Morrison v. Profanchik, No. 05-17-01281-CV, 2019 WL 3798182 (Tex. App.–Dallas Aug. 13, 2019), supplemented, No. 05-17-01281-CV, 2019 WL 5112268 (Tex. App.–Dallas Oct. 10, 2019) is a case involving the summary judgment dismissal of counterclaims for breach of non-disclosure/non-compete agreement and misappropriation of trade secrets. In Morrison, plaintiff Profanchik approached Stonecoat of Texas about purchasing one of its franchises. The parties entered into a nondisclosure/noncompete agreement with the understanding that the competitor would be divulging confidential and trade secret information as part of the due diligence process. Profanchik, however, later walked away from the deal, started a competing limestone veneer company, and sued Stonecoat and its owners for tort causes of action arising from the parties’ negotiations.
Stonecoat and its owners filed a counterclaim alleging Profanchik breached his nondisclosure/noncompete agreement and violated the Texas Uniform Trade Secrets Act (TUTSA), among other things. Profanchik filed a motion for summary judgment, which was granted by the trial court, and the Dallas Court of Appeals affirmed. On appeal, the Court noted that the only evidence arguably cited was a conclusory affidavit of Stonecoat’s owner, which stated, among other things, that Profanchik “received delivery and access to privileged and confidential information, intellectual property and trade secrets of Stonecoat” and that Profanchik “inevitably disclosed” this information to his competing company. The Dallas Court of Appeals held that this affidavit was insufficient evidence to support Stonecoat’s breach of non-disclosure/noncompete agreement because it failed to identify the special material that Profanchik allegedly used, demonstrate the secret or proprietary nature of the material, or describe how use of the alleged material breached the nondisclosure/noncompete agreement.
Stonecoat also did not do itself any favors by omitting records cites in its appellate brief, which was the basis of affirming the TUTSA claim.
The lesson here is that bare-bones assertions of misappropriation of trade secrets or violations of TUTSA will be insufficient to survive summary judgment. Instead, a claimant must specify, at minimum, (1) why the information was a trade secret and (2) how the information was used by the other party.