*1 The above-referenced case was referred to the undersigned United States Magistrate Judge for pretrial purposes in accordance with 28 U.S.C. § 636. Before the Court are the following six pending motions:

The Court, having carefully considered the relevant briefing and hearing arguments of counsel June 20, 2019, recommends the motions for summary judgment be GRANTED.[1] Specifically, the Court recommends StoneCoat GP’s and StoneCoat LP’s remaining claims against Profanchik be dismissed with prejudice, and Plaintiffs’ claims against the remaining defendants be dismissed with prejudice. Plaintiffs’ motion for leave to supplement (Docket Entry # 229) is granted.

I. BACKGROUND

A. The parties in the current lawsuit

In May 2017, plaintiffs-counterdefendants StoneCoat of Texas, LLC (“SCOT”), StoneCoat GP, LLC (“StoneCoat GP”), and StoneCoat, LP (“StoneCoat LP”) (collectively, “Plaintiffs” or “StoneCoat entities”) filed this case against defendants-counterplaintiffs ProCal Stone Design, LLC (“ProCal Stone Design”), John D. Profanchik, Sr. (“Profanchik”), Justin Kinser (“Kinser”), Irma Villarreal (“Villarreal”), Alfredo Gonzalez (“Gonzalez”), Philippe Mergaux (“Mergaux”), and Pierre-Laurent Chamielec (“Chamielec”). The StoneCoat entities are companies that are in the business of making and selling spray-on stone facing. Kenneth W. Morrison (“Morrison”) was involved in the origination of the spray-on stone facing and the formation of the StoneCoat entities. See Docket Entry # 43 at 1. The StoneCoat entities required employees and potential business partners (including Kinser, Villarreal, Gonzalez, Mergaux and others) to sign certain agreements pertaining to permissible competition, confidentiality, and non-disclosure. Id.

In 2015, Profanchik, who expressed an interest in buying the StoneCoat entities, signed a non-disclosure agreement. Id. at 3. After the business relationship between the StoneCoat entites and Profanchik deteriorated, Profanchik ended up creating and forming ProCal Stone Design, which is involved in the same business as the StoneCoat entities. Id. On November 9, 2018, the Court granted the StoneCoat entities’ motion for leave to file an amended complaint adding ProCal Stone Design, US LLC (“ProCal USA”) and ProCal Enterprises, LLC (“ProCal Enterprises”) (together with ProCal Stone Design, “ProCal” or “ProCal entities”) as additional defendants and asserting a new cause of action alleging trademark infringement under § 32 of the Lanham Act. Docket Entry # 100 at 28.

B. The claims in the current lawsuit

1. The StoneCoat entities’ claims

*2 In the Second Amended Original Complaint (Docket Entry # 103) filed November 26, 2018, the StoneCoat entities allege the following against the ProCal entities, Profanchik, Kinser, Villarreal, Gonzalez, Mergaux, and Chamielec:[2] (1) unfair competition and false advertising under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count 1, ¶¶ 141-53); (2) trademark infringement under § 32 of the Lanham Act, 15 U.S.C. § 1114 (Count 1, ¶¶ 154-55); (3) misappropriation of Plaintiffs’ trade secrets and confidential and proprietary information (Count 2, ¶¶ 157-67); (4) misappropriation of Plaintiffs’ trade secrets and confidential information in violation of the United States Defend Trade Secrets Act of 2016, United States Public Law 114-53, effective May 11, 2016 (Count 3, ¶¶ 168-81); (5) conversion (Count 4, ¶¶ 182-89); (6) violation of the Texas Theft Liability Act (Count 5, ¶¶ 190-201); (7) breach of contract (Count 6, ¶¶ 202-09); (8) breach of fiduciary duty (Count 7, ¶¶ 210-19); (9) tortious interference with existing business relationships (Count 8, ¶¶ 220-31); (10) unfair competition (Count 9, ¶¶ 232-41); (11) conspiracy (Count 10, ¶¶ 242-49); and (12) various theories regarding the alleged scheme (assisting or encouraging, concert of action, joint enterprise, and joint and several liability). Plaintiffs assert their breach of fiduciary duty claim against the individual defendants and their claim for tortious interference with existing business relationships against ProCal and Profanchik as to Villarreal, Gonzalez, Kinser, Mergaux, and Chamielec.

Among other things, Plaintiffs allege Profanchik executed a non-disclosure/non-compete agreement in order to obtain, and did obtain, confidential and proprietary information and trade secrets of Plaintiffs in order to evaluate a possible purchase of Plaintiffs or an equity investment in Plaintiffs. According to Plaintiffs, Profanchik ultimately decided not to invest in Plaintiffs; “but, Profanchik, nevertheless, misappropriated Plaintiffs’ confidential and proprietary information and trade secrets and used such information and trade secrets to form Procal and to unlawfully compete with Plaintiffs.” Docket Entry # 103, ¶ 3. Profanchik formed or created the ProCal entities on various dates since May 7, 2015 and allegedly “used and transmitted to Procal misappropriated proprietary and confidential information and trade secrets of Plaintiffs to the Procal [entities] to enable them to unlawfully and unfairly compete against Plaintiffs.” Id., ¶ 4.

Plaintiffs allege Kinser, Villarreal, Gonzalez, Mergaux, and Chamielec all previously worked with Plaintiffs prior to May 7, 2015 and had executed written agreements not to disclose Plaintiffs’ confidential and propriety information and trade secrets; however, after May 7, 2015, they began working for ProCal and began unlawfully and unfairly using Plaintiffs’ confidential and proprietary information and trade secrets while working for ProCal. Id., ¶ 5.

Plaintiffs allege Profanchik and ProCal knew of the contractual agreements made by Kinser, Villarreal, Gonzalez, Mergaux, and Chamielec, but despite such knowledge, interfered with these contractual obligations. Id., ¶ 6. Plaintiffs further allege ProCal “has and continues to falsely misrepresent its involvement in the industry and has falsely made claims that are known to be ... literally false and that caused confusion in the marketplace regarding Procal’s products, services, goods and workmanship.” Id., ¶ 7.

2. Defendants’ Counterclaims

ProCal Stone Design, Profanchik, Kinser, Villarreal, and Gonzalez (collectively, “Counter-plaintiffs”) have filed counterclaims against the StoneCoat entities, the Morrison Family Trust (“MFT”), and Morrison, individually and in his capacity as Trustee of the MFT. The original counterclaim against the StoneCoat entities sought attorneys’ fees.[3] In the First Amended Counterclaim (“amended counterclaim”), Counter-plaintiffs allege StoneCoat and Morrison, as the “principal architect” of StoneCoat’s actions and in conspiracy with StoneCoat, have engaged in widespread violations of the Lanham Act, including without limitation unfair competition, false advertising, and trademark dilution by blurring and/or tarnishment. Docket Entry # 156 at 1-2. The amended counterclaim alleges, by way of example, StoneCoat and Morrison have engaged in the following unlawful acts:

Id. at 2.

In the amended counterclaim, Counter-plaintiffs allege the following causes of action against the StoneCoat entities, MFT, and Morrison: (1) Lanham Act Unfair Competition, 15 U.S.C. § 1125(a) (Count 1, ¶¶ 42-50); (2) Lanham Act False Advertising, 15 U.S.C. § 1125(a) (Count 2, ¶¶ 51-63); (3) Lanham Act Trademark Dilution by Blurring and Tarnishment, 15 U.S.C. § 1125(c) (Count 3, ¶¶ 64-74); (4) Declaratory Relief (Count 4, ¶¶ 75-76); (5) Civil Conspiracy (Count 5, ¶¶ 77-78); and (6) Aiding and Abetting/Concert of Action/Joint and Several Liability (Count 6, ¶¶ 79-83). Counter-plaintiffs assert several causes of action against StoneCoat for attorneys’ fees (Counts 7-11, ¶¶ 84-101). Finally, Counter-plaintiffs allege Morrison and MFT are responsible for the conduct of SCOT, StoneCoat LP, and StoneCoat GP (“Piercing the Corporate Veil,” ¶ 102).[4]

3. MFT and Morrison’s counterclaims

On April 25, 2019, “Additional Counter-defendants” MFT and Morrison answered Counter-plaintiffs’ First Amended Counterclaim and counterclaimed for attorneys’ fees, expenses, litigation cost, court costs, and other unnecessary expense caused by Counter-plaintiffs’ counterclaim against MFT and Morrison. Docket Entry # 180 at 20.

II. MOTIONS FOR SUMMARY JUDGMENT

In five separate motions, Profanchik,[5] Kinser, Villarreal, Gonzalez (together, “individual defendants”), and the ProCal entities (collectively, “Defendants”) move the Court to grant summary judgment against the following claims asserted against them by Plaintiffs: (1) Lanham Act violations (Count 1); (2) misappropriation of trade secrets and theft/conversion (Counts 2-5); (3) breach of contract (Count 6); (4) breach of fiduciary duty (Count 7); (5) tortious interference (Count 8); (6) unfair competition (Count 9); (7) declaratory relief; (8) injunctive relief; and (9) damages. Even though the Court recognizes not all the motions raise every single issue, Defendants’ motions in toto raise the following issues, which the Court groups together for simplicity.

*4 First, Defendants assert Plaintiffs’ Lanham Act claims fail as a matter of law. According to Defendants, the alleged violations fall into two categories – false advertising and trademark infringement – and there is no evidence to support either claim.

Second, Defendants assert Plaintiffs’ Misappropriation of Trade Secrets and Confidential and Proprietary Information (Count 2), Misappropriation of Trade Secrets and Confidential and Proprietary Information, United States Defend Trade Secrets Act of 2016 (Count 3), Conversion (Count 4), and Texas Theft Liability Act (Count 5) claims fail as a matter of law for the following reasons: (1) Plaintiffs do not have any trade secrets, (2) there is no evidence the individual defendants took Plaintiffs’ trade secrets, and (3) there is no evidence the individual defendants are using Plaintiffs’ trade secrets.

Third, Defendants assert Plaintiffs’ Breach of Contract (Count 6) claim fails as a matter of law because there is not a valid contract and the statute of limitations expired before Plaintiffs brought this claim. According to Kinser, Villarreal, and Gonzalez, there was no consideration provided them when entering in the non-disclosure/non-compete agreements and those agreements contain unreasonable limitations. According to ProCal USA and ProCal Enterprises, they were not party to a contract with Plaintiffs.

Fourth, the ProCal entities move for summary judgment against Plaintiffs’ claim for Breach of Fiduciary Duty (Count 7), asserting ProCal did not have a fiduciary relationship with Plaintiffs. Kinser, Villarreal, and Gonzalez also move for summary judgment as to this claim. Kinser argues he was not a fiduciary and the economic loss rule applies. Villarreal and Gonzalez argue there is no evidence they breached fiduciary duties to Plaintiffs.

Fifth, the ProCal entities argue Plaintiffs’ Tortious Interference (Count 8) claim fails as a matter of law because there is not a valid contract to interfere with and the statute of limitations expired related to all contracts at issue before Plaintiffs brought this claim. ProCal Stone Design further argues related entities cannot interfere with their own contracts. ProCal USA and ProCal Enterprises further argue they were not in existence at the time of the alleged interference.

Sixth, Defendants assert Plaintiffs’ claim for Unfair Competition (Count 9) and all iterations of conspiracy fail as a matter of law because they are not an independent causes of action.

Seventh, Defendants assert Plaintiffs’ claims for Declaratory Relief (Count 7) fail as a matter of law because those claims are redundant and such relief is not available in federal court.

Eighth, Defendants assert Plaintiffs’ claims for Injunctive Relief fail as a matter of law.

Finally, Defendants assert all Plaintiffs’ claims should be dismissed because Plaintiffs’ damages calculations are flawed and without evidentiary support.

III. STANDARDS

The Court will apply the well settled summary judgment standards. The purpose of summary judgment is to isolate and dispose of factually unsupported claims or defenses. See Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Summary judgment is proper 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). A dispute about a material fact is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The trial court must resolve all reasonable doubts in favor of the party opposing the motion for summary judgment. Casey Enterprises, Inc. v. American Hardware Mut. Ins. Co., 655 F.2d 598, 602 (5th Cir. 1981) (citations omitted). The substantive law identifies which facts are material. Anderson, 477 U.S. at 248.

*5 The party moving for summary judgment has the burden to show there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Id. at 247. If the movant bears the burden of proof on a claim or defense on which it is moving for summary judgment, it must come forward with evidence that establishes “beyond peradventure all of the essential elements of the claim or defense.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original). But if the nonmovant bears the burden of proof, the movant may discharge its burden by showing there is an absence of evidence to support the nonmovant’s case. Celotex, 477 U.S. at 325; Byers v. Dallas Morning News, Inc., 209 F.3d 419, 424 (5th Cir. 2000).

The party moving for summary judgment bears the initial burden of informing the court of the basis for the motion, and identifying portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material fact. Celotex, 477 U.S. at 323. To meet its burden, the moving party must either submit evidence that negates the existence of some material element of the non-moving party’s claim or defense, or, if the crucial issue is one for which the non-moving party will bear the burden of proof at trial, merely point out that the evidence in the record is insufficient to support an essential element of the nonmovant’s claim or defense. Vallecillo v. Wells Fargo Bank, N.A., No. 5:16-CV-935-DAE, 2018 WL 3603120, at *2 (W.D. Tex. May 15, 2018) (citing Lavespere v. Niagra Machine & Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990)).

Once the movant has carried its burden, the nonmovant must “respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial.” Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce affirmative evidence. Anderson, 477 U.S. at 257. No “mere denial of material facts nor ... unsworn allegations [nor] arguments and assertions in briefs or legal memoranda” will suffice to carry this burden. Moayedi v. Compaq Computer Corp., 98 Fed. Appx. 335, 338 (5th Cir. 2004). Rather, the court requires “significant probative evidence” from the nonmovant in order to dismiss a request for summary judgment supported appropriately by the movant. United States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001). The court must consider all of the evidence, but must refrain from making any credibility determinations or weighing the evidence. See Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007).

All facts and inferences drawn from those facts must be viewed in the light favorable to the party resisting the motion for summary judgment. Mission Pharmacal Co. v. Virtus Pharm., LLC, 23 F. Supp. 3d 748, 756 (W.D. Tex. 2014) (citing Scott v. Harris, 550 U.S. 372, 378 (2007); Hibernia Nat’l Bank v. Carner, 997 F.2d 94, 97 (5th Cir. 1993)). “The court need consider only the cited materials, but it may consider other materials in the record.” Mission Pharmacal, 23 F. Supp. 3d at 756–57 (quoting FED. R. CIV. P. 56(c)(3)).

IV. SUMMARY JUDGMENT EVIDENCE[6]

A. Defendants’ exhibits

1. Profanchik’s motion (Docket Entry # 67)

*6 Profanchik attached copies of the following exhibits to the Affidavit of V. Blayre Peña (“Docket Entry # 67-1”) filed in support of Profanchik’s motion:[7] (1) Affidavit of John Profanchik (“Profanchik Aff.”); (2) Affidavit of Justin Kinser; (3) Kinser Non-Disclosure/Non-Compete Agreement (“Kinser NDA/NC”); (4) Profanchik Non-Disclosure/Non-Compete Agreement (“Profanchik NDA/NC”); (5) May 2016 Deposition of Kenneth Morrison in Collin County Litigation (“Morrison Dep.”); (6) Sam Hance Witness Statement; (7) May 2017 Deposition of Rick Adams in Collin County Litigation (“Adams Dep.”); (8) Affidavit of Alfredo Gonzalez; (9) June 2017 Deposition of Morrison as the corporate representative of SCOT in Collin County Litigation (“Morrison Corp. Rep. Dep.”); (10) USPTO Final Rejection of SCOT Patent Application; (11) Morrison Declaration to USPTO; (12) StoneCoat Website Screenshot; (13) 2009 Mergaux to Pilant Email with DecoPierre Training; (14) Home Depot Screenshot; (15) 2011 Mergaux Non-Disclosure Agreement (“Mergaux NDA”); (16) Final Judgment from Hopkins State Litigation; (17) Jury Charge from Hopkins State Litigation; (18) 2011 Product Rights, Formula Purchase, Royalty Agreement (“Product Rights Agreement”); (19) December 12, 2012 Termination Letter for 2011 Product Rights Agreement; (20) StoneCoat, LP’s and Frederick Hopkins’ First Amended Counterclaim against SCOT and Morrison in the Hopkins State Litigation; (21) Affidavit of Irma Villarreal; (22) Irma Villarreal Non-Disclosure/Non-Compete Agreement (“Villarreal NDA/NC”); (23) Alfredo Gonzalez Non-Disclosure/Non-Compete Agreement (“Gonzalez NDA/NC”); (24) StoneCoat of North Dallas, LLC Secretary of State Filing; (25) SCOT Patent Application; (26) SCOT’s Fourth Amended Petition in Hopkins State Litigation; (27) SCOT’s Motion for New Trial in Hopkins State Litigation; (28) Defs.’ Obj. and Resp. to Pl.’s Third Req. for Production in Collin County Litigation; (29) Defs.’ and Counter-Pl.’s 4th Am. Resp. to Pl.’s and Counter-Def.’s Req. for Disclosure in the Collin County Litigation; (30) Profanchik Original Petition in Collin County Litigation; (31) SCOT Original Counterclaim in Collin County Litigation; (32) SCOT First Amended Counterclaim in Collin County Litigation; (33) Profanchik’s Partial Motion for Summary Judgment in Collin County Litigation (without exhibits); (34) Order Granting Profanchik’s Motion for Summary Judgment in Collin County Litigation; and (35) Final Judgment in Collin County Litigation.

2. The remaining individual defendants’ motions

Villarreal and Gonzalez attached to the Affidavit of V. Blayre Peña (“Docket Entry # 127-1”) filed in support of their motion for summary judgment the following additional exhibits, not already attached in support of Profanchik’s motion: (1) February 15, 2019 Affidavit of Irma Villarreal (“Villarreal Aff.”); (2) February 15, 2019 Affidavit of Alfredo Gonzalez (“Gonzalez Aff.”);[8] (3) Plaintiffs’ Answers to Defendant ProCal’s 1st Set of Interrogatories; (4) Peña Letter to Bundren re Discovery Responses; (5) E-mail Confirming Attorney Conference; (6) Plaintiffs’ Supplemental and Amended Disclosures; (7) Blown Stone Trademark Certificate; (8) Trial testimony of Mergaux in Collin County Litigation; (9) Print-out re Other Spray Stone Companies; (10) Morrison and SCOT’s Expert Disclosures from Collin County Litigation; (11) SCOT’s 2014 Tax Return; (12) SCOT’s 2015 Tax Return; and (13) SCOT’s 2016 Tax Return.

Kinser’s motion for summary judgment contains only one additional exhibit not attached to Villarreal/Gonzalez’s motion: February 14, 2019 Affidavit of Justin Kinser (“Kinser Aff.”), attached as Exhibit 1 to the Affidavit of V. Blayre Peña (“Docket Entry # 128-1”) filed in support of Kinser’s motion for summary judgment.

In their replies in support of their motions for summary judgment, Defendants cite to the Confidential Attorney’s Eyes Only Excerpts of the May 18, 2017 Oral Deposition of Rick Adams, offered in the Collin County Litigation.[9]

3. The ProCal entities’ motions

ProCal Stone Design did not attach any exhibits in support of its motion for summary judgment that were not already attached to one or more of the individual defendants’ motion(s). However, it attached a Declaration of Philippe Mergaux (“Mergaux Decl.”) to its reply. Docket Entry # 175-1.

*7 ProCal USA and ProCal Enterprises attached as exhibits to the Affidavit of V. Blayre Peña (“Docket Entry # 195-1”) filed in support of their motion for summary judgment the following additional exhibits: (1) Declaration of John D. Profanchik, Sr. (“Profanchik Decl.”), along with attached Exhibits 2a (ProCal USA’s Limited Liability Company Charter); 2b (ProCal Enterprises’ Certificate of Filing); 2c (ProCal USA’s 2016 Tax Return); and 2d (ProCal USA’s 2017 Tax Return); (2) Declaration of Jonathan E. Kemmerer, CPA (“Kemmerer Decl.”); (3) Morrison e-mail dated 12/21/12; (4) Morrison e-mail dated 12/27/12; and (5) a proposed final judgment in the Hopkins State Litigation.

ProCal USA and ProCal Enterprises attached a May 6, 2019 Declaration of Alfredo Gonzalez (“May 6, 2019 Gonzalez Decl.”) in support of their reply, along with Exhibits A and B attached thereto (copies of StoneCoat manuals).

B. First, Plaintiffs’ objections to Defendants’ exhibits

Plaintiffs object to various exhibits relied upon by Defendants in support of their motions. In addition to the objections raised by Plaintiffs to the evidence relied upon by Profanchik, which the Court has already ruled on in the Report and Recommendation of the U.S. Magistrate Judge on Profanchik’s Motion for SJ on Res Judicata (“R&R on Res Judicata”) (Docket Entry # 234), Plaintiffs lodge the following additional objections to evidence attached to the remaining defendants’ motions.

Home Depot website showing StoneCoat sells its product through Home Depot (Docket Entry #s 127-11, 128-10)

Plaintiffs object to this exhibit relied upon by Kinser and Villarreal/Gonzalez, asserting a proper foundation has not been laid, and the information is inadmissible hearsay. These defendants assert this is an official court record from the Collin County Litigation, and “[c]ertified court records are public records, thereby falling within the public records exception to the hearsay rule.” Docket Entry # 169 at 3-4 (citing United States v. Cantu, 167 F.3d 198, 204 (5th Cir. 1999)). To the extent the court reporters’ certification was inadvertently omitted previously, Kinser and Villarreal/Gonzalez supplemented the exhibit to include this information in their replies. Plaintiffs’ objection is overruled.

Internet print-outs related to third-party companies that offer services similar to StoneCoat (Docket Entry #s 127-4, 128-13)

Plaintiffs object to this exhibit relied upon by Kinser and Villarreal/Gonzalez, again asserting a proper foundation has not been laid and the information contained within these exhibits is hearsay and not admissible. Docket Entry # 150 at 15. According to Kinser, Villarreal, and Gonzalez, this document is not being offered for the truth of the matter asserted; instead, it supports Kinser’s understanding that he was aware of several other companies performing the same services as StoneCoat. Plaintiffs’ objection is sustained.

Secretary of State records re: StoneCoat of North Dallas (Docket Entry #127-21)

Again, Plaintiffs object, asserting a proper foundation has not been laid for this exhibit and the information contained within the exhibit is hearsay. Villarreal and Gonzalez claim this is an official court record from the Collin County Litigation and falls within the public records exception to the hearsay rule. However, to the extent the district clerk’s certification was inadvertently omitted previously, Villarreal and Gonzalez supplemented the exhibit to include this information in their reply. Plaintiffs’ objection is overruled.

Objections to certain paragraphs in affidavits (Docket Entry #s 127-2, 127-3, 128-2)

Plaintiffs object to ¶¶ 15 (stating her she left SCOT because working for Morrison becaome “unbearable” and, among other things, that Morrison would “constantly yell at [her] and treat [her] poorly”), 17 (stating she left SCOT because she did not want to work for Morrison any longer), 22, 23, and 24 of Villarreal’s affidavit and ¶¶ 8 (statements regarding other limestone veneer companies), 16 (statement that he does not know what the StoneCoat GP/LP entities are and they have never paid him compensation), 19, 20 (stating, among other things, he left SCOT because he did not want to work for Morrison any longer), 25, 26, 27, 28, 29 and 30 of Gonzalez’s affidavit. Plaintiffs further object for various reasons (hearsay, speculation, irrelevant) to ¶¶ 13 (statements regarding who ran or operated the various companies and who were the founders), 28 (Kinser’s understanding of lawsuits), 32 (statement regarding patent/patent application), 34 (statement regarding Profanchik’s intentions and creation of “DecoPierre Videos” and statements regarding patent/patent application), 38, 39 (statements regarding telephone conversations), 40 (statements regarding others and companies for which he has not personal knowledge), 43, 44-49, 51 (statements concerning the nature and properties of trade secrets), 52, and 53 of Kinser’s affidavit.

*8 In the R&R on Res Judicata (Docket Entry # 234), the Court sustained Plaintiffs’ objections to ¶¶ 44-46 of the Affidavit of John Profanchik filed in the Collin County Litigation (Docket Entry # 67-2), ¶¶ 51-53 of the Affidavit of Justin Kinser filed in the Collin County Litigation (Docket Entry # 67-3), and ¶¶ 28-30 of the Affidavit of Alfredo Gonzalez filed in Collin County Litigation (Docket Entry # 67-9). Otherwise, Plaintiffs’ objections were overruled.

Similarly here, the Court sustains Plaintiffs’ objections to the following paragraphs in Villarreal’s updated affidavit (¶¶ 23-24), Gonzalez’s updated affidavit (¶¶ 28-30), and Kinser’s updated affidavit (¶¶ 51-53) (discussing their understanding of “trade secrets and proprietary information;” their belief that Morrison requires people to sign the non-disclosure/non-compete agreements “just to keep as many people out of this industry as he can to prevent competition, but not because SCOT has any actual proprietary or confidential information;” and stating they are not aware of any reason SCOT would need to prevent them from working in the industry for any amount of time, but certainly not for five years). The Court also sustains the following portions of Plaintiffs’ objections to ¶ 15 of Villarreal’s affidavit (“He would constantly yell at me and treat me poorly. Morrison only respected people that he thought were equal to him. I felt used and unappreciated while working at SCOT. April 17 was an especially bad day for me because Morrison was literally yelling at me all day long.”).

The Court also sustains the following portions of Plaintiffs’ objections to ¶ 20 of Gonzalez’s affidavit (“At the time I resigned, several other workers also quit because they were likewise tired of Morrison’s poor treatment of them. Before I quit, a young man had been seriously injured when a SCOT van exploded. SCOT did not have workers compensation insurance and to my knowledge, neither SCOT nor Morrison offered to pay for this man’s medical bills. Other workers were concerned about something similar happening to them.”). Otherwise, Plaintiffs’ objections are overruled.

Plaintiffs also move to strike the declaration of Mergaux, attached as Exhibit 1 to ProCal Stone Design’s reply. According to Plaintiffs, the declaration contains hearsay and speculation and contains legal conclusions regarding the effect and outcome of the Hopkins State Litigation. Docket Entry # 189 at 7. Plaintiffs’ motion to strike is denied. The Court will disregard any improper legal conclusions in its consideration of ProCal Stone Design’s motion for summary judgment.

C. Plaintiffs’ exhibits

1. Responsive briefing to Profanchik’s motion

Plaintiffs attached an Affidavit of Ken Morrison with nine attachments, in support of Plaintiffs’ response to Profanchik’s motion for summary judgment. Plaintiffs also attached copies of the following exhibits to the Affidavit of Wm. Charles Bundren (“Docket Entry # 79-1”) filed in support of Plaintiffs’ response to Profanchik’s motion: (1) Kinser NDA/NC; (2) Villarreal NDA/NC; (3) Gonzalez NDA/NC; (4) July 15, 2016 “ProCal Stone Design, LLC” welcome letter acknowledging Employment Agreement with Justin Kinser signed by John Profanchik “CEO ProCal Stone Design, LLC;” (5) July 15, 2016 “ProCal Stone Design, LLC” Employment Agreement with Justin Kinser signed by John Profanchik “CEO ProCal Stone Design, LLC; (8) July 15, 2016 “ProCal Stone Design, LLC” welcome letter acknowledging Employment Agreement with Irma Villarreal signed by John Profanchik “CEO ProCal Stone Design, LLC;” (9) July 15, 2016 “ProCal Stone Design, LLC” Employment Agreement with Irma Villarreal signed by John Profanchik “CEO ProCal Stone Design, LLC;” (10) July 15, 2016 “ProCal Stone Design, LLC” welcome letter acknowledging Employment Agreement with Alfredo Gonzalez signed by John Profanchik “CEO ProCal Stone Design, LLC;” (11) July 15, 2016 “ProCal Stone Design, LLC” Employment Agreement with Alfredo Gonzalez signed by John Profanchik “CEO ProCal Stone Design, LLC;” (12) September 15, 2016 “ProCal Stone Design, LLC” Agreement with Chamielec signed by John Profanchik “President ProCal Stone Design, LLC;” and (13) August 30, 2017 Charge of the Court and Jury Verdict in Cause No. 416-02057-2015, John D. Profanchik, Sr. vs. Kenneth W. Morrison and StoneCoat of Texas, LLC, in the 416th Judicial District Court of Collin County, Texas (“Collin County Litigation”).

*9 Plaintiffs attached additional evidence as Exhibits A-G to the Affidavit of Wm. Charles Bundren (“Docket Entry # 92-1”) filed in support of Plaintiffs’ surreply in opposition to Profanchik’s motion: (1) Plaintiffs’ Original Petition & Application for Temporary Restraining Order, Temporary & Permanent Injunction, filed in the Hopkins State Litigation; (2) Plaintiffs’ Affidavits Filed in Support of their Application for Temporary Restraining Order (January 22, 2013 Affidavit of Ken Morrison and Affidavit of Jeffory Blackard), filed in the Hopkins State Litigation; (3) StoneCoat LP’s and Frederick Hopkins’ First Amended Counterclaim, filed in the Hopkins State Litigation; (4) StoneCoat LP’s and Frederick Hopkins’ Second Amended Counterclaim, filed in the Hopkins State Litigation; (5) Final Judgment in the Hopkins State Litigation; (6) October 2, 2017 Assignment of Interests between Morrison, as the Trustee of the MFT, and Fred Hopkins; and (7) October 2, 2017 Settlement Agreement and General Release between Morrison, individually and as the Trustee of the MFT, the MFT, SCOT, StoneCoat GP, and StoneCoat LP on the one hand and Fred Hopkins and Michael Hopkins on the other hand.

2. Responses to the remaining defendants’ motions

Plaintiffs filed the same evidence in their responses to the ProCal entities’, Kinser’s, and Villarreal and Gonzalez’s motions for summary judgment: (1) an updated version of the Affidavit of Ken Morrison (“Morrison Aff.”),[10] which is the affidavit the Court references throughout this Report and Recommendation, with eleven attachments; (2) Affidavit of Wm. Charles Bundren (“Bundren Aff.”), with fifteen attachments; (3) August 14, 2017 Affidavit of Rick Adams (“Adams Aff.”) filed in the Collin County Litigation; and (4) August 9, 2017 Affidavit of Vance McMurray (“McMurray Aff”), filed in the Collin County Litigation.

3. Exhibits attached to Affidavit of Ken Morrison (stricken)

As noted above, Morrison’s updated affidavit included eleven attachments.[11] Defendants filed a consolidated motion to strike aspects of the affidavit. As an initial matter, Defendants objected to the entirety of documents attached to Morrison’s affidavit, asserting the documents should be stricken because, among other things, Morrison never states in his affidavit that the attached documents are “true and correct” copies of what they purport to be.

On June 28, 2019, the Court entered a 48-page order granting in part and denying in part Defendants’ motions to strike. Docket Entry # 225. The Court struck the exhibits attached to Morrison’s affidavit, agreeing with Defendants that Plaintiffs had not provided any evidence that the documents Morrison attached to his affidavit are true and correct copies of what they claim them to be.[12] Id. at 11. However, the Court explained the ruling would have little impact on the Court’s analysis of the various summary judgment motions because all but three of the contested exhibits (Exhibits 9-11) were previously attached as exhibits to Profanchik’s motion for summary judgment and thus will be considered by the Court as part of the record. Id. at 12. The Court further noted some of the documents were separately attached to affidavits of Plaintiffs’ attorney Wm. Charles Bundren, and Mr. Bundren’s affidavits properly authenticated those documents. Finally, regarding Exhibit 10, the Court found Defendants’ specific objections to that contested exhibit should be sustained. Therefore, the Court struck Exhibit 10 (screenshots purportedly from YouTube) for those additional reasons.[13]

4. Exhibits attached to Affidavit of Wm. Charles Bundren

*10 Plaintiffs attached copies of the following exhibits to Bundren’s affidavit, referenced herein as “Bundren Aff.” (Docket Entry #s 149, 151, 153, 206-2): (1) June 28, 2016 Charge of Court in the Hopkins State Litigation styled StoneCoat GP, LLC, Plaintiff v. Phillippe Mergaux, Defendant (“Hopkins State Litigation”); (2) August 16, 2016 Final Judgment in the Hopkins State Litigation; (3) Affidavit of Profanchik in the ProCal Defamation Lawsuit; (4) Trial testimony of Kinser in the Collin County Litigation; (5) Trial testimony of Mergaux in the Collin County Litigation; (6) Trial testimony of Profanchik in the Collin County Litigation; (7) Trial testimony of Morrison in the Collin County Litigation; (8) SCOT’s admitted trial exhibits in the Collin County Litigation; (9) Kinser 2016 ProCal Stone Design, LLC Employment Agreement; (10) Kinser 2016 ProCal Stone Design, LLC Mutual Confidentiality and Non-disclosure Agreement; (11) Villarreal 2016 ProCal Stone Design, LLC Employment Agreement; (12) Villarreal 2016 ProCal Stone Design, LLC Mutual Confidentiality and Non-disclosure Agreement; (13) Gonzalez 2016 ProCal Stone Design, LLC Employment Agreement; (14) Gonzalez 2016 ProCal Stone Design, LLC Mutual Confidentiality and Non-disclosure Agreement; and (15) 2011 Product Rights Agreement.

D. Additional exhibits considered by the Court

Finally, to the extent relevant and not contained elsewhere in the briefing related to the motions addressed in this Report and Recommendation, the Court has considered the exhibits relied upon by Plaintiffs/Morrison/MFT in support of their motions for summary judgment, as well as the following exhibits attached to the Affidavit of V. Blayre Peña (“Docket Entry # 155-1”) filed in support of Defendants’ response to Plaintiffs’ motion for summary judgment, which are as follows: (1) 2011 Mergaux Confidentiality/Non-Disclosure Agreement (“Mergaux NDA”); (2) 2012 Termination of Escrow Agreement and Release of Formula; (3) Trial Testimony of Mergaux in Collin County Litigation; (4) June 2017 Deposition of Morrison as the corporate representative of SCOT in Collin County Litigation (“Morrison Corp. Rep. Dep.”); (5) Post-Trial Transcript from Hopkins State Litigation; (6) Final Judgment from Hopkins State Litigation; (7) December 2016 Morrison Deposition in ProCal Defamation Lawsuit; (8) Morrison’s Responses to Interrogatories in ProCal Defamation Lawsuit; (9) Google Reviews; (10) BBB Houston Complaint; (11) BBB N. Central TX Subpoena Response; (12) ProCal Fake Ripoff Report Complaint; (13) Cell Phone Report; (14) Ripoff Report Complaint (France); (15) Secretary of State Filings for Blue Swan Marketing; (16) Google Subpoena Response; (17) Ripoff Report Subpoena Response; (18) Whois.icann.org Report; (19) France Indictment and Plea Agreement; (20) France Family Service Plan Evaluation; (21) 2016 Printouts from StoneCoat Website from Trial in Collin County Litigation; (22) T-Mobile Subpoena Response; (23) Sprint Subpoena Response; (24) SCOT Public Information Report; (25) June 2017 Affidavit of John D. Profanchik, Sr. in the Profanchik Defamation Lawsuit; (26) December 2014 Morrison Deposition in the Hopkins State Litigation; (27) Plaintiffs’ Notice of Non-suit without Prejudice in the ProCal Defamation Lawsuit; (28) Defendants’ Notice of Accelerated Appeal in the Profanchik Defamation Lawsuit; (29) Defendants’ Notice of Appeal in the ProCal Defamation Lawsuit; (30) ProCal Trademark; (31) Fake Facebook Page; (32) 2016 Printout from StoneCoat Website; (33) 2017 Printout from StoneCoat Website; (34) 2018 Printout from StoneCoat Website; (35) 08/29/17 Trial Testimony of Ken Morrison in Collin County Litigation; (36) Expert Report of Jonathan E. Kemmerer, CPA; (37) Certificate of Forfeiture (SCOT); and (38) Declaration of Alfredo Gonzalez (“Gonzalez Decl.”).

E. The pertinent facts

1. Morrison, Mergaux and Chamielec

In 2006 or 2007, Morrison learned about the limestone veneer or “blown stone” industry from DecoPierre, an “established company overseas” that had been “doing that for years.” Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 185:1-12 & 187:13-188:7; see also id. at 189:1-20 (agreeing DecoPierre in Europe had already been blowing a very similar product on walls). Morrison met Philippe Mergaux, who was “repping the [DecoPierre] product” in Dallas, “trying to start the DecoPierre here.” Id. at 185:16-186:5 & 189:21-190:1; see also id. at 190:2-10 (agreeing Mergaux may have had some “loose” dealers in place before Morrison contacted him). At that time, Mergaux was working with Chamielec, a guy who Morrison agreed may have had some shares in DecoPierre in Europe. Id. at 186:16-187:12; see also Docket Entry # 127-1, Ex. 11 (Trial testimony of Mergaux in Collin County Litigation) at 125:7-126:6 (Mergaux explaining he opened DecoPierre, Inc. in Dallas in March 2005, offering the same “limestone spray-on veneer” product offered by DecoPierre in France).[14]

*11 According to Morrison, in 2006 or 2007, Morrison’s company, Deco Vega, entered into an agreement with Mergaux and Chamielec wherein Deco Vega agreed to be the exclusive provider and to market the product. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 190:11-192:21 & 194:3-8. Mergaux states Morrison was one of his dealers for about three years, and Mergaux personally trained Morrison on how to install limestone veneer. Mergaux Decl., ¶ 5. At some point, Mergaux provided Morrison a training manual for use in Morrison’s two companies, Deco Vega and DecoPierre North Texas.[15] Docket Entry # 127-1, Ex. 11 (Trial testimony of Mergaux in Collin County Litigation) at 127:5-130:5 (Mergaux stating he wrote the training manual (which was not “unique” to DecoPierre and was given to all dealers, including Morrison) in 2005 before he ever met Morrison); see also Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 202:11-203:2 (explaining Morrison created another training manual using pieces of the manual provided by Mergaux); see also id. at 205:2-18 (stating there were portions of the manual Morrison used (i.e. a section on application that Deco Vega had purchased for the consideration of being the exclusive provider of DecoPierre to the U.S.) but further stating the training guide was “rewritten to be more inclusive for sales and marketing and lots of other things”).

According to Mergaux, Morrison opened up a 10,000 square feet showroom in Addison, Texas in 2007 and provided Mergaux, who was Morrison’ supplier of “ready-mix bags,” an office in the showroom. Docket Entry # 127-1, Ex. 11 (Trial testimony of Mergaux in Collin County Litigation) at 153:17-155:18. Mergaux worked in Morrison’s showroom for approximately eighteen months. Id. at 155:21-23.

In 2008, Mergaux and Morrison parted ways, with Morrison believing he had performed under the contract and Mergaux had not. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 198:4-199:6. Morrison testified Mergaux “attempted to say he wanted to terminate the contract and he tried to do so and he sent a statement he wanted to, when he found another investor [Creastone Pilants] that he wanted to resell the opportunity for. ...” Id. at 196:24-197:5. Morrison, knowing “most of the formulations,” changed his mind about continuing to do business with Mergaux and said he “would sell [his] shares [to Creastone Pilants] and let them have each other and [Morrison] would go on to create StoneCoat.” Id. at 197:6-23; see also Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 48:3-49:9 (stating he conveyed his shares in DecoPierre of North Texas to the Pilants who paid him $50,000 of $200,000 they were supposed to pay for the shares).

2. Morrison and the StoneCoat entities

Morrison created StoneCoat after the Pilants failed to pay. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 49:10-50:10 (explaining he chased them down for a year legally but realized he needed to “start over from scratch and count [his] losses”). The Certificates of Formation for StoneCoat GP and StoneCoat LP were filed with the Secretary of State on June 7, 2010, and the Certificate of Formation for SCOT was filed with the Secretary of State on April 12, 2011. Id. at 104:3-21. Morrison is the managing member of SCOT with 95% ownership interest in the company. Id. at 105:11-106:2. Morrison runs the day-to-day operations of SCOT and also ran the day-to-day operations of StoneCoat GP and StoneCoat LP before they both basically ceased operating. Id. at 108:7-9; see also id. at 107:11-108:6 (stating StoneCoat GP and StoneCoat LP had not done any business for the previous three years and had only been a “source of litigation”).

At his individual deposition in the Collin County Litigation, Morrison agreed SCOT was set up to be the “model distributor to basically market to third parties to acquire their own distribution or dealership rights.” Id. at 109:2-11. According to Morrison, StoneCoat LP was set up for the marketing of StoneCoat GP (i.e., was going to try to sell bags and distributorships and do the marketing for StoneCoat). Id. at 108:18-112:2. StoneCoat GP’s only asset is the trademark (the name “StoneCoat”). Id. at 112:3-8.

*12 Morrison claims to own Mergaux’s and Chamielec’s DecoPierre “French formula,” which Morrison claims is the same as or very similar to the method or process followed at SCOT. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 200:3-21. One basis for Morrison’s claim of ownership is the Deco Vega contract that was breached or terminated in 2008. Id. at 200:22-201:9. The second instance in which Morrison claims to have bought the French formula is the December 21, 2011 Product Rights, Formula Purchase and Royalty Agreement between StoneCoat GP and Mergaux and Chamielec discussed below. Id. at 207:23-209:10.

In his individual deposition, Morrison stated he assigned the rights to the formulas to SCOT. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 113:22-25. According to Morrison, SCOT also owned the patent and other assets. Id. at 114:18-25.

3. Morrison, the Hopkins and Mergaux (again)

In the winter of 2011, an investor group, which included Michael C. Hopkins (“Michael Hopkins”), approached StoneCoat GP to invest in the business. Docket Entry # 43 at 2. After Michael Hopkins signed a confidentiality agreement, Morrison and Michael Hopkins agreed that Michael Hopkins would make a capital infusion into the business and in exchange would become the managing member of StoneCoat GP in name, while Morrison would continue to handle day-today operations. At the last minute, Michael Hopkins requested to give his interest and role to his son, Frederick Hopkins (“Fred Hopkins”). Id.

Around the time when Morrison created SCOT, Fred Hopkins and StoneCoat GP entered into a Memorandum of Understanding which contemplated Fred Hopkins becoming the managing member of StoneCoat GP. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 201:6-24. On March 3, 2011, Fred Hopkins, “Individually, and as the new Managing Member” of StoneCoat GP, and Morrison, “Individually, and on behalf of the Morrison Family Trust and as a Member” of StoneCoat GP, entered into a Memorandum of Understanding, wherein Fred Hopkins contributed $125,000.00 in consideration of receiving the equivalent of 53.8 % of the existing, outstanding or initial issuance of membership interest of StoneCoat GP. Docket Entry # 92-1 at 40. The agreement further provided that StoneCoat LP has one general partner, being StoneCoat GP, and is a wholly-owned subsidiary of StoneCoat GP. Id. at 42.

The next time Mergaux encountered Morrison after Morrison sold his distributorship was in early 2011 when Morrison told Mergaux he had started a company called StoneCoat. Mergaux Decl., ¶ 5. At first Mergaux was a supplier for StoneCoat. Id. According to Mergaux, at first he supplied limestone product to StoneCoat. Bundren Aff., Ex. 5 (Mergaux trial testimony in Collin County Litigation) at 131:11-17 (further stating he was manufacturing the limestone bag); see also id. at 153:17-154:6 & 155:8-15 (testifying he started selling Morrison “ready-mix bags” in 2007). Later, Morrison and “his business partner approached Chamielec and [Mergaux] about purchasing the formula and ‘know how’ related to the limestone veneer installation.” Mergaux Decl., ¶ 5.

2011 Mergaux NDA

On July 6, 2011, Mergaux signed a Confidentiality/Non-Disclosure Agreement with StoneCoat GP. Mergaux NDA (Docket Entry # 67-1, Ex. 15). The agreement contemplated that Mergaux and StoneCoat GP were agreeing not to disclose each other’s “confidential commercial information for the purpose of evaluating potential business transactions between them.” Id. Pursuant to the Mergaux NDA, “STONECOAT possesses certain confidential commercial information regarding its business model, strategies, relationships, including investor, distributorship and manufacturing sources for the distribution, sales and production of ready mixed product/material, and that can be projected or troweled or otherwise applied and used as a stone or stucco the near for surfacing within the building industry. STONECOAT also possesses confidential information of the other related building products opportunities within the building industry.” Id.

*13 The Mergaux NDA further provides that Mergaux, as the receiving party, “possesses certain confidential commercial information regarding [his] sales and production of ready mixed product/material, and that can be projected or troweled or otherwise applied and used as a stone or stucco veneer for surfacing within the building industry.” Id. Additionally, the Mergaux NDA provides Mergaux also possess “confidential information on other related building product opportunities within the building industry” and “has and will receive certain confidential commercial information regarding STONECOAT GP LLC and its business information.” Id. The Mergaux NDA defined the term “Confidential Information” to mean “[a]ll strategic, technical, financial, business, sources and other information relating to STONECOAT, and specifically including the identity of products, persons or entities relating thereto” and “[o]ther valuable information of the parties designated as confidential expressly or by the circumstances in which it is provided.” Id.

Mergaux agreed “to keep in confidence and will not use and will prevent disclosure to others (including to parents, subsidiaries, affiliates and agents of [Mergaux] for purposes of a Business Transaction) of all STONECOAT Information which has been received from STONECOAT, and to utilize said STONECOAT Information only for purposes of evaluating and implementing potential Business Transactions with STONECOAT.” Id., 2.1. Pursuant to the Mergaux NDA, the foregoing shall not apply to information that StoneCoat asserts is proprietary or confidential if the information was “part of the public domain at the time of disclosure by STONECOAT, or thereafter became part of the public domain as by publication of an article, patented documents or the like ...” or was “disclosed to [Mergaux] or its affiliates on a non-confidential basis by a third party who did not obtain said STONECOAT Information directly or indirectly from STONECOAT or those who were under a confidentiality or non-disclosure obligation with respect thereto. ...” Id.

Mergaux agreed “to prevent the unauthorized disclosure or release of said STONECOAT Information to any employee, associate, agent or affiliate.” Id., 2.3. Pursuant to the Mergaux NDA, “[a]ll Confidential Information disclosed according to this Agreement shall remain the property of the STONECOAT and may not be reproduced by [Mergaux] without prior written consent of the STONECOAT.” Id., 2.10. As for the “Term,” the Mergaux NDA provides the agreement “shall expire two (2) years from the date hereof.” Id., 2.22; see also Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 242:4-25 (Q: “...so it expired by its terms on the 6th of July 2013?” A: “I trust your math.”).

2011 Product Rights Agreement

On or about December 21, 2011, Chamielec and Mergaux agreed to sell the French formula to StoneCoat GP. Mergaux Decl., ¶ 6. On December 21, 2011, Fred Hopkins, on behalf of StoneCoat GP, entered into the Product Rights, Formula Purchase, Royalty Agreement with Mergaux and Chamielec. Product Rights Agreement (Docket Entry # 67-1, Ex. 18); see also Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 205:2-15. Mergaux directly participated in the negotiations of the agreement and has personal knowledge about its terms. Mergaux Decl., ¶ 6.

Pursuant to the Product Rights Agreement, Mergaux and Chamielec agreed to sell to StoneCoat GP all of their rights, interests in, and ownership of the product, product rights, usage and process rights, formulations and intellectual property for the product, which was described as “a stone-like veneer, consisting of a limestone and/or aggregate based surface and resurfacing product, used in commercial and/or residential construction industry for stone or decorative surfacing.” Docket Entry # 67-1, Ex. 18; see also Docket Entry # 127-1, Ex. 11 (Trial testimony of Mergaux in Collin County Litigation) at 148:6-21 (Mergaux agreeing he agreed to sell to StoneCoat all of his intellectual property, product, formula, “everything”).

*14 “Product” is defined in the Product Rights Agreement as “a proprietary technology to create a unique stone appearance and whose components are described on Exhibit ‘A’ attached [to the Product Rights Agreement], and any variation thereof that involves vertical surfacing where hydraulic lime is used.” Docket Entry # 67-1, Ex. 18, ¶ 1d. The “Product” did not include the “DIY product described in Section 5.” Id. Included in the sale by Mergaux and Chamielec to StoneCoat GP were all of the “Product Specifications” which is defined in the Product Rights Agreement as including “applied hydraulic limestone, projected or hand tooled, and sometimes pigmented, limestone veneer coating suitable for both interior and exterior applications” which “results in a significant weight, space installation time and cost savings over conventionally installed quarried stone masonry veneer and over manufactured ... stone veneer alternatives” and also identified as “applied hydraulic limestone technology, originally developed and used previously in Europe. ...” Id., ¶ 1e.

According to the agreement, upon completion of Section 7 (setting forth purchase price and terms), Purchaser shall own the Product, its rights, its formulations, and relationships with all related manufacturing parties, subject to the continuation of a royalty payment per bag of Product for a period of seven years. Id., ¶ 2h. However, upon execution of the Product Rights Agreement, Purchaser “shall immediately be named as owner of Manufactured Product and Product rights including but not limited to Ownership, Manufacturing, selling and distribution of the Product.” Id., ¶ 2i. “Upon purchase and sale of Product and Seller’s trade secrets regarding the Product pursuant to this Agreement, Purchaser shall own the rights and interests in and to the Product subject to Section 9 [continuing royalty payments for seven years], and Seller will not (i) sell the Product or similar products (other than the exception allowed for the DIY Product), and/or (ii) sell the Product to any persons or entities other than Purchaser.” Id., ¶ 2j.

There was a non-disclosure provision and a non-competition provision in the Product Rights Agreement. Docket Entry # 67-1, Ex. 18, ¶¶ 11-12. Pursuant to the non-disclosure provision, Mergaux and Chamielec agreed not to disclose or disseminate to “any other person or entity” the following: (1) “[a]ll technical information of any sort whatsoever, such as ideas (whether patentable, copyrightable or not), know-how, formulas, compositions, processes, discoveries, inventions (whether patentable, copyrightable or not), patent applications, copyright applications, drawings, prototypes and other related documentation, equipment and similar items or research projects;” (id., ¶ 11a); (2) “[a]ll business information, such as information about costs, manufacturing, production, purchasing, profits, marketing, sales, customer information or lists, business models, business plans, business strategies and the like;” (id. 18, ¶ 11b); (3) “[a]ll information pertaining to future developments, such as research and development or future marketing or merchandising, or future business activities, plans and strategies;” (id., ¶ 11c); and (4) “[a]ny information related to the terms of this agreement unless required by a court of law.” Id., ¶ 11d.

Pursuant to the non-competition agreement, Mergaux and Chamielec agreed that during the term of the agreement, “including the period in which a royalty is being paid,” they would not engage or participate in any manner, whether directly or indirectly, in any business or activity which is engaged in the business of Purchaser (other than through the DIY exception). Id., ¶12. Mergaux agreed that after “full completion” of the agreement and for a period of the greater of ten years after final payment to Mergaux or as long as StoneCoat was in operation Mergaux would not directly or indirectly participate in any manner through any entity in “any business or activity that is engaged in the business of Purchaser anywhere in the United States.” Id.

*15 An “escrow agreement” was attached to the Product Rights Agreement and provided that the written formula for the DecoPierre product was to be put in escrow with a law firm to be held until either some sort of breach of the agreement or other event occurred as set forth in the escrow agreement, at which time the law firm would provide the formula to Morrison or return it to Mergaux and Chamielec. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 205:18-206:9. Specifically, the Product Rights Agreement provided as follows:

Product Rights Agreement (Docket Entry # 67-1, Ex. 18), ¶ 8.

The “formula” placed in escrow included “the ingredients, composition, amount of ingredients per size and weight measurement, and supplier contact information” including emails and phone numbers. Id. The term “formula” also included the “sourcing of the ingredients” and the “hydraulic limestone suppliers” and “all manufacturing instruction, information and supplies that would guarantee a smooth and timely transition of ordering all components for an immediate and uninterrupted supply of Product.” Id. The Product Rights Agreement further provided as follows:

Id. (emphasis added).

According to Morrison’s affidavit, the Product Rights Agreement also included the sale of the trademark for the term “Blown Stone.” Morrison Aff., ¶51 (citing Docket Entry # 67-1, Ex. 18). The value of the agreement was estimated to be $500,000, as reflected in the agreement. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 210:9-17; see also Mergaux Decl., ¶ 6 (stating $250,000 was for Chamielec and $250,000 was for Mergaux). Generally speaking, StoneCoat GP was required to pay $80,000 down at the time of closing and then would pay the remaining $420,000 balance over time based on the amount of bags of product it purchased, with the agreement setting forth monthly minimum requirements. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 210:18-25; see also Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 209:21-23 (explaining it was an “$80,000 upfront fee with some override or royalties until it hit like $500,000”); see also id. at 212:13-24 (stating that from March 1, 2012 through August 31, 2012 Mergaux and Chamielec were supposed to be paid a minimum of $5,000 per month and after August 2012 they were supposed to get $10,000 per month until the $500,000 was paid to them).

*16 StoneCoat GP paid the $80,000 initial payment but did not pay the full $500,000. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 211:1-5; see also Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 223:10-17 (stating neither StoneCoat GP, StoneCoat LP, nor SCOT had paid Mergaux and Chamielec $500,000 as of June 1, 2017); see also Docket Entry # 127-1, Ex. 11 (Trial testimony of Mergaux in Collin County Litigation) at 132:7-18 (Mergaux testifying he received $80,000 from the Hopkins but he never received another payment thereafter). Mergaux states in his April 17, 2019 declaration that StoneCoat GP provided the $80,000 down payment “but never made another payment.” Mergaux Decl., ¶ 6.

At some point, Morrison tried to renegotiate the deal with Mergaux. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 212:3-6. According to Morrison, the original estimation was a “little high” so he offered to pay Mergaux another $50,000 for the French formula as the “end-all, be-all” to acquire the rights to the formula. Id. at 212:8-213:2 & 216:6-13. Morrison testified Mergaux agreed, but before Morrison could come up with the money himself, Fred Hopkins and Mergaux tried to terminate the agreement. Id. at 216:17-217:9. Morrison stated Fred and Mike Hopkins “took the same deal,” and Mike deposited the same $50,000 into Chamielec’s account for the same deal and “ran on their own.” Id. at 213:18-25. According to Morrison, Mike Hopkins, Mergaux, and Chamielec had been together until Profanchik. Id. at 214:2-3.

According to Mergaux, because of StoneCoat GP’s failure to pay the total purchase price, Mergaux gave StoneCoat GP a notice of breach on or about November 12, 2012. Mergaux Decl., ¶ 7. Despite the notice, Stonecoat GP never made another payment. The Product Rights Agreement provides as follows under “Term and Termination:”

Product Rights Agreement (Docket Entry # 67-1, Ex. 18), ¶ 14.

Under Remedies, the agreement provides as follow:

Id., ¶ 15.

Pursuant to a “Termination of Escrow Agreement and Release of Formula” document dated December 12, 2012, signed by Mergaux and Chamielec as “Sellers” and Fred Hopkins (managing partner of StoneCoat GP and on behalf of StoneCoat LP by StoneCoat GP) as “Purchaser,” Purchaser failed to perform certain royalty payments following production of the “product.” Docket Entry # 67-1, Ex. 19. According to the document, following Purchaser’s failure to perform, Sellers gave Purchaser on November 12, 2012 a written notice of breach and Purchaser had failed to cure the breach within thirty days thereafter. Id. The document further provided as follows:

Id.

The Hopkins State Litigation ensued between Morrison, the Hopkins, and Mergaux related to these agreements.

4. Hopkins State Litigation

In January 2013, the Morrison Family Trust (MFT), Morrison, StoneCoat GP, StoneCoat LP, and SCOT sued Fred Hopkins, Michael Hopkins, and their business Brazostone, along with Mergaux and others in the 116th Judicial District Court of Dallas County, Texas. Docket Entry # 92-1, Ex. A. StoneCoat, Morrison, and the MFT alleged the Hopkins defendants conspired to: (1) usurp business opportunities from StoneCoat; (2) create a competing business; (3) misappropriate StoneCoat’s business and its knowledge processes, sourcing, and information; (4) violate written agreements of non-competition and confidentiality signed by Michael Hopkins, Chamielec, and Mergaux; (5) interfere with vendor and supplier relationships; (6) interfere with dealer relationships; (7) and deceive and misrepresent material facts. Docket Entry # 43 at 2; see also Docket Entry # 67-1, Ex. 26 (asserting causes of action for, among other things, fraud/deceit, breach of fiduciary duty, breach of contract, negligence, tortious interference, civil conspiracy, and misappropriation of trade secrets).

In addition to the issues based on fiduciary duty and ethics, StoneCoat sued Mergaux over the termination of the Product Rights Agreement and the 2011 non-disclosure agreement Mergaux had signed. Mergaux Decl., ¶ 8. According to Plaintiffs, another issue in dispute in the Hopkins State Litigation was whether or not the Product Rights Agreement was properly terminated and who owned the rights to the formula. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 218:15-219:3.

StoneCoat LP and Fred Hopkins filed a counterclaim against Morrison, individually and as Trustee of the MFT, SCOT, and others in the Hopkins State Litigation, accusing Morrison of fraud. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 226:24-227:4; see also Docket Entry # 67-1, Ex. 20. According to StoneCoat LP’s and Fred Hopkins’ First Amended Counterclaim, Hopkins entered into a Memorandum of Understanding with StoneCoat GP and Morrison whereby Hopkins would invest $125,000 as “initial funding” in exchange for “the equivalent of 35/65 (or 53.8%) of the existing, outstanding or initial issuance of membership interest in StoneCoat GP....” Docket Entry # 67-1, Ex. 20 at 4-5. Later, Fred Hopkins, acting as the managing member of StoneCoat LP and Morrison, acting individually as well as the managing member of StoneCoat of North Texas, LLC (or to be named Local Distributorship) signed a second Memorandum of Understanding for the purpose of granting of the exclusive distributorship rights to Morrison for and within the territorial area of North Texas. Id. at 6. Thereafter, Morrison created SCOT to be the local distributorship made the basis of the second Memorandum of Understanding. Id. at 7. StoneCoat LP and Fred Hopkins alleged SCOT failed to comply with the second Memorandum of Understanding; SCOT and Morrison converted raw materials owned by StoneCoat LP; and SCOT failed to pay StoneCoat LP for finished product. Id. at 7-16. Fred Hopkins sought a declaratory judgment that he was the “managing member of StoneCoat GP” and that Morrison was not the managing member of StoneCoat GP. See Docket Entry # 92-1, Ex. D at 80-90 (StoneCoat LP’s and Frederick Hopkins’ Second Amended Counterclaim, ¶ 85).

*18 The Hopkins settled their dispute with StoneCoat and Morrison, and only StoneCoat GP continued to trial against Mergaux. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 227:5-7; see also Bundren Aff., Ex. 2 (Final Judgment in Hopkins State Litigation). After a full trial, where Mergaux represented himself, the jury found Mergaux had breached the Products Rights, Formula Purchase, and Royalty Agreement he had signed dated December 21, 2011. See Mergaux Decl., ¶ 8 (stating the breach was because he terminated the Product Rights Agreement prematurely). However, the jury found Mergaux did not breach his Confidentiality/Non-Disclosure Agreement dated July 6, 2011. Id.; see also Bundren Aff., Ex. 1 (Charge of the Court in Hopkins State Litigation). StoneCoat GP got a $6,000 judgment against Mergaux, plus payment of attorneys’ fees. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 220:6-15; see also Docket Entry # 127-1, Ex. 11 (Trial testimony of Mergaux in Collin County Litigation) at 158:1-159:14 (Mergaux testifying the jury found he breached the Product Rights Agreement and was liable for $6,000, representing “[l]oss of revenues for the month of January following the termination of the contract”).

StoneCoat GP filed a motion with the trial judge after the jury verdict, asking the court to give it the French formula and the “ten-year noncompete” based on Mergaux’s breach of the Product Rights Agreement. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 221:8-13. StoneCoat GP’s proposed final judgment sought a declaration that StoneCoat GP continued to be the “exclusive, unrestricted, unencumbered owner of the Product” and all related rights and that Mergaux owned no rights of any kind or nature to the Product. Docket Entry # 195-6 (Proposed Final Judgment from Hopkins State Litigation) at pp. 3-5. The proposed final judgment also sought injunctive relief. Id. at pp. 5-7.

The pertinent issue addressed in the post-trial hearing was the final judgment to be entered as to Mergaux. Plaintiffs’ counsel asked the court to construe the Product Rights Agreement, which the jury found Mergaux had breached, as a “sales agreement ... that gave my clients the right to own and have ownership of all of that property.” Docket Entry # 155-1, Ex. 5 (Post-Trial Transcript in Hopkins State Litigation) at 24:12-19. Plaintiffs’ counsel acknowledged there was a dispute at trial concerning ownership, but he argued the request for a declaratory judgment was the providence of the court and not the jury. Id. at 26:11-14.

The court asked Plaintiffs’ counsel how he arrived at the conclusion that the court should declare StoneCoat GP the owner of the product as defined in the Product Rights Agreement. Id. at 28:9-30:8; see also id. at 30:9-16 (THE COURT: “So are you saying that because Mr. Mergaux breached the contract, failed to supply product in a timely fashion such that plaintiff could then sell it to third party and make the $6,000 that the jury assessed was the plaintiffs’ damage, because of that breach then plaintiffs’ obligations under the contract ceased? MR. BUNDREN: “Yes.” ... THE COURT: “Okay. So I want to follow the logic of the argument. So if the position is that because he breached in this 2013 time frame that ... plaintiff no longer had any obligation to make payments and plaintiff gets the formula even though plaintiff has not fully paid for it?” MR BUNDREN: “That’s correct, Your Honor, because that’s the law in Texas and because the defendant failed to ... allege in his pleadings and failed to offer an issue to the jury that somehow that we had not met our obligations under the contract.”). The court in the Hopkins State Litigation then explained its ruling as follows:

Id. at 48:19-51:2.

According to Mergaux, the court in the Hopkins State Litigation refused StoneCoat’s post-trial request to award it the French formula and to declare it the owner of the formula. Mergaux Decl., ¶ 9 (further stating the court refused because StoneCoat had not shown it fully complied with the terms of the Product Rights Agreement). On August 16, 2016, the court in the Hopkins State Litigation entered a final judgment based on the jury verdict. Bundren Aff., Ex. 2. The Final Judgment rendered judgment for StoneCoat GP as follows:

Id.

Mergaux did not appeal the ruling, but StoneCoat did. Mergaux Decl., ¶ 9. Morrison stated he filed an appeal in order to get the French formula that was in escrow.[16] Morrison Corp. Rep. Dep. (Docket Entry # 167-1, Ex. 9) at 220:25-221:6. During the trial in the Collin County Litigation, Mergaux testified he got the “sealed, still unopened formula back from the attorney’s office in escrow” on December 12, 2012, and “went about [his] life.” Docket Entry # 127-1, Ex. 11 (Trial testimony of Mergaux in Collin County Litigation) at 133:4-22; see also id. at 134:6-23 (stating he started a company called DecoXperience in Grapevine, Texas in 2013, offering the same limestone veneer product as DecoPierre and StoneCoat). Mergaux states in his declaration he and Chamielec “felt free to re-sell the formula, along with other related information, because [Mergaux] believed the Product Rights Agreement had been properly terminated.” Mergaux Decl., ¶ 10.

5. Morrison, Profanchik and Kinser

Meanwhile, in late 2014, Profanchik’s daughter’s then-fiancé (now husband),[17] Justin Kinser (“Kinser”), was honorably discharged from the United States Air Force. Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶¶ 9, 11. Kinser went back to finish his college degree, and he also became interested in starting a small business with Profanchik’s financial assistance and participation. Id., ¶¶ 10, 12. Kinser came from four generations in the construction industry and had extensive experience himself, so he set about researching franchise opportunities in the industry.[18] Id., ¶¶ 3, 12.

During the course of Kinser’s research, he came across and shared with Profanchik some French-language videos about the use of limestone powder-mix that companies were spraying onto surfaces and carving “with tools to create what look[ed] and [felt] similar to an actual limestone wall.” Id., ¶ 12; Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 4. Kinser was interested in the limestone spray idea, and he found the names of three companies in the Dallas area that were doing it at that time, including DecoXperience (run by Mergaux), SCOT (run by Morrison and general manager Rick Adams), and Cre8Stone (run by Gary and Garrison Pillant). Kinser Aff., ¶ 13. He also located companies in Europe doing the same thing, including DecoPierre, a company founded by Chamielec in France. Id.

*21 In late 2014, Kinser stopped by SCOT’s showroom and spoke with Sam Hance and Morrison for about ten minutes, during which time Morrison told Kinser there might be a franchise opportunity.[19] Id., ¶14. Kinser continued researching limestone spray applications in the following weeks, including calls to the other two competing companies in Dallas. Id., ¶ 15. Although he set up an appointment with Mergaux at DecoXperience, Kinser “ultimately canceled that appointment because [he] ended up entering into negotiations with Morrison and SCOT.” Id.

Eventually, Kinser met Morrison, the purported owner of SCOT, and they began discussing Kinser purchasing a franchise. Id., ¶¶ 14,16. During his discussions with Morrison, “he touted the success of SCOT’s business, claimed to have a patent for the product and process, and said he had a proprietary limestone formula and process.” Id., ¶ 16.

On January 22, 2015, Kinser signed a non-disclosure/non-compete agreement with SCOT. Kinser NDA/NC (Docket Entry # 67-4). The Kinser NDA/NC “represented that SCOT had valuable trade secret information it intended to disclose” to Kinser, and it contained an industry-wide noncompete term of five years restricting “work in this market or any activities similar in nature or purpose, products and services offered by SCOT” without any geographic restriction, and it had a $250,000 liquidated damages provision. Id. § 2.5; see also Kinser Aff., ¶17. Although the Kinser NDA/NC stated Kinser was “entering into some sort of work relationship with SCOT for payment,” Kinser states he was never paid by SCOT. Kinser Aff., ¶17. Kinser informed SCOT that Profanchik, his “soon-to-be father-in-law,” was interested in considering investing with Kinser. Id., ¶18.

On February 11, 2015, Profanchik and Kinser attended a meeting with Morrison and Sam Hance to inquire about buying a SCOT franchise opportunity. Id., ¶¶18-19. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶¶ 6-8. According to Profanchik, he had been discussing business ideas with Kinser since late 2014, and they had become interested in the limestone spray idea. Profanchik Aff., ¶¶ 4-5. Kinser set up a meeting with Morrison at the SCOT showroom. Id., ¶ 7.

At this February 11, 2015 meeting, Profanchik and Kinser were given a tour of the SCOT showroom and facility. Id.; see also Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 241:11-242:10 (stating he gave Profanchik “the nickel tour” and the meeting lasted “maybe an hour”); see also Adams Dep. (Docket Entry # 67-1, Ex. 7) at 158:10-11 (stating everyone gets a “nickel tour when they come in ...”). According to Profanchik, “[a]lthough the ostensible purpose of the ... meeting was to discuss obtaining a franchise, during the tour, Morrison explained that they were not selling franchises for the Dallas area and that, instead, Kinser and I should consider purchasing a controlling interest in SCOT itself. Morrison represented that he owned the entire company, that he was the inventor of the product and process or method, that SCOT had a patent, and that SCOT was a successful company with significant pending orders.” Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 7.

After the tour, Profanchik and Kinser discussed a due diligence process with Morrison and Hance. Id. at ¶ 9. Among other things, Kinser and Profanchik asked to see financial documents substantiating SCOT’s success, the patent, the proprietary process, and formula. Id. Expecting Morrison and SCOT to show them “supposedly valuable proprietary trade secret information and financial documents,” and expecting Morrison and SCOT “really intended to consider selling Kinser and [himself] a controlling interest in SCOT,” Profanchik signed a non-disclosure/non-compete agreement. Profanchik NDA/NC (Docket Entry # 67-5). Id. Like Kinser’s NDA/NC, the Profanchik NDA/NC represented that SCOT had valuable trade secret information it intended to disclose to Profanchik, and it contained the same industry-wide non-compete term of five years without any geographic restriction, and the same $250,000 liquidated damages provision. Profanchik NDA/NC § 2.5; see also Bundren Aff. Ex. 7 (Morrison trial testimony from Collin County Litigation) at 85:25-87:15 (stating pursuant to the Profanchik NDA/NC StoneCoat committed to give Profanchik “confidential commercial information regarding our business models, strategies, relationships, including investor, distributorship, manufacturing sources for the distribution, sales, and production of ready-mis product and materials”).

*22 Profanchik states the meeting proceeded after he signed the Profanchik NDA/NC, but they did not discuss anything confidential or “constituting some sort of secret method or proprietary formula, compilation, or process, nor did [they] discuss anything in detail.” Profanchik Aff. (Docket Entry # 67-1, Ex. 1) , ¶ 10. Primarily they discussed that SCOT intended to start a new franchising company with Hance, as advertized on SCOT’s website. Kinser Aff., ¶ 21. They also discussed the concept that SCOT wanted to sell its products online at Home Depot, and Profanchik and Kinser indicated their disagreement with the idea and noted they did not want any involvement with it. Id. Kinser states they did not discuss anything “confidential or constituting some sort of secret method or formula, nor did [they] discuss anything in detail.” Id. Kinser does not recall any documents being provided to them or being discussed at the meeting. Id. They had only seen the showroom and heard Morrison’s representations. Id., ¶ 22. They “had not been told any of the supposedly confidential trade secrets or intellectual property, including the patent, the formula, the supposedly proprietary process, or the supposed financial records.” Id.; see also Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 187:9-16 (stating Morrison told Profanchik that StoneCoat had valuable trade secret information (specifically “proprietary formula”) during that meeting and that Kinser expected Morrison would be showing Kinser and Profanchik the supposedly valuable proprietary information).

According to Profanchik, three or four days after his initial meeting with Morrison, Profanchik learned about the Hopkins State Litigation. See additional excerpts of Profanchik’s trial testimony in Collin County Litigation, attached to Plaintiffs’ Motion to Disqualify Terry Scarborough, Esq. and the Law Firm of Hance Scarborough, LLP (“Docket Entry # 110-1”) at 263:19-21. In his affidavit, Profanchik states as follows:

Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 20. According to Profanchik, in addition to being sued, SCOT was suing the Hopkins, Mergaux, and Chamielec and touted the lawsuit as an asset. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 21. Other than describing the Hopkins State Litigation as an asset, Morrison did not tell Profanchik any of the allegations that were being made against him.[20] See Docket Entry # 110-1 at 265:10-13. Morrison states he told Profanchik on February 11, 2015 and thereafter what had happened that led to the Hopkins State Litigation. Bundren Aff., Ex. 7 (Morrison trial testimony in Collin County Litigation) at 120:14-124:16 (further stating StoneCoat was current at that point on all its obligations under the agreement with Mergaux); 149:19-151:11 (stating by March 23, 2015 there was not anything about the Hopkins State Litigation that had not been disclosed to Profanchik).

*23 After Kinser and Profanchik signed the non-disclosure/non-compete agreements, they were also told that SCOT had a patent application. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 22. According to Profanchik, they had been told before signing that SCOT had a patent, not a patent application, “which is a big difference.” Id.; see also Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 303:10-305:4 (explaining Morrison sent him an e-mail at 2:27 p.m. on February 11, 2015 with the subject matter of the e-mail being a “provisional patent application” but further stating he could not – and did not – get the e-mail during the meeting with Morrison, which lasted from 2:30 p.m. (when he signed the Profanchik NDA/NC) to about 3:05 p.m. when Profanchik left Morrison’s presence); see also id. at 305:10-306:18 (stating he got Morrison’s e-mail about 8:00 or 9:00 that night and called his patent attorney the next day).[21]

Profanchik states it was decided at the February 11 meeting that Kinser would begin doing “due diligence” by shadowing SCOT general manager Rick Adams for a few days without letting anyone else at SCOT knowing he was conducting “due diligence.” Id., ¶ 12; see also Kinser Aff., ¶ 23. Kinser later reported to Profanchik SCOT’s operations “were a disorganized mess and incredibly inefficient.” Profanchik Aff. (Docket Entry # 67-1, Ex. 1),¶ 12. Profanchik states his level of detail, including knowledge of SCOT’s pricing method, never went beyond a basic, general description. Id., ¶¶ 13-14. Profanchik never went on any sales calls or received any specific sales training. Id., ¶ 13. Profanchik acknowledges he was shown a demonstration a few weeks later about how the product was applied during a training class Profanchik and Kinser attended. Id., ¶ 15; see also Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 324:9-326:24 (testifying Mr. Hains went into depth during the training explaining the chemical formulas that make up the StoneCoat product, writing the formulas on a board, and further stating he had to sign a nondisclosure agreement before he was allowed to go into the StoneCoat training program). However, Profanchik states he never tried to apply the product or coloring during or after that class, and he does not remember any of it. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 15

*24 According to Kinser, as part of doing due diligence, he began to “anonymously” shadow Adams for a few days. Kinser Aff., ¶ 23. Kinser went on some sales calls with Adams. Id. According to Kinser, Adams’ sales method was not any different from what Kinser had previously done nor was it to Kinser’s knowledge any different or unique to the industry, the remodeling industry, or from general sales concepts without regard to the industry. Id. Kinser was not shown a pricing guide or other such document and is not aware that one exists. Id.

After shadowing Adams a few days, Kinser did some of his own sales calls, but he was not specifically trained by anyone to do the calls. Id., ¶ 24. According to Kinser, it was not complicated, and there was no unique method or process he used to prepare a rough bid for approval from Adams. Id. Kinser states he simply used “common home remodeling knowledge.” Id.

Kinser was also shown the manner in which SCOT managed its work crews and the installation process. Id., ¶ 25. According to Kinser, it was a “disorganized mess and incredibly inefficient,” and he told Adams and Morrison as much. Id.; see also Adams Dep. (Docket Entry # 67-1, Ex. 7) at 178:1-25. Kinser further states it is not any different from the rest of the home remodeling/construction industry, “other than the fact that SCOT is very disorganized about the way in which they operate.” Kinser Aff.,¶ 25.

A few weeks into his time at SCOT, Kinser was shown a demonstration about how the product was applied during the training class that he and Profanchik attended. Id., ¶ 26. Kinser states he never tried to apply the product or coloring during or after that training class, nor did Profanchik. Id. They “simply watched it being applied.” Id. According to his testimony in the Collin County Litigation, Kinser attended two days of training with Mr. Hains and Morrison at StoneCoat wherein they talked about the “chemical makeup of limestone very in depthly, big presentation about limestone” and then “they sprayed samples of stone, and [Profanchik and Kinser] watched.” Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 219:7-220:11; see also id. at 218:18-219:6 (stating he had never been in the blown limestone business before StoneCoat nor had he ever gone through a training class learning how to blow limestone on a wall and to carve it prior to the time he went through the “training class at StoneCoat”); see also id. at 220:15-16 (stating all of the information was available on YouTube videos).

According to both Profanchik and Kinser, they never applied or installed any product or did any coloring/pigment for a customer or otherwise, never mixed any product, never ordered any product, and were never shown the names of any suppliers or vendors, with one exception.[22] Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 16; Kinser Aff., ¶ 27. They never saw a SCOT client list. Profanchik Aff., ¶ 17; Kinser Aff., ¶ 27. They never saw distributor or franchise lists, supplier lists, or vendor lists. Profanchik Aff., ¶ 18; Kinser Aff., ¶ 27. Profanchik has never solicited or asked any of SCOT’s suppliers, vendors, distributors, dealers, or franchises to form any sort of business relationship with Profanchik or ProCal. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 18.

*25 In addition to learning about the Hopkins State Litigation and the patent/patent application, Profanchik and Kinser did their due diligence regarding SCOT’s actual business operations. Kinser testified in the Collin County Litigation that he was at SCOT from the week after February 11, 2015 through April 20, 2015, and during that time he interacted with other employees that were at SCOT. Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 208:4-9. He also had business strategy meetings with Morrison and also received e-mails regarding business opportunities and “leads to follow through on sales calls.” Id. at 207:5-17.

According to Profanchik’s affidavit, the only SCOT business records he ever saw were a “stack of bank statements, a check register, a one-page paper that said SCOT had $1.4 million in revenues, and some tax returns that did not match up with the asserted revenues.” Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 19; see also Adams Aff., ¶ 13 (stating SCOT had revenues of approximately “$1.4” in 2012 and 2013).

According to Rick Adams, the vice president of operations for SCOT, in March and April 2015, Profanchik and Kinser attended numerous SCOT operations meetings with Morrison and Adams, and “the sales and business operations” of SCOT were discussed with Profanchik and Kinser during these meetings. Adams Aff., ¶ 15. Specifically, Adams states SCOT had five distributorships and three or four dealerships in operation in January of 2015, and the distributorships and dealerships were discussed with Profanchik and Kinser. Id., ¶¶ 3, 6; but see Adams Dep. (Docket Entry # 67-1, Ex. 7) at 120:18-25 (stating he did not recall ever showing Profanchik or Kinser any client list on his laptop or the file cabinet with invoice pages of customer receipts); see also id. at 221:17-22 (confirming he had about three conversations with Profanchik and stating he disclosed “zero trade secrets to him” in those conversations).

In his affidavit, Adams states Kinser served as the operations manager for SCOT in the first quarter of 2015 and was aware of the SCOT distributorships and dealerships. Adams Aff., ¶ 7. Adams further states Kinser “received specialized training from Stonecoat to learn the Stonecoat business,” “attended the specialized training classes offered by Stonecoat at the Stonecoat corporate offices, and received a copy of the Stonecoat specialized training manual.” Id., ¶¶ 8-9. Kinser also received specialized training from Adams about the operations of the Stonecoat business.” Id.,¶ 8.

According to Adams, he “confirmed to John Profanchik the considerable business that Stonecoat had received deposits on from customers who were ready to have the Stonecoat product installed at their properties.” Id.,¶¶ 10, 16. Adams represents he was instructed by Morrison to give Profanchik the financial records of SCOT, and Adams gave those records, including the “check stubs and bank statements,” to Profanchik. Id.,¶ 11; see also id., ¶ 14 (stating Profanchik retained Terry Woods to review the financial records of SCOT); see Adams Dep. (Docket Entry # 67-1, Ex. 7) at 160:2-25 (stating at one point he gave Profanchik check stubs and bank statements going back one year but he never showed Profanchik or Kinser StoneCoat tax returns).

In his affidavit, Adams states he requested in late April 2015 that Profanchik return the financial records, but Profanchik never did so. Adams Aff.,¶¶ 11, 14. According to Adams, on April 24, 2015, he sent an e-mail to Profanchik requesting he return the financial information given him during his review of SCOT. Id.,¶ 12. Adams states Profanchik never responded to the e-mail, and he never returned the financial documents.[23] Id.

*26 In his individual deposition in the Collin County Litigation, Morrison stated he had five or six subsequent face-to-face meetings with Profanchik to discuss the opportunity of buying the business or partnering on it. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 243:8-244:3. Morrison stated he and Profanchik talked about formulation, toll blending, distributors, dealers, production agreements, the “French guy,” bank statements, check stubs, tax returns, and “everything.” Id. at 127:5-128:2. According to Morrison, Profanchik and Morrison entered into a non-binding letter of intent (LOI) whereby SCOT would sell all of its assets, “including its cash, its AR, equipment, inventory and all the formulas for all the StoneCoat products ... as well as the intellectual property including the patent, to a new company that [Morrison] and [Profanchik] were going to form and own jointly.” Id. at 246:2-5 & 252:7-13; see also Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 230:16-231:16 (stating Profanchik later tried to renegotiate the signed LOI “to get it down to something that didn’t look like anything like the original amounts and deals” and further stating they did not “even have a discussion by the time [Profanchik] walked out and started another company”); see also Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 296:16-301:23 (explaining he contemplated purchasing the assets of StoneCoat (which included any accounts receivable, equipment, inventory, formulas, intellectual property/trademarks) in order to form a new company where Profanchik would be the 80 percent owner but further stating Morrison told him that he would have to indemnify him of his “IRS, workman’s comp, comptroller problems, or he would not sell [Profanchik] StoneCoat”).

During the trial in the Collin County Litigation, Morrison testified he gave confidential information to Profanchik pursuant to the Profanchik NDA/NC. Bundren Aff., Ex. 7 (Morrison trial testimony in Collin County Litigation) at 87:12-21. According to Morrison, this included strategic, technical, financial business sources related to StoneCoat and its products. Id. at 87:20-24 (further stating he “gave them everything”). Morrison testified he discussed marketing material, communication strategies, and StoneCoat’s “secret” provisional patent application with Profanchik. Id. at 90:15-91:5; 93:7-15; 94:3-98:24. According to Morrison, he also provided Profanchik with employee compensation information/the money that StoneCoat’s independent contractors were being paid to do jobs as well as information about the sales process, with the second step of that “process” referencing StoneCoat’s executive administrator Irma Villarreal. Id. at 155:2-156:15 & 158:4-9. Morrison stated he also shared with Profanchik in February 2015 StoneCoat’s manufacturing, blending and procurement process; StoneCoat’s current mission statement and core values; applications; the “employee overview;” and the “franchising overview” and strategy. Id. at 158:13-160:22.

Morrison also had discussions with Profanchik about StoneCoat’s distributor and dealer strategy, including who the distributors and dealers were. Id. at 160:23-25 & 161:24-162:5. Morrison also disclosed to Profanchik “sales product and application overview,” a lot of which was covered in StoneCoat’s training class. Id. at 164:12-166:3 (further stating StoneCoat does not make the content of the training session publicly available and requires someone to sign a nondisclosure/non-compete agreement prior to training). Morrison also shared with Profanchik the incomes receivables and outgoing costs; how StoneCoat bids projects; the costs for raw material, finished bag cost, retail costs, and what StoneCoat sells to the customers; StoneCoat’s “process for having [its] independent contractors apply the product;” and the “Home Depot initiative.” Id. at 166:4-18; 168:1-15; 172:2-23 (discussion of an e-mail from Morrison to Profanchik disclosing “the toll blending facility, the place where [StoneCoat manufactures its] bags”); 173:12-174:6 (stating he told Profanchik the “source of the aggregate”); 175:5-16 (discussing an e-mail from Morrison to Profanchik “passing off another lead to [Kinser] ... because he was going to be more the operational side” and he “was there every day with the StoneCoat shirt and running crews, and [StoneCoat was] trying to teach him the business and sales and operations, so this is just showing him another source and how leads come in”); 176:12-25 (discussing a March 24, 2015 e-mail from Villarreal to Profanchik wherein she provided him the list of StoneCoat’s installers, their salaries, and the internal personnel information). According to Morrison, StoneCoat was using its own formula between 2012 and 2015, and that formula was “going to be part of what [Profanchik] would purchase as an asset,” including the ownership of Mergaux’s formula if StoneCoat won the Hopkins State Litigation. Id. at 199:3-19. Around March of 2015, Morrison gave Profanchik and his attorney the non-public patent application with a publication date of September 10, 2015. Id. at 203:2-204:24.

*27 As stated in their affidavits, during the due diligence phase, Kinser and Profanchik discovered the following:

Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 24; Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 33.

Morrison and Profanchik never did a deal together. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 252:6-8. In light of all the information discovered during due diligence, Profanchik broke off negotiations with SCOT on or about April 17, 2015. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 27. Villarreal, discussed below, left on the same date. Id. Villarreal went to work as Profanchik’s personal assistant. Id., ¶ 28.

Kinser broke off his relationship with SCOT on April 20, 2015 “because it turned out that SCOT wasn’t the business Morrison had represented it to be.”[28] Kinser Aff., ¶ 36. Alfredo Gonzalez, also discussed below, left with Kinser, along with three other employees. Id. Upon leaving SCOT, Kinser “contemplated starting [his] own limestone company since that was something [he] wanted to do before [he] ever met Morrison.” Id., ¶ 37. Instead Kinser started his own remodeling company called Fourth Generation Home Services. Id. Kinser and Gonzalez worked out of Kinser’s home. Id.

*28 As explained by Morrison in his deposition, Rick Adams called him one day and told him Kinser and Gonzalez were quitting. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 265:21-266:13 (stating he then texted Profanchik asking what was going on and stating it looked like they were not going to “do a deal together”). According to Morrison, then “all of a sudden” three of his key employees who had been trained in the company also left. Id. at 266:24-267:13; see also id. at 271:20-273:25 (stating the workers who left to go work with Profanchik took pictures of Kinser and Profanchik “blowing stone in his backyard” and then came back to work for StoneCoat and brought the pictures and further stating Profanchik recently recruited them back). Morrison’s “theory” was Profanchik “had gone over and did the same thing the Hopkins had done and ... tried to find a shortcut to skip this and go straight with the French guys.” Id. at 268:6-12; see also Docket Entry #79-12 (September 15, 2016 “ProCal Stone Design, LLC” Agreement with Chamielec signed by John Profanchik “President ProCal Stone Design, LLC”).

According to their affidavits, after leaving SCOT in April 2015, Profanchik and Kinser have subsequently learned the following:

Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 25; Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 34.

According to ProCal, SCOT’s formula, method, and process have been disclosed to the public in its patent application, rendering it public information. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 200:3-9 (agreeing the method or the process was set forth in the patent application); see also USPTO publication number US 2015-0251953 A1, available at https://portal.uspto.gov/pair/PublicPair. During his deposition as corporate representative of SCOT, Morrison agreed the patent office had rejected his patent application and that he was appealing the rejection. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 254:24-255:2.

*29 In September 2015, Kinser approached Profanchik about wanting to continue to pursue the idea of going into the limestone veneer business which Kinser and Profanchik had wanted to do before ever coming across SCOT and Morrison. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 30. Neither Profanchik nor Kinser had any documents or anything of value from SCOT that would help Profanchik or Kinser to do that. Id.; see also Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 38. Kinser contacted DecoPierre in France and was ultimately put in touch with Chamielec. Profanchik Aff., ¶¶ 30-31; Kinser Aff., ¶¶ 38-39. Profanchik traveled to France during the third week of September 2015, met with Chamielec, and Chamielec put them in touch with Mergaux in Dallas. Profanchik Aff., ¶ 31; Kinser Aff., ¶ 39. Profanchik and Kinser did all of this completely independently of SCOT and Morrison. Id. According to Profanchik, DecoPierre, Mergaux, and Chamielec were in “open business and open competition in the industry at the time, advertised on the Internet, and all are publicly-known in the industry. They all pre-date Morrison and SCOT’s involvement in the industry.” Profanchik Aff., ¶ 31; see also Kinser Aff., ¶ 40.

Profanchik and Kinser worked for the remainder of 2015 to start a company. Profanchik Aff., ¶ 32; Kinser Aff., ¶ 41. In the summer of 2015, Kinser found “space” a few blocks away from StoneCoat’s showroom that Profanchik later leased. Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 209:24-211:12. On January 11, 2016, Profanchik and Kinser opened ProCal Stone Design, LLC, which offers customers limestone masonry veneer installation. Profanchik Aff., ¶ 33; Kinser Aff., ¶ 42; see also Bundren Aff., Ex. 3 (Profanchik Affidavit in ProCal Defamation Lawsuit), ¶¶ 2-3 (stating Profanchik is a member, founder, Chief Executive Officer and President of ProCal Stone Design, an Addison Texas company specializing in hydraulically sprayed and troweled limestone and further stating Morrison and SCOT are competitors of ProCal in the “same industry”). However, sixty to ninety days before opening in January 2016, Kinser was working on converting the space located a few blocks away from StoneCoat into a showroom for ProCal. Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 211:23-212:8. According to Kinser, by September 2015 he had keys to the new showroom and the “lease space already done;” he was blowing stone and setting up the showroom . Id. at 215:3-216:4; see also id. at 216:21-218:3 (testifying ProCal Stone Design did not sell bags but further testifying another ProCal entity did sell bags to franchisees).

Mergaux testified in the Collin County Litigation he started working for Profanchik’s company, ProCal Stone Design, in January 2016. Docket Entry # 155-1, Ex. 3 at 162:7-163:21; see also id. at 166:20-167:1 (agreeing that to the extent SCOT and ProCal were both selling bags, they would be competing with one another). Mergaux stated the showrooms for ProCal and StoneCoat were located two miles apart and showed the same thing. Id. at 167:21-168:16. As of August 2017, Mergaux was the head of Profanchik’s franchising company, ProCal Stone USA, which sells bags and franchises all over the world. See Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 292:18-294:6 (further explaining that ProCal Stone Design is the application company).

According to Profanchik and Kinser’s affidavits, they opened ProCal Stone Design in 2016 without using anything they learned from SCOT or Morrison. Profanchik Aff., ¶ 33; Kinser Aff., ¶ 42. Specifically, ProCal does not use any of the following:

Profanchik Aff., ¶ 34; Kinser Aff., ¶ 44.

On July 15, 2016, Kinser entered into an Employment Agreement with ProCal Stone Design, LLC. Docket Entry # 79-7. A few months after SCOT filed a lawsuit against Kinser, Kinser decided to stop working at ProCal. Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 43. Kinser has not been in the limestone veneer business since October 11, 2017. Id.

According to Mergaux’s declaration, in 2016 Chamielec and Mergaux sold the French formula, along with the “bragging rights,” to Profanchik and ProCal Stone Design. Mergaux Decl., ¶ 11. “Profanchik paid what was due under [their] agreement and [Chamielec and Mergaux] transferred everything that was required of [them] to Profanchik and ProCal, including the formula.” Id. “Furthermore, Chameilec and [Mergaux] decided to team up with ProCal and formally became associated with ProCal.” Id.; see also id. at ¶ 13 (stating he assisted in ordering the limestone mix from Europe while he was at ProCal and further stating he knows from his past relationship with Morrison and StoneCoat that StoneCoat had its product blended in Texas through at least 2017 and did not purchase its bags of product from Europe).

According to Mergaux, through ProCal’s ownership of the French formula and “associated bragging rights, if ProCal ever made the statement that their origins began in France, where the product was invented, [Mergaux] believe[s] that to be a true statement through ProCal’s completed purchase of the formula and association with Chamielec.” Id., ¶ 12. As of April 17, 2019, the date of his declaration, Mergaux was no longer associated with ProCal, but Mergaux states his departure “from ProCal did not affect ProCal’s ownership of the formula and bragging rights.” Id., ¶ 13.

6. Gonzalez and Villarreal

Gonzalez began working for SCOT in approximately 2010 in Addison, Texas.[31] Gonzalez Aff. (Docket Entry # 127-1, Ex. 2), ¶ 3. Gonzalez came to SCOT with “years of experience spraying and texturing walls.” Id., ¶ 7. He had been in the construction and home remodeling industry since he was fourteen years old and had experience in drywall, plaster, stucco, texturing, taping, and bedding. Id., ¶ 6. He had already been using a hopper, spray guns, mixers, mineral mixes, trowels, and other tools of the trade for many years before he went to work at SCOT, and he had also previously had experience bidding jobs, doing sales and estimates, and managing work crews. Id.

*31 Gonzalez was not executive management or an officer or director at SCOT. Id., ¶ 5. He primarily worked as an installer of the limestone spray-on product and as a manager of work crews. Id. He was considered an “at-will independent contractor” of SCOT. Id., ¶ 3. He could be “fired at any time and did not have a contract for a specific period of employment.” Id. Gonzalez received a paycheck from SCOT. To his recollection, Gonzalez was paid $140 per day and typically worked five to six days per week. Id.

When Gonzalez began at SCOT, Morrison did not train him. Id., ¶ 7. Rather, he watched an installer named Dale Thomas apply some product. Id. After watching and assisting Thomas for a few days, Gonzalez was sent out on his own and was still applying the limestone product on his own over seven years later. Id. According to Gonzalez, those few days with Dale Thomas were the only training he ever received, and it was not difficult to learn because of his experience in spraying and texturing walls. Id. Gonzalez states nobody at SCOT ever explained to him at the time that he was learning to do something unique to SCOT, and he was not asked to sign a non-disclosure agreement before being shown how to apply the product. Id.

Gonzalez further states as follows:

Id., ¶ 8.

Gonzalez also kept track of the warehouse and the back of the showroom, including keeping track of whether SCOT was running low on bags of limestone mix or other supplies. Id., ¶ 9. However, he did not know any SCOT secret limestone formulas, if there were any, and he did not know the details of any SCOT vendor or supplier relationships. Id. He never received any specialized training to be able to tell whether supplies were running low; this was a “simple, common-sense task.” Id. According to Gonzalez, he had plenty of prior experience recognizing when supplies were running low, and what he did at SCOT was “not in any way unique to SCOT or in some way unknown to the remodeling or limestone veneer industry.” Id.

Gonzalez also kept track of the other installers’ hours and would report those hours to Morrison and Adams. Id., ¶ 10. He never received any training in how to keep track of installers’ hours; it was a “simple, common-sense task;” he had previous experience managing work crews; and what he did at SCOT was “not in any way unique to SCOT or in some way unknown to the remodeling or limestone veneer industry.” Id. According to Gonzalez, nothing about the way in which SCOT managed its work crews was, to Gonzalez’s understanding, “proprietary, confidential, unique, special, trade secret, or of particular value to SCOT.” Id.

Gonzalez also performed some sales while at SCOT, which primarily consisted of going into a home, measuring and giving them a bid. Id., ¶ 13. He did not do anything unique or special in preparing the bid but instead used common home remodeling knowledge. Id. He never received any specialized or unique training in sales, and he was never shown and never used any sales or pricing guide or other such document. Id. When he left SCOT on or about April 20, 2015, Gonzalez “was not in the process of causing any clients to choose to do business with SCOT, and [he] never took any potential or existing StoneCoat clients with [him] at any time.” Id.

*32 While at SCOT, Gonzalez was sometimes involved with “training classes” in which SCOT would show potential distributors or dealers how to mix and apply the product. Id., ¶ 14. His role, if he was participating, “was to show the attendees how to apply the product.” Id. According to Gonzalez, he was not teaching them anything unique to SCOT; the method he was teaching them was the same method used by the rest of the industry. Id.

Gonzalez did not have an office at SCOT or perform office tasks. He did not do any data entry or handle any accounts receivable or accounts payable. Id., ¶ 11. He did not perform any accounting, taxes, or banking. Id., ¶ 12. He had no involvement with lawyers, or lawsuits, or patents or patent applications, and he does not know of a SCOT or Morrison patent. Id.

On August 16, 2013, Morrison demanded that Gonzalez sign a non-disclosure/non-compete agreement. Gonzalez NDA/NC (Docket Entry # 67-24). According to Gonzalez, nobody explained what the document was or what it required of him, and he did not read it. Gonzalez Aff. (Docket Entry # 127-1, Ex. 2), ¶ 15. The Gonzalez NDA/NC agreement is with StoneCoat GP, StoneCoat LP, and SCOT, but Gonzalez does not know what the GP or LP entities are or what they do, and neither have ever paid him any compensation. Id., ¶ 16.

When Gonzalez signed the Gonzalez NDA/NC, he had been at SCOT for over approximately three years and had never been asked to sign one of those agreements before that one. Id., ¶ 17. Gonzalez states he did not receive any additional compensation for signing the document. Id. To his knowledge, he was never told of any confidential or secret information after signing the Gonzalez NDA/NC and was not told of anything that he had not already been told over the previous three years of working at SCOT. Id.

Gonzalez left SCOT on or about Monday, April 20, 2015 because he did not want to work for Morrison any longer.[32] Id., ¶¶ 18, 20. When he left, Gonzalez did not take any documents with him of any kind or anything that was of value to SCOT. Id., ¶¶ 18-19. Gonzalez further states as follows:

Id., ¶ 18. Gonzalez did not take any clients with him; he was not in the process of performing any sales; and he is not aware of any SCOT clients or potential clients who were considering hiring SCOT as a result of any service he was performing for SCOT. Id., ¶ 19.

After Gonzalez left SCOT, Kinser formed a company called Fourth Generation Home Services, and Gonzalez worked for Kinser remodeling houses. Id., ¶ 21. Gonzalez helped remodel Kinser’s house, and as part of this process, Gonzalez called Mergaux at DecoXperience - a competitor - and bought two pallets of limestone mix. Id. Gonzalez and Kinser made samples and applied it to the back of Kinser’s house. Id. Gonzalez also worked on Profanchik’s house. Id.

*33 In late 2015, Kinser told Gonzalez he was serious about forming a limestone spray company with Profanchik. Id., ¶ 22. Gonzalez agreed to work with Kinser. Id. On January 11, 2016, nine months after Gonzalez left SCOT, ProCal opened for business in Addison, Texas. Id., ¶ 23. Profanchik is Gonzalez’s boss. Id.

On July 15, 2016, Gonzalez entered into an Employment Agreement with ProCal Stone Design, LLC. Docket Entry # 79-11. At ProCal, Gonzalez is the operations manager; he is an installer; he helps manage work crews; and he sometimes does sales. Gonzalez Aff., ¶ 24. He is not an officer or director. Id. At one time Gonzalez signed a covenant not to compete with ProCal; however, that document was returned to Gonzalez, and he has been released from those obligations. Id.

To Gonzalez’s knowledge, Profanchik and ProCal do not use anything learned from SCOT; they do not use SCOT’s vendors, suppliers, manufacturers, equipment, or limestone formula; they do not use SCOT’s training manual; they do not have the same training sessions as SCOT; and they do not use any unique SCOT sales or pricing process, which Gonzalez does not believe exists. Id., ¶ 25. Gonzalez is not aware of any SCOT clients, distributors, suppliers, vendors, or potential client leads, that ProCal learned about or took from SCOT. Id.

To Gonzalez’s knowledge, ProCal does not use any of the formulas used by SCOT (these SCOT formulas, if any, were never disclosed to Gonzalez); ProCal does not purchase limestone mix or supplies from Mergaux or Chamielec but instead purchases its limestone mix ready-made from a company in Spain, which sells the same product to many others in the industry; SCOT manufactures its own limestone mix somewhere in the Dallas area, but ProCal does not manufacture its own limestone mix, does not use SCOT limestone mix, and does not use anyone in Dallas to manufacture limestone mix. Id., ¶ 26.

Gonzalez further states as follows:

Id., ¶ 26.

Villarreal is Gonzalez’s wife. Id., ¶ 27; see also Villarreal Aff. (Docket Entry # 127-1, Ex. 1), ¶ 3 (stating she married Gonzalez in 2005 and they have two daughters together). She began working for SCOT in Addison, Texas doing basic office work in 2012. Gonzalez Aff. (Docket Entry # 127-1, Ex. 2), ¶ 27; see also Villarreal Aff. (Docket Entry # 127-1, Ex. 1), ¶ 4 (stating she was a secretary/administrative assistant at SCOT). Villarreal was also considered an at-will independent contractor who could be fired at any time. Villarreal Aff., ¶ 4. She received a paycheck from SCOT and never any other entity, and she was paid $10 per hour and worked approximately forty hours per week. Id.

At SCOT, Villarreal was not considered management or an officer or director. Id., ¶ 6. She did not “even have a key to unlock the showroom or office.” Id. She performed routine office tasks, including answering the phone, greeting customers or other people who walked into the showroom, and performing data entry, accounts receivable, and accounts payable.[33] Id. She also made folders of customer invoices as they came in, which she would put into a file cabinet, and she cleaned the office and bathrooms. She never received specific training in any area. Id.

Within the first two to three months she was at SCOT in 2012,Villarreal found a binder of client leads who had not set up appointments with sales people. Id., ¶ 8. According to Villarreal, Morrison told Villarreal that if she called “these cold leads, he would pay [her] $50 for every lead that set up an appointment with a SCOT sales person.” Id. Villarreal called the people in the binder and got eighteen people to set up an appointment with a sales person. Id. Morrison paid Villarreal $900 for this work. Id. Other than setting up these few appointments for the sales people, Villarreal never did any actual sales; she was never a sales person; and she never received any training in sales. Id. When Villarreal left SCOT on or about April 17, 2015, she had never done any actual sales and was not in the process of causing any clients to choose to do business with SCOT. Id. She did not take any sales materials or clients when she left. Id.

*35 While employed at SCOT, Villarreal was not trained in and did not perform installation of the limestone veneer product. Id., ¶ 11. She had no idea how to apply it. Id. While employed at SCOT, Villarreal was aware that SCOT conducted “training classes” during which it showed potential distributors or dealers how to mix and apply the product. Id., ¶ 12. She never sat through the training classes as an attendee, but she did have some involvement to the extent that her job involved ensuring that attendees were comfortable. Id. In addition, one of her jobs was to make copies of the training manuals. Although she made copies of the manual, she never read it. Id. However, she “was aware that the training manual was edited to remove references to Philippe Mergaux and a company called DecoPierre, whose names were accidentally left on some of the pages of the training manual.” Id. According to her affidavit, Villarreal knows this “because, on more than one occasion, an attendee would find a reference to Mergaux or DecoPierre and [she] was asked by Morrison to remove the page and replace it with a copy that had those names removed.” Id. According to Villarreal, “Morrison was often flustered when this would occur.” Id.

On April 19, 2013, Morrison demanded that Villarreal sign a non-disclosure/non-compete agreement. Id., ¶ 13; see also Villarreal NDA/NC (Docket Entry # 67-23). According to Villarreal, April 19 was a Friday - a payday - and she was told she could not receive her paycheck if she did not sign. Villarreal Aff. (Docket Entry # 127-1, Ex. 1), ¶ 13. “It was not explained to [Villarreal] what [she] was signing, except that it was a paper that [she] needed to sign if [she] wanted to receive [her] paycheck.” Id. Villarreal did not read it, “and just signed because [she] needed [her] paycheck.” Id. She did not feel like she had any choice if she wanted her paycheck. Id. She has since learned the agreement was with StoneCoat GP, StoneCoat LP, and SCOT, but she does not know what the GP or LP entities are or what they do, and neither have ever paid her any compensation. Id.

When Villarreal signed the Villarreal NDA/NC, she had been at SCOT for over one year and had never been asked to sign one of those agreements before that one. Id., ¶ 14. According to Villarreal, she did not receive any additional compensation for signing the document and had to sign it in order to receive past-due compensation. Id. To her knowledge, she was never told of any confidential or secret information after signing it and “certainly was not told of anything that [she] had not already been told over the previous year or so of working at SCOT.” Id.

Villarreal left SCOT on or about Friday, April 17, 2015, because “working for Ken Morrison became unbearable” and she no longer wanted to work for him. Id., ¶¶ 15, 17. Villarreal took her personal family calendar and copies of the non-disclosure/non-compete agreements of Villarreal, Gonzalez, Profanchik, and Kinser. Id., ¶ 15. She did not take any business documents such as bank records, client lists, invoices, the training manual, suppliers or vendor lists, formulas, or address books. Id. She has never disclosed any such information to Profanchik, Kinser, or ProCal. Id. When she left SCOT, Villarreal was not in the process of performing any sales or jobs, and she is not aware of any SCOT clients or potential clients who were considering hiring SCOT as a result of any service she was performing for SCOT. Id., ¶ 16. She did not take any clients with her or anything that was of any value to SCOT. Id.

After Villarreal left SCOT, she went to work as Profanchik’s personal assistant. Id., ¶ 18. She worked from home for three or four months and then worked from Profanchik’s home office. Id. She handled his schedule, picked up dry cleaning and prescriptions, and ran errands. Id. She also helped Kinser and Gonzalez with their home remodeling business, keeping track of their budget on the remodeling work they were doing on Kinser’s house. Id.

In late 2015, Kinser and Profanchik told Villarreal they were serious about starting their own limestone spray company. Id., ¶ 19. Villarreal agreed to work as their office manager. Id. On January 11, 2016, nine months after she left SCOT, ProCal opened for business in Addison, Texas. Id., ¶ 20.

*36 On July 15, 2016, Villarreal entered into an Employment Agreement with ProCal Stone Design, LLC. Docket Entry # 79-9. At ProCal, Villarreal is not management or an officer or director. Villarreal Aff., ¶ 21. She is the office manager, and she is paid on an hourly basis. She answers the phone, greets customers, and performs general office tasks, including data entry. Id. She does not perform high-level accounting; she does not do sales; she does not do installations; she does not do training; she does not manage or supervise anyone; and she does not have customer interaction beyond greeting customers as they walk into the showroom. Id. Villarreal does not know details regarding the product, method, sourcing, vendors, suppliers, or formulas. Id. To her knowledge, Profanchik, Kinser, and ProCal are not using anything secret or confidential learned from her from her time at SCOT. Id.

7. Collin County Litigation

After the negotiations between Morrison and Profanchik fell through, Profanchik filed suit against Morrison in the 416th District Court of Collin County on May 27, 2015. Docket Entry # 67-1, Ex. 30 (Profanchik Original Petition in Collin County Litigation). In his lawsuit, Profanchik alleged Morrison had committed fraud. On September 13, 2016, Morrison and SCOT filed a counterclaim against Profanchik, alleging Profanchik had (1) breached his contract (the Profanchik NDA/NC); (2) breached his fiduciary duties; (3) misappropriated trade secrets under Texas and federal law; (4) and committed theft. Docket Entry # 67-1, Ex. 31 (SCOT Original Counterclaim in Collin County Litigation).

Thereafter, on April 28, 2017, Morrison and SCOT amended their counterclaim, alleging Profanchik (1) breached his contract, (2) breached his fiduciary duties, (3) misappropriated trade secrets under Texas law, (4) committed theft, and (5) tortiously interfered with SCOT’s contracts with Villarreal, Gonzalez, Kinser, Mergaux, and Chamielec. Docket Entry # 67-1, Ex. 32 (SCOT First Amended Counterclaim in Collin County Litigation). Additionally, SCOT and Morrison sought injunctive relief to prohibit Profanchik from competing with SCOT.

On July 10, 2017, Profanchik filed a partial motion for summary judgment as to all of Morrison’s/SCOT’s counterclaims and request for damages. Docket Entry # 67-1, Ex. 33 (Profanchik Partial Motion for Summary Judgment in Collin County Litigation (without exhibits)). On August 21, 2017, the Collin County court considered the motion, and on August 24, 2017, the court granted the partial motion for summary judgment, thereby dismissing all of SCOT’s causes of action against Profanchik. Docket Entry # 67-1, Ex. 34 (Order Granting Profanchik’s Motion for Summary Judgment in Collin County Litigation).

After a jury trial went forward on August 28, 2017 related to Profanchik’s claims against Morrison and SCOT, a final judgment was signed on October 16, 2017. Bundren Aff., Ex. 6 (Final Judgment in Collin County Litigation). The final judgment incorporates the court’s rulings on the summary judgment and incorporates the jury’s findings. Id.; see also Bundren Aff., Ex. 5.

Specifically, the Final Judgment provided as follows:

Bundren Aff., Ex. 6 at 2.

8. Other StoneCoat entities

On January 8, 2016, the same week Profanchik and Kinser opened ProCal, Morrison formed StoneCoat of North Dallas, LLC (“SCND”). Docket Entry # 67-1, Ex. 24 (Secretary of State Filing). SCND is a separate legal entity that sells installations to the public, and StoneTech Franchise Systems is a separate legal entity that sells franchises. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 57:11-13; 32:6-10.

According to Morrison’s testimony in the Collin County Litigation, since January 2016, SCOT has, by choice, attempted no sales to the public and does not perform installations. SCOT has no franchises, distributors, or dealers. Id. at 50:20-23; 57:8-10. SCOT stopped offering/performing sales and installations of limestone masonry veneers to the public and is now only a manufacturer of limestone mix. Id. at 32:6-10.

Vance McMurray has served as a transaction attorney through his firm for SCOT beginning in January 2016. McMurray Aff., ¶ 4. In his affidavit, Mr. McMurray states as follows:

McMurray Aff., ¶¶ 4-5.

In ¶ 76 of his updated affidavit, Morrison states as follows:

*38 Morrison Aff., ¶ 76.

9. Other ProCal entities

In the Declaration of John D. Profanchik, Sr. (“Profanchik Decl.”), attached as Exhibit 2 to ProCal USA and ProCal Enterprises’ motion for summary judgment, Profanchik states ProCal USA and ProCal Enterprises were created on May 2, 2016 and September 1, 2016, respectively, to create franchising and/or distributorship opportunities for ProCal Stone Design. Profanchik Decl. (Docket Entry # 195-2), ¶ 21. Profanchik states he is the president of both companies and oversees their activities. Id. According to Profanchik, he hired Jeffrey Seeberger, who had extensive experience in growing franchises, around June 2016 for a “set salary plus reimbursement for expenses.” Id., ¶¶ 22-22. Seeberger had never previously worked for or been affiliated with Morrison or any StoneCoat entity. Id., ¶ 22.

Working together, Seeberger and Profanchik, with the assistance of attorneys Gray, Plat & Mooty in Washington, D.C., created franchise disclosure documents, franchise agreement templates, and other documents required by the various franchise laws. Id. Despite their best efforts, neither ProCal USA nor ProCal Enterprises sold a franchise or distributorship, and Seeberger and Profanchik “parted ways” around March 2017, after Profanchik had spent over $100,000 in trying to grow the franchise business. Id., ¶ 23.

According to Profanchik, in 2016 and 2017, ProCal USA filed federal income tax returns showing no sales and no income. Id., ¶ 24. “Instead, ProCal USA had losses of $12,029 in 2016 and losses of $15,116 in 2017.” Id; see also Exhibits 2(c) and 2(d) attached thereto. ProCal Enterprises did not file a return during this same period of time because it had no business activity. Profanchik Decl., ¶ 24. Since Seeberger left, ProCal USA and ProCal Enterprises have had no “real business operations,” including no sales, no income, and no bank account. Id., ¶ 25. Profanchik further asserts the following facts about ProCal USA and ProCal Enterprises are true:

Id., ¶ 26.

10. Morrison’s Affidavit

June 28, 2019 Order granting in part and denying in part Profanchik’s motion to strike

As noted above, Plaintiffs attached a February 15, 2019 Affidavit of Ken Morrison to their motion.[34] On June 28, 2019, the Court entered an order granting in part and denying in part Defendants’ motion to strike aspects of Morrison’s affidavit. Docket Entry # 225. After striking the exhibits attached to Morrison’s affidavit, the Court considered Profanchik’s specific objections to at least parts of the following paragraphs contained in Morrison’s affidavit, grouping together the issues where possible: ¶¶ 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36-41, 42, 43, 44, 46, 47-53, 54, 55, 56, 57-58, 60, 62, 63, 65, and 66. Id. at 14-32.

Among many other objections, Profanchik objected to numerous statements in Morrison’s affidavits that Profanchik characterizes as offering inadmissible legal opinions. See id. at 20. For example, throughout his affidavit, Morrison refers to Plaintiffs’ information as “confidential” or “proprietary” or as “trade secrets.” The Court sustained Profanchik’s objections to Morrison’s statements to the extent they state a legal conclusion. Id. at 23 (sustaining Profanchik’s objection about what information is confidential or proprietary or constitutes a trade secret); see also id. at 27 (sustaining Profanchik’s objection to Morrison’s affidavit to the extent it states a legal conclusion that the various contracts were signed “without any undue influence or duress”); see also id. at 28 (sustaining Profanchik’s objection to Morrison’s affidavit to the extent it states a legal conclusion that the various contracts are “continuing in nature,” have “not terminated,” and are “still in effect”); see also id. at 31 (sustaining Profanchik’s objection to Morrison’s affidavit to the extent it states a legal conclusion that Mergaux and Chamielec are still “under contract”); see also id. at 42-43 (regarding StoneCoat GP’s and StoneCoat LP’s “trade secrets”); see also id. at 42 (regarding any legal conclusions that alleged advertisements were “literally false”).

*40 However, rather than striking the statements, the Court stated as follows:

Id. at 24-25.

To the extent Morrison’s statements regarding Profanchik’s knowledge in ¶¶ 42–43, 54, 57-58 of his affidavit speculate as to matters not within Morrison’s personal knowledge, the Court stated it will disregard such testimony in its consideration of the motions for summary judgment. Id. at 29-30 (citing BHL Boresight, Inc. v. Geo-Steering Sols., Inc., No. 4:15-CV-00627, 2017 WL 3634215, at *6 (S.D. Tex. Aug. 24, 2017)). Otherwise, Profanchik’s objections were overruled. Id. at 30 (citing Retractable Tech. Inc. v. Abbott Lab., Inc., No. 5:05-CV-157, 2010 WL 11531436, at *5–7 (E.D. Tex. June 18, 2010) (excluding an expert’s testimony as it related to a party’s knowledge, intent, or belief but noting testimony as to Abbott’s knowledge, intent, or belief would be “better elicited from individual witnesses, such as the parties’ various corporate representatives, that participated in the negotiation of the NMDA rather than as expert opinion”)).

The Court set forth Morrison’s statements regarding damages (¶¶ 69-72) in its June 28, 2019 Order granting in part and denying in part Defendants’ motion to strike and does not include them here. For now, the Court would note that in its June 28, 2019 Order, the Court concluded as follows:

*41 Docket Entry # 225 at 41.

With these rulings in mind, the Court sets forth the pertinent facts from Morrison’s affidavit.

Statements in Morrison’s affidavit

Morrison is a designated representative and a manager of SCOT, StoneCoat GP, and StoneCoat LP. Morrison Aff. (Docket Entry # 131-2), ¶ 2. StoneCoat GP and StoneCoat LP are not owned by Morrison or SCOT. Id., ¶ 62. Morrison has no ownership interest in StoneCoat GP, StoneCoat LP or SCOT.[35] Id., ¶ 63.

Morrison is the manager of SCOT and oversees and manages the day-to-day affairs and operations of SCOT and is the custodian of records of SCOT. Id. ¶ 5. Morrison is the manager of StoneCoat GP and oversees and manages the day-to-day affairs and operations of GP and is the custodian of records of GP. Id. ¶ 6. Morrison is the manager of StoneCoat LP and oversees and manages the day-to-day affairs and operations of LP and is the custodian of records of LP. Id. ¶ 7.

Morrison has reviewed books and records and information received from Defendants and received into evidence in the Hopkins State Litigation and the Collin County Litigation. Id. ¶ 3. Morrison assisted and negotiated all of the contracts and agreements that are referenced in his affidavit, and his affidavit states he has “personal knowledge regarding such contracts and agreements.” Morrison’s affidavit also states he has personal knowledge, experience, and observations regarding the application and performance of the contracts and agreements that are referenced in his affidavit. Id. ¶ 9.

Morrison claims Profanchik and ProCal have misappropriated StoneCoat GP’s and StoneCoat LP’s trademarks and have used those trademarks in the marketplace to promote and sell Profanchik’s and ProCal’s products and services. Id. ¶¶ 13-15, 65. According to Morrison, after Profanchik signed the Profanchik NDA/NC and after Kinser signed the Kinser NDA/NC (which were both with SCOT only), Profanchik and Kinser received and were given access to information which Morrison characterizes as “privileged and confidential information, intellectual property and trade secrets of Stonecoat GP and Stonecoat LP.” Id., ¶¶ 17, 20-21. Specifically, Profanchik and Kinser received “financial information regarding the operations” of Plaintiffs, privileged information regarding intellectual property, and information regarding wages and salaries and commissions paid by Plaintiffs, and they also received “specialized intellectual property and day-today training” regarding the operations of the Plaintiffs’ business. Id., ¶¶ 17, 21. Morrison further claims Profanchik received privileged information regarding lawsuits, patents, and trademarks. Id., ¶ 17. Morrison asserts Profanchik and Kinser failed to perform their obligations under their nondisclosure/non-compete agreements by disclosing Plaintiffs’ information to Plaintiffs’ competitors, the ProCal entities, and using Plaintiffs’ information to compete against Plaintiffs. Id., ¶¶ 19, 22, 24.

*42 In ¶ 75 of the updated affidavit, Morrison states in February, March, and April of 2015, Profanchik and Kinser were given, in order for them to conduct their due diligence of StoneCoat, “tax returns, bank statements and other financial records, customer leads, customer names, marketing strategy, attorney-client privileged communication regarding the Hopkins Litigation and it also included specialized training regarding the composition of the Stonecoat sprayed limestone product and specialized training regarding the proper application of the Stonecoat sprayed limestone product and Stonecoat’s business methods.” Id., ¶ 75. According to Morrison, StoneCoat protects this information by requiring individuals to sign written non-disclosure agreements, and StoneCoat GP and StoneCoat LP did not disclose what Morrison characterizes as confidential information or trade secrets publicly or to any individual unless the individual has signed a non-disclosure agreement. Id.

According to Morrison, both Villarreal and Gonzalez signed non-disclosure and non-compete agreements and as consideration for the “promises” in those contracts received and had access to what Morrison characterizes as “privileged and confidential information, intellectual property and trade secrets of Stonecoat GP and Stonecoat LP.” Id., ¶¶ 25-26, 28-29. Specifically, Villarreal and Gonzalez received “financial information regarding the operations” of Plaintiffs, “privileged information regarding intellectual property, and information regarding wages and salaries and commissions paid by Plaintiffs, and [they] also received specialized intellectual property and day-to-day training regarding the operations” of Plaintiffs’ business. Id., ¶¶ 26, 29. As the office manager for Plaintiffs, Villarreal had “access to all company records including financial records, business operations customer accounts, customer pricing, contract pricing, and wages and commissions and bonuses paid by Plaintiffs.” Id., ¶ 26. As the field operations and sales manager for Plaintiffs, Gonzalez had access to “company records including financial records, business operations customer accounts, customer pricing, contract pricing, and wages and commissions and bonuses paid by Plaintiffs.” Id., ¶ 30.

Morrison asserts Villarreal and Gonzalez failed to perform their obligations under their nondisclosure/non-compete agreements by disclosing Plaintiffs’ information to Plaintiffs’ competitors, the ProCal entities. Id., ¶¶ 27, 31. Morrison further asserts Villarreal is using Plaintiffs’ information to compete against Plaintiffs. Id., ¶ 27.

In ¶ 78 of the updated affidavit, Morrison states as follows:

Id., ¶ 78.

On or about July 6, 2011, Mergaux entered into a non-disclosure agreement with StoneCoat GP (Mergaux NDA). Id., ¶ 32. SCOT and StoneCoat LP were not parties to the Mergaux NDA. Id. According to Morrison, as consideration for his “promises in the Mergaux NDA,” Mergaux received and had access to what Morrison characterizes as “privileged and confidential information, intellectual property and trade secrets of Stonecoat GP and Stonecoat LP.” Id., ¶ 33. Specifically, Mergaux “received financial information regarding the operations of Stonecoat GP and Stonecoat LP, privileged information regarding intellectual property, and information regarding wages and salaries and commissions paid by Stonecoat GP and Stonecoat LP, and [he] also received specialized intellectual property and day-to-day training regarding the operations of the Plaintiffs’ business.” Id. As a sales manager for StoneCoat GP and StoneCoat LP, Mergaux “had access to company records including financial records, business operations customer accounts, customer pricing, contract pricing, and wages and commissions and bonuses paid by Stonecoat GP and Stonecoat LP.” Id. The work performed by Mergaux for StoneCoat GP and StoneCoat LP “necessarily required” that Mergaux have access to and knowledge of what Morrison characterizes as “confidential, privileged and proprietary information and trade secrets of Stonecoat GP and Stonecoat LP.” Id., ¶ 36.

*43 According to Morrison, Mergaux went to work for Profanchik. Id., ¶ 35. Morrison claims Profanchik had knowledge of and was aware of StoneCoat GP’s work relationship with Mergaux because of the non-disclosure/non-complete agreement Profanchik entered into with SCOT, and Profanchik nevertheless solicited Mergaux to work for Profanchik and ProCal to enable ProCal to compete with Plaintiffs. Id., ¶¶ 42-43. Morrison asserts Mergaux failed to perform his obligations under the Mergaux NDA by disclosing StoneCoat GP’s and StoneCoat LP’s information to Plaintiffs’ competitor ProCal, and using StoneCoat GP’s and StoneCoat LP’s information to compete against Plaintiffs. Id., ¶¶ 34-35.

On or about December 21, 2011, Mergaux and Chamielec entered into an agreement with StoneCoat GP (referred to herein as the Product Rights Agreement). Id., ¶ 44. SCOT was not a party to the Product Rights Agreement. Id., ¶ 45. According to Morrison, as consideration for their “promises in the Product Rights Agreement,” Mergaux and Chamielec received and had access to what Morrison characterizes as “privileged and confidential information, intellectual property and trade secrets of Stonecoat.” Id., ¶ 46. Specifically, Mergaux and Chamielec “received financial information regarding the operations of Stonecoat GP and Stonecoat LP, privileged information regarding intellectual property, and information regarding wages and salaries and commissions paid by Stonecoat GP and Stonecoat LP, and [they] also received specialized intellectual property and day-to-day training regarding the operations of the Stonecoat GP and Stonecoat LP business.” Id. They “had access to company records including financial records, business operations customer accounts, customer pricing, contract pricing, and wages and commissions and bonuses paid by Stonecoat GP and Stonecoat LP.” Id.

Morrison asserts Mergaux and Chamielec failed to perform their obligations under the Product Rights Agreement by disclosing StoneCoat GP’s and StoneCoat LP’s information to Plaintiffs’ competitor ProCal, and using StoneCoat GP’s and StoneCoat LP’s information to compete against Plaintiffs. Id., ¶¶ 47-48. Morrison states all of the intellectual property of Mergaux and Chamielec regarding the business of Plaintiffs or ProCal was sold to StoneCoat GP in accordance with the Product Rights Agreement, and Mergaux and Chamielec do not own any of the intellectual property any longer. Rather, it is owned by StoneCoat GP and StoneCoat LP. Id., ¶ 48. According to Morrison, SCOT previously had a license for the intellectual property. Id.

Morrison states Profanchik knew – because of the disclosures made to him pursuant to the Profanchik NDA/NC – that Mergaux and Chamielec had knowledge of what Morrison characterizes as “the confidential, privileged and proprietary information and trade secrets of Stonecoat GP” pursuant to the Product Rights Agreement and Profanchik knew that pursuant to the Product Rights Agreement, Mergaux and Chamielec sold all of their intellectual property, confidential information and trade secrets regarding the matters described in the Product Rights Agreement to StoneCoat GP. Id., ¶¶ 54, 57-58. According to Morrison, Profanchik nevertheless solicited Mergaux and Chamielec to work for ProCal to enable ProCal to compete against Plaintiffs. Id., ¶¶ 54, 60.

According to Morrison in his updated affidavit, on January 29, 2019, the USPTO issued a Notice of allowance for SCOT’s patent. Id., ¶ 73. In ¶ 74 of the updated affidavit, Morrison states as follows:

*44 Id., ¶ 74.

11. Profanchik/ProCal’s 2016 “Defamation Cases” against Morrison/SCOT, generally

On December 8, 2016, ProCal Stone Design filed a civil lawsuit in the 296th Judicial District Court of Collin County Texas (“ProCal Defamation Lawsuit”). On the same day, Profanchik filed a civil lawsuit in the 68th Judicial District Court of Dallas County Texas (“Profanchik Defamation Lawsuit”) (together, “Defamation Cases”). Both Defamation Cases assert claims against Morrison and SCOT for defamation from alleged “false” Facebook, Better Business Bureau, and Google “customer reviews.” ProCal Stone Design non-suited its claims in the ProCal Defamation Lawsuit without prejudice so it could intervene in the Profanchik Defamation Lawsuit. Docket Entry # 155-1, Ex. 27 (ProCal Stone Design’s Notice of Non-Suit Without Prejudice filed in the ProCal Defamation Lawsuit).

In Profanchik’s Original Petition in the Profanchik Defamation Lawsuit, Profanchik asserts a defamation cause of action against Defendants. Bundren Aff., Ex. 9. In Plaintiffs’ First Amended Original Petition and Plea in Intervention filed by Profanchik and ProCal Stone Design in the Profanchik Defamation Lawsuit, Profanchik and ProCal Stone Design stated the lawsuit was “about Defendants’ recent campaign to defame and disparage Plaintiffs using fake customer complaints/advertisements for StoneCoat,” including a “fake customer complaint with the Better Business Bureau of Houston (BBB Houston) about Plaintiff’s new Houston location.” Docket Entry # 131-12, Ex. 10, ¶¶ 16-17. Like in the ProCal Defamation Lawsuit, Profanchik and ProCal Stone Design alleged in the Profanchik Defamation Lawsuit Defendants created a fake Facebook page which directed customers to StoneCoat as well as submitting or arranging for the submission of fake customer reviews to Google Reviews and Ripoffreport.com “containing defamatory, deceptive and harassing language, purportedly signed by none other than former Eagles musician Don Henley.” Id., ¶¶ 18-19; see also Docket Entry # 131-12, Ex. 11 (Plaintiffs’ Opposition to Defendants’ Motion to Dismiss and for Damages, Cost and Attorneys Fees and Brief in Support of Plaintiffs’ Counter-Motion for Sanctions, and attachments thereto) (contending through affidavits the alleged fake reviews were made by “Ellis Merworth,” “Don Henley,” and “Jason France”). Profanchik and ProCal Stone Design assert the following causes of action against Morrison and SCOT in the Profanchik Defamation Lawsuit: (1) defamation; (2) business disparagement; and (3) deceptive trade practices. Id., ¶¶ 21-34.

V. PLAINTIFFS’ LANHAM ACT CLAIMS (COUNT 1)

A. The claims

In Count 1, Plaintiffs allege Defendants have engaged in unfair competition and false advertising in violation of Section 43(a) of the Lanham Act,15 U.S.C. § 1125(a) and § 1114. Docket Entry # 103, ¶ 142. Specifically, Plaintiffs assert “Defendants, directly and by and through their agents, officers, directors, managers, consultants and employees are making false, or misleading representations of fact concerning the nature, characteristics or qualities of Defendants’ products, goods and services in its advertising and promotion for Defendants’ products, goods and services” and have “deceived or have the capacity to deceive customers as to the inherent qualities and characteristics of Defendants’ products, goods, and services.” Id., ¶¶ 145-46.

*45 Plaintiffs further allege they own a registered trademark, and Defendants have infringed Plaintiffs’ trademarks. Id., ¶ 154. According to Plaintiffs, “Defendants, directly and by and through their agents, officers, directors, managers, consultants and employees are engaging in unfair competition and unlawful misappropriation and use of Plaintiffs’ trade secrets, and infringement of plaintiffs’ trademarks. Id., ¶ 143.

Plaintiffs seek the recovery of Defendants’ profits, damages sustained by Plaintiffs, and cost of this action in addition to three times the amount as provided for in 15 U.S.C.§ 1117. Id., ¶ 155.

B. Applicable law

Section 1114(1) of the Lanham Act prohibits the “use in commerce [of] any reproduction, counterfeit, copy, or colorable imitation” of a registered trademark “in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” Galvotec Alloys, Inc. v. Gaus Anodes Int’l, LLC, No. 7:13-CV-664, 2014 WL 6805458, at *5 (S.D. Tex. Dec. 2, 2014) (quoting 15 U.S.C. § 1114(1)(a)). “Section 1125(a)(1)(A) similarly prohibits unfair competition with respect to registered and unregistered trademarks.” Galvotec, 2014 WL 6805458, at *5 (citing 15 U.S.C. § 1125(a)(1)(A); Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 235 n. 8 (5th Cir.2010)) (emphasis in Galvotec). To prevail on either claim, a claimant must establish it has a legally protectable mark and show infringement by demonstrating a likelihood of confusion. Galvotec, 2014 WL 6805458, at *5 (citing Amazing Spaces, 608 F.3d at 235–36; Amstar Corp. v. Domino’s Pizza, Inc., 615 F.2d 252, 258 (5th Cir.1980) (claims under §§ 1114(1) and 1125(a)(1)(A) both require showing of likelihood of confusion)).[36]

The Fifth Circuit has identified several factors, known as the digits of confusion, to determine whether there is a likelihood of confusion: “(1) strength of the plaintiff’s mark; (2) similarity of design between the marks; (3) similarity of the products; (4) identity of retail outlets and purchasers; (5) similarity of advertising media used; (6) the defendant’s intent; (7) actual confusion; and (8) degree of care exercised by potential purchasers. The absence or presence of any one factor ordinarily is not dispositive; indeed, a finding of likelihood of confusion need not be supported even by a majority of the ... factors.” Coach Inc. v. Sassy Couture, No. SA-10-CV-601-XR, 2012 WL 162366, at *5 (W.D. Tex. Jan. 19, 2012) (quoting Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 484-85 (5th Cir. 2004) (internal quotations omitted)).

*46 “The law of false advertising is part of the broader law of unfair competition.” 44 Am. Jur. Proof of Facts 3d 1 (Originally published in 1997); see also Seven-Up Co. v. Coca-Cola Co., 86 F.3d 1379, 1382 (5th Cir. 1996) (“The Lanham Act was enacted ‘to protect persons engaged in such commerce against unfair competition.’ 15 U.S.C. § 1127”). Section 1125(a)(1)(B) of the Lanham Act, which has been interpreted by the Fifth Circuit as protecting against false advertising, provides in relevant part:

Galvotec, 2014 WL 6805458, at *11 (quoting 15 U.S.C. § 1125(a)(1)(B); Pizza Hut, Inc. v. Papa John’s Int’l, Inc., 227 F.3d 489, 495 (5th Cir.2000)).

C. Discussion

1. Unfair competition

As an initial matter, Plaintiffs’ claim for “unfair competition” is uncertain in the briefing. Defendants do not address a claim for “unfair competition” under the section of their motions regarding Plaintiffs’ Lanham Act claims,[37] because according to Defendants’ motions, the alleged Lanham Act violations fall into two categories: trademark infringement and false advertising.

In their responses, Plaintiffs assert they do not need to address unfair competition because Defendants’ motions do not address their “Lanham Act claim for unfair competition.” See, e.g. Docket Entry # 206 at 21 (asserting “the unfair competition claim is not subject” to ProCal USA’s and ProCal Enterprises’ motion for summary judgment). However, relying on Texas case law, Plaintiffs then broadly assert that a claim for unfair competition “is the umbrella for all statutory and nonstatutory causes of action arising out of business conduct which is contrary to honest practice in industrial or commercial matters.” See, e.g. Docket Entry # 150 at 19 (quoting Taylor Pub. Co. v. Jostens, Inc., 216 F.3d 465, 486 (5th Cir. 2000) (quoting American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir.1974)). According to Plaintiffs, in general, the tort requires the plaintiff show an illegal act by the defendant which interfered with the plaintiff’s ability to conduct its business. Docket Entry # 150 at 19 (citing Taylor Pub. Co., 216 F.3d at 486). Plaintiffs argue Defendants’ “concert of action” in executing non-disclosure/non-complete agreements and then breaching those agreements by disclosing Plaintiffs’ confidential information and alleged trade secrets to Profanchik and ProCal “is a civil illegal act and constitutes unfair competition.” Docket Entry # 148 at 17; see also Docket Entry # 206 at 6 (“The unfair competition claims derive from Procal’s intentional conduct.”).

*47 Kinser states in his reply Plaintiffs agree in their response that their unfair competition allegations are not separate torts, and “they rest liability on alleged misappropriation of trade secrets and breach of contract,” which are addressed separately in the motions for summary judgment. Docket Entry # 174 at 5. The Court will also address this issue in its discussion of Plaintiff’s unfair competition claims (Count 9) below.[38]

2. Trademark infringement

Turning to the first of Plaintiffs’ Lanham Act claims as addressed in Defendants’ motions, Defendants assert Plaintiffs do not have any evidence to support their trademark infringement claims. Defendants’ motions focus on the “blown Stone” trademark specifically referenced in the Second Amended Original Complaint,[39] whereas Plaintiffs’ responses focus instead on the “Stonecoat” trademark not specifically referenced in their complaint. Plaintiffs state “blown Stone” is “not a basis of Plaintiffs’ trademark violation contention.” See Docket Entry # 148 at 16; Docket Entry # 150 at 19. Based on this representation, the Court recommends Defendants’ motions for summary judgment as to any Lanham Act trademark infringement claim regarding “blown Stone” be granted.

Because Defendants did not specifically address the “Stonecoat” trademark in their motions, Plaintiffs argue the motions on this issue should be denied. However, in their replies, Defendants assert Plaintiffs did not plead a trademark infringement claim for the “Stonecoat” trademark and move to strike Plaintiffs’ “new argument raised related to allegations of infringing the mark ‘Stonecoat’ when those arguments are outside the scope of Plaintiffs’ pleadings.” See, e.g. Docket Entry # 169 at 6. In their surreply in response to Villarreal’s and Gonzalez’s reply, Plaintiffs argue Defendants were clearly aware of the “Stonecoat” trademark registered to StoneCoat GP because it was produced in the Collin County Litigation on July 5, 2017 and re-produced in Plaintiffs’ disclosures in the current lawsuit on August 27, 2017. Docket Entry # 187 at 2; see also Docket Entry # 188, Ex. 1.

*48 The Court will not strike Plaintiffs’ arguments regarding “Stonecoat.” Although Plaintiffs do not reference the trademark for “Stonecoat” in their complaint, they do clearly assert a claim for trademark infringement. As urged by Plaintiffs, Defendants do not dispute Plaintiffs registered “Stonecoat” with the U.S. Patent and Trademark Office on March 5, 2013. See Docket Entry # 148-1, Ex. 9 at 104. Nor do Defendants deny their knowledge of Plaintiffs’ registered trademark for “Stonecoat.” Docket Entry # 187 at 2; Docket Entry # 188 at 6.

Regardless, Defendants have argued there is no evidence to show they used or infringed the “Stonecoat” mark. In their motion, ProCal USA and ProCal Enterprises argue there is no evidence they “have ever used the ‘Blown Stone’ or ‘Stone Coat’ marks in commerce or that [they] have ever used any counterfeits or imitations which could be confusing to customers.” Docket Entry # 195 at 11 (emphasis added). Similarly, Villarreal and Gonzalez argue in their reply that even if the new allegations regarding “Stonecoat” are allowed by the Court, “Plaintiffs’ Exhibit 10 [purported YouTube advertisements] is not competent evidence, but even considering it, there is no indicia on the document that shows [Villarreal’s or Gonzalez’s] participation.” Docket Entry # 169 at 6.

To prevail on their claim of trademark infringement under the Lanham Act, Plaintiffs must show (1) they possess valid trademarks; and (2) Defendants’ use of their trademarks creates a likelihood of confusion as to source, affiliation, or sponsorship. Nola Spice Designs, L.L.C. v. Haydel Enterprises, Inc., 783 F.3d 527, 536 (5th Cir. 2015) (citing Nat'l Bus. Forms & Printing, Inc. v. Ford Motor Co., 671 F.3d 526, 532 (5th Cir.2012); 15 U.S.C. § 1114(1)).

Plaintiffs’ only argument regarding “Stonecoat” is “there is evidence that Procal, in conspiracy and participation with the other Defendants, infringed the StoneCoat GP and StoneCoat LP ‘Stonecoat’ mark in commercial advertising promoting Procal published by Procal on YouTube.” Docket Entry # 206 at 4. In his updated affidavit, Morrison states as follows:

Morrison Aff., ¶ 67.

Defendants objected to ¶ 67 of the updated affidavit, and Exhibit 10 attached thereto, because the testimony and exhibit are not properly authenticated, lack foundation, and are speculative and conclusory. In its June 28, 2019 granting in part and denying in part Defendants’ motions to strike various portions of Morrison’s affidavit, the Court agreed and sustained Defendants’ objections to ¶ 67 and attached Exhibit 10. Docket Entry # 225 at 32 (“Regarding Exhibit 10, there is no indicia that these photos actually came off the YouTube website. For example, there is not a YouTube logo or url header/footer listed on Exhibit 10. While there does appear to be a ProCal logo on the bottom of the photo, Defendants argue that could have been copied and pasted by anyone with minor computer skills. The Court agrees the lack of any identifying information related to where these photos originated makes them unreliable.”).

*49 The only other evidence regarding Plaintiffs’ trademark infringement claim against Defendants are Morrison’s conclusory statements in his updated affidavit that “Profanchik and Procal have misappropriated Stonecoat GP and Stonecoat LP’s trademarks and have used those trademarks in the marketplace to promote and sell Profanchik’s and Procal’s products and services” and that they have “caused confusion in the marketplace regarding the products and services ... promoted in the marketplace by Profanchik and Procal.” Morrison Aff., ¶ 65.

This evidence is insufficient to carry Plaintiffs’ burden at the summary judgment stage. Berge v. Republic National Inc., No. 3:17-CV-1367-D, 2018 WL 2267095, *3 (N.D. Tex. May 17, 2018) (citing Stagliano v. Cincinnati Ins. Co., 633 Fed. Appx. 217, 219 (5th Cir. 2017) (per curiam) (“[W]e think that a single conclusory ... affidavit, devoid of any factual support ... was insufficient to meet Plaintiff’s burden of designating specific facts that there is a genuine issue for trial.”) (internal brackets and quotation marks omitted); Orthopedic & Sports Injury Clinic v. Wang Lab, Inc., 922 F.2d 220, 224 (5th Cir. 1991) (“[T]here is a level of conclusoriness below which an affidavit must not sink if it is to provide the basis for a genuine issue of material fact.”)). Here, the record evidence is insufficient to create a genuine issue of material fact that Defendants, much less Kinser, Villarreal and Gonzalez, used in commerce any reproduction, counterfeit, copy, or colorable imitation of the “Stonecoat” trademark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion or to cause mistake or to deceive. No reasonable jury could find Defendants used “Stonecoat” as required for such a claim or that any such use created a likelihood of confusion in the minds of potential consumers as to the source, affiliation, or sponsorship of Defendants’ products or services. Springboards To Educ., Inc. v. Houston Indep. Sch. Dist., 912 F.3d 805, 812 (5th Cir. 2019), as revised (Jan. 29, 2019), as revised (Feb. 14, 2019) (citing Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 193 (5th Cir. 1998)).

The Court, having considered all of the evidence of record and drawing all reasonable inferences in favor of Plaintiffs, recommends Defendants’ motions for summary judgment regarding Plaintiffs’ trademark infringement claims be granted. The Court now considers Plaintiffs’ Lanham Act claim for “false advertising.”

3. False advertising claim

a. The parties’ assertions

Defendants assert Plaintiffs have produced “no evidence to support the generic allegation” that they made false and misleading statements of facts concerning the nature, characteristics, or qualities of ProCal’s products, goods, or services. Docket Entry # 128 at 14; Docket Entry # 127 at 14. Id. Defendants further assert there is no evidence of actual deception as required to meet the materiality component of a false advertising claim. Nor is there any evidence that a defendant’s representations have a tendency to deceive customers, according to Defendants.

In their motions for summary judgment, the remaining individual defendants assert Plaintiffs have failed to identify a “single alleged false statement published by any defendant in a commercial advertisement, let alone one made by Justin,” Villarreal, or Gonzalez.[40] Id. Similarly, ProCal USA and ProCal Enterprises argue Plaintiffs have failed to identify a single alleged false statement published by them in a commercial advertisement. Docket Entry # 195 at 10.

*50 In response, Plaintiffs assert Defendants have falsely stated in commercial advertising that Defendants “invented” sprayed limestone and have been in the sprayed vertical limestone business for “over 17 years.” See, e.g. Docket Entry # 148 at 15. According to Plaintiffs, Defendants have made these literally “false statements on their website, and in TV ads and print advertising distributed by the United States Postal Service in interstate commerce,” and “Defendants have participated in these false statements and have allowed their images to be used in these false statements.” Id. Plaintiffs argue the statements have a tendency to deceive a substantial segment of the consuming audience.

Specifically, Plaintiffs assert customers “have been obviously deceived by Defendants’ literally false statement regarding the length of time – ‘17 years’ – that Defendants have been involved in the sprayed vertical limestone business and consumers have been confused and deceived by Defendants’ statement that they ‘invented’ sprayed limestone, again, a literally false statement.” Id. Plaintiffs argue these statements are “literally false and are contradicted” by the affidavits of Profanchik, Kinser, Villarreal, and Gonzalez, which confirm that Profanchik did not create ProCal Stone Design and “get started in the sprayed limestone business until the latter part of 2015 and then opened for business as ‘Procal’ in January 2016.” Docket Entry # 206 at 20.

In its reply, ProCal Stone Design points out Plaintiffs have not submitted a specific advertisement for the Court’s review. Docket Entry # 175 at 5. According to ProCal Stone Design, there is “no specific evidence provided to show 1) where the advertisements allegedly ran (location), 2) during what time period the alleged advertisements ran (i.e., was it a one-time thing or did it consist of an advertising campaign that ran over a year) or 3) the forum where the advertisement ran.” Id. Nor is there any evidence the alleged false advertisements were made in interstate commerce, according to ProCal Stone Design. Id. at 6. According to ProCal Stone Design, “[e]ven if Plaintiffs were to submit late-filed evidence in an attempt to substantiate their allegations, which would be improper, they cannot overcome the fact that ProCal purchased the [French] ‘formula’ in an arm’s length transaction after the Product Rights Agreement was terminated, and through that purchase obtained certain rights.” Id. (citing Mergaux Decl. attached as Ex. 1 to Docket Entry # 175).[41]

*51 In their replies, Kinser, Villarreal, and Gonzalez continue to maintain there is no evidence that any of them participated in making statements in advertisements that stated they invented sprayed limestone or had been in business for over seventeen years. According to these individual defendants, the only evidence submitted allegedly relates to ProCal. Docket Entry # 169 at 6; Docket Entry # 174 at 5.

Regarding Kinser specifically, Plaintiffs state in their surreply he was the senior vice president of ProCal; he does not dispute in his reply that Defendants falsely stated in commercial advertising they “invented” sprayed limestone and that they have been in the sprayed vertical limestone business for “over 17 years;” and he does not dispute, and in fact admits, “he acted in concert with and participated with Profanchik in the establishing and developing” of ProCal. Docket Entry # 188 at 6 (citing Kinser Aff. (Docket Entry # 128-2), ¶¶ 36-42). Regarding Villarreal and Gonzalez, however, Plaintiffs merely argue the summary judgment evidence “establishes reasonable inferences that support factual disputes regarding Defendants’ literally false statements made in commercial advertisements ... and because reasonable inferences can be drawn in Plaintiffs’ favor, based on the summary judgment facts, [their] motion for summary judgment should be denied.” Docket Entry # 187 at 8.

Finally, regarding ProCal USA and ProCal Enterprises, Plaintiffs’ surreply argues as follows:

Docket Entry # 206 at 20.

b. Applicable law

The Fifth Circuit regularly states the elements of a false advertising claim under 15 U.S.C. § 1125(a)(1)(B) to be: “(1) A false or misleading statement of fact about a product; (2) Such statement either deceived, or had the capacity to deceive a substantial segment of potential consumers; (3) The deception is material, in that it is likely to influence the consumer’s purchasing decision; (4) The product is in interstate commerce; and (5) The plaintiff has been or is likely to be injured as a result of the statement at issue.” Pizza Hut, 227 F.3d at 495. In order to obtain monetary damages or equitable relief in the form of an injunction, “a plaintiff must demonstrate that the commercial advertisement or promotion is either literally false, or that if the advertisement is not literally false, it is likely to mislead and confuse customers.” Id. (internal quotations omitted). If the statement is shown to be misleading, the plaintiff must also introduce evidence of the statement’s impact on consumers, referred to as materiality. Id. (citing American Council of Certified Podiatric Physicians and Surgeons v. American Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 614 (6th Cir.1999)).

*52 With respect to materiality, when the statements of fact at issue are shown to be literally false, the plaintiff need not introduce evidence on the issue of the impact the statements had on consumers. Pizza Hut, 227 F.3d at 497 (citations omitted). In such a circumstance, the court will assume that the statements actually misled consumers. Id. On the other hand, if the statements at issue are either ambiguous or true but misleading, the plaintiff must present evidence of actual deception. Id. The Fifth Circuit has cautioned against conflating the injury requirement for the false advertising claim with the requirement that a plaintiff prove his actual damages in order to obtain relief. See Logan v. Burgers Ozark Country Cured Hams Inc., 263 F.3d 447, 462–63 (5th Cir. 2001) (citing Balance Dynamics Corp. v. Schmitt Indus., 204 F.3d 683, 689 (6th Cir.2000) (noting the importance of “clearly distinguishing the elements necessary to prove a breach of the Lanham Act from the elements necessary to justify a certain remedy for that breach”)).

Fifteen U.S.C. § 1117(a) provides for the following damages for a violation under 15 U.S.C. § 1125(a) for false advertising: “(1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” Logan, 263 F.3d at 463 n. 11. Typically, injunctive relief is available even where a false advertising plaintiff cannot prove concrete enough damage to qualify for monetary relief. Retractable Techs., Inc. v. Becton Dickinson & Co., 919 F.3d 869, 877 n. 35 (5th Cir. 2019). For example, while the Fifth Circuit Court of Appeals “generally will require a plaintiff seeking monetary relief to demonstrate actual consumer confusion or deception, [it] relax[es] that requirement for a plaintiff seeking purely injunctive relief—the latter need only prove that the advertisement tends to deceive consumers.” Id. (citing Pizza Hut, 227 F.3d at 497–98) (emphasis in Retractable Techs.).

c. Analysis

The first basic element of a false advertising claim requires a plaintiff to show the defendant has made false or misleading statements as to his own product (or another’s). Seven-Up Co., 86 F.3d at 1383, n. 3. As part of this element, the court must determine whether the defendants may be said to have made false or misleading statements in the context of “commercial advertising or promotion.” Id.

“False or misleading” descriptions or representations create two different theories of recovery in a false advertising claim under the Lanham Act: a plaintiff must allege either (1) that the challenged representation is literally false or (2) that it is literally true but nevertheless misleading. In re GNC Corp., 789 F.3d 505 (4th Cir. 2015). If a plaintiff’s theory of recovery on Lanham Act false advertising claim is premised upon a claim of implied falsehood, a plaintiff must demonstrate, by extrinsic evidence, that the challenged advertisements tend to mislead or confuse consumers. PBM Products, LLC v. Mead Johnson & Co., 639 F.3d 111, 98 U.S.P.Q.2d 1377 (4th Cir. 2011). To constitute false advertisement under Lanham Act, a “literally false” message may be either explicit or conveyed by necessary implication when, considering the advertisement in its entirety, the audience would recognize the claim as readily as if it had been explicitly stated. Innovation Ventures, LLC v. N.V.E., Inc., 694 F.3d 723, (6th Cir. 2012) (applying federal law) .

Putting aside the fact Plaintiffs do not sufficiently distinguish the actions of each defendant, the Court considers whether Plaintiffs have produced sufficient evidence to create a genuine issue of material fact that any defendant made alleged false advertisements in interstate commerce. In Seven-Up Co., the Fifth Circuit considered whether the Coca-Cola presentation at issue fell within the meaning of “commercial advertisement or promotion” under the Lanham Act. 86 F.3d at 1383. The court noted the Lanham Act does not define either “advertising” or “promotion.” Id.

*53 According to the Fifth Circuit, courts should give the terms “advertising” and “promotion” their “plain and ordinary meanings.” Id. at 1384 (quoting American Needle & Novelty, Inc. v. Drew Pearson Marketing, Inc., 820 F.Supp. 1072, 1077 (N.D. Ill.1993); see also Alfred Dunhill Ltd. v. Interstate Cigar Co., 499 F.2d 232, 236 (2d Cir.1974) (“[N]otwithstanding that § 43(a) applies to a broad range of misrepresentations, it does not have boundless application ... but is limited to false advertising as that term is generally understood.”) (internal quotation marks omitted in Seven-Up Co.)). The Fifth Circuit noted, however, courts are also in agreement that “the Act’s reach is broader than merely the ‘classic advertising campaign.’ ” Seven-Up Co., 86 F.3d at 1384 (citing Gordon & Breach Science Publishers v. American Inst. of Physics, 859 F.Supp. 1521, 1534 (S.D.N.Y. 1994) (citing cases)).

The Fifth Circuit found the Gordon & Breach court’s summary of the requirements for establishing “commercial advertising or promotion” to be both “accurate and sound.” Seven-Up Co., 86 F.3d at 1384. According to the court in Gordon & Breach:

Gordon & Breach, 859 F.Supp. at 1535–36.

In applying these criteria to the Seven-Up Co. case, the Fifth Circuit noted “both the required level of circulation and the relevant ‘consuming’ or ‘purchasing’ public addressed by the dissemination of false information will vary according to the specifics of the industry.” 86 F.3d at 1385. The court further noted “[w]here the potential purchasers in the market are relatively limited in number, even a single promotional presentation to an individual purchaser may be enough to trigger the protections of the Act.” Id. at 1386. The Fifth Circuit concluded Coca-Cola’s presentation fell within the meaning of “commercial advertising or promotion” under § 43(a) of the Lanham Act. Id.

In support of their false advertising claim, Plaintiffs rely on Morrison’s updated affidavit, wherein he states as follows:

*54 Morrison Aff., ¶ 74.[42]

Once the movant has carried its burden, the nonmovant must “respond to the motion for summary judgment by setting forth particular facts indicating there is a genuine issue for trial.” Byers, 209 F.3d at 424 (citing Anderson, 477 U.S. at 248-49). The nonmovant must adduce affirmative evidence. Anderson, 477 U.S. at 257. Here, Plaintiffs have failed to produce “significant probative evidence” in response to Defendants’ appropriately-supported motions for summary judgment. United States v. Lawrence, 276 F.3d 193, 197 (5th Cir. 2001). Again, Morrison’s affidavit is insufficient to carry Plaintiffs’ burden at the summary judgment stage. Berge, 2018 WL 2267095, *3 (citing Stagliano, 633 Fed. Appx. at 219 (“[W]e think that a single conclusory ... affidavit, devoid of any factual support ... was insufficient to meet Plaintiff’s burden of designating specific facts that there is a genuine issue for trial.”) (internal brackets and quotation marks omitted)).

Importantly, Plaintiffs have not submitted a specific advertisement (or more informal type of promotion) for the Court’s review. Thus, there is no evidence from which the Court could apply the relevant criteria. As urged by ProCal Stone Design, there is “no specific evidence provided to show 1) where the advertisements allegedly ran (location), 2) during what time period the alleged advertisements ran (i.e., was it a one-time thing or did it consist of an advertising campaign that ran over a year) or 3) the forum where the advertisement ran.” Docket Entry # 175 at 5. Nor is there any evidence the alleged false advertisements were made in interstate commerce.

In short, Plaintiffs have not “sufficiently evidenced that [Defendants] made a false statement of fact about its product in a commercial advertisement.” See OrthoAccel Techs., Inc. v. Propel Orthodontics, LLC, No. 4:16-CV-00350-ALM, 2017 WL 1495177, at *3 (E.D. Tex. Apr. 26, 2017). Plaintiffs have not met their burden in showing the alleged false advertising statements (that ProCal “invented” the vertical limestone product and that Procal had been in the vertical limestone business for “over 17 years”) were sufficiently disseminated in interstate commerce. Nor have Plaintiffs “evidenced the final element, likelihood of injury. ...” Id. at *4 (In finding OrthoAccel had shown a genuine issue of material fact existed for its false advertising claim, the court noted during the 39-month period before Propel launched the VPro5 and began their alleged false advertising, OrthoAccel’s monthly net revenues increased on a year-over-year basis in 38 of 39 months; OrthoAccel’s annual operating plan and actual revenues varied by 7% in 2014 and 2% in 2016; and OrthoAccel experienced a sharp decline in sales following the launch of the VPro5, resulting in a variance of 57% from April to July 2016).

*55 Viewing the evidence in the light most favorable to Plaintiffs and drawing all reasonable inferences in their favor, the Court is convinced there are no material issues of fact and Defendants’ are thus entitled to judgment as a matter of law on Plaintiffs’ “false advertising” Lanham Act claim. The Court recommends Defendants’ motions for summary judgment regarding all of Plaintiffs’ Lanham Act claims be granted.

VI. PLAINTIFFS MISAPPROPRIATION OF TRADE SECRET AND CONVERSION CLAIMS (COUNTS 2-5)

A. Plaintiffs’ claims

According to Plaintiffs, StoneCoat GP and StoneCoat LP have asserted claims against the ProCal entities, Profanchik, Kinser, Villarreal, and Gonzalez for common law misappropriation of trade secrets (Count 2) and in Count 3 for “jointly participating in and conspiring to misappropriate trade secrets under ... the United States Defend Trade Secrets Act of 2016 and the Texas Uniform Trade Secrets Act (‘TUTSA’), Tex. Civ. Prac. & Rem. Code Ann. § 134A.001 et seq.” Docket Entry # 148 at 18. In their conversion claim (Count 4), Plaintiffs allege “Defendants have exercised unauthorized dominion and control over Plaintiffs’ property, including the confidential and proprietary information and trade secrets of Plaintiffs, and have thereby converted Plaintiffs’ property to Defendants on use.” Docket Entry # 103, ¶ 183. Plaintiffs’ claims in Count 5 are brought pursuant to the “Texas Theft Liability Act.” According to Plaintiffs, “Defendants have committed and continue to commit theft of Plaintiffs’ trade secrets and confidential and proprietary information including, without limitation, as defined in Section 134.002(2) of the Texas Civil Practice and Remedies Code, and § 31.03(a)(b) of the Texas Penal Code.” Docket Entry # 103, ¶ 191.

Defendants move for summary judgment on misappropriation of trade secrets and related claims (Counts 2-5), all of which rely on the existence of a trade secret as an essential element. According to Defendants, Plaintiffs do not have any trade secrets; Plaintiffs did not disclose any trade secrets to Defendants, and there is no evidence Defendants are using any such information; and Plaintiffs have no damages. Before setting forth the applicable law on trade secret misappropriation, the Court briefly addresses Plaintiffs’ conversion claim.

B. Conversion

1. Applicable law

Under Texas law, conversion is “unauthorized and wrongful assumption and exercise of dominion and control over the personal property of another, to the exclusion of or inconsistent with the owner’s rights.” Beardmore v. Jacobsen, 131 F. Supp. 3d 656, 666 (S.D. Tex. 2015) (quoting Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir.2003) (quoting Waisath v. Lack’s Stores, 474 S.W.2d 444, 447 (Tex.1971))). When an “allegation involves only intellectual property rights ... rather than rights regarding physical property ... [it] is outside the scope of Texas conversion law, which concerns only physical property.” Id.

A few courts have allowed trade secret misappropriation claims styled as conversion claims. Beardmore, 131 F. Supp. 3d at 666, n. 1 (citing Cuidado Casero Home Health of El Paso, Inc. v. Ayuda Home Health Care Servs., LLC, 404 S.W.3d 737, 749 (Tex.App.– El Paso 2013, no pet.) (“The taking of a party’s confidential client list and trade secrets can be the basis for a conversion claim.”); Deaton v. United Mobile Networks, L.P., 926 S.W.2d 756 (Tex.App.– Texarkana 1996), rev'd on grounds of insufficient damages, 939 S.W.2d 146 (Tex.1997) (same); Chandler v. Mastercraft Dental Corp. of Tex., Inc., 739 S.W.2d 460 (Tex.App. – Fort Worth 1987, writ denied) (conversion of “patterns, molds, castings” as well as a “whole system of processing and manufacturing” an orthodontic chair)); but see Xpel Technologies Corp. v. Am. Filter Film Distributors, CIVA SA–08–CA175–XR, 2008 WL 3540345, at *6 (W.D. Tex. Aug. 11, 2008) (“[T]he Court explicitly rejects the assumption in Chandler that conversion of trade secrets is a cognizable claim under Texas law. Such assumption neither comports with the reasoning of the majority of Texas courts nor logically is reconcilable with the elements required to prove conversion.”); see also In re Simons Broad., LP, CIV. W–11–CA–172, 2013 WL 9542015, at *13 (W.D. Tex. Nov. 19, 2013) (“[T]he Court declines to depart from the interpretation of Texas law shared by the majority of Texas courts and the Fifth Circuit, and holds that conversion applies only to physical property under Texas law.”).

2. Analysis

*56 Here, Plaintiffs allege conversion of intangible confidential information and certain “trade secrets.” Conversion does not apply to Defendants’ alleged acts in connection with StoneCoat, “which are more properly considered in relation to [Plaintiffs’] trade secret ... claims.” Beardmore, 131 F. Supp. 3d at 668. The Court recommends Defendants’ motions for summary judgment regarding Plaintiffs’ conversion claim (Count 4) be granted.

C. Trade secret law

1. Generally

Trade secret misappropriation began as a “solely common-law claim,” but with the enactment of the Texas Theft Liability Act (“TTLA”) in 1989, “the Texas Legislature provided an additional civil remedy to victims of trade-secret theft as defined in the Texas Penal Code.” BHL Boresight, Inc. v. Geo-Steering Sols., Inc., No. 4:15-CV-00627, 2017 WL 2730739, at *10 (S.D. Tex. June 26, 2017) (citing Beardmore, 131 F. Supp. 3d at 668). As a result, parties could assert both claims against the same defendant if the facts supported it. See, e.g., Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 591 (5th Cir. 2015); Intermoor Inc. v. Wilson, 4:14-CV-01392, 2016 WL 1107083, at *2 (S.D. Tex. Mar. 22, 2016); Beardmore, 131 F. Supp. 3d at 666; Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 449 n.3 (5th Cir. 2007). In such cases, the common law governed the trade-secret-misappropriation claim, while the TTLA governed the theft-of-trade-secret claim. BHL, 2017 WL 2730739, at *10 (citing Samsung Elecs. Am., Inc. v. Yang Kun Chung, 3:15-CV-4108-D, 2017 WL 635031, at *14 (N.D. Tex. Feb. 16, 2017); Raybourne & Dean Consulting, Ltd. v. Metrica, Inc., SA-14-CA-918-OLG, 2015 WL 12866214, at *13 (W.D. Tex. Apr. 10, 2015), report and recommendation adopted sub nom. Raybourne & Dean Consulting v. Metrica, Inc., SA-14-CV-00918-OLG, 2015 WL 12867469 (W.D. Tex. May 7, 2015)).

In 2013, in an effort to bring Texas law in line with the “overwhelming majority of the United States” and “provid[e] a simple legislative framework for litigating trade secret issues in Texas,” the Texas Legislature enacted a modified version of the Uniform Trade Secrets Act. BHL, 2017 WL 2730739, at *11 (quoting Texas Bill Analysis, S.B. 953, 2013 at 1). The enrolled bill, known as the TUTSA, became effective on September 1, 2013, and displaces both common-law misappropriation-of-trade-secret and TTLA theft-of-trade-secret claims. BHL, 2017 WL 2730739, at *11 (citing In re Mandel, 578 Fed. Appx. 376, 384 n.8 (5th Cir. 2014) (per curiam) (unpublished); Educ. Mgmt. Servs., LLC v. Tracey, 102 F. Supp. 3d 906, 915 (W.D. Tex. 2015)).

“Notwithstanding the merger of TTLA theft-of-trade-secret claims and common-law misappropriation into the TUTSA framework in 2013, because the TUTSA is not retroactive, a plaintiff may still proceed with TTLA theft-of-trade secret, common-law, and TUTSA trade-secret-misappropriation claims in a single case depending on when his claims accrued and what claims the facts of his case support.” BHL, 2017 WL 2730739, at *11 (citation omitted). “Importantly, when it comes to asserting common-law and TUTSA misappropriation claims, precise reliance on one or the other theory in the pleadings is immaterial if the elements of both are met.” Id. (citing Yang Kun Chung, 2017 WL 635031, at *14 (finding in context of 12(b)(6) motion that “Samsung’s misplaced reliance on TUTSA is immaterial, however, because Samsung also sufficiently pleads the elements of Texas common law misappropriation of confidential information.”)).

*57 As noted above, the TUTSA displaced inconsistent common law claims concerning conduct taking place after September 1, 2013; thus, notwithstanding Plaintiffs’ reference to the TTLA, the Court construes Plaintiffs’ allegations in Count 5 as a misappropriation of trade secrets claims under the TUTSA rather than a TTLA civil-theft claim.

The TUTSA defines trade secrets and misappropriation of trade secrets. Miner, Ltd. v. Anguiano, 383 F. Supp. 3d 682 (W.D. Tex. 2019) (citing TEX. CIV. PRAC. & REM. CODE § 134.002).[43] “These definitions are identical to those in TUTSA’s federal counterpart—the DTSA.” Id. (citing 18 U.S.C. § 1839). To show a party misappropriated a trade secret, the plaintiff must establish: (1) the information is a trade secret; (2) the defendant acquired the secret through improper means; and (3) the defendant’s use of the secret resulted in harm to the plaintiff. Id. (citing Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452, 463 (Tex. App.—Austin 2004)).

2. Specifically regarding trade secret misappropriation

Existence of a trade secret

“A trade secret ‘is one of the most elusive and difficult concepts in the law to define.’ ” Ultraflo Corp. v. Pelican Tank Parts, Inc., 926 F. Supp. 2d 935, 958 (S.D. Tex. 2013) (quoting Tewari De–Ox Systems, Inc. v. Mountain States/Rosen, LLC, 637 F.3d 604, 613 (5th Cir.2011) (quoting Lear Siegler, Inc. v. Ark–Ell Springs, Inc., 569 F.2d 286, 288 (5th Cir.1978)). Often “the question of whether certain information constitutes a trade secret ordinarily is best ‘resolved by a fact finder after full presentation of the evidence from each side.’ ” Ultraflo, 926 F. Supp. 2d at 958 (quoting Tewari,637 F.3d at 613) (quoting Lear Siegler, 569 F.2d at 289).

Courts in Texas identify trade secrets, proprietary information, and confidential information separately but provide them similar protection if the requirements—including that of secrecy– are met. Rimkus Consulting Grp., Inc. v. Cammarata, 688 F. Supp. 2d 598, 666 (S.D. Tex. 2010). The owner must take “reasonable measures to keep such information secret” and the information must “derive[ ] independent economic value” from remaining secret. Id. (quoting TEX. CIV. PRAC. & REM. CODE § 134.002(6)(A)-(B)). Once these two criteria are met, “all forms and types of information,” including any “program ... method ... technique ... financial data, or list of actual or potential customers” are classified as trade secrets. Id. (quoting TEX. CIV. PRAC. & REM. CODE § 134.002(5) (further noting the provision in the DTSA is relevantly similar: “the term ‘trade secret’ means all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing.” 18 U.S.C. § 1839(3)).

Improper means of acquiring another’s trade secret

*58 Under both the DTSA and TUTSA, misappropriation includes “acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means.” Primacy Eng’g, Inc. v. SAN Eng’g, No. 1:18-CV-129-RP, 2018 WL 3520143, at *2 (W.D. Tex. July 20, 2018) (quoting 18 U.S.C. § 1839(5)(A); TEX. CIV. PRAC. & REM. CODE § 134A.002(3)(A)). Under the second element of trade secret misappropriation, “[i]mproper means of acquiring another’s trade secrets include theft, fraud, unauthorized interception of communications, inducement of or knowing participation in a breach of confidence, and other means either wrongful in themselves or wrongful under the circumstances of the case.” Ultraflo, 926 F. Supp. 2d at 961 (quoting Astoria Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d 616, 636 (Tex.App.–Fort Worth 2007, pet. denied)).

Apart from any written contract, one of the duties that arises upon formation of an employment relationship “forbids an employee from using confidential or proprietary information acquired during the relationship in a manner adverse to the employer. This obligation survives termination of the employment.” Ultraflo, 926 F. Supp. 2d at 961 (quoting T–N–T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 21–22 (Tex.App. – Houston [1st Dist.] 1998) (citing Miller Paper Co. v. Roberts Paper Co., 901 S.W.2d 593, 600 (Tex.App. – Amarillo 1995, no writ))).

Use of a trade secret

“Use” of a trade secret refers to “commercial use” and occurs whenever “a person seeks to profit from the use of the secret.” Rimkus, 688 F. Supp. 2d at 666, n. 42 (citing Gen. Universal Sys., 500 F.3d at 450 (quoting Trilogy Software, 143 S.W.3d at 464)). “Use” is “any exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant.” Rimkus, 688 F. Supp. 2d at 666, n. 42 (quoting Gen. Universal Sys., 500 F.3d at 451 (quoting Restatement (Third) of Unfair Competition § 40)). Even in the absence of an enforceable nondisclosure agreement, a former employee may not use confidential information or trade secrets the employee learned in the course of his employment for his own advantage and to the detriment of his employer. Rugen v. Interactive Bus. Sys., Inc., 864 S.W.2d 548, 551 (Tex.App.– Dallas 1993, no writ).

Damages

“[W]hen one of the prima facie elements of a claim is damages and the claimant fails to introduce evidence of those damages, he or she commits a fatal error.” MGE UPS Sys., Inc. v. GE Consumer & Indus., Inc., 622 F.3d 361, 368 (5th Cir. 2010) (quoting Prunty v. Ark. Freightways, Inc., 16 F.3d 649, 652 (5th Cir.1994)). The Fifth Circuit has stated “that every case requires a flexible and imaginative approach to the problem of damages” and that “ ‘each case is controlled by its own peculiar facts and circumstances.’ ” Ultraflo, 926 F. Supp. 2d at 963 (quoting University Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 538 (5th Cir. 1974) (citing Enterprise Manufacturing Co. v. Shakespeare Co., 141 F.2d 916, 920 (6th Cir. 1944))). Where the damages are uncertain, “that uncertainty should not preclude recovery; the plaintiff should be afforded every opportunity to prove damages once the misappropriation is shown.” University Computing, 504 F.2d at 539.

D. Plaintiffs’ alleged trade secrets

In their motions, Defendants set forth all the items they assert do not constitute trade secrets under Texas law. According to Defendants, Plaintiffs also fail to prove they improperly acquired, or use(d), any of the following alleged trade secrets:

Docket Entry # 67 at 20-25; Docket Entry # 127 at 23-24; Docket Entry # 128 at 24-26.

Based on the foregoing, Defendants assert Plaintiffs cannot satisfy the six-factor test for developing, maintaining, and possessing any trade secrets, nor can Plaintiffs meet the other elements for trade secret misappropriation.

For ease of reference, the Court has extrapolated the following evidence of record relating to the existence of any trade secrets owned by Plaintiffs. Plaintiffs proffered as evidence Morrison’s affidavit, set forth in detail above, which contained Morrison’s claims as to the alleged trade secrets disclosed to Defendants. According to Morrison, after Profanchik signed the Profanchik NDA/NC and after Kinser signed the Kinser NDA/NC, Profanchik and Kinser received information which Morrison characterizes as “privileged and confidential information, intellectual property and trade secrets of Stonecoat GP and Stonecoat LP.” Morrison Aff., ¶¶ 17, 20-21. Morrison states all of the intellectual property of Mergaux and Chamielec regarding the business of Plaintiffs or ProCal was sold to StoneCoat GP in accordance with the Product Rights Agreement, and Mergaux and Chamielec did not own any of the intellectual property any longer. Id., ¶ 48. Rather, it is owned by StoneCoat GP and StoneCoat LP. Id. According to Morrison, SCOT previously had a license for the intellectual property. Id.

*61 According to Morrison, in February, March, and April of 2015, Profanchik and Kinser were given, in order for them to conduct their due diligence of StoneCoat, “tax returns, bank statements and other financial records, customer leads, customer names, marketing strategy, attorney-client privileged communication regarding the Hopkins [State] Litigation and it also included specialized training regarding the composition of the Stonecoat sprayed limestone product and specialized training regarding the proper application of the Stonecoat sprayed limestone product and Stonecoat’s business methods.” Id., ¶ 75. Morrison states Profanchik and Kinser received “financial information regarding the operations” of Plaintiffs, privileged information regarding intellectual property, and information regarding wages and salaries and commissions paid by Plaintiffs, and they also received “specialized intellectual property and day-today training” regarding the operations of Plaintiffs’ business. Id., ¶¶ 17, 21. Morrison further claims Profanchik received privileged information regarding lawsuits, patents, and trademarks. Id., ¶ 17. According to Morrison, StoneCoat protects this information by requiring individuals to sign written non-disclosure agreements, and StoneCoat GP and StoneCoat LP did not disclose what Morrison characterizes as confidential information or trade secrets publicly or to any individual unless the individual has signed a non-disclosure agreement. Id., ¶ 75.

Morrison states both Villarreal and Gonzalez signed non-disclosure and non-compete agreements and had access to what Morrison characterizes as “privileged and confidential information, intellectual property and trade secrets of Stonecoat GP and Stonecoat LP.” Id., ¶¶ 25-26, 28-29. Specifically, Villarreal and Gonzalez received “financial information regarding the operations” of Plaintiffs, “privileged information regarding intellectual property, and information regarding wages and salaries and commissions paid by Plaintiffs, and [they] also received specialized intellectual property and day-to-day training regarding the operations” of Plaintiffs’ business. Id., ¶¶ 26, 29.

According to Rick Adams, the vice president of operations for SCOT, in March and April 2015, Profanchik and Kinser attended numerous SCOT operations meetings with Morrison and Adams, and “the sales and business operations” of SCOT were discussed with Profanchik and Kinser during these meetings. Adams Aff., ¶ 15. In his affidavit, Adams states Kinser served as the operations manager for SCOT in the first quarter of 2015 and was aware of the SCOT distributorships and dealerships. Id., ¶ 7. Adams further states Kinser “received specialized training from Stonecoat to learn the Stonecoat business,” “attended the specialized training classes offered by Stonecoat at the Stonecoat corporate offices, and received a copy of the Stonecoat specialized training manual.” Id., ¶¶ 8-9. Kinser also received specialized training from Adams about the operations of the Stonecoat business.” Id.,¶ 8. Kinser acknowledged he had business strategy meetings with Morrison and also received e-mails regarding business opportunities and “leads to follow through on sales calls.” Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 207:5-17.

According to Adams, he “confirmed to John Profanchik the considerable business that Stonecoat had received deposits on from customers who were ready to have the Stonecoat product installed at their properties.” Adams Aff.,¶¶ 10, 16. Adams represents he was instructed by Morrison to give Profanchik the financial records of SCOT, and Adams gave those records, including the “check stubs and bank statements,” to Profanchik. Id.,¶ 11; see also id., ¶ 14 (stating Profanchik retained Terry Woods to review the financial records of SCOT); see Adams Dep. (Docket Entry # 67-1, Ex. 7) at 160:2-25 (stating at one point he gave Profanchik check stubs and bank statements going back one year but he never showed Profanchik or Kinser StoneCoat tax returns).

In his affidavit, Adams states he requested in late April 2015 that Profanchik return the financial records, but Profanchik never did so. Adams Aff.,¶¶ 11, 14. According to Adams, on April 24, 2015, he sent an e-mail to Profanchik requesting he return the financial information given him during his review of SCOT. Id.,¶ 12. Adams states Profanchik never responded to the e-mail, and he never returned the financial documents.[44] Id.

*62 In his individual deposition in the Collin County Litigation, Morrison stated he had five or six subsequent face-to-face meetings with Profanchik to discuss the opportunity of buying the business or partnering on it. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 243:8-244:3. Morrison stated he and Profanchik talked about formulation, toll blending, distributors, dealers, production agreements, the “French guy,” bank statements, check stubs, tax returns, and “everything.” Id. at 127:5-128:2.

During the trial in the Collin County Litigation, Morrison testified he gave confidential information to Profanchik pursuant to the Profanchik NDA/NC. Bundren Aff., Ex. 7 (Morrison trial testimony in Collin County Litigation) at 87:12-21. According to Morrison, this included strategic, technical, financial business sources related to StoneCoat and its products. Id. at 87:20-24 (further stating he “gave them everything”). Morrison testified he discussed marketing material, communication strategies, and StoneCoat’s “secret” provisional patent application with Profanchik. Id. at 90:15-91:5; 93:7-15; 94:3-98:24. According to Morrison, he also provided Profanchik with employee compensation information/the money that StoneCoat’s independent contractors were being paid to do jobs as well as information about the sales process, with the second step of that “process” referencing StoneCoat’s executive administrator Irma Villarreal. Id. at 155:2-156:15 & 158:4-9. Morrison stated he also shared with Profanchik in February 2015 StoneCoat’s manufacturing, blending and procurement process; StoneCoat’s current mission statement and core values; applications; the “employee overview;” and the “franchising overview” and strategy. Id. at 158:13-160:22.

Morrison also had discussions with Profanchik about StoneCoat’s distributor and dealer strategy, including who the distributors and dealers were. Id. at 160:23-25 & 161:24-162:5. Morrison also disclosed to Profanchik “sales product and application overview,” a lot of which was covered in StoneCoat’s training class. Id. at 164:12-166:3 (further stating StoneCoat does not make the content of the training session publicly available and requires someone to sign a nondisclosure/non-compete agreement prior to training). Morrison also shared with Profanchik the incomes receivables and outgoing costs; how StoneCoat bids projects; the costs for raw material, finished bag cost, retail costs, and what StoneCoat sells to the customers; StoneCoat’s “process for having [its] independent contractors apply the product;” and the “Home Depot initiative.” Id. at 166:4-18; 168:1-15; 172:2-23 (discussion of an e-mail from Morrison to Profanchik disclosing “the toll blending facility, the place where [StoneCoat manufactures its] bags”); 173:12-174:6 (stating he told Profanchik the “source of the aggregate”); 175:5-16 (discussing an e-mail from Morrison to Profanchik “passing off another lead to [Kinser] ... because he was going to be more the operational side” and he “was there every day with the StoneCoat shirt and running crews, and [StoneCoat was] trying to teach him the business and sales and operations, so this is just showing him another source and how leads come in”); 176:12-25 (discussing a March 24, 2015 e-mail from Villarreal to Profanchik wherein she provided him the list of StoneCoat’s installers, their salaries, and the internal personnel information); see e.g. Bundren Aff., Ex 8 (Trial exhibits).[45]

*63 The Court first considers whether the evidence is sufficient to create a genuine issue of material fact that Plaintiffs own(ed) a trade secret.

E. Discussion

1. Whether there is sufficient evidence Plaintiffs own(ed) a trade secret

a. Defendants’ assertions

In their motions, Defendants first assert Plaintiffs fail to prove they have any trade secrets under Texas law. As an overarching argument, Defendants contend the evidence establishes that “sprayed limestone veneer had been around in Europe long before Plaintiffs were involved with it;” Mergaux had ten dealers in the Metroplex applying the product by 2006 and had provided photo books, sales, and marketing training guides and videos to over one hundred people before he entered into an agreement with Morrison; and a “quick search on the internet reveals there are at least five companies nationwide performing similar services.”[46] Docket Entry # 128 at 22.

ProCal USA and ProCal Enterprises further argue, more specifically, as follows:

Docket Entry # 195 at 11.

b. Plaintiffs’ assertions

Plaintiffs argue the summary judgment record “clearly establishes that Profanchik and Kinser participated jointly and together in conducting the due diligence of SCOT and review of the trade secrets and confidential information ... and that Profanchik is the owner, majority member, manager and controls and directs the operations of the Procal entities.” Docket Entry # 150 at 25. Plaintiffs further assert the summary judgment record establishes Profanchik an d “Kinser received in January -April 2015 trade secrets and confidential information of Plaintiffs which was not accessible to the public or generally known publicly including, but not limited to, information regarding SCOT’s teaching partnerships and business opportunities and marketing strategies, the provisional patent application draft, tax returns, financial records, specialized training and attorney-client privileged information regarding a major lawsuit -- the Hopkins [State] Litigation.” Id. at 25-26. Plaintiffs state Kinser admits that on April 20, 2015 he ceased his employment with SCOT and that Gonzalez and three other employees of SCOT resigned the same day and that he and Gonzalez started spraying vertical limestone upon leaving SCOT. Id. at 23-24 (citing Kinser Aff., ¶¶ 36-37).

*64 Additionally, Plaintiffs assert StoneCoat GP acquired, pursuant to the Product Rights Agreement, all of the trade secrets and confidential information of Mergaux and Chamielec related to the sprayed vertical limestone business – both of whom, thereafter, went to work for ProCal, Profanchik and Kinser. Id. at 25. Plaintiffs maintain ProCal, Profanchik, and Kinser learned of the sale of the trade secrets in accordance with the Product Rights Agreement during their due diligence of SCOT and acquired Plaintiffs’ trade secrets and confidential information for purposes of their due diligence. Id.

Regarding Villarreal and Gonzalez, Plaintiffs contend the evidence of record shows they had access to and receipt of Plaintiffs’ business methods and operations, specialized training, financial records, employee records, wages, salaries, and payment schedules, among other things. Docket entry # 148 at 21. Plaintiffs assert Villarreal and Gonzalez admit they ceased their employment with StoneCoat and began working for Plaintiffs’ competitor, ProCal Stone Design – a company owned, controlled and managed by Profanchik and Kinser. Id. According to Plaintiffs, the “summary judgment record contains disputed facts regarding the trade secrets, ownership of the trade secrets and whether [Villarreal and Gonzalez] in participation and joint enterprise with Kinser, Profanchik and Procal misappropriated the trade secrets of Plaintiffs.” Id.

c. Analysis

Texas law defines a trade secret as “any formula, pattern, device, or compilation of information which is used in one’s business and presents an opportunity to obtain an advantage over competitors who do not know or use it.” Versata Software, Inc. v. Internet Brands, Inc., 902 F. Supp. 2d 841, 852 (E.D. Tex. 2012), aff’d, 550 Fed. Appx. 897 (Fed. Cir. 2014) (quoting In re Bass, 113 S.W.3d at 739 (citation and quotation omitted)). That definition is broad, and it encompasses matters as diverse as “a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers.” Versata, 902 F. Supp. 2d at 852 (citations omitted).

Before information can be a “trade secret,” there must be a substantial element of secrecy. American Precision Vibrator Co. v. National Air Vibrator Co., 764 S.W.2d 274, 276 (Tex.App.–Houston [1st Dist.] 1988, no writ). The owner of a trade secret “will lose his secret by its disclosure unless it is done in some manner by which he creates a duty and places it on the other party not to further disclose or use it in violation of that duty.” Ultraflo, 926 F. Supp. 2d at 959 (quoting Taco Cabana Inter., Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir.1991); Carson Prods. Co. v. Califano, 594 F.2d 453, 461 (5th Cir.1979) (“However strong may be the [plaintiff’s] case on other indicia of trade secret status, it is elemental that ‘[t]he subject matter of a trade secret must be secret’ ....The subject of a trade secret ‘must not be of public knowledge or of general knowledge in the trade or business.’ ”)). “[I]nformation generally known and readily available is not protectable. ... Consistent with this concept of secrecy, a former employee may use the general knowledge, skills and experience acquired during employment to compete with a former employee.” Ultraflo, 926 F. Supp. 2d at 959 (quoting Trilogy Software, 143 S.W.3d at 467 (citing T–N–T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 22 (Tex.App.– Houston [1st Dist.] 1998, no pet.), and Gonzales v. Zamora, 791 S.W.2d 258, 265 (Tex.App. – Corpus Christi 1990, no writ.))).

*65 Nevertheless, “[i]f a voluntary disclosure occurs in a context that would not ordinarily occasion public exposure, and in a manner that does not carelessly exceed the imperatives of a beneficial transaction, then the disclosure is properly limited and the requisite secrecy retained. [citations omitted].” Ultraflo, 926 F. Supp. 2d at 959 (quoting Taco Cabana, 932 F.2d at 1124 (citing Metallurgical Industries Inc. v. Fourtek, Inc., 790 F.2d 1195, 1200 (5th Cir.1986) (finding under Texas law that secrecy was not surrendered where disclosures were not public announcements and were divulged only to businesses with whom plaintiff dealt with the expectation of profit); see also Wellogix, Inc. v. Accenture, LLP, 823 F.Supp.2d 555, 564 (S.D.Tex.2011))). “Moreover the owner of a trade secret may provide it to employees who have pledged to secrecy and others in furtherance of business transactions from which the owner expects to profit without losing trade secret protection.” Ultraflo, 926 F. Supp. 2d at 959-60 (quoting Metallurgical, 790 F.2d at 1200). Nevertheless, “[o]ne who voluntarily discloses information or who fails to take reasonable precautions to ensure its secrecy cannot properly claim that the information constitutes a trade secret.” Ultraflo, 926 F. Supp. 2d at 960 (quoting Interox America v. PPG Industries, Inc., 736 F.2d 194, 202 (5th Cir.1984)). The burden of proving secrecy is on the party claiming secrecy status. Trilogy Software, 143 S.W.3d at 467.

With the possible exception of the formulas discussed in detail below, Plaintiffs have failed to meet this burden. Under black letter Texas law, the party asserting that information is confidential has the burden to establish its confidential nature. A.M. Castle & Co. v. Byrne, 123 F. Supp. 3d 909, 919 (S.D. Tex. 2015) (citing Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 267 (5th Cir. 2007) (“[Plaintiff] seems to confuse what constitutes a trade secret with the evidence necessary to prove that trade secret. ... For [Plaintiff] to succeed on any of these claims, then, it must first prove that it in fact possessed (1) proprietary information, that was (2) valuable to its business” [emphasis in original] ); In re Bass, 113 S.W.3d at 739–40 (discussing criteria by which claimant must meet its burden to establish trade secret protection); Chapa v. Garcia, 848 S.W.2d 667, 670 (Tex.1992) (holding that the “burden of establishing the true existence of a trade secret and its value to the owner remains on the claimant,” who must submit evidence relating to the six factors that Texas law considers for trade secret status); Lasser v. Amistco Separation Products, Inc., No. 01–13–00690–CV, 2014 WL 527539, at *5 (Tex.App.-Houston [1st Dist.] Feb. 6, 2014) (party claiming confidential information must “identify, define, explain, or otherwise describe the information it contends constitutes ... ‘confidential information’ and trade secrets”); Birnbaum v. Alliance of Am. Insurers, 994 S.W.2d 766, 783 (Tex.App.-Austin 1999, pet. denied) (“The party claiming the trade secret has the burden of establishing its existence and its value to the owner.”)).

Putting aside the formulas for now, Plaintiffs have failed to establish any other claimed trade secret exists and its value to StoneCoat. Plaintiffs have not submitted evidence relating to the six factors that Texas law considers for trade secret status: “(1) the extent to which the information is known outside the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken to safeguard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.” Rimkus, 688 F. Supp. 2d at 665-66 (citation omitted); see also In re Bass, 113 S.W.3d at 739.

The evidence of record, including Morrison’s affidavit, does not satisfy the six-part Restatement test—nothing is shown as to knowledge outside the company, the measures taken to guard the secrecy of the information, the value of the information, the difficulty of duplication of the information by others, or the amount of effort or money expended in developing it. Chapa, 848 S.W.2d at 671. Plaintiffs have not shown they expended considerable money and effort in developing any of these items, many of which are available in the public domain. Matters of general knowledge in an industry are not trade secrets. McClain v. State, 269 S.W.3d 191, 197 (Tex. App. – Texarkana 2008).

*66 Therefore, after a consideration of the factors, the Court finds Plaintiffs have failed to establish a prima facie case that any of the following qualify as trade secrets: (1) client list (Plaintiffs have not demonstrated a customer list ever existed, must less that it constituted a trade secret); (2) pricing guide (no evidence one existed); (3) distributors, dealers, and franchises (which StoneCoat did not contend Profanchik misappropriated in the Collin County Litigation (Docket Entry # 67-29, ¶¶ 6-7) and which Adams could not recall ever showing Profanchik or Kinser); (4) supplier or vendor lists (no evidence any existed and which Adams testified are not secret); (5) SCOT’s generic sales/pricing process; (6) color pigments and tools/equipment (which are disclosed on Home Depot website); (7) StoneCoat manuals (available on the Issuu website according to Gonzalez’s declaration (Docket Entry # 209-1)); (8) Plaintiffs’ method or process of applying the limestone product (which pre-dates Morrison’s involvement in the industry and SCOT’s existence);[47] (9) the existence of the publicly-filed Hopkins State Litigation (of which Kinser, Villarreal, and Gonzalez had no detailed knowledge); and (10) the business/financial records. Plaintiffs fail to distinguish their method and process from the rest of the industry; they fail to show any information that has its own independent economic value in order to qualify as a trade secret; they also fail to address how the sale of Plaintiffs’ products at Home Depot or the publication of their patent application affects their alleged trade secret status.

Without providing any specifics, Morrison states StoneCoat protects its alleged confidential and proprietary information by requiring individuals to sign written non-disclosure agreements. Morrison Aff., ¶ 75; see also Bundren Aff. Ex. 7 (Morrison trial testimony in Collin County Litigation) at 164:12-166: 3 (testifying, among other things, StoneCoat did not make the content of training sessions (which included application overview) publicly available). However, without the existence of information worthy of trade-secret protection, security measures and lack of accessibility are inapposite. Miner, 383 F.Supp.3d at 704. As Plaintiffs have not pointed to any information (except possibly the two formulas discussed in detail below) entitled to trade secret protection, the Court need not address whether Defendants acquired the information through improper means and whether the use of the information resulted in harm to Plaintiffs. Id. at 705.

The Court now turns to the “formulas,” which are a different story. When Morrison formed StoneCoat in 2010, he originally created a formula that was based on the knowledge he had gained while using the “Decopierre product.” Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 91:9-14. Morrison claims he then bought “in full” the French formula from Mergaux and Chamielec in 2011. Id. at 92:18-93:5 (explaining the formulas were similar but there were some changes to it); see also id. at 79:18-81:17 (stating the formulas were similar but there were “variations” or “differences” between them); see also id. at 215:11-216:5 (stating Mergaux and Chamielec knew prior to the Product Rights Agreement that Morrison knew the formula and had created a similar one).

Morrison created a new formula to use at StoneCoat since at least 2013. Id. at 227:7-9. Morrison “made it the best of the best, and there were some changes to it.” Id. at 220:12-222:15 (stating that after the notice of termination of the Product Rights Agreement, Fred Hopkins and Mergaux threatened the toll blenders who were scared to use that same formulation so “that’s why we did the other formulation, which resulted into the patent and we moved on realizing the GP and LP was never gonna be able to function again and supply product to anybody again”); see also id. at 224:16-225:13 (explaining the changes as including “tensile strength, viscosity, air entrainment, issues that would keep it from cracking under wind” as well as “acquisition time, you know, how fast you could take a three-dimensional scan,” the content of limestone, and the quality of materials); see also Adams Dep. (Docket Entry # 67-1, Ex. 7) at 103:9-104:9 (stating the formulas of different limestone veneer companies are different and may have some different ingredients in their limestone).

*67 Morrison stated he had more than one version of the formula for different applications. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 94:15-17 & 188:21-192:11 (explaining the various ingredients in the formula; that the “common denominator for all the formulas for the vertical aesthetic limestone veneer” would be the natural hydraulic lime or NHL but there are variations of NHL; discussing other factors like “air entrainment” and “viscosity;” and stating there are binding factors as well and that “a lot of the competitors and people have tried to do this outside of [Mergaux]” and “tried to use a very cementitious mix that will crack and fade over time”). According to Morrison, the current formula was not the same as the one used at the beginning. StoneCoat had “made improvements, modifications,” and “enhancements,” including modifying the new formula to make it for horizontal purposes and for troweling instead of blowing it with a hopper. Id. at 96:21-25; 225:13-20; 228:7-22; see also id. at 227:10-228:6 (stating Norman Hains helped Morrison).

According to Morrison, StoneCoat was using its own new formula between 2012 and 2015, and that formula was “going to be part of what [Profanchik] would purchase as an asset,” including the ownership of Mergaux’s French formula if StoneCoat won the Hopkins State Litigation. Bundren Aff., Ex. 7 (Morrison trial testimony in Collin County Litigation) at 199:3-19; see also Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 261:25-262:10 (stating that pending the Hopkins State Litigation and “getting that [French] formula down, which was wrongfully terminated by [ ] Mergaux,” Morrison was going to give Profanchik “another formula for the horizontal”).

With this evidence in mind, the Court addresses below both formulas Plaintiffs claim ownership and use of during the relevant time (first, the limestone formula contained in SCOT’s patent application and then the French formula described in the Product Rights Agreement).

Limestone formula

Unlike the other categories of alleged trade secrets discussed above, there is some evidence in the record from which the Court can determine, pursuant to the relevant factors and in the context of the surrounding circumstances, that StoneCoat’s limestone formula was a trade secret at the relevant time. In his individual deposition in the Collin County Litigation, Morrison explained Mr. Hains, who had been on retainer with StoneCoat “forever” and who had forty-six years in the limestone business, helped Morrison develop the “new formula” StoneCoat had been using since 2013. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 226:13-228:6.

Disputed issues of fact remain with respect to whether Plaintiffs took reasonable steps to protect the limestone formula. Morrison testified that SCOT tried to maintain the confidentiality of the formula by requiring employees to sign a confidentiality agreement prior to any training. Bundren Aff., Ex. 7 (Morrison trial testimony in Collin County Litigation) at 164:12-166:3 (stating StoneCoat does not make the content of the training session publicly available and requires someone to sign a non-disclosure/non-compete agreement prior to training). The evidence further shows that StoneCoat did not intend to share this information outside of the business, that it took steps to limit the number of employees with access to the information, and that this type of information is not generally shared within the industry. See, e.g. Bundren Aff. (Docket Entry # 206-2) at 211-12 (February 26, 2015 e-mail from Morrison to Profanchik, Kinser, and McCormack re the provisional patent application, stating that “[b]ecause this contains the actual patent (at least the final draft which was the last I have seen documented) this would be of course highly confidential ... so I am trusting absolute confident and non-disclosure on what is contained here.”).

Defendants assert the limestone formula, method, and process have been disclosed to the public in SCOT’s patent application, rendering it public information. Docket Entry # 67-1, Ex. 25 (SCOT Patent Application); see also USPTO publication number US 2015-0251953 A1, available at https://portal.uspto.gov/pair/PublicPair. According to Defendants, Plaintiffs do not deny their patent application was published or that the patent application disclosed their limestone formula, type of equipment and method of installation. See Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 200:3-9 (admitting method and process disclosed in publicly-field patent application); but see Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 311:16-313:20 (generally agreeing that when a patent is initially filed it is not publically available for a period of time and further testifying that on March 9, 2015 StoneCoat had filed for the patent but as of March 11 it was a private document, not a public one).

*68 “Information that is public knowledge or that is generally known in an industry cannot be a trade secret.” Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, L.L.C., 637 F.3d 604, 611 (5th Cir. 2011) (quoting Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002, 104 S.Ct. 2862, 81 L.Ed.2d 815 (1984)). “Material in a patent application remains secret unless and until it is published by the USPTO.” Innovatier, Inc. v. CardXX, Inc., No. 08-CV-00273-PAB-KLM, 2011 WL 3293789, at *4 (D. Colo. Aug. 1, 2011) (citing Roger M. Milgrim & Eric E. Bensen, Milgrim on Trade Secrets § 1.06 (“Patent applications filed with the United States Patent Office are kept in confidence until they are published”)); see also Tewari, 637 F.3d at 612 (information contained in published patent application no longer secret); see also OLA, LLC v. Builder Homesite, Inc., 661 F. Supp. 2d 668, 673 (E.D.Tex. 2009) (“[T]his information lost its trade secret status on July 25, 2002, when the application that became the ‘553 patent was published.”). The USPTO does not generally publish applications until 18 months after they are submitted. See 35 U.S.C. 122(b)(1)(A) (applications are generally published 18 months after filing).

The fact that SCOT may have included the formula in an application to the USPTO “does not diminish the secrecy of the material during the period before the USPTO approved the patent or published the application.” Innovatier, 2011 WL 3293789, at *4. Around March of 2015, Morrison gave Profanchik and his attorney the non-public patent application with a publication date of September 10, 2015. Bundren Aff., Ex. 7 (Morrison trial testimony in Collin County Litigation) at 203:2-204:24. Based on the timeline of events, the contents of the SCOT patent application were still confidential when Profanchik, Kinser, Gonzalez, and Villarreal ceased working with StoneCoat and continued working with each other. Thus, there is a genuine issue of material fact whether the limestone formula constituted a trade secret.

The Court considers below whether there is sufficient evidence that this information was misappropriated by Defendants before September 10, 2015 with knowledge that it was acquired by improper means. But first, the Court considers whether Plaintiffs have also raised a fact issue as to whether the French formula should be considered a trade secret.

French formula

In their responses to Defendants’ motions, Plaintiffs generally refer to the “trade secrets and other confidential information which was purchased from Mergaux and Chamielec in the Product Rights Agreement.” See, e.g. Docket entry # 148 at 4. Plaintiffs assert there is evidence that Villarreal and Gonzalez, in participation with Kinser and Profanchik and ProCal, are using StoneCoat GP’s and StoneCoat LP’s “trade secrets purchased from Mergaux and Chamielec.” Id. When the Court asked Plaintiffs’ counsel at the June 20, 2019 hearing to specify the alleged trade secret(s) at issue in this case, Plaintiffs’ counsel specifically stated the “formula.” Tr. at 53:3-20 (referring to the French “formula” described in the Product Rights Agreement).

Defendants do not explicitly argue that a plaintiff can bring a misappropriation claim under state and federal law only if it has an enforceable interest in a trade secret, however they do appear to contest Plaintiffs’ ownership of the French formula Plaintiffs claim is the main trade secret at issue. In ProCal USA’s and ProCal Enterprises’ motion, which was filed more recently than the other motions for summary judgment, these defendants assert “all of Plaintiffs’ prior briefing related to Plaintiffs’ alleged trade secrets attempts to re-write history” with regard to Plaintiffs’ ownership of the French formula. Docket Entry # 195 at 12. According to the ProCal entities, Plaintiffs are attempting to collaterally attack the outcome of the Hopkins State Litigation.[48] Defendants contend the Final Judgment in the Hopkins State Litigation has preclusive effect in the present action, because Morrison and SCOT sought post-trial a judgment that StoneCoat GP is the exclusive owner of the French formula but the Final Judgment did not include that request. Docket Entry # 195 at 12 (quoting Docket Entry # 195-6 (Proposed Final Judgment from Hopkins State Litigation)). The Final Judgment entered in the Hopkins State Litigation also explicitly denied “all other relief” sought in the matter. Docket Entry # 195 at 16.

*69 Plaintiffs have a different understanding of the outcome (and preclusive effect) of the Hopkins State Litigation.[49] According to Plaintiffs, they won their legal action against the Hopkins parties and Mergaux regarding the Product Rights Agreement; Mergaux was found to have breached the Product Rights Agreement and a final judgment was rendered against him for that breach. According to Plaintiffs, because the court rendered judgment against Mergaux based on the Product Rights Agreement, as a matter of law, that agreement was not terminated and was enforced against Mergaux. Plaintiffs assert the refusal of the state court judge to grant complete relief to Plaintiffs in the Hopkins State Litigation is on appeal to the Dallas Court of Appeals and currently stayed due to Mergaux’s bankruptcy.[50]

With the record before the Court, the Court cannot conclude as a matter of law that the Final Judgment entered by the court in the Hopkins State Litigation prevents Plaintiffs from arguing that the French formula is a StoneCoat GP trade secret. There are no findings by the jury or the court in the Hopkins State Litigation regarding Mergaux’s termination of the Product Rights Agreement or of the ownership of the French formula. Considering this, and further considering Plaintiffs’ supplemental filings regarding the hearing with the bankruptcy court,[51] Plaintiffs have raised a fact issue as to whether the French formula should be accorded trade secret protection.

2. Whether there is sufficient evidence Defendants acquired trade secrets through a breach of a confidential relationship or other improper means

a. Applicable law on improper acquisition

*70 TUTSA defines misappropriation as follows:

TEX. CIV. PRAC. & REM. CODE § 134A.002(3). “ ‘Improper means’ includes theft ... [and] breach of a duty to maintain secrecy. ...”[52] Id. § 134.002(2).

b. Whether there is sufficient evidence Defendants acquired either formula

Villarreal and Gonzalez

Villarreal and Gonzalez assert Plaintiffs never disclosed any formulas to them, thus they did not acquire (through improper means or otherwise), any trade secrets. Gonzalez states he did not know any SCOT secret limestone formulas. Gonzalez Aff., ¶ 9. According to Gonzalez, when he began at SCOT, Morrison did not train him. Id., ¶ 7. Rather, he watched an installer named Dale Thomas apply some product. Id. However, Morrison stated he personally trained Gonzalez to install the product, and this included “formal training, formal application training, formal classroom training, and there was training in the field.” Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 136:16-25. According to Morrison, Gonzalez was part of the quarterly training at StoneCoat. He sat in on the training and helped Morrison “in the application portion of the training, mixing and setting up sample boards.” Id. at 140:4-14. When asked what knowledge Gonzalez had of the StoneCoat formulas, Morrison stated “in part or in whole we were very open with [him] in quality control ... And so at times there would be discussions – many discussion on the IP within the formulation that would help maintain good quality. So I think he was involved in that aspect of the formulation in the field.” Id. at 142:4-16; see also id. at 143:3-6 (speculating Gonzalez did not know 100 percent of the ingredients in the formula).

Similarly, Villarreal states she was not trained in and did not perform installation of the limestone veneer product. Villarreal Aff., ¶ 11. While employed at SCOT, Villarreal was aware that SCOT conducted “training classes” during which it showed potential distributors or dealers how to mix and apply the product. Id., ¶ 12. However, she never sat through the training classes as an attendee. Id. In his corporate representative deposition in the Collin County Litigation, Morrison stated Villarreal sat through the training sessions many times and “officially went through at least one as only a new person going through training.” Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 120:8-16.

*71 Morrison stated Villarreal had access to everything in the offices, including formulations. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 70:5-12. Morrison stated “a large majority” of Villarreal’s computer had deleted files and e-mails following her departure in April 2015. Id. at 91:1-92:12. According to Morrison, Villarreal had interaction with Profanchik and Kinser while they were trying to buy StoneCoat, and there was a “plan to leave and start a competing company and [Villarreal and Gonzalez] were part of [Profanchik’s and Kinser’s] plan to do so.” Id. at 107:12-108:10; see also id. at 95:13-19 (stating Villarreal clearly wanted to be seen leaving StoneCoat without a box of documents, and “it was clear that whatever was planned had been planned for a while” so “if she had taken documents out, they were done prior to her leaving and they were transferred because they were deleted”).

According to Morrison’s updated affidavit, both Villarreal and Gonzalez had access to what Morrison characterizes as “privileged and confidential information, intellectual property and trade secrets of Stonecoat GP and Stonecoat LP.” Morrison Aff., ¶¶ 25-26, 28-29. As the office manager for Plaintiffs, Villarreal had “access to all company records including financial records, business operations customer accounts, customer pricing, contract pricing, and wages and commissions and bonuses paid by Plaintiffs.” Id., ¶ 26. As the field operations and sales manager for Plaintiffs, Gonzalez had access to “company records including financial records, business operations customer accounts, customer pricing, contract pricing, and wages and commissions and bonuses paid by Plaintiffs.” Id., ¶ 30.

The only specific information Morrison claims Villarreal and Gonzalez received were “financial information regarding the operations” of Plaintiffs,“privileged information regarding intellectual property, and information regarding wages and salaries and commissions paid by Plaintiffs, and [they] also received specialized intellectual property and day-to-day training regarding the operations” of Plaintiffs’ business. Id., ¶¶ 26, 29. The only other possible reference to the formulas in Morrison’s affidavit is emphasized as follows:

Id., ¶ 78.

Although Morrison claims in his updated affidavit that StoneCoat gave Villarreal and Gonzalez product and ingredient information, there is no evidence either one knew either of the formulas. See, e.g. Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 70:22-24 (stating he knew for a fact that Villarreal knew about “several of the ingredients” in the formula); see also id. at 72:2-3 (“I’m telling you I don’t know for certainty that she does or does not” know any of the formulas). According to Morrison, he believed Villarreal knew the formula “in part and possibly in whole, because financial information ran through her and so she saw invoices and sources and quantities and she saw everything that was on the inside.” Id. at 118:5-12.

The evidence of record, viewed in the light most favorable to Plaintiffs, is insufficient to create a genuine issue of material fact that Villarreal and Gonzalez acquired or discovered (through improper means or otherwise) the limestone formula or the French formula. Because there is no evidence Villarreal or Gonzalez acquired or discovered through improper means (or used) either formula (the only possible trade secrets at issue in this case), the Court recommends Villarreal’s and Gonzalez’s motion for summary judgment on Counts 2-3 and 5 be granted.

Profanchik (and by extension ProCal) and Kinser

Limestone formula

*72 Profanchik and Kinser assert Plaintiffs never disclosed to them SCOT’s “so-called secret formula.” Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 25; Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 34. However, the evidence shows Kinser and Profanchik both attended a training class regarding StoneCoat’s product in early 2015. Kinser Aff., ¶ 26. Profanchik acknowledges he was shown a demonstration about how the product was applied during a training class Profanchik and Kinser attended. Profanchik Aff., ¶ 15. The training included an in-depth explanation of chemical formulas. Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 324:9-326:24 (testifying Mr. Hains went into depth during the training explaining the chemical formulas that make up the StoneCoat product, writing the formulas on a board, and further stating he had to sign a non-disclosure agreement before he was allowed to go into the StoneCoat training program).

According to his testimony in the Collin County Litigation, Kinser attended two days of training with Mr. Hains and Morrison at StoneCoat, wherein they talked about the “chemical makeup of limestone very in depthly, big presentation about limestone” and then “they sprayed samples of stone, and [Profanchik and Kinser] watched.” Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 219:7-220:11; see also id. at 218:18-219:6 (stating he had never been in the blown limestone business before StoneCoat nor had he ever gone through a training class learning how to blow limestone on a wall and to carve it prior to the time he went through the “training class at StoneCoat”).

When asked whether he discussed the limestone formula with Profanchik in detail when they were talking about a business opportunity together, Morrison stated he was an “open book” with Profanchik; Profanchik knew everything from the legal side; although Morrison did not tell Profanchik what was in the formula, Morrison had Profanchik’s patent attorney talk to Morrison’s patent attorney. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 125:7-126:13. During the trial in the Collin County Litigation, Morrison testified he discussed StoneCoat’s “secret” provisional patent application with Profanchik. Bundren Aff., Ex. 7 (Morrison trial testimony in Collin County Litigation) at 90:15-91:5; 93:7-15; 94:3-98:24.

Around March of 2015, Morrison gave Profanchik and his attorney the non-public patent application. Id. at 203:2-204:24. Because of the Kinser and Profanchik NDAs, McCormack obtained, at his request, SCOT’s private and confidential draft application of SCOT’s patent application before it was filed with the USPTO. See Bundren Aff., Ex. 6 at 302 -305, 307-312, 313, 320; see also Bundren Aff., Ex. 7 at 91-104, 106-110; Bundren Aff., Ex. 8 (Trial Exhibits) at 17, 18, 19, and 21.

Although Kinser states in his affidavit he did not review any documents related to the patent or the patent application, Kinser Aff., ¶ 32, Plaintiffs have produced evidence Kinser received information regarding the SCOT provisional patent and the draft of the patent application. See, e.g. Bundren Aff. (Docket Entry # 206-2) at 211-12 (February 26, 2015 e-mail from Morrison to Profanchik, Kinser, and McCormack re the provisional patent application, stating that “[b]ecause this contains the actual patent (at least the final draft which was the last I have seen documented) this would be of course highly confidential. ...”). The February 26, 2015 e-mail to Profanchik and Kinser, which included attachments, stated “Gardere and Wynn did the research and worked along with Norm and [Morrison] on the document which includes process, equipment, formulations, etc.” Id. at 212.

The Court, having considered all of the evidence and drawing all reasonable inferences in Plaintiffs’ favor, finds there are genuine issues of material fact with respect to whether both Profanchik and Kinser acquired or discovered the limestone formula. The court considers the ProCal entities below.

French formula

*73 Profanchik and Kinser both state Plaintiffs never disclosed to them the French formula SCOT claims to have bought from Mergaux. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 24(m); Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 44(a)). According to Morrison, Mergaux went to work for Profanchik in January 2016. Morrison Aff., ¶ 35. Morrison claims Profanchik had knowledge of and was aware of StoneCoat GP’s work relationship with Mergaux because of the non-disclosure/non-complete agreement Profanchik entered into with SCOT, and Profanchik nevertheless solicited Mergaux to work for Profanchik and ProCal to enable ProCal to compete with Plaintiffs. Id., ¶¶ 42-43. Morrison further states ProCal, Profanchik, and Kinser learned of the sale of the trade secrets in accordance with the Product Rights Agreement during their due diligence of SCOT and acquired Plaintiffs’ trade secrets and confidential information for purposes of their due diligence of SCOT. See id. at ¶¶ 54-60.

According to Mergaux’s declaration, in 2016 Chamielec and Mergaux sold the French formula, along with the “bragging rights,” to Profanchik and ProCal Stone Design. Mergaux Decl., ¶ 11. “Profanchik paid what was due under [their] agreement and [Chamielec and Mergaux] transferred everything that was required of [them] to Profanchik and ProCal, including the formula.” Id. “Furthermore, Chameilec and [Mergaux] decided to team up with ProCal and formally became associated with ProCal.” Id.; see also id. at ¶ 13 (stating he assisted in ordering the limestone mix from Europe while he was at ProCal and further stating he knows from his past relationship with Morrison and StoneCoat that StoneCoat had its product blended in Texas through at least 2017 and did not purchase its bags of product from Europe).

Again, the Court finds there are genuine issues of material fact with respect to whether Profanchik and Kinser acquired or discovered the French formula. The Court now considers whether there is sufficient evidence Profanchik and Kinser discovered either formula through improper means.

c. Whether there is sufficient evidence Defendants discovered either formula through improper means

Defendants argue Plaintiffs cannot establish they acquired Plaintiffs’ trade secrets through improper means. “Texas law recognizes that ‘[e]ven apart from any written contract, a fiduciary relationship arises from an employment relationship forbidding an employee from using trade secrets or confidential or proprietary information in a manner adverse to the employer.’ ” Ultraflo, 926 F. Supp. 2d at 961-62 (quoting Advanced Nano Coatings, Inc. v. Hanafin, 478 Fed. Appx. 838, 847 (5th Cir.2012) (citing Mabrey v. SandStream, Inc., 124 S.W.3d 302, 316 (Tex.App.– Fort Worth 2003, no pet.))). Moreover, “where a competitor woos an employee away from his original employer in an effort to gain knowledge that was confidentially disclosed to that employee by his original employer, the competitor may be enjoined from enjoying the competitive advantage gained by misappropriating trade secrets.” Ultraflo, 926 F. Supp. 2d at 961 (citing Bryan v. Kershaw, 366 F.2d 497, 501–02 (5th Cir.1966), cert. denied, 386 U.S. 959, 87 S.Ct. 1030, 18 L.Ed.2d 108 (1967)).

Although Profanchik’s and Kinser’s initial access to the limestone formula was with the permission of SCOT, indicating they did not acquire the trade secrets by improper means, “[a]cquisition by improper means is not the sole path to liability under TUTSA....” Lifesize, Inc. v. Chimene, 1:16-CV-1109-RP, 2017 WL 1532609, at *9 (W.D. Tex. Apr. 26, 2017); see also id. at *8 (citing Twister B.V. v. Newton Research Partners, LP, 364 S.W.3d 428, 438 (Tex. App.—Dallas 2012, no pet.) (“[L]iability for a misappropriation of trade secrets claim occurs if he discloses or uses another’s trade secrets, without privilege to do so, if (a) he discovers the secret by improper means. ...”) (emphasis added in Lifesize); 70 Tex. Jur. 3d Trademarks, Etc. § 65 (“[A] misappropriation of trade secrets claim requires proof that the defendant ... discovered the secret by improper means. ...”) (emphasis added in Lifesize)). “A defendant can be liable for misappropriation of trade secrets if, at the time of the unauthorized use or disclosure of the information, the defendant knew he obtained the information in circumstances giving rise to a duty to maintain its secrecy.” Id. (citing TEX. CIV. PRAC. & REM. CODE § 134A.002(3)(B)(ii)(b)). In other words, it is not necessary for the defendant’s acquisition to be wrongful; the plaintiff may instead show that the defendant permissibly acquired the information within a relationship of confidence and later disclosed or used the information in violation of that confidence. See id.

*74 Here, Plaintiffs have produced sufficient evidence indicating Defendants discovered the limestone formula under a duty to maintain their secrecy. The Profanchik NDA/NC and the Kinser NDA/NC establish that a confidential relationship existed between Profanchik/Kinser and SCOT. The fact that Profanchik and Kinser signed confidentiality agreements suffice to show they knew or had reason to know of the duty of confidentiality. Profanchik and Kinser may be liable for misappropriation of trade secrets if they used or disclosed without authorization the trade secrets with knowledge that they were under a duty to maintain their secrecy. Lifesize, 2017 WL 1532609, at *9.

The Court also finds sufficient evidence to create a genuine issue of material fact that Profanchik and Kinser acquired the French formula through improper means. Morrison claims Profanchik had knowledge of and was aware of StoneCoat GP’s work relationship with Mergaux, and Profanchik nevertheless solicited Mergaux to work for Profanchik and ProCal to enable ProCal to compete with Plaintiffs. Morrison Aff., ¶¶ 42-43. There is also evidence Profanchik and his attorneys were apprised of the claims asserted in the Hopkins State Litigation, including the issue of ownership of the French formula currently on appeal and being negotiated in the bankruptcy court. Viewing the evidence in the light most favorable to Plaintiffs, the Court finds it would also enable a reasonable juror to reach a conclusion that Profanchik and/or Kinser improperly obtained the French formula from Mergaux and Chamielec in 2016.

3. Whether there is sufficient evidence the individual defendants use(d) any trade secret allegedly belonging to Plaintiffs

a. Applicable law on “use”

“Use” of a trade secret refers to “commercial use” and occurs whenever “a person seeks to profit from the use of the secret.” Rimkus, 688 F. Supp. 2d at 666, n. 42 (citing Gen. Univeral Sys., 500 F.3d at450 (quoting Trilogy Software, 143 S.W.3d at 464)). “Use” is “any exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant.” Rimkus, 688 F. Supp. 2d at 666, n. 42 (quoting Gen. Universal Sys., 500 F.3d at 451 (quoting Restatement (Third) of Unfair Competition § 40)).

b. The parties’ assertions

Defendants assert there is no evidence they used either formula. In their response, Plaintiffs argue only that the TUTSA does not require “use” of the trade secret to be actionable; it only requires that the defendant be in possession of proprietary information and in a position to use it. Docket Entry # 148 at 22-23 (citing Fox v. Tropical Whs., Inc., 121 S.W.3d 853, 860 (Tex.App. – Fort Worth 2003, no pet.)). However, Fox concerned entry of an injunction. See also Hughes v. Age Indus., Ltd., 2017 WL 943423, at *5 (Tex. App. – San Antonio Mar. 8, 2017, no pet.) (“Because the very purpose of an injunction is to prevent disclosure of trade secrets pending trial, an applicant is not required to show the defendant is actually using the information. ... Instead, the applicant must show “the defendant possesses the trade secrets and is in a position to use them.”).

A federal court in the Fifth Circuit has recently explained that “Texas law provides that both actual and threatened misappropriation may be enjoined. Tex. Civ. Prac. & Rem. Code § 134A.003(a). Accordingly, the weight of case law supports the entry of an injunction upon a showing that a defendant probably, rather than actually, disclosed trade secrets.” TFC Partners, Inc. v. Stratton Amenities, LLC, No. 1:19-CV-58-RP, 2019 WL 369152, at *3 (W.D. Tex. Jan. 30, 2019) (citing Cardoni v. Prosperity Bank, 805 F.3d 573, 590 (5th Cir. 2015) (holding that a district court correctly “made an individualized assessment of whether disclosure had occurred or was likely to occur in this case”)). This Report and Recommendation does not address a motion for preliminary injunction. The Court finds evidence of “use” is required.

c. Analysis

Limestone formula

*75 Regarding the limestone formula, Defendants state they do not use the same formula as SCOT. According to Defendants, they do not use SCOT’s limestone mix (which SCOT manufactures) because ProCal buys its limestone mix ready-made in bags from a company in Spain. Defendants further assert neither ProCal USA nor ProCal Enterprises is or ever has been a manufacturer of limestone mix. Profanchik Decl. (Docket Entry # 195-2), ¶ 26. Kinser states he does not personally purchase or use SCOT products.

The relevant time period is between early 2015 and September 10, 2015, the date the patent application disclosing the limestone formula was published. Plaintiffs allege Profanchik formed or created the ProCal entities on various dates since May 7, 2015 and allegedly “used and transmitted to Procal misappropriated proprietary and confidential information and trade secrets of Plaintiffs to the Procal [entities] to enable them to unlawfully and unfairly compete against Plaintiffs.” Docket Entry # 103, ¶ 4. According to Plaintiffs, after April 2015, Profanchik and Kinser searched for and found and developed the competing showroom of Procal Stone Design only a “few blocks” away from where SCOT’s offices were located in Addison, Texas for the purposes of competing against SCOT after Kinser and Profanchik decided not to purchase the assets of SCOT. Plaintiffs further assert Kinser, with the assistance of Gonzalez, blew stone and developed ProCal Stone Design’s competing showroom. See Bundren Aff., Ex. 4 at 209-215.

As noted above, the patent application was published on September 10, 2015, and the question is whether there is sufficient evidence the individual defendants used the limestone formula prior to that date to set up a competing business. The evidence of record reveals as follows. Profanchik broke off negotiations with SCOT on or about April 17, 2015. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 27. Villarreal left on the same date and went to work as Profanchik’s personal assistant. Id., ¶ 28.

Kinser broke off his relationship with SCOT on April 20, 2015. Kinser Aff., ¶ 36. Gonzalez left with Kinser, along with three other employees. Id. As explained by Morrison in his individual deposition in the Collin County Litigation, three of his key employees who had been trained in the company and who left with Kinser took pictures of Kinser and Profanchik “blowing stone in [Kinser’s] backyard” and then came back to work for StoneCoat and brought the pictures. Morrison Dep. (Docket Entry # 67, Ex. 5) at 266:24-267:13; see also id. at 271:20-273:25 (stating “these guys were taking pictures over there at [Kinser’s] house and found hydraulic lime sitting in the garage, a bag of it, a bag of our fines and calcium carbonate, pictures of his formulas that he was working on in trying to do it, pictures of them blowing stone in his backyard”).

After Gonzalez left SCOT, Kinser formed a company called Fourth Generation Home Services, and Gonzalez worked for Kinser remodeling houses. Gonzalez Aff., ¶ 21. Gonzalez helped remodel Kinser’s house, and as part of this process, Gonzalez called Mergaux at DecoXperience and bought two pallets of limestone mix. Id. Gonzalez and Kinser made samples and applied it to the back of Kinser’s house. Id. Gonzalez also worked on Profanchik’s house. Id.

According to Profanchik, it was not until September 2015 that Kinser approached him about wanting to continue to pursue the idea of going into the limestone veneer business which Kinser and Profanchik had wanted to do before ever coming across SCOT and Morrison. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 30. Profanchik states he and Kinser worked for the remainder of 2015 to start a company, and on January 11, 2016, Profanchik and Kinser opened ProCal Stone Design, LLC, which offers customers limestone masonry veneer installation. Id., ¶¶ 32-33; Kinser Aff., ¶¶ 41-42; see also Bundren Aff., Ex. 3 (Profanchik Affidavit in ProCal Defamation Lawsuit), ¶¶ 2-3 (stating Profanchik is a member, founder, Chief Executive Officer and President of ProCal Stone Design, an Addison Texas company specializing in hydraulically sprayed and troweled limestone and further stating Morrison and SCOT are competitors of ProCal in the “same industry”).

*76 Morrison’s opinion is that Profanchik planned to start a competing business when he left. Morrison Corp. Rep. Dep. (Docket Entry 67-1, Ex. 9) at 108:11-20 (stating “when you see sample boards being made in [Kinser’s] backyard that that would appear to, again, a nine year old or anybody with common sense that you’re trying to create a competing company”). There is also evidence that in the summer of 2015, Kinser found “space” a few blocks away from StoneCoat’s showroom that Profanchik later leased. Bundren Aff., Ex. 4 (Kinser trial testimony in Collin County Litigation) at 209:24-211:12. According to Kinser, by September 2015, he had keys to the new showroom and the “lease space already done;” he was blowing stone and setting up the showroom. Id. at 215:3-216:4. Morrison stated there was a time period after Profanchik and Kinser left SCOT “where they were working on [Kinser’s] house and doing the samples in his yard ... and it was only after that they organized and created their company.” Morrison Corp. Rep. Dep. (Docket Entry 67-1, Ex. 9) at 154:10-20.

“Use” has a “broad” definition in trade secret law. GlobeRanger Corp. v. Software AG United States of Am., Inc., 836 F.3d 477, 497 (5th Cir. 2016). “As a general matter, any exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant is a ‘use[.]’ ” Id. (quoting Wellogix, 716 F.3d at 877) (quoting Gen. Universal Sys., 500 F.3d at 451). Examples of use that fall within this definition include “employing the trade secret in manufacturing or production” and “relying on the trade secret to assist or accelerate research and development.” GlobeRanger, 836 F.3d at 497 (quoting Wellogix, 716 F.3d at 877). Nor was Wellogix the first Fifth Circuit case to include use in research and development within misappropriation. GlobeRanger, 836 F.3d at 497 (generally citing Gen. Universal Sys., 500 F.3d at 451) (interpreting Texas law in holding that “use” included using the plaintiff’s product to “accelerate the development and marketability” of a defendant’s own product). A factfinder may find use when “the defendant’s product was quickly developed by someone who had recently resigned from the plaintiff-company.” RealPage, Inc. v. Enter. Risk Control, LLC, No. 4:16-CV-00737, 2017 WL 3313729, at *11 (E.D. Tex. Aug. 3, 2017) (quoting Aspen Tech., Inc. v. M3 Tech., Inc., 569 Fed. Appx. 259, 267 (5th Cir. 2014)).

The only evidence in the record of possible use of the limestone formula within the relevant time period is the evidence that Kinser and Gonzalez were creating samples of limestone mix in Kinser’s backyard and that by September 2015 Kinser was already “blowing stone” in the showroom that would later be utilized by ProCal Stone Design. However, there is no evidence any of the limestone mix at issue was manufactured or produced by Profanchik or Kinser with StoneCoat’s limestone formula, much less any evidence that it was manufactured in such a way as to research and accelerate the development of a competing product. According to Gonzalez, after he left SCOT he helped Kinser remodel Kiner’s house; as part of that process, Gonzalez called Mergaux at DecoXperience and bought two pallets of limestone mix, and Kinser and Gonzalez made “samples and applied it to the back of his house.” Gonzalez Aff., ¶ 21. And Kinser’s testimony regarding “blowing stone” relates to the application of limestone mix, not to the manufacture thereof.

The Court, having considered the evidence of record and drawing all reasonable inferences in favor of Plaintiffs, finds there is not sufficient evidence to create a genuine issue of material fact that Profanchik and Kinser used the limestone formula prior to September 10, 2015.There is also no evidence the yet-to-be-formed ProCal entities ever used the limestone formula contained in the patent application prior to September 10, 2015. As such, the only alleged trade secret that could have been used by Profachik (and by extension ProCal) and/or Kinser would be the French formula.

French formula

*77 According to Profanchik, at the relevant time, SCOT had lost the French formula and was in a lawsuit about it. Profanchik Aff. (Docket Entry # 67-1, Ex. 2), ¶ 24(d). Profanchik, Kinser, and ProCal state they do not use the French formula that SCOT claims to have bought from Mergaux. Id., ¶ 34(b); Kinser Aff., ¶ 44(b).

However, in his declaration attached to ProCal Stone Design’s reply, Mergaux states he re-sold the same French formula to ProCal Stone Design in 2016 because he believed the Product Rights Agreement had been properly terminated. Mergaux Decl. (Docket Entry # 175-1), ¶ 10. Mergaux states Profanchik paid what was due under the agreement, and Mergaux and Chamielec transferred everything that was required of them to Profanchik and ProCal, including the French formula. Id., ¶ 11. It is not clear when Profanchik’s affidavit was created in the Collin County Litigation. It appears to have been signed in 2017. See Profanchik Aff. at p. 19.

Mergaux’s declaration is dated April 17, 2019. See Mergaux Decl. at p. 5. Mergaux states he and Chamielec teamed up and “formally became associated with ProCal” in 2016, and that while he was at ProCal, he assisted in ordering the limestone mix from Europe. Id., ¶¶ 11, 13. According to Mergaux, at that time, ProCal purchased its product from Europe and did not use StoneCoat’s product. Id., ¶ 13. Without giving any specific information as to when he departed from ProCal, Mergaux states he is no longer associated with ProCal, but his departure did not affect ProCal’s ownership of the French formula. Id.

According to the evidence before the Court, which was primarily created in the Collin County Litigation, ProCal Stone Design does not manufacture its own limestone mix. Rather, it purchases its limestone mix ready-made from a company in Spain, which sold the same product to many others in the industry. Profanchik Aff., ¶ 34(d); Kinser Aff., ¶ 44(d); Gonzalez Aff., ¶ 26(d). Plaintiffs do not contend that ProCal Stone Design, despite the fact it claims to have bought the French formula from Mergaux in 2016, manufactures its own limestone mix using the French formula.

Recently, the Fifth Circuit has noted with approval the even more liberal construction of the term “use” contained in the Restatement (Third) of Unfair Competition Section 40: “[a]s a general matter, any exploitation of trade secrets that is likely to result in injury to the trade secret owner or enrichment to the defendant is ‘use’ under this Section.” Wellogix, 788 F. Supp. 2d at 540 (quoting General Universal Systems, 500 F.3d at 451). Improper use of a trade secret includes “relying on the trade secret to assist or accelerate research or development” and “soliciting customers through the use of information that is a trade secret.” General Universal Systems, 500 F.3d at 451. The Fifth Circuit applied this definition of “use” in Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867 (5th Cir. 2013). In that case, Wellogix presented evidence showing

*78 Wright’s Well Control Servs., LLC v. Oceaneering Int’l, Inc., No. CV 15-1720, 2018 WL 1875849, at *14 (E.D. La. Apr. 19, 2018) (quoting Wellogix, 788 F. Supp. 2d at 877).

The court in Wellogix held this evidence sufficed to support the jury’s finding of misuse of Wellogix’s trade secrets, noting “the standard for finding use is not whether Accenture’s templates contained Wellogix trade secrets, but whether Accenture relied on the trade secrets to assist or accelerate research or development of its templates.” Id. (internal quotation marks omitted). In Wright’s Well, the court considered “use” in the context of a breach of contract claim and found a reasonable juror could infer that Oceaneering relied on operational details about the WWCS system to assist or accelerate the development of the FRS competing product. 2018 WL 1875849, at *14 (noting one of Oceaneering’s corporate deponents admitted that documents in the FRS development file were “used to aid and assist in the development of [the FRS]” and further finding additional circumstantial evidence supported the inference that confidential information about the WWCS system aided Oceaneering in the development of the FRS).

Here, there is no evidence in the record showing that Profanchik, Kinser, and/or ProCal Stone Design used or currently use the French formula.[53] As far as the Court can tell, Plaintiffs have not relied on any new evidence generated from the discovery conducted in this case, much less any evidence, circumstantial or otherwise, that could create a genuine issue of material fact as to Defendants’ “use” of the French formula. With the record before the Court, the Court cannot find a reasonable juror could find that Profanchik, Kinser, and/or ProCal Stone Design used (at a time uncertain) the French formula Mergaux states they purchased. The uncontroverted evidence before the Court is ProCal Stone Design does not manufacture its limestone mix.

Regarding the other ProCal entities, ProCal USA and ProCal Enterprises were created to create franchising and/or distributorship opportunities for ProCal Stone Design. Profanchik Decl. (Docket Entry # 195-2), ¶ 21. Profanchik represents neither ProCal USA nor ProCal Enterprises sold a franchise or distributorship, and neither entity made a profit or sale during their existence. Most importantly for purposes of this discussion, Profanchik represents (and there is no evidence in the record to suggest otherwise) neither ProCal USA nor ProCal Enterprises is or ever has been a manufacturer of limestone mix. Id., ¶ 26.

The Court, having considered the evidence of record and drawing all reasonable inferences in favor of Plaintiffs, finds Plaintiffs have failed to point to any evidence suggesting that Profanchik, Kinser, or the ProCal entities used the French formula. See Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 600 (5th Cir. 2015) (“Despite this generous definition of ‘use,’ however, we agree with the district court that SMI has failed to point to any evidence suggesting that ARGO or BCS used its purported trade secrets.”). On the record before the Court, it would not be reasonable for a jury to infer that Defendants used the French formula, the only remaining trade secret at issue.[54] Id. at 602. For this reason, the Court recommends Profanchik’s, Kinser’s, and the ProCal entities’ motions’ for summary judgment regarding the misappropriation of trade secret and related claims (Counts 2-3, 5) be granted.

VII. PLAINTIFFS’ BREACH OF CONTRACT CLAIM (COUNT 6) AND TORTIOUS INTERFERENCE CLAIM (COUNT 8)

A. Breach of contract

1. The parties’ assertions

*79 Plaintiffs assert a breach of contract claim (Count 6) against all Defendants. Under Texas law, “[t]he elements of a breach of contract claim are: (1) the existence of a valid contract between plaintiff and defendant; (2) the plaintiff’s performance or tender of performance; (3) the defendant’s breach of the contract; and (4) the plaintiff’s damage as a result of the breach.” Thoroughbred Ventures, LLC v. Disman, No. 4:18-CV-00318, 2018 WL 3752852, at *2 (E.D. Tex. Aug. 8, 2018) (quoting In re Staley, 320 S.W.3d 490, 499 (Tex. App.—Dallas 2010, no pet.)).

Plaintiffs have generally alleged that “the contracts and agreements described herein and entered into by the defendants are valid and enforceable contracts” and “defendants did not perform their obligations.” Docket Entry # 103, ¶¶ 203, 206. Defendants have moved for summary judgment as to the breach of contract claims, asserting they fail as a matter of law for various reasons. The Court first addresses Plaintiffs’ claims against Profanchik and the ProCal entities.

a. Profanchik and ProCal

In his motion, Profanchik asserts the Profanchik NDA/NC, which was entered into with only SCOT, is unenforceable for several reasons. ProCal Stone Design asserts it is undisputed that no contract exists between Plaintiffs and ProCal. As such, ProCal Stone Design argues it “could not have breached a nonexisten[t] contract and could not have caused damages for breaching a nonexistent contract.” Docket Entry # 129 at 10-11. ProCal USA and ProCal Enterprises further argue they were not party to a contract with Plaintiffs.

In response, Plaintiffs agree the Profanchik NDA/NC, which was entered into only with SCOT, should be litigated in the Collin County Litigation. Because Plaintiffs have failed to establish any other contract under which Profanchik would be liable to StoneCoat GP/LP, the Court recommends Profanchik’s motion for summary judgment regarding StoneCoat GP’s and StoneCoat LP’s breach of contract claim (Count 6) be granted.

It is also undisputed that no contract exists between Plaintiffs and ProCal. In their responsive briefing, Plaintiffs “concede that Procal was not in existence in January 2015 through April 2015 during the time that Profanchik and Kinser were conducting their due diligence of SCOT and receiving proprietary and confidential information and trade secrets of Plaintiffs and, therefore, there is no direct contract between Plaintiffs and Procal.” Docket Entry # 152 at 28. Plaintiffs’ arguments regarding their breach of contract claims focus on the non-disclosure/non-compete agreements signed by Profanchik, Kinser, Villarreal, and Gonzalez, who Plaintiffs assert are “all parties who are or were employed under contract or working with Procal beginning in 2016.” See, e.g. Docket Entry # 189 at 4-5.

According to ProCal Stone Design’s reply, to maintain the breach of contract cause of action against the ProCal entities, “Plaintiffs should have attempted to explain how or why ProCal should be held liable for other Defendants’ alleged breaches of contract. ... Because they did not, and did not even plead any sort of respondeat superior liability, the Motion for Summary Judgment should be granted as to these claims.” Docket Entry $ 175 at 8. The Court agrees and recommends the ProCal entities’ motions for summary judgment as to Plaintiffs’ breach of contract claims (Count 6) should be granted.

b. Kinser, Villarreal, and Gonzalez

Arguments

*80 The only remaining breach of contract claims are against Kinser, Villarreal, and Gonzalez related to their non-disclosure/non-competition agreements. According to these defendants, Plaintiffs have failed to plead any specific breaches of contract with regard to them, and the extent of the allegations related to these three individuals primarily concern Profanchik’s alleged knowledge of their obligations under the NDAs and his alleged tortious interference with those obligations.

To the extent the Court believes Plaintiffs have adequately pleaded a cause of action for breach of contract against Villarreal and Gonzalez, these defendants move to dismiss that claim because of lack of consideration and because the NDAs are unenforceable as a matter of law because they do not contain reasonable restrictions. Specifically, these defendants assert the NDAs are illusory and not supported by consideration; contain an unreasonable industry-wide scope and undefined geographic restriction; and contain an unreasonable five-year term.

The NDA/NCs

Villarreal signed the Villarreal NDA/NC on April 19, 2013, and Gonzalez signed the Gonzalez NDA/NC on August 16, 2013. Plaintiffs state it is undisputed that StoneCoat LP and StoneCoat GP were parties to the Villarreal and Gonzalez NDA/NCs. On January 22, 2015, Kinser signed the Kinser NDA/NC with SCOT; neither StoneCoat GP nor StoneCoat LP were parties to the Kinser NDA/NC. The non-disclosure obligations are nearly identical and provide that the recipients agree to “keep in confidence and will not use and will prevent disclosure to others” of any and all StoneCoat information and to use such information “only for purposes of engaging and implementing Business” with certain exceptions. Docket Entry #s 67-5, 67-23, and 67-24, ¶ 2.1.

The non-compete provisions are also nearly identical and provide as follows:

Id., ¶ 2.4. The NDA/NCs further provide as follows:

Id., ¶ 2.5.[55]

2. Enforceability of the covenants not to compete

a. Applicable law

*81 The enforceability of a covenant not to compete is a question of law. Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642, 644 (Tex.1994); Alex Sheshunoff Mgt. Srv., L.P. v. Johnson, 124 S.W.3d 678, 684 (Tex.App.-Austin 2003, pet. filed). A covenant not to compete is a disfavored contract in restraint of trade and is unenforceable unless it meets certain statutory requirements. See TEX. BUS. & COMMERCE CODE ANN. §§ 15.05, .50 (West 2002); Sheshunoff, 124 S.W.3d at 684. Those requirements are set forth in Section 15.50 of the Texas Business and Commerce Code:

TEX. BUS. & COMMERCE CODE ANN. § 15.50(a).

Section 15.50 thus imposes two threshold requirements that a covenant not to compete must meet in order to be enforceable. Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452, 459 (Tex. App. – Austin 2004). “The first is a two pronged test: there must exist an otherwise enforceable agreement that must have existed at the time the non-compete agreement is made. Second, the non-compete agreement must be ancillary to or part of that ‘otherwise enforceable agreement.’ ” Id. at 459-60 (emphasis in original).

With this law in mind, the Court now considers whether Plaintiffs have satisfactorily shown the non-disclosure/non-competition agreements are ancillary to or part of an otherwise enforceable agreement and that the restrictions are reasonable. Because the facts as to each defendant differ slightly, the Court will set out the facts separately, grouping Villarreal and Gonzalez where possible.

b. The facts

Villarreal and Gonzales

Gonzalez began working for SCOT in 2010, primarily as an installer of limestone spray-on product. Gonzalez Aff. (Docket Entry # 127-1, Ex. 2), ¶¶ 3, 5. Villarreal began working for SCOT in 2012, as a secretary/administrative assistant. Villarreal Aff. (Docket Entry # 127-1, Ex. 1), ¶ 4. Both were considered “at-will” independent contractors of SCOT who could be fired at any time. Id.; Gonzalez Aff., ¶ 3.

In 2013, Morrison had Villarreal and Gonzalez sign the non-disclosure/non-compete agreements that give rise to this claim. Villarreal Aff., ¶ 13 (Villarreal NDA/NC was signed April 19, 2013); Gonzalez Aff., ¶ 15 (Gonzalez NDA/NC was signed on August 16, 2013). Neither Villarreal nor Gonzalez had been asked to sign one of those agreements, and neither received any additional compensation as a result of signing the agreements. Gonzalez Aff., ¶ 17; Villarreal Aff., ¶ 14 (further stating she had to sign it in order to receive past-due compensation).[56]

*82 To their knowledge, neither Villarreal nor Gonzalez were ever told of any confidential or secret information after signing the agreements and were not told of anything that they had not already been told over the previous time they had already been working at SCOT. Gonzalez Aff., ¶ 17; Villarreal Aff., ¶ 14. Villarreal left SCOT on April 17, 2015. Villarreal Aff., ¶¶ 15, 17. Gonzalez left SCOT on April 20, 2015. Gonzalez Aff., ¶ 18.

Morrison asserts Villarreal and Gonzalez failed to perform their obligations under their nondisclosure/non-compete agreements by disclosing Plaintiffs’ information to Plaintiffs’ competitors, the ProCal entities. Morrison Aff., ¶¶ 27, 31. Morrison further asserts Villarreal is using Plaintiffs’ information to compete against Plaintiffs. Id., ¶ 27. Morrison states Gonzalez has competed and is competing against Plaintiffs. Id., ¶ 31.

Kinser

On January 22, 2015, Kinser signed a non-disclosure/non-compete agreement with SCOT. Kinser NDA/NC (Docket Entry # 67-4). As noted above, the Kinser NDA/NC “represented that SCOT had valuable trade secret information it intended to disclose” to Kinser, and it contained an industry-wide non-compete term of five years restricting “work in this market or any activities similar in nature or purpose, products and services offered by SCOT” without any geographic restriction, and it had a $250,000 liquidated damages provision. Id. § 2.5; see also Kinser Aff., ¶17. Although the Kinser NDA/NC stated Kinser was “entering into some sort of work relationship with SCOT for payment,” Kinser states he was never paid by SCOT. Kinser Aff., ¶17.

c. Whether the agreements are ancillary to or part of an otherwise enforceable agreement

There is an “otherwise enforceable agreement” where the covenant is “part of an agreement that contained mutual non-illusory promises.” Miner, Ltd. v. Anguiano, 383 F. Supp. 3d 682, 696 (W.D. Tex. 2019) (citing Marsh USA Inc. v. Cook, 354 S.W.3d 764, 773 (Tex. 2011) (citing Sheshunoff, 209 S.W.3d at 648-49)). To be valid and enforceable, a contract must include consideration, that is, a mutuality of obligation. Miner, 383 F. Supp. 3d at 696 (citing Fed. Sign v. Tex. S. Univ., 951 S.W.2d 401, 408 (Tex. 1997), abrogated on other grounds, Gen. Servs. Comm'n v. Little–Tex Insulation Co., Inc., 39 S.W.3d 591, 593 (Tex. 2001)). The Texas Supreme Court has explained that “[t]he covenant cannot be a stand-alone promise from the employee lacking any new consideration from the employer.” Miner, 383 F. Supp. 3d at 696 (quoting Sheshunoff, 209 S.W.3d at 651).

At-will employment is insufficient consideration to support a non-compete covenant under Texas law. Miner, 383 F. Supp. 3d at 696 (citing Hunn v. Dan Wilson Homes, Inc., 789 F.3d 573, 584 (5th Cir. 2015)). Continued employment is not sufficient consideration to support a non-compete agreement. See In re Electro-Motor, Inc., 390 B.R. 859, 867 (Bankr. E.D. Tex. 2008) (“Thus, for there to be an enforceable agreement to which a covenant not to compete can attach, it must be based upon something other than the continued employment of the employee.”); Light, 883 S.W.2d at 645 n.5; see also Purselley v. Lockheed Martin Corp., 322 Fed. Appx. 399, 402 (5th Cir. 2009) (“ ‘[P]ast consideration’ is not consideration.”).

In 2006, the Texas Supreme Court, interpreting the first requirement, held non-compete covenants can be considered unilateral contracts, made at the time a non-compete is signed, that become binding once an employer provides the employee confidential information. TransPerfect Translations, Inc. v. Leslie, 594 F. Supp. 2d 742, 752 (S.D. Tex. 2009) (citing Sheshunoff, 209 S.W.3d at 651).[57] Here, the agreements state the consideration for signing the non-compete is SCOT’s agreement to provide access to confidential information. Thus, the only question is whether SCOT’s agreement to provide access to confidential information is sufficient consideration.

*83 “Texas courts have regularly found there is an enforceable agreement supporting a noncompete covenant where an employer promises to provide an employee with confidential information and the employee promises not to disclose such confidential information.” Miner, 383 F. Supp. 3d at 696 (citations omitted). An employer need not provide the consideration at the time a non-compete agreement is signed, as long as the employer eventually provides consideration for the employee’s covenant. Weber Aircraft, L.L.C. v. Krishnamurthy, No. 4:12-CV-666, 2014 WL 12521297, at *4 (E.D. Tex. Jan. 27, 2014), report and recommendation adopted sub nom. Weber Aircraft v. Krishnamurthy, No. 4:12-CV-00666-RC-ALM, 2014 WL 4536594 (E.D. Tex. July 29, 2014) (citing Sheshunoff, 209 S.W.3d at 651, 655-56; and TransPerfect, 594 F. Supp. 2d at 753).

The evidence shows Kinser was provided confidential information regarding SCOT after he signed the Kinser NDA/NC. Morrison Aff., ¶¶ 17, 21. As part of his due diligence, Kinser participated in business discussions and a training class regarding the limestone industry. Among other things, Kinser received information regarding SCOT’s non-public provisional patent application, including the limestone formula. Id., ¶ 75 (stating Kinser was given, in order to conduct due diligence of StoneCoat, “tax returns, bank statements and other financial records, customer leads, customer names, marketing strategy, attorney-client privileged communication regarding the Hopkins Litigation and it also included specialized training regarding the composition of the Stonecoat sprayed limestone product and specialized training regarding the proper application of the Stonecoat sprayed limestone product and Stonecoat’s business methods”).

There is also evidence indicating Villarreal and Gonzalez received confidential information. For example, Morrison states in his updated affidavit as follows:

Morrison Aff., ¶ 78.

However, Villarreal and Gonzalez contend no new confidential information was provided to them after they signed their agreements. Like in the Weber Aircraft case, Villarreal and Gonzalez assert that at the time they were employed with SCOT, they had access to all the information (confidential or otherwise), and that access was not changed at any time. 2014 WL 12521297, at *5. The plaintiff in Weber Aircraft argued that, “while the types and categories of confidential information provided to Defendants may not have changed, the actual confidential documents, drawings, test reports, engineering designs, etc. were constantly updating and changing.” Id.

The court found there was adequate consideration for the covenant not to compete at issue in that case. Id. The court noted that in Sheshunoff, the parties disputed whether the nature of the training and confidential information the employee received after he signed the agreement was different from the information and training he previously received; however, there was no dispute that after the employee signed the agreement, he received confidential information. Id. (citing Sheshunoff, 209 S.W.3d at 647). That was also true in Weber Aircraft; it was undisputed that after they signed the agreement, the defendants received confidential information. 2014 WL 12521297, at *5.

*84 The court stated the plaintiff’s evidence revealed that the defendants continued to receive confidential information throughout their employment with the plaintiff and also that “the confidential information provided to Defendants was constantly being updated and changed.” Id. According to the court, the defendants’ “non-illusory promise not to compete was later accepted by Plaintiff, who provided Defendants with confidential information.” Id. (citation omitted).

“In addition, in order to satisfy element (i) of the § 15.50 test, the consideration must give rise to the employer’s interest in restraining the employee from competing and must be designed to enforce the employee’s return promise.” Weber Aircraft, 2014 WL 12521297, at *5 (quoting TransPerfect, 594 F. Supp. 2d at 753 (citing Sheshunoff, 209 S.W.3d at 649)). The court in Weber Aircraft found the plaintiff’s provision of confidential information gave rise to its interest in the agreement’s non-compete by providing the defendants with important information that could be damaging to the plaintiff. Weber Aircraft, 2014 WL 12521297, at *5. Additionally, the court noted the defendants’ covenant not to compete was for only one year post-employment and held it was “clearly designed to enforce [the defendants’] promise not to disclose Plaintiff’s confidential information to competitors.” See id. The court held the agreement satisfied “the requirements of element (i), which requires that the non-compete agreement be ancillary to or part of an otherwise enforceable agreement at the time the agreement is made.” Id.

Similarly here, the Court finds there is sufficient evidence Kinser, Villarreal, and Gonzalez received confidential information after they signed the agreements, and said information can support the non-compete agreements entered into by these defendants. In sum, the Court finds the agreements satisfy the requirements of the first element, which requires that the non-compete agreement be ancillary to or part of an otherwise enforceable agreement at the time the agreement is made. The Court now considers the reasonableness of the restrictions contained in the agreements.

d. Whether the restrictions are reasonable

Applicable law

The second portion of the test to determine whether a non-compete agreement is enforceable under Texas law is whether any limitations as to time, geographical area, and scope of activity to be restrained are reasonable. “The purpose of Chapter 15 is ‘to maintain and promote economic competition in trade and commerce’ occurring in Texas.” Marsh USA, 354 S.W.3d at 769 (citing TEX. CIV. PRAC. & REM. CODE § 15.04). “Unreasonable limitations on employees’ abilities to change employers or solicit clients or former co-employees, i.e., compete against their former employers, could hinder legitimate competition between businesses and the mobility of skilled employees.” Weber Aircraft, 2014 WL 12521297, at *6 (citations omitted). “On the other hand, valid noncompetes constitute reasonable restraints on commerce agreed to by the parties and may increase efficiency in industry by encouraging employers to entrust confidential information and important client relationships to key employees.” Id. (citations omitted).

Analysis

The parties disagree on whether the limitations in the non-compete agreements are reasonable. Plaintiffs contend the limitations are reasonable. Alternatively, Plaintiffs argue the Court should reform any limitation it finds to be unreasonable. Hearing Tr. at 65:15-66:9.

*85 Kinser, Villarreal, and Gonzalez assert the limitations contained in the agreements are unreasonably broad in time, geographical area, and scope and thus are an unlawful restraint on trade. According to Kinser, the agreement “purports to preclude him from working in the general industry, without a defined market, even for companies doing something different than Plaintiffs, and even for customers who were never Plaintiffs’ customers” and it fails to include any geographic restrictions or reasonable limitations on time. Docket Entry # 128 at 28-29.

The non-compete provisions are limited to a period of five years from the dates the agreements were signed. See, i.e., Docket Entry # 128-1, Ex. 2 ¶ 2.4. “Texas courts have held that two to five years is a reasonable time restriction in a non-competition agreement.” Salas v. Chris Christensen Systems, Inc., No. 10-11-00107, 2011 WL 4089999, at *19 (Tex. App. – Waco Sept. 14, 2011, no pet.) (collecting cases); O'Brien v. Rattikin Title Co., No. 2-05-238, 2006 WL 417237, at *6 (Tex. App. – Fort Worth Feb. 23, 2006, no pet.) (finding that two year non-compete was reasonable); Drummond Am., LLC v. Share Corp., 692 F. Supp. 2d 650, 655 (E.D. Tex. 2010) (same).

With regard to the geographic scope, it is undisputed the agreements do not contain a specific geographic limitation. “Texas law does ... mandate that a geographical limitation cannot impose a greater restraint than is necessary to protect the goodwill or other business interest of the employer.” Weber Aircraft, 2014 WL 12521297, at *7 (quoting Cobb v. Caye Publishing Group, Inc., 322 S.W.3d 780, 785 (Tex. App. – Fort Worth 2010, no pet); General Devices, Inc. v. Bacon, 888 S.W.2d 497, 504 (Tex. App. – Dallas 1994, no writ) (finding that a non-compete was unreasonable where it contained no geographical or time limitation)). Texas courts have struck down covenants not to compete for failure to include a geographic limitation under TEX. BUS. & COMM. CODE § 15.50(a). See, e.g., Goodin v. Jolliff, 257 S.W.3d 341, 351-52 (Tex. App. – Fort Worth 2008, no pet.); Juliette Fowler Homes, Inc. v. Welch Assocs., 793 S.W.2d 660, 663 (Tex. 1990).

However, a limitation in a covenant not to compete that restricts it to a particular client base “is an acceptable substitute for a geographic limitation.” Morrell Masonry Supply, Inc. v. Coddou, No. 01-13-00446-CV, 2014 WL 1778285, at *4 (Tex. App. – Houston [1st Dist.] May 1, 2014) (quoting Salas v. Chris Christensen Sys., Inc., 10–11–00107–CV, 2011 WL 4089999, at *19 (Tex.App.– Waco, Sept 14, 2011, no pet.) (noting that “[o]rdinarily a covenant not to compete with broad or no geographical scope is unenforceable”)). Whereas in Salas the court enforced the covenant not to compete despite its lack of a specific geographic restriction because it was limited instead to a particular client base, the court in Morrell found the statewide restriction in a covenant not to complete too broad, noting no such “substitute” limitation (restricting the covenant to a particular client base) existed. Morrell, 2014 WL 1778285, at *4. Similarly here, no such “substitute” limitation exists.

In Weber Aircraft, the court found the agreements were unreasonably broad in geographic limitation. 2014 WL 12521297, at * 8. The court also found the agreements were unreasonably broad in scope, pointing out the agreements prevented the defendants from accepting any type of employment, even as a janitor, for any company that was directly or even indirectly engaging in a similar business as the plaintiff. Id.

*86 Here, the non-complete agreements are broader than necessary to protect StoneCoat’s business interests, especially considering the five-year period contained therein. Because there is no geographic limit in the non-compete provisions, the covenants not to compete are overbroad, making them unenforceable as a matter of law.

Additionally, the Court finds the scope of the non-compete provisions impermissibly broad and an unreasonable restraint on trade. “A restrictive covenant is unreasonable unless it bears some relation to the activities of the employee.” Weber Aircraft, 2014 WL 12521297, at * 8 (quoting Wright v. Sport Supply Group, Inc., 137 S.W.3d 289, 298 (Tex. App. – Beaumont 2004, no pet.) (citing Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381, 386-87 (Tex. 1991))). Here, the agreements restrict Kinser, Villarreal, and Gonzalez from engaging, either directly or indirectly, in any activities “so similar in nature or purpose to those” of StoneCoat and prohibiting them from working in “this market or any activities similar in nature or purpose, products and services offered by” StoneCoat for a period of five years. See, i.e., Docket Entry # 128-1, Ex. 2 ¶ 2.4. The Court finds this non-compete covenant is unreasonably broad because it is not related to the activities of the employee, and does not define the type of work in which the employee could not engage. Weber Aircraft, 2014 WL 12521297, at * 8 (citing TransPerfect, 594 F. Supp. 2d at 755); see also Kenyon Int’l Emergency Services, Inc. v. Malcolm, No. H-09-3550, 2010 WL 452745, at *4 (S.D. Tex. Feb. 8, 2010) (finding the noncompetition clause unenforceable “because it is too broad in all respects: it does not limit the area, the tasks, or the time that it prohibits its employees from competing with it), affirmed by 400 Fed. Appx. 893 (5th Cir. 2010); see also Am. Exp. Fin. Advisors, Inc. v. Scott, 955 F. Supp. 688, 692-93 (N.D. Tex. 1996) (finding the scope of a noncompetition agreement reasonable when the employer limited the agreement to the territory in which the employee worked, and further limited the agreement to clients and potential clients who are defined in the agreement as those persons or entities that the employee sold products to or to whom the employee made a sales presentation).

e. Whether the Court should reform the agreements

Section 15.51 requires a court to reform a non-compete agreement if it is unreasonably broad in scope. Weber Aircraft, 2014 WL 12521297, at * 9 (citing TEX. BUS. & COM. CODE § 15.51(c) (“If the covenant is found to be ancillary to or part of an otherwise enforceable agreement but contains limitations as to time, geographical area, or scope of activity to be restrained that are not reasonable . . the court shall reform the covenant to the extent necessary to cause the limitations contained in the covenant ... to be reasonable and to impose a restraint that is not great than necessary to protect the goodwill or other business interest of the promise and enforce the covenant as reformed.”)). The Court need not wait for the parties to request this remedy. Weber Aircraft, 2014 WL 12521297, at * 9 (citing TransPerfect, 594 F. Supp. 2d at 756; Wright, 137 S.W.3d at 298).

If the court reforms the agreement, “the court may not award the promisee damages for a breach of the covenant before its reformation and the relief granted to the promisee shall be limited to injunctive relief.” Weber Aircraft, 2014 WL 12521297, at * 9 (citing TEX. BUS. & COM. CODE § 15.51(c)). In the Weber Aircraft case, the plaintiff requested that if the court found the noncompete agreements unreasonably broad in geographical limitation and scope, that it reform the agreements. 2014 WL 12521297, at * 9. The court found any reformation unwarranted and recommended the defendants’ motions for summary judgment be granted on the plaintiff’s claim for breach of the covenant not to compete. Id. at *10.

*87 The Court finds any reformation unwarranted here as well. Section 15.51(c) precludes damages for violation of a clause that had to be reformed to be enforceable. This limit applies to damages for breaches that occurred before or after reformation. Alliantgroup, L.P. v. Feingold, 803 F. Supp. 2d 610, 621 (S.D. Tex. 2011) (citations omitted). Thus, Plaintiffs could seek only injunctive relief for any claim for breach of the non-compete agreement.

“While reformation would generally be an appropriate remedy for a covenant such as the one at bar, the court nonetheless declines to exercise this remedy because the term of the covenant has already expired.” Leath v. Tracer Constr. Co., No. 1:08-CV-358, 2009 WL 8188138, at *7 (E.D. Tex. Aug. 18, 2009). The covenant at issue was effective for five years following the date of signing. Villarreal and Gonzalez signed the NDA/NCs in 2013. Thus, the covenant not to compete ceased to be operative, at the latest, in 2018, prior to the date of this ruling. “Consequently, reformation of the covenant would be a futile exercise because prospective injunctive relief is not available and any changes would be inoperative.” Id. (citing Juliette Fowler Homes, Inc., 793 S.W.2d at 663 n.6); Daytona Group of Tex., Inc. v. Smith, 800 S.W.2d 285, 290 (Tex. App. – Corpus Christi 1990, writ denied); Leon's Fine Foods, Inc. v. McClearin, No. 05-97-01198-CV, 2000 WL 277135, at *1 (Tex. App. – Dallas March 15, 2000, pet. denied) (injunctive relief was moot upon expiration of noncompete period) (citing Rimes v. Club Corp. of America, 542 S.W.2d 909, 912 (Tex. App. – Dallas 1976, writ ref’d n.r.e.)).

Kinser signed his NDA/NC on January 22, 2015. However, Kinser has presented uncontroverted summary judgment evidence showing that he stopped working in the limestone veneer industry as of October 11, 2017. Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 43. Plaintiffs have not responded with any summary judgment evidence showing damages, and none are available pursuant to § 15.51(c). See Redi-Mix Sols., Ltd. v. Express Chipping, Inc., No. 6:16CV298, 2017 WL 4079542, at *5 (E.D. Tex. Aug. 24, 2017), report and recommendation adopted, No. 6:16-CV-00298-RWS, 2017 WL 4076445 (E.D. Tex. Sept. 14, 2017).

For all of these reasons, there are no genuine issues of material fact concerning Plaintiffs’ breach of contract claims arising out of the covenants not to compete signed by Kinser, Villarreal, and Gonzalez. The Court finds Kinser, Villarreal, and Gonzalez are entitled to judgment as a matter of law, and summary judgment should be granted on this issue.

3. Breach of the non-disclosure provision

Plaintiffs also claim that Kinser, Villarreal, and Gonzalez breached the NDAs by disclosing Plaintiffs’ confidential information. “[A] non-disclosure agreement may be enforceable even if a covenant not to compete is not.” Alliantgroup, 803 F. Supp. 2d at 622 (citing Tom James of Dallas, Inc. v. Cobb, 109 S.W.3d 877, 888 (Tex.App. – Dallas 2003, no pet.); accord Hi–Line Elec. Co. v. Dowco Elec. Prods., 765 F.2d 1359, 1363 n. 5 (5th Cir.1985) (applying Texas law); see also Guy Carpenter & Co., Inc. v. Provenzale, 334 F.3d 459, 465 (5th Cir.2003) (Section 15.50 of the Texas Business and Commerce Code does not “govern or impair the enforceability of nondisclosure covenants.”)). Under Texas law, non-disclosure provisions are more readily enforced than noncompete clauses “because the non-disclosure provisions are restraints on trade, they do not prevent the employee from making use of the general experience he acquired during employment, and they do not offend public policy.”[58] Olander v. Compass Bank, 172 F.Supp.2d 846, 852 (S.D.Tex.2001) (citing CRC–Evans Pipeline Int'l, Inc. v. Myers, 927 S.W.2d 259, 265 (Tex.App.– Houston [1st Dist.] 1996, no writ)). They “prevent only the nondisclosure of confidential information and trade secrets and confidential information acquired by the former employee.” CRC–Evans, 927 S.W.2d at 265. In order to determine whether they are supported by consideration, courts are not confined to look only at the time the agreement is made and may consider any confidential and proprietary information, as well as trade secrets, that an employer may have given an employee before, during, and after the agreement is executed. See Corporate Relocation, Inc., 2006 WL 4101944, at *14 (quoting Olander, 172 F.Supp.2d at 856; CRC–Evans, 927 S.W.2d at 265).

*88 Here, the non-disclosure provisions prohibited Kinser, Villarreal, and Gonzalez from disclosing any confidential or proprietary information of StoneCoat except as such disclosure may be required in connection with employee’s services for StoneCoat. Regarding Kinser, the uncontroverted evidence shows he was never paid by SCOT. Kinser Aff. (Docket Entry # 128-1, Ex. 1), ¶ 17. The Kinser NDA/NC specifically provides StoneCoat and Kinser desire “to enter into a working business relationship that will cause the exchange of confidential commercial information through the course of everyday business via consulting, employment, or any other type of paid business engagement of the Receiving party [Kinser] with StoneCoat.” Docket Entry # 127-1, Ex. 2 at p. 2 (emphasis added).

Although the evidence shows that Villarreal and Gonzalez had access to information before and after the execution of the non-disclosure agreement that could be characterized as confidential information, Plaintiffs have not produced evidence sufficient to create a genuine issue of material fact that Villarreal or Gonzalez used any confidential information thereby breaching the nondisclosure covenants. See CDX Holdings, Inc. v. Heddon, No. 3:12-CV-126-N, 2012 WL 11019355, at *11–12 (N.D. Tex. Mar. 2, 2012), report and recommendation adopted, No. 3:12-CV-126-N, 2012 WL 11019354 (N.D. Tex. June 21, 2012).

In sum, the Court recommends Kinser’s, Villarreal’s, and Gonzalez’s motions for summary judgment regarding Plaintiffs’ breach of contract claims (Count 6) should be granted.

B. Tortious interference with contract

1. Defendants’ assertions

Plaintiffs also assert a tortious interference with existing business relationships claim (Count 8) against the ProCal entities and Profanchik. Plaintiffs allege ProCal’s and Profanchik’s actions described in the complaint constitute tortious interference with Plaintiffs’ existing business relationships because contracts exist between Plaintiffs and Kinser, Villarreal, Gonzalez, Mergaux and Chamielec.

Docket entry # 103, ¶¶ 222-23.

Profanchik moves for summary judgment, asserting the non-disclosure/non-compete agreements are unenforceable for the same reasons addressed above, and as such, “cannot serve as the basis for a claim of tortious interference.” Docket Entry # 67 at 27. To the extent there is evidence of a contract with which Profanchik and the ProCal entities interfered, Profanchik argues “the statute of limitations to pursue a claim for tortious interference has expired.” Id. at 28.

The ProCal entities also move for summary judgment against Plaintiffs’ tortious interference claim, asserting there is not a valid contract to interfere with and the statute of limitations expired related to all contracts at issue before Plaintiffs brought this claim. ProCal Stone Design further argues related entities cannot interfere with their own contracts. ProCal USA and ProCal Enterprises further argue they were not in existence at the time of the alleged interference.

2. Applicable law

The elements of tortious interference with a contract 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. Super Starr Int’l, LLC v. Fresh Tex Produce, LLC, 531 S.W.3d 829, 846–47 (Tex. App. – Corpus Christi-Edinburg 2017) (citing Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000)). To prevail on a tortious interference claim, “a plaintiff must present evidence that the defendant interfered with a specific contract.” Funes v. Villatoro 352 S.W.3d 200, 213 (Tex. App.—Houston [14th Dist.] 2011, pet. denied).

*89 When a dispute arises from the terms of a contract, and the contract is not ambiguous, the court can determine the parties’ rights and obligations under the agreement as a matter of law. ACS Inv’rs, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997) (citing Friendswood Dev. Co. v. McDade + Co., 926 S.W.2d 280, 282 (Tex.1996); Westwind Exploration, Inc. v. Homestate Sav. Ass’n, 696 S.W.2d 378, 381 (Tex.1985)). Ordinarily, merely inducing a contract obligor to do what it has a right to do is not actionable interference. See C.E. Servs., Inc. v. Control Data Corp., 759 F.2d 1241, 1248 (5th Cir.), cert. denied, 474 U.S. 1037, 106 S.Ct. 604, 88 L.Ed.2d 583 (1985); West Texas Gas, Inc. v. 297 Gas Co., 864 S.W.2d 681, 686 (Tex.App.—Amarillo 1993, no writ)(citing Kingsbery v. Phillips Petroleum Co., 315 S.W.2d 561, 576 (Tex.Civ.App.—Austin 1958, writ ref’d n.r.e.)); but cf. Sterner v. Marathon Oil Co., 767 S.W.2d 686 (Tex.1989). “Moreover, a contracting party’s preemptive rights are not triggered by the other contracting party’s negotiations with a third party purchaser.” ACS, 943 S.W.2d at 430 (citing Tenneco Inc. v. Enterprise Prod. Co., 925 S.W.2d 640, 645 (Tex.1996)).

3. Discussion

As an initial matter, the Court finds the Mergaux NDA expired by its terms on July 6, 2013 before Profanchik had any dealings with StoneCoat or Mergaux.[59] The Court has found the Kinser, Villarreal, and Gonzalez covenants not to compete unenforceable and declined to reform them. Regarding the non-disclosure covenants, the Court found there is no evidence Kinser was subject to the non-disclosure agreement and Plaintiffs have not produced sufficient evidence showing that Villarreal or Gonzalez used any confidential information thereby breaching the non-disclosure covenants.

To sustain a tortious interference with a contract claim regarding the only remaining contract at issue in this case (the 2011 Product Rights Agreement), Plaintiffs must prove an existing contract subject to interference, the occurrence of an act of interference that was willful and intentional, the act was a proximate cause of Plaintiffs’ damage, and actual damage or loss occurred. Holloway v. Skinner, 898 S.W.2d 793, 795–96 (Tex.1995). Defendants assert Mergaux terminated the agreement, relying on the December 12, 2012 “Termination of Escrow Agreement and Release of ‘Formula’ ” document signed by Mergaux (and Chamielec) and Fred Hopkins on behalf of StoneCoat GP/LP prior to the Hopkins State Litigation. Plaintiffs dispute the Product Rights Agreement was effectively terminated by Mergaux on December 12, 2012, pointing out the jury in the Hopkins State Litigation found on June 28, 2016 that Mergaux failed to comply with the Product Rights Agreement Defendants now claim Mergaux terminated in 2012. There is no indication in the verdict form what part of the Product Rights Agreement the jury found breached.[60] Jury Charge from Hopkins State Litigation (Docket Entry # 67-1, Ex. 17) at 4.

*90 Regardless of whether the December 12, 2012 “Termination of Escrow Agreement and Release of ‘Formula’ ” document effectively terminated the Product Rights Agreement, there are separate non-disclosure and non-compete covenants within the Product Rights Agreement that arguably could “survive any termination” of the agreement. Product Rights Agreement (Docket Entry # 67-1, Ex. 18), ¶¶ 11-12, 14b. The plaintiff must present evidence that a contract provision was breached. Rimkus Consulting, 688 F. Supp. 2d at 675 (citing N.Y. Life Ins. Co. v. Miller, 114 S.W.3d 114, 125 (Tex.App.-Austin 2003, no pet.); Archives of Am., Inc. v. Archive Litig. Servs., Inc., 992 S.W.2d 665, 667–68 (Tex.App.-Texarkana 1999, pet. denied)). This Plaintiffs have failed to do.

Pursuant to the non-disclosure provision, Mergaux agreed not to disclose or disseminate to “any other person or entity” the following: (1) “[a]ll technical information of any sort whatsoever, such as ideas (whether patentable, copyrightable or not), know-how, formulas, compositions, processes, discoveries, inventions (whether patentable, copyrightable or not), patent applications, copyright applications, drawings, prototypes and other related documentation, equipment and similar items or research projects;” (id., ¶ 11a); (2) “[a]ll business information, such as information about costs, manufacturing, production, purchasing, profits, marketing, sales, customer information or lists, business models, business plans, business strategies and the like;” (id. 18, ¶ 11b); (3) “[a]ll information pertaining to future developments, such as research and development or future marketing or merchandising, or future business activities, plans and strategies;” (id., ¶ 11c); and (4) “[a]ny information related to the terms of this agreement unless required by a court of law.” Id., ¶ 11d.

Mergaux also agreed in the Product Rights Agreement that during the term of the Agreement, “including the period in which a royalty is being paid,” he would not engage or participate in any manner, whether directly or indirectly, in any business or activity which is engaged in the business of Purchaser (other than through the DIY exception). Id., ¶12. Mergaux agreed that after “full completion” of the agreement and for a period of the greater of ten years after final payment to Mergaux or as long as StoneCoat was in operation Mergaux would not directly or indirectly participate in any manner through any entity in “any business or activity that is engaged in the business of Purchaser anywhere in the United States.” Id.

Even if the Court were to put aside the fact the jury in the Hopkins State Litigation found Mergaux did not breach the separate 2011 Mergaux NDA and also ignore the evidence of StoneCoat’s lack of royalty payments and final payment on top of the other issues with the scope of the covenant not to compete, Plaintiffs would still fail to meet their burden with respect to their claim for tortious interference with the Product Rights Agreement. A plaintiff alleging tortious interference with contract must produce some evidence that the defendant knowingly induced one of the contracting parties to breach its contract obligations. Rimkus Consulting, 688 F. Supp. 2d at 674 (citations omitted). To show Profanchik’s and ProCal’s interference, Plaintiffs rely on the same insufficient evidence discussed in detail above. For example, Morrison conclusorily asserts in his affidavit that Profanchik knew – because of the disclosures made to him pursuant to the Profanchik NDA/NC – that Mergaux and Chamielec had knowledge of StoneCoat GP’s “confidential, privileged and proprietary information and trade secrets” pursuant to the Product Rights Agreement and Profanchik knew that pursuant to the Product Rights Agreement, Mergaux and Chamielec sold all of their intellectual property, confidential information, and trade secrets regarding the matters described in the Product Rights Agreement to StoneCoat GP. Morrison Aff., ¶¶ 54, 57-58. According to Morrison, Profanchik nevertheless solicited Mergaux and Chamielec to work for ProCal to enable ProCal to compete against Plaintiffs. Id., ¶¶ 54, 60.

*91 However, there is no evidence any defendant knowingly induced Mergaux or Chamielec to breach their contract obligations. Plaintiffs have not established a genuine dispute with regard to this material fact, and as such, summary judgment is warranted for this claim as well.[61] Spear Mktg., Inc. v. BancorpSouth Bank, No. 3:12-CV-3583-B, 2014 WL 2608485, at *18 (N.D. Tex. June 11, 2014), aff'd, 791 F.3d 586 (5th Cir. 2015). The Court recommends Profanchik’s and ProCal’s motions for summary judgment on Plaintiffs’ claims for tortious interference with existing contracts (Count 8) be granted.

VIII. PLAINTIFFS’ BREACH OF FIDUCIARY DUTY CLAIM (COUNT 7)

A. The parties’ assertions

Plaintiffs assert a breach of fiduciary duty claim (Count 7) against the individual defendants.[62] As noted earlier, on July 25, 2019, the undersigned entered a Report and Recommendation, recommending all of SCOT’s claims against Profanchik and StoneCoat GP’s and StoneCoat LP’s claim for breach of fiduciary duty against Profanchik be dismissed. R&R on Res Judicata (Docket Entry #234). If adopted, there will no longer be a breach of fiduciary duty claim against Profanchik in this case.

Kinser, Villarreal, and Gonzalez move for summary judgment as to this claim. Kinser argues he was not a fiduciary and the economic loss rule applies. Villarreal and Gonzalez argue they did not owe any fiduciary duties to Plaintiffs after they resigned. According to Villarreal and Gonzalez, there is no evidence they breached fiduciary duties to Plaintiffs. Villarreal and Gonzalez argue “[d]uring their employment, there is no evidence they stole Plaintiffs’ trade secrets, solicited Plaintiffs’ customers, and carried away any confidential information.” Docket Entry # 127 at 29.

B. Applicable law

“The elements of a breach of fiduciary duty claim are: (1) a fiduciary relationship must exist between the plaintiff and defendant; (2) the defendant must have breached his fiduciary duty to the plaintiff; and (3) the defendant’s breach must result in injury to the plaintiff or benefit to the defendant.” D’Onofrio v. Vacation Publications, Inc., 888 F.3d 197, 215 (5th Cir. 2018) (quoting Hunn v. Dan Wilson Homes, Inc, 789 F.3d 573, 581 (5th Cir. 2015) (quoting Graham Mortg. Corp. v. Hall, 307 S.W.3d 472, 479 (Tex. App.—Dallas 2010, no pet.))). A third party who knowingly participates in the breach of a fiduciary duty “becomes a joint tortfeasor with the fiduciary and is liable as such.” D’Onofrio, 888 F.3d at 215-16 (quoting Kinzbach Tool Co. v. Corbett–Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 514 (1942)). “To establish a claim for knowing participation in a breach of fiduciary duty, a plaintiff must assert: (1) the existence of a fiduciary relationship; (2) that the third party knew of the fiduciary relationship; and (3) that the third party was aware that it was participating in the breach of a fiduciary relationship.” Meadows v. Hartford Life Ins. Co., 492 F.3d 634, 639 (5th Cir. 2007) (applying Texas law).

C. Discussion

1. Kinser

*92 Kinser first denies that he was in a fiduciary relationship with SCOT. According to Kinser, SCOT participated in an arm’s length negotiation to sell its business to Profanchik, and Kinser participated in that process with and on behalf of Profanchik. Kinser argues no fiduciary relationship existed before and apart from the agreement that is the basis of this suit, and therefore, he was not in a fiduciary relationship with SCOT. Docket Entry # 128 at 30 (citing Willis v. Donnelly, 199 S.W.3d 262, 277 (Tex. 2006)).

Under Texas law, a “fiduciary relationship may arise from formal and informal relationships and may be created by contract.” Jacked Up, L.L.C. v. Sara Lee Corp., 854 F.3d 797, 808 (5th Cir. 2017) (quoting Lundy v. Masson, 260 S.W.3d 482, 501 (Tex. App.—Houston [14th Dist.] 2008, no pet.)). A fiduciary relationship “exists where a special confidence is reposed in another who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.” Jacked Up, 854 F.3d at 809 (quoting Tex. Bank & Trust Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980) (quoting Lappas v. Barker, 375 S.W.2d 248, 251 (Ky. 1964))).

“But Texas law ‘does not recognize a fiduciary relationship lightly,’ Lundy, 260 S.W.3d at 501, ‘especially in the commercial context,’ Willis, 199 S.W.3d 262, 278 (Tex. 2006).” Jacked Up, 854 F.3d at 809. “To impose an informal fiduciary duty in a business transaction, the special relationship of trust and confidence must exist prior to, and apart from, the agreement made the basis of the suit.” Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 288 (Tex. 1998); see also Willis, 199 S.W.3d at 277 (quoting Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex.1997)).

NDAs or other agreements requiring confidentiality generally do not create fiduciary relationships. Jacked Up, 854 F.3d at 809 (citing Anglo-Dutch Petroleum Int’l, Inc. v. Smith, 243 S.W.3d 776, 782 (Tex. App.—Houston [14th Dist.] 2007, pet. denied) (“To the extent Smith’s position equates a confidentiality agreement to a relationship of trust and confidence giving rise to a fiduciary duty, he has cited, and we have found, no authority supporting the notion that confidentiality agreements can create fiduciary relationships.”); Wellogix, 788 F.Supp.2d at 546 (finding that an NDA did not give rise to a fiduciary relationship)). Additionally, “mere subjective trust alone is not enough to transform arm’s-length dealing into a fiduciary relationship.” Jacked Up, 854 F.3d at 809 (quoting Crim Truck, 823 S.W.2d at 595 (quoting Thigpen v. Locke, 363 S.W.2d 247, 253 (Tex. 1962))).

As in Jacked Up, the Court finds Plaintiffs fail to point to sufficient evidence that would support finding a fiduciary relationship between Plaintiffs and Kinser. 854 F.3d at 809-10. The Court recommends Kinser’s motion for summary judgment on Plaintiffs’ breach of fiduciary duty claim (Count 7) be granted.

2. Villarreal and Gonzalez

It is generally true that employees are not fiduciaries of their employers simply by virtue of the employment relationship. However, under common-law principles of agency, employees do owe certain limited fiduciary duties not to compete with their employers. D’Onofrio, 888 F.3d at 216 (citing Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 202 (Tex. 2002)). The scope of such duties has been carefully and narrowly drawn to balance “an employer’s right to demand and receive loyalty” with “society’s legitimate interest in encouraging competition.” Id. at 201. “An at-will employee may properly plan to go into competition with his employer and may take active steps to do so while still employed.” Id. (quoting Augat, Inc. v. Aegis, Inc., 409 Mass. 165, 565 N.E.2d 415, 419 (1991)). However, an employee “may not appropriate his employer’s trade secrets[,] ... solicit his employer’s customers while still working for his employer ..., [or] carry away certain information, such as lists of customers.” Id. at 202 (quoting Augat, Inc., 565 N.E.2d at 419–20); accord M P I, Inc. v. Dupre, 596 S.W.2d 251, 254 (Tex. Civ. App.—Fort Worth 1980, writ ref’d n.r.e.) (“It is only when an employee uses his official position to gain a business opportunity which belongs to his employer or when he actually competes for customers while still employed that a legal wrong will have accrued.”)).

*93 Here, Villarreal and Gonzalez did not owe any fiduciary duties to Plaintiffs after they resigned their employment. There is no evidence that either Villarreal or Gonzalez misappropriated Plaintiffs’ trade secrets, solicited Plaintiffs’ customers, or carried away any confidential information. As such, the Court recommends Villarreal’s and Gonzalez’s motion for summary judgment as to Plaintiffs’ claims for breach of fiduciary duty (Count 7) be granted.

IX. PLAINTIFFS’ DERIVATIVE CLAIMS FOR UNFAIR COMPETITION AND CONSPIRACY CLAIMS (COUNT 9)

A. Defendants’ assertions

Defendants assert Plaintiffs’ claim for Unfair Competition (Count 9) and all iterations of conspiracy fail as a matter of law. Specifically, Defendants argue Plaintiffs’ claims for unfair competition and the various iterations of conspiracy can only survive summary judgment if a substantive tort survives. Because all of the substantive torts should be dismissed, so too should all the derivative torts. Docket Entry # 175 at 11.

B. Applicable law

“Unfair competition under Texas law ‘is the umbrella for all statutory and nonstatutory causes of action arising out of business conduct which is contrary to honest practice in industrial or commercial matters.’ ” Taylor Publ'g Co., 216 F.3d at 486 (quoting Am. Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir. 1974)). The tort requires a plaintiff to show that the defendant engaged in an illegal act that interfered with the plaintiff’s ability to conduct business. Id. “Although the illegal act need not necessarily violate criminal law, it must at least be an independent tort.” Id.

To prevail on a claim for conspiracy a plaintiff must show (1) two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts in furtherance of the conspiracy, and (5) damages as a proximate result. Ultraflo Corp. v. Pelican Tank Parts, Inc., 926 F. Supp. 2d 935, 950 (S.D. Tex. 2013) (citing Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex.1983)). In determining that civil conspiracy is a theory of vicarious liability and not an independent tort and equating the limitations period for civil conspiracy with that of the underlying tort, the Supreme Court of Texas recently stated its “conspiracy decisions both before and after Massey emphasize that the damages that matter come from the underlying wrongful act, not the conspiracy itself.” Agar, 2019 WL 1495211, at *4-*5 (citations omitted).

C. Discussion

Plaintiffs’ unfair competition and conspiracy claims depend on Plaintiffs establishing one or more of the claims previously discussed. Because they have failed to do so, Plaintiffs’ derivative claims also fail. Accordingly, the Court also finds summary judgment appropriate on Plaintiffs’ unfair competition and civil conspiracy claims. Spear Mktg., 2014 WL 2608485, at *19.

X. PLAINTIFFS’ CLAIMS FOR DECLARATORY AND INJUNCTIVE RELIEF

In their Second Amended Original Complaint, Plaintiffs request the Court “declare the actions of Defendants described herein to be unlawful and a violation of the Lanham Act, the Defend Trade Secrets Act of 2016, a breach of the contracts described herein and, further, that the court enter a declaratory relief with respect to the proprietary and confidential information and trade secrets owned by Plaintiffs.” Docket Entry # 103, ¶ 293. Defendants assert Plaintiffs’ claims for declaratory relief should be dismissed because those claims are redundant and such relief is not available in federal court. The Court has broad discretion in determining whether to entertain a declaratory judgment action under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. Flanagan v. Chesapeake Expl., LLC, No. 3:15-CV-0222-B, 2015 WL 6736648, at *4 (N.D. Tex. Nov. 4, 2015) (citing Winton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (noting that the Declaratory Judgment Act is “an enabling Act, which confers discretion on the courts rather than an absolute right upon the litigant”)). Although a court may not dismiss a request for declaratory relief “on the basis of whim or personal disinclination ... the court may consider a variety of factors in determining whether to decide a declaratory judgment suit.” Flanagan, 2015 WL 6736648, at *4 (quoting Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 28–29 (5th Cir. 1989)). For example, if a request for a declaratory judgment adds nothing to an existing lawsuit, it need not be permitted. See Pan-Islamic Corp. v. Exxon Corp., 632 F.2d 539, 546 (5th Cir. 1980) (affirming refusal to allow leave to add claims that were adequately raised in the original complaint). Here, to the extent not mooted by the Court’s recommended grant of summary judgment on Plaintiffs’ claims, the Court recommends summary judgment be granted for Defendants on Plaintiffs’ request for declaratory judgment.

*94 Additionally, Defendants assert Plaintiffs’ claims for injunctive relief fail as a matter of law. The Court agrees. As set forth above, Plaintiffs cannot establish a likelihood of success on the merits when all of their causes of action should be dismissed. This failure, on its own, is a sufficient basis to dismiss the request for injunctive relief. The Court recommends Defendants’ motions for summary judgment regarding Plaintiffs’ claims for injunctive relief be granted.

XI. RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED that John Profanchik, Sr.’s Motion for Summary Judgment (regarding StoneCoat GP’s and StoneCoat LP’s remaining claims against him) (Docket Entry # 67); Irma Villarreal and Alfredo Gonzalez’s Motion for Summary Judgment (Docket Entry # 127); Justin Kinser’s Motion for Summary Judgment (Docket Entry # 128); ProCal Stone Design, LLC’s Motion for Summary Judgment (Docket Entry # 129); and ProCal Stone Design USA, LLC and ProCal Enterprises, LLC’s Motion for Summary Judgment (Docket Entry # 195) be GRANTED. It is further

RECOMMENDED that StoneCoat GP’s and StoneCoat LP’s remaining claims against John Profanchik, Sr. be DISMISSED WITH PREJUDICE. It is further

RECOMMENDED Plaintiffs’ claims against Irma Villarreal, Alfredo Gonzalez, Justin Kinser, ProCal Stone Design, LLC, ProCal Stone Design USA, LLC, and ProCal Enterprises, LLC be DISMISSED WITH PREJUDICE.

Objections

Within fourteen (14) days after receipt of the magistrate judge’s report, any party may serve and file written objections to the findings and recommendations of the magistrate judge. 28 U.S.C.A. 636(b)(1)(C). In order to be specific, an objection must identify the specific finding or recommendation to which objection is made, state the basis for the objection, and specify the place in the magistrate judge’s report and recommendation where the disputed determination is found. An objection that merely incorporates by reference or refers to the briefing before the magistrate judge is not specific.

A party’s failure to file written objections to the findings, conclusions and recommendations contained in this Report within fourteen days after being served with a copy shall bar that party from de novo review by the district judge of those findings, conclusions and recommendations and, except on grounds of plain error, from appellate review of unobjected-to factual findings and legal conclusions accepted and adopted by the district court. Douglass v. United Servs. Auto. Ass’n., 79 F.3d 1415, 1430 (5th Cir. 1996) (en banc), superseded by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending the time to file objections from ten to fourteen days).

ORDERED Plaintiffs’ Motion for Leave to Supplement Summary Judgment Record With Settlement Agreement (Docket Entry # 229) is GRANTED.

SIGNED this 12th day of August, 2019.

Seven motions for summary judgment have been filed in this case, five of which the Court considers herein. Examination of the voluminous record, which includes evidence from a number of other lawsuits, and the extensive briefing before the Court, has necessitated an exceedingly lengthy opinion.

According to the parties’ Joint Report of Rule 26(f) Conference, Chamielec is a French citizen who does not live or work in the United States. He has not been served in this lawsuit and is not represented by counsel for Defendants. Docket Entry # 30 at 1, n.1.

On November 9, 2018, the Court granted ProCal Stone Design’s motion for leave to add new counterclaims against the StoneCoat entities. Docket Entry # 100. The Court initially denied, without prejudice, ProCal Stone Design’s motion to add Morrison and MFT as parties and to assert the same counterclaims against them. However, on March 27, 2019, the Court granted ProCal Stone Design’s re-filed motion for leave to amend its counterclaims to add Morrison, individually and in his capacity as Trustee, and MFT as counterclaim defendants. The Court denied ProCal Stone Design’s motion for leave to amend to add StoneCoat of North Dallas, LLC (“StoneCoat ND”) as an additional party. Docket Entry # 147 at 29.

On July 25, 2019, the undersigned entered an 129-page Report and Recommendation of the United States Magistrate Judge Regarding StoneCoat, Morrison, and MFT’s Motions for Summary Judgment. Docket Entry # 236. The undersigned recommended both motions be denied.

On July 25, 2019, the undersigned entered an 86-page Report and Recommendation of the Magistrate Judge Regarding Profanchik’s Motion for SJ on Res Judicata. Docket Entry # 234. The undersigned recommended SCOT’s claims against Profanchik be dismissed. The undersigned further recommended StoneCoat GP’s and StoneCoat LP’s claim for breach of fiduciary duty against Profanchik be dismissed. The undersigned advised the parties all other claims of StoneCoat GP and StoneCoat LP against Profanchik would be addressed in this separate Report and Recommendation on the remaining defendants’ motions for summary judgment.

The Court has considered the entire admissible record in this case, including the previous filings of both Plaintiffs and Defendants in the briefing on Profanchik’s motion for summary judgment and Plaintiffs’ and Morrison/MFT’s motions for summary judgment. See FED. R. CIV. P. 56 (c)(3) (“Materials Not Cited. The court need consider only the cited materials [filed with a motion for summary judgment or response], but it may consider other materials in the record.”).

The Court notes the first twenty-nine exhibits attached as evidence to the Affidavit of Ms. Peña mirror those attached to Profanchik’s Partial Motion for Summary Judgment filed in the Collin County Litigation. The only additional exhibits attached in support of Profanchik’s current motion are exhibits 30-35.

The February 15, 2019 affidavits of Villarreal and Gonzalez are substantially similar to the ones attached to Profanchik’s motion (which were from the Collin County Litigation). In this Report and Recommendation, however, the Court utilizes the updated affidavits of Villarreal and Gonzalez, as well as the February 14, 2019 updated affidavit of Kinser (which is also substantially similar to the one attached to Profanchik’s motion).

Redacted copies of the same testimony were previously filed as Docket Entry #s 67-8, 127-16, 128-15 and 129-9. On April 18, 2019, the Court granted Defendants’ unopposed motion to file the document under seal and ordered the Confidential Attorneys’ Eyes Only Excerpts of the Oral Deposition of Rick Adam (filed under seal at Docket Entry # 173) is deemed to have been filed as of the original date of its filing under seal.

Paragraphs one through sixty-six of the affidavit are substantially similar, if not identical, to the prior affidavit filed by Plaintiffs in response to Profanchik’s motion and in support of Plaintiffs’ motion for summary judgment. However, the affidavit adds thirteen new paragraphs (¶¶ 67-79).

The first nine attachments are the same as those attached to Morrison’s affidavit filed in support of Plaintiffs’ response to Profanchik’s motion: Exhibits 1-5 are the non-disclosure/non-compete agreements signed by Profanchik, Kinser, Villarreal, Gonzalez, and Mergaux. Exhibit 6 is a copy of the 2011 Product Rights Agreement. Exhibit 7 is a copy of the Charge of the Court in the Hopkins State Litigation. Exhibit 8 is the Final Judgment in the Hopkins State Litigation. Exhibit 9 is a document from the United States Patent and Trademark Office indicating Stone Coat as a registered mark.

The Court further found that although Morrison may be qualified to testify to the authenticity of any business records attached to his affidavit, Morrison had not properly laid the foundation in his affidavit. Docket Entry # 225 at 11. According to the Court, Morrison had not vouched that the requirements of Federal Rule of Evidence 803(6) are met. Additionally, nowhere does Morrison state any of the attached records were kept in the course of regularly conducted business activity or that it is the regular practice of the business activity to make the records; any records were made at or near the time of each act, event, condition, opinion, or diagnosis that was recorded; or that the records were made by, or from information transmitted by, persons with knowledge of the matters set forth in the records. Id. at 11-12.

The Court held there is no indicia that these photos actually came off the YouTube website. Docket Entry # 225 at 32.

According to his April 17, 2019 declaration attached to ProCal Stone Design’s reply, Mergaux first got involved in the limestone veneer business at the end of 2004. Mergaux Decl. (Docket Entry # 175-1), ¶ 2. Mergaux and Chamielec started a company called Decopierre, Inc. in the Dallas/Fort Worth area in 2005. Id., ¶ 3. “At the beginning, [Mergaux] personally performed almost every task required to run a limestone veneer installation company, from keeping the books to physically installing the product on residences and commercial buildings.” Id. Mergaux also marketed the product by participating in home shows, and by mid-2006, the company had ten dealers in the Metroplex applying the product for it. Id. Mergaux stated the dealers would “go through intensive training, both in-class and hands-on training, which lasted approximately a week,” and were provided “photo books, sales and marketing training guides, videos and a training manual,” none of which Mergaux considered confidential, proprietary, or trade secret. Id., ¶ 4.

Morrison’s company called DecoPierre of North Texas (which was the “beginning of the stone company”), manufactured veneer coated limestone from at least “2006 through 2010.” Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 38:11-39:18.

According to the parties, Morrison has appealed to the Dallas Court of Appeals, where the parties have finished briefing the issues. See Appellate Cause Number 05-16-01355-CV. However, the appeal is currently stayed because of Mergaux’s bankruptcy.

Kinser married Profanchik’s daughter on September 19, 2015. Kinser Aff., ¶ 11.

In his affidavit, Kinser states before he ever met Morrison he had “extensive background” in the home remodeling and construction industries, “including sales, estimates, bidding, pricing, installation, and management.” Kinser Aff., ¶ 3. Kinser states he started working in construction when he was thirteen years old; his grandfather had founded a home remodeling company called GARTEX Painting and Construction Co., which was renamed in 1990 as Best Deal Home Repair. Id. Kinser worked summers and Saturdays for his grandfather for many years, “well into [his] 20s.” Id. Because of this background and experience, Kinser is “competent in all phases of home remodeling, including but not limited to electrical, plumbing, drywall, framing, trim, paint, carpentry, fencing, windows, and sales, estimates, bidding, pricing, installation, and management.” Id.

The Court would note Kinser’s updated affidavit removes paragraph 14 contained in the affidavit filed in the Collin County Litigation and attached in support of Profanchik’s motion for summary judgment.

In his Affidavit, Profanchik states he set up a meeting between himself and his lawyer Terry Scarborough, and Morrison and his lawyer, Chris Davis. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 21. At a meeting at Davis’ office on February 13, 2015, they went over the lawsuit, which at that time was focused on SCOT “being mired in a bankruptcy dispute regarding either itself or another Stonecoat entity, which was another fact not disclosed prior to [his] signing the nondisclosure/non-compete agreement[ ].” Id.; see also Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 315:8-316:11.

In his affidavit, Profanchik states he had his patent lawyers discuss the patent application with SCOT and its lawyers. Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 23; see also Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 311:16-313:20 (generally agreeing that when a patent is initially filed it is not publically available for a period of time and further testifying that on March 9, 2015 StoneCoat had filed for the patent but as of March 11 it was a private document, not a public one). Profanchik and his attorney continued working with StoneCoat’s attorney on the patent application and did not ask at that time to be out of his noncompete agreement. Bundren Aff., Ex. 6 (Profanchik trial testimony in Collin County Litigation) at 314:5-13.

According to Profanchik, he was provided an invoice from a “local toll blender that listed the name of the toll blender and a line entry for $500 without any other information.” Profanchik Aff. (Docket Entry # 67-1, Ex. 1), ¶ 16. However, neither Profanchik nor ProCal Stone Design has ever contacted or ordered anything from this blender. Id.

According to Adams, a copy of his April 24, 2015 e-mail is attached to his affidavit. Adams Aff., ¶ 12. However, nothing is attached to the affidavit. In the Court’s June 28, 2019 Order granting in part and denying in part Defendants’ motion to strike, the Court sustained Defendants’ objection to Adams affidavit. To the extent it references an exhibit not attached to the affidavit. Docket Entry # 225 at 46. Otherwise, the Court overruled Defendants’ objections to the affidavit of Rick Adams (specifically ¶¶ 11-12). Id.

See also Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 253:8-15 (agreeing the patent application had been rejected).

See also Docket Entry #67-1, Ex. 26 (SCOT’s Fourth Amended Petition in Hopkins State Litigation).

See also Villarreal Aff. (Docket Entry # 127-1, Ex. 1), ¶ 12.

In his individual deposition, when asked whether he discussed the formula with Profanchik in detail when they were talking about a business opportunity together, Morrison stated he was an “open book” with Profanchik; Profanchik knew everything from the legal side; although Morrison did not tell Profanchik what was in the formula, Morrison had Profanchik’s patent attorney talk to Morrison’s patent attorney. Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 125:7-126:13.

Kinser states Morrison made a “number of representations concerning SCOT” during the course of the initial meetings that led Kinser “to believe it was a legitimate business with certain valuable, confidential, and trade secret information that SCOT owned and intended to disclose.” Kinser Aff. (Docket Entry # 128-2), ¶ 35. According to Kinser, he relied on “these misrepresentations and each one induced [him] to sign the [Kinser] NDA/NC. Had SCOT disclosed the truth, [he] would not have signed those agreements.” Id.

See Adams Dep. (Docket Entry # 67-1, Ex. 7) at 188:11-19; see also Docket Entry # 155-1, Ex. 35 (08/29/17 Trial Testimony of Morrison) at 18:14-19:21 (agreeing that if StoneCoat’s website ever said StoneCoat had a “patent or patented process” at any time, it would be untrue because it was a “provisional patent”); see also id. at 22:15-23:14; see also Docket Entry # 155-1, Exs. 32-34 (2016 and 2017 printouts from StoneCoat website referring to “[o]ur patented process” and 2018 printout from StoneCoat website referring to “[o]ur patent-pending process”).

See Adams Dep. (Docket Entry # 67-1, Ex. 7) at 197:1-23; 197:24-198:11; 198:23-199:1 (agreeing that if Morrison or consultant Norman Hains told someone he invented spray-on limestone he’d be lying to that person); see also Morrison Dep. (Docket Entry # 67-1, Ex. 5) at 226:13-228:6 (explaining Hains, who had been on retainer with StoneCoat “forever” and who had forty-six years in the limestone business, helped Morrison develop the “new formula” StoneCoat had been using since 2013).

Gonzalez never performed any work or services or received any compensation from StoneCoat GP or StoneCoat LP. Gonzalez Aff., ¶ 4.

According to Gonzalez, during his tenure at SCOT, he “saw many workers come and go, sometimes because Ken Morrison was impossible to work for.” Gonzalez Aff. (Docket Entry # 127-1, Ex. 2), ¶ 5.

Villarreal did not perform high-level accounting functions, taxes or banking, as that was handled by Rick Adams or outside accountants. Villarreal Aff., ¶ 7. According to Villarreal, she did not have access to SCOT’s accounting system, if SCOT had one, and any such system was maintained on Morrison’s desktop computer, “which he carried in and out of the office daily.” Id. “When the desktop computer was kept at the SCOT office, it was continuously behind a locked door, to which [Villarreal] never had access.” Id.

The affidavit is substantially similar to the August 29, 2018 Affidavit of Ken Morrison filed in response to Profanchik’s Motion for Summary Judgment. Among possible differences, the affidavit attached in support of Plaintiffs’ Motion for Summary Judgment added the following, which are not contained in the affidavit attached to Plaintiffs’ response to Profanchik’s motion: (1) ¶ 3 adds the captions of the various cases in which SCOT, StoneCoat GP or StoneCoat LP were or are parties; (2) ¶ 35 adds (as highlighted) that Profanchik and Philippe Mergaux have confessed to Morrison that Philippe Mergaux went to work for Profanchik and misappropriated and gave to Profanchik confidential information and trade secrets that were the property of StoneCoat GP and StoneCoat LP; and (3) ¶ 60 adds (as highlighted) that based on Morrison’s review of all of the information referenced in the affidavit and admissions that have been made to him by Profanchik and Philippe Mergaux, Mergaux and Chamielec are working with Procal and Profanchik and are competing with Plaintiffs, and they are using the proprietary and confidential intellectual property and trade secrets of Stonecoat GP as described in the Product Rights Agreement which were sold to Stonecoat GP exclusively.

In Morrison’s December 2016 deposition, individually and as the corporate representative of SCOT, in the Profanchik Defamation Lawsuit, Morrison stated he owns 95% of SCOT, and there is another five percent owner of SCOT. Docket Entry # 155-1, Ex. 7 at 35:7-10. Similarly, in Morrison’s August 29, 2017 trial testimony in the Collin County Litigation, Morrison testified he is the owner of SCOT and the boss/man in charge at SCOT. Docket Entry # 155-1, Ex. 35 at 6:1-8.

Unfair competition claims under the Lanham Act are governed by the same standard as those for trademark infringement—the likelihood of confusion. Tinker, Inc. v. Poteet, No. 3:14-CV-2878-L, 2017 WL 4351304, at *6 (N.D. Tex. Sept. 30, 2017); see also Coach Inc. v. Sassy Couture, No. SA-10-CV-601-XR, 2012 WL 162366, at *5 (W.D. Tex. Jan. 19, 2012) (citing Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 483 (5th Cir. 2004) (“To prove trademark infringement and unfair competition under federal law, Scott Fetzer must show that the use of the KIRBY mark by House of Vacuums is likely to cause confusion among consumers as to the source, affiliation, or sponsorship of House of Vacuums’s products or services.”); Int'l Ass'n of Machinists & Aero. Workers v. Winship Green Nursing Ctr., 103 F.3d 196, 200 (1st Cir.1996) (“[L]ikelihood of confusion often is the dispositive inquiry in a Lanham Act case.”)).

However, Defendants’ motions address Plaintiffs’ separate claim for unfair competition under Texas law (as set forth in Count 9 of the complaint), asserting it is not an independent tort and Plaintiffs’ allegations are redundant to Plaintiffs’ claims for misappropriation, theft, and breach of contract. See, e.g. Docket Entry # 127 at 29.

The Court notes there is essentially no difference in the issues raised in a federal trademark infringement and unfair competition claim. In Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225 (5th Cir. 2010), the Fifth Circuit Court of Appeals stated Amazing Spaces brought claims under the Lanham Act and Texas law and further noted the analysis with respect to Amazing Spaces’s claims under the Lanham Act would be dispositive of its corresponding claims under Texas law as well. Id. at 236, n. 7 According to the court, a “trademark infringement and unfair competition action under Texas common law presents essentially ‘no difference in issues than those under federal trademark infringement actions.’ ” Id. (quoting Horseshoe Bay Resort Sales Co. v. Lake Lyndon B. Johnson Improvement Corp., 53 S.W.3d 799, 806 n. 3 (Tex.App.—Austin 2001, pet. denied) (quoting Zapata Corp. v. Zapata Trading Int'l, Inc., 841 S.W.2d 45, 47 (Tex.App.—Houston [14th Dist.] 1992, no writ))).

See Docket Entry # 103, ¶ 116 (“The Product Rights Agreement also included the sale of the trademark for the term ‘Blown Stone.’ ”); ¶ 124 (“The Chamielec Product Rights Agreement also included the sale of the trademark for the term ‘Blown Stone.’ ”). Although Plaintiffs’ complaint references “Blown Stone,” Plaintiffs’ responses reference “blown Stone.” In this Report and Recommendation, the Court refers to that trademark as “blown Stone.”

Because Kinser, Villrreal, and Gonzalez are not officers or owners of ProCal, Defendants argue the only way to impose liability on them would be for their own tortious acts.

As noted above in the discussion of the summary judgment evidence, Plaintiffs object to the declaration of Mergaux relied upon by ProCal Stone Design in its reply. The Court has overruled Plaintiffs’ objections, but will disregard any improper legal conclusions contained in the declaration.

Defendants objected to ¶ 74, asserting Morrison’s statements lack foundation. According to Defendants, Morrison claims to have viewed false advertisements but does provide specifics on what he saw, when he saw it, or where he saw it. Defendants further objected to the extent Morrison attempts to make a legal conclusion that any alleged advertisement was “literally false.” In its June 28, 2019 granting in part and denying in part Defendants’ motions to strike various portions of Morrison’s affidavit, the Court overruled Defendants’ objections to ¶ 74 but noted the Court would disregard any legal conclusions that alleged advertisements were “literally false” when considering the motions for summary judgment. Docket Entry # 225 at 42.

The TUTSA defines “trade secret” as follows:

However, on May 18, 2017, Adams testified as follows:

See January 14, 2015 e-mail to Kinser requesting NDA before visiting jobs with SCOT representatives (Trial Ex. 9); February 11, 2015 e-mail from Morrison forwarding information regarding SCOT non-public provisional patent application (Trial Ex. 11); February 12, 2015 e-mail forwarding information regarding business opportunity (Trial Ex. 12); February 12, 2015 e-mail summarizing confidential business discussions (Trial Ex. 13); February 24, 2015 e-mail regarding business development opportunities (Trial Ex. 15); February 25, 2015 e-mail regarding business leads and opportunities (Trial Ex. 16); March 11, 2015 e-mail regarding SCOT non-public US provisional patent application and attorney-client communications with SCOT patent attorney, Terrell Miller, Esq. (Trial Ex. 17); February 26, 2015 e-mail regarding attorney communications between SCOT patent attorney, Terrell Miller, Esq. and Profanchik patent attorney Brian C. McCormack, Esq. (Trial Ex. 18); March 4, 2015 additional e-mail regarding attorney discussion of SCOT provisional patent application (Trial Ex. 19); March 5, 2015 additional e-mail regarding attorney discussion of SCOT provisional patent application (Trial Ex. 21); March 11, 2015 e-mail regarding Home Depot supplier buying agreement (Trial Ex. 22); March 17, 2015 e-mail between SCOT Hopkins Lawsuit legal counsel Chris Davis, Esq. and Profanchik hired an attorney Terry Scarborough, Esq. regarding the SCOT Hopkins Lawsuit (Trial Ex. 27); March 27, 2015 e-mail regarding AIA business opportunity for SCOT (Trial Ex. 28); March 23, 2015 e-mail between SCOT Hopkins Lawsuit legal counsel Chris Davis, Esq. and Profanchik hired an attorney Terry Scarborough, Esq. regarding Hopkins Lawsuit (Trial Ex. 30); March 24, 2015 e-mail regarding SCOT project status update with Regency Development (Trial Ex. 31); March 24, 2015 e-mail regarding SCOT installer and internal personnel salaries and payments (Trial Ex. 32); March 26, 2015 e-mail regarding SCOT business opportunity (Trial Ex. 34); March 31, 2015 e-mail regarding SCOT business opportunity (Trial Ex. 35); March 31, 2015 e-mail regarding attorney discussion concerning the Hopkins Lawsuit (Trial Ex. 36); and, April 1, 2015 e-mail regarding SCOT business and construction opportunities (Trial Ex. 38).

Docket Entry # 128-1, Ex. 13 contain “Web print outs related to the other spray stone companies.” Plaintiffs object to this exhibit, asserting a proper foundation has not been laid and the information contained within these exhibits is hearsay and not admissible. Docket Entry # 150 at 15. The Court has sustained Plaintiffs’ objection and does not rely on this exhibit in its consideration of this issue.

Gonzalez states as follows:

Under the doctrine of collateral estoppel, or issue preclusion, “once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude litigation of the issue in a suit on a different cause of action involving a party to the first case.” Wellogix, Inc. v. Accenture, LLP, 788 F. Supp. 2d 523, 532 (S.D. Tex. 2011) (quoting Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980)). “Collateral estoppel can be used defensively—a plaintiff may be estopped from asserting a claim that the plaintiff has previously litigated and lost against another defendant—or can be used offensively—a plaintiff seeks to estop a defendant from relitigating issues that the defendant previously litigated and lost against another plaintiff.” Wellogix, 788 F. Supp. 2d at 532 (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 328, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979)). “Collateral estoppel applies when, in the initial litigation, (1) the issue at stake in the pending litigation is the same, (2) the issue was actually litigated, and (3) the determination of the issue in the initial litigation was a necessary part of the judgment.” Wellogix, 788 F. Supp. 2d at 532 (quoting Harvey Specialty & Supply, Inc. v. Anson Flowline Equip. Inc., 434 F.3d 320, 323 (5th Cir.2005)).

In fact, in their motion for partial summary judgment on Defendants’ affirmative defenses, Plaintiffs argued (in addition to lack of standing) that Defendants should be barred from asserting the Product Rights Agreement terminated or is otherwise unenforceable “because res judicata and the doctrine of claim preclusion preclude that issue from being re-litigated after a Final Judgment was entered in the Hopkins Litigation.” Docket Entry # 131 at 30. In the July 25, 2019 Report and Recommendation regarding Plaintiffs’ motions for summary judgment, the Court stated Plaintiffs’ assertions regarding whether Defendants may argue the enforceability, or lack thereof, of the Product Rights Agreement are best addressed in the Court’s consideration of the remaining motions for summary judgment, rather than in conjunction with Plaintiffs’ motion for partial summary judgment on Defendants’ affirmative defenses (none of which specifically mention the Product Rights Agreement). Docket Entry # 236 at 128, n. 39.

On July 10, 2019, Plaintiffs filed a Notice of Settlement (Docket Entry # 226), requesting the Court take notice of a proposed Trustee Settlement Agreement between Plaintiffs and Mergaux filed in the bankruptcy court by Mergaux’s Chapter 7 trustee which concerns the Product Rights Agreement which Plaintiffs assert sold the formula and trade secrets to StoneCoat GP. That same date, Plaintiffs filed a separate opposed Motion for Leave to Supplement Summary Judgment Record with Settlement Agreement. Docket Entry # 229.

According to Plaintiffs’ first supplement, the Chapter 7 trustee for Mergaux and Appellants in the appeal of the Hopkins State Litigation (Plaintiffs) have reached a settlement of Mergaux’s appellate rights in the appeal of the Hopkins State Litigation. Docket Entry # 229 at 5. In Plaintiffs’ second supplement, Plaintiffs inform the Court the “Settlement Motion approving the Trustee’s Settlement Agreement is set for a hearing with the bankruptcy Court on August 26, 2019” and if approved, will resolve issues between Mergaux and StoneCoat as to the Product Rights Agreement. Docket Entry # 235 at 6; see also proposed settlement agreement in Mergaux bankruptcy (Docket Entry # 229-1) (providing, if approved, the parties will file an agreed motion in the Dallas court of appeals to remand to the district court in the Hopkins State Litigation for entry of an Amended Agreed Final Judgment declaring, among other things, StoneCoat GP’s undivided ownership in the French formula).

The definitions of misappropriation and improper means under the federal Defend Trade Secrets Act are identical to those under TUTSA in all respects material to the analysis here. Lifesize, 2017 WL 1532609, at *8 (citing 18 U.S.C. § 1839). Like the court in Lifesize, the Court’s discussion of TUTSA is equally applicable to Plaintiffs’ DTSA claims.

According to Kinser’s affidavit, a few months after this lawsuit was filed, he “decided to stop working at ProCal” and he is no longer in the limestone veneer business. Kinser Aff., ¶ 43.

Because the Court finds there is insufficient evidence Defendants ever used the French formula, as required by the law on misappropriation of trade secrets, the Court need not consider whether Plaintiffs would be able to show they sustained damages as a result of any use of the French formula.

In his updated affidavit, Morrison states as follows:

According to Villarreal, April 19 was a Friday - a payday - and she was told she could not receive her paycheck if she did not sign. Villarreal Aff., ¶ 13. “It was not explained to [Villarreal] what [she] was signing, except that it was a paper that [she] needed to sign if [she] wanted to receive [her] paycheck.” Id. Villarreal did not read it, “and just signed because [she] needed [her] paycheck.” Id. She did not feel like she had any choice if she wanted her paycheck. Id. She has since learned the agreement was with StoneCoat GP, StoneCoat LP, and SCOT, but she does not know what the GP or LP entities are or what they do, and neither have ever paid her any compensation. Id.

Sheshunoff overruled the prevailing Texas Supreme Court decision interpreting § 15.50 to require that the non-compete covenant must be supported by a valid promise at the time the agreement is made. TransPerfect, 594 F. Supp. 2d at 752 (citation omitted).

A non-disclosure agreement prohibiting employees from using general knowledge, skill, and experience acquired in their former employment is more properly characterized as a noncompete agreement. Oxford Global Res., Inc. v. Weekley–Cessnun, 2005 WL 350580, at *2 (N.D. Tex. Feb. 8, 2005).

On or about July 6, 2011, Mergaux entered into a non-disclosure agreement with StoneCoat GP (Mergaux NDA). Morrison Aff., ¶ 32. As for the “Term,” the Mergaux NDA provides the agreement “shall expire two (2) years from the date hereof.” Docket Entry # 67-16, ¶ 2.22; see also Morrison Corp. Rep. Dep. (Docket Entry # 67-1, Ex. 9) at 242:4-25 (Q: “...so it expired by its terms on the 6th of July 2013?” A: “I trust your math.”).

Mergaux states in his April 17, 2019 declaration the jury found he breached the Product Rights Agreement “by terminating it prematurely.” Mergaux Decl. (Docket Entry # 175-1), ¶ 8.

Because the Court finds there is insufficient evidence regarding the elements of Plaintiffs’ tortious interference claim, the Court does not need to address the statute of limitations arguments.

Although Plaintiffs’ Second Amended Original Complaint only alleges the individual defendants owed fiduciary duties to Plaintiffs (and thus this claim is not asserted against the corporate defendants), out of an abundance of caution, the ProCal entities move for summary judgment against Plaintiffs’ claim for breach of fiduciary duty to the extent asserted by Plaintiffs, asserting ProCal did not have a fiduciary relationship with Plaintiffs. See, e.g. Docket Entry # 195 at 9-10. In response, Plaintiffs admit “there is no fiduciary duty owed by Procal to Plaintiffs.” Docket Entry # 152 at 40. Therefore, to the extent Plaintiffs even assert such a claim, the Court recommends Plaintiffs’ breach of fiduciary claim against the ProCal entities be dismissed.