Recif Resources, LLC v. Juniper Capital Advisors, LP et al
Filing
209
MEMORANDUM AND ORDER granting 130 Juniper's Motion for Summary Judgment and denying 135 Recif's Motion for Summary Judgment.(Signed by Judge Nancy F Atlas) Parties notified.(TDR, 4)
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United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
§
§
§
v.
§
§
JUNIPER CAPITAL ADVISORS, L.P., §
et al.,
§
Defendants.
§
November 17, 2020
David J. Bradley, Clerk
RECIF RESOURCES, LLC,
Plaintiff,
CIVIL ACTION NO. H-19-2953
MEMORANDUM AND ORDER
This case arises from unsuccessful discussions between the parties regarding
a potential oil-and-gas development project. The case is now before the Court on two
motions seeking summary judgment in connection with the claims asserted by
Plaintiff Recif Resources, LLC (“Recif”). The first is the Motion for Summary
Judgment (“Juniper’s Motion”) [Doc. # 130] filed by Defendants Juniper Capital
Advisors, L.P., Juniper Capital Investments, LLC, Juniper Capital III, LP, and State
Line Exploration, LLC (collectively, “Juniper”).1 The second pending motion is
1
Recif filed a Response [Doc. # 153] to Juniper’s Motion, and a Supplement to its
Response [Doc. # 157]. Defendants filed a Reply [Doc. # 158], Recif filed a Surreply
[Doc. # 174], and Defendants filed a Surreply [Doc. # 181]. Defendants filed a
Supplement [Doc. # 186] in support of their Motion, Recif filed a Supplement to its
Response [Doc. # 188], and Defendants filed a Supplement to their Reply [Doc.
# 191].
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Recif’s Motion for Summary Judgment on Breach of Contract and Misappropriation
of Trade Secrets (“Recif’s Motion”) [Doc. # 135].2
The Court has carefully reviewed the record and the applicable legal authorities.
Based on that review, the Court denies Recif’s Motion and grants Juniper’s Motion.
I.
BACKGROUND
Recif’s claims against Juniper are based on information that Recif provided to
Juniper. In October 2017, Kevin Voelte introduced Recif to Juniper. Voelte, an
investment banker, was assisting Recif in its search for private equity investment for
an oil-and-gas development project in Recif’s Area of Interest (“AOI”) in the
Louisiana Austin Chalk.3 Recif was asking potential private-equity investors “for a
$100MM equity investment into the Recif Prospect in order to acquire mineral leases
on 50,000 acres and to drill 13 wells on those leases over three years. In the fourth
year, Recif planned to sell the Recif Prospect and predicted a fourfold return for
investors at oil prices averaging $50 a barrel.”
First Amended Complaint
2
Defendants filed a Response [Doc. # 160] to Recif’s Motion, and Recif filed a Reply
[Doc. # 182]. Recif filed a Supplement [Doc. # 187] to its Motion, Defendants filed
a Supplement to their Opposition [Doc. # 189], and Recif filed a Supplement to its
Reply [Doc. # 190].
3
The Louisiana Austin Chalk is a geological formation of underground chalk located
in central Louisiana and southwestern Mississippi. It is part of the larger Austin
Chalk formation.
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2
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(“Complaint”) [Doc. # 52], ¶ 29. Paul C. Langlois and Steven M. Jones are Recif’s
sole principals.
To facilitate their discussions regarding Juniper’s investment in the oil-and-gas
project in Recif’s AOI, Recif and Juniper entered into a Confidentiality Agreement
that required Juniper to keep confidential all proprietary information that Recif
provided to Juniper.4 See Confidentiality Agreement, Exh. 18 to Juniper’s Motion,
¶ 2.
“Recif Information” is a defined term, referring to Recif’s proprietary
information. See id., ¶ 15. Excluded from Juniper’s “obligations of secrecy” is
information that:
a.
b.
was in [Juniper’s] possession prior to the time it was acquired
hereunder; or
c.
4
is or becomes part of the public domain through no fault of
[Juniper] in violation of this Agreement, notwithstanding,
however, RECIF electronic leashold [sic] shape/mapping files and
the lease and property descriptions of the Properties related
thereto shall not be construed as being part of the public domain;
was received by [Juniper] without any obligation of secrecy from
a third party rightfully in possession of the Information and
having no direct or indirect obligation of secrecy to RECIF that
would prohibit the disclosure of such Information to [Juniper].
The Confidentiality Agreement provides that it “shall be governed by and construed
in accordance with the substantive laws of the state of Louisiana.” Confidentiality
Agreement, ¶ 18. Throughout the parties’ extensive briefing, they have cited to and
argued Texas law with no suggestion that it differs in any material respect from
Louisiana law. Therefore, the Court applies Texas law, and deems the parties to have
waived construction of the Confidentiality Agreement under Louisiana law.
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Id., ¶ 6. Pursuant to the terms of the Confidentiality Agreement, Recif provided
certain proprietary information to Juniper. Recif describes its proprietary information
as “secrets.” See First Amended Complaint (“Complaint”) [Doc. # 52], ¶¶ 11, 13, 77.
In May 2018, Juniper terminated its discussions with Recif. At approximately
the same time, Juniper formed State Line Exploration LLC (“State Line”). State Line
then entered into a business relationship with Amelia Resources, LLC (“Amelia”),
from whom it obtained leases (the “State Line Leases”) for properties outside the
Recif AOI. Recif alleges that in connection with Juniper’s relationship with Amelia,
Juniper improperly used and/or disclosed Recif’s proprietary information in violation
of the Confidentiality Agreement. Recif states its allegations broadly to allege that
everything Recif provided to Juniper was proprietary and was improperly used or
disclosed by Juniper. Following extensive discovery, however, primarily at issue are
four well logs and a map with the outline of the Recif AOI (“Recif AOI Map”).
In the Complaint, Recif asserts a breach of contract claim based on Juniper’s
alleged violations of the Confidentiality Agreement, and a trade secret
misappropriation claim based on Juniper’s alleged misuse of Recif’s proprietary
information which Recif alleges constitutes trade secrets. Recif also asserts state law
claims of fraudulent inducement, fraudulent misrepresentation, civil conspiracy,
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“detrimental reliance/promissory estoppel,” unfair competition, and unjust
enrichment.
After comprehensive discovery, Juniper filed its Motion seeking summary
judgment on all claims asserted against it. Recif filed its Motion seeking summary
judgment in its favor on its breach of contract and trade secret misappropriation
claims. The two motions have been fully briefed and are now ripe for decision.
II.
SUMMARY JUDGMENT STANDARD
Rule 56 of the Federal Rules of Civil Procedure provides for the entry of
summary judgment against a party who fails to make a sufficient showing of the
existence of an element essential to its case and on which it will bear the burden at
trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Curtis v. Anthony, 710 F.3d
587, 594 (5th Cir. 2013); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994) (en banc). Summary judgment “should be rendered if the pleadings, the
discovery and disclosure materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the movant is entitled to judgment as a
matter of law.” FED. R. CIV. P. 56(a); Celotex, 477 U.S. at 322-23; Curtis, 710 F.3d
at 594. Where the movant bears the burden of proof at trial on the issues at hand, it
“bears the initial responsibility of demonstrating the absence of a genuine issue of
material fact with respect to those issues.” Transamerica Ins. Co. v. Avenell, 66 F.3d
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715, 718 (5th Cir. 1995); see also Brandon v. Sage Corp., 808 F.3d 266, 269-70 (5th
Cir. 2015); Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir. 2005).
For summary judgment, the initial burden falls on the movant to identify areas
in which there is an “absence of a genuine issue of material fact.” ACE Am. Ins. Co.
v. Freeport Welding & Fabricating, Inc., 699 F.3d 832, 839 (5th Cir. 2012). The
moving party may meet its burden by pointing out “the absence of evidence
supporting the nonmoving party’s case.” Malacara v. Garber, 353 F.3d 393, 404 (5th
Cir. 2003) (citing Celotex, 477 U.S. at 323; Stults v. Conoco, Inc., 76 F.3d 651, 656
(5th Cir. 1996)).
If the moving party meets its initial burden, the non-movant must go beyond the
pleadings and designate specific evidence showing that there is a genuine issue of
material fact for trial. Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 141 (5th Cir.
2004); Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001)
(internal citation omitted). “An issue is material if its resolution could affect the
outcome of the action.” Spring Street Partners-IV, L.P. v. Lam, 730 F.3d 427, 435
(5th Cir. 2013).
In deciding whether a genuine and material fact issue has been created, the
court reviews the facts and inferences to be drawn from them in the light most
favorable to the nonmoving party. Reaves Brokerage Co. v. Sunbelt Fruit &
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Vegetable Co., 336 F.3d 410, 412 (5th Cir. 2003). A genuine issue of material fact
exists when the evidence is such that a reasonable jury could return a verdict for the
non-movant. Tamez v. Manthey, 589 F.3d 764, 769 (5th Cir. 2009) (citing Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
“‘Conclusional allegations and denials, speculation, improbable inferences,
unsubstantiated assertions, and legalistic argumentation do not adequately substitute
for specific facts showing a genuine issue for trial.’” Pioneer Exploration, L.L.C. v.
Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014) (quoting Oliver v. Scott, 276
F.3d 736, 744 (5th Cir. 2002)); accord Delta & Pine Land Co. v. Nationwide
Agribusiness Ins. Co., 530 F.3d 395, 399 (5th Cir. 2008). Although the Court may not
make credibility determinations or weigh any evidence, the Court is not required to
accept conclusory allegations, speculation, and unsubstantiated assertions which are
either entirely unsupported, or supported by a mere scintilla of evidence. Chaney v.
Dreyfus Serv. Corp., 595 F.3d 219, 229 (5th Cir. 2010) (citing Reaves Brokerage Co.,
336 F.3d at 413); accord, Little, 37 F.3d at 1075. Instead, the nonmoving party must
present evidence of specific facts that show “the existence of a genuine issue
concerning every essential component of its case.” Firman v. Life Ins. Co. of N. Am.,
684 F.3d 533, 538 (5th Cir. 2012) (citation and internal quotation marks omitted). In
the absence of any proof, the court will not assume that the non-movant could or
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would prove the necessary facts. Little, 37 F.3d at 1075 (citing Lujan v. Nat’l Wildlife
Fed’n, 497 U.S. 871, 888 (1990)).
Affidavits cannot preclude summary judgment unless they contain competent
and otherwise admissible evidence. See FED. R. CIV. P. 56(c)(4); Love v. Nat’l Med.
Enters., 230 F.3d 765, 776 (5th Cir. 2000); Hunter-Reed v. City of Houston, 244 F.
Supp. 2d 733, 745 (S.D. Tex. 2003). A party’s self-serving and unsupported
statement in an affidavit will not defeat summary judgment where the evidence in the
record is to the contrary. See In re Hinsley, 201 F.3d 638, 643 (5th Cir. 2000).
Finally, “[w]hen evidence exists in the summary judgment record but the
nonmovant fails even to refer to it in the response to the motion for summary
judgment, that evidence is not properly before the district court.” Malacara, 353 F.3d
at 405. “Rule 56 does not impose upon the district court a duty to sift through the
record in search of evidence to support a party’s opposition to summary judgment.”
Id. (internal citations and quotations omitted); Williams v. Valenti, 432 F. App’x 298,
302 (5th Cir. 2011).
III.
BREACH OF CONTRACT CLAIM
A.
Legal Standards for Breach of Contract Claim
“In Texas, breach of contract requires four elements: (1) a valid contract,
(2) plaintiff’s performance, (3) defendant’s breach, and (4) resulting damages.”
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Wease v. Ocwen Loan Servicing, L.L.C., 915 F.3d 987, 993 (5th Cir. 2019) (citing
Henning v. OneWest Bank FSB, 405 S.W.3d 950, 969 (Tex. App. -- Dallas 2013, no
pet.)). “To determine the meaning of contractual terms, Texas courts focus on the
parties’ intentions as expressed in the contract itself.” Wease, 915 F.3d at 993 (citing
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333
(Tex. 2011)). “[W]hether the contract is ambiguous is itself a question of law for the
court to decide.” Wease, 915 F.3d at 993 (quoting First Bank v. Brumitt, 519
S.W.3d 95, 105 (Tex. 2017)). A contract is not ambiguous simply because the parties
disagree about its interpretation. Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711,
728 (Tex. 2001).
B.
Claim that Juniper Used Recif’s Information in Violation of
Confidentiality Agreement
Recif alleges that Juniper breached the Confidentiality Agreement by using
Recif’s confidential information to decide to acquire the State Line Leases. As noted
above, primarily at issue are four well logs and the Recif AOI Map. It is undisputed
that the State Line Leases are outside the Recif AOI.
In connection with Recif’s claim that Juniper breached the Confidentiality
Agreement by using Recif’s information when evaluating and deciding whether to
invest in the State Line Leases, Juniper argues that the well logs are public
information not covered by the Confidentiality Agreement. Juniper argues also that
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it did not use Recif’s information because the information was not relevant outside of
Recif’s AOI and because Juniper conducted its own analysis to guide its decision
whether to invest in the State Line Leases. To the extent Recif argues that Juniper
improperly used mental impressions it retained from reviewing Recif’s information,
Juniper argues that it did not use any retained mental impressions and that the
Confidentiality Agreement allows Juniper to use any retained mental impressions.
1.
Well Logs
The well logs that Recif provided to Juniper are not covered by the
Confidentiality Agreement. Paragraph 6 of the Confidentiality Agreement specifically
and unambiguously excludes information that is “part of the public domain.”
Confidentiality Agreement, ¶ 6. Although Recif is correct that “[w]ell logs do not
hang from trees,” it is undisputed that the four well logs at issue were publicly
available from private vendors and paid subscription services. See Surreply [Doc.
# 174], p. 3. Recif’s Langlois testified that the well logs are publicly available for
anyone to purchase. See Paul Langlois Depo., Exh. 3 to Juniper’s Motion, pp. 143-44,
256, 359. Juniper’s employee Chase Schrotel testified that the well logs are available
free of charge from the Louisiana Department of Natural Resources SONRIS website.
See Chase Schrotel Depo. [Doc. # 186], Exh. 1, p. 47. Schrotel testified also that the
public subscription services have filter options which would “absolutely” have
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identified approximately “a dozen” well logs, including the same four well logs Recif
provided, that satisfied the filter criteria. See id. at 47. According to Schrotel’s sworn
testimony, receiving the publicly-available well logs from Recif saved him “a couple
of hours” search on public websites. See id. The uncontroverted evidence in the case
establishes that the four well logs at issue were in the public domain and, therefore,
were not subject to the Confidentiality Agreement’s secrecy obligations. As a result,
any use of the four well logs by Juniper did not breach the Confidentiality Agreement.
2.
Relevance of Recif’s Information Outside the Recif AOI
Juniper argues that it did not use Recif’s information in connection with the
State Line Leases because the Recif information was not relevant outside the Recif
AOI. There is no evidence that Recif provided information to Juniper that contained
any analysis specific to the State Line Leases area. It is undisputed that Recif did not
conduct any well log analysis outside its own AOI and, specifically, did not conduct
any well log analysis within the State Line Leases area. Recif argues, therefore, that
its analysis of the four well logs from wells within its AOI is relevant and applicable
to the State Line Leases area outside Recif’s AOI. The uncontroverted evidence is to
the contrary.
It is undisputed that the Recif AOI is 8-12 miles southwest of the State Line
Leases area. “[T]he geologic properties of the two areas vary dramatically.” Wayman
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Gore Expert Report (“Gore Report”), Exh. 43 to Juniper’s Motion, p. 21; see also
Tope Ogunyomi Depo., Exh. 6 to Juniper’s Motion, p. 230 (“geologically speaking,
it’s like night and day”). Recif’s own analysis shows that there is significant variation
in the porosity and thickness of the Recif AOI. See Gore Report, p. 14. The porosity
more than triples across the Recif AOI, and the thickness increases 262% from the
east to the west across the Recif AOI. See id. The farther away one moves from the
Recif AOI, the larger the variation becomes. See id.; see also Langlois Depo., p. 294
(testifying that the farther away one gets from the hard data points provided by the
well logs, the greater the uncertainty).
Recif conducted an analysis for four well logs within the Recif AOI. Juniper
submitted the expert opinion that, as a result, the information Recif provided to
Juniper “was insufficient to justify investment, particularly in areas outside of the
Recif AOI.” See Gore Report, p. 21. Gore states that the use of only four well logs
to conduct a geologic analysis of the 400-square mile Recif AOI creates “extremely
large uncertainty.” See id. at 16. As Gore explains:
Each of the four well logs used by Recif to map the Recif AOI would
have a total investigative area of 24 square inches or 2 square feet, with
the total investigative area of the four logs combined being no more than
8 square feet. This represents 0.00000073% of the Recif AOI or 7.3
ten-millionths of a percent.
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Id. It is Gore’s expert opinion that this results in an inadequate analysis of the Recif
AOI and, a fortiori, of the State Line Leases area. See id. at 21. Indeed, Gore states
that in his 40 years as a petroleum engineer, he has “never seen anyone claim that a
geological interpretation based on only 4 well logs in a very large area can be applied
to a different area some ten miles away [because] the uncertainty of such an analysis
is so great that it would have no probative value.” See id. at 18. Gore opines that the
“analysis inside the Recif AOI, as limiting as it was, simply could not have been used
to evaluate the State Line [Leases area] some 10 miles away to the northeast.” Id.
at 24.
In response to Juniper’s evidence, Recif offers deposition testimony from
Langlois and Voelte, the investment banker helping Recif obtain private equity
financing. Neither witness presents evidence that raises a genuine issue of material
fact regarding whether the Recif information provided to Juniper was applicable to the
State Line Leases. During his deposition, Langlois drew a circle on a map and
testified that Recif’s information could be applied to all areas within the circle. See
Langlois Depo., pp. 362-63. Langlois has neither been designated nor accepted by the
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Court as an expert witness, and his opinion is inadmissible under Rule 701 of the
Federal Rules of Evidence.5
Voelte, who is also not designated as an expert, agreed during his deposition
that “it is possible for an AOI to shift as a negotiation with a private equity group
progresses.” See Kevin Voelte Depo., Exh. 39 to Recif’s Response [Doc. # 153],
p. 136. Voelte also testified as follows in response to questioning by Recif’s counsel:
Q.
Would you agree that Recif’s information could, in fact, be
applied to the very region where [State Line Leases are] today?
A.
I mean, maybe parts of it could, but I don’t know for sure which
parts.
Q.
But you think parts of it potentially could?
A.
Potentially.
Id. at 171. This speculative testimony from a non-expert witness regarding mere
possibilities, coupled with Voelte’s admission that he is not sure which parts of
Recif’s information “maybe” could “potentially” apply to the State Line Leases area,
5
During Langlois’s deposition, he also drew a red oval to designate the area on the map
where Recif’s information would indicate drilling should not take place. As pointed
out during Langlois’s deposition testimony, areas that Recif suggested to Juniper for
drilling were within the red “don’t go” oval. See Langlois Depo., p. 368. Because
Langlois’s opinion regarding the applicability of the Recif information outside Recif’s
AOI lacks internal consistency and a valid methodology, it would likely be excluded
as unreliable under Rule 702 of the Federal Rules of Evidence even if Langlois had
been designated as a non-retained expert. See, e.g., FED. R. EVID. 702; Brown v.
Illinois Cent. R. Co., 705 F.3d 531, 536 (5th Cir. 2013).
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does not raise a genuine issue of material fact regarding the applicability of Recif’s
information to the State Line Leases.
Recif argues that its information enabled Juniper to decide to obtain the State
Line Leases. When Langlois was asked in his deposition what he believed Recif gave
Juniper that allowed it to purchase the State Line Leases, he answered, “a tool chest
that Recif put together that they could use to find out where to go and where not to
go.” See Langlois Depo., p. 361. As noted by Gore, the Recif information indicated
that “where to go” would be the area west-northwest of the Recif AOI in order to
maximize potential hydrocarbon volumes. See Gore Report, p. 15. It is uncontested
that the State Line Leases are east-northeast of the Recif AOI. Evidence that Juniper’s
investment was outside the “where to go” area suggested by Recif’s information is not
evidence that Recif’s information was applicable to the State Line Leases area or was
used by Juniper to evaluate and obtain those leases.
Recif argues also that the Confidentiality Agreement states:
WHEREAS, RECIF owns or controls certain information and data and
has developed certain proprietary concepts and knowledge
(“Information”) with respect to oil and gas exploration generally on
lands covered by any and all of the oil and gas exploration related
agreements and leases of interest by RECIF and made a part hereof by
this reference (the “Properties”)[.]
Confidentiality Agreement, p. 1 (emphasis in original). Recif argues that it provided
Juniper with maps showing lease ownership in the area, including the Amelia acreage.
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Recif argues that the language cited above establishes that the Recif information
applies to all areas on the lease ownership maps, including the area of the State Line
Leases obtained from Amelia. The uncontroverted evidence in the record establishes
that Juniper had previously told Recif that it was interested in areas northeast of
Recif’s AOI, but Recif declined to conduct any analysis of those areas. The maps on
which Recif relies are devoid of any analysis and show only publicly available
information regarding lease ownership.
The language in the Confidentiality
Agreement, coupled with Recif’s publicly-available maps, does not raise a genuine
issue of material fact that Recif’s information was factually relevant or applicable to
the State Line Leases, or that Juniper used Recif’s information to reach its decision
regarding investment in the State Line Leases.
Juniper has presented substantial evidence that the information it received from
Recif was not applicable to the State Line Leases area. Recif has failed to present
admissible evidence that raises a genuine issue of material fact on this issue.
3.
Juniper’s Analysis
Recif concedes that if Juniper did not use Recif’s information to reach its
decision to invest in the State Line Leases and, instead, relied on its own analysis and
information provided by other companies, there would be no breach of the
Confidentiality Agreement. See Steven Jones Depo., Exh. 2 to Juniper’s Motion,
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p. 269; Langlois Depo., p. 118. Juniper has presented sworn testimony that it invested
in the State Line Leases based on its own analysis and not on any information
provided by Recif. See Kevin Cumming6 Depo., Exh. 1 to Juniper’s Motion, pp. 22526, 293 (“I’m a hundred percent telling you we did not use any information that Recif
provided to us to decide to acquire acreage in the entirely separate area where we’ve
acquired acreage.”), 324; Schrotel Depo., Exh. 5 to Juniper’s Motion, pp. 135, 153,
174, 238; Ogunyomi Depo., Exh. 6 to Juniper’s Motion, pp. 219-20; Josh Schmidt7
Depo., Exh. 44 to Juniper’s Motion, p. 73.
Juniper has presented evidence of its prior work in the Austin Chalk and the
Tuscaloosa Marine Shale (“TMS”).8 As early as September 20, 2017, prior to its first
business meeting with Recif in late November 2017, Juniper had begun mapping “lifeto-date volumes” of wells in the Louisiana Austin Chalk, including Eagles Ranch
well. See Schrotel Depo., pp. 257-58. Also prior to meeting with Recif, Juniper had
obtained and reviewed maps of the TMS, including porosity maps and resistivity
6
Kevin Cumming is a partner at Juniper and a Manager at State Line.
7
Josh Schmidt is Juniper’s Managing Director.
8
The TMS is a separate formation that is located beneath the Austin Chalk. See Kirk
Barrell Depo., Exh. 4 to Juniper Motion, p. 79. The same formation is known in
Texas as the Eagle Ford Shale. See id. at 80.
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maps. See id. at 260-61. There is no evidence that Recif conducted any analysis of
the TMS.
During the time it was meeting with Recif, Juniper continued to conduct an
analysis of the entire region, obtaining and studying over 50 well logs in the Austin
Chalk formation, and continuing to conduct substantial analysis in the TMS. See id.
at 255-56, 274-75. Juniper identified the area in the Austin Chalk formation it
believed most economically favorable. Then Juniper identified the area in the TMS
formation it believed most economically favorable. After those two steps were
completed, Juniper focused its interest for the State Line project in the area where the
two identified areas intersected. See id. at 265-66. This became the State Line AOI.
See id. There is no evidence that Recif conducted a similar analysis.
Juniper eventually created an Investment Committee Memo (“IC Memo”)
regarding its analysis of the State Line Leases project. The IC Memo summarizes
Juniper’s work that led to its decision to acquire the State Line Leases from Amelia,
and contains a detailed analysis of the geology of the area, leasing information,
drilling results, projected reserves, and economics. See Gore Report, p. 19. The IC
Memo also contains a detailed financial analysis of wells in the area, and a “thorough
risk analysis” including environmental, social and governmental risks. See id.
Juniper has presented evidence that the IC Memo contains all the information Juniper
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relied upon in deciding where to obtain the State Line Leases. See Schrotel Depo., p.
263; Ogunyomi Depo., p. 219. The IC Memo identifies no Recif information, and
Juniper has presented evidence that it did not rely on any Recif information in making
its State Line Leases investment decision. See Schrotel Depo., p. 264; Ogunyomi
Depo., p. 220.
Recif has presented no evidence that contradicts Juniper’s evidence regarding
its own analysis of the State Line Leases prospect. Instead, Recif argues that Juniper
did not have the experience or training necessary to conduct its own analysis in the
time permitted. Specifically, Recif argues that Ogunyomi was Juniper’s only degreed
geologist and did not begin to work for Juniper until March 18, 2018, giving him only
six weeks to complete an independent analysis before the May 3, 2018 investment
decision was made. Although it is undisputed that Ogunyomi was Juniper’s only
degreed geologist and that he did not begin work for Juniper until March 2018,
Juniper has presented uncontroverted evidence that it began work on the State Line
Leases project well before March 2018, indeed Juniper was working on the State Line
Leases project at least two months before Juniper’s first business meeting with Recif
in November 2017. Additionally, Juniper has presented uncontroverted evidence that
six weeks was ample time for Juniper to complete the analysis for the State Line
Leases investment. See Gore Report, p. 20; Ogunyomi Depo., p. 212. Indeed,
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Ogunyomi testified that six weeks was “absolutely” enough time to conduct the
analysis and reach an opinion on the investment. See Ogunyomi Depo., p. 212.
Ogunyomi testified that, from his experience with multiple companies, he had
developed the ability to go into an area, quickly analyze the data, and form an opinion
in usually “a few weeks to two months.” See id.
Recif argues, with supporting evidence, that Schrotel had no formal training in
either engineering or geology. There is uncontroverted evidence in the record,
however, that Schrotel had been working for Juniper conducting well log analysis
since 2014 and had taken several relevant online classes. During the years before
meeting with Recif, Juniper had evaluated and provided capital investment for
multiple oil and gas development projects, two involving the Austin Chalk/Eagle Ford
formations. See Cumming Depo., pp. 52-53. One of those two projects was the
Rocky Creek Resources (“RCR”) project. See Gore Report, p. 18. Schrotel was
Juniper’s technical lead on the RCR project, which culminated in the sale of
approximately 17,000 acres and 8 wells to Marathon Oil Company. Id. Perhaps the
most compelling evidence refuting Recif’s challenge to Schrotel’s abilities is Recif’s
concession that it claimed Schrotel’s analysis as its own to solicit investments after
discussions with Juniper ended.
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The uncontroverted evidence in the record establishes further that Juniper’s
ability to conduct its own analysis in the time permitted was assisted by information
provided to Juniper by Amelia’s Kirk Barrell. Juniper had access to Barrell’s
extensive analysis of the Austin Chalk, where he had conducted detailed well log
analysis on approximately 900 wells. See Kirk Barrell Depo., Exh. 4 to Juniper’s
Motion, pp. 95-97. Juniper’s “access to Barrell’s experience and extensive library of
work” facilitated Juniper’s quick analysis and decision regarding the State Line
Leases. See, e.g., Gore Report, p. 21.
Recif has failed to present evidence, rather than conjecture by its counsel and
principals, that raises a genuine issue of material fact regarding Juniper’s ability to
conduct its own analysis without using any information provided by Recif.
4.
Use of “Mental Impressions” Under the Confidentiality
Agreement
Recif argues that even if Juniper did not use Recif’s information, Juniper used
“mental impressions” it obtained from reviewing that information. As an initial
matter, any “mental impressions” from the Recif information would suggest that one
should drill in the area west-northwest of the Recif AOI in order to maximize
potential hydrocarbon volumes. See Gore Report, p. 15. It is undisputed that the State
Line Leases are east-northeast of the Recif AOI, inconsistent with any “mental
impressions” obtained from reviewing Recif’s information.
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Additionally, the Confidentiality Agreement allows Juniper to use mental
impressions. Paragraph 16 of the Confidentiality Agreement provides:
16. RECIF understands and acknowledges that [Juniper] and its
Representatives are actively engaged in the business of oil and natural
gas exploration, development and operations, and [Juniper] and its
Representatives may have current operations in the vicinity of the
Properties. Notwithstanding any other provision in this Agreement,
RECIF understands and agrees that [Juniper] and its Representatives may
now or in the future be working on other projects in such area and may
retain mental impressions of [Recif’s] Information. The use of such
mental impressions is not prohibited by this Agreement. RECIF agrees
that neither [Juniper] nor any of its Representatives shall be precluded by
the terms of this Agreement from working on or acquiring interests in
any properties solely because of such retained mental impressions.
Confidentiality Agreement, ¶ 16.
Recif argues that whether Juniper used the actual Recif information or only
mental impressions of that information is a fact question to be resolved by the jury.
For the reasons discussed in the preceding sections, Recif has failed to present
evidence that raises a genuine issue of material fact in support of the allegation that
Juniper used actual Recif information. As a result, the issue is whether any use by
Juniper of mental impressions violated the Confidentiality Agreement.9
Recif argues that ¶ 16 of the Confidentiality Agreement applies only “if
Defendants acquire “interest in any properties solely because of such retained mental
9
Juniper denies using any mental impressions it obtained from reviewing Recif’s
information.
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impressions.” Recif’s Response [Doc. # 153], p. 29. Recif notes that Juniper
responded during discovery that it did not acquire the State Line Leases “based only
on any retained mental impressions of any Information provided by Recif.” Id. (citing
Response to Interrogatory 9, Exh. 52 to Response). Therefore, Recif argues, ¶ 16 does
not apply. Recif misreads ¶ 16. The paragraph states that Juniper will not be
“precluded by the terms of this Agreement from working on or acquiring interests in
any properties solely because of such retained mental impressions.” Confidentiality
Agreement, ¶ 16 (emphasis added). Pursuant to the unambiguous language in ¶ 16,
Recif agrees that Juniper solely having retained mental impressions of Recif’s
information will not preclude Juniper from working on or acquiring interest in
properties in the area. The language does not provide, as Recif argues, that ¶ 16 is
inapplicable unless Juniper acquires the interest based solely on retained mental
impressions.
Recif argues that ¶ 16 is ambiguous. In support of this argument, Recif cites
deposition testimony from its principals. Langlois and Jones testified that, based on
the language in ¶ 16 that Juniper “may have current operations in the vicinity” of
Recif’s AOI, they thought ¶ 16 applied only to any current operations Juniper had in
the vicinity of Recif’s AOI, not to any future operations Juniper may have. “Courts
interpreting unambiguous contracts are confined to the four corners of the document,
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and cannot look to extrinsic evidence to create an ambiguity.” Addicks Servs., Inc. v.
GGP-Bridgeland, LP, 596 F.3d 286, 294 (5th Cir. 2010); see also Nat’l Union Fire
Ins. Co. of Pittsburgh v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (“Parol
evidence is not admissible for the purpose of creating an ambiguity.”). Paragraph 16
states clearly and unambiguously that notwithstanding any other provision of the
Confidentiality Agreement, which would include the statement regarding current
operations in the vicinity of Recif’s AOI, Recif understands and agrees that Juniper
“may now or in the future” be working on other projects the area of Recif’s AOI and
“may retain mental impressions” of Recif’s information.
See Confidentiality
Agreement, ¶ 16. The paragraph provides further that the “use of such mental
impressions is not prohibited by this Agreement.” Id.
Recif has failed to present evidence that raises a genuine issue of material fact
to support its claim that Juniper used “mental impressions” of the Recif information.
Moreover, pursuant to ¶ 16 of the Confidentiality Agreement, any use of mental
impressions is “not prohibited by [that] Agreement.” Id.
5.
Conclusion Regarding Use of Recif Information
Recif has failed to present admissible evidence that raises a genuine issue of
material fact regarding its claim that Juniper breached the Confidentiality Agreement
by using Recif’s information in its decision to invest in the State Line Leases. Indeed,
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the uncontroverted evidence in the record demonstrates that Juniper did not
improperly use any Recif information or “mental impressions” when it conducted its
analysis and reached its decision to obtain the State Line Leases from Amelia.
C.
Claim that Juniper Improperly Disclosed Recif’s Information
Recif alleges that Juniper breached the Confidentiality Agreement by disclosing
Recif’s information to Michael Rozenfeld10 and Tope Ogunyomi. It is undisputed that
Juniper disclosed the Recif AOI Map to Rozenfeld and Ogunyomi.11 Juniper argues
it is entitled to summary judgment on the breach of contract claim as to these
disclosures because Recif has presented no evidence of damages. Recif has not
presented evidence that either Rozenfeld or Ogunyomi used the Recif AOI Map in any
way.
An essential element of a breach of contract claim is that there be “damages
sustained as a result of the breach.” See Innova Hosp. San Antonio, Ltd. P’ship v.
Blue Cross & Blue Shield of Georgia, Inc., 892 F.3d 719, 731 (5th Cir. 2018);
Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 655 n.26
10
Michael Rozenfeld worked for Boomtown, LLC, a company with Juniper as its only
client. See Michael Rozenfeld Depo., Exh. 28 to Recif’s Response [Doc. # 153],
pp. 35-36.
11
It is unclear that the Recif AOI Map is confidential information covered by the
Confidentiality Agreement. It is not evident from the map, which contains a “box”
outline of Recif’s AOI, who had an interest in the AOI or why.
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(Tex. 2009) (required element in a breach of contract claim is that the plaintiff was in
fact damaged by the breach). Where the plaintiff provides no evidence of damages
resulting from an alleged breach, summary judgment for the defendant on the breach
of contract claim is appropriate. See Univ. Baptist Church of Fort Worth v. Lexington
Ins. Co., 787 F. App’x 194, 198 (5th Cir. 2019). The issue before the Court is whether
Recif has presented evidence of any damages resulting from Juniper’s disclosure of
the Recif AOI Map to Rozenfeld and Ogunyomi, not whether Recif has proven the
amount of the resulting damages with adequate certainty.
Recif argues that it is entitled to recover nominal damages. Nominal damages
are not recoverable when the alleged harm is “entirely economic and subject to proof.”
Merritt Hawkins & Assocs., L.L.C. v. Gresham, 861 F.3d 143, 155 (5th Cir. 2017)
(citing MBM Fin. Corp. v. Woodlands Operating Co., L.P., 292 S.W.3d 660, 665
(Tex. 2009)). “[A] breach-of-contract plaintiff who seeks nothing beyond economic
damages cannot receive a judgment based on breach alone.” Intercontinental Grp.,
295 S.W.3d at 660. Similarly, a “stand alone finding of breach confers no benefit
whatsoever.” Id. at 665 n.26.
Recif argues also that it is entitled under the Confidentiality Agreement to an
award of attorneys’ fees and costs. Pursuant to ¶ 19 of the Confidentiality Agreement,
attorneys’ fees and costs are recoverable only where a court of competent jurisdiction
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issues a final, non-appealable order finding a breach of contract. See Confidentiality
Agreement, ¶ 19. The award of attorneys’ fees and costs are not damages resulting
from the alleged breach of the Confidentiality Agreement by the disclosure of the
Recif AOI Map to Rozenfeld and Ogunyomi. Therefore, they do not support Recif’s
breach of contract claim.
Recif’s response to the lack of evidence of damages includes a discussion of a
reasonable royalty, citing Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882,
889-90 (Tex. App. -- Dallas 2004, pet. denied). It is unclear that this discussion
relates to the breach of contract claim relating to the disclosures to Rozenfeld and
Ogunyomi. In any event, under Texas law, contract damages are defined by the
plaintiff’s actual loss and, therefore, a hypothetical royalty is not recoverable for
breach of a confidentiality agreement. See CQ, Inc. v. TXU Min. Co., L.P., 565 F.3d
268, 278 (5th Cir. 2009).12 Like Recif, the plaintiff in CQ argued that Qaddura
permitted recovery of a hypothetical royalty as damages for the breach of a
confidentiality agreement. See id. at 278 n.5. The Fifth Circuit rejected the argument.
Recif has failed to present evidence of damages resulting from the disclosure
12
The unavailability of a hypothetical reasonable royalty as the measure of damages for
the alleged breach of a confidentiality agreement applies to all aspects of the breach
of contract claim based on the alleged breaches of the Confidentiality Agreement. See
CQ, 565 F.3d at 278.
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of the Recif AOI Map to Rozenfeld and Ogunyomi. As a result, Juniper is entitled to
summary judgment on this aspect of Recif’s breach of contract claim.
D.
Claim that Juniper Breached the Confidentiality Agreement in State
Court Proceeding
On January 17, 2019, Recif filed this lawsuit in Texas state court. In its
Amended Complaint, Recif alleges that Juniper breached the Confidentiality
Agreement while the case was pending in state court by (1) contesting Recif’s
application for temporary injunctive relief and (2) requiring Recif to post a bond and
opposing the release of that bond.
Paragraph 19 of the Confidentiality Agreement provides that Juniper agrees that
Recif can seek injunctive relief “without proof of immediate, irreparable and/or actual
damages.” Confidentiality Agreement, ¶ 19. The paragraph provides further that
Juniper agrees to waive any requirement for “securing or posting any bond in
connection with the pursuit of” injunctive relief. See id.
With reference to the allegations regarding the bond requirements, Rule 684 of
the Texas Rules of Civil Procedure requires an order granting a temporary injunction
to fix the amount of security to be given by the applicant. This requirement is
mandatory, and an order granting a temporary injunction that fails to fix the amount
of security “is subject to being declared void and dissolved.” Qwest Commc’ns Corp.
v. AT&T Corp., 24 S.W.3d 334, 337 (Tex. 2000). Indeed, any agreement to waive the
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bond requirement “is immaterial because the failure of the temporary injunction order
to comply with rule 684 renders the order void, and ‘a party who agrees to a void
order has agreed to nothing.’” City of McAllen v. McAllen Police Officers’ Union,
2011 WL 2175606, *3 n.7 (Tex. App. -- Corpus Christi-Edinburg June 2, 2011,)
(quoting In re Garza, 126 S.W.3d 268, 271 (Tex. App. -- San Antonio 2003, orig.
proceeding). The provision in the Confidentiality Agreement that Juniper agreed not
to require a bond is contrary to the requirement of Rule 684, and any temporary
injunction that Recif obtained based on that provision would be void. See id.; see also
Qwest, 24 S.W.3d at 337.
Additionally, the Confidentiality Agreement is dated November 16, 2017, and
the lawsuit was filed January 17, 2019.
Paragraph 15 of the Confidentiality
Agreement provides that the “obligations under this Agreement shall terminate one
year after the date of this Agreement.” Confidentiality Agreement, ¶ 15. As a result,
Juniper’s obligations under the Confidentiality Agreement, including those under
¶ 19, expired before the lawsuit was filed and before Juniper engaged in the
challenged conduct while the case was pending in state court.
Recif argues that ¶ 18 of the Confidentiality Agreement provides that Recif’s
failure or delay in exercising its rights does not constitute a waiver. See Recif’s
Response [Doc. # 153], p. 28. Juniper does not argue that Recif waived any rights.
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Instead, Juniper argues that its obligations under the Confidentiality Agreement,
including those under ¶ 19, terminated when the contract expired and, therefore, its
conduct while the case was pending in Texas state court cannot constitute a breach of
the Confidentiality Agreement. The waiver provision in ¶ 18 is not relevant.
Juniper is entitled to summary judgment on Recif’s breach of contract claim
based on conduct by Juniper while this case was pending in state court after its
obligations under the Confidentiality Agreement terminated.
IV.
TRADE SECRET MISAPPROPRIATION CLAIM UNDER TUTSA
A.
Legal Requirements for TUTSA Claim
Under TUTSA, “misappropriation” includes “disclosure or use of a trade secret
of another without express or implied consent by a person who (i) used improper
means to acquire knowledge of the trade secret . . ..” TEX. CIV. PRAC. & REM. CODE
§ 134A.002(3); see also Six Dimensions, Inc. v. Perficient, Inc., 969 F.3d 219, 230
(5th Cir. 2020). To prevail on a trade secret misappropriation claim under TUTSA,
the plaintiff must prove: (1) the information at issue is a trade secret; (2) the defendant
acquired the trade secret through improper means; and (3) the defendant’s improper
use of the trade secret harmed the plaintiff. See StoneCoat of Tex., LLC v. ProCal
Stone Design, LLC, 426 F. Supp. 3d 311, 340 (E.D. Tex. 2019); Miner, Ltd. v.
Anguiano, 383 F. Supp. 3d 682, 702 (W.D. Tex. 2019).
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B.
Existence of a Trade Secret
The first element of a TUTSA claim is that the information satisfies the
definition of a trade secret. Under TUTSA, a “trade secret” includes information that:
(A) the owner of the trade secret has taken reasonable measures under
the circumstances to keep the information secret; and
(B) the information derives independent economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable through proper means by, another person who can obtain
economic value from the disclosure or use of the information.
TEX. CIV. PRAC. & REM. CODE § 134A.002(6); see also Vest Safety Med. Servs., LLC
v. Arbor Envtl., LLC, 2020 WL 4003642, at *4 (S.D. Tex. July 15, 2020).
“Information is valuable when it provides the competitor details about a product or
service that give them a competitive advantage.” Miner, 383 F. Supp. 3d at 703
(citing In re Cooper Tire & Rubber Co., 313 S.W.3d 910, 918 (Tex. App -- Houston
[14th Dist.] 2010)).
Juniper argues that Recif has presented no evidence that its alleged trade secrets
had independent economic value.13 Juniper’s damages expert, Brent Bersin, testified
that the value of Recif’s information “would be $0” unless it had utility outside
13
In its Response to Recif’s Motion, filed August 10, 2020, Juniper stated that there was
a fact dispute regarding the value of the Recif information. See Response [Doc.
# 160], p. 16. This statement was made, however, prior to the Court’s exclusion of
the proffered opinion of Recif’s damages expert, J. W. Bill Rhea, IV, in the
Memorandum and Order [Doc. # 199] entered October 1, 2020.
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Recif’s AOI. See Brent Bersin Depo., Exh. 58 to Response [Doc. # 160], pp. 259-60.
As discussed above, Recif has failed to present evidence that raises a genuine fact
dispute regarding the applicability of its information outside its AOI. Langlois,
Recif’s principal, testified that the well logs have no intrinsic value related to
evaluating an oil and gas opportunity until and unless they are interpreted and
analyzed.14 See Langlois Depo., p. 359. Recif did not address Juniper’s argument in
its Reply or in its Supplement to its Reply.
Juniper has presented evidence, including deposition testimony from Recif’s
principal, that the Recif information has no independent economic value. Recif has
not presented evidence to the contrary, and has not addressed Juniper’s argument.
Therefore, Recif has failed to present evidence that raises a genuine issue of material
fact that its information has independent economic value as required to qualify as
trade secrets under TUTSA.
C.
Requirement of Improper Use of Trade Secrets
Another essential element of a TUTSA violation is unauthorized use of the
trade secret. See Universal Plant Servs., Inc. v. Dresser-Rand Grp., Inc., 571 S.W.3d
14
Additionally, as discussed above in Section III.B.1, the well logs are publiclyavailable information. Therefore, they cannot be trade secrets. See, e.g., Carson
Prod. Co. v. Califano, 594 F.2d 453, 461 (5th Cir. 1979) (noting that “it is elemental
that the subject matter of a trade secret must be secret” and “must not be of public
knowledge or of a general knowledge in the trade or business”).
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346, 360 (Tex. App. -- Houston [1st Dist.] 2018, no pet.); StoneCoat of Texas, 426 F.
Supp. 3d at 344. As is discussed above in Section III.B., Recif has failed to present
evidence that raises a genuine issue of material fact regarding Juniper’s alleged use
of any trade secrets. On this basis also, Juniper is entitled to summary judgment on
Recif’s trade secret misappropriation claim.
V.
OTHER STATE LAW CLAIMS
Juniper argues that Recif’s remaining state law claims of fraudulent
inducement,
fraudulent
misrepresentation,
civil
conspiracy,
“detrimental
reliance/promissory estoppel,” unfair competition, and unjust enrichment are
preempted by TUTSA, TEX. CIV. PRAC. & REM. CODE § 134A.007. “Where a claim
is based on a misappropriation of a trade secret, then it is preempted by the
[TUTSA].” DHI Grp., Inc. v. Kent, 397 F. Supp. 3d 904, 922 (S.D. Tex. 2019) (citing
Super Starr Int’l, LLC v. Fresh Tex Produce, LLC, 531 S.W.3d 829, 843 (Tex. App. Corpus Christi 2017, no pet.)); TEX. CIV. PRAC. & REM. CODE § 134A.007(a). Many
Texas federal courts have held that TUTSA preempts claims regarding the
misappropriation of information, even if the information is not a trade secret. See
Richter v. Carnival Corp., 2020 WL 1876098, *3 (N.D. Tex. Apr. 15, 2020), and
cases cited therein. Most district courts in Texas hold that if a plaintiff’s tort claim is
premised on the same factual allegations as its claim for trade secret misappropriation,
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the claim is preempted by TUTSA. See StoneCoat of Texas,, 426 F. Supp. 3d at 337;
Computer Sciences Corp. v. Tata Consultancy Servs. Ltd., 2020 WL 2487057,*7
(N.D. Tex. Feb. 7, 2020), report and recommendation adopted, 2020 WL 1428941
(N.D. Tex. Mar. 24, 2020); 360 Mortg. Grp., LLC v. Homebridge Fin. Servs., Inc.,
2016 WL 900577, at *8 (W.D. Tex. Mar. 2, 2016). In the Southern District of Texas,
a “claim is not preempted if the plaintiff is able to show the claim is based on facts
unrelated to the misappropriation of the trade secret.” AMID, Inc. v. Medic Alert
Found. United States, Inc., 241 F. Supp. 3d 788, 825 (S.D. Tex. 2017) (emphasis
added) (Rosenthal, J.).
In this case, with the possible exception of the “detrimental reliance/promissory
estoppel” claim, each of Recif’s remaining state law claims is based on the same
factual allegations that underlie the trade secret misappropriation claim.
The
fraudulent inducement claim is based on the allegation that Juniper induced Recif to
disclose its proprietary information.
See Complaint, ¶ 66.
The fraudulent
misrepresentation claim is based on the factual allegations that Juniper misrepresented
that they would not misuse Recif’s proprietary information, and that Recif relied on
Juniper’s representation and shared its proprietary information with Juniper. See id.,
¶¶ 70-71. In the civil conspiracy claim, Recif alleges that Defendants conspired with
each other to misrepresent that they would not misuse Recif’s proprietary information
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and to conceal that they were sharing Recif’s proprietary information with others. See
id., ¶ 74. In the unfair competition claim and the unjust enrichment claims, Recif
alleges that Juniper misappropriated Recif’s proprietary information to “bypass” Recif
and enter into an oil and gas lease development. See id., ¶¶ 85, 86, 88.
In the Complaint, Recif identifies its proprietary information -- the information
on which the state law claims are based -- as “secrets.” See id., ¶¶ 11, 13. Indeed, in
the Complaint, Recif alleges that all of its proprietary information constitutes trade
secrets. See id., ¶ 77. Throughout this litigation, Recif has maintained the position
that all of its proprietary information qualifies as trade secrets. See, e.g., Recif’s
Second Amended Answers to Juniper Capital’s First Set of Interrogatories, Exh. 38
to Juniper’s Motion, p. 5 (Recif’s trade secrets include “all business, scientific,
technical, lease availability, economic, or engineering information [Recif] generated
that was related to its plan for the Recif Prospect that it shared with Juniper”); Recif’s
First Amended Responses to State Line’s First Set of Discovery Requests, p. 11.
Recif’s fraudulent inducement, fraudulent misrepresentation, civil conspiracy,
unfair competition, and unjust enrichment claims are premised on the same factual
allegations as its claim for trade secret misappropriation. Stated differently, Recif has
failed to show that these state law claims are based on factual allegations unrelated to
the allegations supporting the trade secret misappropriation claim. As a result, these
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state law claims are preempted by TUTSA.
The factual basis for the promissory estoppel claim is unclear. Recif alleges
only that “Juniper made representations to Recif by conduct and/or word which Recif
justifiably relied upon. As a result of Recif’s reliance, Recif changed its position to
its detriment.” See Complaint, ¶ 83. To the extent the alleged representations related
to the use of Recif’s alleged trade secrets, the claim is preempted by TUTSA.
Additionally, although promissory estoppel is normally defensive in nature, “it
is an available cause of action to a promisee who relied to his detriment on an
otherwise unenforceable promise.” Blackstone Med., Inc. v. Phoenix Surgicals,
L.L.C., 470 S.W.3d 636, 655 (Tex. App. - Dallas 2015, no pet.) (emphasis added).
The promissory estoppel doctrine presumes that no contract exists. Id. (citing Subaru
of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 226 (Tex. 2002)).
Promissory estoppel “is not applicable to a promise covered by a valid contract
between the parties,” but may “apply to a promise outside a contract.” Id. Therefore,
to the extent Recif’s promissory estoppel claim is based on promises in the
Confidentiality Agreement, the claim fails as an independent cause of action.15
Based on the foregoing, Juniper is entitled to dismissal of Recif’s state law
15
To the extent Recif intended to rely on a different promise, it failed to plead adequate
facts in the Complaint or provide an adequate explanation in the summary judgment
briefing. Therefore, any such promissory estoppel claim is dismissed.
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Case 4:19-cv-02953 Document 209 Filed on 11/17/20 in TXSD Page 37 of 37
claims of fraudulent inducement, fraudulent misrepresentation, civil conspiracy,
“detrimental reliance/promissory estoppel,” unfair competition, and unjust enrichment
as preempted by TUTSA.
VI.
CONCLUSION AND ORDER
Recif has not presented evidence that raises a genuine issue of material fact in
support of its breach of contract and trade secret misappropriation claims. As a result,
Recif’s Motion is denied and Juniper’s Motion is granted on these two claims.
TUTSA preempts Recif’s other state law claims. The promissory estoppel
claim is either preempted by TUTSA or fails as an independent cause of action
because it is based on promises covered by the Confidentiality Agreement.
Accordingly, it is hereby
ORDERED that Juniper’s Motion for Summary Judgment [Doc. # 130] is
GRANTED. It is further
ORDERED that Recif’s Motion for Summary Judgment on Breach of Contract
and Misappropriation of Trade Secrets [Doc. # 135] is DENIED.
SIGNED at Houston, Texas, this 17th day of November, 2020.
NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE
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