Roberts v. Overby-Seawell Company et al
Filing
121
MEMORANDUM OPINION AND ORDER granting in part and denying in part 80 , 74 Motions for Partial Summary Judgment; denying without prejudice 71 Defendants' Motion to Exclude the Testimony and Report of J. Daniel Caskey, Mark A. Gannaway, and Janice Williams; denying without prejudice 104 Defendants' Motion to Strike Plaintiff's Untimely Expert Declarations; granting 76 Plaintiff's Motion to Exclude Expert. In light of this opinion and the necessarily fact-intensive nature of the waiver defense, the court directs the parties to inform it in writing by 3/30/2018, whether this action is suitable for mediation before a mediator or a magistrate judge. (Ordered by Judge Sam A Lindsay on 3/23/2018) (axm)
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
§
§
Plaintiff,
§
§
v.
§
§
OVERBY-SEAWELL COMPANY,
§
BRECKENRIDGE INSURANCE GROUP, §
INC., and BRECKENRIDGE IS, INC.,
§
§
Defendants.
§
DAVID ROBERTS,
Civil Action No. 3:15-CV-1217-L
MEMORANDUM OPINION AND ORDER
Before the court are: Defendants’ Motion for Partial Summary Judgment (Doc. 74), filed
June 16, 2017; Plaintiff’s Motion for Summary Judgment (Doc. 80), filed June 16, 2017;
Defendants’ Motion to Exclude the Testimony and Report of J. Daniel Caskey, Mark A. Gannaway,
and Janice Williams (Doc. 71), filed June 16, 2017; Plaintiff’s Motion to Exclude Expert (Doc. 76),
filed June 16, 2017; and Defendants’ Motion to Strike Plaintiff’s Untimely Expert Declarations
(Doc. 104), filed July 21, 2017. Having considered the motions, legal briefing, appendixes,
evidence, record, and applicable law, the court grants in part and denies in part Defendants’
Motion for Partial Summary Judgment (Doc. 74); grants in part and denies in part Plaintiff’s
Motion for Summary Judgment (Doc. 80); denies Defendants’ Motion to Exclude the Testimony and
Report of J. Daniel Caskey, Mark A. Gannaway, and Janice Williams (Doc. 71); grants Plaintiff’s
Motion to Exclude Expert (Doc. 76); and denies Defendants’ Motion to Strike Plaintiff’s Untimely
Expert Declarations (Doc. 104).
Memorandum Opinion and Order - Page 1
I.
Background Facts and Procedural History
This action arises from a dispute between an insurance salesman, Plaintiff David Roberts
(“Roberts”), and his former employer, Defendant Overby-Seawell Company (“OSC”), a subsidiary
of Defendant Breckenridge IS, Inc. (“Breckenridge IS”). Roberts contends that OSC failed to pay
him contingent commissions to which he was entitled under the parties’ agreement, and reduced his
commission checks by $35,000 per month over a period of ten months without his authorization.
Defendants contend that Roberts was not owed contingent commissions, and that contingent
commissions cannot even be calculated for an individual salesperson. Alternatively, Defendants
contend that Roberts waived any right to seek contingent commissions by failing to assert his
entitlement to them during his employment at OSC. With regard to the $35,000 deducted each month
from Roberts’s commission check, Defendants assert that Roberts agreed to this deduction.
On March 24, 2015, Roberts filed Plaintiff’s Original Petition in the 160th Judicial District
Court, Dallas County, Texas, against OSC, as well as Breckenridge Insurance Group, Inc.
(“Breckenridge Group”), which acquired OSC in 2010. On April 22, 2015, Defendants OSC and
Breckenridge Group removed this action to the district court for the Northern District of Texas on
grounds that complete diversity of citizenship exists between the parties and that the amount in
controversy exceeds $75,000, exclusive of interest and costs.
On May 12, 2015, Roberts amended his pleadings, and on September 23, 2015, after the court
granted him leave, he filed Plaintiff’s Second Amended Complaint (“Complaint”) (Doc. 19), the
operative pleading in this case, adding Breckenridge IS as a party. Roberts is suing Defendants for:
(1) breach of contract; (2) promissory estoppel; and (3) quantum meruit, and he also seeks
declaratory relief with respect to the rights and obligations of the parties. Roberts seeks actual
Memorandum Opinion and Order - Page 2
damages, attorney’s fees, and costs. Disagreeing about the specifics of Roberts’s commission
agreement and contending that Roberts breached a confidentiality agreement, Defendants OSC and
Breckenridge IS (sometimes collectively “Defendants”) offer a number of affirmative defenses and
assert counterclaims against Roberts for: (1) breach of fiduciary duty; (2) fraud by nondisclosure;
(3) misappropriation of trade secrets; and (4) breach of contract. See Defs.’ Ans. to Pl.’s Sec. Am.
Compl. and Overby-Seawall Company and Breckenridge IS’s Counterclaims against Pl. (Doc. 20).1
Defendants seek actual damages, exemplary damages, costs, and attorney’s fees. The court now sets
forth the facts in accordance with the standard in Section II(A) of this opinion.2
A.
OSC’s Business
OSC is a Managing General Agency (MGA) in the business of selling lender or “force
placed” insurance to its clients (including banks and mortgage servicing companies) and placing
those policies with various insurance companies. “Force placed” insurance coverage is insurance
placed on collateral by a lender seeking to protect its interests when the borrower fails to maintain
the required insurance coverage on the collateral. In 2010, Breckenridge Group acquired OSC.
Breckenridge IS is the “parent company” with whom OSC and Breckenridge Group are affiliated.
1
In their Answer, Defendants assert that “Breckenridge Insurance Group, Inc. did not employ
Plaintiff at any time. Breckenridge IS, Inc., a Delaware corporation with its principal place of business in
Georgia, is the parent company of both OSC and Breckenridge Insurance Group, Inc.” See Defs.’ Ans. to
Pl.’s Sec. Am. Compl. and Overby-Seawall Company and Breckenridge IS’s Counterclaims against Pl. 1 n.1
(Doc. 20).
2
The court’s recitation of the facts is taken from the uncontested evidence contained in the summary
judgment record provided by the parties, or evidence to which the court has overruled a party’s objection.
Contested facts are noted. The court only cites to the record when it is directly quoting from it.
Memorandum Opinion and Order - Page 3
B.
OSC’s Commission Structure
As part of the revenue received from certain carriers with whom OSC places business, OSC
may be entitled to contingent commissions from insurance carriers. Contingent commissions, also
known as profit commissions, are based on the overall profitability of the accounts that OSC places
with each insurance carrier. The insurance carrier evaluates the overall profitability of the book of
business that OSC placed with it and performs this analysis based on a three-year period. Even if
a contingent commission is paid to OSC in one year, it is possible that if the contingents are negative
for the following year that OSC could be required to repay money to the carrier or that the negative
amounts are carried forward year after year.
Mark Pearce, Head of the Underwriting Department for OSC, explained the commission
structure as follows:
Q. What are contingent commissions?
A. Contingent commission in our world is -- well, there’s two pieces of the
commission process. You get what they call front commission, which is
commission that an agent or an agency earns as premium comes in the
door. When policies -- when policies are paid for, contingent commission
then is an additional piece of premium that an agency can earn if the
portfolio of business that you write performs well below certain
pre-established loss limits and -- and that’s -- it’s just an additional deal
that you look after the fact. You say, okay, here’s -- here’s a year’s worth
of business. How did we do? We took in this much premium, we had this
many losses. And based on the calculation then as described by each
carrier that you have a relationship with -- and there is a calculation that
occurs after on a retrospective basis.
Q. And if the company wanted to, they could drill down and figure out how
much of that was related to each individual salesperson’s production?
A. Oh, yeah, I would think so. Yeah. We certainly keep track of -- we
certainly keep track of premium and losses at a client level, policy level.
Memorandum Opinion and Order - Page 4
Pl.’s Summ. J. App. 218-219 (Doc. 82). Eugene Norton (“Norton”), OSC’s Vice-President of
Accounting, who was designated by Defendants as the corporate representative to speak on the
structure and calculation of contingent payments, described a contingent commission as something
that is “calculated contingent on the profitability of a business, of a book of business that’s paid to
the – someone like us[,] [a] general agent from the carrier” Id. at 176. Norton also stated at his
deposition that contingent commissions are revenue:
Q. So there’s -- there may be more than this, but there’s at least a couple of
different revenue sources to OSC for writing business, that would be the front-end
commission?
A. Yes.
Q. And then the contingent commission?
A. Yes.
Id. at 176. Keith Gilroy (“Gilroy”), OSC’s President, similarly stated at his deposition that
contingent commissions are “an additional type of revenue.” Id. at 81.
C.
Roberts’s Employment with OSC
Roberts has worked in the insurance industry for twenty years. His primary focus is on “force
placed” insurance and large accounts in the mortgage servicing space. On May 3, 2011, OSC hired
Roberts as a sales executive. The offer letter states that Roberts’s salary “will be $3,653.85 per biweekly pay period, plus commission, paid bi-weekly.” Defs.’ Summ. J. Resp. App. 1.
At the inception of his employment, Roberts signed a Confidentiality Agreement that stated
in part:
Best Efforts: Individual agrees to devote his full time and best efforts in his position
relating to the marketing, selling, administrating, managing or servicing the
Company’s business and in the performance of any general duties as may be from
time to time required by Company.
Memorandum Opinion and Order - Page 5
Conflict of Interest: Individual agrees that, during his employment with Company,
he will not perform any activities or services or accept such other employment that
would be inconsistent with Company’s business or would in any way interfere
with or present a conflict of interest concerning Individual’s employment with
Company.
Extent of Service: Individual shall exclusively devote his entire working time, energy
and attention to his duties in connection with the Company.
Id. at 2 (Confidentiality Agreement).
Roberts brought in approximately $1,000,000 in premiums his first year. In January of 2012,
Roberts signed OSC’s largest account—Shellpoint Loan Servicing (“Shellpoint”), formerly named
Resurgent. Shellpoint accounted for $9,000,000 in premiums in 2012 and grew to an annual
premium exceeding $20,000,000.
D.
The 2011 Commission Agreement
In 2011, OSC’s commission agreement provided that Roberts would receive 20%
commission on “OSC Net Revenue” for the first year of a new account. Pl.’s Summ. J. App. 11
(2011 Commission Agreement) (Doc. 82). After one year, the commission changed to the renewal
rate, which was 10% of “OSC Net Revenue.” Id. The 2011 Commission Agreement did not define
the terms “commission” or “OSC Net Revenue.”
In February 2013, the Shellpoint account was in its thirteenth month. Under the 2011
Commission Agreement, therefore, Roberts’s commission on that account lowered from 20% to the
renewal rate of 10%. In the fall of 2013, Roberts noticed the reduction in his commission and
questioned John Dangoia (“Dangoia”), then-president of OSC, and James Robertson (“Robertson),
OSC’s Executive Vice President, regarding the lower rate. Dangoia and Robertson reminded him
that the 2011 Commission Agreement provided that after one year, commissions are paid on the
Memorandum Opinion and Order - Page 6
renewal rate. Roberts thereafter agreed that his commissions had been paid properly under the 2011
Commission Agreement, even though he never received any portion of contingent commissions
under that agreement.
E.
The 2014 Commission Agreement
In the spring of 2014, after soliciting input from Roberts and other salespersons, OSC
implemented a new commission agreement (the “2014 Commission Agreement”), retroactive to
April 1, 2014. Id. at 12 (2014 Commission Agreement). The 2014 Commission Agreement
removed the renewal rate, allowing the initial commission rate to be effective throughout the term
of the agreement. Commissions would now be paid on 12.5% of “OSC Gross Revenue.” Id. Just
as the 2011 Agreement did not define “OSC Net Revenue,” the 2014 Commission Agreement did
not define “commission” or “OSC Gross Revenue.” Id.
F.
The $35,000 Monthly Deductions
Beginning in May 2014, the Shellpoint business no longer included a subagent commission.
As a result, under OSC’s commission structure, Roberts’s commission percentage was to increase
from 5% to 12.5%. Contending that the elimination of a subagent translated into increased expenses
associated with servicing the account, OSC began internal discussions about how to share these costs
with Roberts. On October 21, 2014, Robertson, Dangoia, and other OSC executives had a
conference call with Roberts to propose a cost-sharing agreement. The parties dispute whether
Roberts ultimately agreed to share these costs. While OSC believed, based on the conference call
with Roberts, that he had agreed to share the costs associated with servicing the Shellpoint account,
thereby authorizing the monthly deductions, Roberts stated at his deposition that he never agreed to
share the expenses. According to Roberts, he believed that no agreement was reached, as his
Memorandum Opinion and Order - Page 7
questions were never answered in a satisfactory manner and the information provided him was
insufficient.
G.
The Sales Bonus and General Release and Waiver of Claims
In September 2014, OSC provided certain employees, including Roberts, a sales bonus in
exchange for a release of claims. Defs.’ Summ. J. Resp. App. 55-58 (Sales Bonus Agreement); id.
at 59-61 (General Release and Waiver of Claims). The General Release provided that an employee
receiving the sales bonus released Defendants from all claims in consideration for the sales bonus
award. Roberts signed both documents.
OSC continued to pay commissions solely on revenue from premiums, and Roberts registered
no complaints. During the entire period of his employment, Roberts never informed his employer
that he expected to be paid on contingent commissions and never complained about not being paid
them.
H.
Termination of Roberts’s Employment
On March 20, 2015, Defendants terminated Roberts’s employment. In the termination letter,
Robertson stated that the basis for Roberts’s termination included failing to use best efforts, engaging
in unlawful competition, and usurping business opportunities. Defendants also threatened him in
the letter with civil and criminal legal actions.
I.
This Lawsuit
On March 24, 2015, Roberts filed this civil action. This case was originally set for trial on
the court’s four-week docket commencing August 1, 2016. After numerous discovery disputes,
which necessitated extensions of time and amendments to the court’s scheduling order, on January
11, 2017, the court granted the parties’ Amended Fifth Agreed Motion to Extend Scheduling Order
Memorandum Opinion and Order - Page 8
Deadlines. See Sixth Am. Sch. Order (Doc. 45). The court reset the trial date for the court’s fourweek docket beginning on October 2, 2017, extended the deadline for pretrial disclosures to
September 5, 2017, extended the deadline to object to the opposing parties’ pretrial disclosures to
September 18, 2017, extended the deadline for dispositive motions to June 16, 2017, extended the
deadline to challenge experts to June 16, 2017, and extended the deadline to complete all discovery,
including expert discovery, to June 2, 2017. See Sixth Am. Sch. Ord. (Doc. 45).
On June 9, 2017, a week after discovery closed, Roberts filed a Motion to Compel
Interrogatory Responses and Document Production. (Doc. 66). Among other things, Roberts argued
that Defendants had “thwart[ed] [his] efforts to recover his commission on the contingent
commission revenue received by Defendants” by arguing it was “not possible to calculate the amount
of contingent commission allocable to an individual producer.” Pl.’s Mot. to Compel 5. Robert
introduced evidence that, contrary to Defendants’ answers and objections to interrogatories and
production requests, several of OSC’s executives, including Norton and Pearce, stated in their
depositions that contingent commissions could be calculated on the basis of an individual producer.
Among other things, Roberts moved to compel a proper answer to Subpart (a) of Interrogatory 21
contained in Plaintiff’s Fourth Set of Interrogatories to Overby Seawell and Breckenridge Insurance
Group, Inc. and the Second Set to Breckenridge IS, Inc. The Interrogatory and Answer are as
follows:
INTERROGATORY NO. 21: For all contingent commission payments received by you
related to any business produced by Plaintiff, set forth:
(a) The amount of the contingent commission payment received which was attributable to
business produced by Plaintiff;
Memorandum Opinion and Order - Page 9
ANSWER:
(a) Defendant is unable to break down all contingent commissions received by business
produced by any salespeople, including Roberts. Defendant is also producing documents relating
to contingent commissions received.
In support of his motion to compel, Roberts argued: “The documents produced with the
response do not provide all of the information necessary to calculate Roberts’ commission.
Therefore, Roberts moves to compel a response that states the amount of contingent commission
attributable to business produced by Roberts.” Pl.’s Mot. to Compel 9-10. The court referred the
motion to compel to United States Magistrate Judge Renée Harris Toliver. On July 18, 2017,
Magistrate Judge Toliver held a hearing on Roberts’s motion to compel. As the hearing was not
officially transcribed, the court has listened to the audiotape of the hearing. At the hearing, after
considering Roberts’s argument that certain OSC executives had testified that contingent
commissions could be calculated on the basis of an individual producer, Magistrate Judge Toliver
granted Roberts’s motion to compel with respect to Interrogatory No. 21, reopened discovery, and
ordered Defendants to amend their responses to Interrogatory 21 by September 15, 2017. On
September 11, 2017, she entered a written order memorializing her ruling. She also ruled that in lieu
of amending their respective responses to Interrogatory No. 21, Defendants had the option of
producing specified documents related to contingent commission payments. See Order on Pl.’s Mot.
to Compel Interrogatory Resp. and Doc. Prod. (Doc. 118).3
3
As part of her Order, Magistrate Judge Toliver also ordered Defendants to designate a Rule 30(b)(6)
representative to be deposed on those topics upon which Robertson was originally designated by September
15, 2017, finding that Defendants did not provide sufficient notice to Roberts prior to withdrawing Robertson
as a Rule 30(b)(6) deponent. Magistrate Judge Toliver denied the motion to compel insofar as certain of
Roberts’s requests for production, finding that these requests were not sufficiently specific to require a
response.
Memorandum Opinion and Order - Page 10
On August 25, 2017, the parties filed an Agreed Motion to Extend Scheduling Order
Deadlines (“Agreed Motion”) (Doc. 114). While the parties did not seek an extension of the trial
date, they sought extensions of the pretrial disclosure deadlines. In addition to notifying the court
that the parties were attempting to settle the case and would be attending mediation, the parties
informed the court of Magistrate Judge Toliver’s decision and the need for additional time needed
to fully comply with her ruling. According to the Agreed Motion:
The Parties are currently working together to resolve the document production issues
and in scheduling the additional deposition. Defendants are located in Georgia which
is a complicating factor in finalizing additional discovery ordered by Magistrate
Judge Toliver. The additional discovery is necessary to allow Plaintiff to fully
comply with its pretrial disclosure obligations. Plaintiff also believes that the granting
of Plaintiff’s Motion to Compel materially bears on the resolution of all outstanding
motions filed by Defendants. Due to ongoing settlement negotiations and the
pending mediation, as well as completion of the discovery issues addressed by
Magistrate Judge Toliver’s ruling, the parties request that the Court extend the
pretrial disclosure and objection deadlines so that the parties can focus their energy
and resources on attempting to reach a resolution.
Agreed Mot. 3. On August 28, 2017, the court granted the Agreed Motion and, among other things,
ordered the parties to conduct a settlement conference by September 15, 2017, extended the deadline
for pretrial disclosures to September 19, 2017, and extended the deadline to object to the opposing
parties’ pretrial disclosures to September 25, 2017. See Order (Doc. 115). On September 14, 2017,
the parties informed the court that they were unable to reach a settlement. On September 15, 2017,
the court issued an order vacating all pretrial deadlines as well as the trial setting, stating it would
reset the deadlines after ruling on the parties’ pending motions. See Order (Doc. 12).
Prior to Magistrate Judge Toliver’s ruling granting in part Roberts’s motion to compel, the
parties filed summary judgment motions that present overlapping facts, legal issues, and arguments.
Roberts moves for summary judgment on his breach of contract claim as to the contingent
Memorandum Opinion and Order - Page 11
commissions and allegedly unauthorized monthly deductions from his commissions, as well as on
Defendants OSC and Breckenridge IS’s counterclaims for breach of fiduciary duty, fraud by
nondisclosure, misappropriation of trade secrets, and breach of contract, and on their affirmative
defenses. Defendants move for partial summary judgment on Roberts’s breach of contract claim
against them relating to the contingent commissions (but not with respect to the allegedly
unauthorized monthly deductions), as well as on his promissory estoppel and quantum meruit claims
and his request for declaratory judgment. Prior to Magistrate Judge Toliver’s ruling granting in part
Roberts’s motion to compel, the parties also filed motions to exclude experts, and Defendants filed
a motion to strike Roberts’s expert declarations as untimely. In light of Magistrate Judge Toliver’s
ruling while these motions were pending, and as explained later in this decision, many of the issues
raised in the arguments in these motions are now moot. The court first addresses the parties’
respective summary judgment motions.
II.
The Parties’ Summary Judgment Motions
A.
Applicable Legal Standard
Summary judgment shall be granted when the record shows that there is no genuine dispute
as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas
Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is “genuine”
if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary
judgment, the court is required to view all facts and inferences in the light most favorable to the
nonmoving party and resolve all disputed facts in favor of the nonmoving party. Boudreaux v. Swift
Memorandum Opinion and Order - Page 12
Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005). Further, a court “may not make credibility
determinations or weigh the evidence” in ruling on a motion for summary judgment. Reeves v.
Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support the
nonmoving party’s case, the party opposing the motion must come forward with competent summary
judgment evidence of the existence of a genuine dispute of material fact. Matsushita Elec. Indus.
Co. v. Zenith Radio, 475 U.S. 574, 586 (1986). On the other hand, “if the movant bears the burden
of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative
defense, he must establish beyond peradventure all of the essential elements of the claim or defense
to warrant judgment in his favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)
(emphasis in original). “[When] the record taken as a whole could not lead a rational trier of fact
to find for the nonmoving party, there is no ‘genuine [dispute] for trial.’” Matsushita, 475 U.S. at
587. (citation omitted). Mere conclusory allegations are not competent summary judgment
evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73
F.3d 1322, 1325 (5th Cir. 1996).
Unsubstantiated assertions, improbable inferences, and
unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19
F.3d 1527, 1533 (5th Cir. 1994).
The party opposing summary judgment is required to identify specific evidence in the record
and to articulate the precise manner in which that evidence supports his or her claim. Ragas, 136
F.3d at 458. Rule 56 does not impose a duty on the court to “sift through the record in search of
evidence” to support the nonmovant’s opposition to the motion for summary judgment. Id.; see also
Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 & n.7 (5th Cir. 1992). “Only disputes over
Memorandum Opinion and Order - Page 13
facts that might affect the outcome of the suit under the governing laws will properly preclude the
entry of summary judgment.” Anderson, 477 U.S. at 248. Disputed fact issues that are “irrelevant
and unnecessary” will not be considered by a court in ruling on a summary judgment motion. Id.
If the nonmoving party fails to make a showing sufficient to establish the existence of an element
essential to its case and on which it will bear the burden of proof at trial, summary judgment must
be granted. Celotex, 477 U.S. at 322-23.
B.
Analysis
1.
Roberts’s Motion for Partial Summary Judgment
Roberts seeks summary judgment on his breach of contract claim. In addition, he moves for
summary judgment on all of Defendants’ counterclaims and affirmative defenses.4
a.
Breach of Contract Claim
Roberts seeks summary judgment on his breach of contract claim. He contends that OSC
breached the 2014 Commission Agreement by: (1) failing to pay him the contingent commissions
to which he was entitled; and (2) by unilaterally reducing his commission checks by $35,000 per
month over a period of ten months. The court considers these issues in turn.
i.
Contingent Commissions
Roberts argues that the 2014 Commission Agreement unambiguously provided that all
salespersons would receive a percentage of “OSC Gross Revenue.” See Pl.’s Summ. J. App. 12
(2014 Commission Agreement). Roberts contends that contingent commissions are part of gross
4
Although Roberts labels his motion as “Plaintiff’s Motion for Summary Judgment,” as Defendants
correctly point out, he has not moved for summary judgment on his claims for promissory estoppel or
quantum meruit. Accordingly, his motion for summary judgment is actually a motion for partial summary
judgment.
Memorandum Opinion and Order - Page 14
revenue and, pursuant to the plain language of the Commission Agreement, that he is entitled to be
paid a percentage of contingent commissions. In support, Roberts relies on deposition testimony of
OSC’s executives Norton and Gilroy who stated contingent commissions are part of OSC’s gross
revenue paid to them by the carriers. Roberts contends that despite OSC’s receipt of significant
contingent commissions from the business sold by Roberts, Defendants have refused to pay him any
commission at all for the contingent commission revenue received by Defendants from the carriers,
even though his 2014 Commission Agreement clearly provides that he is entitled to a percentage of
all revenue received by Defendants.
In response, Defendants argue that the 2014 Commission Agreement is ambiguous, and that
the court should, therefore, deny Roberts’s motion for summary judgment on this basis. As the
parties’ dispute concerns whether Roberts is entitled to contingent commissions under the 2014
Commission Agreement, the court’s inquiry begins with the terms of the 2014 Commission
Agreement and Texas law governing contract interpretation.
Under Texas law, “[t]he essential elements of a breach of contract claim are: (1) the existence
of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the
contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.”
Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009) (quoting Aguiar v. Segal, 167
S.W.3d 443, 450 (Tex. App.—Houston [14th Dist.] 2005, pet. denied)). “In construing a written
contract, [the] primary objective is to ascertain the parties’ true intentions as expressed in the
language they chose.” Plains Exploration & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d
296, 305 (Tex. 2015). Thus, a contract must be interpreted as a whole “to give meaning to all of its
terms,” so that none is rendered meaningless, superfluous, or contradictory. In re Isbell Records,
Memorandum Opinion and Order - Page 15
Inc., 586 F.3d 334, 337 (5th Cir. 2009); accord Plains Exploration, 473 S.W.3d at 305; Ewing
Constr. Co. v. Amerisure Ins. Co., 420 S.W.3d 30, 37 (Tex. 2014).
If a contract “is so worded that it can be given a certain or definite legal meaning or
interpretation, then it is not ambiguous and the court will construe it as a matter of law.” Coker v.
Coker, 650 S.W.2d 391, 393 (Tex. 1983). “Whether a contract is ambiguous is a question of law
for the court to decide by looking at the contract as a whole in light of the circumstances present
when the contract was entered.” Id. at 394 (citation omitted). “Courts interpreting unambiguous
contracts are confined to the four corners of the document, and cannot look to extrinsic evidence to
create an ambiguity.” Texas v. American Tobacco Co., 463 F.3d 399, 407 (5th Cir. 2006) (citation
omitted). A contract is not ambiguous simply because the parties advance different interpretations.
American Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). “[I]f the contract [,
however,] is subject to two or more reasonable interpretations after applying the pertinent
construction principles, the contract is ambiguous, creating a fact issue regarding the parties’ intent.”
Plains Exploration, 473 S.W.3d at 305 (citation omitted). A “contract is not necessarily ambiguous
merely because some sections arguably conflict.” NuStar Energy, L.P. v. Diamond Offshore Co.,
402 S.W.3d 461, 466 (Tex. App.—Houston [14th Dist.] 2013, no pet.). “[I]n Texas, a specific
contractual provision prevails over a general provision.” Evercore Capital Partners II, L.L.C. v.
Davis Trust (In re Davis Offshore, L.P.), 644 F.3d 259, 266 (5th Cir. 2011) (citation omitted); see
also Luig v. North Bay Enters., Inc., 55 F. Supp. 3d 942, 953 (N.D. Tex. 2014) (quoting NuStar
Energy, 402 S.W.3d at 466) (“[T]o the extent of any conflict, specific provisions control over more
general ones.”).
Memorandum Opinion and Order - Page 16
Finally, a court should avoid when possible “a construction [that] is unreasonable,
inequitable, and oppressive.” Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987); see
also Pavecon, Inc. v. R-Com, Inc., 159 S.W.3d 219, 222 (Tex. App.—Fort Worth 2005, no pet.)
(stating that when interpreting a contract, a court should avoid, if possible, “a construction that is
unreasonable, inequitable, or oppressive, or would lead to an absurd result.”).
Under Texas law, an ambiguity in a contract is either “patent” or “latent.” National Union
Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., 907 S.W.2d 517, 520 (Tex. 1995). A patent ambiguity
in a contract is an ambiguity that is evident on the face of the contract. Id. (other citation omitted).
A latent ambiguity, on the other hand, arises when a contract that is unambiguous on its face is
applied to the subject matter with which it deals and an ambiguity appears by reason of some
collateral matter. Id. (other citations omitted). In this matter, the court need look no farther than
the face of 2014 Commission Agreement to determine whether a salesperson is entitled to contingent
commissions is subject to more than one reasonable interpretation, and is, therefore, patently
ambiguous.
The 2014 Commission Agreement is a one-page agreement and states that a salesperson’s
commissions are paid on a percentage of “OSC Gross Revenue.” Pl.’s Summ. J. App. 12. Applying
the rules of contract interpretation discussed previously, the court concludes the language is
susceptible of two reasonable interpretations. Under the first interpretation, contingent commissions
paid by the insurance carrier to the MGA, here OSC, are not included in the individual salesperson’s
compensation. Under this interpretation, “OSC gross revenue” is based on revenue generated by the
operation of the OSC. This is the interpretation urged by Defendants. Under the second
interpretation, “OSC Gross Revenue” is based on revenue generated from a particular salesman’s
Memorandum Opinion and Order - Page 17
account, without any deductions. Looking at the contract as a whole in light of the circumstances
present when the parties made the agreement, the court concludes that both interpretations are
reasonable. Further, adopting either interpretation of whether contingent commissions paid by the
insurance carriers to OSC are included in the calculation of a salesperson’s commission payments
requires the court to look beyond the four corners of the agreement and consider parol evidence to
establish the true intention of the parties.
In sum, the court concludes that the 2014 Commission Agreement is patently ambiguous.
To discern the true intent of the parties, parol evidence is required. Accordingly, the court will deny
Roberts’s motion for summary judgment on this claim.
ii.
$35,000 Monthly Deductions from Shellpoint Commissions
Roberts also seeks summary judgment on his breach of contract claim based on Defendants’
deduction of $35,000 from his commission on the Shellpoint account each month for a period of ten
months. In opposition, Defendants argue that summary judgment should be denied because
“[s]everal genuine issues of material fact exist regarding Plaintiff’s claim for breach of contract
based on deductions.” Defs.’ Resp. to Pl.’s Mot. for Summ J. 29 (Doc. 89). Having carefully
considered the summary judgment record, the court agrees that genuine disputes of material fact
preclude entry of summary judgment in Roberts’s favor on this claim.
Beginning in May 2014, the Shellpoint business no longer included a subagent commission.
As a result, under OSC’s commission structure, Roberts’s commission percentage was to increase
from 5% to 12.5%. Contending that the elimination of a subagent translated into increased expenses
associated with servicing the account, OSC began internal discussions about how to share these costs
with Roberts. On October 21, 2014, Robertson, Dangoia, and other OSC executives, had a
Memorandum Opinion and Order - Page 18
conference call with Roberts to propose a cost-sharing agreement. The parties dispute whether
Roberts ultimately agreed to share these costs. While OSC believed, based on the conference call
with Roberts, that he had agreed to share the costs associated with servicing the Shellpoint account,
thereby authorizing the monthly deductions, Roberts stated at his deposition that he never agreed to
share the expenses. According to Roberts, he believed that no agreement was reached, as his
questions were never answered in a satisfactory manner and the information provided him was
insufficient. In their appendix supporting their response brief, Defendants include e-mails from
Roberts indicating that he agreed to, at a minimum, share in “extraordinary expenses.” See Defs.’
Summ. J. Resp. App. 88-90, 113-17.
Based on the summary judgment record, genuine disputes of material fact exist as to whether
and under what circumstances Roberts agreed to share in costs associated with the Shellpoint
account and whether the deductions from his Shellpoint commissions constitute “extraordinary
expenses.” For these reasons, the court will deny Roberts’s motion for summary judgment on his
breach of contract claim based on the deductions from his Shellpoint commissions.
b.
Defendants’ Counterclaims
The court now turns to Roberts’s argument that he is entitled to summary judgment on all
Defendants’ counterclaims. As previously stated, Defendants assert counterclaims against Roberts
for: (1) breach of fiduciary duty; (2) fraud by nondisclosure; (3) misappropriation of trade secrets;
and (4) breach of a confidentiality agreement. See Defs.’ Ans. to Pl.’s Sec. Am. Compl. and OverbySeawall Company and Breckenridge IS’s Counterclaims against Pl. (Doc. 20).
Memorandum Opinion and Order - Page 19
i.
Breach of Fiduciary Duty
Roberts seeks summary judgment on Defendants’ counterclaim for breach of fiduciary duty.
In support, he argues he does not owe Defendants a fiduciary duty and that Defendants have no
evidence of damages arising from his alleged breach of fiduciary duties. In opposition, Defendants
contend that Roberts owed them a fiduciary duty and breached that duty by failing to disclose his
ownership interest in other entities, and by focusing his time and effort on those entities to his own
personal benefit instead of pursuing new business for OSC.5
Under Texas law, the elements of a breach of fiduciary duty claim are: (1) the existence of
a fiduciary relationship; (2) a breach of the fiduciary duty; and (3) the breach resulted in injury to the
plaintiff or benefit to the defendant. Navigant Consulting, Inc. v. Wilkinson, 508 F.3d 277, 283 (5th
Cir. 2007) (citation omitted). Texas recognizes that the agent-principal relationship gives rise to a
fiduciary duty. See Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d, 509, 513 (Tex. 1941);
Abetter Trucking Co. v. Arizpe, 113 S.W.3d 503, 508 (Tex. App.—Houston [1st Dist.] 2003, no
pet.); Samsung Elecs. Am., Inc. v. Yang Kun Chung, 2017 WL 635031, at *11 (N.D. Tex. Feb. 16,
2017) (Fitzwater, J.) (noting Texas law recognizes the principal-agent relationship gives rise to a
fiduciary duty). An agent “has a duty to deal openly with the employer and to fully disclose to the
employer information about matters affecting the company’s business.” Navigant Consulting, 508
F.3d at 283-84 (citation omitted). Further, an agent who negotiates on behalf of his principal must
disclose any adverse interest in the matter of the negotiation. Id. at 285; see also Kinzbach, 160
5
Defendants inform the court that while at the time they filed their Answer they believed Roberts’s
entities competed with OSC, they learned during discovery that these entities did not directly compete with
OSC. Defendants still assert, though, that Roberts concealed the fact that he stood to gain financially from
his interest in these other entities.
Memorandum Opinion and Order - Page 20
S.W.2d at 509; Abetter Trucking, 113 S.W.3d at 511. An agent owes a “duty to deal fairly with the
principal in all transactions between them.” Abetter Trucking, 113 S.W.3d at 510 (citations omitted).
First, the court concludes that Roberts, acting as an agent who negotiated on behalf of OSC,
owed Defendants a fiduciary duty that arose as a matter of law as part of the principal agent
relationship.6 Second, contrary to Roberts’s argument in his motion for summary judgment,
Defendants do not need evidence of damages, as a benefit to the plaintiff suffices to prevail on a
breach of fiduciary duty claim. Navigant Consulting, 508 F.3d at 283. Roberts’s income tax returns
are evidence of profits from these other businesses sufficient to raise a genuine dispute of material
fact as to whether he benefited from the alleged breach. See Defs.’ Summ. J. App. 178, 185-89, 193,
196-200, 206, 211-15.
Having reviewed the summary judgment record, the court determines that the parties have
provided conflicting evidence as to whether Roberts fully disclosed his ownership interest and active
role in other entities to Defendants, including Equiguard Agency, Lendwell, and Tech2Roi. Defs.’
Summ. J. Resp. App. 21-22, 103-04, 128. As this issue is at the heart of Defendants’ breach of
fiduciary duty counterclaim, the court will deny Roberts’s motion for summary judgment on this
counterclaim.
6
Even were the court to conclude that a formal fiduciary duty did not arise as a matter of law out of
the principal-agent relationship in this case, the court would conclude that an informal fiduciary relationship
arose out of the employer-employee relationship. See Associated Indem. Corp. v. CAT Contracting, Inc.,
964 S.W.2d 276, 287 (Tex. 1998) (“An informal fiduciary duty may arise from a moral, social, domestic or
purely personal relationship of trust and confidence, generally called a confidential relationship.”) (citation
omitted).
Memorandum Opinion and Order - Page 21
ii.
Breach of Confidentiality Agreement
Roberts seeks summary judgment on Defendants’ counterclaim for breach of the
confidentiality agreement he signed when he began working at OSC. Among other things, Roberts
argues that Defendants have no evidence of damages based on the alleged breach. The court agrees.
As previously stated, Roberts signed a Confidentiality Agreement that stated in part:
Best Efforts: Individual agrees to devote his full time and best efforts in his position
relating to the marketing, selling, administrating, managing or servicing the
Company’s business and in the performance of any general duties as may be from
time to time required by Company.
Conflict of Interest: Individual agrees that, during his employment with Company,
he will not perform any activities or services or accept such other employment that
would be inconsistent with Company’s business or would in any way interfere
with or present a conflict of interest concerning Individual’s employment with
Company.
Extent of Service: Individual shall exclusively devote his entire working time, energy
and attention to his duties in connection with the Company.
Defs.’ Summ. J. Resp. App. 2 (Confidentiality Agreement).
Under Texas law, “[t]he essential elements of a breach of contract claim are: (1) the existence
of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the
contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.”
Mullins, 564 F.3d at 418 (quoting Aguiar, 167 S.W.3d at 450.
In response to Roberts’s motion for summary judgment on Defendants’ counterclaim for
breach of the confidentiality agreement, Defendants’ sole argument is as follows:
By devoting extensive time and effort to Equiguard Agency during working hours
and spending “all his time” on the tenant liability program, which involved two of
his entities, Plaintiff breached the “Best Efforts” and “Extent of Services” clauses.
Plaintiff will argue that he disclosed his interests in Equiguard, Lendwell, and
Tech2Roi to Defendants, but evidence in the record conflicts with this. App.
0000104, 000106, Ex. 42, Robertson Dep. 65:8-18; 154:3-12. Moreover, Plaintiff
Memorandum Opinion and Order - Page 22
may also argue that he did not spend a significant amount of time on these entities
during his working hours, but that raises a fact issue for the jury to determine. As
such, summary judgment on Defendants’ counterclaim for breach of contract should
be denied.
Defs.’ Summ. J. Resp. Br. 35-36 (Doc. 89). Defendants do not provide the court with any evidence
of damages arising from Roberts’s alleged breach of the confidentiality agreement. Further, it is not
incumbent upon the court to scour the record for such evidence.
As Defendants have failed to raise a genuine dispute of material fact that they suffered any
damages as a result of Roberts’s alleged breach of the confidentiality agreement, the court will grant
Roberts’s motion for summary judgment on this counterclaim.
iii.
Fraud by Nondisclosure and Misappropriation of Trade
Secrets
Roberts also moves for summary judgment on Defendants’ counterclaims of fraud by
nondisclosure and misappropriation of trade secrets. Defendants fail to address their counterclaims
for fraud by nondisclosure and misappropriation of trade secrets, much less respond to any of
Roberts’s arguments in support of his motion for summary judgment on these two counterclaims.
The court concludes that Defendants have abandoned or waived their fraud by nondisclosure and
misappropriation of trade secrets counterclaims. When a party fails to pursue a claim or defense
beyond the party’s initial complaint, the claim is deemed abandoned or waived. Black v. Panola Sch.
Dist., 461 F.3d 584, 588 n.1 (5th Cir. 2006) (plaintiff abandoned claim when she failed to defend
claim in response to motion to dismiss); Keenan v. Tejeda, 290 F.3d 252, 262 (5th Cir. 2002) (noting
that “an issue raised in the complaint but ignored at summary judgment may be deemed waived[]”)
(citation omitted). As Defendants failed to pursue their counterclaims for fraud by nondisclosure
and misappropriation of trade secrets against Roberts, these counterclaims are no longer before the
Memorandum Opinion and Order - Page 23
court, and Defendants have abandoned or waived them. Accordingly, the court will grant summary
judgment in Roberts’s favor on these two counterclaims based on Defendants’ waiver or
abandonment.
c.
Defendants’ Affirmative Defenses
The court now addresses Roberts’s argument that he is entitled to summary judgment on all
Defendants’ affirmative defenses. To reiterate, Defendants assert the following affirmative defenses:
mistake, unclean hands, waiver, estoppel, duress, ratification, novation, accord and satisfaction,
offset, and failure to mitigate.
With respect to the following affirmative defenses, Defendants fail to respond to Roberts’s
motion for summary judgment: offset, failure to mitigate, accord and satisfaction, novation, estoppel,
duress, and ratification. As Defendants fail to address these affirmative defenses, much less respond
to any of Robert’s arguments in support of his motion for summary judgment on these affirmative
defenses, the court concludes that Defendants have abandoned or waived these affirmative defenses.
See Black v. Panola Sch. Dist., 461 F.3d at 588; Keenan v. Tejeda, 290 F.3d at 262. As Defendants
failed to pursue these affirmative defenses, they are no longer before the court, and Defendants have
abandoned or waived them. Accordingly, the court will grant summary judgment in favor of Roberts
on Defendants’ affirmative defenses of offset, failure to mitigate, accord and satisfaction, novation,
estoppel, duress, and ratification, and dismiss with prejudice these affirmative defenses.
With respect to the affirmative defenses of mistake, unclean hands, and waiver, however, the
court has considered the summary judgment evidence and concludes that Defendants have raised
genuine disputes of material fact as to each of these affirmative defenses, and Roberts is, therefore,
not entitled to summary judgment on these affirmative defenses.
Memorandum Opinion and Order - Page 24
B.
Defendants’ Motion for Partial Summary Judgment
Defendants move for summary judgment on Roberts’s breach of contract claim related to the
payment of contingent commissions, as well as on his promissory estoppel and quantum meruit
claims, and his request for declaratory relief.
1.
Roberts’s Breach of Contract Claim - Contingent Commissions
Defendants move for summary judgment on Roberts’s breach of contract claim related to the
payment of contingent commissions.7 In support, Defendants argue that they are entitled to summary
judgment because “the undisputed evidence establishes that after two years of discovery, Plaintiff
is still unable to quantify his alleged damages.” Defs.’ Summ. J. Br. 18 (Doc. 75). According to
Defendants, “Plaintiff has not (and cannot) adduce evidence regarding how any carrier calculated
contingent commissions paid to OSC. Critically, Plaintiff has no evidence of whether, much less
how and to what degree, his accounts contributed to any contingent commissions paid to OSC.” Id.
at 19. In light of Magistrate Judge Toliver’s ruling granting Roberts’s motion to compel answers to
interrogatories related to the calculation of contingent commissions, as well as her decision ordering
Defendants to designate a Rule 30(b)(6) deponent to replace Robertson, the court will deny
Defendants’ motion for partial summary judgment, as it is premised entirely on the purported
inability of Robertson to quantify his damages. Given Magistrate Judge Toliver’s ruling, it would
be unjust for the court to rule in Defendants’ favor on the basis urged when Roberts was not
7
Defendants are not moving for summary judgment on Roberts’s claim for breach of contract
regarding deductions from his Shellpoint commissions in the amount of $35,000 per month for a period of
ten months. See Defs.’ Summ. J. Br. 18 (Doc. 75) (“Plaintiff’s claim for breach of contract on shared
expenses has numerous material fact issues in dispute, so it is not appropriate for summary judgment.”).
Memorandum Opinion and Order - Page 25
provided adequate discovery from which he (or his experts) could quantify the amount of alleged
contingent commissions owed him.
2.
Waiver
Defendants seeks summary judgment on the affirmative defense of waiver. In support, they
argue that the “undisputed evidence conclusively established [Roberts] waived his claim for
contingent commissions.” Defs.’ Summ. J. Br. 20 (Doc. 75). Defendants argue and introduce
evidence that during the approximately four years he was employed by them, Roberts never informed
OSC that he expected to be paid on contingent commissions, accepted commission payments without
being paid on contingent commissions, and despite making repeated objections about the amount
of his commissions to Robertson and Dangoia, remained silent about his alleged right to be paid on
contingent commissions. According to Defendants: “[Roberts’s] silence and inaction regarding
contingent commissions establishes waiver and summary judgment should issue.” Id. at 22.
In opposition, Roberts contends that Defendants are not entitled to summary judgment on
their affirmative defense of waiver based on the facts and circumstances in this case. Roberts
concedes that he never informed OSC that he sought to be paid on contingent commission until after
they terminated his employment in March 2015. He states in his Declaration and also stated at his
deposition that Defendants did not routinely provide him with commission statements breaking out
the source of his commissions, leaving him unsure on what he was and was not paid. Pl.’s Resp.
App. 331, 350. Roberts also states in his Declaration that when he noticed a drop in his commission
checks in the Fall of 2013, he discussed the problem with Robertson and others, and realized his
commission was being calculated in accordance with the terms of the 2011 Commission Agreement
as it related to the renewal rate. According to Roberts, at the time he was focused on that issue and
Memorandum Opinion and Order - Page 26
did not realize he was not being paid on the contingent commissions revenue. Id. at 331. He also
states that in March 2014, when he was working with management to restructure the commission
structure, his focus was on that task and, once again, he did not realize he had not been paid on the
contingent commission revenue. Id. According to Roberts, it was not until after his termination in
March 2015, that he began reviewing the commission statements he did have and the checks he had
been paid and realized he had no been paid his contingent commission percentage. Id. At his
deposition, Roberts stated: “I just assumed that I’m being paid on the revenue that is produced by
the accounts I bring in that, unless any revenue is specifically excluded, contingent commission[s]
are included in that commission.” Id. at 383.
“Waiver is the intentional relinquishment of a right actually known, or intentional conduct
inconsistent with claiming that right.” Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778
(Tex. 2008). “The elements of waiver include (1) an existing right, benefit, or advantage held by a
party; (2) the party’s actual knowledge of its existence; and (3) the party’s actual intent to relinquish
the right, or intentional conduct inconsistent with the right.” Id. “Silence or inaction, for so long
a period as to show an intention to yield the known right, is also enough to prove waiver.” Tenneco
Inc. v. Enterprise Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996). As explained by the Texas
Supreme Court:
Waiver is largely a matter of intent, and for implied waiver to be found through a
party’s actions, intent must be clearly demonstrated by the surrounding facts and
circumstances. There can be no waiver of a right if the person sought to be charged
with waiver says or does nothing inconsistent with an intent to rely upon such right.
Waiver is ordinarily a question of fact, but when the surrounding facts and
circumstances are undisputed, as in this case, the question becomes one of law.
In re Gen. Elec. Capital Corp., 203 S.W.3d 314, 316 (Tex. 2006) (quoting Jernigan v. Langley, 111
S.W.3d 153, 156-57 (Tex. 2003) (citations omitted)). Under Texas law, waiver is an affirmative
Memorandum Opinion and Order - Page 27
defense, and the party asserting waiver has the burden of proof. Castle Hills Pharmacy, LLC v.
Trial, 2014 WL 3587382, at *5 (Tex. App.—Houston [14th Dist.] 2014, pet. denied).
Defendants have failed to provide sufficient summary judgment evidence of Roberts’s
specific intention to waive his alleged contractual right to contingent commissions, and the court
cannot imply intent from the surrounding facts and circumstances in this case. While the
circumstances indicate possible inattention or perhaps lack of care on Roberts part, they do not imply
that he intended to waive a right by not complaining until after Defendants terminated his
employment. See Van Indep. Sch. Dist. v. McCarty, 165 S.W.3d 351, 353 (Tex. 2005) (“While
waiver may sometimes be established by conduct, that conduct must be unequivocally inconsistent
with claiming a known right.”).
Further, Defendants cite to no case holding that a party to a contract waived a right when he
or she did not actually know facts pertinent to the breach. In Tenneco, the Texas Supreme Court
found waiver established as a matter of law for a contractual provision prohibiting assignment of an
ownership interest in a fractionation plant unless the assignee agreed to deliver 31,000 barrels of
natural gas liquids per day to the plant. 925 S.W.2d at 642-43. The assignee never agreed to the
delivery requirement and failed to meet the quota for three years. Id. The evidence showed that the
plaintiffs actually knew that the assignor had transferred its ownership interest to the assignee, and
the plaintiffs accepted the assignee’s delivery of less than 31,000 barrels per day for three years. Id.
at 643. There, actual knowledge was key to establishing waiver.
Here, Roberts has submitted evidence that Defendants did not routinely provide him with
commission statements and that he had no actual knowledge until after his employment was
terminated that the contingent commissions were not included in his earnings. He has also provided
Memorandum Opinion and Order - Page 28
evidence that during the periods he was negotiating with Defendants regarding the amount of his
commission and advocating for changes in the compensation structure, he was not focused on the
issue of whether contingent commissions were being paid. In his deposition, Roberts stated : “I just
assumed that I’m being paid on the revenue that is produced by the accounts I bring in that, unless
any revenue is specifically excluded, contingent commission[s] are included in that commission.”
Pl.’s Resp. App. 383. On this record, the court concludes that Roberts’s lack of knowledge is
sufficient to defeat Defendants’ motion for summary judgment on their affirmative defense of
waiver. See Clear Lake Ctr., L.P. v. Garden Ridge, L.P., 416 S.W.3d 527, 542-43 (Tex.
App.—Houston [14th Dist.] 2013, no pet.). In that case, Garden Ridge claimed that from 2003 to
2009, Clear Lake charged it impermissible fees under a commercial real property lease. Id. at 53234. Clear Lake raised several affirmative defenses, including waiver. Id. at 533. The court held that
Garden Ridge’s payments did not constitute waiver because Garden Ridge paid the management fee
without knowing that the fee included charges not authorized by the lease, and the fee statements
suggested the entire fee was proper. Id. at 543. The court also noted that “Clear Lake cites no case
holding that a party to a contract waived a right when the plaintiff did not actually know facts
pertinent to the breach.” Id. at 542; see also Enterprise–Laredo Assocs. v. Hachar’s, Inc., 839
S.W.2d 822, 836 (Tex. App.-San Antonio 1992), writ denied, 843 S.W.2d 476 (Tex. 1993) (per
curiam) (settlement agreement whereby parties agreed to “waive any other violations of the Lease”
occurring before a particular date did not establish affirmative defense of waiver when the plaintiff
“was not aware of the CAM overcharges at the time it signed the agreement”; thus, the plaintiff did
not waive the right to sue for CAM overcharges).
Memorandum Opinion and Order - Page 29
As Roberts has provided summary judgment evidence raising a genuine dispute of material
fact as to whether he had knowledge that his commissions did not include amounts from contingent
commissions, Defendants’ motion for summary judgment on the affirmative defense of waiver will
be denied.8
3.
Roberts’s Promissory Estoppel and Quantum Meruit Claims
Defendants also move for summary judgment on Roberts’s claims for promissory estoppel
and quantum meruit. In his response brief, Roberts fails to address his promissory estoppel and
quantum meruit claims against Defendants, much less respond to any of Defendants’ arguments in
support of their motion for summary judgment on these two claims. The court concludes that
Roberts has abandoned or waived his promissory estoppel and quantum meruit claims against
Defendants. As previously stated, when a party fails to pursue a claim or defense beyond the party’s
initial complaint, the claim is deemed abandoned or waived. Black v. Panola Sch. Dist., 461 F.3d
at 588 n.1 (plaintiff abandoned claim when she failed to defend claim in response to motion to
dismiss); Keenan v. Tejeda, 290 F.3d at 262(noting that “an issue raised in the complaint but ignored
at summary judgment may be deemed waived[]”) (citation omitted). As Roberts failed to pursue his
promissory estoppel and quantum meruit claims against Defendants, they are no longer before the
court, and he has abandoned or waived them. Accordingly, the court will grant summary judgment
8
In his motion for summary judgment, Roberts argues that he is entitled to summary judgment on
Defendants’ affirmative defense of waiver. In support, he states: “There is no evidence Roberts waived his
entitlement to his commissions under the Commission Agreement.” Pl.’s Summ. J. Br. 38 (Doc. 81). Based
on the evidence considered by the court in denying Defendants’ argument that Roberts waived his right to
assert a breach of contract claim for the contingent commissions, the court similarly will deny Roberts’s
motion for summary judgment on this affirmative defense.
Memorandum Opinion and Order - Page 30
in Defendants’ favor on Roberts’s promissory estoppel and quantum meruit claims based on his
abandonment or waiver of these claims.
4.
Roberts’s Request for Declaratory Relief
Defendants move for summary judgment on Roberts’s request for declaratory relief. In
support, Defendants argue that Roberts’s request for declaratory judgment is duplicative and
unnecessary because resolution of his breach of contract claim will necessarily resolve his request
for declaratory judgment. In response, Roberts clarifies that his request for declaratory judgment is
unrelated to his breach of contract claim. Instead, he seeks a declaration as to the rights and
obligations of the parties with respect to certain entities in which Defendants asserted an ownership
interest in their March 20, 2015 letter terminating his employment. See Pl.’s Summ. J. Resp. Br. 1718 (Doc. 94). Given that Roberts is not seeking declaratory relief with respect to his breach of
contract claim, the court will deny Defendants’ motion for summary judgment as to this claim. In
addition, Defendants’ request for summary judgment on a claim for declaratory judgment is denied
as premature.
C.
Defendants’ Motion to Exclude the Testimony and Report of J. Daniel Caskey,
Mark A. Gannaway, and Janice Williams (Doc. 71) and Motion to Strike
Plaintiff’s Untimely Expert Declarations (Doc. 104)
On July 18, 2017, Magistrate Judge Toliver held a hearing on Roberts’s motion to compel
and granted the motion with respect to certain answers to interrogatories, reopened discovery, and
ordered Defendants to designate a new Rule 30(b)(6) deponent in place of Robertson. Prior to this
ruling, Defendants filed their Motion to Exclude the Testimony and Report of J. Daniel Caskey,
Mark A. Gannaway, and Janice Williams (Doc. 71) and Motion to Strike Plaintiff’s Untimely Expert
Declarations (Doc. 104). These motions are largely predicated on the argument that Roberts and,
Memorandum Opinion and Order - Page 31
in turn, his experts, are unable to calculate the amounts due him for contingent commissions, and
that Roberts could have sought this information from the insurance carriers, rather than from
Defendants. In light of the intervening ruling by Magistrate Judge Toliver, it appears to the court
that these motions no longer “hold water.” At a minimum, the court is unable to ascertain whether,
and to what extent, Defendants’ arguments in support of these motions, have been explicitly or
implicitly rejected by Magistrate Judge based on her ruling. For these reasons, the court will deny
without prejudice Defendants’ Motion to Exclude the Testimony and Report of J. Daniel Caskey,
Mark A. Gannaway, and Janice Williams (Doc. 71) and Motion to Strike Plaintiff’s Untimely Expert
Declarations (Doc. 104).
D.
Plaintiff’s Motion to Exclude Expert (Doc. 76)
Roberts moves the court to exclude the expert witness testimony of Philip L. Blais. He
argues that the testimony should be excluded because: (1) Mr. Blais is not qualified to testify to the
issues involved in this case; (2) Mr. Blais’s opinions are not reliable; and (3) Mr. Blais’s opinions
are not relevant. Further, Roberts argues that Mr. Blais’s opinions should be stricken for his failure
to comply with Fed. R. Civ. P. 26a(2)(B).
The Federal Rules of Civil Procedure set forth the procedures litigants must follow in
designating expert witnesses. Rule 26(a)(2)(B) provides in pertinent part:
Witnesses Who Must Provide a Written Report. Unless otherwise stipulated
or ordered by the court, this disclosure must be accompanied by a written
report—prepared and signed by the witness—if the witness is one retained or
specially employed to provide expert testimony in the case . . . . The report must
contain:
(i) a complete statement of all opinions the witness will express and the basis and
reasons for them;
(ii) the facts or data considered by the witness in forming them;
Memorandum Opinion and Order - Page 32
(iii) any exhibits that will be used to summarize or support them;
(iv) the witness’s qualifications, including a list of all publications authored in the
previous 10 years;
(v) a list of all other cases in which, during the previous 4 years, the witness testified
as an expert at trial or by deposition; and
(vi) a statement of the compensation to be paid for the study and testimony in the
case.
In response to Roberts’s motion, Defendants fail to provide any argument that they have
complied with Rule 26(a)(2)(B)(iv), (v), and (vi). For this reason, the court will grant Plaintiff’s
Motion to Exclude Expert (Doc. 76).
Alternatively, the court concludes that Defendants have failed to meet their burden under
Federal Rule of Evidence 702(a) of showing that Mr. Blais has the requisite knowledge, skill,
experience, training and education to render a opinion requiring force-placed insurance knowledge
and contingent commissions. Mr. Blais is offered to refute the testimony of Roberts’s insurance
experts. Mr. Blais did not provide his resume but instead provided a summary of his “experience
and expertise.” He asserts he is an expert in the insurance field specializing in “professional liability
(which includes Directors and Officers Liability, Errors and Omissions coverage, Employment
Practices liability, Crime Insurance, Fiduciary Liability, Cyber Liability and Kidnap and Ransom
Liability), aviation and financial institution coverages.” The court agrees with Roberts that Mr.
Blais’s experience and expertise do not reflect “any knowledge in force-placed insurance coverage,
expense allocation or contingent commissions. His opinions do not reflect any knowledge in these
areas, only conclusory statements.” Pl.’s Mot. to Exclude ¶ 12. Moreover, in light of this deficiency,
Defendants have not established that Mr. Blais’s testimony will be relevant and reliable, or how it
Memorandum Opinion and Order - Page 33
will “help the trier of fact to understand the evidence or determine a fact in issue.” Fed. R. Evid.
702(a). For these reasons, the court will grant Plaintiff’s Motion to Exclude Expert.
IV.
Conclusion
For the reasons herein stated, the court grants in part and denies in part Plaintiff’s Motion
for Partial Summary Judgment (Doc. 80). Specifically, the court grants the motion with respect to
Defendants’ counterclaims of fraud by nondisclosure, misappropriation of trade secrets, and breach
of the confidentiality agreement, and dismisses with prejudice these counterclaims; and grants the
motion with respect to Defendants’ affirmative defenses of offset, failure to mitigate, accord and
satisfaction, novation, estoppel, duress, and ratification, and dismisses with prejudice these
affirmative defenses. The court denies Plaintiff’s Motion for Partial Summary Judgment in all other
respects.
Further, the court grants in part and denies in part Defendants’ Motion for Partial
Summary Judgment (Doc. 74). Specifically, the court grants the motion with respect to Roberts’s
claims for promissory estoppel and quantum meruit, and dismisses with prejudice these claims.
The court denies Defendants’ Motion for Partial Summary Judgment in all other respects.
Further, the court denies without prejudice Defendants’ Motion to Exclude the Testimony
and Report of J. Daniel Caskey, Mark A. Gannaway, and Janice Williams (Doc. 71); denies without
prejudice Defendants’ Motion to Strike Plaintiff’s Untimely Expert Declarations (Doc. 104); grants
Plaintiff’s Motion to Exclude Expert (Doc. 76); and overrules as moot all remaining evidentiary
objections made by either party upon which the court has not already ruled in this decision, as it has
not had need to consider any of this evidence in reaching its decision.
Memorandum Opinion and Order - Page 34
The claims and counterclaims remaining for trial are: Roberts’s claim for breach of contract
with respect to the payment of contingent commissions and the deductions from his Shellpoint
commissions in the amount of $35,000 per month for ten months; Roberts’s request for declaratory
relief; Defendants’ counterclaim for breach of fiduciary duty; and Defendants’ affirmative defenses
of mistake, unclean hands, and waiver. The court will reset the trial of this case and pretrial
deadlines by separate order. In light of this opinion and the necessarily fact-intensive nature of
the waiver defense, the court directs the parties to inform it in writing by March 30, 2018,
whether this action is suitable for mediation before a mediator or a magistrate judge.
It is so ordered this 23rd day of March, 2018.
_________________________________
Sam A. Lindsay
United States District Judge
Memorandum Opinion and Order - Page 35
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?