Choctaw Constr. Servs. LLC v. Rail-Life R.R. Servs., LLC

• Decision Date: 29 December 2020
• Docket Number: NO. 01-20-00216-CV,01-20-00216-CV
• Parties: CHOCTAW CONSTRUCTION SERVICES LLC, Appellant v. RAIL-LIFE RAILROAD SERVICES, LLC; David Pina Torres; Esequiel Olmeda, Appellees
• Court: Texas Court of Appeals

617 S.W.3d 143

CHOCTAW CONSTRUCTION SERVICES LLC, Appellant

v.RAIL-LIFE RAILROAD SERVICES, LLC; David Pina Torres; Esequiel Olmeda, Appellees

NO. 01-20-00216-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued December 29, 2020

Quentin L. Smith, Caroline C. Stewart, Vinson & Elkins LLP, 1001 Fannin St., Ste. 2500, Houston, Texas 770022-6760, for Appellant.

Anabel King, John Wesley Wauson, Wauson & Probus, One Sugar Creek Center Blvd., Ste. 880, Sugar Land, Texas 77478, for Appellees.

Panel consists of Justices Keyes, Lloyd, and Landau.

Sarah Beth Landau, Justice

Rail-Life Railroad Services, LLC sued Choctaw Construction Services, LLC for tortious interference with contract, business disparagement, and other claims arising out of allegedly false allegations by Choctaw. Choctaw sought dismissal of the suit under the Texas Citizens Participation Act ("TCPA").¹ The trial court denied Choctaw's motion to dismiss. On appeal, Choctaw challenges the trial court's order denying its TCPA motion. We reverse and remand.

Background

Choctaw is a construction company specializing in railroad construction, railroad maintenance, railroad emergency services, soil excavation, and underground utilities. In June 2017, Choctaw hired Esequiel Olmeda as a supervisor. The year after, Choctaw hired David Pina Torres as a general foreperson. Olmeda and Torres collectively had over two decades of experience in railroad maintenance and construction. Their duties included providing services to Choctaw's clients, including Union Pacific Corporation.

Around July 2019, while still working for Choctaw, Olmeda and Torres formed Rail-Life to "become a direct supplier/vendor/contractor for Union Pacific." Choctaw later terminated Olmeda and Torres upon learning about their rival business. Union Pacific required every contractor to retrieve eRailsafe badges from terminated employees. An eRailsafe badge is an identification card that Union Pacific developed to comply with the Department of Homeland Security's requirements issued in the wake of the September 11, 2001 terrorist attacks. See 6 U.S.C. § 1161 – 1172 (addressing railroad security recommendations). Union Pacific required every person entering its property to show an eRailsafe badge identifying the person's name and employer.

After Choctaw fired Olmeda and Torres, their company, Rail-Life, sued Choctaw for tortious interference with prospective business relations and existing contracts, business disparagement, defamation, and unfair competition. Rail-Life alleged that Choctaw had falsely accused Rail-Life's employees of using Choctaw-issued eRailsafe badges to gain access to Union Pacific's worksite. Rail-Life also alleged that C. Baker, a general manager at Choctaw, reported Rail-Life's misuse of Choctaw badges to "Union Pacific's RailRoad Police." Union Pacific investigated these allegations. During the investigation, Union Pacific temporarily prohibited Rail-Life from working on any of its existing projects. Union Pacific also did not invite Rail-Life to bid on any new projects during this time. Rail-Life denied the allegations that it had taken and misused Choctaw's badges.

Along with the accusations of misusing badges, Rail-Life alleged that Choctaw had falsely accused Rail-Life of stealing fuel and equipment from Choctaw. It claimed that Choctaw general manager Baker told Union Pacific that Rail-Life had stolen fuel belonging to Choctaw and used Choctaw's equipment without permission. Based on these false accusations, Union Pacific cancelled its contracts with Rail-Life, causing Rail-Life to lose income and profits from at least six existing contracts.

In response, Choctaw answered, filed special exceptions, and moved to dismiss under Rule 91a of the Texas Rules of Civil Procedure. Rail-Life amended its original petition and nonsuited most of its claims, leaving only claims against Choctaw for tortious interference with an existing contract and business disparagement. Choctaw withdrew is Rule 91a motion to dismiss, and the trial court entered an order dismissing the other three claims.

Choctaw filed a TCPA motion to dismiss Rail-Life's claims, arguing that Rail-Life's lawsuit was based on or was in response to Choctaw's exercise of the right of free speech and the right to petition. Choctaw maintained that Rail-Life was targeting its constitutional right to speak freely and to petition based on "Choctaw's report to Union Pacific police regarding Rail-Life's improper use of Choctaw's eRailsafe badge." Choctaw argued that Rail-Life's claims "necessarily involve Choctaw's communications with semi-government personnel" about subjects of concern to the public.

Citing Union Pacific's policy and federal laws, Choctaw contended that its communications and report about Rail-Life's wrongful display of an eRailsafe badge belonging to Choctaw were subjects of concern to the public because Union Pacific implemented and enforced a Controlled Access Policy "to meet the U.S. Department of Homeland Security requirements." Within this policy, as Choctaw explained, Union Pacific required all suppliers to display a company-issued eRailsafe badge prior to entering its property for safety reasons. A wrongful display of an eRailsafe badge belonging to another company compromises the safety and security of not only the workers on Union Pacific's worksite, but also the public at large.

Choctaw also asserted that Rail-Life could not establish a prima facie case on each element of its claim of tortious interference with contract, as required by the TCPA to avoid dismissal of its underlying suit against Choctaw. And dismissal of Rail-Life's suit was required because, even if Rail-Life had established a prima facie case, Choctaw had established the affirmative defense of justification to tortious interference with contract. Choctaw did not assert any affirmative defenses for Rail-Life's business-disparagement claim, but it argued that Rail-Life failed to establish the elements of its business-disparagement claim by clear and specific evidence. Choctaw attached evidence supporting its assertions, including Baker's declaration, Union Pacific's Controlled Access Policy, copies of 6 U.S.C. sections 1161 through 1172, and a congressional hearing discussing the effect of background and security clearances on the transportation workforce.

In response, Rail-Life requested that the court deny Choctaw's TCPA motion and asserted that the claims alleged in its amended petition were not the kind that the TCPA covered, but, instead, were based "a pattern of misconduct by [Choctaw] that evidences the intention to interfere with Rail-Life's contracts with Union Pacific and a pattern of conduct intended to disparage its reputation and business." Rail-Life did not address Choctaw's free-speech arguments. Instead, Rail-Life argued that it could establish a prima facie case on each element of its claims. It referenced the evidence set out in the affidavits of Olmeda and Torres, among other evidence.

Rail-Life also pointed out Choctaw's failure to assert an affirmative defense to its business-disparagement claim. And in explaining why Choctaw failed to establish justification as an affirmative defense to its tortious-interference claim, Rail-Life contended that Choctaw was not justified in engaging in a pattern of intentional misconduct by making "untrue statements" to Union Pacific because Choctaw had failed to prove that its "interference was a good faith claim to a colorable legal right." Rail-Life attached supporting documents to its response, including an email from Olmeda to Union Pacific, stating, in part

I am touching base with you on the [sic] behalf of the issues/rumors that are taking place[.] I'm not running illegal employees. [T]hey are all up to date.... I have all needed [sic] paper work [sic] to present to you or if anyone else would need[,] sir. My guys['] e-rail[safe] badges are processed and awaiting via mail to my office. They will be in this week[,] sir. [A]s soon as [I] receive them[,] I can send them your way via e-mail.

Rail-Life also attached Torres and Olmeda's affidavits, Rail-Life's insurance policy, and equipment rental agreements and receipts, among other things.

In response, Choctaw asserted that it was justified in reporting the misuse of badges to Union Pacific based on state and federal law requirements as well as Union Pacific's policy. It also argued that Rail-Life's evidence confirmed that Rail-Life's employees displayed Choctaw-issued eRailsafe badges to Union Pacific. Choctaw objected to Olmeda's affidavit as untimely and Rail-Life's other evidence as misleading and inadmissible.

The trial court overruled Choctaw's objections and denied Choctaw's TCPA motion. Choctaw filed this interlocutory appeal. See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(12) (authorizing interlocutory appeal of order denying motion to dismiss filed under TCPA Section 27.003).

Texas Citizens Participation Act

A. Standard of review

We review de novo the denial of a TCPA motion to dismiss. Better Bus. Bureau of Metro. Hous., Inc. v. John Moore Servs., Inc. , 441 S.W.3d 345, 353 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). When determining whether to dismiss the legal action, the trial court considers "the pleadings, evidence a court could consider under Rule 166a, Texas Rules of Civil Procedure, and supporting and opposing affidavits stating the facts on which the liability or defense is based." TEX. CIV. PRAC. & REM. CODE § 27.006(a). We evaluate the basis of a legal action only "by the plaintiff's allegations" and view the evidence in the light most favorable to the nonmovant. Hersh v. Tatum , 526 S.W.3d 462, 467 (Tex. 2017) ; Dolcefino v. Cypress Creek EMS , 540 S.W.3d 194, 199 (Tex. App.—Houston [1st Dist.] 2017, no pet.).

B. Applicable law

The 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...