The four-year-long legal battle between property valuation firm Amrock and real estate analytics company HouseCanary experienced another twist this week.
The Texas Fourth Court of Appeals ruled that a flawed jury charge that resulted in a $706 million verdict – later increased to $740 million for attorneys’ fees and prejudgment interests – for HouseCanary needs to be tried again before a San Antonio jury.
But the same three-judge panel ruled that most of HouseCanary’s claims of trade secrets violations and fraud seemed to be supported by the evidence presented at trial. In fact, the justices citing page-after-page of evidence indicating that HouseCanary had met its obligations under its contracts with Amrock and that Amrock officials appeared to be using HouseCanary’s technology and information to develop their ownproduct, which was prohibited under the agreement.
In addition, the San Antonio appeals court upheld the trial court’s decision that Amrock’s allegations of breach of contract against HouseCanary were unfounded. Amrock was previously known as Title Source and is an affiliated with Quicken Loans.
Justice Beth Watkins, in a 26-page opinion, wrote that the damages verdict must be reversed because the jury charge on the count of misappropriation of trade secrets included references to bribery and espionage.
“HouseCanary conceded at oral argument that there is no evidence TSI acquired the trade secrets through bribery, and our review of the record reveals no evidence that TSI acquired the trade secrets through espionage,” Justice Watkins wrote. “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.”
“Because HouseCanary did not pursue bribery or espionage theories at trial, it contends the record does not support a conclusion that the jury based its findings on those theories,” the decision states. “However, we are reasonably certain that the jury was significantly influenced by the erroneous inclusion of the ‘breach or inducement of a breach of a duty to maintain secrecy, to limit use, or to prohibit discovery of a trade secret’ instruction.”
Lawyers for both sides declared victory.
“The court of appeals found that HouseCanary did have trade secrets and that HouseCanary took reasonable steps to protect those secrets and that TSI and that the jury got it right when they ruled against Title Source for illegally using our client’s trade secrets,” Susman Godfrey partner Max Tribble, who represents HouseCanary, told The Texas Lawbook on Thursday.
“If we need a new trial, we are ready to go to trial tomorrow,” Tribble said. “We should get more money than we were awarded last time.”
Catherine Stone, a partner at Langley & Banack and lead appellate counsel for Amrock, said her client was pleased that the justices ordered a new trial because “the outlandish compensatory damages award cannot stand.”
“We are confident that given all of the evidence – including the whistleblower testimony that came out in a post-trial hearing – Amrock will be vindicated and a new jury will conclude that Amrock was never given, and never used, any of HouseCanary’s purported trade secrets,” Stone said in a written statement.
The original trial took place in early 2018 for two-and-a-half months. The jury awarded $235.4 million in compensatory damages and $470.8 million in punitive damages. HouseCanary also was awarded about $29 million in prejudgment interest and $4.5 million in attorneys’ fees.
Amrock is expected to appeal the Fourth Court’s decision eliminating its breach of contract claims against HouseCanary.
HouseCanary needs to decide whether it wants to ask for an en banc review of the Fourth Court’s decision, appeal directly to the Texas Supreme Court or agree to re-try the case to a new jury in San Antonio.
“We are still evaluating our options,” Tribble said. “We think we have a fair chance of success which ever option we take.”