Date: 04-23-2017

Case Style:

Case Number: 01-16-00297-CV

Judge: Michael Massengale

Court: Texas Court of Appeals, First District on Appeal from the County Civil Court at Law No. 4, Harris County

Plaintiff's Attorney: Jeremy Saenz

Defendant's Attorney: Joe Shields

Description: Appellee Ultimate Vacation Group LLC d/b/a Royal Bahamas Cruise Line
sued appellant Joe Shields for breach of a settlement agreement that resolved an
earlier lawsuit between the parties. Shields filed a motion to dismiss under the
Texas Citizens Participation Act, arguing that the lawsuit was related to a comment
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he had filed with Federal Communications Commission. See TEX. CIV. PRAC. &
REM. CODE §§ 27.001–.011. The trial court denied the motion to dismiss, and
Shields filed this interlocutory appeal. In six issues, Shields argues that the court
erred by denying his motion.
We conclude that Ultimate established by clear and convincing evidence a
prima facie case for breach of contract, and that Shields did not establish a defense
by a preponderance of the evidence. Accordingly, we affirm the trial court’s order
denying the motion to dismiss.
Background
Joe Shields has taken an active interest in citizen enforcement of the
Telephone Consumer Protection Act. See 47 U.S.C. § 227. Since 1998, he has filed
suits in state and federal courts alleging illegal telemarketing based on calls to his
terrestrial and mobile telephones. In addition to private causes of action, over a
period of approximately 14 years Shields filed 174 comments with the Federal
Communications Commission under Docket No. 02-278, which pertains to “Rules
and Regulations Implementing the Telephone Consumer Protection Act of 1991.”
Shields sued Ultimate in federal district court for violation of the Telephone
Consumer Protection Act based on an unsolicited phone call. Ultimate responded
that Shields had consented to the call by providing his phone number on a
webpage. Shields denied having done so and, in discovery, he sought proof of his
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consent to the call. To facilitate discovery, the federal district court entered an
agreed protective order requiring the parties to mark as “confidential” any
discovery responses that they believed were entitled to protection from public
disclosure.
Ultimate produced over 200 pages of documents to Shields. The three pages
at issue in this dispute—labeled “Ultimate 00010” and “Ultimate 00204–05”—
were not marked “confidential.” These documents are not in the appellate record,
but the record includes descriptions of each document. Ultimate 00010 is a log file
showing that Shields visited a website one month before the phone number that
received the unsolicited call was placed in service. Ultimate 00204–05 are email
communications dated one month before service was activated on the phone
number. These documents purport to show that Shields consented to the call by
providing his phone number, but he contends the documents are fabrications
because the dates of the log file and the emails preceded the date of activation of
his phone number.
While the litigation was pending in federal court, Shields filed a comment
with the FCC under Docket No. 02-278. In his comment, Shields attached Ultimate
00010 and Ultimate 00204–05, and he shared his belief that these documents were
fabricated to show that he allegedly had consented to receive the unsolicited call.
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The parties settled the federal litigation. In the settlement agreement, Shields
warranted that he had not disseminated or distributed any “Confidential
Information,” as defined in the agreement, “with anyone for any reason at any
time.” The settlement agreement further provided that Shields would be liable for
any material breach in the liquidated amount of $45,000.
Four months after the settlement, Ultimate learned that Shields had
publicized its documents as an attachment to his FCC comment. Ultimate
demanded that Shields take all necessary steps to ensure the FCC’s removal of its
documents from the public record. Ultimate also alleged that Shields had defamed
its attorneys in statements to the FCC, by alleging that they had engaged in fraud
before a federal court. In addition to seeking liquidated damages for breach of
contract, Ultimate demanded payment of $125,000 to each of four individuals, for
a total of $500,000. Shields did not pay the settlement demands.
Ultimate sued Shields for breach of contract, but not for defamation. Shields
filed a motion to dismiss under the Texas Citizens Participation Act. The crux of
his argument was that Ultimate’s lawsuit was related to the exercise of his right of
free speech, specifically his submission to the FCC. Shields attached as evidence
the demand letter and his affidavit, in which he averred:
By filing my comments with federal proceeding 02-278 I was
exercising my right of freedom of speech on a matter of public
concern. I was expressing my opinion on the behavior of those in the
telemarketing industry to fabricate evidence and falsely accuse
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victims of illegal telemarketing. Moreover, at the time of submission
of my comments the complained about information was not marked or
treated as confidential.
Shields anticipated that Ultimate would attempt to establish a prima facie
case for breach of contract, and he argued that the court should nevertheless
dismiss the lawsuit because he could prove, by a preponderance of the evidence,
each essential element of a defense. In his original answer, Shields asserted six
defenses, which he characterized as “affirmative defenses.” Three of these defenses
argued that nothing included with his FCC comment was confidential.1 One
defense repeated the allegations that Shields made in the federal court litigation.
The other two defenses related to issues of contract interpretation.2
In response to the motion to dismiss, Ultimate argued that, for various
reasons, its cause of action for breach of contract was not subject to the TCPA. It
also argued that dismissal was unwarranted because it could demonstrate by clear
1 In particular, Shields alleged that he could not have shared “Confidential
Information” with anyone because the documents were not marked
“confidential” as required by the protective order at the time he filed his
submission with the FCC. He further argued Ultimate’s suit was barred by
equitable estoppel because it failed “to designate production as confidential
information prior to entering into an agreement,” leading to an “unjust and
inequitable burden.” He also contended that all conditions precedent were
not satisfied because Ultimate “failed to properly designate what constituted
confidential information at the time the Agreement was signed.”
2 Shields argued that the settlement agreement “is missing essential terms and
is indefinite on what constitutes confidential information.” He also alleged
that he “relied on fraudulent information” that he had been “released from
any and all claims ‘to the date of this Settlement Agreement and Release.’”
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and specific evidence a prima facie case for breach of contract. Ultimate identified
each essential element of breach of contract and showed support for each in the
pleadings and affidavit of its attorney, Jack Wagner. It also refuted each of the
defenses that Shields had pleaded in his answer.
The trial court denied the motion to dismiss, and Shields appealed.
Analysis
On appeal, Shields raises six issues challenging the trial court’s denial of his
TCPA motion to dismiss. In his first three issues, he argues that he proffered
“sufficient evidence” to show that none of the documents included in his FCC
filing were marked “confidential” as required by the parties’ agreed protective
order. In his fourth issue, he argues that he proffered “sufficient evidence” that
Ultimate’s legal action was based on, related to, and was in response to his
exercise of free speech about a matter of public concern in a federal proceeding
which is part of the administration of the law. In his fifth issue, Shields argues that
he showed by “sufficient evidence” that Ultimate brought its legal action for an
improper purpose. Finally, in his sixth issue, he argues that because it is a felony
under Texas law to fabricate evidence, it is against public policy to consider
fabricated evidence as confidential.
The TCPA provides for dismissal of meritless claims that are based on the
defendant’s exercise of the rights of free speech, petition, or association, as defined
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by the statute. TEX. CIV. PRAC. & REM. CODE § 27.003. The TCPA establishes a
summary procedure which affords the parties an opportunity to show whether the
claims at issue relate to or are in response to the exercise of protected
constitutional rights. See id. § 27.003(a). This procedure does not require the
parties to marshal all of their evidence. When ruling on a motion to dismiss, a court
must “consider the pleadings and supporting and opposing affidavits stating the
facts on which the liability or defense is based.” Id. § 27.006(a).
To obtain dismissal under the TCPA, a movant must show “by a
preponderance of the evidence that the legal action is based on, relates to, or is in
response to the party’s exercise of (1) the right of free speech; (2) the right to
petition; or (3) the right of association.” Id. § 27.005(b). If the movant meets this
burden, then the burden shifts to the nonmovant to establish “by clear and specific
evidence a prima facie case for each essential element of the claim in question.” Id.
§ 27.005(c). A “prima facie case” means “evidence sufficient as a matter of law to
establish a given fact if it is not rebutted or contradicted.” In re Lipsky, 460 S.W.3d
579, 590 (Tex. 2015). Mere notice pleadings that might satisfy the requirements of
the Rules of Civil Procedure may not provide a sufficient factual basis to support a
prima facie claim in the context of the TCPA dismissal procedure. Id. at 590–91.
Once the nonmovant establishes its prima facie case, the burden shifts back to the
movant, who may obtain dismissal by establishing “by a preponderance of the
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evidence each essential element of a valid defense to the nonmovant’s claim.” TEX.
CIV. PRAC. & REM. CODE §27.005(d).
On appeal, we review de novo a trial court’s ruling on a motion to dismiss
under the TCPA. Schlumberger Ltd. v. Rutherford, 472 S.W.3d 881, 891–92 (Tex.
App.—Houston [1st Dist.] 2015, no pet.). We review the pleadings and evidence in
a light favorable to the nonmovant. Id. at 892.
I. Nonmovant’s prima facie case
“The essential elements of a claim for breach of contract 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 as
a result of the breach.” B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 16 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied). “A breach of contract occurs when a
party fails or refuses to do something he has promised to do.” Id.
In its petition, Ultimate alleged the existence of a valid contract, its
settlement agreement with Shields. The specific provisions at issue in this case,
Sections 5.3.1, 5.3.3, and 5.3.7, are as follows:
5.3.1. Plaintiff [Shields] and Defendant [Ultimate] Released Parties
acknowledge that there is a mutual benefit to the Parties hereto in
maintaining the confidentiality of all monies paid, in the provision of
information and/or documentation as required by the Settlement
Agreement and Release in settlement of the Litigation, and in the
provision of responses to requests for admission, response to requests
for production, and answers to interrogatories in the Litigation
(“Confidential Information”).
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* * *
5.3.3. Plaintiff and his attorneys jointly agree, promise, warrant, and
covenant that, prior to the payment under Paragraph 4, they have not
disseminated, distributed, shown, or otherwise shared any
Confidential Information with anyone for any reason at any time, save
and except for those persons within the law offices of Plaintiff’s
attorney and any persons hired and/or retained by Plaintiff’s attorney
to provide services in the Litigation.
* * *
5.3.7. Any breach of this provision is a material breach of this
Agreement and may be enforced by injunction, including a temporary
restraining order and a temporary injunction. In addition, should any
provision of Paragraph 5.3 be found to be violated, Plaintiff shall pay
liquidated damages in the amount of Forty-Five Thousand Dollars and
No Cents ($45,000.00). Such liquidated damages shall be deemed to
be a genuine estimate of the foreseeable damages incurred by
Defendant due to Plaintiff’s failure to performance [sic] under the
provisions of Paragraph 5.3.
Ultimate alleged that Shields breached the agreement by making the representation
in Section 5.3.3 while knowing that he already had shared Ultimate 00010 and
Ultimate 00204-05 as part of the comment he had submitted to the FCC.
The petition also alleged that Ultimate had suffered and would continue to
suffer damages. The element of performance or tendered performance by the
plaintiff was established by the Wagner affidavit, which stated: “Ultimate
performed under the terms of the Agreement by the payment of settlement
proceeds to Mr. Shields, among other ways.” This factual statement was not
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rebutted or contradicted by Shields’s answer or affidavit. See Lipsky, 460 S.W.3d
at 590.
Shields argues that he could not have breached Section 5.3.3 because the
documents he attached to his FCC comment were not marked “confidential,” or
they were publicly filed with a federal district court, not under seal. The primary
dispute concerns the interpretation of “Confidential Information” in Section 5.3.3.
Ultimate argues that it has the same meaning in Section 5.3.3 as it does in Section
5.3.1. Shields argues that “Confidential Information” has the same meaning as it
did in the agreed protective order entered in the federal litigation.
In conducting our analysis, we are not able to consider the protective order,
because it is not part of the appellate record. “Evidence that is not contained in the
appellate record is not properly before this Court.” See TEX. R. APP. P. 34.1.
Despite the deficiencies in the appellate record, some facts are undisputed by
the parties. They agree that at least portions of the Ultimate 00010 and Ultimate
00204-05 documents were included with the FCC comment, and they agree those
documents were not marked “confidential” under the agreed protective order in the
federal litigation. The entirety of the settlement agreement is not in the appellate
record, but the pleadings include the relevant provisions. Section 5.3.1 stated that
the parties “acknowledge that there is a mutual benefit” in “maintaining the
confidentiality of all monies paid,” in providing information and documentation to
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effectuate the settlement agreement, and “in the provision of responses to requests
for admission, response to requests for production, and answers to interrogatories
in the Litigation (‘Confidential Information’).” “Confidential Information” was
defined in the settlement agreement as “responses to requests for admission,
response to requests for production, and answers to interrogatories in the
Litigation.” The defined term was not limited to documents that had been marked
“confidential.”
In Section 5.3.3, the defined term “Confidential Information” appeared again
in reference to the warranty that Ultimate maintains was breached. Thus, the
warranty provided by Shields in Section 5.3.3, by referencing “Confidential
Information,” included all discovery responses from the federal litigation, not only
those documents that had been marked “confidential.”
In his first three issues, Shields essentially argues that he could not have
breached the warranty provision of the settlement agreement because the
documents in question were not marked “confidential.” Having concluded that the
settlement agreement defined “Confidential Information” differently, to include all
discovery responses provided by Ultimate, we find his arguments unavailing. To
the extent that Shields’s arguments depend on evidence that is not part of the
appellate record, he has not rebutted or contradicted the evidence that Ultimate
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produced to establish a prima facie case of its breach-of-contract claim. We
overrule Shields’s first three issues.
II. Improper purpose
In his fifth issue, Shields asserts that he introduced sufficient evidence to
show that Ultimate’s claim was brought for an improper purpose. The TCPA
directs that a court “shall dismiss a legal action” if the movant shows by a
preponderance of the evidence that it “is based on, relates to, or is in response to”
the movant’s exercise of the rights of free speech, to petition, or of association.
TEX. CIV. PRAC. & REM. CODE § 27.005(b). It further provides that a court may not
dismiss a “legal action” when the nonmovant “establishes by clear and specific
evidence a prima facie case for each essential element of the claim in question.” Id.
The ruling on the motion to dismiss does not require a determination of whether
the legal action was brought “for an improper purpose.” See id. But the TCPA
provides that at the request of the movant, the court “shall issue findings regarding
whether the legal action was brought to deter or prevent the moving party from
exercising constitutional rights and is brought for an improper purpose, including
to harass or to cause unnecessary delay or to increase the cost of litigation.” Id.
§ 27.007(a).
Shields does not provide a reference to the record to identify any evidence
that supports his argument about an alleged improper purpose by Ultimate, nor
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does he explain how such a finding would support a ruling in his favor on his
motion to dismiss, in light of the clear statutory directives on ruling on a motion to
dismiss. We overrule the fifth issue.
III. Valid defense
In his sixth issue on appeal, Shields argues that “the trial court erred in
denying” his motion to dismiss “when it is against public policy to treat fabricated
evidence filed in any legal proceeding, a felony under Texas criminal law, as
confidential.” The brief has no references to the record in support of this argument.
The brief fails to articulate a coherent argument that Shields proved by a
preponderance of the evidence that the settlement agreement was unenforceable as
against public policy. A brief “must contain a clear and concise argument for the
contentions made, with appropriate citations to authorities and to the record.” TEX.
R. APP. P. 38.1(i). We hold that the sixth issue is inadequately briefed.

Outcome: Having concluded that Ultimate satisfied its burden to avoid dismissal under
the TCPA by demonstrating a prima facie case for each element of its contract
claim, we need not address the remaining disputed question of whether the TCPA
applies to this dispute. See TEX. R. APP. P. 47.1. We affirm the order of the trial court.

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