The Texas Supreme Court has denied rehearing to HouseCanary in its bid to undo an order that the real estate analytics company either go through a new trade secrets trial in the dispute that netted it a $740 million award or seek judgment on a $201 million contract claim.
The ruling came down from the state’s high court Friday morning and means the six-year-old legal fight with Amrock — an affiliate of Quicken Loans previously known as Title Source — will return to Bexar County District Court. Justices Rebeca Huddle and Evan Young did not participate in the decision to deny rehearing.
Startup company HouseCanary lodged counterclaims against Amrock in 2016, accusing it of stealing trade secrets that were the basis for its real estate appraisal app to create its own competing software. HouseCanary had given Amrock access to the data for $5 million a year under a November 2015 software licensing contract, according to court records.
Amrock has maintained throughout the litigation that HouseCanary’s app wasn’t functional, and that claim was the basis of its breach of contract and fraudulent inducement suit against HouseCanary.
The trial took place in 2018 and lasted more than two months.
After an appeal to the Fourth Court of Appeals, a three-justice panel of that court determined in the summer of 2020 that a flawed jury charge doomed the massive award. The jury question about misappropriation of trade secrets included references to bribery and espionage, the panel wrote, despite the fact that there is “no evidence” Amrock obtained the trade secrets through such methods.
“Because those theories are not supported by the evidence, they should have been omitted from the ‘improper means’ definition that was submitted to the jury,” Justice Beth Watkins wrote for the court.
The court held that HouseCanary had a choice: recover on the jury’s breach of contract findings or retry the whole case.
It wasn’t known on Friday, based on the denial of rehearing, what HouseCanary will opt to do in the trial court.
In a separate but related appeal, the Texas Supreme Court ruled in April 2021 that a San Antonio trial court erred when it agreed, after trial, to seal from public scrutiny exhibits that had been subject to trade secret protections but were revealed in open court.
The unanimous ruling sent the dispute back to the trial court to consider whether less restrictive means could be put in place to protect the trade secrets while adhering to Texas Rule of Civil Procedure 76a, which presumes court records are open to the public and requires public notice prior to sealing.
On remand, the trial court sealed in their entirety the same at-issue exhibits that triggered the first appeal.
Amrock appealed that ruling to the Fourth Court of Appeals in February, according to court records.
“The trial court never so much as acknowledged that much of the information contained in these exhibits is already public, as it was part of the public record in a parallel federal proceeding and has been published by a newspaper,” the company argued in its petition for review.
“Instead, the trial court said that retroactive sealing satisfied the public’s First Amendment and common law rights of access because the media still had access to much of the same information in the trial transcript and other trial exhibits; that, of course, only highlights the absurdity of keeping the exhibits under seal,” Amrock argued.
According to the docket, the parties have fully briefed the case before the Fourth Court of Appeals and it was submitted to the court for consideration on Sept. 1.
Amrock is represented by Harriet O’Neill, Catherine M. Stone of Langley & Banack, David M. Prichard of Prichard Young, David E. Keltner of Kelly Hart & Hallman, Helgi C. Walker of Gibson Dunn & Crutcher and Jeffrey B. Morganroth of Morganroth & Morganroth.
The cause number in the sealing dispute is 04-21-00584-CV. The cause number before the Texas Supreme Court is 20-0683.