Baylor Scott & White v. Project Rose MSO, LLC, Touchdown Interception, LLC, Individually and Derivatively on Behalf of 62 Roses, LLC

NO. 12-20-00246-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
BAYLOR SCOTT & WHITE, § APPEAL FROM THE 7TH
APPELLANT
V.
PROJECT ROSE MSO, LLC, § JUDICIAL DISTRICT COURT
TOUCHDOWN INTERCEPTION, LLC,
INDIVIDUALLY AND
DERIVATIVELY ON BEHALF OF 62
ROSES, LLC,
APPELLEES § SMITH COUNTY, TEXAS
OPINION
Baylor Scott & White (BSW) appeals the trial court’s denial of its Texas Citizens
Participation Act (TCPA) motion to dismiss the counterclaim against it filed by Project Rose
MSO, LLC; Touchdown Interception, LLC, Individually and Derivatively on Behalf of 62
Roses, LLC (collectively “Rose” unless otherwise indicated). We affirm in part and reverse and
remand in part.
BACKGROUND 1
In 2015, Texas Spine and Joint Hospital began discussions with former National Football
League (NFL) players Earl Campbell and Gary Baxter about a business venture establishing a
cutting-edge sports science and medical facility at the Spine and Joint Hospital facility in Tyler,
Texas. These discussions continued throughout 2015 and early 2016, leading Campbell and
Baxter to form several new entities, including Project Rose and Touchdown Interception.
1
The recitation of the facts in this opinion is based on the pleadings and evidence as they have been
developed at this early stage of the litigation. We recognize that the parties have not yet conducted discovery.
1
Touchdown Interception and Texas Spine and Joint executed a Company Agreement to form 62
Roses to develop and operate the facility.
The parties entered several contracts in 2017 and 2018, including a Lease Agreement, a
License Agreement, and a Consultant Agreement. Under the Consulting Agreement, Project
Rose was to provide consulting services to Texas Spine and Joint related to the facility’s
marketing, construction, and operation. Due to the high-profile nature of the parties and the
facility, the venture generated significant public interest from the community and the press.
Rose alleges that it was not compensated for its efforts as promised under the agreements.
Rather, according to it, Texas Spine and Joint strung Rose along and encouraged its owners to
continue their efforts to market the facility and provide the services they agreed upon. Rose
alleges that Texas Spine and Joint represented to it that compensation would be forthcoming
after recouping its capital expenditures in developing it, but that it never came.
Shortly prior to the scheduled opening, Baxter and Campbell noticed that the facility’s
logo changed to include Baylor Scott & White in its title. After further investigation, Rose
alleges that it learned that Texas Spine and Joint sold a controlling portion of its interest in the
venture to a Baylor Scott & White entity. Rose alleges that BSW is a controlled affiliate of this
entity that took part in the purchase, and that the sale violates Texas Spine and Joint’s
agreements with Rose.
Rose contends that the facility opened and became a successful venture, but Texas Spine
and Joint repudiated their agreements. Rose alleges that Texas Spine and Joint and BSW, along
with the other third-party defendants, engaged in a fraudulent scheme and conspired to profit
from Rose’s efforts in bringing the facility to fruition, without ever providing any compensation
to it.
According to BSW, Texas Spine and Joint received little assistance from Rose in building
the facility, and because it had little to show for its investments, it gave notice of termination of
the License Agreement, the Consultant Agreement, and the Lease Agreement in August 2019. In
response, Project Rose sent invoices to Texas Spine and Joint for hourly consulting work totaling
$4,319,370. Texas Spine and Joint disputed the validity of the invoices, and according to it,
Baxter threatened to hold a press conference announcing litigation against it.
2
Accordingly, Texas Spine and Joint preemptively filed suit against Rose, including
claims for breach of the Consultant Agreement, a declaratory judgment that it had not breached
the Consultant Agreement, and a request to wind up 62 Roses’ business.
Rose filed a counterclaim against Texas Spine and Joint and added third-party claims
against several third-party defendants, including BSW (we refer to this claim, including the
third-party claim against BSW, as a “counterclaim” for ease of reference). Specifically, Rose’s
counterclaim included the following causes of action against BSW: (1) fraudulent inducement
and fraud; (2) tortious interference with existing contract; (3) theft of trade secrets and
intellectual property under the Texas Theft Liability Act (TTLA) and Texas Uniform Trade
Secrets Act (TUTSA); (4) unfair competition; (5) common-law misappropriation; (6) promissory
estoppel/detrimental reliance; (7) quantum meruit; (8) unjust enrichment; (9) money had and
received; (10) civil conspiracy; (11) aiding and abetting and knowingly participating in Texas
Spine and Joint’s alleged breaches of fiduciary duties; and (12) a declaratory judgment that the
2017 sale of ownership in the facility is void. 2
BSW answered the counterclaim with a general denial and also asserted that it was not a
proper party to the suit. BSW moved to dismiss Rose’s counterclaim under the TCPA. The trial
court denied the TCPA motion to dismiss. Rose amended its petition to join other third-party
defendants as parties to the dispute, who similarly filed motions to dismiss under the TCPA. The
trial court denied a request for discovery and overruled BSW’s TCPA motion. BSW filed this
interlocutory appeal challenging the trial court’s denial of its motion. 3
TCPA 4
In BSW’s first issue, it contends that the trial court erred in denying its TCPA motion to
dismiss Rose’s counterclaim because (1) its claims are based on BSW’s exercise of its rights of
2
In addition to these causes of action, Rose also pleaded other causes of action against Texas Spine and
Joint that are not part of this interlocutory appeal and are unaffected by our opinion.
3
See TEX. CIV. PRAC. & REM. CODE ANN. § 27.008 (West 2020) (authorizing expedited appeal). The
parties in the underlying suit await our disposition of this appeal before moving forward on their companion TCPA
motions filed by the other third-party defendants after the trial court overruled BSW’s motion.
4
The Texas Legislature recently amended the TCPA. See Act of May 17, 2019, 86th Leg., R.S., ch. 378,
2019 Tex. Gen. Laws 684. These revisions apply to actions filed on or after September 1, 2019. Id. §§ 11–12, 2019
Tex. Gen. Laws at 687. The underlying lawsuit was filed on February 24, 2020. Rose joined BSW as a third-party
defendant and filed its counterclaim on April 17, 2020. Therefore, as the parties agree, the current revised version of
the TCPA controls. See id.
3
free speech and association and that no exemption applies, 5 thereby implicating the TCPA; (2)
Rose failed to establish by clear and specific evidence a prima facie case of each essential
element of its claims against BSW; and (3) in any event, BSW established that it is entitled to
judgment as a matter of law because Rose sued the wrong party. In its second issue, BSW
contends that the trial court erred by failing to sustain its objections to Rose’s evidence.
Standard of Review
We consider de novo the legal question of whether the movant has established by a
preponderance of the evidence that the challenged legal action is covered by the TCPA.
MediaOne, L.L.C. v. Henderson, 592 S.W.3d 933, 939 (Tex. App.—Tyler 2019, pet. denied)
(citing Serafine v. Blunt, 466 S.W.3d 352, 357 (Tex. App.—Austin 2015, no pet.)). We also
review de novo a trial court’s determination of whether a nonmovant has presented clear and
specific evidence establishing a prima facie case of each essential element of the challenged
claims. Id. Similarly, we review questions of statutory construction de novo. Id. (citing
Molinet v. Kimbrell, 356 S.W.3d 407, 411 (Tex. 2011)). We review the pleadings and the
evidence in the light most favorable to the nonmovant. Id. (citing Dolcefino v. Cypress Creek
EMS, 540 S.W.3d 194, 199 (Tex. App.—Houston [1st Dist.] 2017, no pet.)).
General TCPA Framework
The stated purpose of the TCPA 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 ANN. § 27.002
(West 2020).
To accomplish this objective, the TCPA provides a three-step process for the dismissal of
a “legal action” to which it applies. Montelongo v. Abrea, 622 S.W.3d 290, 295–96 (Tex. 2021)
(citing Castleman v. Internet Money Ltd., 546 S.W.3d 684, 686 (Tex. 2018) (per curiam)).
First, the movant must demonstrate that the “legal action” is “based on or is in response to” its
exercise of the right of speech, petition, or association. TEX. CIV. PRAC. & REM. CODE ANN.
§§ 27.003(a) (West 2020), 27.005(b) (West Supp. 2020). Second, if the movant meets that
burden, the nonmovant may avoid dismissal by establishing “by clear and specific evidence a
5
BSW concedes that Rose’s common law fraud cause of action is exempt from the TCPA. See TEX. CIV.
PRAC. & REM. CODE ANN. § 27.010(a)(12). BSW expressly challenges the applicability of any other exemption.
4
prima facie case for each essential element of the claim in question.” Id. § 27.005(c). Finally, if
the nonmovant satisfies that burden, the court still must dismiss the “legal action” if the movant
“establishes an affirmative defense or other grounds on which the moving party is entitled to
judgment as a matter of law.” Id. § 27.005(d).
Intertwined with and overlying this multi-step dismissal process is the TCPA provision
exempting certain actions from its application. 6 See id. § 27.010 (West 2020); Morrison v.
Profanchik, 578 S.W.3d 676, 680 (Tex. App.—Austin 2019, no pet.). When invoked, the trial
court must consider an exemption’s applicability after and in the context of the movant having
met its initial burden under the first step of the dismissal process. See Castleman, 546 S.W.3d at
688; Morrison, 578 S.W.3d at 680.
THE TCPA’S APPLICABILITY
BSW contends that the TCPA applies to Rose’s counterclaim, because it is based on or in
response to BSW’s exercise of the right of free speech, or alternatively, its right of association.
Governing Law - Exercise of the Right of Free Speech
In relevant part, a “legal action” means a lawsuit, cause of action, petition, complaint,
cross-claim, or counterclaim or any other judicial pleading or filing that requests legal,
declaratory, or equitable relief. TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(6) (West 2020).
“Based on or in response to” is not defined in the statutory scheme. Prior to the 2019
amendments, the statute provided that a TCPA motion to dismiss could be predicated on a legal
action “based on, related to, or in response to a party’s exercise of the right of free speech . . . .”
See Act of June 17, 2011, 82nd Leg., R.S., ch. 341, 2011 Tex. Sess. Law. Serv. 960 (amended
2019) (current version at TEX. CIV. PRAC. & REM. CODE §§ 27.003(a), 27.005(b)). It is unclear
how the removal of the “relates to” language affects this nexus requirement. See Mark C.
Walker, The Essential Guide to the Texas Anti-SLAPP Law, the Texas Defamation Mitigation
Act, and Rule 91a, 91 THE ADVOC. (TEXAS) 280, 297-99 (2020) (discussing evolution of TCPA,
including 2019 amendments and issues raised thereby).
6
We note that although Texas courts have described the TCPA as a three-step process, it may actually be
now better described as a four-step process: (1) Does the movant demonstrate that the TCPA applies to the legal
action; (2) Does the nonmovant show that any statutory exemptions remove some or all of its claims from the
TCPA’s scope; (3) Does the nonmovant meet its burden to establish a prima facie case on non-exempted causes of
action; and (4) Does the movant establish a defense or other ground entitling it to judgment as a matter of law? This
has become more apparent as the Legislature greatly increased the number of exemptions in its 2019 amendments to
the TCPA.
5
Texas courts have used the plain and ordinary meaning of such words and phrases
derived from relevant dictionary sources in the past. For example, the Texas Supreme Court
recently described the definition for “related to” in the TCPA in part as defined by Black’s Law
Dictionary. See In re City of Galveston, 622 S.W.3d 851, 858 n.28 (Tex. 2021). Similarly,
another court recently used dictionary definitions of the word “common” in the TCPA “exercise
of the right of association” context. See Kawcak v. Antero Res. Corp., 582 S.W.3d 566, 575-78
(Tex. App.—Fort Worth 2019, pet. denied).
“Based on” in Black’s Law Dictionary is defined only in the copyright context. See
Based on, BLACK’S LAW DICTIONARY (10th ed. 2009). However, the verb “base” is defined in
relevant part as “to make, form, or serve as a foundation for . . . [;] to establish (an agreement,
conclusion, etc.); to place on a foundation; to ground . . . .” See Base, BLACK’S LAW
DICTIONARY (10th ed. 2009). Similarly, “base” is defined in another dictionary as “[t]he
fundamental principle or underlying concept of a system or theory; basis; a fundamental
ingredient; chief constituent . . . [;] the fact, observation, or premise from which a reasoning
process is begun . . . .” See Base, THE AM. HERITAGE COLL. DICTIONARY (2d ed. 1982).
Whatever the exact contours of the phrase “based on” means after the Legislature’s
amendment removing the phrase “related to,” Texas courts, including this Court, have stated that
the TCPA’s required nexus is satisfied at minimum for legal actions that “are factually
predicated on” allegations of conduct that fall within one of the TCPA’s protected rights. See,
e.g., Dyer v. Medoc Health Servs., LLC, 573 S.W.3d 418, 429 (Tex. App.—Dallas 2019, pet.
denied); Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 879 (Tex. App.—Austin 2018, pet.
denied); Morgan v. Clements Fluids S. Tex., LTD., 589 S.W.3d 177, 185 (Tex. App.—Tyler
2018, no pet.). The level of nexus required “includes no qualification as to its limits,” and is
very broad. See Coleman, 512 S.W.3d at 901; see also Grant, 556 S.W.3d at 879-80 (citing
Cavin v. Abbott, 545 S.W.3d 47, 70 (Tex. App.—Austin 2017, no pet.)). A plaintiff’s claims are
“in response to” a protected activity when they react to or are asserted subsequently to the
communication. See Grant, 556 S.W.3d at 880.
Moreover, overlaid on top of this nexus requirement, at least in the exercise of free
speech context, is the definition that the “exercise of the right of free speech” means “a
communication made in connection with a matter of public concern.” TEX. CIV. PRAC. & REM.
CODE ANN. § 27.001(3) (emphasis added). Texas courts have interpreted this phrase to mean
6
that the statute requires only that the communication have a “tangential relationship” to such a
matter, and the connection need not be more than “tenuous or remote.” Coleman, 512 S.W.3d at
900-01. Importantly, the legislature left this definition and ensuing caselaw undisturbed in the
2019 amendments to the TCPA.
“Communication” includes the making or submitting of a statement or document in any
form or medium, including oral, visual, written, audiovisual, or electronic. TEX. CIV. PRAC. &
REM. CODE ANN. § 27.001(1). Private communications made in connection with a matter of
public concern fall within the TCPA’s definition of the exercise of the right of free speech.
Lippincott v. Whisenhunt, 462 S.W.3d 507, 509 (Tex. 2015) (per curiam). Further, the TCPA
does not require that the communications specifically mention a matter of public concern or have
more than a “tangential relationship” to such a matter. Coleman, 512 S.W.3d at 900. Rather, the
TCPA applies so long as the movant’s statements are “in connection with” any of the matters of
public concern listed in the statute. See id.
The 2019 legislative amendments modified the definition of “matter of public concern” to
mean a statement or activity regarding: (A) a public official, public figure, or other person who
has drawn substantial public attention due to the person’s official acts, fame, notoriety, or
celebrity; (B) a matter of political, social, or other interest to the community; or (C) a subject of
concern to the public. TEX. CIV. & PRAC. CODE ANN. § 27.001(7).
In determining whether the TCPA is applicable, we conduct “a holistic review of the
pleadings.” Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 897 (Tex. 2018). Our
analysis is not constrained by the “precise legal arguments or record references” made by the
moving party regarding the TCPA’s applicability. Id. Rather, our focus is “on the pleadings and
on whether, as a matter of law, they are based on or [in response to] to a matter of public
concern.” Id. In the final analysis then, “[w]hen it is clear from the [nonmovant’s] pleadings
that the action is covered by the [TCPA], the [movant] need show no more.” Id. (quoting Hersh
v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017)); see also Coleman, 512 S.W.3d at 901–02
(concluding as a matter of law that private statements by movants concerning plaintiff’s alleged
failure to gauge a storage tank related to a matter of public concern); Lippincott, 462 S.W.3d at
510 (concluding as a matter of law that provision of medical services by a health care
professional was a matter of public concern).
7
The TCPA Applies to Rose’s Counterclaim as an Exercise of the Right of Free Speech
BSW asserts that the TCPA applies to Rose’s counterclaim, including all causes of action
as part of that counterclaim, because they are based on or in response to its exercise of the right
to free speech and association. The pleadings, especially the plaintiff’s allegations, are the best
evidence to determine the nature of a legal action and the applicability of the TCPA. See Hersh,
526 S.W.3d at 467.
The gravamen of Rose’s counterclaim is that Texas Spine and Joint, along with all the
other defendants, including BSW, acted in a concerted scheme to take advantage of Rose’s
owners’ notoriety, celebrity, professional contacts and relationships, as well as their expertise in
what would be attractive to a prospective patient, without having the reciprocal obligation to
compensate them for their efforts. The communications at issue forming the basis of the suit
have at least a tenuous, remote, or tangential relationship to a matter of public concern.
There is little doubt that the legislature amended the TCPA, at least in part, to curtail the
overly broad language and applicability of its framework. Indeed, Rose points to a recent Texas
Supreme Court case holding that “[a] private contract dispute affecting only the fortunes of the
private parties involved is simply not a ‘matter of public concern’ under any tenable
understanding of those words.” Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, 591
S.W.3d 127, 137 (Tex. 2019). Rose argues that the dispute here involves only private contract
and tort claims arising out of its business dealings, and that as it involves only private parties, the
dispute is not a matter of public concern, and the TCPA does not apply to its counterclaim.
While we are bound by this holding, we do not agree that it applies under the particular
facts of this case. In making its holding, the Court stated as follows:
The record is devoid of allegations or evidence that the dispute had any relevance to the broader
marketplace or otherwise could reasonably be characterized as involving public concerns. On the
contrary, the alleged communications were made to two private parties concerning modest
production at a single [oil and gas] 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.
Id. at 136 (footnote omitted). The Court went on to explain that “[w]e have previously held that
private communications are sometimes covered by the TCPA.” Id. (citing Coleman, 512 S.W.3d
895; Lippincott, 462 S.W.3d 507). The Court stated, “These prior cases involved environmental,
health, or safety concerns that had public relevance beyond the pecuniary interests of the private
8
parties involved,” and that those cases involved matters of public concern expressly defined in
the statute to include issues related to “health or safety,” and “environmental, economic, or
community well-being,” concerns not implicated in Creative Oil. See id. (citing Coleman, 512
S.W.3d at 898, 901 (concluding that private statements by movants concerning plaintiff’s alleged
failure to gauge a storage tank related to a matter of public concern due to “serious safety and
environmental risks”); Lippincott, 462 S.W.3d at 509–10 (concluding that alleged improper
provision of medical services by a health care professional are matters of public concern)).
Rather than entirely foreclosing private business disputes from the TCPA’s scope, the
Texas Supreme Court left open the possibility that such cases may still implicate the TCPA as a
matter of public concern if its subject matter otherwise falls within the TCPA’s definitional
scope or when it has public relevance beyond the purely private interests of the parties involved
in the dispute. 7
Rose also relies on a case transferred from this Court to the Texarkana Court of Appeals. 8
See Martin v. Hutchison, No. 06-19-00093-CV, 2020 WL 6788243, at *9-10 (Tex. App.—
Texarkana Nov. 19, 2020, pet. denied) (mem. op.). Following Creative Oil, the Texarkana Court
held in Martin that a dispute concerning the distribution of proceeds from the transfer of an asset
among the shareholders in a closely-held, ten shareholder corporation with no publicly traded
stock, was a purely private business dispute with no potential relevance or impact on the wider
community or public-at-large. See id. As such, the court concluded that the TCPA did not
apply. See id. We agree that Martin is similar to Creative Oil and was the correct holding. 9 But
again, we conclude that this case is distinguishable.
The Texas Supreme Court also stated in Creative Oil that “[i]t is not the Court’s task to
choose between competing policies addressed by legislative drafting[,]” and that “[w]e apply the
7
This is in contrast to the amendments to the “right of association” prong, which Texas courts have
generally interpreted to require the “common interest” to be a common interest with the public-at-large, and that the
right of association does not encompass or protect activity of two tortfeasors conspiring to act tortiously for their
own selfish benefit. See, e.g., Gaskamp v. WSP USA, Inc., 596 S.W.3d 457, 476 (Tex. App.—Houston [1st Dist.]
2020, pet. dism’d) (op. on reh’g en banc); Kawcak v. Antero Res. Corp., 582 S.W.3d 566, 588 (Tex. App.—Fort
Worth 2019, pet. denied).
8
Rose also relies on other cases decided before Creative Oil. See, e.g., Dyer v. Medoc Health Servs., LLC,
573 S.W.3d 418, 428 (Tex. App.—Dallas 2019, pet. denied). Since the Texas Supreme Court provides more recent
analysis in Creative Oil, we instead focus on it and subsequent cases interpreting it.
9
Martin also discusses other pre- and post-Creative Oil cases relied upon by Rose that are similarly
distinguishable from the instant case.
9
mandates in the statute as written.” Creative Oil, 591 S.W.3d at 133. Rose’s counterclaim falls
within the TCPA’s exercise of free speech prong because it is based on or in response to
communications made in connection with a matter of public concern as that definition has been
modified by the Legislature’s recent amendments.
In contrast to the Creative Oil line of cases, this case involves prominent celebrities. See
TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(7) (including within the TCPA’s scope statements
or activities regarding public figures or other persons who have drawn substantial public
attention due to their official acts, fame, notoriety, or celebrity). The formation of the
relationship between the parties was based in part on their celebrity status and the attention that
fact would bring to their business venture. This business venture did in fact lead to significant
interest in the community, as it was covered by several media outlets, and it pertains to a world-
class sports medicine facility. Their involvement in the project was specifically designed to be a
matter of public concern, because the parties, by design, utilized the media and press coverage to
foster public interest in the project.
In fact, the media followed the progression of the project with substantial press coverage.
For example, one article discussed a VIP tour and reception at the facility including the
involvement of other NFL celebrities such as Mike Singletary and Robert Brazile, along with
Butch Myers and Cash Myers, who are prominent rodeo competitors. This article discussed the
NFL’s involvement in the project, and that it would attract many former and current NFL players
and other elite athletes. The news article, along with others BSW attached to its motion, further
discussed that the facility features the latest innovations in modern fitness and rehabilitation
equipment, and will have a significant role as a biomedical research and treatment facility on a
wide array of sports injuries, from muscle tears to concussions and other topics of concern to the
public. The articles also focused on the facility’s creation of jobs, along with the broader
economic impact it could have on the local community by attracting retired and current athletes
due to their notoriety, which would in turn attract the public-at-large.
Rose’s counterclaim is in response to the private communications and the ensuing alleged
agreements between Texas Spine and Joint and BSW, along with the other third-party
defendants, to deprive Rose, which is operated by notable public figures, of the fruits of their
labor and compensation by committing various acts of fraud, interference with their relationship
with Texas Spine and Joint, and misappropriation of trade secrets, along with various remedies to
10
compensate them for this wrongdoing. These communications that led to agreements, which are
communications in and of themselves, were made regarding Rose’s owners, who are public
figures. Therefore, we reject Rose’s argument that its counterclaim is in response to BSW’s
conduct in financing the acquisition of the facility rather than its communications and ensuing
agreements to deprive it of the expected benefits of the business venture.
Furthermore, the fallout by the repudiation of the venture by Texas Spine and Joint, based
on this alleged scheme involving agreements between it, BSW, and the other third-party
defendants, to acquire the facility without compensating Rose, is also a matter of public concern.
Texas Spine and Joint’s and BSW’s alleged agreements, which are communications, have
relevance to the public beyond the purely private business dispute. The communications have an
effect on whether the facility would ever come to fruition, and limit Rose’s involvement in the
project. In fact, after learning of the repudiation, Baxter allegedly threatened to go to the media
to force Texas Spine and Joint, BSW, and the other third-party defendants to cease their
allegedly tortious conduct and galvanize support for Rose. This further bolsters the connection
with the communications and the community’s interest in the venture and its dissolution.
Therefore, we hold that the TCPA applies to Rose’s counterclaim under these unique
circumstances. See, e.g., Montano v. Cronan, No. 09-20-00232-CV, 2021 WL 2963801, at *5
(Tex. App.—Beaumont July 15, 2021, no pet. h.) (mem. op.) (applying 2019 amendments and
holding that TCPA applied to plaintiff’s claim because retaliatory defamatory statements by
defendants were made in response to plaintiff’s allegations, which were not purely private
matters, but pertained to “a subject of general interest and of value and concern to the public”
because of involvement of rowing clubs, U.S.A. Rowing, and safety and welfare concerns).
Finally, we are unpersuaded by Rose’s argument that its owners’ status as public figures
has no bearing on the TCPA applicability determination. Obviously, the communication must be
“made in connection with the matter of public concern,” but the definition of “matter of public
concern” does not require that the statement or activity be regarding a public figure who is a
party. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(3), (7). Rather, it must be regarding a
public figure. See id. Rose’s owners’ status as public figures, along with the fact that Rose is a
party, provides the nexus linking the communications’ relevance to a matter of public concern.
In summary, under the unique circumstances of this case, even though the Legislature’s
amendments show an intent to limit the applicability of the TCPA, we must apply it as written.
11
It is apparent from the pleadings that the TCPA applies, and BSW need show no more. That is,
BSW demonstrated based on Rose’s pleadings that the communications had at least a tangential,
remote, or tenuous relationship to a matter regarding the owners of Rose, who are public figures
on a matter of public concern—namely the completion and operation of the world-class sports
medicine and research facility, which did in fact generate considerable public interest through
press and media coverage. The alleged private communications between Texas Spine and Joint
and BSW resulted in an agreement, which is in itself a communication, to acquire the facility that
became successful due to Rose’s owners’ notoriety. Rose’s suit is in response to those
communications. Thus, while these communications resulting in this dispute no doubt have an
effect on the private financial interests of the parties involved, it also had a wider impact on the
public-at-large as a matter of public importance. In other words, contrary to the Creative Oil line
of cases, Rose’s counterclaim is in response to BSW’s exercise of its right of speech on a matter
of public importance, which implicates the TCPA.
Because we have concluded that Rose’s counterclaim is based on or is in response to
BSW’s exercise of the right of free speech, we need not consider the argument that it separately
applies under the right of association ground. See TEX. R. APP. P. 47.1; Coleman, 512 S.W.3d at901–02 (“Because we hold that, on this record, the communications were made in the exercise of
the right of free speech under the TCPA, we need not reach [the issue of whether the TCPA
applies under the “right of association prong.]”).
We sustain the portion of BSW’s first issue contending that the trial court erroneously
concluded that the TCPA does not apply to Rose’s counterclaim.
TCPA EXEMPTIONS
Rose contends that the TCPA’s fraud and misappropriation of trade secrets and corporate
opportunities exemptions apply and absolve it of its duty to make a prima facie case on these and
related claims.
TCPA Exemption Standard of Review
The party asserting a TCPA exemption bears the burden of proving its applicability. See
Hieber v. Percheron Holdings, LLC, 591 S.W.3d 208, 211 (Tex. App.—Houston [14th Dist.]
2019, pet. denied). Just as determining the applicability of the TCPA, the applicability of an
12
exemption may be determined from the pleadings. 10 See Gaskamp v. WSP USA, Inc., 596
S.W.3d 457, 480 (Tex. App.—Houston [1st Dist.] 2020, pet. dism’d) (noting we may rely on
allegations in petition to satisfy exemption requirements); see also Hawkins v. Fox Corp.
Housing, LLC, 606 S.W.3d 41, 46 (Tex. App.—Houston [1st Dist.] 2020, no pet.) (same); see
also Hersh, 526 S.W.3d at 467. It would be incongruous to require the nonmovant to prove the
elements of these causes of action to show that the exemption applies in order to avoid making
the prima facie case of the claim’s elements to survive the TCPA motion to dismiss. See Round
Table Physicians Group, PLLC v. Kilgore, 607 S.W.3d 878, 883 (Tex. App.—Houston [14th
Dist.] 2020, pet. denied) (noting that application of exemption means nonmovant need not make
its prima facie case). We also review this evidence in the light most favorable to the nonmovant.
Hieber, 591 S.W.3d at 211.
If an action falls under a TCPA exemption, the TCPA does not apply and may not be
used to dismiss the action. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.010; Best v. Harper,
562 S.W.3d 1, 11 (Tex. 2018). Accordingly, application of an exemption means the nonmovant
need not make its prima facie case. See Round Table Physicians Group, 607 S.W.3d at 883; see
also Atlas Survival Shelters, LLC v. Scott, No. 12-20-00054-CV, 2020 WL 6788714, at *6 (Tex.
App.—Tyler Nov. 18, 2020, no pet.) (mem. op.).
Rose’s Common Law Fraud Claim Does Not Exempt Entire Counterclaim From TCPA
BSW conceded that Rose’s common law fraud claim is exempt from the TCPA. See
TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(a)(12). Rose argues that all of its causes of action
are part of its “counterclaim” as a single “legal action” under the TCPA, the definition of which
includes not only individual causes of action, but also its “counterclaim” and its entire “lawsuit”
as a whole. Accordingly, its argument continues, since BSW has conceded that Rose’s common
law fraud claim is exempt, the entire counterclaim is based on common law fraud, and that all of
its other causes of action are exempt. Recently, one of our sister courts rejected this argument,
and we agree. See KB Home Lone Star Inc. v. Gordon, No. 04-20-00345-CV, 2021 WL
1760318, at *5 (Tex. App.—San Antonio May 5, 2021, no pet. h.) (op.) (rejecting similar
10
As we discuss later in this opinion, the same is not true when the burden shifts to the nonmovant to prove
by clear and convincing evidence a prima facie case for each essential element of the claim in question. See Buzbee
v. Clear Channel Outdoor, LLC, 616 S.W.3d 14, 29 (Tex. App.—Houston [14th Dist.] 2020, no pet.).
13
argument that because DTPA exemption applied to DTPA claim that it exempted all other claims
due to broad definition of “legal action”).
As part of this argument, Rose also appears to contend that the factual bases for all of its
causes of action arise from the same scheme that gives rise to the fraud claim: Texas Spine and
Joint’s plan to seize ownership of the facility from Rose and to extract its services without
payment, and that BSW was a participant in that scheme. Accordingly, Rose argues, this
common nucleus of facts exempts its entire counterclaim. But the Texas Supreme Court recently
explained, “a cause of action consists not merely of the alleged facts, but also the elements those
facts must establish to entitle the claimant to relief.” Montelongo, 622 S.W.3d at 301. We do
not dismiss “a fact or facts” in the TCPA context. See id. While the TCPA “indisputably
requires the claimant to submit evidence of facts, the facts themselves are meaningless and
cannot prevent dismissal unless they sufficiently establish ‘each essential element of the claim.’”
Id.
Instead, as with our cause of action by cause of action analysis in evaluating claims for
dismissal under the TCPA, we must determine whether each individual cause of action falls
within an exemption. See KB Home Lone Star Inc., 2021 WL 1760318, at *5. This approach is
consistent with the legislature’s recent additions to its itemized laundry list of exemptions. That
is, the exemptions apply to: (1) a specified laundry list of different types of parties based on their
status in the underlying suit, (2) different categories of causes of action based on the nature of the
claim, or (3) some combination thereof. See generally TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.010. Given that any particular lawsuit may involve multiple parties redressing several
independent injuries through a multitude of different causes of action, this laundry list exemption
methodology demonstrates the legislature’s intent to examine each exemption on a cause of
action by cause of action basis within the context of the entire lawsuit that otherwise falls within
the TCPA. See id.; KB Home Lone Star Inc., 2021 WL 1760318, at *5.
Fraud Exemption
The TCPA does not apply to “a legal action based on a common law fraud claim.” TEX.
CIV. PRAC. & REM. CODE ANN. § 27.010(a)(12). The 2019 legislative amendment enacted this
exemption for the first time.
BSW admits that Rose’s common law fraud claim is exempt from the TCPA. Although
we have held that this concession does not automatically exempt Rose’s entire counterclaim,
14
other causes of action or claims for relief fall within this exemption. That is, the statutory fraud
exemption does not exempt only common law fraud claims. It is not so limited. Instead, it states
that the TCPA does not apply to a legal action based on a common law fraud claim. See id. We
presume that the Legislature worded it in this manner for a purpose, and we apply the plain
language of the words used in the statutory exemption. See Creative Oil, 591 S.W.3d at 133.
There are other legal actions—i.e. causes of action or claims for relief—alleged by Rose that are
based on, and require proof of, common law fraud. This means that, as pleaded by Rose, these
causes of action require proof of common law fraud as part of their elements, are “based on a
common law fraud claim,” and thus are exempt from the TCPA’s reach under the facts of this
case. Specifically, we hold that Rose’s causes of action for unjust enrichment, civil conspiracy,
and aiding and abetting a breach of fiduciary duty are based on common law fraud.
Unjust Enrichment
The Texas Supreme Court has suggested, although not definitively ruled, that unjust
enrichment is a recognized independent cause of action. See, e.g., Ritchie v. Rupe, 443 S.W.3d
856, 882 (Tex. 2014) (“[V]arious common-law causes of action already exist to address
misconduct by corporate directors and officers [such as] unjust enrichment . . . .”); Heldenfels
Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) (suggesting “recovery
under the theory of unjust enrichment” available as a cause of action). Texas intermediate
appellate courts are split regarding whether it is a separate cause of action. Compare Richardson
Hosp. Auth. v. Duru, 387 S.W.3d 109, 114 (Tex. App.—Dallas 2012, no pet.) (holding unjust
enrichment is not stand-alone cause of action, but is an implied contract, equitable measure of
damages that addresses failure to make restitution for benefits wrongfully received) with Eun
Bok Lee v. Ho Chang Lee, 411 S.W.3d 95, 111 (Tex. App.—Houston [1st Dist.] 2013, no pet.)
(holding unjust enrichment is independent cause of action). For TCPA purposes, however, an
unjust enrichment claim or remedy is a “legal action” because it is a “cause of action” or “other
judicial pleading or filing that requests . . . equitable relief.” See TEX. CIV. PRAC. & REM. CODE
ANN. § 27.001(6).
Unjust enrichment occurs when a person has wrongfully secured or passively received a
benefit which it would be unconscionable to retain. Tex. Integrated Conveyor Sys., Inc. v.
Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 367 (Tex. App.—Dallas 2009, pet.
denied). As a remedy based on quasi-contract principles, unjust enrichment is unavailable when
15
a valid, express contract governing the subject matter of the dispute exists. Fortune Prod. Co. v.
Conoco, Inc., 52 S.W.3d 671, 683–84 (Tex. 2000); Eun Bok Lee, 411 S.W.3d at 111–12.
A party may recover under an unjust-enrichment theory if one party has obtained a
benefit from another by fraud, duress, or the taking of unfair advantage. See HECI Expl. Co. v.
Neel, 982 S.W.2d 881, 891 (Tex. 1998); Heldenfels Bros, 832 S.W.2d at 41; Denco CS Corp. v.
Body Bar, LLC, 445 S.W.3d 863, 876–77 (Tex. App.—Texarkana 2014, no pet.).
Rose alleges that Campbell and Baxter provided substantial value, service, and benefits
by developing and marketing the facility. During the two years that followed BSW’s acquisition
of the facility, it did not reject these benefits. Rather, Rose contends that BSW schemed to
“leave it in the dark” about the nature of the interest that BSW had purchased, and about the
facility’s ownership. The agreements themselves—and, at minimum, Campbell’s and Baxter’s
continued work—gave BSW ample notice that Rose expected profit distributions and
compensation. Instead, Rose alleges that it received no compensation, the facility’s profits were
diverted through Texas Spine and Joint to BSW, and BSW must return these profits.
The underlying basis for Rose’s argument is that BSW acquired benefits from Rose’s
efforts by fraud. Therefore, as a claim or equitable remedy based on underlying proof of a
common law fraud claim, this claim or remedy falls within the TCPA fraud exemption, and Rose
need not make a prima facie case as to unjust enrichment. 11
Civil Conspiracy
To recover for civil conspiracy, a plaintiff must show “(1) a combination of two or more
persons; (2) the persons seek to accomplish an object or course of action; (3) the persons reach a
meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts are
taken in pursuance of the object or course of action; and (5) damages occur as a proximate
result.” First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 222 (Tex.
2017). “[A] defendant’s liability for conspiracy depends on participation in some underlying tort
for which the plaintiff seeks to hold at least one of the named defendants liable.” Tilton v.
Marshall, 925 S.W.2d 672, 681 (Tex. 1996). In other words, it is a derivative tort. Agar Corp.,
Inc. v. Electro Circuits Int’l, LLC, 580 S.W.3d 136, 142 (Tex. 2019).
11
To the extent this claim or remedy arises from Rose’s misappropriation of trade secrets, Texas Uniform
Trade Secrets Act, and/or unfair competition claim, it would separately fall within the misappropriation of trade
secrets TCPA exemption, as we discuss later in this opinion. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.010(a)(5)(A).
16
The underlying tort here is fraud. 12 Specifically, Rose alleges that BSW and Texas Spine
were members of a group that agreed to work toward and did in fact purport to seize ownership
of the facility from Rose and deny it the distributions and payments due under the agreements.
As part of this scheme, Rose contends that BSW paid more than $40 million to fund the purchase
of a controlling interest in Texas Spine and Joint, and thus, purportedly, the facility. Rose
suffered injury to the extent that BSW and Texas Spine and Joint’s conspiracy deprived them of
their interest in the facility, profit distributions, and compensation. Since the basis of this
derivative tort of conspiracy is fraud, it is likewise based on a common law fraud claim, and the
exemption applies to it.
Aiding or Abetting Breach of Fiduciary Duty
A third party who knowingly aids and assists in the breach of a fiduciary duty may also
be liable. See Sw. Tex. Pathology Associates, L.L.P. v. Roosth, 27 S.W.3d 204, 208 (Tex.
App.—San Antonio 2000, pet. dism’d w.o.j.) (citing Kinzbach Tool Co. v. Corbett–Wallace
Corp., 138 Tex. 565, 160 S.W.2d 509, 514 (1942)). To establish a claim for knowing
participation in a breach of fiduciary duty under Texas law, a plaintiff must assert: (1) the
existence of a fiduciary relationship; (2) that the third party knew of the fiduciary relationship;
and (3) that the third party was aware that it was participating in the breach of that fiduciary
relationship. See Meadows v. Hartford Life Ins. Co., 492 F.3d 634, 639 (5th Cir. 2007);
Straehla v. AL Glob. Services, LLC, 619 S.W.3d 795, 804 (Tex. App.—San Antonio 2020, pet.
denied). This claim is also a derivative tort. Straehla, 619 S.W.3d at 804.
Rose alleged that, as a member and manager of 62 Roses, Texas Spine owed the fiduciary
duties of care, loyalty, candor, and independence to Rose. See, e.g., Ritchie, 443 S.W.3d at 868-
69. Rose contends that (1) Texas Spine and Joint committed a tort when it intentionally withheld
notice that a transaction involving ownership of the facility had occurred; (2) BSW knew of the
relationship, knew that it was a tort, and both intended to and did assist Texas Spine and Joint in
completing it by participating in the transaction through its fraudulent conduct; and (3) the
transaction’s timing, BSW’s involvement, and the changes to Texas Spine’s logo and name
would allow a factfinder to conclude that BSW knowingly participated in Texas Spine and
12
Separately, BSW’s actions supporting Rose’s civil conspiracy claim could also fall within the TCPA’s
misappropriation of trade secrets exemption we discuss in the next section of this opinion. See TEX. CIV. PRAC. &
REM. CODE ANN. § 27.010(a)(5)(A); see also W. Fork Advisors, LLC v. SunGard Consulting Services, LLC, 437
S.W.3d 917, 920–21 (Tex. App.—Dallas 2014, pet. denied) (noting that misappropriation of trade secrets and unfair
competition are underlying torts that could possibly support claim for civil conspiracy).
17
Joint’s breaches of fiduciary duty. Similar to the civil conspiracy claim, this derivative tort is
based on the alleged fraudulent scheme. Accordingly, we hold that it falls within the fraud
exemption.
Conclusion
In summary, we hold that Rose’s legal actions for unjust enrichment, civil conspiracy,
and aiding and abetting breach of fiduciary duties are “legal action[s] based on a common law
fraud claim,” and accordingly are exempt from the TCPA. See TEX. CIV. PRAC. & REM. CODE
ANN. § 27.010(a)(12). Importantly, BSW’s concession that Rose’s common law fraud claim is
exempt supplies the underlying tortious conduct required to support these derivative torts, and
consequently, their exemption from the TCPA. 13 See id. Accordingly, Rose need make no prima
facie case as to these claims. See Round Table Physicians Group, 607 S.W.3d at 883; see also
Atlas Survival Shelters, 2020 WL 6788714, at *6.
Misappropriation of Trade Secrets TCPA Exemption
The TCPA also does not apply to “a legal action arising from an officer-director,
employee-employer, or independent contractor relationship that: [ ] seeks recovery for
misappropriation of trade secrets or corporate opportunities . . . .” TEX. CIV. PRAC. & REM. CODE
ANN. § 27.010(a)(5)(A). “Arising from” is not defined in the TCPA. The ordinary meaning of
“arise” is “to originate; to stem from.” See Arise, BLACK’S LAW DICTIONARY (10th ed. 2009);
see also Fazio v. Cypress/GR Houston I, L.P., 403 S.W.3d 390, 398 (Tex. App.—Houston [1st
Dist.] 2013, pet. denied). Other Texas courts have applied a similar meaning in the TCPA
context for other exemptions. See, e.g., Giri v. Estep, No. 03-17-00759-CV, 2018 WL 2074652,
at *4 (Tex. App.—Austin May 4, 2018, pet. denied) (mem. op.) (applying similar dictionary
definition of “arises out of” to TCPA commercial speech exemption); Robert B. James, DDS,
Inc. v. Elkins, 553 S.W.3d 596, 605-07 (Tex. App.—San Antonio 2018, pet. denied) (defining
“arising out of” as to TCPA insurance contract exemption).
Rose’s counterclaim includes causes of action for unfair competition/unfair competition
by misappropriation, also called “common law misappropriation,” and violations of the Texas
Uniform Trade Secrets Act (TUTSA) and Texas Theft Liability Act (TTLA). Rose contends that
13
In so holding, we do not intend to create a rule that these claims and remedies are per se based on a
common law fraud claim in every case. However, under the pleadings and underlying facts as they have been
developed at this juncture, these legal actions are based on a common law fraud claim.
18
these claims arose from ProjectRose’s independent contractor relationship with Texas Spine and
Joint, and consequently, these claims are exempt from the TCPA.
The Consultant Agreement, which was executed between Baylor Scott & White Texas
Spine and Joint Hospital (Client) and ProjectRose MSO, LLC (Consultant) recites as follows:
WHEREAS, Client has the need to obtain certain consulting services, particularly to provide
consulting activities such as equipment procurement, funding sources, marketing activities,
program structure for NFL athletics, etc., as well as assistance in sports science health and
wellness sleep consultants marketing in the East Texas region. Consultant represents and
warrants that it has expertise and proficiency in providing advice in this area, and the detail of
the services to be rendered is set forth on Exhibit A (collectively referred to herein as
“Services”);
WHEREAS, it is the desire of Client to engage the Services of Consultant to perform for Client
consulting services for assistance in sports science sleep consultants marketing in the East Texas
region, as an independent contractor and not as an employee.
....
6.01 Independent Contractor
(a) It is expressly acknowledged by the Parties hereto that Consultant is an “independent
contractor” and nothing in this Agreement is intended nor shall be construed to create an
employer/employee relationship, a partnership, a joint venture relationship, lease or
landlord/tenant relationship, or to allow the Client to exercise control or direction over the
manner or method by which Consultant performs the Services which are the subject matter of
this Agreement; provided, always, that the Services to be furnished hereunder by Consultant
shall be provided in a manner consistent with the standards governing such Services and the
provisions of this Agreement.
The attached Exhibit A described similar activities as described in the recital concerning
the types of services that Project Rose would provide. Rose contends that the services involve
trade secrets. BSW does not provide any evidence refuting this assertion.
BSW does not challenge the applicability of this exemption other than to argue that BSW
did not contract with Rose, and without such a relationship, the exemption does not apply.
Importantly, and contrary to BSW’s argument, this exemption applies to a legal action arising
from an independent contractor relationship; it is not necessary that the party against whom the
exemption applies be a party to the contract. So, even though Rose did not contract directly with
BSW, Rose’s legal action for these causes of action against BSW arose from ProjectRose’s
independent contractor relationship with Baylor Scott & White Texas Spine and Joint Hospital.
As with the TCPA fraud exemption, we must determine what claims asserted by Rose
“seek recovery for misappropriation of trade secrets or corporate opportunities.” Rose pleaded
19
causes of action for “unfair competition” for business conduct contrary to honest practice in
industrial or commercial matters. As part of this action, Rose pleaded the tort of unfair
competition by misappropriation, along with a misappropriation of trade secret claim under
TUTSA and the TTLA.
The law of unfair competition is the umbrella for all statutory and nonstatutory causes of
action arising out of business conduct which is contrary to honest practice in industrial or
commercial matters. U.S. Sporting Prods., Inc. v. Johnny Stewart Game Calls, Inc., 865
S.W.2d 214, 217 (Tex. App.—Waco 1993, writ denied). The tort called “unfair competition”
consisting of “conduct that is contrary to honest practice in industrial or commercial matters” is a
derivative tort requiring “a viable underlying tort or other illegal conduct for liability to exist.”
Greenville Automatic Gas Co. v. Automatic Propane Gas & Supply, LLC, 465 S.W.3d 778, 788
(Tex. App.—Dallas 2015, no pet.). Unfair competition includes a number of types of
objectionable trade practices, including trademark infringement, dilution of good will,
misappropriation of business value, palming off, passing off, and theft of trade secrets. U.S.
Sporting Prods., 865 S.W.2d at 217.
The elements of the tort of unfair competition by misappropriation, also called “common-
law misappropriation,” are “(1) the creation of plaintiff’s product (i.e., the trade secret
information) through extensive time, labor, skill, and money; (2) the defendant’s use of that
product in competition with the plaintiff, thereby gaining a special advantage in that competition
(i.e., a ‘free ride’) because defendant is burdened with little or none of the expense incurred by
the plaintiff; and (3) commercial damage to the plaintiff.” BP Automotive, L.P. v. RML
Waxahachie Dodge, L.L.C., 448 S.W.3d 562, 572 (Tex. App.—Houston [1st Dist.] 2014, no
pet.). Unlawful competition by misappropriation is one of multiple torts in the unfair
competition umbrella. See KBIDC Investments, LLC v. Zuru Toys Inc., No. 05-19-00159-CV,
2020 WL 5988014, at *5, n.4 (Tex. App.—Dallas Oct. 9, 2020, pet. filed) (mem. op. on reh’g).
Rose also sued BSW for statutory and common-law misappropriation of trade secrets,
violations of the TTLA and TUTSA, and for unfair competition by misappropriation.
Misappropriation, or unlawful appropriation, is an element of each of these causes of action. See
TEX. CIV. PRAC. & REM. CODE ANN. § 134.002(2) (West 2019) (under TTLA, “‘[t]heft’ means
unlawfully appropriating property . . . .”); id. § 134A.003, .004 (West 2019) (under TUTSA,
party may receive injunctive relief and damages for misappropriation of trade secrets); BP
20
Automotive, 448 S.W.3d at 572 (elements of unfair competition by misappropriation include the
defendant used the plaintiff’s product in competition with the plaintiff); Twister B.V. v. Newton
Research Partners, LP, 364 S.W.3d 428, 437 (Tex. App.—Dallas 2012, no pet.) (elements of
common law misappropriation of trade secrets include “the trade secret was acquired through
breach of a confidential relationship or was discovered by improper means” and “the defendant
used the trade secret without authorization”). 14
Rose alleges that Campbell’s and Baxter’s unique collegiate and professional experience
resulted in extensive knowledge of sports injuries, return to play from injuries, sports medicine,
and rehabilitation. They allege that these experiences led them to develop extensive trade secrets
and intellectual property that they used to plan and develop the facility, including its marketing
efforts. Campbell and Baxter, through Rose, used these trade secrets to develop and market the
facility and the products it offers. Rose contends that BSW misappropriated these trade secrets
and products and used them in competition with Rose after it gained an interest in the facility,
thus damaging it. Specifically, Rose contends BSW profited from this misappropriation despite
never paying anything for it.
It is important to note that the parties are not actually litigating the merits of these causes
of action at this juncture, and we express no opinion as to whether Rose will prevail on them.
Rather, we are merely determining whether these individual causes of action fall within the
exemption. Moreover, as we have stated, BSW has not challenged Rose’s assertion that these
causes of action fall within the “misappropriation of trade secrets or corporate opportunities
exemption” other than to contend that these causes of action do not arise from an independent
contractor relationship because it did not contract with Rose.
14
TUTSA “displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for
misappropriation of a trade secret.” Title Source, Inc. v. HouseCanary, Inc., 612 S.W.3d 517, 532–33 (Tex.
App.—San Antonio 2020, pet. filed) (citing TEX. CIV. PRAC. & REM. CODE ANN. § 134A.007(a) (West 2019)). It
does not affect “other civil remedies that are not based upon misappropriation of a trade secret.” Id. (citing TEX.
CIV. PRAC. & REM. CODE ANN. § 134A.007(b)(2)). When the gravamen of a common law claim duplicates a
TUTSA claim, the common law claim is preempted. Id. at 533. This occurs if the factual basis of the common law
claim, as pleaded, would not exist without the use of alleged trade secrets. Id. However, because TUTSA’s
preemption provision applies only to conflicting common law remedies, a common law claim is not preempted by
TUTSA if it addresses harm separate from the trade secret misappropriation. Id. We need not resolve whether any
of these claims are preempted here or address their continued viability. All of them, to the extent they are still viable
causes of action, would fall within the exemption because they require misappropriation as they are pleaded by
Rose. Their continued viability is to be litigated another day, not as part of a TCPA motion to dismiss, but some
other appropriate method such as summary judgment or a trial on the merits.
21
Therefore, we hold that Rose’s unfair competition/common law misappropriation and
TUTSA/TTLA claims for misappropriation of trade secret causes of action are within the
exemption. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(a)(5). Consequently, as these
causes of action are exempt from the TCPA, Rose is absolved from making a prima facie case as
to the elements of those claims. See Round Table Physicians Group, 607 S.W.3d at 883; see
also Atlas Survival Shelters, 2020 WL 6788714, at *6.
PRIMA FACIE CASE
Next, we examine whether Rose satisfied its burden to establish a prima facie case for the
remaining causes of action that are not exempt from the TCPA, namely: tortious interference
with existing contract, promissory estoppel/detrimental reliance, quantum meruit, money had and
received, and declaratory judgment. But first, we must address arguments that BSW failed to
properly brief its challenge to Rose’s claims, whether BSW preserved the trial court’s failure to
rule on its evidentiary objections, and the nature and quality of the evidence Rose must present to
satisfy its burden to establish a prima facie case by clear and convincing evidence on each
element of these claims.
BSW Preserved Challenge to Rose’s Prima Facie Case
Rose first argues that BSW waived its challenge to the prima facie case on appeal by
failing to properly brief the issue. We disagree. We are reluctant to find briefing error. Adams,
547 S.W.3d 890, 896-97 (Tex. 2018) (cautioning against applying overly restrictive error
preservation rules in TCPA context). BSW raised the issue in its brief by stating that Rose failed
to meet its burden to establish by clear and convincing evidence a prima facie case on each
element of its causes of action. BSW identified the elements for all causes of action raised by
Rose and explained that it failed to meet its burden. 15 The burden is on Rose to establish its
prima facie case. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c); Andrews Cty. v. Sierra
Club, 463 S.W.3d 867, 867 (Tex. 2015) (per curiam). Furthermore, we review the trial court’s
implied finding that Rose sufficiently discharged this burden de novo. Adams, 547 S.W.3d at
896-97. Accordingly, BSW preserved its challenge.
15
We note, however, that BSW failed to provide much in the way of analysis as to how Rose failed to
satisfy its burden. But in any event, it preserved the issue for our review.
22
Governing Law – Prima Facie Case
To defeat BSW’s TCPA motion to dismiss, the TCPA requires Rose to establish by clear
and specific evidence a prima facie case for each essential element of its counterclaim. TEX.
CIV. PRAC. & REM. CODE ANN. § 27.005(c). “Clear” means unambiguous, sure or free from
doubt, and “specific” means explicit or relating to a particular named thing. In re Lipsky, 460
S.W.3d at 590. A prima facie case is “the minimum quantum of evidence necessary to support a
rational inference that the allegation of fact is true.” Id. It refers to evidence sufficient as a
matter of law to establish a given fact if it is not rebutted or contradicted. Id. To meet the “clear
and specific evidence” requirement, a plaintiff must provide enough detail to show the factual
basis for its claim. Id. at 591. The TCPA does not require direct evidence of each essential
element of the underlying claim to avoid dismissal. Id. However, conjecture, guess, or
speculation cannot survive “clear and specific” scrutiny under the TCPA. See Van der Linden v.
Khan, 535 S.W.3d 179, 195 (Tex. App.—Fort Worth 2017, pet. denied).
BSW Preserved Trial Court’s Refusal to Rule on Its Evidentiary Objections
The 2019 TCPA amendments provide that we shall consider the pleadings, evidence that
we could consider under Texas Rule of Civil Procedure 166a (summary judgment rule), and
supporting and opposing affidavits. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.006 (West
2020). In general, for purposes of issue preservation for appeal, a trial court’s ruling on an
objection to summary judgment evidence is not implicit in its ruling on the motion for summary
judgment. Seim v. Allstate Tex. Lloyds, 551 S.W.3d 161, 165-66 (Tex. 2018). Summary
judgment evidence must be admissible. See TEX. R. CIV. P. 166a(f); United Blood Services v.
Longoria, 938 S.W.2d 29, 30 (Tex. 1997).
Here, BSW made its objections to Rose’s TCPA evidence. The trial court did not rule on
BSW’s objections. BSW timely objected to the trial court’s refusal to rule in writing.
Accordingly, BSW preserved error in this regard. See TEX. R. APP. P. 33.1(a)(2)(B) (stating
objection to refusal to rule sufficient to preserve issue for appeal); see also Lynne Liberato &
Natasha Breaux, Objecting to Summary Judgment Evidence in State Court: Recent Clarifications
and Remaining Complications, 56 Hous. Law. 10, 11–12 (Sept./Oct. 2018) (describing evolution
of Texas law on error preservation when trial court does not rule on summary judgment
evidentiary objections).
23
Furthermore, we are in the same position as the trial court in evaluating the objections at
the TCPA phase of this proceeding. Although we were unable to locate specific authority on this
subject, we agree with the reasoning from a prominent treatise discussing Texas summary
judgments:
A trial judge who makes a ruling on the admissibility of summary judgment proof, however, is in
no different position than an appellate justice looking at the identical proof. The judge and the
justice are both looking at the same affidavit or deposition from a paper trial and are equally
situated in terms of applying the rules of evidence—which is the very reason the standard of
appellate review for the merits of a summary judgment appeal is de novo. Consequently, there
appears to be a sound argument for applying a de novo standard of review to evidentiary rulings in
a summary judgment proceeding rather than the deferential standard used for trials.
Timothy Patton, Summary Judgments in Texas: Practice, Procedure and Review § 6.10[5] (3d
ed. 2020). Therefore, based on the above rationale, along with judicial economy concerns, we
need not remand to the trial court with instructions to rule on the complained of TCPA evidence.
Pleadings Alone Are Insufficient to Satisfy Nonmovant’s Evidentiary Burden
Rose contends that we may rely on the pleadings alone as sufficient evidence to support
the finding that it discharged its TCPA burden to establish by clear and convincing evidence a
prima facie case of each element of its claims. See Rogers v. Soleil Chartered Bank, No. 02-19-
00124-CV, 2019 WL 4686303, at *7 (Tex. App.—Fort Worth Sept. 26, 2019, no pet.) (mem.
op.). 16 The Fourteenth Court of Appeals in Houston disagreed with the reasoning in Rogers and
we agree. See Buzbee v. Clear Channel Outdoor, LLC, 616 S.W.3d 14, 29 (Tex. App.—
Houston [14th Dist.] 2020, no pet.).
Although there is only one section discussing the evidence we may review, there are
different burdens on the parties during the multi-step TCPA procedural framework. For
instance, the movant need only “demonstrate” that the TCPA applies, and the cases recite that
the pleadings alone may satisfy this burden in reference to the movant’s initial burden in
demonstrating the TCPA’s applicability. See, e.g., TEX. CIV. PRAC. & REM. CODE ANN.
§ 27.005(b); Hersh, 526 S.W.3d at 467 (holding that, when determining TCPA applicability,
16
The Rogers court went on to caution, however, that a party who chooses to rely only on its pleading
“gambles that the often-times conclusory and sketchy allegations of a notice pleading will not satisfy the clear and
specific burden of establishing a prima facie case.” Rogers v. Soleil Chartered Bank, No. 02-19-00124-CV, 2019
WL 4686303, at *7 (Tex. App.—Fort Worth Sept. 26, 2019, no pet.) (mem. op.). The Rogers court ultimately
concluded that the nonmovant’s “gamble did not pay off,” because the nonmovant’s pleading lacked the specificity
necessary to establish a prima facie case for each of the nonmovant’s claims. Id.24
court may look solely to nonmovant’s pleading and, in doing so, accept the allegations as true
insofar as they describe the nature of claims). Similarly, whether an exemption applies may be
determined by examining the pleadings. See Gaskamp, 596 S.W.3d at 480; see also Hawkins,
606 S.W.3d at 46.
Once the TCPA is applicable, however, the nonmovant has a different burden. The
nonmovant must satisfy the prima facie case requirement, and although we may consider the
pleadings as part of this analysis, they are not sufficient by themselves to satisfy this standard.
As the Buzbee court explained, “accepting all allegations as true for purposes of establishing a
prima facie case—without concomitantly demanding evidence that is legally sufficient to
establish the allegations as factually true if it is not countered . . . would nullify the very purpose
of the TCPA’s burden-shifting mechanism.” Buzbee, 616 S.W.3d at 29. The Texas Supreme
Court has suggested that this is the appropriate rule in this phase of the process. See
Montelongo, 622 S.W.3d at 301 (noting that nonmovant must “submit evidence of facts” that
establish each essential element of the claim); Hersh, 526 S.W.3d at 467-68 (although noting
that the nonmovants’ petition is best evidence for determining TCPA applicability in first step of
analysis, nonmovants failed to satisfy their burden to “produce” sufficient evidence of essential
element of claim in second step of TCPA analysis).
Accordingly, once the court is satisfied that the TCPA applies and the burden shifts to the
nonmovant, the TCPA requires something beyond allegations in the pleading “to support a
rational inference that an allegation is true.” Buzbee, 616 S.W.3d at 29. “Allegations alone are
not sufficient.” See id.
In reviewing whether Rose discharged its burden, the current statute states that we
consider the pleadings, evidence properly considered under Texas Rule of Civil Procedure 166a,
and supporting and opposing affidavits. Primarily, BSW challenges the admissibility of Baxter’s
declaration.
In general, “an unsworn declaration may be used in lieu of a written sworn declaration,
verification, certification, oath, or affidavit required by statute . . . .” TEX. CIV. PRAC. & REM.
CODE ANN. § 132.001(a) (West 2019). Such a declaration must be in writing and must be
subscribed as true under penalty of perjury. Id. § 132.001(c). The statute requires a jurat to
appear in “substantially” the same form as the template jurat before an unsworn declaration
becomes operative. Id. § 132.001(d).
25
“Although the declaration jurat fails to contain [the declarant’s] address and date of birth,
such an omission is not fatal . . . .” United Rentals, Inc. v. Smith, 445 S.W.3d 808, 812–13
(Tex. App.—El Paso 2014, no pet.). Rather, the “key to an unsworn declaration” is that it must
be signed under penalty of perjury. See Gillis v. Harris County, 554 S.W.3d 188, 193 (Tex.
App.—Houston [14th Dist.] 2018, no pet.).
Finally, given the early stage of this litigation, although we have held that Rose must
present some evidence to satisfy its burden here, it need not necessarily present the best evidence
to satisfy this burden. See MediaOne, L.L.C. v. Henderson, 592 S.W.3d 933, 943 (Tex. App.—
Tyler 2019, pet. denied) (citing Tu Nguyen v. Duy Tu Hoang, 318 F. Supp. 3d 983, 998 (S.D.
Tex. 2018) (“Clearly, under the expedited TCPA proceedings, [the nonmovant] would be
prejudiced if he were required to obtain the best evidence since he has not had the opportunity to
conduct discovery . . . .”)). Baxter’s declaration states that it is made under penalty of perjury,
and we hold that its shortcomings are not fatal and that it is admissible for TCPA purposes.
Tortious Interference with Existing Contract
To establish a claim for tortious interference with a contract, a plaintiff must establish:
(1) the existence of a valid contract subject to interference; (2) that the defendant willfully and
intentionally interfered with the contract; (3) that the interference proximately caused the
plaintiff’s injury; and (4) that the plaintiff incurred actual damage or loss. Cmty. Health Sys.
Prof’l Services Corp. v. Hansen, 525 S.W.3d 671, 689 (Tex. 2017).
To prove the willful and intentional interference element of a tortious interference claim,
the plaintiff must show that the defendant was legally capable of tortious interference. Id. To be
legally capable of tortious interference, the defendant must be a stranger to the contract with
which he allegedly interfered. Id. BSW admits that it never contracted with Rose.
Intentional interference does not require intent to injure, only that “the actor desires to
cause the consequences of his act, or that he believes that the consequences are substantially
certain to result from it.” Id. According to Baxter’s declaration and its attached exhibits, Rose
provided evidence BSW was aware of Rose’s existing agreements with Texas Spine and Joint.
As we discuss in the section of this opinion on BSW’s misidentification defense, Rose attached
admissible evidence of the purchase raising a fact issue as to BSW’s role in the purchase by way
of a Securities and Exchange Commission (SEC) 10-K report detailing the purchase. BSW
challenges the admissibility of this document. However, it is admissible as a self-authenticating
26
business record of a government agency. See TEX. R. EVID. 803(6), 901(b)(4), 902.5; Savoy v.
Nat’l Collegiate Student Loan Tr. 2005-3, 557 S.W.3d 825, 832 (Tex. App.—Houston [1st
Dist.] 2018, no pet.) (holding that documents retrieved from the “SEC’s online database” were
admissible as self-authenticating business records).
Rose contends that this funding and acquisition of Texas Spine and Joint, and
consequently the facility, was a willful and intentional interference with Rose’s contracts with
Texas Spine and Joint, because it subsequently repudiated the agreements without compensating
Rose for Baxter’s and Campbell’s efforts. Specifically, Baxter claimed in his declaration that
BSW was aware of the agreements during the next two years that Texas Spine feigned operation
of the facility under the agreements’ terms. BSW’s interference caused Rose to lose its interest
in the facility and to suffer lost distributions and payments that were due under the agreements’
terms. Accordingly, we hold that Rose satisfied its TCPA burden with respect to its tortious
interference claim.
Promissory Estoppel/Detrimental Reliance
The elements of a claim of promissory estoppel or detrimental reliance are: (1) the
defendant made a promise to plaintiff, (2) the plaintiff reasonably and substantially relied on the
promise to its detriment, and (3) plaintiff’s reliance was foreseeable to defendant. See Henry
Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n.25 (Tex. 2002). Promissory estoppel is not
applicable to a promise covered by a valid contract between the parties, but can apply to a
promise outside a contract. Trevino & Associates Mech., L.P. v. Frost Nat. Bank, 400 S.W.3d
139, 146 (Tex. App.—Dallas 2013, no pet.).
Rose provided no evidence that BSW made any promise to it, an essential element of a
detrimental reliance/promissory estoppel claim. See Maddox v. Vantage Energy, LLC, 361
S.W.3d 752, 761–62 (Tex. App.—Fort Worth 2012, pet. denied) (citing Wheeler v. White, 398
S.W.2d 93, 97 (Tex. 1965)). Consequently, it failed to make a prima facie case as to each
essential element of this cause of action, and it must be dismissed.
Quantum Meruit
Quantum meruit is an equitable theory of recovery which is based on an implied
agreement to pay for benefits received. Heldenfels Bros., Inc. v. City of Corpus Christi, 832
S.W.2d 39, 41 (Tex. 1992). The elements of quantum meruit are: (1) valuable services were
rendered or materials furnished; (2) for the person sought to be charged; (3) those services and
27
materials were accepted by the person sought to be charged, and were used and enjoyed by him;
and (4) the person sought to be charged was reasonably notified that the plaintiff performing
such services or furnishing such materials was expecting to be paid by the person sought to be
charged. Hill v. Shamoun & Norman, LLP, 544 S.W.3d 724, 732–33 (Tex. 2018). Generally,
the existence of an express contract covering the subject matter of the dispute precludes recovery
in quantum meruit. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005);
see also Hill, 544 S.W.3d at 733.
Furthermore, to recover in quantum meruit, Rose must show that its efforts were
undertaken for the party sought to be charged; it is not enough to merely show that its efforts
benefitted the defendant. Bashara v. Baptist Mem’l Hosp. Sys., 685 S.W.2d 307, 310 (Tex.
1985); McFarland v. Sanders, 932 S.W.2d 640, 643 (Tex. App.—Tyler 1996, no writ).
The services were provided specifically to Texas Spine and Joint, and there is no
evidence that Rose intended to provide the services directly to BSW. Rather, the allegations and
evidence suggest that BSW may have been an incidental beneficiary based on the alleged actions
we have discussed at length in this opinion, which is insufficient to satisfy Rose’s burden.
Although this cause of action is related to the unjust enrichment and money had and received
causes of action, Rose failed to make a prima facie case for this cause of action due to its
additional element that the services be provided to BSW. See Bashara, 685 S.W.2d at 310;
McFarland, 932 S.W.2d at 643. Therefore, this claim must be dismissed.
Money Had and Received
Rose pleaded a claim for money had and received. A cause of action for money had and
received is equitable in nature. Stonebridge Life Ins. Co. v. Pitts, 236 S.W.3d 201, 203 n.1
(Tex. 2007); Acoustical Screens in Color, Inc. v. T. C. Lordon Co., Inc., 524 S.W.2d 346, 350
(Tex. Civ. App.—Dallas 1975, writ ref’d n.r.e.). The claim “belongs conceptually to the doctrine
of unjust enrichment.” Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex. App.—El Paso
1997, no writ).
The courts describe this claim in general principles. For example, courts have stated that
a claim for money had and received seeks to restore money where equity and good conscience
require restitution. Edwards v. Mid-Continent Office Distributors, L.P., 252 S.W.3d 833, 837
(Tex. App.—Dallas 2008, pet. denied). It is not premised on wrongdoing, but seeks to determine
to which party, in equity, justice, and law, the money belongs, and it seeks to prevent
28
unconscionable loss to the plaintiff and unjust enrichment to the defendant. Bryan v. Citizens
Nat’l Bank in Abilene, 628 S.W.2d 761, 763 (Tex. 1982); Staats v. Miller, 150 Tex. 581, 584,
243 S.W.2d 686, 687 (1951). As these broad and general descriptions demonstrate, a cause of
action for money had and received is “less restricted and fettered by technical rules and
formalities than any other form of action. It aims at the abstract justice of the case, and looks
solely to the inquiry, whether the defendant holds money, which . . . belongs to the plaintiff.”
Staats, 150 Tex. at 584, 243 S.W.2d at 687–88 (internal quotations and citations omitted).
To prove the claim, a plaintiff must show that a defendant holds money which in equity
and good conscience belongs to him. See Best Buy Co. v. Barrera, 248 S.W.3d 160, 162–63
(Tex. 2007) (per curiam) (citing Staats, 150 Tex. at 584, 243 S.W.2d at 687). Texas courts have
allowed restitution for these types of claims in a variety of cases, including by a defrauded party
against the party who committed the fraud. See Edwards, 252 S.W.3d at 837 (citing Staats, 150
Tex. at 583–85, 243 S.W.2d at 686–88; Wiseman v. Baylor, 69 Tex. 63, 64–66, 6 S.W. 743,
743–44 (Tex. 1887)).
Unlike promissory estoppel/detrimental reliance and quantum meruit, money had and
received does not depend on either representations made by the defendant or that the services
specifically be provided to the defendant. Rather, it is the broadest equitable remedy to
compensate the claimant for money that in good conscience belongs to it, without regard to
wrongdoing of any party. Although other causes of action are more specifically designed to
compensate Rose and redress its injuries based on the actions of BSW here, we cannot say that
the cause of action does not apply or that Rose failed to make a prima facie case by clear and
specific evidence of its essential elements. 17
Rose presented evidence from Baxter’s declaration that it provided substantial value in
relation to the facility, including hours of marketing efforts, trade secrets, and intellectual
property. For example, the news articles we describe above track the progress of the facility and
the efforts and value that Baxter and Campbell provided. Rose also attached photos of the
various stages of completion, including what appears to be a finished product. Through these
efforts, Rose maintains, BSW, TSJH, and the third-party defendants all received the benefit of—
17
With this flexible equitable remedy that may sometimes compensate a plaintiff for fraudulent acts as
Rose has pleaded, it is unclear whether this could fall within the “legal action based on common law fraud”
exemption. This is due in part to the amorphous nature and flexibility of this cause of action. Even if it does not fall
into the exemption, Rose has satisfied its burden to show a prima facie case here as we have explained.
29
and continue to generate revenue from—a state-of-the-art sports medicine facility. However,
Rose has not received any payment for these services and trade secrets. Rose also attached its
invoices for the consulting work it provided that remain unpaid. In short, Rose contends that
BSW continues to reap the benefits and revenue of a world-class facility that was built on the
efforts, intellectual property, and network of Baxter and Campbell without providing any
compensation, which if true, would lead to unjust enrichment. Therefore, we hold that Rose
satisfied its TCPA burden on this cause of action.
Declaratory Judgment
The Uniform Declaratory Judgments Act (UDJA) is a procedural device available as a
remedy. Chenault v. Phillips, 914 S.W.2d 140, 141 (Tex. 1996) (per curiam) (orig. proceeding).
The UDJA’s purpose is to settle and to afford relief from uncertainty and insecurity with respect
to rights, status, and other legal relations. TEX. CIV. PRAC. & REM. CODE ANN. § 37.002(b). A
person interested under a written contract or other writing constituting a contract or whose rights
are affected by a contract may have determined any question of construction or validity arising
under the instrument or contract, and obtain a declaration of rights, status, or other legal relations
thereunder. Id. § 37.004(a). Thus, a declaratory judgment is appropriate when a justiciable
controversy exists concerning the rights and status of the parties and the controversy will be
resolved by the declaration sought. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex.
1995). A justiciable controversy is one in which a real and substantial controversy exists
involving a genuine conflict of tangible interest and not merely a theoretical dispute. Id.In the instant case, the Company Agreement between Touchdown Interception and Texas
Spine and Joint contained a provision requiring written consent of the other members prior to a
sale of its interest. Specifically, Section 10.01 of the Company Agreement, entitled “Prohibition
Against Transfers,” states that “[e]xcept as otherwise provided in this Agreement, a Member
shall not sell, assign, transfer, encumber, or otherwise dispose of any portion of its Membership
Interests except with the prior written consent of a Majority in Interest.” Section 10.05 of the
Agreement states that “[a]ny attempted transfer not in full compliance with the terms of this
Agreement shall, except for the limited rights provided to an Assignee hereunder, be null and
void.”
Rose contends that Texas Spine and Joint breached this provision when it sold its interest
to BSW and repudiated the contract. Rose contends that BSW’s purchase-funding interfered
30
with the Company Agreement between Touchdown and Texas Spine and Joint. Rose seeks a
declaration of its rights after the sale, and a real and substantial justiciable controversy exists
here that can be resolved by a declaration because Touchdown did not agree to any transfer, and
it now seeks to have the transfer made null and void. Rose sufficiently made its prima facie case
on its UDJA claim. See Berry v. ETX Successor Tyler, No. 12-18-00095-CV, 2019 WL 968528,
at *5 (Tex. App.—Tyler Feb. 28, 2019, no pet.) (mem. op.) (evaluating declaratory judgment
action in TCPA context).
Damages
In the TCPA analysis, the nonmovant need not provide proof by way of direct evidence
of damages, but the evidence must be sufficient to allow a rational inference that some damages
naturally flowed from the defendant’s conduct. See S & S Emergency Training Sols., Inc. v.
Elliott, 564 S.W.3d 843, 847 (Tex. 2018).
Rose contends that the facility was opened and that Texas Spine and Joint and the third-
party defendants operate the facility without ever compensating them for their time, toil, talent,
and labor, as well as their expertise and trade secrets they contributed. Rose submitted invoices
for all its work which it alleges remain unpaid. Viewing the evidence in the light most favorable
to Rose, it has shown the required prima facie case supporting the inference that it suffered some
damages that naturally flowed from Texas Spine and Joint’s and the third-party defendants’
wrongful conduct, including BSW’s actions.
Conclusion
We hold that Rose satisfied its burden with respect to its tortious interference with
existing contract, money had and received, and declaratory judgment claims. Rose failed to
satisfy its burden with respect to its promissory estoppel/detrimental reliance and quantum
meruit claims, and those claims must be dismissed.
Therefore, the portion of BSW’s first issue arguing that it preserved its challenge to
Rose’s prima facie case, the scope of the evidence we may consider in this evaluation, as well as
its challenge to Rose’s promissory estoppel/detrimental reliance and quantum meruit claims is
sustained. The portion of its first issue challenging Rose’s prima facie case on its remaining
claims is overruled.
31
BSW’S DEFENSE
BSW contends that it established its defense that Rose sued the wrong party when it
impleaded BSW as a third-party defendant. In its brief, BSW spends significant argument
concerning Rose’s alleged failure to show that BSW was a proper party. However, it is BSW’s
burden to conclusively establish its defense in the TCPA phase of the litigation in order to obtain
dismissal of Rose’s counterclaim against it. BSW failed to discharge this burden. See TEX. CIV.
PRAC. & REM. CODE ANN. § 27.005(d) (requiring movant to establish an affirmative defense or
other ground on which it is entitled to “judgment as a matter of law).
BSW points to the declaration of Jennifer Colon, the Vice President of Finance for Joint
Ventures of Baylor Health Enterprises. In her declaration, she states that “Baylor Scott &
White” is not a legal name of a corporation on file with the Texas Secretary of State but is
instead an assumed name of Baylor Scott & White Health. Colon stated that this company
provided legal, human resources, and other support services to affiliated entities so that they can
operate a not-for-profit health system in Texas, providing healthcare at many locations. She
further stated that Baylor Scott & White Health did not acquire any interest in Texas Spine and
Joint Hospital LLC, as alleged in the Third-Party Petition. As support, Colon attached a filing
from the Texas Secretary of State showing that Baylor Scott & White is an assumed name.
However, Colon provided no evidence that BSW took no part in the acquisition of the facility
other than her statement to that effect in her declaration. While this might be sufficient evidence
to support such a finding, it is far from conclusive.
Furthermore, Rose attached a public SEC 10-K filing, retrieved from its online database,
which at least raises a fact issue on BSW’s misidentification defense. 18 This means that BSW
failed to show it is entitled to judgment as a matter of law. For example, the 10-K report
describing the acquisition of the facility states as follows:
Texas Health Ventures Group, L.L.C. and subsidiaries (THVG or the Company), a Texas limited
liability company, was formed on January 21, 1997, for the primary purpose of developing,
acquiring, and operating ambulatory surgery centers and related entities. THVG is a joint venture
between Baylor University Medical Center (BUMC), an affiliate of Baylor Scott & White
Holdings (BSW Holdings), who owns 50.1% of THVG and USP North Texas, Inc. (USP), a
Texas corporation and consolidated subsidiary of United Surgical Partners International, Inc.
18
As we held earlier in this opinion, the report is admissible as a self-authenticating business record of a
government agency. See TEX. R. EVID. 803(6), 901(b)(4), 902.5; Savoy v. Nat’l Collegiate Student Loan Tr. 2005-
3, 557 S.W.3d 825, 832 (Tex. App.—Houston [1st Dist.] 2018, no pet.).
32
(USPI), who owns 49.9% of THVG. USPI is a subsidiary of Tenet Healthcare Corporation. BSW
Holdings and its “controlled” affiliates are referred collectively herein as “BSWH”. THVG’s
fiscal year ends June 30. Fiscal years of THVG’s subsidiaries end December 31; however, the
financial information of these subsidiaries included in these consolidated financial statements is as
of June 30, 2018 and 2017, and for the years ended, June 30, 2018, 2017 and 2016.
....
On August 2, 2017, Texas Health Venture Texas Spine, LLC, a wholly-owned subsidiary of
THVG, completed its acquisition of Texas Spine and Joint Hospital, LLC (Tyler), resulting in a
50.25% controlling interest. The consideration of $40,900,000 and $40,700,000 was paid to the
sellers by BSWH and USP, respectively. From the date of contribution to June 30, 2018, THVG
recognized approximately $98,600,000 of total revenues and approximately $5,800,000 of net
income from Tyler.
....
8. RELATED-PARTY TRANSACTIONS
THVG operates the Facilities under management and royalty contracts, and THVG in turn
is managed by BSWH and USP, resulting in THVG incurring management and royalty fee
expense payable to BSWH and USP in amounts equal to the management and royalty fee
income THVG receives from the Facilities. THVG’s management and royalty fee income from
the facilities it consolidates for financial reporting purposes eliminates in consolidation with the
facilities’ expense and therefore is not included in THVG’s consolidated revenues. THVG’s
management and royalty fee income from facilities which are not consolidated was $600,000 for
years ended June 30, 2018, 2017, and 2016, and is included in other income in the accompanying
consolidated statements of income.
The management and royalty fee expense to BSWH and USP was approximately $41,973,000,
$38,530,000, and $35,432,000 for the years ended June 30, 2018, 2017, and 2016, respectively,
and is reflected in operating expenses in THVG’s consolidated statements of income. Of the total,
64.3% and 1.7% represent management fees payable to USP and BSWH, respectively, and 34%
represents royalty fees payable to BSWH.
The 10-K report establishes that one of the parties that acquired Texas Spine and Joint
Hospital is Baylor University Medical Center, which is an affiliate of Baylor Scott & White
Holdings. The 10-K report also states that BSW Holdings and its “controlled” affiliates are
referred throughout the report as BSWH. BSW admits it is an assumed name for Baylor Scott &
White Health in its brief and through Colon’s declaration, and it failed to negate that it is an
affiliate controlled by BSWH, as that term is used in the 10-K report. Finally, the report notes
BSWH paid consideration of $40,900,000 to Texas Spine and Joint Hospital, LLC to acquire it.
This evidence creates a fact issue on BSW’s defense. 19
19
Bolstering Rose’s argument is the fact that it served a request for disclosure, one of which requests
disclosure of “the correct names of the parties to the lawsuit.” See TEX. R. CIV. P. 194.2(a). BSW failed to respond
to this request, as it is required to do. It is not unreasonable to surmise that BSW failed to respond to the request for
disclosure because Rose might have sued the correct party, but it is simply a matter of misnomer rather than
misidentification.
33
Therefore, the remaining portion of BSW’s first issue pertaining to its defense of
misidentification is overruled, as is its second issue challenging the trial court’s failure to sustain
its evidentiary objections.
DISPOSITION
We have held that the TCPA applies to Rose’s counterclaim, and that Rose failed to
satisfy its burden to make a prima facie case as to its promissory estoppel/detrimental reliance
and quantum meruit causes of action as part of its counterclaim against BSW. Accordingly,
BSW is entitled to at least some amount and measure of attorney’s fees under the TCPA. 20
However, Rose was largely successful in demonstrating that its causes of action were
either exempt from the TCPA or satisfying its burden of making a prima facie case on most of its
causes of action. BSW also failed to establish its defense that Rose sued the wrong party when it
impleaded BSW into this lawsuit.
Accordingly, we reverse the trial court’s order denying BSW’s TCPA motion in part and
render an order dismissing the following legal actions against BSW: (1) promissory
estoppel/detrimental reliance, and (2) quantum meruit. We affirm the remainder of the trial
court’s order denying the TCPA motion. We remand this case to the trial court for a
determination of attorneys’ fees and costs as to these legal actions, and for further proceedings
consistent with this opinion.
JAMES T. WORTHEN
Chief Justice
Opinion delivered August 30, 2021.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
(PUBLISH)
20
See TEX. CIV. PRAC. & REM. CODE ANN. § 27.009 (West 2020).
34
COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
AUGUST 30, 2021
NO. 12-20-00246-CV
BAYLOR SCOTT & WHITE,
Appellant
V.
PROJECT ROSE MSO, LLC, TOUCHDOWN INTERCEPTION, LLC, INDIVIDUALLY
AND DERIVATIVELY ON BEHALF OF 62 ROSES, LLC,
Appellees
Appeal from the 7th District Court
of Smith County, Texas (Tr.Ct.No. 20-0438-A)
THIS CAUSE came to be heard on the oral arguments, appellate record and
briefs filed herein, and the same being considered, it is the opinion of this Court that there was
error in the order as entered by the court below and that same should be reversed and judgment
rendered in part, and affirmed in part.
It is therefore ORDERED, ADJUDGED and DECREED by this Court that
the trial court’s order denying Appellant Baylor Scott and White’s TCPA motion in part be, and
the same is, hereby reversed and an order rendered dismissing the following legal actions
against Baylor Scott and White: (1) promissory estoppel/detrimental reliance, and (2) quantum
meruit. It is further ORDERED, ADJUDGED and DECREED that the remainder of the trial
35
court’s order denying the TCPA motion be affirmed and this cause be remanded to the trial
court for a determination of attorneys’ fees and costs as to these legal actions, and for further
proceedings consistent with this opinion; and that this decision be certified to the court below for
observance.
James T. Worthen, Chief Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
36