VSMSQ Structural Eng'r v. Structural Consultants Assoc., Inc.

679 S.W.3d 767

VSMSQ STRUCTURAL ENGINEERS, LLC, Stephan P. Voss, Rory A. Starling, Martin R. Maingot, and Jay Martin, Appellants

v.STRUCTURAL CONSULTANTS ASSOCIATES, INC., Appellee

NO. 01-22-00543-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued July 20, 2023

On Appeal from the 295th District Court, Harris County, Texas, Trial Court Case No. 2022-19896

Andrew Cobos, Nicholas Kacal, for Appellee.

Frank Converse Brame, Joseph Centrich, Shenadoah, Kirby Hopkins, for Appellant.

Panel consists of Justices Kelly, Hightower, and Countiss.

OPINION

Richard Hightower, Justice

Appellants—VSMSQ Structural Engineers, LLC (VSMsq), Stephan P. Voss, Rory A. Starling, Martin R. Maingot, and Jay Martin—filed a motion under the Texas Citizens Participation Act (TCPA)¹ to dismiss the common-law misappropriation claim filed against them by appellee Structural Consultants Associates, Inc. (SCA). In its response, SCA argued that, under the commercial-speech exemption, its misappropriation claim was exempt from the TCPA’s protections. Appellants asserted that the artistic-work exception to the commercial-speech exemption applied, thereby excluding the misappropriation claim from the commercial-speech exemption.

The trial court signed an order denying Appellants’ TCPA motion to dismiss, citing, inter alia, the commercial-speech exemption as a basis for the denial. Appellants filed this interlocutory appeal challenging the order.² Because SCA met its burden to show that the commercial-speech exemption applied to its misappropriation claim, and Appellants did not prove that the artistic-work exception applied, we affirm the trial court’s order denying Appellants’ TCPA motion to dismiss.

Background

On April 22, 2022, SCA filed suit against Appellants. In its original petition, SCA described itself as "a structural engineering firm located in Sugar Land, Texas, who has become an industry leader in structural design and engineering services for both national and international clients." Appellants Voss, Starling, Maingot, and Martin were previously employed by SCA. Voss, Martin, and Maingot were hired by SCA as engineers, and Starling was hired as a drafter. SCA later appointed Voss and Martin to be executives of SCA. Martin resigned from SCA in March 2020, and Voss, Starling, Maingot resigned in March 2022.

SCA alleged that it discovered that Voss, Starling, Maingot, and Martin had formed VSMsq—an engineering services company—in January 2022, before Voss, Starling, and Maingot resigned. SCA described VSMsq as "a market competitor."

SCA asserted that Voss, Starling, and Maingot took "highly valuable confidential and proprietary information" from SCA to use for VSMsq’s benefit. SCA alleged that Voss, Starling, and Maingot had met with SCA’s clients while employed by SCA to secure business for VSMsq. SCA claimed that Voss, Starling, and Maingot had "approached dozens of SCA employees to lure them away from [SCA] by making outlandish and fraudulent misrepresentations that SCA was going [out of business]." SCA further alleged that, shortly after Voss, Starling, and Maingot resigned, SCA learned that its "most consistent client, Hanover Company, had entered into agreements with Voss and VSMsq whereby Hanover Company hired VSMsq to perform engineering consulting services." SCA alleged that the "timing of these agreements show[ed] that negotiations between [Appellants] and Hanover had occurred prior to" the resignations of Voss, Starling, and Maingot.

According to SCA, its discovery of the Hanover agreements led it to VSMsq’s website. There, SCA saw that Appellants were posting images of buildings that had been engineered by SCA. SCA claimed that Appellants were using the images of the buildings "to promote [VSMsq’s] engineering services on its website: VSMsq. com." SCA included a screenshot from VSMsq’s website in its petition. The screenshot showed an image of a building engineered by SCA with the label "Project Types Engineered by VSM[sq]." SCA asserted that Appellants were representing that the buildings depicted in the image had been engineered by VSMsq. SCA alleged that "VSMsq’s use of the above referenced building projects was done with the intention of deceiving the public and potential clients into falsely believing that Defendant VSMsq was the entity who developed and created the building projects." SCA claimed that "VSMsq ha[d] gained special advantage in its competition with [SCA] through the use of these building projects and engineering design[s], because Defendant VSMsq [was] burdened with little or none of the expense incurred by Plaintiff SCA in creating the respective building plans." SCA asserted that "VSMsq knew that these building projects were created by Plaintiff SCA at the time the images were placed on [VSMsq’s] website [because] Defendants Voss, Starling, Maingot, and Martin, the owners and agents of Defendant VSMsq, worked on the above referenced building projects for SCA during their employment with [SCA]."

SCA asserted 11 causes of action against Appellants. Of those, the only cause of action relevant here is SCA’s common-law misappropriation claim.³ The misappropriation claim arose from Appellants’ posting of the images of buildings engineered by SCA on VSMsq’s website for the purpose of promoting Appellants’ engineering services. SCA asserted that Appellants had "used [SCA’s] building projects knowingly and willfully, with the intent to mislead the public and cause confusion and mistake and have actively deceived customers in doing so." SCA alleged that Appellants "specifically attempted to pass off [SCA’s] services as its own" and that those "actions are known as ‘reverse-passing off and constitute[ ] unfair competition." SCA claimed that, as a result of those actions, it had "incurred and will continue to incur substantial monetary damages in the form of lost business, profit, and revenue." SCA also sought injunctive relief.

On May 6, 2022, Appellants filed their "Original Answer and Counterclaims." They generally denied SCA’s claims, raised several affirmative defenses, and counterclaimed for back-wages and unpaid vacation.

On May 11, 2022, SCA filed an application for a temporary restraining order (TRO) based on its common-law misappropriation claim. SCA asked the trial court "to issue a temporary restraining order ordering Defendant VSMsq to remove references of SCA projects, products, and services from VSMsq.com." The next day, the parties entered into a Rule 11 agreement in which SCA agreed to forgo the TRO hearing, and Appellants agreed "to remove any and all depictions of, or references to, the SCA Building Projects from VSMsq.com within forty-eight (48) hours of the execution of this Rule 11 Agreement."

On May 27, 2022, Appellants filed a TCPA motion to dismiss SCA’s commonlaw misappropriation cause of action. Appellants asserted that SCA’s "claim for common law misappropriation should be dismissed because it is based on or is in response to defendants’ exercise of their right of free speech." They argued that the TCPA applied to the misappropriation claim because it was "based on or [was] in response to a communication made by [them] in connection with a matter of public concern." Appellants further asserted that SCA could not establish a prima facie case for each essential element of SCA’s common-law misappropriation claim.

On June 21, 2022, SCA filed its first amended petition. Although SCA added some additional language, the operative facts regarding the common-law misappropriation claim remained the same in the amended pleading.

In support of the first amended petition, SCA attached the affidavit of its Chief Executive Officer, Mark Shepard. That same day, SCA filed its response to Appellants’ TCPA motion. Among its supporting evidence, SCA offered its first amended petition and Shepard’s affidavit.

SCA asserted that its misappropriation claim was exempt from the TCPA’s application based on several statutory exemptions, including the commercial-speech exemption. SCA also asserted that Appellants had failed to show that the TCPA applied to its misappropriation claim because Appellants’ "pursuit of their new business [was] not a matter of … public concern." And SCA claimed that Appellants’ motion should be denied because SCA offered clear and specific evidence to establish a prima facie case for each element of its misappropriation claim.

At the hearing on the TCPA motion, Appellants continued to assert that the TCPA applied to SCA’s common-law misappropriation claim because the claim was based on or in response to the exercise of their free-speech rights. They argued that the subject matter of the claim was a matter of public concern. They also asserted that the commercial-speech exemption did not apply based on the artistic-work exception to that exemption found in TCPA subsection 27.010(b)(1). Appellants pointed out that SCA had mistakenly argued in its response that the artistic-work exception was an exemption to the TCPA rather than an exception to the exemption.

The trial court denied Appellants’ TCPA motion to dismiss SCA’s common-law misappropriation claim. In its order, the trial court stated that, "[a]lthough [SCA] did not present prima facie evidence of its common law misappropriation claim," the court found that the TCPA did not apply based on the commercial-speech exemption. The trial court also indicated that Appellants had not met the public-concern requirement necessary to establish that the misappropriation claim had been based on or in response to the exercise if their free-speech rights.

This interlocutory appeal followed. Appellants raise three issues challenging the trial court’s order denying their TCPA dismissal motion.

Denial of TCPA Motion

Because it is dispositive, we begin with Appellants’ second issue in which they contend that "SCA fail[ed] to show that its common law misappropriation claim is exempt from the TCPA" under the commercial-speech exemption.

A. ...