In re Marketing Investors Corp.
| Decision Date | 31 December 1998 |
| Docket Number | No. 05-98-00535-CV,05-98-00535-CV |
| Parties | In re MARKETING INVESTORS CORP., Relator. |
| Court | Texas Court of Appeals |
Shahin A. Khoshbin, Michael Craig Wilson, Butrus, Khoshbin & Wilson, L.L.P., Dallas, for relator.
William B. Dawson, J. Stuart Tonkinson, Carrington Coleman Sloman & Blumenthal, Dallas, for real party in interest.
Before Justices MALONEY, CHAPMAN, and WRIGHT.
Relator contends the trial judge abused his discretion in not ordering John F. MacDonald, former president of Marketing Investors Corporation (the Corporation), to return certain documents taken from the Corporation and in not disqualifying his counsel who refused to return the documents. We agree and conditionally grant mandamus.
In 1995, as a condition of his employment, MacDonald agreed in writing to be bound by the Corporation's policies as contained in its manual. Those policies restricted the use of trade secrets, as well as proprietary and confidential information. The manuals specified that (1) this information belongs to the Corporation, (2) no employee will disclose such information without prior written consent of the board of directors, and (3) the restrictions would continue after an employee was terminated.
The Corporation terminated MacDonald and told him not to return to the Corporation's premises. Although he agreed at his firing that personal items would be sent to him at a later date, he returned to the Corporation the next day and removed items from his office. Later, the Corporation returned two boxes of additional items to MacDonald. Two corporate employees checked the boxes sent to MacDonald to ensure no corporate items were included.
Five days after the Corporation terminated MacDonald, the Corporation filed suit against him alleging fraud, fraudulent inducement, negligent misrepresentation, negligence, gross negligence, and breach of contract, fiduciary duty, and the duty of good faith and fair dealing. The Corporation's petition requests an accounting, damages, declaratory judgment, attorney's fees, and injunctive relief.
The Corporation discovered MacDonald had some of its documents in his possession when he responded to discovery requests. Three days later, the parties entered into an agreed protective order to maintain the confidentiality of properly obtained discovery.
Next, the Corporation requested that MacDonald return the documents he took and agree not to use them. MacDonald returned the originals, but kept copies and refused to agree not to use the documents. In response, the Corporation filed motions to stay and to seal the documents. The trial court granted a stay pending determination of the protective order, but denied the motion to seal.
The Corporation then moved for a protective order requesting return of the documents, sanctions, and disqualification of counsel. At the hearing on its motion, the Corporation tendered all the documents for in camera review. Some of the tendered documents are marked privileged, confidential, `and/or attorney work product while other tendered documents refer to legal matters involving the Corporation.1 When the trial court denied the motion for protective order, the Corporation filed this mandamus.
A mandamus will issue only to correct a clear abuse of discretion when there is no adequate remedy by appeal. See National Med. Enter., Inc. v. Godbey, 924 S.W.2d 123, 128, 133 (Tex.1996) ; Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.1992) . A trial court clearly abuses its discretion when it reaches an arbitrary and unreasonable decision that is a clear and prejudicial error of law. Walker, 827 S.W.2d at 839. The trial court has no discretion in determining what the law is or applying the law to the facts. The trial court abuses its discretion when it does not analyze or apply the law correctly. Id. at 810.
The Corporation asserts the employment agreement signed by MacDonald created a contractual obligation on MacDonald. The Corporation argues the employment agreement provides the documents remain its property and restricts any use or dissemination by a former employee.
MacDonald admits the documents are privileged under Texas law and that he does not own them or the privilege. He contends, however, because he had access to the documents when he worked for the Corporation, he is entitled to possess and use the documents as he sees fit. MacDonald also maintains that he could not breach the agreement by using the documents in this case because the employment agreement only required that he keep the documents confidential and he has kept the documents confidential because he only gave them to his attorneys.
Nondisclosure covenants prevent. the disclosure of confidential information and trade secrets. Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 663 (Tex.App. — Dallas 1992, no writ). Unlike noncompete covenants, nondisclosure covenants are not against public policy. Id. Nondisclosure covenants do not prevent a former employee from competing with a former employer by using the general knowledge, skill, and experience gained from his or her work experience. Id. We analyze breach of a nondisclosure covenant as we would any contractual provision.
We construe a written contract to determine the parties' intent as expressed in the writing, not the parties' present interpretation. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983); Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731-32 (Tex.1981). We give terms their plain, ordinary, and generally accepted meaning unless the contract shows that the parties used them in a technical or different sense. Western Reserve Life Ins. Co. v. Meadows, 152 Tex. 559, 261 S.W.2d 554, 557 (1953), cert. denied, 347 U.S. 928, 74 S.Ct. 531, 98 L.Ed. 1081 (1954). We construe unambiguous contracts as a matter of law. Coker, 650 S.W.2d at 393. We will not rewrite contracts to insert provisions parties could have included or imply restraints for which they did not bargain. Tenneco Inc. v. Enterprise Prods. Co., 925 S.W.2d 640, 646 (Tex.1996).
The employment agreement recites that all information is a Corporation asset, that an employee will not disclose any information without prior written consent of the Board of Directors, and the agreement continues after an employee leaves the Corporation. The agreement provides no exception for an ex-employee to disclose Corporation information to his personal attorneys who are in an adversarial position with the Corporation. The agreement does not support MacDonald's position that he is only obligated to keep the documents confidential and has done so by only disclosing them to counsel. We conclude the agreement prohibits MacDonald's possession of the documents and disclosure of the documents to anyone.2
MacDonald asserts that he has proper possession of the documents under the parties' agreed protective order. Therefore, he contends he cannot violate the Corporation's privilege.
Our rules of civil procedure govern the issuance of protective orders. TEX.R. CIV P. 166b(5). Protective orders apply to "discovery." Id. Protective orders are issued to protect parties from undue burden, unnecessary expense, harassment, annoyance, or invasion of personal, constitutional, or property rights. Id.
The protective order provides that "confidential, proprietary, commercial, personal, or financial information and/or other kinds of similar information which the producing and/or receiving parties deem confidential" shall be revealed only to specified persons and returned upon conclusion of the litigation. The agreement applies to all information produced in discovery, before or after the entry of the agreed order. The agreement provides that inadvertent production or disclosure of privileged information or information exempt from discovery would not waive the privilege or exemption. Each party reserved the right to redesignate as privileged or exempt any information already produced.
Nothing in the agreed order affected the admissibility of any information. Nothing in the agreed order remotely purports to make proper the improper manner by which MacDonald obtained the documents at issue. Nothing in rule 166b remotely addresses a situation where a party absconds with confidential corporate documents. Nor have we found any case law that ratifies a party's improper acquisition of documents because the trial court later entered a protective order. We conclude the order applies only to documents obtained by proper discovery.
Here, the Corporation had no opportunity to assert any privilege in its documents or to lodge any objection to production of the documents because MacDonald had taken them from the Corporation before discovery began. We hold the protective order neither makes MacDonald's improper possession of documents proper nor waives the Corporation's right to confidentiality or applicable privileges.
MacDonald argues that because he was entitled to view or possess the documents while in the Corporation's employ, he cannot violate the attorney-client privilege. He contends that because he has disclosed the documents only to his attorneys, his disclosure did not endanger the Corporation's privilege. Additionally, MacDonald argues that return of the documents is wasteful because he has sent discovery to the Corporation requesting "[a]ll documents, shown, provided to [sic], or created by MacDonald while President of MIC." MacDonald also asserts the joint-representation exception to the attorney-client privilege as support for his position that the privilege does not apply to his possession of the documents. The Corporation maintains the privilege belongs to it and MacDonald lost all right to possession of the documents when...
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