Fraud-Tech, Inc. v. Choicepoint, Inc.
| Citation | 102 S.W.3d 366 |
| Decision Date | 27 March 2003 |
| Docket Number | No. 2-01-347-CV.,2-01-347-CV. |
| Parties | FRAUD-TECH, INCORPORATED, Dean McGee and Robert Andrews, Appellants, v. CHOICEPOINT, INC. f/k/a Database Technologies, Inc., The Information Connectivity Group, Inc., Thomas H. Hoolihan, Phillip Wamock, Andrew Perlmutter, Appellees. |
| Court | Court of Appeals of Texas |
Bucholz, Sassin, & DeMaio, P.L.L.C., and Robert W. Bucholz, F. Bady Sassin, W. Charles Campbell, Dallas, for Appellants.
Herrick & Associates, P.C. and David P. Herrick, DeHay & Elliston, L.L.P., Gary D. Elliston and W. Scott Berry, Dallas, for Appellees.
Panel B: LIVINGSTON, DAUPHINOT, and HOLMAN, JJ.
This is a commercial dispute between Appellants Fraud-Tech, Inc. ("FTI"), Dean McGee, and Robert Andrews and Appellees ChoicePoint, Inc. f/k/a Database Technologies, Inc. ("DBT"), The Information Connectivity Group, Inc. ("ICON"), Thomas H. Hoolihan, Phillip Wamock, and Andrew Perlmutter involving the joint development of FTI's idea and concept of a fraud detection system for the mortgage industry. FTI, McGee, and Andrews appeal from the trial court's summary judgment, which was granted on Appellees' motion. We affirm in part and reverse and remand in part.
DBT is a Florida-based software development company that, among other services, provides tracking software to law enforcement agencies and insurance investigators. McGee and Andrews, who were both residents of Texas, approached DBT in the spring of 1998, proposing that the parties jointly develop and market a mortgage fraud detection system for the mortgage banking industry, in which mortgage banking companies could determine the legitimacy of information provided in a potential borrower's loan application. McGee and Andrews formed FTI, a Texas corporation, to facilitate the business transactions with DBT.
On March 4, 1998, Andrews, individually, entered into a nondisclosure agreement with DBT. Under the terms of the agreement, both parties agreed that they would not disseminate or use the other's confidential information for competitive purposes or for any other purpose "not in furtherance of the business relationship between them." The nondisclosure agreement also provided that, in the event of a breach or a threatened breach by either party, the "non-breaching party will have no adequate remedy in money damages and, accordingly, shall be entitled to seek an injunction against such breach." The non-breaching party was additionally entitled under the agreement to "any other legal or equitable remedies available to it."
On June 9, 1998, FTI and DBT executed a letter of intent outlining the terms of a proposed transaction whereby FTI and DBT would jointly develop and market mortgage fraud detection software. The letter of intent also provided that the terms of the nondisclosure agreement entered into by the parties on March 4, 1998 would remain in full force and effect until negotiations between the parties yielded a legally binding agreement. FTI and DBT continued to work together pursuant to the letter of intent and negotiated a draft licensing agreement. Ultimately, however, the parties never consummated the agreement contemplated by the letter of intent.
FTI filed suit on November 2, 1998 against Appellees, alleging that on October 1, 1998, Wamock and Perlmutter contacted FT Mortgage Company, a large lending institution, at its Dallas office. Wamock and Perlmutter represented to FT Mortgage that they were representatives of ICON, which was affiliated with DBT. Wamock and Perlmutter stated that they were interested in discussing FT Mortgage's interest in a new software concept being developed by DBT. FTI's petition further alleged that on October 8, 1998, Wamock and Perlmutter met with representatives of FT Mortgage at the Dallas office and disclosed that DBT and ICON were developing a system that would be used (luring the loan application process to detect and identify fraud. Appellees answered and on November 12, 1998, the court entered an agreed temporary injunction, which was subsequently extended.
Appellees later filed a document titled "Defendants' Original Cross-Claim" on August 2, 1999 against Andrews and McGee, seeking temporary and permanent injunctive relief. On August 26, 1999, Andrews and McGee filed their original answer to Appellees' cross-claim.
In its fifth amended petition, filed August 28, 2000, FTI sought injunctive relief, as well as damages for fraud, conversion, breach of fiduciary duty, civil conspiracy, breach of the nondisclosure agreement, breach of the letter of intent, and breach of the application development, distribution, and license agreement ("licensing agreement"). FTI sought to prove through expert testimony that its initial investment of $10,000 in the system would have grown to $17,648,000 within five years. FTI also requested the remedy of specific performance on these agreements.
On October 2, 2000, Andrews and McGee filed their first amended answer and counterclaim to Appellees' cross-claim. The pleading included the following statement: "Cross-Defendants adopt, individually and collectively, and incorporate by reference each and every allegation and cause of action set forth in Plaintiffs Original Petition and each and every amendment and/or supplement thereof and/or thereto as if set forth herein at length verbatim."
On May 15, 2001, Appellees sought a motion for summary judgment against FTI, under rule 166a of the Texas Rules of Civil Procedure, seeking judgment as a matter of law on FTI's claims for breach of contract and civil conspiracy. Appellees also sought a no-evidence motion for summary judgment, pursuant to rule 166a(i), on the grounds that there was no evidence to support FTI's claims for breach of contract, fraud, civil conspiracy, breach of fiduciary duty, and conversion. Along with their dual motion for summary judgment, Appellees filed a motion to exclude the testimony of FTI's damages experts, Dean McGee, Dr. J. Herbert Burkman, and J. Richard Claywell.
Subsequently, on June 8, 2001, FTI filed its sixth amended petition, in which it withdrew its claims for breach of fiduciary duty and civil conspiracy and added a claim for breach of a contract implied in law regarding the licensing agreement. Appellees, however, did not amend their dual motion for summary judgment. FTI then filed a notice of partial nonsuit with prejudice as to its claims against Appellees Hoolihan, Wamock, and Perlmutter, and the trial court entered an order granting the nonsuit on June 20, 2001. The trial court later granted the remaining defendants' (Appellees ICON and DBT) motion to exclude FTI's damages experts on July 2, 2001 and their motion for summary judgment on July 24, 2001.
Because the parties were concerned with the finality of the summary judgment, the trial court received and reviewed postjudgment briefing from both sides and conducted a hearing to determine whether the judgment disposed of all parties and claims. On August 8, 2001, the trial court entered a final summary judgment, which indicated the court's intent to dispose of all claims and all parties. The summary judgment stated, in pertinent part:
ORDERED, ADJUDGED, AND DECREED that Defendants are awarded final summary judgment against Plaintiff Fraud-Tech, Inc.
This appeal arises from this final summary judgment.
On appeal, McGee and Andrews argue that the trial court erred in granting summary judgment because: (1) FTI's sixth amended petition did not amend away McGee and Andrews's counterclaims against Appellees; (2) the trial court's judgment cannot be affirmed on any other legal theories; (3) Appellees waived any complaint about the sufficiency of McGee and Andrews's counterclaims; and (4) the trial court erroneously ruled that McGee and Andrews's counterclaims had been voluntarily dismissed.
Additionally, FTI complains that the trial court erred in granting summary judgment because: (1) the trial court granted summary judgment on issues not presented to it during the summary judgment hearing; (2) the judgment granted more relief than Appellees requested, in that Appellees' motion for summary judgment did not address FTI's claims for specific performance or breach of a contract implied in law; (3) FTI raised a genuine issue of material fact with respect to its claims for damages; (4) the judgment was based on an erroneous decision to exclude FTI's expert witnesses on damages; and (5) FTI raised genuine issues of material fact on its claims of breach of contract, fraud, and conversion.
In a summary judgment case, the issue on appeal is whether the movant met his summary judgment burden by establishing that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law.1 The burden of proof is on the movant, and all doubts about the existence of a genuine issue of material fact are resolved against the movant.2 Therefore, we must view the evidence and its reasonable inferences in the light most favorable to the nonmovant.3
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