Texas Law Allows Legal Fee Award to Manager in Trade Secrets Row

A Texas enterprise that delivers cleanse-up and construction solutions in the wake of disasters ought to spend the authorized fees of a former managing member following it sued him alleging theft of trade techniques, an appeals courtroom in the state ruled.

Restoration Specialists LLC alleged that Mark DeMattia breached his fiduciary duties and stole trade tricks shortly prior to the company’s 2018 sale to WyoTexGa LLC. DeMattia argues that company rules and the Texas Business Organizations Code have to have the business to pay back his authorized service fees, unbiased of his appropriate to indemnification or allegations of wrongdoing.

The Texas Court of Appeals, Fifth District agreed with DeMattia in an impression issued Tuesday.

Restoration alleges that DeMattia wrongfully copied or deleted the company’s undertaking history data files in the times in advance of the sale shut. The enterprise offers emergency providers and development to attributes ruined by storms, floods, and fires.

Restoration contends that as a limited liability firm, its company files do not make it possible for for the improvement of costs to previous governing users.

Nevertheless, the state’s organization group legislation states that an LLC’s governing paperwork can include provisions that allow development of realistic expenditures to the two present-day and previous governing members, the court claimed.

And as courts have made crystal clear in preceding circumstance regulation, progression of charges is expected if a company’s governing documents so condition, Justice Erin A. Nowell wrote for the court docket.

The court was not confident by Restoration’s argument that the indemnifications clause in its governing paperwork and its improvement clause want to be interpreted separately.

Restoration alleges that the progression clause applies only to present-day users, but the indemnification clause applies to both latest and previous associates, the court docket claimed.

It stated that the language in the two clauses is go through as getting an “obvious romance concerning the provisions” and therefore the advancement provision can be applied to former members.

The courtroom also turned down Restoration’s arguments that the development clause need to be declared unenforceable simply because DeMattia’s alleged perform was poor and towards general public coverage.

Justices David J. Schenck and Dennise Garcia joined the unanimous feeling.

DeMattia was represented by Munck Wilson Mandala LLP. Restoration was represented by Stolley Law Pc and Cherry Petersen Landry Albert LLP.

The situation is In re DeMattia, Tex. App., 5th Dist., No. 05-21-00460, 4/12/22.