All-Tex Staffing & Pers., Inc. v. Sarah Romo Torres (In re All-Tex Staffing & Pers., Inc.)

• Decision Date: 08 April 2019
• Docket Number: Case No. 17-31109,Adversary No. 17-03210
• Citation: 599 B.R. 289
• Parties: IN RE: ALL-TEX STAFFING & PERSONNEL, INC., Debtor. All-Tex Staffing & Personnel, Inc., Plaintiff, v. Sarah Romo Torres, Momentum Staffing Solutions, LLC, and Sylvia Romo, Defendants.
• Court: U.S. Bankruptcy Court — Southern District of Texas

599 B.R. 289

IN RE: ALL-TEX STAFFING & PERSONNEL, INC., Debtor.

All-Tex Staffing & Personnel, Inc., Plaintiff,

v.Sarah Romo Torres, Momentum Staffing Solutions, LLC, and Sylvia Romo, Defendants.

Case No. 17-31109

Adversary No. 17-03210

United States Bankruptcy Court, S.D. Texas, Houston Division.

Signed April 8, 2019

Reese W. Baker, Baker & Associates, Houston, TX, for Plaintiff.

Jarrod B. Martin, McDowell Hetherington LLP, Houston, TX, Shane Allister McClelland, Law Offices of Shane McClelland, Katy, TX, for Defendants.

MEMORANDUM OPINION REGARDING THE DEBTOR'S MOTION FOR RELIEF FROM JUDGMENT

[Adv. Doc. No. 115]

Jeff Bohm, United States Bankruptcy Judge

I. INTRODUCTION

On February 6 and 11, 2019, this Court held a hearing (the "Hearing") on the motion for relief from judgment (the "Motion") filed by All-Tex Staffing & Personnel, Inc. (the "Debtor"). [Adv. Doc. No. 115]. There was opposition to the Motion. Specifically, Sarah Romo Torres ("Torres") filed an objection and motion to strike the Motion. [Adv. Doc. No. 118]. Additionally, an objection and motion to strike was filed by Momentum Staffing Solutions, LLC ("Momentum Staffing") and Sylvia Romo ("Romo"). [Adv. Doc. No. 116].¹ Only one witness, Archie Patterson ("Patterson"), the Debtor's owner and president, testified at the Hearing. The Court admitted Exhibits A, C, D, E2 (pages 1–6 only), F, G, K, L, and M offered by the Debtor. After listening to the testimony, reviewing the exhibits, and hearing closing arguments, the Court took this matter under advisement.

Pursuant to Federal Rules of Bankruptcy Procedure 7052 and 9014, the Court now issues these Findings of Fact and Conclusions of Law to explain why it has decided to deny the Motion. To the extent that any Finding of Fact is construed to be a Conclusion of Law, it is adopted as such; and to the extent that any Conclusion of Law is construed to be a Finding of Fact, it is adopted as such. The Court reserves the right to make additional findings and conclusions as it deems appropriate.

II. FINDINGS OF FACT

1. The Debtor is in the business of providing temporary labor services to customers in the Houston metropolitan area. [See Adv. Doc. No. 1-1 at 8 of 60]. On or about November 8, 2016, the Debtor filed a lawsuit against Torres styled All-Tex Staffing & Personnel Inc. v. Sarah Romo [Torres], Cause No. 2016-77306, in the District Court of the 281st Judicial District in Harris County, Texas (the "State Court Lawsuit"). [See Adv. Doc. No. 1-1 at 1 of 60].² In the State Court Lawsuit, the Debtor brought the following causes of action against Torres, a former employee: breach of contract, misappropriation of trade secrets, tortious interference of contracts and business relationships, unfair competition, breach of computer security crimes, breach of fiduciary duty, conversion, breach of the Texas Theft Liability Act, and conspiracy. [Adv. Doc. No. 1-1, at 45–60 of 60]. The Debtor alleged that Torres—in violation of the confidentiality, non-solicitation, and non-compete agreements that she signed while an employee of the Debtor—misappropriated the Debtor's trade secrets and other confidential information and solicited the Debtor's customers for a competing business—namely, Momentum Staffing. [Id. ]. Torres had been an employee of the Debtor from approximately January 2013 to November 2016. [Adv. Doc. No. 31, Apr. 27, 2017, Hrg. Tr. 10:7-10].

2. On February 26, 2017, the Debtor filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. [Main Case Doc. No. 1].

3. On April 11, 2017, the Debtor removed the State Court Lawsuit to this Court, and the Clerk of Court assigned the State Court Lawsuit adversary number 17-03210. [Adv. Doc. No. 1].

4. On April 25, 2017, the Debtor filed a Corrected Application for Temporary Restraining Order, Temporary Injunction and Permanent Injunction and Amended Complaint (the "Amended Complaint").³ [Adv. Doc. No. 10]. The Amended Complaint added Momentum Staffing and Romo as defendants. Romo is Torres' mother. Romo owns Momentum Staffing, which provides temporary labor services to customers in the Houston area—i.e., Momentum Staffing is in the same business as the Debtor. The Amended Complaint alleged that Torres had worked for Momentum Staffing since March of 2016, which overlaps with the time period she worked for the Debtor (i.e., Torres worked for the Debtor from January of 2013 to November of 2016).

5. On April 27, 2017, the Court held a hearing on the Debtor's request for a temporary restraining order contained in the Amended Complaint. At that hearing, Torres, who was representing herself pro se , testified that Momentum Staffing is her mother's (i.e, Romo's) business and that her mother was running Momentum Staffing.⁴ Torres denied providing any advice to anyone with Momentum Staffing, or assisting or working with her mother at Momentum Staffing.⁵ Torres also denied assisting with the formation of Momentum Staffing.⁶ In fact, Torres testified that she has "no tie" to Momentum Staffing.⁷

6. On May 3, 2017, the Court held a continued hearing on the Debtor's request for a temporary restraining order. At the beginning of the hearing, Torres—who had retained counsel by this point—invoked her right under 18 U.S.C. § 1623 to recant the testimony she gave at the April 27, 2017, hearing. At the May 3, 2017, hearing—in direct opposition to her prior testimony at the April 27, 2017, hearing—Torres testified that she had assisted her mother (i.e., Romo) with Momentum Staffing.⁸ She also testified that she had periodically helped her brother (who also is employed by Momentum Staffing) with work for Momentum Staffing.⁹ Specifically, Torres testified that she had written "ghost emails" for her brother to at least two entities—i.e., Torres actually composed the emails but the emails were composed in such a way such that the recipients of those emails were to believe that her brother wrote and sent them.¹⁰ Torres further testified that during the time period she was employed by the Debtor, she had told one of the Debtor's clients (Prefco Distribution) about the staffing company her mother had opened,¹¹ and she also testified that she had told another client of the Debtor (Lonestar Heat Treat) about Momentum Staffing.¹² Thus, her testimony from the April 27, 2017, hearing that she had "no tie" to Momentum Staffing was patently false. In addition to the testimony just described, Torres also testified at the May 3, 2017, hearing that she had never been employed by Momentum Staffing or received a paycheck from this entity, but rather that she had received money from her mother, Romo, since the termination of her employment with the Debtor.¹³ Finally, Torres denied taking any property of the Debtor with her when her employment there was terminated, including any I-9 forms of the Debtor's employees, and she further testified that the officers and directors of Momentum Staffing are Romo, and no one else.¹⁴ At the conclusion of the May 3, 2017, hearing the Court continued the hearing to May 30, 2017.¹⁵

7. On May 26, 2017, Momentum Staffing and Romo filed an Answer. [Adv. Doc. No. 41]. Also on May 26, 2017, Torres filed an Answer and a counterclaim for attorneys' fees. [Adv. Doc. No. 42].

8. On May 30, 2017, Torres filed her First Amended Answer. [Adv. Doc. No. 44].

9. The Court held the continued hearing on May 30, 2017. After hearing testimony from two additional witnesses and closing arguments, the Court requested additional briefing from the parties and continued the hearing until June 7, 2017.

10. At the continued hearing on June 7, 2017, the Court heard additional argument from the parties and then took the matter under advisement.

11. On June 30, 2017, the Court denied the Debtor's request for a temporary restraining order. [Adv. Doc. No. 52]. The Court thereafter scheduled trial for February 28, 2018. [Adv. Doc. No. 64].

12. On December 18, 2017, counsel for Torres filed a notice of settlement, stating that the parties had reached a resolution of the claims in the adversary proceeding (The agreement which the parties eventually signed, which was admitted as Exhibit L at the Hearing, is hereinafter referred to as the "Settlement Agreement"). [Adv. Doc. No. 100].

13. On February 15, 2018, the Debtor filed a motion to compromise pursuant to Federal Rule of Bankruptcy Procedure 9019 (the "Motion to Compromise"), requesting that the Court approve the Settlement Agreement. [Main Case Doc. No. 63].

14. On February 23 and March 1, 2018, the Court held hearings on the Motion to Compromise. At the conclusion of the March 1, 2018, hearing the Court orally granted the Motion to Compromise and orally granted a motion to dismiss the adversary proceeding. On March 7, 2018, the Court entered an order memorializing its ruling regarding the Motion to Compromise. [Main Case Doc. No. 68]. Attached to the March 7, 2018, order was a copy of the Settlement Agreement, which was deemed to have taken effect on March 1, 2018. In pertinent part, the following terms comprise the Settlement Agreement:

A. The Defendants were to pay the Debtor a total of $ 200,000.00; $ 10,000.00 of which was to be paid within 14 days following the entry of the order approving the Motion to Compromise, with the remaining funds to be paid in a series of four larger lump payments and also 60 smaller monthly payments;

B. The Defendants entered into a non-compete agreement in which they agreed not to solicit or conduct business with 20 named companies that were listed on an attachment to the Settlement Agreement; and

C. The Defendants were required to provide a letter to the Debtor stating that Defendants had agreed not to solicit or conduct business with the 20 named companies, and the Debtor was permitted to share this letter with the 20 named companies.

15. On March 8, 2018, the parties filed a joint stipulation of dismissal in the adversary proceeding, dismissing all causes of actions brought by the Debtor and stipulating that the...