Texas Court Reverses Ortho Surgeon’s $9M Win

The Texas Fourteenth District Court of Appeals (appellate court), via a three-judge panel, has reversed a $9 million judgment won by an orthopedic spine surgeon against a Texas ambulatory surgical center.

In 2012, Houston Metro Ortho and Spine Surgery, LLC (Metro), an ambulatory surgical center, opened. Richard Francis, M.D., via his business entity Juansrich, Ltd., owned an interest in Metro. According to court documents, Metro had initial success. Dr. Francis contributed to its success, providing more than 20% of its revenue.

In 2014, “two large insurance companies stopped paying Metro for services rendered to their insureds.” Consequently, Dr. Francis began performing procedures at other facilities. That same year, the Metro board of directors voted to remove Juansrich as a member.

In 2015, Metro sued Dr. Francis alleging that he had violated his noncompete agreement. Juansrich intervened. Juansrich alleged breach of contract, conversion, aiding and abetting, and unjust enrichment.

Dr. Francis filed a successful motion for summary judgment, arguing that the noncompete was unenforceable. The trial court then “realigned the parties making Juansrich the plaintiff” and later granted Juansrich’s two Rule 166 motions.

After a bench trial, the trial court awarded “Juansrich $9,855,596.85 in damages on Juansrich’s conversion cause of action and $23,048.50 in attorney’s fees.” The trial court also awarded “Dr. Francis $403,918.15 in attorney’s fees and costs for defending against Metro’s noncompete claim.”

Metro then appealed the trial court’s decision, challenging everything except its award of $23,048.50 in attorney’s fees. The appellate court reversed the trial court’s final judgment based on conversion. This means that Juansrich gets nothing for its conversion cause of action. The appellate court also reversed the trial court’s award of $403,918.15 in attorney’s fees and costs. It further found that the “trial court erred when it granted Juansrich’s first and second Rule 166 motions.”

All was not lost. The appellate court did conclude “that the evidence is legally sufficient to support the trial court’s judgment on Juansrich’s claim for missed distribution payments.” It affirmed “the final judgment’s award of $191,764.51 for missed distributions.”