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Harris County District Court, 55th
Corporations – Securities; Employment – Compensation; Contracts – Breach of Contract; Employment – Wrongful Termination
Raymond G. Houde v. Pinnacle Engineering Inc., Pinnacle Project Services Inc., Jeffery Ligget, and Terence Townend,
October 15, 2013
Raymond G. Houde (Male, 62 Years)
David L. Stockel;
Raymond G. Houde ■ Craig D. Dillard;
Raymond G. Houde ■ J. W. (Don) Johnson;
Raymond G. Houde
Pinnacle Engineering Inc.,
Pinnacle Project Services Inc.
Hicks Thomas LLP;
Jeffery Ligget, Terence Townend, Pinnacle Engineering Inc., Pinnacle Project Services Inc. ■ Greg R. Koush;
Hicks Thomas LLP;
Jeffery Ligget, Terence Townend, Pinnacle Engineering Inc., Pinnacle Project Services Inc. ■ Stephen Barrick;
Hicks Thomas LLP;
Jeffery Ligget, Terence Townend, Pinnacle Engineering Inc., Pinnacle Project Services Inc.
Plaintiff Raymond G. Houde, 62, was a facility manager for Pinnacle Engineering Inc. and Pinnacle Project Services Inc., and he was also a shareholder. On Jan. 17, 2011, he was notified by the companies that he was being terminated, and he was told that he was fired for having falsely represented at the time of hiring in 2001 that he had a chemical engineering degree. The companies offered him $1,363,000 in severance and asked him to sign a five-year nonsolicitation agreement, which he refused to do. They then told him he was being terminated for cause and refused to pay him any severance. The other two primary principals of the companies were Jeffery Liggett and Terence Townend. Houde had been hired in 2001 to head one of Pinnacle Engineering’s principal departments, which designs and engineers offshore hydrocarbon production platforms. He also became a shareholder in both Pinnacle entities at that time. In October 2003, he and Pinnacle Engineering signed a shareholders’ agreement. In January 2008, he and Pinnacle Project Services signed one, as well. Both agreements stated that, if Houde were terminated without cause, he would receive a severance package that was detailed and calculated in the agreements. Neither agreement said that Houde would have to sign a nonsolicitation agreement. Houde sued Liggett, Townend, and both companies for breach of contract and minority shareholder oppression, based on their refusal to pay a severance. The defendants contended that Houde was fired for cause, in that, before he received an offer to join the companies as a vice president and shareholder, he falsely represented that he had a bachelor’s degree in chemical engineering from Georgia Tech. The defendants also counterclaimed, for fraudulent inducement and negligent misrepresentation, alleging that they relied on Houde’s misrepresentation in making him the offer and entering into the two agreements. One of the key issues was a version of a resume of Houde’s which the defendants created and sent out to a client in November 2010. The resume stated that Houde had a bachelor’s in chemical engineering from Georgia Tech. The circumstances of the authorship and creation of the resume were hotly disputed. It was created in the companies’ format and saved on the companies’ servers. A Pinnacle employee testified that she printed out a copy of the resume and sent it to Houde for corrections, and that he did not correct the statement about his education. Both sides retained computer experts to examine the metadata associated with the resume. There were 16 versions of the resume in Microsoft Word, but only the last one was produced. There were also two prior pdf versions that were not produced. Houde sought sanctions and a spoliation instruction. The court sanctioned Pinnacle Engineering, but did not grant a spoliation instruction. Defense counsel said the sanction was for failure to preserve one hard drive, and that Houde’s computer expert acknowledged that the hard drive malfunctioned because of a legitimate Windows XP error while the case was pending.
Houde sought severance compensation. Also, the agreements required the companies to purchase all of the shareholder’s stock upon termination. At the time of his termination, Houde held a third of Pinnacle Engineering’s stock and a quarter of Pinnacle Project Services’ stock. For severance under the Pinnacle Engineering agreement, Houde sought $1,512,954. For severance under the Pinnacle Project Services agreement, he sought $64,449. According to the jury charge, the measure of these damages was 150 percent of the average compensation paid to Houde by each company during the preceding three years. Plaintiff’s counsel said that the contracts specified this calculation. Defense counsel said that the percentage in the Pinnacle Project Services contract was 25 percent. For lost shareholder distributions under the Pinnacle Engineering agreement, Houde sought $448,500. For lost shareholder distributions under the Pinnacle Project Services agreement, he sought $636,750. On their counterclaims, the defendants sought rescission of the agreement and sought to recover more than $6 million in compensation that they had paid to Houde. The plaintiff’s experts on attorney fees were his attorney Craig Dillard and William Chesney. Defense counsel was the defendants’ attorney fee expert.
The jury found that, assuming the Pinnacle Engineering shareholders agreement was valid and was breached, Houde’s damages were $1,961,454. The jury found that, assuming the Pinnacle Project Services shareholders agreement was valid and was breached, the plaintiff’s damages were $701,199. The jury found that Liggett’s and Townend’s conduct toward Houde constituted minority shareholder oppression, but did not award damages for this conduct. The jury did not find malice on the defendants’ part by clear and convincing evidence. The jury did not find that Houde fraudulently induced either Pinnacle entity into signing the agreements or making him a shareholder, and did not find that he committed statutory fraud.
Raymond G. Houde $1,512,954 Commercial: severance under Pinnacle Engineering agreement; $448,500 Commercial: lost shareholder distribution under Pinnacle Engineering agreement; $64,449 Commercial: severance under Pinnacle Project Services agreement; $636,750 Commercial: lost shareholder distribution under Pinnacle Project Services agreement
This report is based on information that was provided by plaintiff’s and defense counsel.