Opinion
NO. 03-16-00557-CV
03-15-2018
Chris Peterson, Robert Turner, Scott Reichardt and Pamela Reichardt, Appellants v. Overlook at Lake Austin, L.P., Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. D-1-GN-15-005194 , HONORABLE ORLINDA NARANJO, JUDGE PRESIDING MEMORANDUM OPINION
This interlocutory appeal challenges the district court's order partially denying motions to dismiss under the Texas Citizens Participation Act (TCPA) in a dispute concerning a condominium development. We will reverse the district court's order partially denying the motions to dismiss and remand the case for determination of attorney fees, costs, expenses, and sanctions consistent with this opinion and the TCPA.
Background
Appellant Chris Peterson owns a unit in the Las Colinas at Lake Austin Condominiums, which are situated on a .807-acre lot that was originally part of a larger 3.094-acre tract. Appellee Overlook at Lake Austin, L.P., owns the remaining undeveloped 2.288 acres. Appellants Robert Turner and Scott and Pamela Reichardt own properties that are adjacent to Overlook's 2.288 acres.
Overlook acquired the 2.288-acre tract in October 2014 with plans to develop a 22-unit condominium complex on the site. As part of its development plan, Overlook submitted to the City of Austin Zoning and Planning Commission (ZAP) a re-subdivision application seeking to combine the 2.288-acre lot and the .807-acre lots into a single lot for development purposes. Peterson sent a letter objecting to Overlook's proposed re-subdivision application and asking ZAP to postpone its consideration of the application because none of the Las Colinas Condominium owners had authorized or approved the re-subdivision. Soon thereafter, ZAP approved Overlook's re-subdivision application, and it was set for consideration at a public hearing of the Travis County Commissioners Court.
Before the public hearing, Peterson filed the underlying suit against Overlook and several local government entities and officials, seeking mandamus, declaratory, and injunctive relief asserting his opposition to the re-subdivision application and to resolve perceived issues regarding rights under the condominium declaration that created the Las Colinas Condominiums (Condominium Declaration). Turner and the Reichardts (collectively, "Intervenors") intervened in Peterson's suit, seeking mandamus, declaratory, and injunctive relief regarding the re-subdivision application.
The governmental defendants generally denied the claims against them and asserted governmental-immunity defenses. Overlook likewise generally denied the claims against it and asserted counterclaims for breach of contract against Peterson, "tortious interference" against the Intervenors, and "conspiracy" against Peterson and Turner. Overlook's pleadings assert that Overlook, as successor to the declarant, has rights under the Condominium Declaration and that Peterson's objection letter to ZAP and his lawsuit breached a provision in the Condominium Declaration prohibiting unit owners from "do[ing] anything to interfere with special Declarant rights." Overlook contends that Peterson's agreement in the Condominium Declaration to not interfere with special declarant rights means that he would not object to any action by Overlook to re-zone or re-plat the real property, and that Peterson's letter to ZAP and his lawsuit against Overlook and the government officials violates that provision because it is an objection to Overlook's re-subdivision plans. Overlook further asserted that Peterson and Turner conspired "to wrongfully and maliciously impede Overlook's lawful rights to develop its real property" under the Condominium Declaration "by their concerted action in filing th[e] lawsuit and seeking and obtaining injunctive relief against governmental entities and public officials that are immune from suit and liability under [governmental] immunity." Finally, Overlook asserted that the Intervenors tortiously interfered with its rights under the Condominium Declaration by filing an "unmeritorious temporary injunction to stop the approval of Overlook's permits and significantly delay the project."
Peterson and the Intervenors each moved to dismiss Overlook's counterclaims under the TCPA, arguing that Overlook's counterclaims against them are "legal action[s that are] based on, relate[d] to, or [are] in response to [Peterson's and the Intervenors'] exercise of the right of free speech, right to petition, or right of association." Tex. Civ. Prac. & Rem. Code § 27.003. Peterson specifically asserted that Overlook's counterclaims for breach of contract and conspiracy are "based on, relate[d] to, or in response to" Peterson's "exercise" of his "right to petition" and of "free speech" under the TCPA because the counterclaims are predicated on Peterson's letter to ZAP, his communications with Turner, and his lawsuit against Overlook. Turner and the Reichardts similarly asserted that Overlook's counterclaims for tortious interference and conspiracy are "based on, relate[d] to, or in response to" the Intervenors' "exercise" of their "right to petition", of "free speech," and of "association" under the TCPA because the counterclaims are predicated on communications with Peterson, intervention in Peterson's suit, and communications with various government entities.
Overlook responded to the motions to dismiss by asserting that the movants had not met their burden of showing that the challenged counterclaims "arise from protected activities" and, in the alternative, that Overlook met its burden of presenting a prima facie case for each element of its counterclaims. See id. § 27.005(b) (requiring dismissal if movant "shows 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" protected rights); (c) (allowing nonmovant to avoid dismissal by "establish[ing] by clear and specific evidence a prima facie case for each essential element" of claim in question). After a hearing, the district court issued an order granting the motion to dismiss Overlook's conspiracy claims and denying the motions to dismiss the tortious-interference claim. The district court did not rule on Peterson's motion to dismiss the breach of contract claim, but it was later denied by operation of law. See id. §§ 27.005(a), .008(a) (collectively providing that TCPA motion to dismiss is denied by operation of law 30 days after hearing on motion). Peterson and the Intervenors appeal from these denials.
Discussion
On appeal, Peterson challenges the district court's refusal to dismiss Overlook's breach-of-contract claim, while Turner and the Reichardts challenge the district court's refusal to dismiss Overlook's tortious-interference claim. We will briefly review the TCPA's dismissal procedure and standard of review then address each of the challenged causes of action in turn.
TCPA dismissal procedure
The TCPA provides a two-step process to expedite the dismissal of a "legal action" that is "based on, relates to, or is in response to a party's exercise of the right of free speech, right to petition, or right of association." Id. § 27.003(a). First, the movant under the TCPA must "show[ ] by a preponderance of the evidence that the [nonmovant's] legal action is based on, relates to, or is in response to the [movant]'s exercise of (1) the right of free speech; (2) the right to petition; or (3) the right of association." Id. § 27.005(b). Second, if the movant meets its burden under section 27.003(a), 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" to avoid dismissal. Id. § 27.005(c). Even if the nonmovant meets its burden under section 27.005(c), however, the trial court "shall dismiss a legal action against the moving party if the moving party establishes by a preponderance of the evidence each essential element of a valid defense to the nonmovant's claim." Id. § 27.005(d). "In determining whether a legal action should be dismissed . . . , the court shall consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based." Id. § 27.006(a).
The "exercise of" these three protected categories of expressive activity are defined in Section 27.001 of the TCPA. See Tex. Civ. Prac. & Rem. Code § 27.001(2)-(4).
In this appeal, Overlook does not dispute that Peterson and the Intervenors established by "a preponderance of the evidence" that Overlook's counterclaims for breach of contract and tortious interference fall under the TCPA—i.e., that the counterclaims are "legal actions" that are based on, related to, or in response to at least one of the protected categories of expressive activity defined by the Act. Instead, Overlook maintains that the district court properly denied appellants' motions to dismiss because Overlook met its burden under section 27.005(c) of establishing by clear and specific evidence a prima facie case for each essential element of the challenged claims. In this context, "clear" means "unambiguous, sure, or free from doubt" and "specific" means "explicit or relating to a particular named thing." In re Lipsky, 460 S.W.3d 579, 590 (Tex. 2015) (citing KTRK Television, Inc. v. Robinson, 409 S.W.3d 682, 689 (Tex. App.—Houston [1st Dist.] 2013, pet. denied)). A prima facie case "refers to evidence sufficient as a matter of law to establish a given fact if it is not rebutted or contradicted." Id. "It is the 'minimum quantum of evidence necessary to support a rational inference that the allegation of fact is true.'" Id. (quoting In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004) (per curiam)). We review de novo whether a party carried its assigned burden. Long Canyon Phase II and III Homeowners Ass'n, Inc. v. Cashion, 517 S.W.3d 212, 218 (Tex. App.—Austin 2017, no pet.).
Overlook did assert below and in its brief to this Court that because Peterson's lawsuit against immune governmental entities constitutes "sham petitioning"—a category of speech that falls outside First Amendment Protection—Peterson did not meet his burden of showing, under section 27.005(b), that Overlook's breach-of-contract counterclaim was based on, relates to, or is in response to his constitutional exercise of his rights of free speech, petition, or association. See Long Canyon Phase II and III Homeowners Ass'n, Inc. v. Cashion, 517 S.W.3d 212, 221 (Tex. App.—Austin 2017, no pet.) (citing Serafine v. Blunt, 466 S.W.3d 352, 366 (Tex. App.—Austin 2015, no pet.) (Pemberton, J., concurring) (citing Professional Real Estate Inv's, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61, (1993))). When questioned at oral argument, however, Overlook conceded that Peterson had met this part of his initial burden.
Breach of contract
The elements of a breach-of-contract claim are (1) the existence of a valid contract between the parties; (2) performance (or excuse) by the party asserting the claim; (3) breach of the terms of the contract by another party; and (4) damages resulting from the breach. See, e.g., C.W. 100 Louis Henna, Ltd. v. El Chico Rests. of Tex., L.P., 295 S.W.3d 748, 752 (Tex. App.—Austin 2009, no pet.). On appeal, Peterson argues, among other things, that Overlook failed to offer clear and specific evidence of the damages element of its cause of action. We agree.
Overlook asserted in its pleadings that Peterson's alleged breach cost Overlook $2.5 million in lost sales because it delayed approval of the re-subdivision application and that delay resulted in the termination of two construction contracts. As evidence of the damages element of its breach claim, Overlook offered an affidavit from James Moore and copies of two contracts (totaling $2.5 million) for the construction of condominiums in Overlook's new condominium development. Moore avers in the affidavit, with regard to damages, that
Because of the delay [in approval of its site plan for Overlook's new development], Overlook lost sales of its proposed condominium units to buyers that contracted to pay $2.5 million for such units. Buyers Lance and Erin Ramsey terminated their contract to purchase a unit for $1.3 million and Overlook returned their $65,000.00 earnest money. Buyers John and Caroline Byrne terminated their contract to purchase a unit for $1.2 million and Overlook returned their $60,000.00 earnest money.However, Peterson and the Intervenors objected to the phrase "Because of the delay" in the first sentence of this paragraph as being conclusory and speculative, and the district court sustained the objection, striking the phrase from the affidavit—i.e., leaving the affidavit to merely state that two Overlook construction contracts worth $2.5 million were terminated, with no explanation as to why they were terminated. As such, Overlook failed to provide clear and specific evidence that it sustained damages as a result of Peterson's alleged breach. See In re Lipsky, 460 S.W.3d at 590 (noting that "clear" means "unambiguous, sure, or free from doubt" and "specific" means "explicit or relating to a particular named thing"). And even if the district court had not sustained the objection, conclusory statements and bare, baseless opinions, such as the one offered in Moore's affidavit, are not probative of and accordingly do not establish a prima facie case. See id. at 592-93. The mere fact that two contracts worth $2.5 million were terminated is not specific evidence that they were terminated as a result of Peterson's actions. See id. at 593 (noting affidavit in question did not include specific facts showing how actions caused economic losses) (citing Burbage v. Burbage, 447 S.W.3d 249, 262 (Tex. 2014) (noting that jury could not reasonably infer that cancellations for funeral-home business were caused by defamation when any number of reasons could have caused the cancellations)). Accordingly, Overlook failed to carry its burden of establishing a prima facie case for the damages element of its breach-of-contract claim and, thus, it was error for the district court to deny Peterson's motion to dismiss. See Tex. Civ. Prac. & Rem. Code § 27.005(c) ("The court may not dismiss a legal action . . . if the [nonmovant] establishes by clear specific evidence a prima facie case for each essential element of the claim in question." (emphasis added)). We sustain Peterson's first issue.
"Conclusory" means "[e]xpressing a factual inference without stating the underlying facts on which the inference is based." Conclusory, Black's Law Dictionary (10th ed. 2014).
In his initial brief to this Court, Peterson asserted two additional issues challenging the district court's failure to award attorney fees, costs, and sanctions. In his reply brief, however, Peterson re-characterized these second and third issues as requests for relief—namely, he requests that, in the event we sustain his first issue, we remand the case to the district court for further proceedings relating to his attorney fees, costs, expenses, and sanctions as contemplated under the TCPA. See Tex. Civ. Prac. & Rem. Code § 27.009 ("If the court orders dismissal of a legal action under [TCPA], the court shall award to the moving party" specified damages and costs). Accordingly, Peterson has raised only one issue for this Court to address.
Tortious interference
Intervenors appeal from the district court's denial of their motion to dismiss Overlook's counterclaim for tortious interference with an existing contract. The elements for this claim are: (1) an existing contract subject to interference, (2) a willful and intentional act of interference with the contract, (3) that proximately caused the plaintiff's injury, and (4) caused actual damages or loss. Prudential Ins. Co. of Am. v. Financial Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000) (citing ACS Investors, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997)). On appeal, Intervenors argue that, among other things, Overlook failed to meet its burden under Section 27.005(c) to offer clear and specific evidence of the damage element of its cause of action. We agree.
Similar to its breach-of-contract claim, Overlook asserted in its pleadings that Intervenors' interference with Overlook's contractual rights caused a delay in the approval of its re-subdivision application, which in turn caused it to lose the two pending construction contracts. Overlook offered the same evidence to support the damages element of its tortious-interference claims that it offered to support its claim for breach of contract—i.e., Moore's affidavit and copies of the two terminated contracts. Thus, for the same reasons set forth above—i.e., Overlook's evidence establishes only that the two contracts were terminated, but not that they were terminated as a result of the Intervenors' tortious interference—Overlook failed to meet its burden of establishing by clear and specific evidence a prima facie case for the damages element of its tortious-interference claim and, as a result, the district court erred in denying Intervenors' motion to dismiss the tortious-interference counterclaim. See Tex. Civ. Prac. & Rem. Code § 27.005(c). We sustain Intervenors' issue.
Like Peterson, Intervenors have since re-characterized two issues challenging the district court's failure to award costs and damages under the TCPA as requests for appellate relief. See supra n. 4. Accordingly, Intervenors have asserted only one issue that we need address.
Conclusion
We reverse the district court's order denying Peterson's motion to dismiss Overlook's claim for breach of contract. We also reverse the district court's order denying the Intervenors' motion to dismiss Overlook's claim for tortious interference. We remand the case to the district court to order dismissal of these claims and for further proceedings consistent with this opinion regarding a determination of attorney fees, costs, expenses, and sanctions under section 27.009. See Id. § 27.009; Schimmel v. McGregor, 438 S.W.3d 847, 862-63 (Tex. App.—Houston [1st Dist.] 2014, pet denied) (holding that where appellate court reversed trial court's denial of TCPA motion to dismiss, appropriate disposition of case was to remand attorney-fees issue to trial court).
/s/_________
Jeff Rose, Chief Justice Before Chief Justice Rose, Justices Pemberton and Goodwin Reversed and Remanded Filed: March 15, 2018