New York Pizzeria, Inc. v. Syal et al

Filing 95

MEMORANDUM AND ORDER granting 39 MOTION for Summary Judgment On His Counterclaims ( Trial on damages set for 2/16/2016 at 09:00 AM before Judge Gregg Costa) Courtroom TBA. (Signed by Judge Gregg Costa) Parties notified.(arrivera, 4)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
GALVESTON DIVISION
NEW YORK PIZZERIA, INC.,
Plaintiff,
VS.
RAVINDER SYAL, et al,
Defendants.

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January 26, 2016
David J. Bradley, Clerk

CIVIL ACTION NO. 3:13-CV-335

MEMORANDUM AND ORDER
New York Pizzeria, Inc. (NYPI) filed this suit alleging that former
employee, Adrian Hembree, conspired with others to steal secret recipes and other
proprietary information so they could open a competing pizza chain. Hembree
filed a counterclaim asserting that by filing this suit, NYPI breached the terms of
the First Settlement Agreement—a contract that, among other things, provided that
each party would release the other from “liabilities of any kind or nature
whatsoever, at law and in equity, whether known or unknown, . . . foreseen or
unforeseen.” Docket Entry No. 39-1 at 4–5. Hembree contends he is entitled to
summary judgment on his breach of contract counterclaim and seeks both
attorney’s fees and reputational damages. NYPI responds that (1) Hembree failed
to present competent summary judgment evidence; (2) the First Settlement
Agreement is ambiguous therefore precluding summary judgment; or, in the
alternative (3) the First Settlement Agreement is not ambiguous and does not
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release Hembree from his duty to not disclosure trade secrets. For the reasons
discussed below, this Court finds that NYPI breached the terms of the First
Settlement Agreement by filing this suit, Hembree’s motion for summary judgment
is GRANTED.
Summary judgment should be granted “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). Hembree claims NYPI breached the terms
of the First Settlement Agreement by filing this suit. To establish that NYPI
breached the agreement Hembree must show that there was a valid contract; the
plaintiff performed or tendered performance; that the defendant breached the
contract; and that the plaintiff was damaged as a result of the breach. Bridgmon v.
Array Sys. Corp., 325 F.3d 572, 577 (5th Cir. 2003).
This Court has already found that the First Settlement Agreement was valid
and released Hembree from all future claims when dismissing NYPI’s claims
against Hembree. New York Pizzeria, Inc. v. Syal, 53 F. Supp. 3d 962, 965–66
(S.D. Tex. 2014). The agreement, in relevant part, states:
NYPI . . . hereby irrevocably and unconditionally waives, releases, and
forever discharges HEMBREE . . . from any and all claims, charges,
demands, sums of money, actions, rights, promises, agreements, cause of
action [sic], obligations and liabilities of any kind or nature whatsoever, at
law or in equity, whether known or unknown, existing or contingent,
suspected or unsuspected, foreseen or unforeseen, apparent or concealed . . .
which NYPI now or in the future may have or claim to have against
HEMBREE.
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Docket Entry no. 36-1 at 4–5. This Court found that while “general categorical
release clauses are narrowly construed, the one at issue here uses exceptionally
broad language. New York Pizzeria, Inc., 53 F. Supp 3d at 966 (citing Victoria
Bank & Trust Co. v. Brady, 811 S.W.2d 931, 938 (Tex. 1991)). And this Court
dismissed the claims against Hembree “because the first settlement agreement
categorically released Hembree from liability to NYPI for past and future claims.”
Id.
By filing this second suit, NYPI breached the terms of the agreement. If a
party pursues a claim that it has previously waived or released, or agreed not to
pursue, then the party has breached the agreement containing the waiver or release.
White v. Grinfas, 809 F.2d 1157, 1160 (5th Cir.1987) (“As a matter of Texas law,
in the absence of fraud, settlement agreements and releases are a complete bar to
any later action based on matters included therein.”); see Array Holdings Inc. v.
Safoco, Inc., No. CIV.A. H-12-366, 2013 WL 2617965, at *6 (S.D. Tex. June 11,
2013) (granting summary judgment on defendant’s breach of contract counterclaim
when plaintiffs violated terms of a “release” clause in a valid settlement agreement
by filing suit).

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Hembree’s motion for summary judgment (Docket Entry No. 39) is
GRANTED. Trial on damages is set for February 16.
SIGNED this 26th day of January, 2016.

______________________________

Gregg Costa
United States Circuit Judge*

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Sitting by designation

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