Herrmann & Andreas Ins. Agency, Inc. v. Appling

• Decision Date: 19 November 1990
• Docket Number: No. 13-90-095-CV,13-90-095-CV
• Citation: 800 S.W.2d 312
• Parties: HERRMANN & ANDREAS INSURANCE AGENCY, INC., Appellant, v. W.H. APPLING, et al., Appellees.
• Court: Texas Court of Appeals

Page 312

800 S.W.2d 312

HERRMANN & ANDREAS INSURANCE AGENCY, INC., Appellant, v. W.H. APPLING, et al., Appellees.

No. 13-90-095-CV.

Court of Appeals of Texas Corpus Christi.

Nov. 19, 1990.

Thomas W. Sankey, J. Cary Gary, Looper, Reed, Ewing & McGraw, Houston, for appellant.

Kathryn S. Cook, Pearson Grimes, Butler & Binion, Houston, George Willis, El Campo, Audrey L. Selden, Donald Verplancken, Butler & Binion, Houston, for appellees.

Before NYE, C.J., and SEERDEN and KEYS, JJ.

OPINION

NYE, Chief Justice.

Herrmann & Andreas Insurance Agency, Inc. (H & A) appeals the summary judgments granted in favor of appellees, W.H. "Hefner" Appling, Sr. (Appling) and Appling & Kyle Insurance Agency, Inc. (A & K). By four points of error, H & A asserts that the trial court erred by granting the summary judgments, rendering final judgment in favor of appellees and ordering H & A to pay Appling's attorney's fees. We reverse and remand.

Appling and P.J. Herrmann, Jr. (Herrmann) were partners in Appling & Herrmann Insurance Agency (Appling & Herrmann) of El Campo, Texas. On February 28, 1989, pursuant to a settlement agreement from a previous lawsuit, Appling conveyed all of his stock in said agency to Appling & Herrmann for approximately $270,000. Herrmann subsequently formed H & A with new partner David Andreas and moved his offices across the street to the new agency's place of business. Pursuant to the stock sale, this new agency took control of the Appling & Herrmann client files.

During March, 1989, Appling, his son W.H. "Bubba" Appling, Jr., and William Kyle formed A & K, a Texas partnership. Appling's local recording agent's license enabled the partnership to sell fire, casualty and surety insurance. This new partnership assumed the office space previously used by Appling & Herrmann.

Later and pursuant to the settlement stipulation, Herrmann, individually and as President of Appling & Herrmann, and Appling executed an agreement on April 11, 1989. This agreement stated in pertinent part:

WHEREAS, in an agreed stipulation (the "Stipulation") concerning Cause No. 28,611 and Cause No. 28,584, both pending in the District Court of Wharton County, Texas, W.H. Appling and P.J. Herrmann, Jr., the major stockholders of the Company [Appling & Herrmann Insurance Agency], agreed between themselves that each party possessed certain trade secrets of the Company and, therefore, agreed that in connection with the sale of stock in the Company contemplated by the Stipulation, the stockholder selling his stock in the Company to the other stockholder would be subject to an agreement to not solicit existing customers of the Company for the sale of insurance for a period of twenty (20) months from the date of final sale; and

WHEREAS, on the date hereof, pursuant to the Stipulation, Appling has sold to the Company all of Appling's shares of stock in the Company;

NOW, THEREFORE, in consideration of the sale of stock from Appling and the consideration Appling received from such sale and the premises and the mutual covenants set forth below, the undersigned agree as follows:

1. Term

The term of this agreement shall begin on April 1, 1989 and terminate on November 30, 1990.

2. Agreement

Appling hereby agrees that he will not directly or indirectly solicit, either for himself or for any other person or entity, the business or trade of any existing customer of the Company [Appling & Herrmann Insurance Agency] on the date hereof, nor induce, prevail upon, attempt to induce or prevail upon any existing customer of the Company on the date hereof to discontinue its dealings with the Company. "Indirectly" shall be deemed to include solicitation and/or inducement by any business and its employees, officers or agents in which Appling holds a position as a shareholder, partner, officer, agent, or employee. "Existing customers" is defined as a customer having a current insurance policy written by or through Appling & Herrmann as of March 31, 1982. A list of said customers is attached hereto as Exhibit "A".... [Emphasis added]

To this Agreement, the parties attached a confidential list of Appling & Herrmann's clients intended to be protected from solicitation by the terms stated above.

Sometime after the Agreement was effective, A & K mailed an announcement of its availability for business to every El Campo resident. This mailing included El Campo residents who were H & A's customers identified on the confidential client list. A & K also placed several business advertisements in the El Campo Leader News (Leader News ), a newspaper of general circulation in the Wharton County area. Several clients on the confidential list subscribed to the Leader News.

A & K held its Grand Opening on May 24, 1989, after publishing a Grand Opening advertisement in the Leader News and mailing invitations for the event. Several clients from the confidential list received invitations. The Leader News covered the opening and published a photograph depicting Appling and others participating in the festivities.

After the formation of the two new insurance agencies, several H & A clients from the confidential customer list transferred their business to A & K. H & A subsequently sued Appling asserting six causes of action: (1) breach of an alleged covenant not to compete; (2) common law fraud; (3) statutory fraud; (4) breach of confidential relationship and implied duty of good faith; (5) misappropriation of trade secrets, namely, the confidential customer list; and (6) tortious interference with the business relationship between H & A and its customers and seeking a temporary injunction preventing Appling from violating the covenant not to compete. H & A alleged that at the time the Agreement was executed, Appling had no intention of fulfilling the legal obligations outlined therein and proceeded to violate the Agreement by soliciting H & A's customers. Additionally, H & A inferred that Appling violated the agreement terms by soliciting Appling & Herrmann clients in the period after the stipulation was reached but before the Agreement was executed.

H & A also alleged that Appling openly violated the Agreement by directly soliciting customers from the confidential customer list by mailing them Grand Opening invitations, by representing himself at the Grand Opening as an owner of A & K and by advising several guests, some of whom were H & A's clients, that he would "take care of their insurance needs." The trial court granted the temporary injunction pending trial.

Appling moved for summary judgment. He asserted that H & A had no cause of action because the persons he allegedly solicited for their insurance business had provided written or deposition testimony denying any such direct or indirect solicitation and that Martin Electric was doing business with neither H & A nor A & K. He also counterclaimed seeking recovery of attorney's fees, alleging that H & A's suit violated Tex.Civ.Prac. & Rem.Code §§ 9.001-9.014 (Vernon Supp.1990) and Tex.R.Civ.P. 13 in that it was groundless and brought in bad faith solely to harass Appling. H & A responded to Appling's motion for summary judgment and countermoved for partial summary judgment regarding Appling's alleged breach of the Agreement.

H & A later amended its original petition adding A & K as a codefendant. H & A alleged that A & K (1) misappropriated H & A's trade secrets by using the information contained in the confidential customer list for mailing business announcements; (2) tortiously interfered with H & A's business relationships by using the confidential customer list and mailing notices allegedly using Appling's name to H & A's clients; and (3) conspired with Appling to misappropriate the confidential client list and tortiously interfere with H & A's business. A & K also moved for summary judgment. The trial court granted both motions for summary judgment, dismissed with prejudice H & A's entire cause of action, and ordered it to reimburse Appling for $12,000 in litigation expenses and to pay all court costs.

A summary judgment is proper only when the movant establishes that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex.1985); R.I.O. Systems, Inc. v. Union Carbide Corp., 780 S.W.2d 489, 490 (Tex.App.--Corpus Christi 1989, writ denied); Wyatt v. Mealy, 704 S.W.2d 63, 64 (Tex.App.--Corpus Christi 1985, no writ). On appeal, as well as at trial, the issue is not whether the summary judgment proof raises fact issues regarding the essential elements of the plaintiff's claim or cause of action, but rather, whether the summary judgment proof establishes as a matter of law that there is no genuine issue of fact concerning one or more of the essential elements of the plaintiff's cause of action. In deciding whether a disputed material fact issue exists to preclude a summary judgment, evidence favorable to the non-movant will be accepted as true. Dieter v. Baker Serv. Tools, A Div. of Baker Int'l Inc., 776 S.W.2d 781, 783 (Tex.App.--Corpus Christi 1989, writ denied). Thus, every reasonable inference will be indulged in favor of the non-movant and any doubts resolved in the non-movant's favor. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970); R.I.O. Systems, 780 S.W.2d at 490; Denison v. Haeber Roofing Co., 767 S.W.2d 862, 864 (Tex.App.--Corpus Christi 1989, no writ); Tex.R.Civ.P. 166a(c).

By its first and second points of error H & A challenges the trial court's granting of the summary judgments in favor of Appling and A & K. The trial court's final order granting the motions and dismissing H & A's causes of action broadly states that it "heard counsel's arguments and reviewed the same."

To avoid confusion, we examine the evidence which appellees, Appling and A & K, presented in support of their motions for summary judgment. The Adolph Ortiz affidavit establishes that Appling was a...