or
promote either asserted common interest—that is, the negotiation, execution, or enforcement of
the lease or the operation of the H Mart store. Moreover, appellants have not demonstrated that
they shared any specific common interest with the prior landlords other than mere consummation
of the sales transaction. As we held in Crossroads Cattle, the mere conducting of business
together as buyer and seller is not sufficient on its own to meet the statutory definition of
exercising the right of association. See 607 S.W.3d at 105. We thus conclude that appellants
have not met their burden to demonstrate that the TCPA applies based on the first and second
categories of alleged communications listed above.
We reach the same conclusion as to the third alleged communication because
appellants and Agu Ramen cannot reasonably be considered, on this record, to have been
collectively pursuing or promoting any common interest apart from potentially establishing a
landlord-tenant relationship, which is analogous to conducting business as mere buyer and seller,
which we have previously held is insufficient, without more, to constitute “joining together” to
“collectively pursue or promote a common interest” under the TCPA. See Crossroads Cattle,
607 S.W.3d at 105. Appellants have not contended, and Mama Fu’s has not pleaded, that
Agu Ramen had anything to do with the lease at issue or with operation of the H Mart store.
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However, even if Agu Ramen had been involved in either of those ventures, we cannot on this
record glean the respective individual interests of Agu Ramen and appellants in potentially
consummating the landlord-tenant relationship or, therefore, whether the interests were the same,
and we must view the pleadings in Mama Fu’s favor. See id. at 102, 105. We thus conclude that
appellants have not met their burden to demonstrate that the TCPA applies based on the third
communication listed above.
Having concluded that none of Mama Fu’s claims is based on, related to, or in
response to appellants’ alleged exercise of the right of association as defined in the TCPA, we
hold that the Act does not apply on that basis. Also, because appellants did not meet their initial
burden to demonstrate that the TCPA applies to the claims at issue, we need not address their
other arguments about whether the commercial-speech exemption applies, whether the trial court
erred in overruling their evidentiary objections, whether Mama Fu’s met its prima facie burden
as to each of its claims, or whether the TCPA motion was untimely as to certain claims. See Tex.
R. App. P. 47.1, 47.4.
Award of attorney’s fees
In their second issue, appellants contend that the trial court abused its discretion in
awarding Mama Fu’s its attorney’s fees and costs. See Tex. Civ. Prac. & Rem. Code § 27.009(b)
(“If the court finds that a motion to dismiss filed under this chapter is frivolous or solely intended
to delay, the court may award court costs and reasonable attorney’s fees to the responding
party.”); Sullivan v. Texas Ethics Comm’n, 551 S.W.3d 848, 857–58 (Tex. App.—Austin 2018,
pet. denied) (“A party seeking attorney’s fees and costs bears the burden to put forth evidence
regarding its right to the award,” and “we review a trial court’s decision to award attorney’s
12
fees for an abuse of discretion.”). Although the trial court did not make express findings that
appellants’ motion was frivolous or solely intended to delay, we review the evidence upon which
Mama Fu’s relied to determine whether it is sufficient to support an implied finding under either
prong. See Sullivan, 551 S.W.3d at 857–58 (reviewing legal sufficiency of evidence to support
finding that motion was solely intended to delay and reviewing de novo whether motion was
frivolous); Daimler-Benz Aktiengesellschaft v. Olson, 21 S.W.3d 707, 715 (Tex. App.—Austin
2000, pet. dism’d w.o.j.) (noting that when trial court does not make express finding, all fact
findings necessary to support judgment are implied, and appellate court must uphold implied
finding if sufficient evidence supports it).
Although we have determined that the TCPA does not apply to the claims at
issue, we cannot conclude that appellants’ motion was frivolous because, when they filed their
motion, appellants did not have the benefit of Creative Oil and Gas and Crossroads Cattle,
which, as discussed above, have effectively closed the door on the arguments appellants made in
their TCPA motion. See Sullivan, 551 S.W.3d at 857–58 (concluding that trial court abused
discretion in finding that TCPA motion was frivolous because appellant’s arguments did not lack
legal or factual basis); see also Keane Frac, LP v. SP Silica Sales, LLC, 608 S.W.3d 416, 433
(Tex. App.—Houston [1st Dist.] 2020, no pet.) (reversing fees award based on trial court’s
frivolity finding because “there was at least a colorable basis in law and fact” for TCPA motion
due to “unclear state of the law at the time” appellant filed motion because supreme court had
not yet decided Creative Oil & Gas). Therefore, to the extent that the trial court awarded fees
and costs on the basis of a finding that appellants’ motion was frivolous, we conclude that the
trial court abused its discretion. See Sullivan, 551 S.W.3d at 857.
13
As to whether Mama Fu’s met its burden to put forth legally sufficient evidence
to support a finding that the motion was solely intended to delay, we conclude that it did not.
See id. (concluding that evidence was legally insufficient to support finding that delay was sole
reason for filing TCPA motion). In requesting an award of fees in its response to appellants’
TCPA motion, Mama Fu’s addressed merely the frivolity prong and only summarily so: “As
demonstrated above [in argument as to why TCPA did not apply], Defendants’ motion is without
merit.” On appeal, Mama Fu’s supports the trial court’s implied delay finding by asserting that
appellants “waited approximately nine months and conducted extensive discovery” before filing
their motion. While nine months had elapsed between when Mama Fu’s filed its original petition
and when appellants filed their TCPA motion, the motion was filed within sixty days of the filing
of Mama Fu’s second amended (live) petition, making it an appropriate and timely vehicle to
challenge the newly pleaded claims. See Tex. Civ. Prac. & Rem. Code § 27.003(b) (requiring
TCPA motion to be filed within sixty days of service of legal action); Jordan v. Hall,
510 S.W.3d 194, 198 (Tex. App.—Houston [1st Dist.] 2016, no pet.) (noting that amended
petition asserting new claims based upon new factual allegations may reset TCPA deadline as to
new claims). While Mama Fu’s challenged the timeliness of the motion by contending that some
of the claims it asserted in its second amended petition were not new, it concedes that some of its
claims were new. Furthermore, we cannot reasonably conclude that appellants’ conducting of
discovery in the nine-month period before Mama Fu’s amended its petition to add new claims—
without more—demonstrates that their subsequent filing of a TCPA motion to dismiss the newly
added claims was motivated solely by delay. Accordingly, we conclude that the trial court
abused its discretion in impliedly finding that appellants’ motion was frivolous or solely intended
to delay and awarding Mama Fu’s its attorney’s fees and costs.
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CONCLUSION
We reverse the portion of the trial court’s order awarding Mama Fu’s its
attorney’s fees and costs and render judgment that Mama Fu’s take nothing. We otherwise
affirm the trial court’s order.
__________________________________________
Thomas J. Baker, Justice
Before Chief Justice Rose, Justices Baker and Kelly
Affirmed in Part; Reversed and Rendered in Part
Filed: December 2, 2020
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