Orbison v. Ma-Tex Rope Co., 06-17-00112-CV

• Decision Date: 15 June 2018
• Docket Number: No. 06-17-00112-CV,06-17-00112-CV
• Citation: 553 S.W.3d 17
• Parties: Samuel D. ORBISON and American Piping Inspection, Inc., Appellants v. MA-TEX ROPE COMPANY, INC., Appellee
• Court: Texas Court of Appeals

553 S.W.3d 17

Samuel D. ORBISON and American Piping Inspection, Inc., Appellants

v.MA-TEX ROPE COMPANY, INC., Appellee

No. 06-17-00112-CV

Court of Appeals of Texas, Texarkana.

Date Submitted: April 26, 2018

Date Decided: June 15, 2018

Rehearing Denied July 3, 2018

James W. Walker, Ian Ross Phillips, Cole Scholtz PC, 2515 McKinney Ave., Ste. 1350, Dallas, TX 75201, for Appellants.

Gregory D. Smith, Smith Legal PLLC, 110 N. College Ave., Ste. 1120, Tyler, TX 75702, Bruce A. Smith, Ward & Smith Law Firm, Brett Miller, Ward, Smith & Hill, PLLC, P.O. Box 1231, Longview, TX, for Appellee.

Before Morriss, C.J., Moseley and Burgess, JJ.

OPINION

Opinion by Chief Justice Morriss

At the start of the almost five years that Samuel D. Orbison worked for Ma-Tex Rope Company, Inc. (Ma-Tex), he signed an employment agreement containing a non-competition agreement, a non-disclosure agreement, and a non-solicitation agreement. During his tenure, he learned various things about Ma-Tex’s business and customers and became the coordinator of Ma-Tex’s recertification department. Orbison continued in that position until he resigned from Ma-Tex, went to work for Ma-Tex’s competitor, American Pipe Inspections, Inc. (API), as the coordinator of its recertification department, and began soliciting work for API from Ma-Tex’s customers. This lawsuit arose from that series of events and centers on Orbison’s non-competition, non-disclosure, and non-solicitation agreements.

Ma-Tex fabricates and services equipment used in the oil and gas industry. As part of its services, Ma-Tex recertifies wireline¹ equipment for companies throughout the continental United States. Orbison began working for Ma-Tex in September 2011, at which time he executed the employment agreement that is at the center of this action. In July 2013, Orbison became the coordinator of Ma-Tex’s recertification department. He resigned from Ma-Tex August 12, 2016.

Shortly after Orbison left its employ, Ma-Tex discovered that Orbison was working for API in the same position he had filled with Ma-Tex and that he was soliciting recertification work from Ma-Tex’s customers. When Ma-Tex failed to receive a satisfactory response to its cease-and-desist letter sent to Orbison and API, Ma-Tex sued them and obtained a temporary restraining order barring Orbison and API from disclosing or using Ma-Tex’s trade secrets and confidential information, from soliciting or serving Ma-Tex’s customers, and from competing with Ma-Tex in the servicing and recertification of wireline equipment in nineteen states. After a bench trial on the merits, the trial court granted Ma-Tex a permanent injunction against Orbison and API and awarded Ma-Tex actual damages and attorney fees against Orbison and API.

In this appeal, Orbison and API (Appellants) assert that the trial court erred in admitting evidence of damages, in awarding damages, in enforcing the post-employment restrictions contained in the employment agreement, in issuing the permanent injunction, in denying Appellants' motion for sanctions, and in awarding attorney fees against them.

While we find that (1) there is insufficient evidence in this record to support the award of damages for lost profits and lost good will, we also conclude that (2) there was no abuse of discretion in issuing the permanent injunction, (3) there was no abuse of discretion in denying API’s motion for sanctions, (4) there was no abuse of discretion in awarding attorney fees, (5) Appellants waived any objection to late-disclosed evidence by refusing the offered continuance, and (6) Appellants failed to preserve their complaint regarding termination of the employment contract. Therefore, we reverse the award of damages for lost profits and good will, delete the award of just those two elements of damages, and affirm the trial court’s judgment in all other respects.

(1) There Is Insufficient Evidence in this Record to Support the Award of Damages for Lost Profits and Lost Good Will

Appellants challenge the legal sufficiency of the evidence to support the award of damages for lost profits, lost good will, fee forfeiture, and profit disgorgement. ²

In its findings of fact,³ the trial court found that, but for Orbison’s solicitation on behalf of API, Ma-Tex would have secured the two recertification orders of Halliburton Pinnacle and Arklatex and that it would have made a net profit of $2,321.00 on these orders. The trial court also found that Orbison’s and API’s actions in soliciting its customers caused Ma-Tex to lose good will of the value of $120,000.00. In addition, the trial court found that Orbison spent at least 10% of his working time between April 11, 2016, and August 12, 2016, assisting API in setting up its recertification division to the detriment of Ma-Tex. The trial court also entered conclusions of law that Ma-Tex should recover unjust enrichment damages as a result of Orbison’s misappropriation of trade secrets, and for his breach of fiduciary duties, in the amount of $1,866.15 (10% of the salary paid to Orbison by Ma-Tex from April 16 through August 12, 2016), and $2,307.68 (the amount paid to Orbison by API from August 15 through August 31, 2016). Appellants challenge the legal sufficiency of the evidence to support these findings.⁴

"In reviewing a legal sufficiency complaint of an adverse finding on which the appellant did not have the burden of proof, the appellant must demonstrate on appeal that no evidence supports the adverse finding." Great N. Energy, Inc. v. Circle Ridge Prod., Inc. , 528 S.W.3d 644, 669 (Tex. App.—Texarkana 2017, pet. denied) (quoting Monasco v. Gilmer Boating & Fishing Club , 339 S.W.3d 828, 830 (Tex. App.—Texarkana 2011, no pet.) (citing Croucher v. Croucher , 660 S.W.2d 55, 58 (Tex. 1983) ) ). We will find the evidence legally insufficient only when the record shows

(1) a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla of evidence; or (4) the evidence established conclusively the opposite of a vital fact.

Id. (quoting Monasco , 339 S.W.3d at 830 ) (citing Merrell Dow Pharms. v. Havner , 953 S.W.2d 706, 711 (Tex. 1997) ). "When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence." Jelinek v. Casas , 328 S.W.3d 526, 532 (Tex. 2010) (quoting Kindred v. Con/Chem, Inc. , 650 S.W.2d 61, 63 (Tex. 1983) ). In considering legal sufficiency of evidence, we determine "whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review." E.R.C. , 496 S.W.3d at 284 (quoting City of Keller v. Wilson , 168 S.W.3d 802, 827 (Tex. 2005) ).

Lost Profits. In challenging the trial court’s damage award of $2,321.00 for lost profits, Appellants challenge the legal sufficiency of the evidence supporting the trial court’s findings (1) that without Orbison’s solicitation on behalf of API, Ma-Tex would have secured the two recertification orders of Halliburton Pinnacle and Arklatex and (2) that Ma-Tex would have made a net profit of $2,321.00 on those orders. Assuming, without deciding, that sufficient evidence supports the trial court’s finding that Ma-Tex would have secured the two recertification orders, we find that insufficient evidence supports its finding that Ma-Tex would have made a net profit of $2,321.00 on those orders.

The evidence at trial showed that Orbison’s solicitation for API resulted in API securing one recertification job each from Halliburton Pinnacle and Arklatex. API’s invoice to Halliburton Pinnacle showed charges for recertification of four 32" WTI sheaves, a load test and visual inspection of two chain slings and two wire rope slings, and a ½" Loc-a-loy, for total charges of $2,455.00. Its invoice to Arklatex showed charges for recertification of two 17" WTI sheaves, a break test on one prototype tool, and a line retention pin, for total charges of $885.00. Testimony regarding Ma-Tex’s lost profits from these two lost sales came from Matthews, its president.⁵ Matthews testified as follows:

Q. [By counsel for Ma-Tex] Would you please just assume for me I've done the math correctly, and that [the Halliburton Pinnacle and the Arklatex invoices] total $3,340?

A. That’s correct.

Q. And then based on that number, has Ma-Tex then attempted to determine how much profit would be derived if they had done those two sales?

A. Yes, it was close to $2300.

....

Q. (BY MR. SMITH ) Make sure that our record is clear, how much was the amount that you just said?

....

A. It was 23—$2321 is your net profits on that—on those sales.

In Texas, what constitutes sufficient evidence of lost profit damages is well-established:

Recovery for lost profits does not require that the loss be susceptible of exact calculation. However, the injured party must do more than show that they suffered some lost profits. The amount of the loss must be shown by competent evidence with reasonable certainty. What constitutes reasonably certain evidence of lost profits is a fact intensive determination. As a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates.

ERI Consulting Eng'rs, Inc. v. Swinnea , 318 S.W.3d 867, 876 (Tex. 2010) (quoting Holt Atherton Indus., Inc. v. Heine , 835 S.W.2d 80, 84 (Tex. 1992) (citations omitted) ). However, "[a] plaintiff ‘must do more than show they suffered some lost profits.’ " Lamont v. Vaquillas Energy Lopeno Ltd., LLP , 421 S.W.3d 198, 224 (Tex. App.—San Antonio 2013, pets. denied) (quoting Houston Mercantile...