Statute

Texas Citizens Participation Act (TCPA), TEX. CIV. PRAC. & REM. CODE ANN. § 27.001 et. seq.

Case

Holt Texas Ltd. v. M&M Crushed Stone Products Inc., 04-17-00621-CV, (Tex. App. – San Antonio Aug. 22, 2018 no pet.) (mem. op.)

General Allegations that Merely Recite the Elements of a Cause of Action are not Clear and Specific Evidence

Facts

Holt sued M&M on an open account. M&M counterclaimed against Holt claiming that Holt had tortiously interfered with a prospective business relationship.  That relationship was M&Ms attempting to get a loan from Cat Financial. Cat called Holt to inquire about M&Ms credit. Holt told Cat that M&M had an outstanding balance and that a lawsuit had been filed. About the same time, Cat Financial denied M&M’s loan. M&M then filed a Counterclaim against Holt for tortious interference with prospective business relationship. Holt filed a motion to dismiss under the Texas anti-SLAPP, TCPA, law.

The Texas Anti-SLAPP law or TCPA has a three step process. In step one, the movant bears the burden of establishing by a preponderance of the evidence that the nonmovant’s claim is a legal action in response to the movant’s exercise of his right of association, his exercise of his right of free speech or his exercise of his right to petition. §27.003 (a).

The appeals court first held that Holt had met its burden by showing that M&Ms counterclaim was a legal action under the TCPA.

The TCPA provides its own definition of ‘exercise of the right of free speech, ‘” which “is not fully coextensive with the constitutional free-speech right protected by” the United States and Texas Constitutions. The TCPA defines the “exercise of the right of free speech” to mean “a communication made in connection with a matter of public concern.”

Few would doubt an end consumer’s right to communicate about the quality (or lack thereof) of businesses in the marketplace. Conversely, businesses have a corresponding right to communicate between themselves about customers, or potential customers. Otherwise, a bank could never inform other financial institutions that a putative borrower chronically defaults on loans, or a merchant could never warn other stores of serial shoplifters. To be sure, the information provided must be truthful, but this free flow of accurate information is essential to an efficient marketplace. Stripping away the falsity component of the allegation, Appellants here have done no more than warn other media outlets about potential customers who (allegedly) do not pay their accounts.

In the instant case, it is undisputed that M&M sells services to customers for crushing, screening, drilling, blasting, and mining aggregate, including stone. By responding to CAT Financial’s request for a credit reference regarding M&M, Holt “made a communication ‘in connection with’ a ‘service’ in the relevant marketplace…This is in keeping with the right businesses have “to communicate between themselves about customers.” In fact, the email exchange between Esparrago and Wahne in July of 2016, which M&M attached to its response, demonstrates credit references are routinely exchanged in the industry. Therefore, we hold Holt satisfied its initial burden of showing the TCPA is applicable to M&M’s tortious interference counterclaim because that claim is based on, relates to, or is in response to Holt’s exercise of the right of free speech. 

Once the movant has shown that the nonmovant’s legal action is covered by the act, the burden shifts to the nonmovant to demonstrate a prima facie case for each essential element of a cause of action by “clear and specific evidence.” §27.005 (c).

 To prevail on a claim for tortious interference with prospective business relations, the plaintiff must establish that (1) there was a reasonable probability that the plaintiff would have entered into a business relationship with a third party; (2) the defendant either acted with a conscious desire to prevent the relationship from occurring or knew the interference was certain or substantially certain to occur as a result of the conduct; (3) the defendant’s conduct was independently tortious or unlawful; (4) the interference proximately caused the plaintiff injury; and (5) the plaintiff suffered actual damage or loss as a result.

M&M filed affidavits claiming that because of Holt’s statements, Cat Financial refused the loan. However, none of the affidavits were from Cat Financial explaining that they denied the loan based on Holt’s communications to them.

In this case, neither M&M’s pleadings nor the evidence it produced provide sufficient detail to establish the causation element of its tortious interference claim. Instead, both the allegations in its pleadings and Martinez’s affidavit do nothing more than conclusively state CAT Financial denied the loan due to Holt’s response to CAT Financial’s request for a credit reference…The fact that the credit reference occurred roughly contemporaneously with CAT Financial’s decision does not establish Holt’s credit reference caused CAT Financial to decline the loan…But just as conjecture, guess, or speculation will not survive a proximate cause sufficiency challenge in the summary judgment context, conjecture, guess, or speculation cannot survive ‘clear and specific’ scrutiny under chapter 27.

See In re Lipsky, 460 S.W.3d 579 at 590-91, (Tex. 2015) (“[G]eneral allegations that merely recite the elements of a cause of action [] will not suffice.”)

If the nonmovant meets his burden of establishing a prima facie case for each essential element of a cause of action by “clear and specific evidence”, the court must still grant the motion to dismiss if the movant establishes a valid defense by a “preponderance of evidence”. §27.005 (d).

The court never reached the third step because M&M failed to carry its burden under Step-two.

General Allegations that Merely Recite the Elements of a Cause of Action are not Clear and Specific Evidence

Because the TCPA was applicable to M&M’s counterclaim for tortious interference with prospective business relations but M&M did not establish by clear and specific evidence a prima facie case for that claim, the trial court erred in denying Holt’s motion to dismiss. Therefore, we reverse the trial court’s order and dismiss M&M’s counterclaim for tortious interference with prospective business relations against Holt. The cause is remanded to the trial court to determine the amount Holt should be awarded under section 27.009(a) of the TCPA. See Youngkin, 546 S.W.3d at 683 (remanding for reconsideration of award under section 27.009(a)); Sullivan v. Abraham, 488 S.W.3d 294, 299 (Tex. 2016) (holding TCPA requires an award of reasonable attorney’s fees to the successful movant).