Securus Technologies Inc v. Global Tel*Link Corporation

Filing 194

MEMORANDUM OPINION AND ORDER granting 181 Motion for Summary Judgment filed by Securus Technologies Inc. (Ordered by Judge Ed Kinkeade on 11/2/2015) (aaa)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
SECURUS TECHNOLOGIES, INC.
Plaintiff,
v.
GLOBAL TEL*LINK CORPORATION,
Defendant.

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Civil Action No. 3:13-CV-03009-K

MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff/Counterclaim-Defendant Securus Technologies,
Inc.’s Motion for Partial Summary Judgment (Doc. No. 181) (the “Motion for
Summary Judgment”). The Court has reviewed the parties’ briefs and all related filings
and evidence, including the reply and response to the Motion for Summary Judgment
and all evidence and appendixes filed in support of the parties’ arguments and
positions. The Court is of the opinion that the Motion for Summary Judgment should
be granted.
I.

Background
A.

Procedural

Plaintiff, Securus Technologies, Inc. (‘Securus’) initiated the current action by
filing Plaintiff’s Original Complaint for Patent Infringement and Demand for Jury Trial. In
the Plaintiff’s complaint, it alleged that Defendant, Global Tel*Link Corporation

ORDER – PAGE 1

(“GTL”) infringed upon certain patents owned by or assigned to Securus. Securus’
claims for patent infringement have been dismissed by the Court by grant of summary
judgment in favor of Defendant. These claims for patent infringement were dismissed
by summary judgment because Securus had previously entered into a covenant not to
sue, which protected GTL from the patent infringement lawsuit brought by Securus.
GTL asserted counterclaims against Securus, including an assertion that Securus
breached the covenant not to sue and that GTL was entitled to recovery of damages
under a breach of contract theory. In the Motion for Summary Judgment, Securus
asserts that it is entitled to summary judgment on the breach of contract action
because GTL cannot prove damages at trial. The parties are in agreement that the
covenant not to sue is governed by Texas law.
II.

Applicable Law - Summary Judgment Standard
Summary judgment is proper under Federal Rule of Civil Procedure 56 if the

movant shows that there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law. FED.R.CIV.P. 56(a). A factual dispute is
genuine if the evidence is sufficient that a reasonable trier of fact could return a verdict
for the nonmoving party. Crowe v. Henry, 115 F.3d 294, 296 (5th Cir. 1997). If the
moving party seeks summary judgment as to an opponent’s claims or defenses, the
“moving party bears the initial burden of identifying those portions of the pleadings
and discovery in the record that it believes demonstrate the absence of a genuine issue

ORDER – PAGE 2

of material fact, but is not required to negate elements of the nonmoving party’s case.”
Lynch Props., Inc. v. Potomac Ins. Co., 140 F.3d 622, 625 (5th Cir. 1998). Once the
moving party meets this burden, the non-moving party must set forth specific facts
showing a genuine issue for trial. Little v Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994) (en banc). When a party bears the burden of proof of an essential element and
that party fails to make a showing sufficient to establish the existence of the essential
element there is no dispute of material fact regarding the essential element and it is
proper to grant summary judgment against the party with the burden of proof. Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, s55s, 91 L. Ed. 2d 265 (1986).
III.

The Motion For Summary Judgment
A.

Securus’ Argument

Securus argues that GTL cannot prevail on its breach of the covenant not to sue
because GTL cannot prove damages caused by this breach. When a party breaches a
covenant not to sue, the damages caused by that breach are the costs and expenses of
defending the litigation that the parties agreed would not happen under the covenant
not to sue. Included in these damages are the attorney fees that a defendant would
have to pay to defend the suit that violated the covenant not to sue. Securus argues, in
the Motion for Summary Judgment, that GTL cannot prove these damages for two
reasons: first, because GTL did not timely and properly respond to Securus’ discovery
requests regarding the calculation and amounts of damages; and second, because GTL

ORDER – PAGE 3

did not designate an attorney expert to testify as to the damages.
Regarding the first issue, that GTL did not properly respond to discovery,
Securus asserts that it requested damage information from GTL in interrogatory and
disclosure requests and that GTL did not respond to these requests. Securus further
asserts that now discovery is closed in this matter, GTL cannot timely and properly
respond to these requests. So, GTL should be barred from presenting any non
disclosed damages at trial.
Regarding the second issue, that GTL cannot prove its damages at trial because
it did not designate an attorney expert, Securus argues that these damages can only be
proven through an expert who is an attorney and that GTL did not designate such an
expert before the deadline to do so. So, since no expert is designated to testify at trial
about these damages, GTL cannot prove the damages.
B. GTL’s Argument.
Regarding the first issue, that GTL did not properly respond to discovery
requests about damages calculations, GTL argues that it did provide the information
needed to determine the amount of damages claimed under the breach of the covenant
not to sue. It argues that while it might not have formally responded to the requests,
Securus was otherwise provided the necessary information by way of letter from GTL’s
attorney and that this letter and other documentation provided amount to otherwise
providing the information requested and satisfy GTL’s duty to respond to discovery.

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Regarding the second issue, that GTL cannot prove damages because it did not
designate an expert to do this, GTL argues that it does not need an expert to prove
these damages. Instead, it argues that it can prove these damages through GTL’s
corporate representative witnesses, whom it has properly designated. GTL argues that
even though the damages it seeks to prove are attorney fees, it does not need an expert
witness to prove these damages because they are the natural and foreseeable
consequence of breaching the covenant not to sue. GTL makes a distinction between
this case, in which the attorney fees are the actual damages for the breach of contract
and in the case where a party is attempting to recovery attorney fees incurred in
bringing a breach of contract claim, where attorney fees incurred are not actual
damages from the breach of contract. In the second case the attorney fees are those
that are authorized by statute, and these fees must be reasonable and necessary in light
of the litigation. GTL argues that this is not the type of damage that it seeks to recover.
It argues that it seeks to recover actual damages from the breach of the covenant not to
sue and that because of this there is no need or requirement to show that the attorney
fees incurred are reasonable or necessary. So, the fees do not have to be proven by an
attorney expert. According to GTL, all it needs to prove is that the fees were incurred
as a result of the breach of the covenant not to sue, which it can do without an expert.
C. The Court’s Analysis
The Court disagrees with Securus’ first argument, that GTL cannot present

ORDER – PAGE 5

damage issues because GTL failed to properly respond to discovery, but the Court
agrees with Securus’ second argument that GTL must prove attorney fees through an
expert who is an attorney.
Regarding the first argument, it appears from the record before the Court that
Securus was provided with enough information about GTL’s damages calculations so
that Securus could properly determine the damages in this cause of action. It also
appears that some of this information may have been provided after the time to
respond. But if that was so, the mistake was not harmful to Securus because it was
provided well before the trial setting in this matter. But, in light of the Court’s
assessment of Securus’ second argument regarding the failure to designate an expert to
testify to attorney fees, the Court finds that this argument is moot and declines to rule
on it.
Regarding the argument that GTL cannot prove damages because it has not
designated an expert, the Court agrees with Securus. Most of the case law regarding the
level of proof needed to prove up attorney fees is in the context of proving up
statutorily authorized attorney fees incurred in bringing an action. For example, the
attorney fee recoveries allowed by Texas Civil Practices and Remedies Code Chapter
38, which allows for recovery of attorney fees incurred in successfully bringing a breach
of contract claim and other types of claims. Securus argues that the standard for
proving attorney fees in this case is the same as that under this Chapter 38. GTL

ORDER – PAGE 6

argues that because the attorney fees in this case are actual contract damages, this
standard does not apply.
The Court disagrees with GTL. GTL approaches the matter by noting a
difference in the type of damages that are being claimed, asserting that when actual
damages are claimed, it is not necessary to use an expert to prove the attorney fees.
The Court does not agree with this approach. The real question presented here is a
question of evidence, not a question of damages. Why a party would need to prove
attorney fees makes little difference in how those fees should be proven. If the claimed
attorney fees are actual damages or if they are fees incurred in bringing an action, the
standard of evidence needed to prove them is the same. In, the case of attorney fees,
the rule is that an expert needs to testify as to these fees because they are outside the
normal understanding of a lay person. Twin City Fore Ins. Co. v. Vega-Garcia, 223
S.W.3d 762, 770 (Tex. App.-Dallas 2007, rev. denied).
The Court sees two significant problems with GTL’s argument. First, GTL is
arguing that there are two different standards needed to prove up attorney fees. Under
GTL’s argument, one would need an expert to prove attorney fees incurred in bring an
action but would not need to use an expert to prove attorney fees when those fees are
actual damages. In either case, the amount of reasonable and necessary attorney fees is
what needs to be proven. Under the statutorily authorized fees, this standard is set by
statute. When the fees are claimed as the actual foreseeable damages of a breach of

ORDER – PAGE 7

contract, only those fees that are reasonable and necessary should be included in these
damages because those are the only ones that are the foreseeable consequence of the
breach. Under both situations, it is necessary to use an expert to prove that these fees
are reasonable.
The second problem that the Court sees with GTL’s analysis is that under
GTL’s analysis an expert would never be needed to prove actual damages. GTL does
not provide any support for this argument besides pointing to the natural and
foreseeable consequence standard for breach of contract damages. Just because claimed
damages are a natural and foreseeable consequence of a breach of contract does not
automatically mean that an expert is not needed to prove those damages. Again, this is
a difference between the type of damages that one can claim in an action and the
standard of proof needed to prove those damages. Under a breach of contract claim,
the damages that can be recovered are those that are natural and foreseeable. Under an
evidence standard, things that are outside of a lay person’s understanding must be
proven by an expert. There is no connection between these two standards that makes
natural and foreseeable consequences automatically understandable by a lay person,
which is what GTL appears to argue. In many situations, an expert is necessary to
prove that the claimed damages are the foreseeable consequences of the breach.
Wortham Bros., Inc. v. Haffner, 347 S.W.3d 356, 360-61 (Tex.App.—Eastland 2011)
(expert opinion necessary to prove damages were reasonable and necessary); Mustang

ORDER – PAGE 8

Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 200-201 (Tex. 2004)
(reasonableness of contract damages needed to be proven by expert testimony); see also
Dallas Ry. & Terminal Co. v. Gossett, 294 S.W.2d 377, 381-83 (Tex. 1956) (proof of
amounts charged or paid is not presumptive evidence of reasonableness of the charges;
therefore, without other evidence the charges are reasonable, recovery of such expenses
will be denied). This is one of those situations.
GTL further argues that even if an expert is needed to prove the attorney fees,
granting summary judgment is not necessary because this Court can take judicial
notice of the reasonable attorney fees. GTL points to Texas Civil Practices and
Remedies Code Chapter 38 for support of this position. Under this chapter, when fees
are statutorily authorized a judge may take judicial notice of usual and customary
attorney fees and the contents of case file. CPRC §38.004. In addition, the usual and
customary fees are presumed to be reasonable, unless rebutted. CPRC §38.003. But,
what GTL fails to point out it that this statute only authorizes a judge to take judicial
notice of fees and the case file only when the proceeding is before the court or in a jury
case when the parties agree to submit the issue of fees to the court. TRCP §38.004.
Neither of those conditions is met here and the Court sees no reason or authority to
apply a different standard to this issue just because this chapter does not strictly apply
to the fees in issue in this case.

ORDER – PAGE 9

D. Conclusion
In summary, the Court is of the opinion that the Motion for Summary
Judgment should be granted because GTL cannot prove attorney fee damages for its
breach of the covenant not to sue claim. These damages are the attorney fees incurred
in defense of the litigation that Securus agreed not to bring but did bring, and the fees
must be proven by an attorney expert. GTL has failed to designate an attorney expert
to testify as to these fees and the time for designation of such an expert is passed. So,
GTL cannot prove these damages at trial. Because GTL cannot prove an essential
element of its breach of covenant not to sue, Securus is entitled to judgment as a
matter of law. For these reasons, the Court grants the Motion for Summary Judgment.
SO ORDERED.
Signed November 2nd, 2015.

________________________________
ED KINKEADE
UNITED STATES DISTRICT JUDGE

ORDER – PAGE 10