BarZ Adventures Inc. v. Patrick
| Docket Number | Civil Action 4:20-CV-299 |
| Decision Date | 13 March 2023 |
| Parties | BARZ ADVENTURES INC. d/b/a BAR-Z MOBILE DEVELOPMENT, Plaintiff, v. TIMOTHY PATRICK and APP STAR, LLC, Defendants. |
| Court | U.S. District Court — Eastern District of Texas |
Pending before the Court is Plaintiff's Motion for Summary Judgment (Dkt. #143). Having considered the motion and the relevant pleadings, the Court finds that the motion should be GRANTED in part and DENIED in part.
This case arises out of a former employer-employee relationship whereby Defendant Timothy Patrick (“Patrick”) used to work for Plaintiff BarZ Adventures Inc. d/b/a Bar-Z Mobile Development (“Bar-Z”). Bar-Z is a company based in Austin, TX that is in the business of creating mobile applications, designed to run on a mobile device and perform certain functions, such as games, ticket purchasing or mapping, depending on the client (Dkt. #120 at p. 3). Bar-Z has a civic division, zCivic, that is tasked with developing applications that support municipalities, parks and attractions, main street organization, tourism, and nonprofit organizations (Dkt. #120 at p. 3). In March of 2017, Bar-Z hired Patrick as the Director of Sales (Dkt. #143 at p. 5).
As part of his employment, Patrick signed an Employment, Confidential Information and Invention Assignment Agreement (“Employment Agreement”) with Bar-Z (Dkt. #120 at p. 4).
The Employment Agreement included a confidentiality and non-compete provision that mandated Patrick to keep Bar-Z's information confidential and restricted Patrick from competing with Bar-Z for the twelve (12) months after his employment concluded (Dkt. #120 at p. 4; Dkt. #143 Exhibit 1 at pp. 9-10).
During his time at Bar-Z, Patrick assisted the company to work on certain mobile applications for various chambers of commerce (Dkt. #143 at p. 6). These applications contained information, using a “block architecture” format about various hotspots in the local community as well as other local businesses for residents or tourists to locate (Dkt. #143 at p. 6).[1]Bar-Z would also sell advertisements on these chamber applications to receive a profit (Dkt. #143 at p. 6). Bar-Z released a number of applications with this format, including “I Love Granbury,” “Passport 2 Midland,” “Our Odessa,” and “SWLA Connection” (Dkt. #143 at p. 9). Part of Patrick's role in this department was to create certain marketing materials for the applications and a list of potential chambers of commerce that could be future clients with Bar-Z (Dkt. #143, Exhibit 1 at pp. 4, 6). An employee of Bar-Z heard Patrick express his frustration about the company from time to time, and in doing so, Patrick would state that he could leave Bar-Z and do exactly what Bar-Z was doing on his own. When the employee would remind him that he signed a non-compete, Patrick responded that “non-compete agreements are not enforceable in Texas” (Dkt. #143, Exhibit 34 ¶ 3).
In September of 2018, Bar-Z ultimately terminated Patrick for cause (Dkt. #120 at p. 6). Patrick signed a Termination Certification, acknowledging his termination as well as the provisions from his Employment Agreement that place a duty on Patrick to not compete and not disclose Bar-Z's confidential information once he left (Dkt. #120 at p. 6). Following his termination, Patrick was eventually “homeless” and without a car, until he acquired a new job (Dkt. #143, Exhibit 2).
Bar-Z was informed of Patrick's employment with Defendant App Star, LLC (“App Star”) in July of 2019 (Dkt. #120 at p. 6). Patrick worked with App Star as their Director of Sales (Dkt. #143, Exhibit 11). Bar-Z was also informed that Patrick had been working with App Star to create mobile applications just like the ones he had worked on while working at Bar-Z. These applications included “Colleyville Now,” “Princeton Now,” and “Celina Connected” (Dkt. #81 at p. 2; Dkt. #120 at p. 6). After discovering this information, Bar-Z President Lee Little (“Little”) reminded Patrick of his contractual obligations and informed App Star's CEO Eugene Rice (“Rice”) of the same (Dkt. #120 at p. 6). Neither response indicated to Little that either Patrick or Rice intended to comply with Patrick's obligations under the Employment Agreement, as both individuals essentially told Little in separate conversations “what are you going to do about it?” (Dkt. #143, Exhibit 1 at p. 7). Bar-Z subsequently filed suit.
On June 1, 2021, Bar-Z filed its Fifth Amended Complaint against the two remaining defendants, Patrick and App Star, for their conduct regarding the use of Bar-Z's trade secrets, in breach of the Employment Agreement that Patrick signed (Dkt. #120). There are other defendants listed in the amended complaint, including Colleyville Chamber of Commerce and Rice, but they have since been dismissed by this Court or the Court has ordered default judgment against them (Dkt. #103; Dkt. #146). Neither Patrick nor App Star have responded to the Fifth Amended Complaint, just as they did not respond to the Fourth Amended Complaint. The last answers that Patrick and App Star filed were back on October 14, 2020, in response to Bar-Z's Third Amended Complaint, where Patrick and App Star filed twelve (12) and eleven (11) affirmative defenses, respectively (Dkt. #66; Dkt. #68). Additionally, Patrick and App-Star each filed several counterclaims against Bar-Z (Dkt. #66; Dkt. #68). On October 23, 2020, Bar-Z responded to these counterclaims with its own affirmative defenses (Dkt. #78; Dkt. #81).
On March 3, 2022, Bar-Z filed the pending motion for summary judgment on all claims (Dkt. #143). The Court finds that each of Bar-Z's claims have been conclusively proven, and that Patrick and App Star's affirmative defenses and counterclaims have no merit. For the reasons discussed below, Bar-Z is entitled to judgment as a matter of law for its claims against both Patrick and App Star.
The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary judgment is proper under Rule 56(a) of the Federal Rules of Civil Procedure “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A dispute about a material fact is genuine when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). Substantive law identifies which facts are material. Id. The trial court “must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment.” Casey Enters., Inc. v. Am. Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981).
The party seeking summary judgment bears the initial burden of informing the court of its motion and identifying “depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials” that demonstrate the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(c)(1)(A); Celotex, 477 U.S. at 323. If the movant bears the burden of proof on a claim or defense for which it is moving for summary judgment, it must come forward with evidence that establishes “beyond peradventure all of the essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). Where the nonmovant bears the burden of proof, the movant may discharge the burden by showing that there is an absence of evidence to support the nonmovant's case. Celotex, 477 U.S. at 325; Byers v. Dall. Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000).
A nonmovant's failure to respond to a motion for summary judgment does not entitle the movant to a default judgment. Retzlaff v. de la Vina, 606 F.Supp.2d 654, 656 (W.D. Tex. 2009) (citing Eversley v. MBank Dallas, 843 F.2d 172, 174 (5th Cir. 1988)). Rather, the Court may accept the movant's evidence as undisputed, and then conduct an analysis whether the summary judgment evidence establishes a prima facie showing of the movant's entitlement to judgment. Id. The Court must consider all the evidence but “refrain from making any credibility determinations or weighing the evidence.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).
The Court will begin this analysis by outlining all the pending claims, affirmative defenses, and counterclaims that are outstanding in this case.
To start, Bar-Z alleges violations of the Texas Uniform Trade Secrets Act, the Federal Defend Trade Secrets Act, a breach of two different sections of Patrick's Employment Agreement, and a breach of fiduciary duty against Patrick. Patrick raises the following twelve affirmative defenses: (1) preemption; (2) scope of copyright protection; (3) no copyright infringement; (4) lack of registration; (5) failure to mitigate; (6) unclean hands; (7) lack of standing; (8) contributory negligence; (9) estoppel; (10) Bar-Z's own breach of the contract; (11) arbitration; and (12) unenforceability and unconscionability (Dkt. #68 at pp. 7-9). Additionally, Patrick filed counterclaims against Bar-Z for a breach of contract, defamation, violations of the Texas Uniform Trade Secrets Act and Federal Defend Trade Secrets Act, as well as requesting a declaratory judgment that no copyright infringement existed (Dkt. #68 at pp. 11-14). Bar-Z responded to the counterclaims by raising affirmative defenses of its own, including the use of privileged statements, the equitable doctrine of estoppel and unclean hands, excuse from performance...
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