Gaughan v. Nat'l Cutting Horse Ass'n, 02–09–00450–CV.

• Decision Date: 06 October 2011
• Docket Number: No. 02–09–00450–CV.,02–09–00450–CV.
• Citation: 351 S.W.3d 408
• Parties: Paula GAUGHAN and Dean Sanders, Appellants, v. NATIONAL CUTTING HORSE ASSOCIATION, Appellee.
• Court: Texas Court of Appeals

351 S.W.3d 408

Paula GAUGHAN and Dean Sanders, Appellants,

v.NATIONAL CUTTING HORSE ASSOCIATION, Appellee.

No. 02–09–00450–CV.

Court of Appeals of Texas, Fort Worth.

July 28, 2011.Rehearing Overruled Oct. 6, 2011.

James W. Walker, Dan Gus, Walker Sewell LLP, Dallas, for Appellants.

James W. Morris, Goins Underkofler Crawford & Langdon LLP, for Appellee.

PANEL: GARDNER and McCOY, JJ.; and WILLIAM BRIGHAM (Senior Justice, Retired, Sitting by Assignment).

OPINION

ANNE GARDNER, Justice.

I. Introduction

Appellants Paula Gaughan and Dean Sanders (collectively, Gaughan) and Appellee National Cutting Horse Association (the NCHA) filed cross-motions for summary judgment in Gaughan's suit against the NCHA for a declaratory judgment that the NCHA's books and records that Gaughan sought to inspect and copy are not confidential. The trial court initially entered a protective order in favor of the NCHA that prohibited Gaughan from disseminating the NCHA's books and records to others. Later, the trial court granted the NCHA's motion for summary judgment, denied Gaughan's motion for summary judgment, and incorporated the protective order into the final judgment. Gaughan contends in three issues that the trial court erred by entering the protective order and thereby prohibiting her from disclosing documents designated as confidential by the NCHA, by granting summary judgment for the NCHA on the ground that the NCHA's records are entitled to confidential treatment under the law, by denying her motion, and by ruling that there are no genuine issues of material fact concerning the reasonableness and necessity of the NCHA's attorney's fees. We affirm.

II. Factual and Procedural Background

The NCHA is a non-profit corporation organized and existing under Texas law. Gaughan is a member in good standing of the NCHA.¹ On April 21, 2008, Gaughan made a written request pursuant to article 1396–2.23 of the Texas Non–Profit Corporation Act to “inspect the books and various financial records of the NCHA.” ² Gaughan requested six categories of documents from the NCHA—including employment contracts, bank statements, payroll records, and payments to vendors—for the stated purpose that Gaughan was “genuinely interested in fostering increased participation in NCHA events by lowering the costs associated with that participation and making sure that the membership dues and other monies received by the NCHA are being spent with the best interests of the NCHA membership in mind.” The NCHA responded to Gaughan's letter on April 28, 2008, enclosing audited financial statements for the years 2004 through 2007, but it requested that Gaughan clarify her stated purpose, pay for staff and professional time necessary to respond to the request, and agree to maintain the confidentiality of certain information relating to third parties (such as employees and vendors) before the NCHA would produce the remaining requested records.

Gaughan responded to the NCHA on May 9, 2008, disagreeing that her stated purpose was inadequate but also clarifying that she wished to review the financial records to confirm that the “NCHA is not guilty of waste or mismanagement in its financial affairs and in the administration of the NCHA's business.” Gaughan declined to enter into a confidentiality agreement and objected to paying for staff or professional fees associated with the NCHA's compliance with her inspection request. Gaughan also requested that all responsive documents be produced within one week.

The NCHA responded on May 13, 2008, again asserting the confidentiality of some of its records, specifically records relating to its employees, third-party vendors, and sponsors. The NCHA stated that the confidentiality of its records “does not mean that you cannot have access to some or all of the information you desire[,] but it does mean that any access you may have must be in accordance with procedures which are in the best interest of [the NCHA] and include fulfilling [the NCHA]'s obligation of confidentiality.”

Gaughan filed suit against the NCHA on May 20, 2008, seeking a judicial declaration that she is entitled to inspect and photocopy each of the categories of records identified in her April 21, 2008 letter. Gaughan also sought and obtained a temporary restraining order to prevent the NCHA from destroying or altering the records she sought to inspect and copy. The NCHA filed a motion to dissolve the temporary restraining order and offered to disclose all documents requested by Gaughan subject to entry of a protective order to prevent her disclosure of information the NCHA believed to be confidential. Following the hearing on the NCHA's motion, the trial court dissolved the temporary restraining order and granted the NCHA's request for entry of a protective order.

The trial court then signed a protective order permitting the NCHA to designate certain documents that it had agreed to produce to Gaughan as confidential (by stamping “Confidential” in a conspicuous manner on each page to be so designated) and prohibiting Gaughan from reproducing, disclosing, or disseminating those documents to anyone other than her counsel except upon order of the trial court. The order stated that it was entered solely to facilitate review and provided that at any time after delivery of documents designated as confidential, counsel for Gaughan could challenge the designation by written notice to the NCHA and a motion to challenge the confidential nature of all or a portion of the information, in which event the NCHA would have the opportunity to establish that the disputed documents were entitled to confidential treatment.

After entry of the protective order, the NCHA produced 89,214 pages of documents to Gaughan but designated 36,556 of those pages as confidential as permitted by the protective order. It is undisputed that Gaughan reviewed and copied all documents she requested from the NCHA, including the documents designated as confidential. The NCHA also counterclaimed against Gaughan, seeking recovery of its attorney's fees and a judicial declaration that it had “acted reasonably and in accordance with the law in responding to [Gaughan's] requests to review the NCHA documents.”

Gaughan and the NCHA eventually filed cross-motions for summary judgment. In her motion, Gaughan requested, among other things, a judicial declaration that “NCHA may not prevent [her] from disclosing to her fellow NCHA members or to other third parties the substance and form of all records reflecting the NCHA's financial activity.” ³ Gaughan argued that articles 1396–2.23 and 1396–2.23A of the non-profit corporation act required the NCHA to make its books and records available to members and the general public alike, that the NCHA is therefore precluded from designating any of its financial records as confidential, and that the trial court should withdraw the protective order because it contravenes articles 1396–2.23 and 1396–2.23A. In addition, Gaughan's motion for summary judgment included the following alternative request for relief:

Strictly in the alternative, and only because [the trial court's] Protective Order otherwise requires it and remains in force until it is withdrawn as requested hereinabove, Gaughan moves the Court to conduct an in camera inspection of the 36,556 pages of NCHA books and records that the NCHA has classified as confidential and, upon inspection of same, declare that they are not properly classified as confidential documents given the statutory mandate that they be made available to the NCHA members and the general public alike. [Emphasis added.]

The NCHA's motion sought summary judgment on its claims for a judicial declaration and attorney's fees. Within the motion, the NCHA argued that Gaughan did not need to file the lawsuit to obtain the requested documents; that Texas law supports the trial court's entry of the protective order; that the protective order provided a mechanism for Gaughan to challenge the NCHA's designation of any document as confidential; and that Gaughan had never challenged the NCHA's designation of any document as confidential—despite having possession of the vast majority of the documents for months—but instead claimed that no information contained in the documents requested under art. 1396–2.23 could be treated as confidential and that the protective order regarding the documents requested was contrary to law.

In its final judgment granting the NCHA's motion for summary judgment and denying that of Gaughan, the trial court declared that the NCHA had fully complied with all of Gaughan's requests to review documents of the association and all legal requirements, that the NCHA had designated documents as confidential in accordance with the protective order, that Gaughan had taken no action to contest the designations, and that the documents designated as confidential by the NCHA were thus entitled to confidential treatment as a matter of law. The trial court further ordered Gaughan to return all records marked as “Confidential” to the NCHA and to not disclose, disseminate, or reveal any of the “Confidential” records or their contents to any third parties. This appeal followed.

III. Standard of Review

We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex.2010). We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009). We indulge every reasonable inference and resolve any doubts in the nonmovant's favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex.2008). A defendant who conclusively negates at least one essential element of a cause of action is entitled to summary judgment on that claim. Frost Nat'l Bank v. Fernandez, 315...