A federal jury in East Texas awarded Plano-based property management software company ResMan a $152 million verdict after finding a former customer improperly accessed ResMan’s software to develop its own rival product with a third party.
In Sherman federal court, the five-woman, three-man jury ordered two Houston defendants, customer Karya Property Management and software developer Expedien, to pay ResMan $32.29 million in compensatory damages and $120 million in punitive damages for breach of contract, misappropriation of trade secrets and tortious interference. Because ResMan is entitled to attorneys’ fees, that amount could climb in the coming weeks once U.S. District Judge Amos Mazzant discusses the matter with the parties.
Thursday afternoon’s verdict ties the bow on a second trial in the case after the first trial resulted in a mistrial in November due to a Covid-19 outbreak that left 15 trial participants infected — despite, according to both sides, the court putting in place proper safety protocols. The second trial, which added temperature checks for every person before they entered the Paul Brown Federal Courthouse, concluded with no incident.
The jury heard nine days of testimony and arguments and then deliberated for about two hours before returning its judgment.
The verdict is also a large-dollar victory for a Houston-based, women-led trial team at Hogan Lovells who were able to win a high-stakes business dispute at a time when courts across Texas are facing a significant, pandemic-induced backlog in jury trials that totals in the thousands.
“It’s important that we continue to try cases and I’m hopeful that with each trial that is finished that people will feel more confident about the courthouse and trying cases,” said Hogan Lovells lawyer Maria Wyckoff Boyce, who led ResMan’s trial team. “It was very important that we got back in the courtroom in front of a jury as soon as the court scheduled us to retry the case.
“The jury’s verdict for ResMan provides important relief for our client and its hard-working employees, who spent years and many millions of dollars developing this groundbreaking property software used to manage apartment buildings throughout the United States,” she said.
ResMan Chief Executive Paul Bridgewater reflected that sentiment.
“We are grateful for the jury’s verdict and appreciate the hard work of our trial team under very difficult circumstances,” Bridgewater said. “This case is very important to ResMan because our intellectual property is one of our most valuable assets. Our trial team partnered closely with us to protect our state-of-the-art property management solution.”
The defendants’ lead lawyer, Michael Richardson of Corpus Christi firm Hilliard Martinez, did not immediately respond to a request for comment. The Texas Lawbook also made multiple unsuccessful efforts to contact the defendants for a comment.
Although defense lawyers admitted at trial that Karya breached its subscription agreement with ResMan, they argued that no misappropriation of trade secrets took place and that the so-called “trade secrets” entailed publicly-available information, according to lawyers.
They also claimed that they independently developed their software without using ResMan’s product.
Karya is a privately-held company that manages more than 20,000 apartment units in Houston, Dallas, San Antonio, Austin, Salt Lake City, Las Vegas and Kansas City.
At trial, jurors heard and viewed evidence that Karya and Expedien improperly accessed ResMan’s system more than 1,000 times without ResMan’s knowledge or permission in order to create Arya, the name of the rival software. Evidence that proved the improper access included teleconference recordings between the defendants that analyzed the ResMan system to determine which features to use in the Arya software.
Boyce said her side was also able to present the jurors with testimony by witnesses for the defense that contradicted what they said at the first trial.
The Hogan Lovells team representing ResMan at trial also included Houston trial lawyer Cristina Espinosa Rodriguez, Washington, D.C. appellate partner Jessica Ellsworth and Houston associates Jillian Beck, Ira Jamshidi, Lee Whitesell, Jennifer Bevilacqua and Sydney Rupe. Tyler-based lawyer Mike Jones of Potter Minton served as local counsel.
In addition to Richardson, the defense team also included Seepan Parseghian and Russell Post of Beck Reddden; Mark Strachan and Dick Sayles of Bradley Arant Boult Cummings; Kelly Koudelka-Clark, Michael Ellis and Steven Mitby of Seiler Mitby; and Ali Dhananiof Baker Botts.