Rufus Odem v. Deloitte & Touche, LLP John Morgan and Kathie Schwerdtfeger

MEMORANDUM OPINION
No. 04-09-00747-CV
Rufus ODEM,
Appellant
v.
DELOITTE & TOUCHE, LLP, John Morgan, and Kathie Schwerdtfeger,
Appellees
From the 37th Judicial District Court, Bexar County, Texas
Trial Court No. 2007-CI-15162
Honorable David A. Berchelmann, Jr., Judge Presiding
Opinion by: Marialyn Barnard, Justice
Sitting: Catherine Stone, Chief Justice
Sandee Bryan Marion, Justice
Marialyn Barnard, Justice
Delivered and Filed: February 2, 2011
AFFIRMED
Appellant Rufus Odem brought claims for defamation, tortious interference with contract,
conspiracy, negligence, and gross negligence against Deloitte & Touche, LLP, John Morgan, and
Kathie Schwerdtfeger (collectively “Deloitte & Touche”). Odem’s claims arose out of a report
prepared by Deloitte & Touche following a quality assessment review of the San Antonio Water
System’s internal audit department, which was conducted pursuant to an agreement between
Deloitte & Touche and the San Antonio Water System (“SAWS”). Deloitte & Touche moved
04-09-00747-CV
for summary judgment on all of Odem’s claims, and the trial court granted the motion in its
entirety, ruling that Odem should take nothing. Odem appeals contending the trial court erred in
granting Deloitte & Touche’s motion for summary judgment. We affirm the judgment in favor
of Deloitte & Touche.
BACKGROUND
In 1985, Odem went to work for the City Water Board, which later became SAWS.
Odem worked in the internal audit department. Within a year of his employment Odem was
promoted to director of the internal audit department. According to Odem, during his tenure,
which spanned more than twenty years, his department saved SAWS millions of dollars by
exposing waste and corruption.
In January 2005, SAWS hired a new CEO, David Chardavoyne. SAWS was undergoing
a reorganization, which included hiring new management personnel and forming an Audit
Committee. From the beginning, Odem and Chardavoyne had a troubled relationship. Odem,
believing Chardavoyne was discriminating against him based on race and age, filed a complaint
with the Equal Employment Opportunity Commission (“EEOC”) in July 2005. The dispute was
publicized in the local media. The EEOC conducted an investigation, and based on the
information obtained as a result of that investigation, it issued a Determination Letter on August
30, 2006. The EEOC determined it could not find discrimination based on age, but there was
evidence to support Odem’s claim of racial discrimination, specifically that he was: (1) denied
promotional opportunities, (2) denied the opportunity to attend a financial seminar, (3) prohibited
from hiring department staff, (4) barred from SAWS meetings, (5) stripped of essential duties,
(6) given little or no cooperation by other SAWS employees at the direction of Chardavoyne, and
(7) scrutinized by management in a way dissimilar to other similarly situated employees. The
-2-
04-09-00747-CV
EEOC issued a Right to Sue letter, and Odem filed suit against SAWS and Chardavoyne on
September 12, 2006. The parties eventually entered into a settlement agreement pursuant to
which Odem agreed to voluntarily resign in exchange for a monetary settlement of $635,000.00.
Also in 2005, in accord with the major changes that were occurring at SAWS, SAWS’s
external auditing firm, Padgett Stratemann, LLP recommended SAWS hire an outside consultant
to perform a quality assessment review (“QAR”) of SAWS’s internal audit function. The
summary judgment evidence shows Odem agreed with the need for a QAR. In October 2006,
SAWS hired Deloitte & Touche to perform the QAR, and the parties entered into a consulting
agreement that described the nature of the work to be performed, the time frame, and
compensation. John Morgan and Kathie Schwerdtfeger were the Deloitte & Touche personnel
involved with the SAWS review. In general, Deloitte & Touche was required to interview
SAWS and Padgett Stratemann personnel, review working papers from a selection of audits done
by SAWS’s internal audit department, and compare SAWS to similar entities with regard to
certain objective benchmark performance indicators. Deloitte & Touche was not hired to
evaluate any specific personnel. After performing the QAR, Deloitte & Touche was required to
produce a report containing its findings. That report was to be, pursuant to the consulting
agreement, confidential.
After completing its fieldwork, Deloitte & Touche prepared a preliminary version of its
conclusions, and sought input from SAWS management and Odem regarding the conclusions. In
letters dated November 16 and November 22, Odem advised Deloitte & Touche about his
problems with SAWS and Chardavoyne, explaining how the discrimination found by the EEOC
led to a reduction in the function of the internal audit department. The evidence shows, and
Odem admits, Deloitte & Touche listened and considered his point of view. In fact, based on the
-3-
04-09-00747-CV
issues raised by Odem, Deloitte & Touche took additional time to evaluate the internal audit
department, and performed additional procedures. The QAR report was supposed to be
presented by December 2006, but because of the additional work, it was not completed until
January 8, 2007. The report stated the internal audit function of SAWS did not substantially
conform to standards promulgated by the Institute for Internal Auditors, noting numerous
failures in the internal audit function, including the failure to have a charter to define
expectations of the internal audit department, the failure of the CEO and Audit Committee to
clearly define the role of the director and the department, the failure to have a quality assurance
function, the failure to have a formal continuing education policy for the department, the failure
to develop a thorough risk-based planning model to support the annual audit plan, as well as
several other failures. The report specifically noted at the end of these “key observations”
regarding the internal audit function that “the IA Director expressed concern about several of our
conclusions above. His concerns were taken into consideration in finalizing this report.”
On January 17, 2007, SAWS placed Odem on paid administrative leave. Odem claimed
the Deloitte & Touche report gave SAWS the excuse to place him on leave, but that the action
was really a continuation of the discrimination and retaliation for his EEOC complaint and the
lawsuit. According to Jerald Bailey, vice president of human resources for SAWS, the reason
Odem was placed on administrative leave was not a result of the Deloitte & Touche report,
which had not yet been reviewed by the SAWS board, but because of something that occurred in
late 2006. According to Bailey, Odem was asked at a November 27, 2006 employee evaluation
meeting to provide to Chardavoyne certain information regarding the employees in his
department. Bailey stated Odem was specifically advised this information was to be provided
before the next meeting, which was scheduled for December 5, 2006. Bailey testified Odem did
-4-
04-09-00747-CV
not provide the requested information for the December 5 meeting, and on December 6,
Chardavoyne sent a memorandum to Odem documenting this. Bailey heard nothing more about
the issue until the first week of January 2007 when he received a memorandum from Odem
complaining about the December 6 memorandum from Chardavoyne. Odem claimed he had
provided the information to Chardavoyne on December 5, but Chardavoyne was claiming Odem
had failed to provide the information as part of his continued harassment and discrimination.
Attached to Odem’s memorandum to Bailey was the document Chardavoyne had requested for
the December 5 meeting and it was dated December 5. Bailey, remembering Chardavoyne
complaining the document had not been provided, took the matter to the IT department. Bailey
testified he was confused by Odem’s claim the document had been provided on schedule, as
evidenced by the date on the document, and Chardavoyne’s claim that he had not received it. IT
advised Bailey the document, although dated December 5, was finalized between 4:00 p.m. and
5:00 p.m. on December 6. Bailey said given the information from IT, it was impossible for
Odem to have provided the document to Chardavoyne on December 5, and therefore it appeared
Odem had backdated the document to make it seem as if he had provided it to Chardavoyne by
the December 5 deadline.
On January 17, 2007, Bailey had a meeting with Odem, asking him to explain the
discrepancy. Bailey testified Odem had no response other than that the document could have
been created on December 6. Bailey said he advised Odem this was a serious issue because the
basis for Odem’s most recent complaint to human resources was that Chardavoyne was unfairly
criticizing him for not timely providing a report, when in fact the report had not been provided in
a timely manner. At that point, Bailey told Odem he was being placed on administrative leave
until Bailey could complete an investigation into the matter. Bailey testified Odem was told he
-5-
04-09-00747-CV
was being placed on leave because of the possible backdating of the report and subsequent
misrepresentation with regard to his complaint against Chardavoyne. Although the Deloitte &
Touche report was completed, and Bailey handed a copy to Odem as he was leaving, Bailey
specifically testified during his deposition that he gave Odem a copy as “a courtesy” to advise
Odem of “this other issue out there you need to be aware of.” Bailey did not mean to suggest the
report was the basis for placing Odem on administrative leave.
After Odem was placed on administrative leave, he filed a complaint against
Schwerdtfeger with the Texas State Board of Public Accountancy (“the Board”), essentially
making the same allegations ultimately brought against Deloitte & Touche in the present matter.
The Board’s enforcement division considered the complaint and found “there is no evidence of a
violation of the Board’s Rules of Professional Conduct or the Public Accountancy Act.” Later,
the Board’s Technical Standards Review Committee recommended dismissal of Odem’s
complaint due to insufficient evidence.
As noted above, Odem’s suit against SAWS and its CEO was settled in October 2007,
and Odem voluntarily resigned as part of the settlement agreement. That same month, and after
his complaints against Schwerdtfeger had been dismissed by the Board, Odem filed suit against
Deloitte & Touche and its employees associated with the QAR of SAWS. In his suit, Odem
alleged Deloitte & Touche libeled him in the QAR report, tortiously interfered with his
employment contract with SAWS, acted negligently with respect to its QAR work, and engaged
in a conspiracy with SAWS against Odem. In essence, Odem asserted that although Deloitte &
Touche knew of his problems with Chardavoyne and other members of SAWS management, it
prepared a report in cooperation with SAWS, and with minimal input from him, that ignored the
discrimination issues and ultimately resulted in damage to his reputation and the loss of his
-6-
04-09-00747-CV
position. Deloitte & Touche filed traditional and no evidence motions attacking each of Odem’s
claims. After a hearing, the trial court granted Deloitte & Touche’s motion in all respects,
entering a take nothing judgment in favor of Deloitte & Touche. Odem perfected this appeal.
DISCUSSION
Standard of Review
Deloitte & Touche filed both traditional and no evidence motions for summary judgment.
The propriety of a summary judgment, traditional or no evidence, is a question of law which we
review de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003).
In reviewing a traditional motion for summary judgment, we must determine whether the
successful movant in the trial court carried the burden of showing no genuine issue of material
fact exists and was therefore entitled to judgment as a matter of law. Browning v. Prostok, 165
S.W.3d 336, 355 (Tex. 2005); Western Invs., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005);
see TEX. R. CIV. P. 166a(c). In making this determination, we must take evidence favorable to
the nonmovant as true, crediting the nonmovant with all reasonable inferences and resolving any
doubts in the nonmovant’s favor. Fort Worth Osteopathic Hosp. v. Reese, 148 S.W.3d 94, 99
(Tex. 2004); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). When
reviewing a no evidence motion for summary judgment, we also examine the record in the light
most favorable to the nonmovant. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750 (Tex.
2003); Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002). However, once a
party properly moves for no evidence summary judgment by specifically asserting that no
evidence exists as to one or more elements of a claim on which the nonmovant would have the
burden of proof at trial, the burden is on the nonmovant to present more than a scintilla of
probative evidence to raise a genuine issue of material fact on each of the challenged elements.
-7-
04-09-00747-CV
TEX. R. CIV. P. 166a(i); Wal-Mart, 92 S.W.3d at 506. “Less than a scintilla of evidence exists
when the evidence is ‘so weak as to do no more than create a mere surmise or suspicion’ of a
fact.” King Ranch, 118 S.W.3d at 751 (quoting Kindred v. Con/Chem., Inc., 650 S.W.2d 61, 63
(Tex. 1983)).
Negligence/Gross Negligence
Odem first contends the trial court erred in granting summary judgment on his claims for
negligence and gross negligence. Odem did not bring a claim for negligent misrepresentation.
In its motion for summary judgment, Deloitte & Touche asserted, among other grounds, that it
was entitled to judgment on the negligence claims because it owed no duty to Odem as a matter
of law. We agree.
To establish a claim for negligence, a plaintiff must show he was owed a duty by the
defendant and the defendant breached that duty, proximately causing damage to the plaintiff.
Urena, 162 S.W.3d at 550; Doe v. Boys Club of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex.
1995). The threshold question in any negligence case is whether the defendant owed the plaintiff
a duty. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995); Greater Houston
Transp. Co. v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990). Whether a duty exists is a question of
law for the court to decide under the facts of the specific case. Tri v. J.T.T., 162 S.W.3d 552,
563 (Tex. 2005); Lefmark Mgmt. Co. v. Old, 946 S.W.2d 52, 53 (Tex. 1997). Based on Odem’s
pleadings, as well as his responses to interrogatories, which were submitted as part of Deloitte &
Touche’s summary judgment evidence, any duty in this case was based on Deloitte & Touche’s
professional engagement with SAWS. In his third amended petition, the live pleading, Odem
alleged Deloitte & Touche was negligent and grossly negligent “in the preparation of the QAR.”
The QAR resulted from the professional engagement of Deloitte & Touche by SAWS.
-8-
04-09-00747-CV
Moreover, during discovery, Odem was specifically asked in interrogatories propounded by
Deloitte & Touche to identify any duty owed to him by Deloitte & Touche. In response, Odem
stated Deloitte & Touche “had a duty to perform under its contract with SAWS.” The contract
between Deloitte & Touche and SAWS called for Deloitte & Touche to provide professional
accounting and auditing services. Because the engagement was for professional services, the
negligence claim is one for professional malpractice, and the issue is whether the professional
exercised the care, skill, and diligence that ordinary professionals in that field commonly possess
and exercise. See Averitt v. PriceWaterhouseCoopers, L.L.P., 89 S.W.3d 330, 334 (Tex. App.—
Fort Worth 2002, no pet.). Indeed, Odem recognizes this in his brief when he states that to show
negligence in this case, he was required to prove Deloitte & Touche “failed to do that which an
accountant of ordinary prudence would have done under the same or similar circumstances or did
that which an accountant of ordinary prudence would not have done under the same or similar
circumstances.”
The question of an auditor’s or accountant’s duty to third-parties who are not in privity
with them was recently answered by the Texas Supreme Court in Grant Thornton LLP v.
Prospect High Income Fund, 314 S.W.3d 913 (Tex. 2010). In Grant Thornton, the supreme
court reaffirmed this state’s adherence to section 552 of the Restatement (Second) of Torts,
which provides that a cause of action is available only when the professional at issue–accountant,
auditor, or attorney–provides information to a known party for a known purpose. Id. at 920. As
noted by the court, section 552 defines a “known party” as one who falls in a limited class of
potential claimants “‘for whose benefit and guidance [one] intends to supply the information or
knows that the recipient intends to supply it.’” Id. (quoting McCamish, Martin, Brown &
-9-
04-09-00747-CV
Loeffler v. F.E. Appling Interests., 991 S.W.2d 787, 791 (Tex. 1999) (quoting RESTATEMENT
(SECOND) OF TORTS § 552(2)(a) (1965)).
So, was Odem a “known party” within the parameters of section 552 such that Deloitte &
Touche owed a duty to him based on its professional engagement with SAWS? We hold he was
not. By the terms of the agreement between Deloitte & Touche and SAWS, Deloitte & Touche
was conducting a QAR of the internal audit department for use by SAWS–for SAWS to
determine the efficacy of the department. The QAR was not being supplied to Odem, as an
individual, for his benefit and guidance. We therefore hold, as a matter of law, that Deloitte &
Touche owed no duty to Odem, and the trial court correctly granted summary judgment on the
negligence claim.
Odem cites numerous professional standards he claims created a duty by Deloitte &
Touche. However, Odem did not raise these standards in response to Deloitte & Touche’s
motion for summary judgment. We recognize Odem cited numerous professional standards in
his response, but they were not cited with regard to his negligence cause of action, and he did not
provide any summary judgment evidence to raise a fact issue as to their applicability to any duty
owed by Deloitte & Touche to him.
With regard to gross negligence, it is axiomatic that without a successful negligence
claim in the first instance there can be no claim for gross negligence. See Sanders v. Herold, 217
S.W.3d 11, 20 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (holding that although gross
negligence refers to different character of conduct, one’s conduct cannot be grossly negligent
without being negligent); Muniz v. State Farm Lloyds, 974 S.W.2d 229, 237 (Tex. App.—San
Antonio 1998, no pet.) (holding that if party is not liable for negligence, it cannot be liable for
- 10 -
04-09-00747-CV
gross negligence). Accordingly, the trial court did not err in granting summary judgment in
favor of Deloitte & Touche on Odem’s gross negligence claim.
Malicious Harm
In his second issue, Odem argues the trial court erred in granting summary judgment in
favor of Deloitte & Touche because he raised a fact issue on whether Deloitte & Touche
“maliciously harmed” him. We are, admittedly, at a loss with regard to this issue. Odem has
cited no authority for his assertion that a cause of action for “malice” or “malicious harm” exists
at law or equity, and we have found none. Additionally, we have reviewed Odem’s live
pleading, the third amended petition, and can find no allegation of “malice,” except with regard
to “actual malice” associated with his defamation claim. We therefore overrule this issue.
Libel
Odem next complains the trial court erred in granting summary judgment on his libel
claim. To establish a cause of action for defamation, a plaintiff must prove: (1) the defendant
published a factual statement, (2) that was capable of defamatory meaning, (3) concerning the
plaintiff, (4) while acting with either negligence, if the plaintiff is a private individual, or actual
malice, if the plaintiff is a public figure or a public official, concerning the truth of the statement.
WFAA-TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998); Grand Champion Film Prod.,
L.L.C. v. Cinemark USA, Inc., 257 S.W.3d 478, 481 (Tex. App.—Dallas 2008, no pet.). Deloitte
& Touche moved for summary judgment on several grounds. In one of its grounds, Deloitte &
Touche argued there was no evidence the recipients of the QAR, which was Odem’s basis for his
libel action, understood it to be defamatory, thereby negating the required element of publication.
To constitute actionable defamation, the alleged defamatory statement must be
communicated so that it is understood by a third party in a defamatory sense, and there must be
- 11 -
04-09-00747-CV
evidence that at least one recipient of the alleged defamatory communication understood the
words as defamatory. Rodriguez v. Printone Color Corp., 982 S.W.2d 69, 73 (Tex. App.—
Houston [1st Dist.] 1998, pet. denied); Marshall v. Mahaffey, 974 S.W.2d 942, 949 (Tex. App.—
Beaumont 1998, pet. denied); Diesel Injection Sales & Servs., Inc. v. Renfro, 656 S.W.2d 568,
573 (Tex. App.—Corpus Christi 1983, writ ref’d n.r.e.). When there is no evidence that at least
one person understood the words as defamatory, the required element of publication is absent.
AccuBanc Mortg. Corp. v. Drummonds, 938 S.W.2d 135, 147 (Tex. App.—Fort Worth 1996,
writ denied). As stated by the court in Drummonds:
Defamatory statements are “published” if they are communicated orally, in
writing, or in print to some third person capable of understanding their
defamatory import and in such a way that the third person did so understand.
Id.; see Farias v. Bexar County Bd. of Trustees for Mental Health Mental Retardation Servs.,
925 F.2d 866, 868 (5th Cir.), cert. denied, 502 U.S. 866 (1991).
We have reviewed Odem’s response to Deloitte & Touche’s no evidence motion for
summary judgment on this issue, and we find he provided no evidence that any person who
received the QAR understood it to be defamatory. Once Deloitte & Touche asserted there was
no evidence as to the publication element of Odem’s libel cause of action, the burden shifted to
Odem to present more than a scintilla of probative evidence to raise a genuine issue of material
fact on this challenged element. See TEX. R. CIV. P. 166a(i); Wal-Mart, 92 S.W.3d at 506.
Because he failed to provide even a scintilla of probative evidence that any recipient of the QAR
understood it to have a defamatory import, the trial court did not err in granting Deloitte &
Touche’s motion for summary judgment on the libel claim.
- 12 -
04-09-00747-CV
Tortious Interference with Contract
In his fourth issue, Odem challenged the summary judgment granted in favor of Deloitte
& Touche on his claim for tortious interference with contract. Odem argues he raised a fact issue
as to whether Deloitte & Touche tortiously interfered with his employment contract with SAWS.
A plaintiff prevails in a cause of action for tortious interference if he can prove: (1) the
existence of a contract subject to interference, (2) willful and intentional interference, (3)
interference that proximately caused damage to the plaintiff, and (4) actual damage or loss by the
plaintiff. Powell Indus., Inc. v. Allen, 985 S.W.2d 455, 456 (Tex. 1998); Milam v. Nat’l Ins.
Crime Bureau, 989 S.W.2d 126, 131 (Tex. App.—San Antonio 1999, no pet.) (citing
Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 281, 282 (Tex. 1996)). As one of its
grounds for summary judgment, Deloitte & Touche asserted it was entitled to summary judgment
on Odem’s claim for tortious interference with contract because Odem did not have an
employment contract with SAWS. In response, Odem argued, as he does here, Texas recognizes
a claim for interference with an “at-will relationship.” In other words, Odem contends no
contract is necessary for him to prevail on a tortious interference with contract claim. In support
of his argument, Odem relies upon Juliette Fowler Homes, Inc. v. Welch Assocs., Inc., 793
S.W.2d 660 (Tex. 1990), Sterner v. Marathon Oil Co., 767 S.W.2d 686 (Tex. 1989), and Knox v.
Taylor, 992 S.W.2d 40 (Tex. App.—Houston [14th Dist.] 1999, no pet.). These cases, however,
do not support Odem’s argument that an existing contract is unnecessary to support a tortious
interference with contract claim. Rather, these cases stand for the proposition that a party can
maintain a tortious interference with contract claim even if the contract in question is terminable
at will. See Juliette Fowler Homes, 793 S.W.2d at 666; Sterner, 767 S.W.2d at 689; Knox, 992
S.W.2d at 57-58. As articulated by the supreme court in Sterner, even if a contract is terminable
- 13 -
04-09-00747-CV
at will, until it is terminated, the contract is valid and subsisting, and if a third party tortiously
interferes with it, a cause of action for tortious interference with contract will lie. Sterner, 767
S.W.2d at 689; see Juliette Fowler Homes, 793 S.W.2d at 666; see Knox, 992 S.W.2d at 57-58.
In other words, Texas simply recognizes that even though a contract can be terminated at any
time, third parties may not tortiously interfere with it while it is in existence. See id.
It is undisputed that Odem did not have a contract with SAWS, not even a terminable-at-
will contract so as to render Sterner and its progeny applicable. Deloitte & Touche presented
summary judgment evidence of the absence of a contract between Odem and SAWS, which
established the absence of a contract as a matter of law. Specifically, Deloitte & Touche
submitted the SAWS Employee Policy Manual provision, which states (1) all SAWS employees
are employees-at-will, (2) the manual does not establish any employment contract, i.e., “policy
manual is not intended to create a de facto contract of employment[,]” and (3) no agreement or
promise relating to an employee’s employment is binding on SAWS unless it is in writing and
signed by the CEO. Odem did not present any evidence to counter the evidence submitted by
Deloitte & Touche, and in fact concedes, he had no employment contract with SAWS. In the
absence of some type of contract between Odem and SAWS, Odem cannot maintain his claim
for tortious interference with contract. The trial court therefore did not err in granting summary
judgment in favor of Deloitte & Touche on this claim.
Conspiracy
Finally, Odem contends the trial court erred in granting summary judgment on his claim
for conspiracy. Odem alleged, in essence, Deloitte & Touche conspired with SAWS to violate
Odem’s civil rights, and that Deloitte & Touche did so by producing a one-sided report that
allowed SAWS to take action that ultimately resulted in Odem’s loss of employment. Deloitte &
- 14 -
04-09-00747-CV
Touche moved for summary judgment on Odem’s conspiracy claim pursuant to rule 166a(i),
asserting there was no evidence as to any element of this claim. See TEX. R. CIV. P. 166a(i).
A civil conspiracy is “a combination by two or more persons to accomplish an unlawful
purpose or to accomplish a lawful purpose by unlawful means.” Triplex Commc’ns, Inc. v. Riley,
900 S.W.2d 716, 720 (Tex. 1995) (quoting Massey v. Armco Steel Co., 652 S.W.2d 932, 934
(Tex. 1983)). The essential elements of a civil conspiracy are: (1) two or more persons; (2) an
object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one
or more unlawful, overt acts; and (5) proximately resulting damages. Tri, 162 S.W.3d at 556;
Massey, 652 S.W.2d at 934.
Deloitte & Touche moved for summary judgment asserting, among other things, there
was no evidence of a meeting of the minds between Deloitte & Touche and SAWS to perform
any unlawful act. Because Deloitte & Touche properly moved for no evidence summary
judgment by specifically asserting there was no evidence of the “meeting of the minds” element,
the burden shifted to Odem to present more than a scintilla of probative evidence to raise a
genuine issue of material fact on that element. See TEX. R. CIV. P. 166a(i); Wal-Mart, 92 S.W.3d
at 506. In an effort to meet his burden, Odem referred to “emails [sic] that went back and forth
to develop the report in a light most favorable to SAWS.” Odem attached as evidence to his
motion for summary judgment two e-mails. The first e-mail document contains communications
from Odem to Schwerdtfeger, from Schwerdtfeger to a SAWS representative, Doug Evanson,
and Evanson’s response to Schwerdtfeger. In those communications, Odem asked
Schwerdtfeger to call him because he would like to discuss changes to Deloitte & Touche’s
report that had not previously been discussed. He mentioned potential erroneous information
that may have been received by Deloitte & Touche. In response, Schwerdtfeger contacted
- 15 -
04-09-00747-CV
Evanson with SAWS, and told him Deloitte & Touche would prefer if Odem “work directly
through SAWS and that SAWS let us know if there is something else required of us with respect
to this report and Mr. Odem’s comments.” Evanson responded ten days later, stating he “will
attempt to check this weekend for your e-mail, but if I do not receive, can you please forward
directly to Dave next week.”
The second e-mail is from Schwerdtfeger to John Morgan–both Deloitte & Touche
representatives who worked on the SAWS report. In that e-mail, Schwerdtfeger advised Morgan
the report was reviewed with Odem and Odem took exception to some portions of the report,
indicating the problems found by Deloitte & Touche with his department were not “his fault and
that everyone in mgt and bard has lied to us because they are trying to get rid of him.”
Schwerdtfeger noted Odem felt his department had added value to SAWS, but no one else in
management felt the same way, and that Deloitte & Touche’s independent evaluation found the
internal audit department was not providing the value it should. She expressed concern for
Odem, but concluded he does not understand the purpose of an internal audit department.
Schwerdtfeger stated that although Odem never had any problem with SAWS management in the
past, SAWS had undergone significant change in its board and leadership, specifically a new
CEO and an Audit Committee. It was new management that requested the outside scrutiny by
Deloitte & Touche because management had “heard from others and was beginning to observe
for themselves that IA was dysfunctional but they didn’t want to pull the trigger until a formal
review was done.” Schwerdtfeger then opined that SAWS was likely to make a change with
regard to the internal audit department, but the situation with Odem was complicated because of
his lawsuit against SAWS. Finally, she stated she was open to a response from Odem, but noted
that any response could be “very negative,” and SAWS would then be entitled to reply to
- 16 -
04-09-00747-CV
Odem’s response. Schwerdtfeger asked Morgan if Deloitte & Touche really wanted to get into
that, and perhaps Deloitte & Touche should just let Odem and SAWS “duke it out internally.”
She advised that whatever Deloitte & Touche does, it should be conservative given Odem’s
“record of filing lawsuits and complaints.” This e-mail is dated November 21, 2006, more than a
month before the final report issued.
Having reviewed these e-mails, which are the only summary judgment evidence provided
by Odem in response to Deloitte & Touche’s allegation that there was no evidence of any
meeting of the minds between Deloitte & Touche and SAWS to do an unlawful act, we agree
with Deloitte & Touche there is nothing in the e-mails to show a meeting of the minds between
Deloitte & Touche and SAWS to violate Odem’s civil rights or otherwise harm Odem. In sum,
these e-mails merely establish Deloitte & Touche was aware of the problems Odem was having
with SAWS, and was seeking to stay out of the fray in an attempt to avoid what ultimately
happened–a lawsuit against Deloitte & Touche by Odem. There is not a scintilla of evidence,
circumstantial or direct, within these e-mails to show an agreement between Deloitte & Touche
and SAWS to take any unlawful action. Accordingly, because Odem failed to present even a
scintilla of evidence to establish at least one element of his civil conspiracy claim, we hold the
trial court did not err in granting summary judgment in favor of Deloitte & Touche on the
conspiracy claim. See id.
CONCLUSION
Based on the foregoing discussion and analysis, we overrule all of Odem’s issues.
Having overruled Odem’s issues, we affirm the summary judgment in favor of Deloitte &
Touche.
Marialyn Barnard, Justice
- 17 -