CDM Constructors, Inc. v. City of Weslaco

CDM CONSTRUCTORS, INC. AND CDM SMITH, INC., Appellants, v. CITY OF WESLACO, TEXAS, Appellee.

NUMBER 13-19-00447-CV

COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG

March 25, 2021

On appeal from the 139th District Court of Hidalgo County, Texas.

MEMORANDUM OPINION

Before Justices Benavides, Longoria, and Tijerina

Memorandum Opinion by Justice Longoria

Appellants CDM Constructors, Inc. and CDM Smith, Inc. bring this interlocutory appeal to challenge the denial of their motions to dismiss pursuant to the Texas Citizen's Participation Act (TCPA). See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(12). By three issues, appellants contend that the trial court erred in failing to dismiss appellee the City of Weslaco's (the City) claims against them. We affirm.

I. BACKGROUND

The Texas Commission on Environmental Quality (TCEQ) notified the City that its water treatment facilities were non-compliant and needed improvements. The City contracted with CDM Constructors in 2008 to repair and improve the City's south wastewater treatment plant (Project 1). In 2012, the City contracted with CDM Constructors to build a new treatment plant and distribution system (Project 2).

In October 2018, the City filed suit against CDM Constructors for declaratory relief regarding CDM Constructors' allegation that the City still owed $2,400,000 under the contract for Project 2. The City amended its petition, adding additional claims against CDM Constructors. The City then filed another amended petition, maintaining the same claims and adding CDM Smith, among others, as a defendant. In its live pleading, the City asserts claims against appellants for fraud and conspiracy, for which it seeks monetary damages, and in the alternative, equitable relief based on the theories of unjust enrichment and constructive trust. It also asserts claims specifically against CDM Constructors for "money-had-and-received and declaratory judgment," seeking rescission as an equitable remedy.

The City's live pleading alleges that appellants committed fraud by "making false representations to the City to pay [appellants] millions of dollars." Further, the City alleges that appellants committed acts of bribery and civil conspiracy in order to defraud the city. The City's allegations are based on the City's contention that appellants, along with several other individuals and companies, conspired to have the contracts for Project 1and Project 2 awarded to appellants as part of a larger scheme to inflate invoices and defraud the City of large amounts of money.

After the City filed its third amended petition, CDM Constructors filed a TCPA motion to dismiss the City's claims that were added in the second amended pleading but did not challenge the initial claim brought by the City. Subsequently, CDM Smith filed a TCPA motion to dismiss the claims specifically asserted against it by the City's third amended petition. The motions were consolidated and set for a single hearing.

The City filed a response, the appellants filed a joint reply in support of their motions, and the City filed a sur-reply in opposition. The trial court denied appellants' motions and this appeal followed.

II. TCPA

By three issues, appellants argue that the trial court erred in denying the TCPA motions to dismiss. Specifically, appellants contend that (1) the TCPA applies to the City's challenged claims, (2) the commercial speech exemption cannot apply to the challenged claims, and (3) there is no clear and specific evidence of all essential elements of the City's challenged claims.

A. Standard of Review & Applicable Law

We review de novo a trial court's ruling on a TCPA motion to dismiss. Dall. Morning News, Inc. v. Hall, 579 S.W.3d 370, 377 (Tex. 2019). In conducting our review, we consider the pleadings and evidence in a light favorable to the nonmovant. Dyer v. Medoc Health Servs., LLC, 573 S.W.3d 418, 424 (Tex. App.—Dallas 2019, pet. denied).

The TCPA is an anti-SLAPP law; "SLAPP" is an acronym for "Strategic LawsuitsAgainst Public Participation." Fawcett v. Grosu, 498 S.W.3d 650, 654 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) (op. on reh'g). The TCPA is intended "to encourage and safeguard the constitutional rights of persons to petition, speak freely, associate freely, and otherwise participate in government to the maximum extent permitted by law and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable injury." TEX. CIV. PRAC. & REM. CODE ANN. § 27.002; Cox Media Grp., LLC v. Joselevitz, 524 S.W.3d 850, 859 (Tex. App.—Houston [14th Dist.] 2017, no pet.). The TCPA "protects citizens from retaliatory lawsuits that seek to intimidate or silence them" from exercising their First Amendment freedoms and provides a procedure for the "expedited dismissal of such suits." In re Lipsky, 460 S.W.3d 579, 586 (Tex. 2015). We construe the TCPA liberally to effectuate its purpose and intent fully. See Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex. 2018); ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 899 (Tex. 2017); see also TEX. CIV. PRAC. & REM. CODE ANN. § 27.011(a).

A defendant invoking the act's protections must show first, by a preponderance of the evidence, that the plaintiff's legal action is "based on, relates to, or is in response to" the defendant's exercise of one or more of the enumerated rights. In re Lipsky, 460 S.W.3d at 586. If the defendant makes the initial showing, the burden shifts to the plaintiff to establish by clear and specific evidence a prima facie case for each essential element of the claim in question. See id. at 587. "Prima facie case" refers to the quantum of evidence required to satisfy the nonmovant's minimum factual burden and generally refers to the amount of evidence that is sufficient as a matter of law to support a rationalinference that an allegation of fact is true. See id. at 590.

The evidence offered to support a prima facie case must be "clear and specific." Bedford v. Spassoff, 520 S.W.3d 901, 904 (Tex. 2017) (per curiam). Clear and specific evidence means that the nonmovant must provide enough detail to show the factual basis for its claim. Id. at 904. If the movant's constitutional rights are implicated and the nonmovant has not met the required showing of a prima facie case, the trial court must dismiss the nonmovant's claim. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005. The trial court considers "the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based." Id. § 27.006(a).

B. Applicability

Appellants contend that the TCPA applies to the challenged claims because those claims "arise from Appellants' specific exercise of their respective rights of free speech on matters of public concern, rights to petition, and rights of association."

1. Free Speech

The TCPA defines the "exercise of the right of free speech" as a "communication made in connection with a matter of public concern." TEX. CIV. PRAC. & REM. CODE ANN. § 27.001(3). A "matter of public concern" includes an issue related to health or safety; environmental, economic, or community well-being; or a good, product or service in the marketplace. Id. § 27.001(7)(A)-(B), (E).¹ Communications do not become amatter of public concern simply based on the nature of the parties' business—there must be some relevance to issues beyond the interests of the parties. See Caliber Oil & Gas, LLC v. Midland Visions 2000, 591 S.W.3d 226, 239-40 (Tex. App.—Eastland 2019, no pet.) (holding that, for a communication to relate to economic well-being, it must "have an impact on more than the party's personal financial well-being" and to relate to community well-being, a communication must affect "the well-being of the community at large or at least a subset of its residents"); see also Staff Care, Inc. v. Eskridge Enters., LLC, No. 05-18-00732-CV, 2019 WL 2121116, at *4 (Tex. App.—Dallas May 15, 2019, no pet.) (mem. op.) (noting that, to determine whether the TCPA applies, a court "must look to the content of the communications themselves and not focus solely on the occupation of the speaker or the related industry"); Blue Gold Energy Barstow, LLC v. Precision Frac, LLC, No. 11-19-00238-CV, 2020 WL 1809193, at *7 (Tex. App.—Eastland Apr. 9, 2020, no pet.) (mem. op.).

Appellants contend that the communications at issue here fall into the category protected by the TCPA as they involved matters of public concern, specifically the City's water treatment plant. The City, however, likens this case to Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC, 591 S.W.3d 127 (Tex. 2019), which the City contends served to restrict the scope of the TCPA. The City argues that the TCPA does not apply here because this case involved communications relating to a private contract dispute which relates to appellants' "own financial interests, not matters of public concern." We agreewith appellants.

Here, contrary to the cases cited by the City that follow the holding in Creative Oil, the contract was not between private entities, but rather between private companies and the City, and concerned the public water supply in the City.

We have previously held that private communications are sometimes covered by the TCPA. E.g., ExxonMobil Pipeline Co., 512 S.W.3d 895; Lippincott v. Whisenhunt, 462 S.W.3d 507 (Tex. 2015) (per curiam). These prior cases involved environmental, health, or safety concerns that had public relevance beyond the pecuniary interests of the private parties involved. See ExxonMobil Pipeline Co., 512 S.W.3d at 898, 901 (concluding that private statements by movants concerning plaintiff's alleged failure to gauge a storage tank related to a matter of public concern due to "serious safety and environmental risks"); Lippincott, 462 S.W.3d at 509-10 (concluding that alleged improper provision of medical services by a health care professional are matters of public concern).

Id., 591 S.W.3d at 136. As...