You are on page 1of 93

FILED

7/11/2018 2:20 PM
Donna Kay McKinney
Bexar County District Clerk
Accepted By: Cynthia Gonzales

CAUSE NO. 2016-CI-06300

TITLE SOURCE, INC., § IN THE DISTRICT COURT OF


§
Plaintiff, §
§
§
vs. § BEXAR COUNTY, TEXAS
§
HOUSECANARY, INC., §
f/k/a CANARY ANALYTICS, INC., §
§
Defendant. § 73RD JUDICIAL DISTRICT

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page i


TABLE OF CONTENTS

INTRODUCTION .......................................................................................................................................1

SUMMARY OF ARGUMENT.......................................................................................................................3

LEGAL STANDARD ................................................................................................................................14

ARGUMENT ...........................................................................................................................................14

I. HouseCanary failed to establish liability on any of its claims .....................................14

A. HouseCanary’s TUTSA claims fail as a matter of law ........................15

B. HouseCanary’s fraud claims fail as a matter of law ............................45

C. HouseCanary’s claims sound—if at all—only in contract ..................47

D. HouseCanary’s contract claims fail as a matter of law ........................50

II. The jury’s massive damages award is contrary to law and cannot stand.....................52

A. The compensatory damages are speculative, unsupported,


and contrary to law...............................................................................52

B. The jury’s grossly excessive punitive damages award


violates Texas law and the federal Constitution .................................75

III. Title Source is entitled to JNOV on its claim that HouseCanary breached
Amendment One ..........................................................................................................80

PRAYER ................................................................................................................................................83

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page ii


INDEX OF AUTHORITIES

Page(s)
Cases

360 Mortg. Grp., LLC v. Homebridge Fin. Servs., Inc.,


No. A-14-CA-00847-SS, 2016 WL 900577 (W.D. Tex. Mar. 2, 2016) ............................10, 45

Akin, Gump, Strauss, Hauer & Feld, LLP v. Nat’l Dev. & Res. Corp.,
299 S.W.3d 106 (Tex. 2009)....................................................................................................14

Allan J. Richardson & Assoc. v. Andrews,


718 S.W.2d 833 (Tex. App.—Houston [14th Dist.] 1986, no writ) ........................................38

Ally Fin., Inc. v. Gutierrez,


No. 02-13-00108-CV, 2014 WL 261038 (Tex. App.—Fort Worth Jan. 23,
2014) ........................................................................................................................................49

Aquila Sw. Pipeline, Inc. v. Harmony Expl., Inc.,


48 S.W.3d 225 (Tex. App.—San Antonio 2001, pet. denied) .........................................2, 9, 52

Atlas Copco Tools, Inc. v. Air Power Tool & Hoist, Inc.,
131 S.W.3d 203 (Tex. App.—Fort Worth 2004, pet. denied) ...........................................69, 70

Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc.,


518 S.W.3d 432 (Tex. 2017)....................................................................................................81

Baxter & Assocs., L.L.C. v. D & D Elevators, Inc.,


No. 05-16-00330-CV, 2017 WL 604043 (Tex. App.—Dallas Feb. 15, 2017,
no pet.) ...............................................................................................................................24, 38

Baylor Univ. v. Sonnichsen,


221 S.W.3d 632 (Tex. 2007)....................................................................................................11

BMW N. Am., Inc. v. Gore,


517 U.S. 559 (1996) .....................................................................................................77, 79, 80

Boerner v. Brown & Williamson Tobacco Co.,


394 F.3d 594 (8th Cir. 2005) ...................................................................................................79

BondPro Corp. v. Siemens Power Generation, Inc.,


463 F.3d 702 (7th Cir. 2006) ...................................................................................................42

Chapman Custom Homes, Inc. v. Dallas Plumbing Co.,


445 S.W.3d 716 (Tex. 2014) (per curiam) ...............................................................................47

City of Keller v. Wilson,


168 S.W.3d 802 (Tex. 2005)....................................................................................................14

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page iii


Coastal Transport Co. v. Crown Cent. Petrol. Corp.,
136 S.W.3d 227 (Tex. 2004)..................................................................................35, 36, 52, 69

Computize, Inc. v. Longhorn Packaging Inc.,


No. 04-03-00138-cv, 2004 WL 86143 (Tex. App.—San Antonio Jan. 21,
2004) ........................................................................................................................................81

ConocoPhillips Co. v. Koopmann,


542 S.W.3d 643 (Tex. App.—Corpus Christi 2016), aff’d on other grounds,
No. 16-0662, 2018 WL 1440639 (Tex. Mar. 23, 2018), reh’g denied (June 22,
2018) ........................................................................................................................................47

Crown Life Ins. Co. v. Casteel,


22 S.W.3d 378 (Tex. 2000)......................................................................................................18

DeClaris Assocs. v. McCoy Workplace Sols., L.P.,


331 S.W.3d 556 (Tex. App.––Houston [14th dist.] 2011, no pet.) ..........................................81

Demond v. Infiniti HR LLC,


No. 3:17-CV-1322-D, 2017 WL 3835951 (N.D. Tex. Aug. 11, 2017) ...................................16

DeSantis v. Wackenhut Corp.,


793 S.W.2d 670 (Tex. 1990)....................................................................................................46

Eagle Oil & Gas Co. v. Shale Expl., LLC,


No. 01-15-00888-CV, -- S.W.3d --, 2018 WL 1870081 (Tex. App.—Houston
Apr. 19, 2018) ....................................................................................................................75, 76

Educ. Mgmt. Services, LLC v. Tracey,


102 F. Supp. 3d 906 (W.D. Tex. 2015)........................................................................16, 25, 37

Educ. Mgmt. Servs. v. Cadero,


No. SA-14-CA-587, 2014 WL 12586781 (W.D. Tex. Nov. 18, 2014) .............................11, 49

Embarcadero Techs., Inc. v. Redgate Software, Inc.,


No. 1:17-CV-444-RP, 2018 WL 315753 (W.D. Tex. Jan. 5, 2018) ..................................45, 46

Fortune Prod. Co. v. Conoco, Inc.,


52 S.W.3d 671 (Tex. 2000)......................................................................................................29

GE Betz, Inc. v. Moffitt-Johnston,


885 F.3d 318 (5th Cir. 2018) ...................................................................................................37

Gharda USA, Inc. v. Control Sols., Inc.,


464 S.W.3d 338 (Tex. 2015)....................................................................................................14

Glob. Water Grp., Inc. v. Atchley,


244 S.W.3d 924 (Tex. App.—Dallas 2008, pet. denied) .............................................16, 27, 41

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page iv


Greenville Automatic Gas Co. v. Automatic Propane Gas & Supply, LLC,
465 S.W.3d 778 (Tex. App.—Dallas 2015, no pet.) ................................................................30

Guy Carpenter & Co. v. Provenzale,


334 F.3d 459 (5th Cir. 2003) ...................................................................................................38

Haase v. Glazner,
62 S.W.3d 795 (Tex. 2001)......................................................................................................46

Hammerly Oaks, Inc. v. Edwards,


958 S.W.2d 387 (Tex. 1997)....................................................................................................30

Hancock v. Variyam,
400 S.W.3d 59 (Tex. 2013)......................................................................................................30

Harris Cty. v. Smith,


96 S.W.3d 230 (Tex. 2002)......................................................................................................18

Horizon Health Corp. v. Acadia Healthcare Co.,


520 S.W.3d 848 (Tex. 2017)....................................................................................................76

Houston Mercantile Exch. Corp. v. Dailey Petroleum Corp.,


930 S.W.2d 242 (Tex. App.—Houston [14th Dist.] 1996, no writ) ..............................9, 52, 68

Hunter Bldgs. & Mfg., L.P. v. MBI Glob., L.L.C.,


436 S.W.3d 9 (Tex. App.—Houston [14th Dist.] 2014, pet. denied) .............................. passim

Interplan Architects, Inc. v. C.L. Thomas, Inc.,


2010 WL 4065465 (S.D. Tex. Oct. 9, 2010)............................................................................60

Lakeway Reg’l Med. Ctr., LLC v. Lake Travis Transitional LTCH, LLC,
No. 03-15-00025-CV, 2017 WL 672451 (Tex. App.—Austin Feb. 17, 2017,
pet. denied) ....................................................................................................................... passim

Lesikar v. Rappeport,
33 S.W.3d 282 (Tex. App.—Texarkana 2000, pet. denied) ....................................................29

Lompe v. Sunridge Partners, LLC,


818 F.3d 1041 (10th Cir. 2016) ...............................................................................................79

Marathon Corp. v. Pitzner,


106 S.W.3d 724 (Tex. 2003)..........................................................................................2, 14, 33

McLaughlin, Inc. v. Northstar Drilling Techs., Inc.,


138 S.W.3d 24 (Tex. App.—San Antonio 2004, no pet.) ........................................................50

Moddha Interactive, Inc. v. Philips Elec. N. Am.,


92 F. Supp. 3d 982 (D. Haw. 2015) .........................................................................................46

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page v


Myriad Dev., Inc. v. Alltech, Inc.,
817 F. Supp. 2d 946 (W.D. Tex. 2011)..............................................................................49, 76

Noble Energy, Inc. v. ConocoPhillips Co.,


532 S.W.3d 771 (Tex. 2017)....................................................................................................82

Numed, Inc. v. McNutt,


724 S.W.2d 432 (Tex. App.—Fort Worth 1987, no writ) .......................................................38

Pac. Mut. Life Ins. Co. v. Haslip,


499 U.S. 1 (1991) .....................................................................................................................80

Quaker Petroleum Chems. Co. v. Waldrop,


75 S.W.3d 549 (Tex. App.—San Antonio 2002, no pet.) ..........................................................2

R & R Marine, Inc. v. Max Access, Inc.,


377 S.W.3d 789 (Tex. App.—Beaumont 2012, no pet.) .........................................................83

Ramco Oil & Gas Ltd. v. Anglo-Dutch (Tenge) L.L.C.,


207 S.W.3d 801........................................................................................................................72

Research Equip. Co. v. C.H. Galloway & Scientific Cages, Inc.,


485 S.W.2d 953 (Tex. Civ. App.—Waco 1972, no writ) ........................................................38

Rusty’s Weigh Scales & Service, Inc. v. North Texas Scales, Inc.,
314 S.W.3d 105 (Tex. App.—El Paso 2010, no pet.) ........................................................55, 77

SCM Corp. v. Triplett Co.,


399 S.W.2d 583 (Tex. App.—San Antonio 1966, no writ) .....................................................38

Smith v. Nelson,
53 S.W.3d 792 (Tex. App.—Austin 2001, pet. denied)...........................................................74

Smith v. O’Donnell,
288 S.W.3d 417 (Tex. 2009)....................................................................................................76

Speedemissions, Inc. v. Capital C Enterprises, Ltd.,


No. 01-07-00400-CV, 2008 WL 4006748 (Tex. App.—Houston [1st Dist.]
Aug. 28, 2008, no pet.) ............................................................................................................55

St. Jude Med. S.C., Inc. v. Janssen-Counotte,


No. A-14-CA-877-SS, 2014 WL 7237411 (W.D. Tex. Dec. 17, 2014) ..................................15

State Farm Mut. Auto. Ins. Co. v. Campbell,


538 U.S. 408 (2003) ...............................................................................................13, 77, 78, 79

Statewide Bank & SN Servicing Corp. v. Keith,


301 S.W.3d 776 (Tex. App.—Beaumont 2009, pet. abated) ...................................................74

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page vi


Stewart Title Guar. Co. v. Sterling,
822 S.W.2d 1 (Tex. 1991)........................................................................................................49

Super Starr Int’l, LLC v. Fresh Tex Produce, LLC,


531 S.W.3d 829 (Tex. App.—Corpus Christi 2017, no pet.) ..................................................45

Sw. Bell Tel. Co. v. DeLanney,


809 S.W.2d 493 (Tex. 1991)........................................................................................47, 48, 49

Sw. Energy Prod. Co. v. Berry-Helfand,


491 S.W.3d 699 (Tex. 2016)............................................................................................ passim

Tex. Adv. Optoelectronic Sols., Inc. v. Renesas Elecs. Am., Inc.,


888 F.3d 1322 (Fed. Cir. 2018)................................................................................................18

TM Prods., Inc. v. Nichols,


542 S.W.2d 704 (Tex. Civ. App.—Dallas 1976, no writ) .......................................................44

Transp. Ins. Co. v. Moriel,


879 S.W.2d 10 (Tex. 1994)......................................................................................................75

Trilogy Software, Inc. v. Callidus Software, Inc.,


143 S.W.3d 452 (Tex. App.—Austin 2004, pet. denied).............................................15, 30, 43

Triple Tee Golf, Inc. v. Nike, Inc.,


485 F.3d 253 (5th Cir. 2007) ...................................................................................................42

United Way of San Antonio, Inc. v. Helping Hands Lifeline Found., Inc.,
949 S.W.2d 707 (Tex. App.—San Antonio 1997, writ denied)...............................................70

Univ. Computing Co. v. Lykes-Youngstown Corp.,


504 F.2d 518 (5th Cir. 1974) ...................................................................................................66

Wal-Mart Stores, Inc. v. Merrell,


313 S.W.3d 837 (Tex. 2010)..............................................................................................35, 72

Constitutional Provisions

U.S. Const. amend. XIV, § 1 .........................................................................................................77

Statutes

Tex. Civ. Prac. & Rem. Code Ann. § 41.001 ................................................................................75

Tex. Civ. Prac. & Rem. Code Ann. § 41.003 ................................................................................75

Tex. Civ. Prac. & Rem. Code Ann. § 134A.002.................................................................... passim

Tex. Civ. Prac. & Rem. Code Ann. § 134A.004......................................................................53, 75

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page vii


Tex. Civ. Prac. & Rem. Code Ann. § 134A.007..........................................................10, 42, 45, 53

Rules

Tex. R. Civ. P. 300 ...........................................................................................................................1

Tex. R. Civ. P. 301 ...........................................................................................................................1

Other Authorities

1 Milgrim on Trade Secrets ...........................................................................................................16

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page viii


Plaintiff Title Source, Inc. files this Motion for Judgment Notwithstanding the Verdict

(JNOV) under Texas Rules of Civil Procedure 300 and 301.

INTRODUCTION

Juries play a foundational role in our judicial system. But the opportunity for review and

relief through a JNOV exists because juries are not infallible, trials can be infected with

misleading and confusing tactics, and proficient storytelling and appeals to emotion can

overshadow evidence and fact. That is why courts bear the ultimate responsibility to ensure any

verdict––particularly when it imposes nearly a billion dollars in damages—comports with the

law. This verdict does not.

The punitive damages award in this case is the largest in the history of Bexar County.

Yet the case began with Title Source filing suit for breach of a $5-million contract after

HouseCanary failed to deliver what it had promised—a mobile application that appraisers could

use to complete appraisals in the field—and instead produced, months late, a non-functioning

application that still had “serious bugs” and failed to include necessary components.

HouseCanary, however, twisted a suit about its failure to deliver a product into nearly a billion-

dollar misappropriation verdict in its favor, leading the jury astray with conspiracy theories,

heated diatribes on corporate ethics, and legally irrelevant “evidence.” But verdicts cannot be

based on assertions and arguments of counsel. They cannot be based on speculation and

conjecture. And they cannot be based on emotion and caprice. Because the verdict here has no

legally sufficient basis, it cannot stand.

The Texas Supreme Court, the Fourth Court of Appeals, and other appellate courts have

ruled that the JNOV tool was created for cases just like this one—and Title Source respectfully

requests that the Court accept the invitation extended by those courts to correct a jury’s mistake

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 1


that, if left uncorrected, would lead to an injustice of massive proportions. See Marathon Corp.

v. Pitzner, 106 S.W.3d 724, 727-29 (Tex. 2003) (reversing and rendering judgment for defendant

because “there [was] legally insufficient evidence to support” the verdict, and the plaintiff’s

experts impermissibly “pile[d] speculation on speculation and inference on inference”); Quaker

Petroleum Chems. Co. v. Waldrop, 75 S.W.3d 549, 554-55 (Tex. App.—San Antonio 2002, no

pet.) (concluding the “trial court erred in denying [defendant’s] motion for JNOV” and reversing

and rendering for defendant, because plaintiff’s “evidence is legally insufficient” to support the

verdict); Aquila Sw. Pipeline, Inc. v. Harmony Expl., Inc., 48 S.W.3d 225, 246 (Tex. App.—San

Antonio 2001, pet. denied) (affirming JNOV where “the underlying factual basis” of an expert’s

damages opinion was “merely speculative”); Hunter Bldgs. & Mfg., L.P. v. MBI Glob., L.L.C.,

436 S.W.3d 9, 22 (Tex. App.—Houston [14th Dist.] 2014, pet. denied) (reversing trade secrets

verdict and rendering judgment for defendants, where “[a]fter reviewing all of the trial evidence

under the applicable standard of review, we conclude this evidence is legally insufficient to

support a finding that the [defendants’] misappropriation of trade secrets proximately caused [the

claimant] to sustain lost-profits damages in the past”); see also Lakeway Reg’l Med. Ctr., LLC v.

Lake Travis Transitional LTCH, LLC, No. 03-15-00025-CV, 2017 WL 672451, at *14 (Tex.

App.—Austin Feb. 17, 2017, pet. denied) (rejecting trade secrets claim as a matter of law where

claimant’s proffered evidence “did not show a sufficient causal link” between any

misappropriation and damages, and “[w]ithout that causal link, [claimant] cannot succeed on a

claim for misappropriation of trade secrets”).

This motion boils down to a simple request. Title Source asks the Court to look

systematically at the record evidence for each of HouseCanary’s claims and to apply the law to

each. This review of the evidence will demonstrate that HouseCanary’s claims fail on the

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 2


fundamental, dispositive elements. It will show that the evidence does not support the verdict.

Because HouseCanary’s claims crumble under the required scrutiny, this Court must grant

judgment notwithstanding the verdict.

SUMMARY OF ARGUMENT

I. HouseCanary’s misappropriation claims under the Texas Uniform Trade Secrets


Act (TUTSA) fail as a matter of law for multiple reasons.

Although dispassionate review reveals many reasons why the verdict on HouseCanary’s

trade secret claims runs badly afoul of governing law, two are fundamental and independently

require judgment notwithstanding the verdict.

First, the heart of HouseCanary’s theory of liability, upon which all its claims depend, is

misappropriation—requiring HouseCanary to establish that it owned bona fide trade secrets, that

Title Source acquired those trade secrets, and that Title Source used them in its automated

valuation model (“AVM”), known as MyAVM—the only model Title Source actually used in its

business. But by HouseCanary’s own repeated admissions, there is no evidence to support these

speculations. HouseCanary never provided its formulas or analytics—the “set of algorithms,”

(Sicklick 3/7/18 AM 31),1 that make up its purported “secret sauce,” (Sicklick 3/9/18 AM 73)—

to Title Source. Instead, HouseCanary’s expert testified that all it provided to Title Source was

the model outputs—“They didn’t have any of the analytics inside of it.” (Rhyne 3/6/18 AM

119). The testimony did not stop there: HouseCanary executives repeatedly testified that they

never gave Title Source any set of algorithms, and that HouseCanary does not “provide

information about how its models operate to its customers.” (Stroud 2/26/18 PM 183). As a

1
Citations of the daily trial transcripts filed concurrently with this motion are referred to by
the speaker, followed by the date and time of the daily edition, and then the page number;
thus, “Sicklick 3/7/18 AM 31.”

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 3


matter of law, Title Source could not misappropriate what it never acquired; and as a matter of

logic, it could not replicate what it never had in the first place.

HouseCanary’s own expert testified that Title Source did not use any of HouseCanary’s

trade secrets—that there was no evidence of “any fingerprints, any clues, any reference to any

HouseCanary technology” in MyAVM. E.g., (Rhyne 3/6/18 PM 87). After painstakingly

analyzing the methodology and source code for MyAVM and comparing it to HouseCanary’s

models, HouseCanary’s expert further admitted that MyAVM was not “related to the

HouseCanary AVM.” (Rhyne 3/6/18 AM 119). Faced with this fact, HouseCanary alternatively

asserted that Title Source used a “magic machine” to reverse engineer HouseCanary’s purported

trade secrets (i.e., by allegedly using HouseCanary output data to “train[]” a machine learning

model to replicate HouseCanary’s AVM). (HouseCanary closing 3/14/18 PM 62). But

HouseCanary’s theory again was belied by its own expert, who admitted that “Title Source did

not use any HouseCanary data to train MyAVM.” (Rhyne 3/6/18 PM 40; see also id. at 39-40

(admitting that he “know[s] that Title Source did not use HouseCanary data to train its MyAVM

product”)).

Stripped of its main theories—and faced with evidence conclusively establishing the

opposite—HouseCanary’s allegations rest on nothing more than red herrings, bare speculation

that misled the jury, and arguments that Title Source misappropriated generalized industry

concepts that, as a matter of black-letter law, are not trade secrets at all.

Specifically, HouseCanary rested much of its case on sensationalized allegations against

a former Title Source employee named Ryan Yang—but those baseless allegations were in fact

about the development of a different, simplistic valuation model that Title Source never moved

forward with, never used, and that had nothing to do with MyAVM. Because HouseCanary’s

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 4


entire theory of liability and damages is based on MyAVM (again, the only model Title Source

actually used in its business), this whole line of accusations was nothing more than misdirection

and a red herring.

Similarly, HouseCanary made great hay out of an internal Title Source presentation

suggesting that the “logic” for Title Source’s AVM shared some of the same concepts as

HouseCanary’s model. Putting aside the fact that MyAVM ultimately used a different

methodology, these modeling concepts were standard and basic, long published in literature, and

commonly known by practitioners. Indeed, the record in this case contains an industry journal

article, published in 2003, that outlined the concepts and methods at issue. PX359.

HouseCanary did not invent these generally known industry concepts, and as a matter of law, it

cannot claim them as its trade secrets. HouseCanary’s sensationalized allegations may have

worked to mislead the jury, but a sober review will leave no doubt that HouseCanary’s purported

“smoking guns” only fire blanks.

In short, when the allegations in this case are reviewed within the confines of the law,

there is no evidence that Title Source acquired HouseCanary’s trade secrets, either directly or by

reverse engineering; there is no evidence that Title Source used them in MyAVM; and what was

alleged to have been used—commonly known industry concepts—were not trade secrets at all.

For this reason, HouseCanary’s liability claims fail.

Second, there is no evidence to support the $201.6 million damages award for the alleged

misappropriation—and the incredible claim of Walter Bratic, HouseCanary’s expert, that the

trade secrets would generate this much value over a mere two years of expected use is no

evidence. Not only was Bratic’s damages calculation entirely speculative and untethered to the

facts, it was starkly at odds with them, and with demonstrable market reality. Bratic did not offer

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 5


evidence valuing any specific trade secret, but rather offered only a lump-sum damages

calculation. That calculation was based on the assumption that every allegedly misappropriated

trade secret would be somehow incorporated into one-page AVM “value reports” that Title

Source purportedly expected to generate for two years. (Bratic 3/9/18 PM 126-28; see also id. at

150-51). But Bratic conjured numbers out of thin air, and committed other serious errors, in an

effort to maximize damages over the short two-year period. (E.g., Bratic 3/12/18 PM 80).

As his primary measure of damages, Bratic purported to calculate the value a “reasonably

prudent investor” would have paid for the alleged trade secrets. But Bratic’s claim that Title

Source would value the allegedly misappropriated valuation technology at over $200 million for

two years of expected use flies in the face of the objective evidence and market reality. Multiple

AVMs are available for free. (See Bratic 3/12/18 AM 48-49). HouseCanary itself paid less than

$1 million per year to receive a license for unlimited use of two different AVMs from a third

party, Black Knight—along with all of Black Knights’ data. Id. at 27-29. Most importantly,

Bratic ignored the fact that the parties had already defined the value of the products at issue in

this case: the parties contracted for Title Source to use all of HouseCanary’s technology and

data—including the main and most important product, the never-delivered appraisal app—for $5

million per year. See PX3.

To calculate his outlandish figure, Bratic made a series of unfounded assumptions. Bratic

first assumed, contrary to record evidence, that a reasonably prudent investor would be willing to

pay for high-volume use of AVM value reports on a per-use basis. He then calculated the value

per alleged use at an outlandish figure––$11 per use––that has no basis in reality, or in the

evidence. The $11 figure is belied by its own source, which stated that $11 per such use would

have been “cost prohibitive.” DX36; (Bratic 3/9/18 PM 116). Demonstrating just how absurd

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 6


this valuation is, HouseCanary actually offers its comprehensive value reports (which not only

contain valuation model outputs, but up to eight pages of additional information) to retail

consumers for only a fraction of this price—with further discounts for large-volume purchasers.

In other words, HouseCanary’s damages calculation assumes that Title Source, as a “reasonably

prudent investor,” would pay several times what HouseCanary actually charges small retail

customers for a more comprehensive product.

Bratic reached his $201.6 million valuation by asserting, in a conjecture this Court called

“very speculative” and “a stretch,” (Bratic Robinson 1/24/18 PM 89), that Title Source would

value the alleged trade secrets based on paying $11 per use for nearly 14 million AVM value

reports a year—with 95 percent of these unsubstantiated uses attributed to Quicken Loans Inc., a

separate corporate entity that is not a party to this case. (Bratic 3/9/18 PM 127, 160). But this

assertion was based on the supposed maximum capacity or bandwidth of HouseCanary’s AVM

transmission pipeline—50,000 uses per day—not any evidence of actual use. See DX499;

(Bratic 3/9/18 PM 104; Sicklick 3/7/18 AM 122-123). Bratic asserted, without any evidence but

in a transparent effort to maximize damages, that Title Source would use the maximum

technological capacity every single day. And since Bratic estimated that Title Source at most

executes 2,750 appraisals per day (660,000 appraisals per year divided by 240 business days

(Bratic 3/9/18 PM 94, 110)), he had to turn to implausible speculation about Quicken Loans to

make up the rest of his far larger total.

Precisely because Quicken Loans is not a party to this case, there was no competent

evidence of how and to what extent Quicken Loans actually uses an AVM (or value report), nor

an opportunity for proper and informed consideration of that question—and Bratic could only

speculate. Based solely on an internal HouseCanary email suggesting that Quicken Loans’

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 7


mortgage bankers can process 2,000 bulk purchase customer leads per hour, Bratic assumed that

Quicken Loans’ bankers would generate a value report for each lead “to start th[e] dialogue with

a perspective [sic] customer,” and do so 24 hours per day. (Bratic 3/9/18 PM 106-07). He then

tacked on—based on yet another erroneous assumption—an additional 5,000 uses per day to

respond to customer inquiries, including routine phone calls asking about the interest rate or

generic loan terms (thereby reaching, and indeed even exceeding, the maximum bandwidth of

50,000 total uses per day). Id. at 110; (Bratic 3/12/18 AM 53).

Bratic’s assumptions are both illogical and directly contrary to actual, unrebutted

testimony from Title Source that it expected Quicken Loans to use automated valuation

technology for only a small subset of prospective clients—only for refinance loans, and only for

those that actually reach the loan application stage. Bratic’s assumptions also defy common

sense and would require that every cold call from these bulk lists results in a successful contact

with someone seriously interested in a mortgage; that a value report is generated in every

instance, regardless of whether it makes any sense; and that this uninterrupted streak of success

occurs with 2,000 new customers every hour of the day, including in the middle of the night.

The heart of Bratic’s damages opinion on the alleged value to Title Source—accounting

for 95 percent of the damages award—thus runs contrary to unrebutted testimony and rests on

nothing more than bare speculation about use by a third-party over whom Title Source has no

control. But there is no need for this speculation. Implicitly recognizing that it cannot recover

damages here based on Quicken Loans’ supposed use, HouseCanary has filed a separate lawsuit

against Quicken Loans in Texas federal district court. Basic principles of due process require

that any misappropriation claims based upon Quicken Loans’ alleged use of HouseCanary trade

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 8


secrets must be adjudicated in that forum, providing yet another reason that the damages

attributed to Quicken Loans’ supposed use must be eliminated from the verdict here.

In the end, Bratic’s speculative opinions on damages are no evidence at all. Instead, they

are entirely at odds with the objective evidence and demonstrable market reality. As the Texas

Supreme Court has held, “relying on imagination is not justified when objective evidence is

available,” and here the parties’ contract, as well as record evidence on the market price for

unlimited uses of AVM products, constitute “objective evidence that . . . bears directly on ‘the

amount that a person desiring to use the trade secret would be willing to pay for its use.’” Sw.

Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 721 (Tex. 2016). But such objective

evidence was not used, because it would not support Bratic’s goal of conjuring a massive

damages award.

Texas courts routinely grant JNOV where “the underlying factual basis” of an expert’s

damages opinion is “merely speculative,” Aquila Sw. Pipeline, 48 S.W.3d at 246, or “based on

assumed facts that vary materially from the actual, undisputed facts,” Houston Mercantile Exch.

Corp. v. Dailey Petroleum Corp., 930 S.W.2d 242, 248 (Tex. App.—Houston [14th Dist.] 1996,

no writ). This Court must do the same. As there is no legally sufficient basis for the damages

award here, it cannot stand.

* * *

Faced with record evidence that gives no quarter to its claims, HouseCanary will likely

argue that this case rests on matters of witness credibility and will emphasize and sensationalize

legally irrelevant evidence. Misdirection is the hallmark of magic; but rigorous application of

law and evidence is the foundation of justice. When this Court systematically reviews each

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 9


required element of the purported misappropriation and the damages award, it will see that each

fails on dispositive legal and evidentiary questions. There is no evidence to support the verdict.

II. HouseCanary’s fraud and breach of contract claims fail along with its TUTSA
claims.

HouseCanary’s tag-along claims for fraud and breach of contract are a mere repackaging

of its misappropriations claims, and with no evidence of misappropriation, they fall together. In

any event, because all of HouseCanary’s claims rest on the same fundamental facts and supposed

injury, the “one satisfaction rule” means that HouseCanary can recover under only one of its

overlapping theories of liability—not twice and three times over.

HouseCanary’s tag-along claims fail for independent reasons as well. HouseCanary’s

fraud claims are barred as a matter of law by TUTSA’s preemption provision, which plainly

“displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for

misappropriation of a trade secret.” Tex. Civ. Prac. & Rem. Code Ann. § 134A.007(a). A claim

can withstand preemption only if it is “based on facts unrelated to the misappropriation of the

trade secret.” 360 Mortg. Grp., LLC v. Homebridge Fin. Servs., Inc., No. A-14-CA-00847-SS,

2016 WL 900577, at *6–7 (W.D. Tex. Mar. 2, 2016). Here, the fraud claim is based on exactly

the same allegations. See, e.g., Ex. A (HouseCanary’s 4th Am. Answer & Countercls.), ¶ 83

(alleging under “Count Three: Fraud and Fraudulent Inducement” that “TSI misappropriated

HouseCanary trade secrets”).

Alternatively, both the fraud and TUTSA claims fail because, if anything, this is only a

contract dispute. E.g., (HouseCanary closing 3/14/18 PM 42). Not surprisingly, given that this

case began as a breach-of-contract action brought by Title Source against HouseCanary,

HouseCanary’s TUTSA and fraud claims arise—if at all—out of that contract. Because Texas

law squarely prohibits plaintiffs from using “artful pleading to morph contract claims into fraud

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 10


causes of action,” Baylor Univ. v. Sonnichsen, 221 S.W.3d 632, 636 (Tex. 2007), HouseCanary

can at most show a breach of contract—and the fraud claim fails for that additional, alternative

reason. Similarly, because HouseCanary “has not alleged facts establishing the breach of any

legal duty independent of the [parties’] agreement[s], its [TUTSA] claims sound only in

contract” and must be dismissed. Educ. Mgmt. Servs. v. Cadero, No. SA-14-CA-587, 2014 WL

12586781, at *2 (W.D. Tex. Nov. 18, 2014).

However, HouseCanary’s breach of contract claims also fail as a matter of law because

there is no evidence of breach (i.e., misappropriation). HouseCanary alternatively claimed that

Title Source breached the contract by failing to provide notice and an opportunity to cure in

response to HouseCanary’s failure to deliver a functioning app as required under the contract.

But the contract itself provided for immediate termination under that very circumstance. PX3,

Ex. D, § 2. Judgment notwithstanding the verdict should be entered on HouseCanary’s contract

claims for this reason, too.

In short, HouseCanary repackaged its allegations into multiple claims, but each iron in

the fire was made of the same fundamental facts and alleged injury. None of them can withstand

the heat. There is no evidence allowing them to stand individually and, being overlapping and

duplicative, they certainly cannot stand collectively.

Finally, the jury based its damages award for the breach of contract and fraud claims on

Bratic’s legally insufficient opinion. In addition to the damages for the purported

misappropriation, the jury awarded $33.8 million in damages for the alleged breach of contract,

and the exact same amount for the alleged fraud, based on Bratic’s speculative measure of lost

profits. Ex. B (Jury Verdict Form), Qs. 13, 28. But the contract at issue limits damages for both

breach of contract and fraud to a cap of $2 million. See PX3 § 8. In any event, Bratic based his

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 11


damages calculations on pure speculation about whether and to what extent independent, third-

party appraisers would use the never-completed HouseCanary app based solely upon Title

Source’s use. Bratic extended his unsupported opinion by adopting the factually and legally

infirm supposition that HouseCanary was entitled to three years of revenue under the contract

even though the contract was subject to termination after one year on purely discretionary

grounds. (Bratic 3/9/18 PM 164). Bratic’s opinions are speculative, contrary to law, and provide

no evidence to support this damages award.

In the end, if liability were to stand, and it manifestly should not, HouseCanary cannot

recover on its numerous overlapping theories and its wildly speculative damages figures.

Instead, what started out as a contract case should end as a contract case. If HouseCanary is to

recover anything, it is limited to damages caused by the alleged breach of the confidentiality

provisions of the contract (i.e., what HouseCanary calls misappropriation)—that is all. The

alleged breach did not destroy the value of the purported trade secrets, and HouseCanary did not

argue that it reduced their value in the market, as nothing has prevented HouseCanary from

marketing its technology to other users. As a result, the entirety of the damages in this action can

be nothing more than the value HouseCanary would have received under the contract—at most,

the contract price of $5 million per year.

III. The punitive damages award violates Texas law and the U.S. Constitution.

Because HouseCanary failed to prove its claims—including compensatory damages—as

a matter of law, the jury’s record-breaking punitive damages award necessarily fails. But the

jury’s award of nearly half a billion dollars in punitive damages cannot stand regardless. The

award violates Texas law because HouseCanary proffered no evidence—much less clear and

convincing evidence—that Title Source acted with any malice, as black-letter law requires. It

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 12


violates the U.S. Constitution because it is grossly excessive, arbitrary, unreasonable, and

disproportionate. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416–17 (2003).

HouseCanary chose to turn this case into a referendum on “the perceived deficiencies” of

Title Source, its affiliates, and all of “Corporate America.” It asked the jury to “stand[ ] up and

. . . tell[ ] Corporate America, I’ve had enough of this” by putting this case “in the Wall Street

Journal.” (HouseCanary closing 3/14/18 PM 72). HouseCanary’s strategy worked to inflame

the jury, but it violates Texas law and the U.S. Constitution.

IV. Title Source is entitled to JNOV on its claims.

Title Source initiated this action because HouseCanary broke its contractual promise to

provide a mobile application that appraisers could use to complete appraisals in the field. Again,

HouseCanary’s own witnesses fatally undermined its legal position: they admitted HouseCanary

never delivered a completed app. E.g., (Poindexter 3/2/18 AM 82–83; Rhyne 3/6/18 PM 140).

HouseCanary failed to deliver a working product—much less one that could live up to its

promises.

HouseCanary tried to pin the blame for its breach on others—including Title Source. But

those excuses fail because there is no evidence to support them. Instead, the evidence

conclusively establishes that the app HouseCanary was contractually bound to deliver could not

be used to complete and submit appraisals—thereby thwarting the fundamental purpose of the

agreement—and there was no evidence that HouseCanary’s failure was excused. This Court

should therefore reverse and render judgment for Title Source on its breach of contract claim.

* * *

The stakes in this litigation have become enormous, not only for Title Source, but for this

critical area of commercial law. If bare assertion and insinuation of the kind proffered here can

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 13


become the basis for a misappropriation claim, and if generalized industry concepts can be

afforded trade secret protection, the consequences for commercial relationships and innovation

throughout the economy will be profound. The matter before this Court is of great weight, but

the evidence and the law lead to one answer: the grant of judgment notwithstanding the verdict.

LEGAL STANDARD

A trial court should render JNOV when there is “no evidence of an essential element of

the [litigant’s] claims.” Gharda USA, Inc. v. Control Sols., Inc., 464 S.W.3d 338, 342 (Tex.

2015). No evidence supports a verdict where there is: “(a) a complete absence of evidence of a

vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only

evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more

than a mere scintilla; (d) the evidence establishes conclusively the opposite of the vital fact.” Id.

at 347.

“Evidence does not exceed a scintilla” where it “do[es] no more than create a mere

surmise or suspicion that the fact exists.” Akin, Gump, Strauss, Hauer & Feld, LLP v. Nat’l Dev.

& Res. Corp., 299 S.W.3d 106, 115 (Tex. 2009) (citations omitted); see also Marathon Corp. v.

Pitzner, 106 S.W.3d 724, 728 (Tex. 2003) (“[A]n inference stacked only on other inferences is

not legally sufficient evidence.”). Although courts may not “substitut[e] their opinions on

credibility for those of the jurors,” “proper review also prevents jurors from substituting their

opinions for undisputed truth.” City of Keller v. Wilson, 168 S.W.3d 802, 816-17 (Tex. 2005).

“When evidence contrary to a verdict is conclusive, it cannot be disregarded.” Id. at 817.

ARGUMENT

I. HouseCanary failed to establish liability on any of its claims.

HouseCanary’s claims are all grounded in the same core theory: that Title Source was

scheming all along to abscond with the alleged trade secrets for its own use. That conspiracy

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 14


theory is unsupported by evidence. As explained below, the TUTSA claims for

misappropriation—the centerpiece of HouseCanary’s case—fail as a matter of law, and

HouseCanary’s duplicative, tag-along claims melt away as well.

A. HouseCanary’s TUTSA claims fail as a matter of law.

The starting point for any judgment is the law. For each of the five alleged trade secrets,

HouseCanary bore the burden of satisfying each element of TUTSA misappropriation: (1)

HouseCanary owned a bona fide trade secret; (2) the trade secret was acquired by Title Source

through “improper means” or acquired and impermissibly used for a commercial benefit, and (3)

HouseCanary suffered harm as a result.2 These are the essential elements of a misappropriation

claim, and each element must be proven for each trade secret that was allegedly

misappropriated.

To qualify as a trade secret, the owner of technology must have taken “reasonable

measures . . . to keep the information secret,” and the information must derive “independent

economic value . . . from not being generally known” in addition to “not being readily

ascertainable.” Tex. Civ. Prac. & Rem. Code Ann. § 134A.002(6). Thus, when “information [is]

generally known and readily available [it] is not protectable.” Trilogy Software, Inc. v. Callidus

Software, Inc., 143 S.W.3d 452, 467 (Tex. App.—Austin 2004, pet. denied). Further, it is black-

2
See Tex. Civ. Prac. & Rem. Code Ann. § 134A.002(6) (defining “trade secret”);
§ 134A.002(3-a) (defining “owner”); St. Jude Med. S.C., Inc. v. Janssen-Counotte, No. A-14-
CA-877-SS, 2014 WL 7237411, at *15 (W.D. Tex. Dec. 17, 2014) (plaintiff “has not shown”
that it “actually owned those trade secrets”); Tex. Civ. Prac. & Rem. Code Ann.
§ 134A.002(3) (defining “misappropriation” as “(A) acquisition of a trade secret of
another . . . by improper means” or “(B) disclosure or use of a trade secret of another without
express or implied consent”); § 134A.002(1) (defining a “claimant” as “a party seeking to
recover damages”); Lakeway Reg’l Med. Ctr., 2017 WL 672451, at *6 (There must be a
“‘direct causal link’ between the misconduct, the plaintiff’s injury, and the damages
awarded.”).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 15


letter law that a trade secret must be defined with “a reasonable degree of precision and

specificity.” 1 Milgrim on Trade Secrets § 1.09[3]. Where the information at issue is

“imprecise,” that “weighs heavily against it being a trade secret” and calls into “question what

information [defendants] should be prohibited from using.” Glob. Water Grp., Inc. v. Atchley,

244 S.W.3d 924, 930 (Tex. App.—Dallas 2008, pet. denied) (JNOV for defendant was proper

where “[t]here is no discrete formula at issue”).

For a trade secret to be acquired using “improper means,” the acquisition must have

occurred through subterfuge (e.g., “theft, bribery . . . or espionage”) or by “breach of a duty to

maintain secrecy.” Tex. Civ. Prac. & Rem. Code Ann. § 134A.002(2). Notably, a defendant

does not acquire a claimant’s trade secret by “improper means” if the claimant discloses the trade

secret willingly pursuant to a confidentiality agreement—even if the trade secret is later used in

violation of that agreement. See Educ. Mgmt. Services, LLC v. Tracey, 102 F. Supp. 3d 906, 914

(W.D. Tex. 2015); Demond v. Infiniti HR LLC, No. 3:17-CV-1322-D, 2017 WL 3835951, at *6

(N.D. Tex. Aug. 11, 2017).

To prove the element of use, HouseCanary had to proffer evidence that “specific” trade

secrets “were misappropriated” and then put to commercial use by Title Source. Sw. Energy

Prod. Co., 491 S.W.3d at 722 (use means “commercial use by which the offending party seeks to

profit from the use of the secret’”) (quoting Glob. Water Grp., 244 S.W.3d at 930).

To prove harm, HouseCanary was required to establish a “direct causal link between the

misconduct, the plaintiff’s injury, and the damages awarded.” Lakeway Reg’l Med. Ctr., 2017

WL 672451, at *6 (internal quotation marks omitted).

HouseCanary alleged, and the jury found, that Title Source misappropriated five

purported trade secrets: (1) HouseCanary AVMs, (2) Similarity Score, (3) Data Dictionary, (4)

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 16


Data Compilation, and (5) Complexity Score. Ex. B (Jury Verdict Form), Q. 38). HouseCanary

rested its entire theory of misappropriation on Title Source’s development and use of MyAVM.

See, e.g., (HouseCanary Opening 1/31/18 AM 95 (claiming Title Source was “using our

confidential information, our data to train their model”); HouseCanary closing 3/14/18 PM 39-40

(claiming Title Source was attempting to “replicate” trade secrets with their “own

model”)). Thus, the dispositive legal question is whether each purported trade secret was

acquired and improperly used in the development of MyAVM. As the record shows, with

respect to each purported trade secret, the answer is no. (E.g., Rhyne 3/6/18 PM 87

(HouseCanary’s technical expert admits there is no evidence of “any fingerprints, any clues, any

reference to any HouseCanary technology” in MyAVM)).

Because its own expert prevented it from establishing that any trade secret was used in

MyAVM, HouseCanary resorted to lumping together disparate emails and communications that

were unrelated to MyAVM, misleading the jury into believing that this mishmash of unrelated

evidence somehow showed misappropriation. But a systematic, objective review of the elements

of misappropriation on a trade-secret-by-trade-secret basis shows that there is no evidence to

support the verdict on any of the five purported trade secrets.

In the alternative, HouseCanary asserted that Title Source used a so-called “magic

machine” to reverse engineer HouseCanary’s purported trade secrets—purportedly using

HouseCanary data to “train” its own machine learning model to replicate HouseCanary’s

outcomes. (HouseCanary closing 3/14/18 PM 62). But this theory was again foreclosed by its

own expert, who admitted that “Title Source did not use any HouseCanary data to train

MyAVM.” (Rhyne 3/6/18 PM 40 (emphasis added); id. at 39-40).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 17


Importantly, the Court need not find that HouseCanary failed to prove its case with

respect to all of the alleged trade secrets. Instead, the entire verdict fails as a matter of law if

even a single element is unsatisfied for just one trade secret, because HouseCanary’s damages

expert combined all the trade secrets together into one lump-sum calculation and “did not explain

which of the trade secrets contributed to what amount of [damages].” Tex. Adv. Optoelectronic

Sols., Inc. v. Renesas Elecs. Am., Inc., 888 F.3d 1322, 1335 (Fed. Cir. 2018) (vacating entire

award, under Texas law, when expert valued all trade secrets together and at least some of the

trade secret findings were invalid); Hunter Bldgs. & Mfg., 436 S.W.3d at 21 (where damages

opinion is based in part on conduct that does “not constitute misappropriation of trade secrets,”

entire opinion is no evidence of damages); see also Harris Cty. v. Smith, 96 S.W.3d 230, 234

(Tex. 2002) (reversing verdict based on “charge[] which mixed valid and invalid elements of

damages in a single broad-form submission” (citing Crown Life Ins. Co. v. Casteel, 22 S.W.3d

378, 388 (Tex. 2000)).

In light of these principles, each purported trade secret is analyzed based on the TUTSA

elements and the record evidence.

1. Purported trade secret #1: AVMs.

An automated valuation model or AVM is a mathematical model used to estimate the

value that “a human appraiser” would assign to a home. (Rhyne 3/6/18 PM 102). HouseCanary

purported to have three AVMs: (1) a “Regression AVM,” (2) the “Cascade” AVM––a composite

of two AVMs it had licensed from a third-party, Black Knight––and (3) the “HouseCanary

AVM.” (See, e.g., HouseCanary closing 3/14/18 PM 18-19). HouseCanary failed to carry its

burden of proving each element of misappropriation for each AVM. Accordingly, judgment

must be rendered for Title Source on Jury Question Nos. 37(A) and 38(A).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 18


As HouseCanary’s own witnesses testified, AVMs have been on the market for “probably

20 years.” (Stroud 2/26/18 PM 180). As a result, the basic concepts behind various types of

AVMs are generally known in the industry and are not trade secrets. See Tex. Civ. Prac. & Rem.

Code Ann. § 134A.002(6)(B) (trade secrets must have “independent economic value . . . from

not being generally known”). Recognizing that general industry concepts cannot constitute trade

secrets, HouseCanary’s founder and CEO, Jeremy Sicklick, testified that the “secret sauce” in

each of the three AVMs is “[t]he HouseCanary algorithms, [that] put it all together.” (Sicklick

3/9/18 AM 73). It is this “set of algorithms” (Sicklick 3/7/18 AM 31)—the source code—that

“blend th[e] different analytics together,” providing “the right combination by market to get the

best valuations . . . .” (Sicklick 3/9/18 AM 70).

But even if HouseCanary may have a trade secret in some AVM algorithms, the record is

clear that Title Source never acquired or used any such trade secrets. Indeed, HouseCanary

admitted that it did not give any set of algorithms representing any of its AVM models to Title

Source. (See Rhyne 3/6/18 AM 119 (HouseCanary expert admits “[t]hey [Title Source] didn’t

have any of the analytics inside of” HouseCanary’s models); Stroud 2/26/18 PM 183 (testifying

that HouseCanary does not “provide information about how its models operate to its

customers”)). Rather, as demonstrated below, what was alleged to have been acquired and

used—generalized concepts––are not trade secrets at all.

a. Regression AVM.

No acquisition of HouseCanary trade secrets. As discussed above, HouseCanary did

not reveal to Title Source the analytics or algorithms behind its so-called Regression AVM. Title

Source, in fact, did not receive home valuation estimates from the Regression AVM. (See Stroud

2/16/18 PM 21 (testifying that all valuations provided were generated using the Cascade AVM or

HouseCanary AVM)).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 19


Unable to show that Title Source acquired its analytics, HouseCanary claimed that it had

a discussion with Jordan Petkovski, Title Source’s Vice-President and Chief Appraiser, in which

he was told that the appraiser app would use “a regression-based model” to help appraisers with

valuations in the field. (Stroud 2/26/18 PM 100).3 That is the sum total of what HouseCanary

revealed to Title Source about the methodology of its Regression AVM model. But regression

analysis is not a trade secret; it is a widely known form of statistical analysis dating to the

beginning of the 19th century. HouseCanary’s own expert, Vernon Rhyne, testified that Title

Source was “well aware of how to do a linear regression” before it met HouseCanary. (Rhyne

3/6/18 PM 64). As a result, HouseCanary cannot build a misappropriation claim—let alone one

worth hundreds of millions of dollars—on the allegation that it told Title Source it used common

mathematical concepts to estimate home values.

No use of HouseCanary trade secrets. Nor did HouseCanary show any use by Title

Source of HouseCanary’s regression-based model—or any HouseCanary model—in MyAVM.

HouseCanary’s own witness, Rhyne, testified that he performed an in-depth “investigation of the

Title Source source code” for MyAVM. (Rhyne 3/6/18 PM 85-86). But that investigation did

not reveal any use of HouseCanary’s trade secrets—Rhyne testified that “[he] didn’t see any

fingerprints, any clues, any reference to any HouseCanary technology.” Id. at 87 (emphasis

added). He testified that he “didn’t see any indication . . . of using HouseCanary technology”

3
HouseCanary elicited testimony from its expert that the “regression AVM” was “provided to
Title Source” in the never-delivered “appraiser app.” (Rhyne 3/6/18 PM 106-07 (reading
prior Stroud testimony that app would provide appraiser with “adjustments” calculated by the
regression AVM)). That is not evidence that Title Source ever acquired the algorithms that
make up the regression AVM. As any user of an app knows, a user only interacts with a user
interface, not the back-end algorithms that the user never sees. The app is not like a box with
physical AVMs inside that can be pulled out.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 20


in MyAVM. Id. at 86 (emphasis added). And he admitted that Title Source never developed a

model that was even “related” to HouseCanary’s AVMs. (Rhyne 3/6/18 AM 119 (“Q: Was Title

Source able to develop anything related to the HouseCanary AVM[s]? A: No.”)). Rhyne’s own

testimony conclusively establishes that HouseCanary cannot satisfy the use element for its AVM

trade secrets (or any others).

Additional evidence also demonstrated that the Regression AVM was never “used” by

Title Source. MyAVM is nothing like a regression AVM. MyAVM is a sophisticated machine

learning model, which is developed—or “trained”—through the repeated analysis of “training

data.” (Petkovski 2/14/18 PM 109-10 (explaining that “machine learning” models “use actual

appraisal data to improve the accuracy of [their] predictions,” as the model “learns as it continues

to grow and consumes more information”)). By contrast, regression is a simple statistical

method that is “totally different” from machine learning. (Rosenberg 3/1/18 AM 100; Rhyne

3/6/18 PM 101-02). Thus, any trade secret in HouseCanary’s Regression AVM is entirely

distinct from—and not used in––MyAVM.

b. Cascade AVM.

As with the Regression AVM, HouseCanary never provided the Cascade AVM to Title

Source, and its own expert disavowed that it was ever used in MyAVM.

No acquisition of HouseCanary trade secrets. HouseCanary’s Cascade AVM was

developed by combining two other AVMs that HouseCanary licensed from Black Knight, a third

party, with HouseCanary’s Home Pricing Index (HPI), which adjusts home prices across time.

(Stroud 2/26/18 PM 19). Under the terms of the parties’ contract, Title Source sent addresses to

HouseCanary, and HouseCanary ran those addresses through the Cascade AVM and sent value

reports back to Title Source. Id. at 19-21. In the words of HouseCanary’s expert, “all [Title

Source] had was the data [outputs]. They didn’t have any of the analytics inside of it.” (Rhyne

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 21


3/6/18 AM 119). And, as HouseCanary’s witnesses admitted, the “outputs” of a model are not

sensitive information, much less a trade secret. (E.g., Sicklick 3/7/18 AM 104).

In short, HouseCanary never provided Title Source with either the model or the inputs for

the Cascade AVM. In fact, Title Source had no knowledge that HouseCanary was even using

Black Knight’s AVMs as part of its model until after the start of litigation—HouseCanary hid the

fact that the Cascade AVM was not really its AVM at all. (See Stroud 2/26/18 PM 23-24). Nor

did Title Source have any information regarding the “weighting” of the model, which is the

aspect of the model that HouseCanary claimed was confidential. Id. at 209. HouseCanary’s

claim that Title Source misappropriated its trade secrets with respect to the Cascade AVM thus

fails. It is not possible to replicate what you never had, and never knew, in the first instance.

No use of HouseCanary trade secrets. Given the undisputed evidence, it is not

surprising that Title Source never used Cascade AVM when developing MyAVM. Nor can there

be any contention that MyAVM even resembles the Cascade AVM (i.e., combines two Black

Knight AVMs). As with the Regression AVM—and every HouseCanary trade secret—

HouseCanary’s expert, Rhyne, testified that he “didn’t see any indication . . . of using

HouseCanary technology” in MyAVM. (Rhyne 3/6/18 PM 86 (emphasis added)). No contrary

evidence was introduced—and the record leaves no doubt that Title Source never acquired, and

never used, HouseCanary’s purported trade secrets with respect to the Cascade AVM.

c. HouseCanary AVM.

No acquisition of HouseCanary trade secrets. As with the prior two AVMs,

HouseCanary never provided Title Source with the model or analytics for its HouseCanary

AVM. Indeed, as with the Cascade AVM, HouseCanary’s own expert confirmed that

HouseCanary only disclosed some AVM model outputs to Title Source (i.e., the value estimates

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 22


produced by the AVMs), but it never disclosed the mathematical models themselves. (Rhyne

3/6/18 AM 119).

No use of HouseCanary trade secrets. Yet again, the unrebutted testimony of

HouseCanary’s own expert forecloses any claim of use of the “HouseCanary AVM.” See supra

pp. 20-22; (Rhyne 3/6/18 PM 87 (Rhyne “didn’t see any fingerprints, any clues, any reference to

any HouseCanary technology” in MyAVM) (emphases added)).

Unable to show that Title Source acquired or used its formula or “secret sauce” for the

HouseCanary AVM, HouseCanary argued, based on a PowerPoint presentation, that MyAVM

used some of the same modeling concepts as the HouseCanary AVM. See DX777 at 15. But the

structure discussed in this presentation was merely a proposal; it was never implemented and put

into use, as HouseCanary’s own expert, Rhyne, admitted. (Rhyne 3/6/18 AM 35). Moreover,

each of the basic concepts referenced in the PowerPoint has been publicly known, discussed, and

used in the real estate industry and by statistical modelers for decades. (E.g., Stroud 2/26/18 PM

195; Sicklick 3/7/18 PM 114-15; see also C. Wang 2/28/18 AM 141, 146-47). Thus, they are not

trade secrets.

Specifically, HouseCanary claimed that Title Source had purportedly “misappropriated”

the following basic concepts, each of which is generally known in the industry:

 Gradient Boosting Machine (GBM): GBM is a form of machine learning that

Title Source used to create MyAVM. HouseCanary cannot claim any proprietary

interest in the use of gradient boosting. HouseCanary did not invent GBM and

GBM code is available for free to everyone on the internet. (See C. Wang 2/28/18

PM 14-15). Moreover, as HouseCanary’s witnesses admitted, HouseCanary’s

own model did not even use GBM until after the parties’ relationship ended.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 23


(Stroud 2/26/2018 PM 128, 195; Sicklick 3/7/18 PM 114). Title Source could not

have replicated something that was not part of the HouseCanary AVM model in

the first instance.

 Comparable Sales Approach: HouseCanary also cannot claim any proprietary

interest in the use of a comparable sales approach to value properties. As

HouseCanary’s Chief of Research, Chris Stroud, admitted, use of comparable

sales—i.e., comparing the property being appraised to similar properties that have

already been sold––has been around since the early 2000s. (Stroud 2/26/18 PM

195). Moreover, it has been published as a standard methodology for AVMs

since at least 2003. PX359 (“Standard on Automated Valuation Models”). Thus,

as HouseCanary’s expert, Rhyne, admitted, information on the use and creation of

a comparable sales model for an AVM is publicly available information. (Rhyne

3/6/18 PM 43-44).

 Time Series: Adjusting values for time is also not a trade secret, but a basic and

commonly known modeling requirement. Indeed, published standards

recommend and outline the use of time series adjustment in designing an AVM.

PX359; (C. Wang 2/28/18 AM 146-47). Moreover, HouseCanary never claimed,

let alone showed, that MyAVM uses HouseCanary’s Home Pricing Index or HPI.

As Rhyne testified, it does not. See, e.g., (Rhyne 3/6/18 PM 87).

In sum, it is uncontested that Title Source never received HouseCanary’s actual model

formulas or analytics––its “secret sauce”—and generally known and published industry concepts

are not trade secrets. Baxter & Assocs., L.L.C. v. D & D Elevators, Inc., No. 05-16-00330-CV,

2017 WL 604043, at *9 (Tex. App.—Dallas Feb. 15, 2017, no pet.) (concept is not a “trade

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 24


secret” under TUTSA if it could be ascertained from the public domain); Tex. Civ. Prac. & Rem.

Code Ann. § 134A.002(6)(B) (trade secrets must have “independent economic value . . . from

not being generally known”).4 Thus, HouseCanary’s misappropriation claim with respect to its

AVMs each fail as a matter of law.

d. There is no evidence or logic for HouseCanary’s reverse


engineering theory.

Failing to establish direct acquisition and use, HouseCanary alternatively asserted that

Title Source used a “magic machine” to take HouseCanary’s output data and reverse engineer its

purported trade secrets. (See HouseCanary closing 3/14/18 PM 22-23, 62). But HouseCanary

offered no evidence of any reverse engineering.

HouseCanary’s attorneys argued that Title Source reverse engineered its models by

feeding the output from HouseCanary AVMs (i.e., their estimates of home value) and data

compilations into a machine-learning algorithm to “train” the algorithm to re-create

HouseCanary’s models. This was equivalent, in HouseCanary’s words, to pouring Coke into a

“magic machine” to train the machine to produce more Coke. (HouseCanary closing 3/14/18

PM 62). But attorney argument is not evidence—and at trial, HouseCanary’s own expert,

Rhyne, repeatedly admitted that “Title Source did not use any HouseCanary data to train

4
While Title Source has analyzed each AVM for the sake of clarity and completeness, three
arguments apply to multiple trade secrets: (1) Rhyne’s testimony established that no trade
secret—AVM or otherwise—can satisfy the use element, as there is no evidence that any
trade secret was used in MyAVM (see Rhyne 3/6/18 PM 86; id. at 39-40); (2) HouseCanary
cannot claim that any model—AVM, similarity score, or complexity score—was acquired by
Title Source because, as Rhyne testified, Title Source “didn’t have any of the analytics inside
of [the models],” “all they had was the data [outputs],” (Rhyne 3/6/18 AM 119), and
HouseCanary cannot argue that any secret was acquired by “improper means,” as any
information Title Source did acquire about HouseCanary’s technology was provided
voluntarily by HouseCanary itself, see Educ. Mgmt., 102 F. Supp. 3d at 914; and (3) Rhyne’s
testimony establishing the absence of use in MyAVM’s development also defeats liability
and the damages element for every trade secret.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 25


MyAVM.” (Rhyne 3/6/18 PM 40; id. at 39-40 (admitting that he “know[s] that Title Source did

not use HouseCanary data to train its MyAVM product”); id. at 54 (“agree[ing]” that “MyAVM

did not use any HouseCanary information for its training data”)).

As Title Source’s lead developer testified, MyAVM’s training data was either owned by

Title Source or publicly available; the training data was not from HouseCanary. (C. Wang

2/28/18 PM 15 (explaining that MyAVM “learns on three parts of the data: Appraisal––Title

Source appraisal data and the demographic data to describe the zip code, and also the

macroeconomic data”)); (Rhyne 3/6/18 PM 60 (Rhyne agrees Title Source’s “data sources are

internal information, information from FNC, US Census, and publicly available data”)). In short,

HouseCanary’s own expert testified that Title Source never poured the “Coke”—i.e.,

HouseCanary’s data, reflecting its purported trade secrets—into the so-called “magic machine.”

After all, it would have made no sense for Title Source to train its model to replicate

HouseCanary’s. As HouseCanary’s expert admitted, the objective in building an AVM is not to

mimic another model’s estimates of property values, but to mimic the real thing—actual

appraisal values, which Title Source already possessed. (Rhyne 3/6/18 PM 102-03; id. at 64-65).

Common-sense examples illustrate the point. HouseCanary’s claim would be like using polling

data, and not actual voting results, to develop a model that explains election outcomes. It would

be like using weather forecasts from the nightly news, and not actual weather data, to develop a

model that explains climate. That is precisely why Title Source used actual appraisal values to

train its model for MyAVM. See id. For this reason, there is neither evidence nor logic to

support the claim of reverse engineering using HouseCanary’s output data, and no reasonable

jury could find it to have occurred.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 26


In any event, HouseCanary presented no evidence to show that Title Source was able to

“discover [the] design, structure, construction, or source code” behind the HouseCanary models.

Tex. Civ. Prac. & Rem. Code Ann. § 134A.002(5) (defining “[r]everse engineering” under

TUTSA). In fact, HouseCanary didn’t even allege it. Instead, HouseCanary alleged merely that

Title Source used a form of machine learning to attempt to replicate the outputs from

HouseCanary’s models. (Rhyne Robinson 2/23/18 AM 83-84 (machine learning is “try[ing] to

teach my model to work like your model whether lines are coded the same or not”)). But

machine learning is not synonymous with reverse engineering as defined in TUTSA—it does not

reveal “source code” or the “design [or] structure” of a computer program.5 Id. HouseCanary’s

reverse engineering theory fails for this independent reason as well.

e. HouseCanary’s additional arguments are red herrings.

Given evidence that was either uncontested or incontrovertible, HouseCanary attempted

to misdirect the jury by arguing that a former Title Source employee, Ryan Yang, attempted to

use HouseCanary’s models in creating a different model—his Home Value Estimation (“HVE”)

model. But HVE is unrelated to MyAVM and was never commercialized.

HVE is an “incredibly simple” and “one-page” formula that Title Source never used for

any purpose—much less a commercial one, which is what matters where trade secrets are

concerned. (Rosenberg 3/1/18 AM 93-94); see Sw. Energy Prod. Co., 491 S.W.3d at 722 (“use”

of a trade secret “means commercial use by which the offending party seeks to profit from the

use of the secret” (quoting Glob. Water Grp., 244 S.W.3d at 930)). As HouseCanary’s expert

testified, HVE was not even “code” in the programming sense of the word—rather, it was a

5
HouseCanary’s expert testified that the “fundamental nature” of machine learning renders it
inappropriate for examining “Source Code.” (Rhyne Robinson 2/23/18 AM 46-47 (“the
nature of machine learning” is unrelated to “Source Code”)).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 27


simple statistics equation. (Rhyne 3/6/18 PM 89 (“I just don’t think of that [HVE formula] as

code”); see also id. (“I don’t think of that [HVE formula] as software”)).

HVE’s simple “one-page” regression model bears no resemblance to the sophisticated

machine-learning model in MyAVM. (Rosenberg 3/1/18 AM 93-94; id. at 100). Because the

law requires commercial use, and because HouseCanary’s entire theory of harm and its damages

model are predicated on use in MyAVM, any argument with respect to HVE is nothing more

than a red herring.

The Court need go no further to determine that any evidence with respect to HVE is

legally irrelevant and cannot support the jury’s verdict. But HouseCanary’s arguments with

respect to Ryan Yang’s HVE work also fail on numerous other independent grounds. To begin

with, HouseCanary ratified and approved Yang’s work on HVE—and waived any right to

complain about it. Precisely because there was nothing nefarious about Yang’s work, Title

Source openly disclosed Yang’s modeling in emails sent to HouseCanary before Amendment

One was signed—and HouseCanary did nothing. (Sicklick 3/8/18 AM 45-46).6 DX128; PX116;

(Sicklick 3/7/18 AM 93). Sicklick testified that he understood the emails to show that Yang was

“building a model and using [HouseCanary’s] data and understanding of attributes to improve

his model.” (Sicklick 3/7/18 AM 95; see id. at 98). But this was not improper—after all,

HouseCanary had agreed that Title Source had the “right to develop, use, or market products or

services similar to or competitive with those of [HouseCanary].” DX1085, Section 3. And

HouseCanary took no adverse action in response to learning of Yang’s modeling—to the

6
Sicklick attempted to claim there were provisions that were inserted into Amendment One in
response to PX116 (Sicklick 3/7/18 AM 95-98), but he later admitted that the language he
referred to was proposed in September 2015 prior to receipt of the email in PX116 (Sicklick
3/8/18 AM 39-44).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 28


contrary, HouseCanary signed Amendment One and continued to contract with Title Source until

it terminated the agreement.

It was not until Title Source brought this lawsuit that HouseCanary conveniently

complained about Yang’s work. But by then it was too late. By choosing to enter into a

contractual relationship with Title Source with full knowledge of Ryan Yang’s work,

HouseCanary impliedly consented to and ratified that work—or, at a minimum, waived any right

to complain about it. See Tex. Civ. Prac. & Rem. Code Ann. § 134A.002(3)(B) (defining

misappropriation as use of a trade secret without “implied consent”); see also Lesikar v.

Rappeport, 33 S.W.3d 282, 300 (Tex. App.—Texarkana 2000, pet. denied) (waiver and

ratification of contract claims); Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 677 (Tex.

2000) (ratification of fraud claims). HouseCanary’s inaction––in the face of knowledge that

Ryan was developing HVE––is an independent basis to reject HouseCanary’s TUTSA, fraud,

and contract claims stemming from HVE.

Moreover, as HouseCanary’s own expert admitted, the evidence does not show any

reverse engineering in the creation of HVE at all. Although HouseCanary’s attorneys insinuated

that a particular email—DX134—shows “reverse engineering,” their own expert expressly

denied that it showed anything of the sort. (Rhyne 3/6/18 PM 101-02 (Rhyne rejects argument

that DX134 shows copying by Yang)). It merely showed that, in 2015, Yang was comparing the

accuracy of his own independently developed model (HVE) with that of HouseCanary’s Cascade

model (the model that is merely a composite of two Black Knight AVMs) to see which was more

accurate. (Rhyne 3/6/18 AM 128). Comparing is not copying. (Rhyne 3/6/18 PM 101-02).

Indeed, Rhyne testified that it was at least “equally likely” that Yang was merely trying

to improve his own model, HVE, to match the actual appraisal value, rather than engaging in any

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 29


reverse engineering. (Rhyne 3/6/18 PM 103). This testimony by HouseCanary’s own expert is

independently fatal because, under the equal inference rule, “a jury may not reasonably infer an

ultimate fact from ‘meager circumstantial evidence which could give rise to any number of

inferences, none more probable than another.’” Hancock v. Variyam, 400 S.W.3d 59, 70-71

(Tex. 2013) (quoting Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387, 392 (Tex. 1997)); see

also Lakeway Reg’l Med. Ctr., 2017 WL 672451, at *9–10, 14 (rejecting trade secrets claim

where equal inference rule severed causation between misappropriation and damages).

Finally, HouseCanary broadly asserted that Ryan Yang’s mere presence on the MyAVM

development team—even in a minor, tangential role—was enough to show that he somehow used

proprietary HouseCanary information in MyAVM. But under Texas law, mere suspicion is not

evidence—and even an individual who had access to trade secrets (which Yang did not) cannot

be presumed to have used them later. See Greenville Automatic Gas Co. v. Automatic Propane

Gas & Supply, LLC, 465 S.W.3d 778, 787–88 (Tex. App.—Dallas 2015, no pet.) (evidence that

claimant’s former employee had extensive knowledge of its proprietary customer lists, and

served the same customers for his new employer, was “not evidence of use,” as claimant did not

show employee’s knowledge of trade secrets was actually used in creating the new employer’s

customer list); Trilogy Software, 143 S.W.3d at 465 (“Standing alone, [the programmer’s] receipt

of the e-mail [containing trade secrets] . . . does not raise a genuine issue of material fact that he

or [his employer] actually used [claimant’s] trade secrets”).

In the end, HouseCanary’s speculation about Ryan Yang and the development of his

simplistic, never-used HVE model—which has nothing to do with MyAVM—is simply a red

herring and does not support its misappropriation claims. The HVE allegations are legally

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 30


irrelevant and fail on numerous other independent grounds. What HouseCanary presented to the

jury as a smoking gun fires only blanks.

2. Purported trade secret #2: similarity score.

HouseCanary also claimed that it developed a “similarity score model,” which Chris

Stroud, HouseCanary’s Chief of Research, described as showing how “similar” each

“comp[arable]” property was to the subject property. (Stroud 2/26/18 PM 155-56). This model

generated a similarity “score” between 0 and 100 that was listed on HouseCanary Value Reports

and was intended to appear in the appraisal app. Id. at 156-57. But yet again, HouseCanary

failed to show that Title Source either acquired or used HouseCanary’s similarity model, let

alone as part of its development of MyAVM.

No acquisition of HouseCanary trade secrets. As with HouseCanary’s AVM models,

HouseCanary’s “similarity score model,” with its “mathematical distance” calculations and

“regression-based method,” was never provided to Title Source. (Rhyne 3/6/18 AM 119). As

HouseCanary admitted, it only provided Title Source with general “information about the

similarity score” and some “outputs from the similarity score model”—not the model itself.

(Stroud 2/26/18 PM 155).

What HouseCanary did provide are not trade secrets. As HouseCanary’s witnesses

admitted, the “outputs” of a model are not sensitive information, much less a trade secret.

(Sicklick 3/7/18 AM 104). And HouseCanary’s executives denied that the generic information it

provided about the similarity score was “proprietary” or a trade secret. This information

consisted of half a page in a sales presentation with practically the same information about

HouseCanary’s similarity score that HouseCanary provides publicly on its website. Compare

DX759, with PX518B. Chris Zaloumis, HouseCanary’s Vice President of Product, stated that

this presentation (DX759) contained only a “general description” of the inputs for the similarity

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 31


score, and posited that HouseCanary would only be “at risk of giving away anything proprietary”

if it were to provide Title Source with “more technical specifics” than were in the

presentation. DX334.

Chris Stroud, HouseCanary’s Chief of Research, responded that HouseCanary could even

“provide a longer list [of information] while still keeping it generic to protect our IP”—in other

words, the description was so “generic” that even more detail could be included without

disclosing any proprietary information. Id. HouseCanary’s expert testified that this document

does not convey any information about the underlying modeling technology. (Rhyne Robinson

2/23/18 AM 88-89 (testifying that DX759 “doesn’t tell you how the model operates, no”)). And

he even admitted that the “geographic and property characteristics” that the document described

(Rhyne 3/6/18 PM 74) were “common sense” in the real estate industry and well known to Title

Source long before its relationship with HouseCanary. Id. at 55-57. A “general” description of a

model—which largely repeats public information, does not describe “how the model operates,”

and was “common sense” already known to Title Source—is not a trade secret. Tex. Civ. Prac.

& Rem. Code Ann. § 134A.002(6)(B) (trade secret must be non-public and provide “independent

economic value”).

Unable to present evidence that Title Source acquired the similarity model—and faced

with conclusive evidence to the contrary—HouseCanary instead pressed the theory that Title

Source could have acquired HouseCanary’s similarity model if it “t[ook] a machine-learning

based algorithm and start[ed] to train it to replicate the similarity score.” (Stroud 2/26/18 PM

171). This is all suspicion and no evidence. HouseCanary’s stack of inferences—that Title

Source had the motive to develop its own “similarity score,” that it could have used “machine-

learning” to acquire HouseCanary’s similarity score, and that it ultimately developed some,

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 32


unknown “similarity model,” (see, e.g., id.; Sicklick 3/7/18 AM 104-05)—does not amount to

even a scintilla of evidence that Title Source actually acquired HouseCanary’s similarity score

model, much less used it. See Marathon, 106 S.W.3d at 728 (“[A]n inference stacked only on

other inferences is not legally sufficient evidence.”); Lakeway Reg’l Med. Ctr., 2017 WL

672451, at *14 (no evidence of misappropriation when claimant was “simply speculating” that

defendants “must have used [it]s confidential information”). There is no evidence that anyone at

Title Source used machine learning to acquire HouseCanary’s similarity model. And, as

discussed below, any similarity metric developed by Yang neither reflected HouseCanary’s

purported trade secrets nor was used in MyAVM.

No use of HouseCanary trade secrets. Most importantly, both of HouseCanary’s experts

testified that the similarity model was not used in MyAVM. As Rhyne testified, there is no

evidence that any HouseCanary technology—including the similarity model—was in MyAVM.

(Rhyne 3/6/18 PM 87). And HouseCanary’s other expert—after painstakingly examining

MyAVM—testified it did not contain any similarity model at all. (Manheim 3/6/18 AM 22

(“When I was conducting my code review [of MyAVM], I couldn’t––I didn’t see any evidence

of similarity score”)). Nor is there any evidence that any HouseCanary similarity score outputs

were used to “train” MyAVM’s machine learning model. (Rhyne 3/6/18 PM 39-40 (“Title

Source did not use any HouseCanary data to train MyAVM”)). These admissions are fatal to any

attempt to satisfy the use element, and to this claim.

Unable to establish use in MyAVM, HouseCanary again resorted to pure speculation and

misdirection, pointing to a Title Source presentation that mentioned a generic “similarity score”

to assert that Title Source used HouseCanary’s similarity score. (Sicklick 3/9/18 AM 24-25).

But the presentation only states that some similarity metric may have been developed by Ryan

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 33


Yang, not that HouseCanary’s specific model was somehow used: As HouseCanary’s expert

testified, while there is some evidence that Yang was “working on some similarity metrics,”

“that could be anything.” (Manheim 3/6/18 AM 40-41). Similarity scores are nothing new—and

HouseCanary can hardly claim a trade secret based on the mere idea of a similarity score. (E.g.,

Stroud 2/26/2018 AM 146).7 Indeed, Rhyne testified that Title Source already had a similarity

score before entering into an agreement with HouseCanary. (Rhyne 3/6/18 PM 68-71

(discussing PX130)). There is no evidence that Yang’s unknown metric used, or bears any

semblance to, HouseCanary’s similarity model, and HouseCanary’s experts testified that

HouseCanary’s similarity model was not used in MyAVM—which is all that counts as a matter

of law.

HouseCanary’s expert Manheim later testified—notwithstanding the fact that he found no

“evidence” or source code for any “similarity score or similarity model” of a similarity score in

MyAVM (Manheim 3/6/18 AM 43)—that a similarity score could have been used in MyAVM

because he had seen an empty folder on Yang’s computer labeled “similarity score.” Id. at 43-

44, 54. But Manheim admitted that Claude Wang, who developed MyAVM, did not have the

empty folder on his computer. Id. at 39, 44. He further admitted there could be “a lot of

different explanations as to why there is a similarity folder outside of [there] having to be Source

Code for it.” Id. at 43. And he admitted that he could not tell “anything about the history of that

folder, who created it, and when it was created,” or “if there was ever any code in it.” Id. at 51.

7
Moreover, full mathematical formulas for creating similarity scores are available on the
internet, including on Wikipedia. (Stroud 2/26/18 145-46; Rhyne 3/6/18 44). Indeed, this is
precisely the information that Yang used to create a simple similarity metric. (C. Wang
2/28/18 PM 154).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 34


This testimony, like the folder, is empty and devoid of legal significance. Any opinion

Manheim had regarding the folder was purely speculative, at odds with the actual facts (i.e., his

own admission that there was no similarity model used in MyAVM), and cannot support the

judgment. See Wal-Mart Stores, Inc. v. Merrell, 313 S.W.3d 837, 840 (Tex. 2010) (“An expert’s

failure to explain or adequately disprove alternative theories of causation makes his or her own

theory speculative and conclusory.”); Coastal Transport Co. v. Crown Cent. Petrol. Corp., 136

S.W.3d 227, 232 (Tex. 2004) (“Opinion testimony that is conclusory or speculative is not

relevant evidence.”).

In sum, HouseCanary’s own testimony establishes that Title Source never acquired its

similarity model or analytics and did not use that model––indeed, did not use any similarity

model––in MyAVM. Again, because HouseCanary’s entire theory of liability and damages is

predicated on the use of its purported trade secrets in MyAVM, this claim fails.

3. Purported trade secret #3: data dictionary.

According to HouseCanary, its data dictionary was an index of the various types of data

available for sale from HouseCanary, along with brief descriptions of the type of data. See

(Stroud 2/26/18 PM 186; Rhyne 3/6/18 AM 111-12). As HouseCanary’s Chief of Research,

Chris Stroud, admitted, most of the data dictionary was licensed from Black Knight—a third

party—and was not owned by HouseCanary. (E.g., Stroud 2/26/18 PM 27-28 (“Q: . . . [T]he

county level homeowner file and all of these property characteristics [in the data dictionary],

those all come from Black Knight, right? A: Yes, we license those.”); id. at 29 (“Q: Included in

this Black Knight data was, you know – whether [the home] has a garage, a pool, things like that,

right? A: Yes.”)). Similarly, any non-licensed data described in the dictionary was public

information. Id. at 142 (data dictionary is an index of “data that we licensed” from third parties

“and/or acquire ourselves from government sources”).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 35


No acquisition of HouseCanary trade secrets. HouseCanary’s misappropriation claim

hinges on evidence that Yang reproduced some pages of a “data dictionary” from a HouseCanary

spreadsheet in August 2015. (Rhyne 3/6/18 91); DX136. But those pages were not

HouseCanary’s—they were indisputably created by, owned by, and licensed from a third party,

Black Knight (previously known as LPS). (Rhyne 3/6/18 PM 94 (“It is clearly data that

originated with LPS”); id. at 95 (“It originated, obviously, with LPS”); id. at 95 (“It originated

with LPS, no doubt about it.”); see also id. at 94 (Rhyne agrees that Yang “could get that stuff

from LPS directly”)); PX49 at 43-60 (data dictionary containing LPS logo); PX62 (Black Knight

licensing agreement). HouseCanary cannot have a trade secret in what it did not develop, and

did not own, in the first instance.8

Further, it is undisputed that Title Source did not acquire any portion of the data

dictionary by “improper means”—rather, the dictionary was freely shared by HouseCanary itself

as part of various promotional materials for its products. (Stroud 2/26/18 PM 26); PX49; PX64.

Indeed, as is true for all of the purported trade secrets, HouseCanary willingly gave Title Source

all the information Title Source received about the data dictionary—none of the purported trade

secrets were acquired by improper means. Given that all of the purported trade secret

8
House Canary’s License Agreement with Black Knight did not give HouseCanary any “title
to, or the right to enforce rights in” the excerpt of Black Knight’s data dictionary. Tex. Civ.
Prac. & Rem. Code Ann. § 134A.002(3-a). To the contrary, the License Agreement only
gave HouseCanary “right, title and interest in and to [so-called] Derivative Works,” PX62 at
15, which are works created by HouseCanary which “do not include the Licensed Materials
in the form provided by BK,” id. at 1 (emphasis added). Here, the undisputed evidence is
that the excerpt of the data dictionary was in “the form provided by BK,” complete with the
“LPS” (i.e., Black Knight) logo on the top. Compare DX136 at 2–8 with PX49 at 43–48.
Thus, it does not constitute a “Derivative Work[],” and Black Knight retains “all rights in and
to” these pages, including all “proprietary rights.” See id. at 2 (“BK reserves all rights in and
to the Licensed Materials, including, but not limited to . . . all . . . proprietary rights”).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 36


information was voluntarily disclosed, even a subsequent violation of contractual confidentiality

provisions is no evidence of acquisition by improper means. See, e.g., Educ. Mgmt. Servs., 102

F. Supp. 3d at 914 (subsequent breach of confidentiality provisions “is irrelevant to the method

by which he obtained access to the trade secrets in the first instance”).

No use of HouseCanary trade secrets. Nor did HouseCanary provide any evidence that

Title Source used the data dictionary in MyAVM. See Tex. Civ. Prac. & Rem. Code Ann.

§ 134A.002(3)(B). The mere reproduction of lawfully acquired material is insufficient to

demonstrate use. See GE Betz, Inc. v. Moffitt-Johnston, 885 F.3d 318, 327 (5th Cir. 2018)

(employee’s “download of [trade secret] data and emails to herself on the eve of her departure”

were “no evidence of actual use”). And HouseCanary’s expert, Rhyne, admitted that he “didn’t

see any implementing of the HouseCanary data dictionary” in MyAVM. (Rhyne 3/6/18 PM

87).9 In fact, the undisputed evidence shows that Title Source used the data from its own

appraisals, along with data from a few widely known public sources, to train MyAVM. (C.

Wang 2/28/18 PM 15).

HouseCanary also cannot claim that Title Source used the data dictionary to identify and

copy the “ingredients” (variables) that HouseCanary used in its AVMs. The data dictionary does

not identify the specific variables used in HouseCanary’s AVMs; rather, it contains an

9
Rhyne claimed that there was some similarity between MyAVM and the pages Yang
reproduced because Yang’s compiled data dictionary contained headings regarding
“Neighborhood characteristics,” “demographics,” and “economic data,” and a PowerPoint
slide regarding MyAVM stated that Title Source uses “Demographic data at zip level,”
“Neighborhood information, “Macro-economic data,” and “Appraisal reports.” (Rhyne
3/6/18 AM 125). But Rhyne admitted that Yang developed a data dictionary that used the
“[s]ame set of characteristics” as MyAVM before HouseCanary shared the Black Knight
dictionary. Id. at 58 (emphasis added). And Rhyne admitted that Title Source—like every
other AVM developer—would use the same categories of data. (Rhyne 3/6/18 PM 56).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 37


exhaustive list of available data sources. (Rhyne 3/6/18 AM 123 (data dictionary has “more

attributes than you ever expect to use”)).

Further, as discussed just above, the variables used in MyAVM to predict property value

are the very same property and neighborhood factors used by Title Source’s human appraisers to

value a property. These attributes are “common sense” and were known to Title Source long

before it received HouseCanary’s data dictionary. (Rhyne 3/6/18 PM 55, 64). Moreover, Rhyne

admitted that Title Source—and, indeed, every other AVM developer—would use these same

types of data. (Rhyne 3/6/18 PM 56 (testifying that Title Source and other appraisal companies

“know what are the attributes, the property attributes that provide a home value”); Stroud

2/26/18 PM 98 (admitting that Title Source gave HouseCanary ideas about where to collect MLS

data, not the other way around)). And it is well established that a listing of publicly available

information does not, and cannot, make that information proprietary and preclude its use. See

Baxter & Assocs., 2017 WL 604043, at *9 (information is not a “trade secret” under TUTSA if it

could be ascertained from the public domain).10

In sum, the portions of the data dictionary at issue are not HouseCanary’s trade secret and

were not used in the creation of MyAVM. Further, as a matter of Texas law, Title Source’s

10
Texas courts routinely hold that data lists—for example, customer lists—are not confidential
information deserving trade secret protection if that information is readily accessible by
industry inquiry. See, e.g., Guy Carpenter & Co. v. Provenzale, 334 F.3d 459, 467-68 (5th
Cir. 2003) (“A customer list of readily ascertainable names and addresses will not be
protected as a trade secret.”); SCM Corp. v. Triplett Co., 399 S.W.2d 583, 586 (Tex. App.—
San Antonio 1966, no writ) (data compilation “was readily ascertainable by anyone, and was
therefore not a trade or business secret”); see also Numed, Inc. v. McNutt, 724 S.W.2d 432,
434–35 (Tex. App.—Fort Worth 1987, no writ); Allan J. Richardson & Assoc. v. Andrews,
718 S.W.2d 833, 836–37 (Tex. App.—Houston [14th Dist.] 1986, no writ); Research Equip.
Co. v. C.H. Galloway & Scientific Cages, Inc., 485 S.W.2d 953, 956 (Tex. Civ. App.—Waco
1972, no writ). HouseCanary has no right to prevent the use of this public information by
any other party.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 38


knowledge of basic, “common sense” information about home valuation cannot be the basis for

establishing misappropriation, and Title Source has every right to use its own data, and widely-

known public source data, to train MyAVM.

4. Purported trade secret #4: data compilation.

Chris Stroud, HouseCanary’s Chief of Research, testified that HouseCanary created its

data compilation—i.e., database––from publicly available data and data licensed from third

parties. (Stroud 2/26/18 PM 152; see also id. at 144). As with HouseCanary’s other purported

trade secrets, undisputed evidence demonstrates that Title Source neither acquired nor used

HouseCanary’s data compilation in any improper manner.

No acquisition of HouseCanary trade secrets. It is undisputed that HouseCanary never

provided Title Source with its data compilation. All that Title Source received from

HouseCanary were valuation reports containing individual pieces of data for the specific

property—for example, the number of bedrooms in a particular house or the year it was built.

(See, e.g., Sicklick 3/7/18 AM 116-17); DX303. These pieces of data may have come from the

data compilation, but they were not equivalent to the compilation itself. It was the compilation

as a whole—not the scattered pieces of data it contained—that was the trade secret put before the

jury in the charge.

Stroud, HouseCanary’s Chief of Research, testified that what made the data compilation

useful to HouseCanary was both its size—allegedly “the most comprehensive residential real

estate database available” (Stroud 2/26/18 PM 152)—and its structure—“a large part” of

developing a model is “getting the data infrastructure in place,” id. at 92. The individual points

of data were comparatively worthless. See id. at 108. And, indeed, they are either in the public

domain or owned by third-party licensors.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 39


HouseCanary may claim that Title Source received approximately 150,000 valuation

reports in the course of the parties’ contractual relationship. DX651. But in the context of

HouseCanary’s “residential real estate dataset” covering “100 million residential properties”

across the United States, (Stroud 2/26/18 PM 108, 110, 152), that is less than 0.2% of the value

reports that could have been generated by the data compilation. The amount of data Title Source

received was far too small to build a data compilation large enough to create a workable AVM.

Moreover, the individual data points Title Source received in the value reports were not

compiled. To reconstruct even a fraction of HouseCanary’s data compilation, Title Source

would have had to compile HouseCanary’s data itself—by extracting raw data from every one of

HouseCanary’s value reports and then collating, culling, and organizing that data into a working

dataset. There was no reason for Title Source to go through this rigmarole to get a mere fraction

of data already available to it from public sources and its own appraisals.

No use of HouseCanary trade secrets. Because Title Source never acquired

HouseCanary’s data compilation, it could not have used it, either. As previously discussed,

Rhyne expressly testified that no HouseCanary data was used to develop or train MyAVM.

(Rhyne 3/6/18 PM 39-40). Again, Title Source used the data from its own appraisals, along with

data from public sources, to train MyAVM. (C. Wang 2/28/18 PM 15).

s. Purported trade secret #5: complexity score.

A complexity score helps determine how difficult it would be for an appraiser to assess

the value of a particular property so that the task is priced appropriately and an appraiser with the

right skill level is assigned to it. Yet again, the undisputed evidence demonstrates that Title

Source neither acquired nor used HouseCanary’s complexity score. Indeed, because complexity

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 40


scores are only used in assigning and pricing traditional, hands-on appraisals, they were not used

as part of either HouseCanary’s AVM or Title Source’s MyAVM.11

No acquisition of HouseCanary trade secrets. HouseCanary proposed in a PowerPoint

presentation, as part of its continued effort to market products to Title Source, to “build a model

of appraisal complexity.” (Stroud 2/26/18 PM 62); DX561. But the undisputed evidence, as

HouseCanary’s Chief of Research, Chris Stroud, admitted, is that a complexity model was

“never developed.” (Stroud 2/26/18 PM 187); see also PX314 (email noting decision made to

“shelve[]” the development of appraisal complexity score “indefinitely”). It defies reality that

something that was admittedly never created could somehow be acquired.

The PowerPoint slides themselves, moreover, are no evidence of a trade secret—they

contain no formulas, no source code, and no concrete information about how the complexity

score would actually work. DX561 at 3. The general descriptions in this sales pitch thus cannot

qualify as a trade secret as a matter of law. See Glob. Water Grp., Inc., 244 S.W.3d at 930

(where “[t]here is no discrete secret formula at issue,” “the imprecise nature of the information

weighs heavily against it being a trade secret”). And HouseCanary offered no evidence that it

11
At trial, HouseCanary confusingly referred to two different concepts as a “complexity score”:
(1) an “appraisal complexity model,” and (2) a “property score.” The only “complexity
score” that Stroud asserted as a trade secret at trial, however, was the “appraisal complexity
model.” (Stroud 2/26/18 AM 132). In deposition testimony (admitted at trial), Stroud
testified that the “complexity score” was also known as a “property score,” a metric
HouseCanary was obligated to provide to Title Source under the contract. Id. at 122. Unlike
the “appraisal complexity score,” the “property score” was intended to represent whether
enough information was available for a computer model (i.e., an AVM) to estimate the value
of a home. (Rhyne 3/6/18AM 113); PX3, Ex. A. At trial, Stroud disavowed his prior
statements equating the “complexity score” and “property score” and instead claimed that the
“appraisal complexity model” was the “complexity score.” (Stroud 2/26/18 AM 125).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 41


had or provided to Title Source any code related even to a preliminary model of a complexity

score, or any outputs of a preliminary model.

Moreover, under Texas law, a trade secret must have “independent economic value.”

Tex. Civ. Prac. & Rem. Code Ann. § 134A.002(6)(b). And the sales pitch HouseCanary

provided to Title Source—which was insufficient to develop a complexity score model—was

manifestly useless, given that HouseCanary never developed the model to production and

“shelved [the project] indefinitely.” (Stroud 2/26/18 AM 125); PX314. Thus, the “project” itself

had no measurable commercial value to HouseCanary. See Tex. Civ. Prac. & Rem. Code Ann.

§ 134A.007(6)(B) (requiring a trade secret to have “independent economic value” from “not

being generally known”); see also Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 266 (5th Cir.

2007) (“For TTG to succeed on any of these claims, then, it must first prove that it in fact

possessed (1) proprietary information, that was (2) valuable to its business.”) (emphasis added);

BondPro Corp. v. Siemens Power Generation, Inc., 463 F.3d 702, 707 (7th Cir. 2006) (grant of

JNOV was proper because evidence that process was not commercially used provided a

“compelling” inference that the process has no measurable commercial value) (applying UTSA

as adopted in Wisconsin). For all these reasons, HouseCanary did not have or provide, and Title

Source did not acquire, any complexity score trade secret.

No use of HouseCanary trade secrets. Rhyne admitted there is no evidence that Title

Source ever developed or used a complexity score at all as part of its business (it does not), let

alone in MyAVM. See, e.g., (Rhyne 3/6/18 PM 87, 99-101). That is not surprising since a

complexity score is not used to create an AVM, and it was not used as part of HouseCanary’s

AVM or Title Source’s MyAVM. Again, because HouseCanary’s entire theory of liability and

damages is predicated on the use of its purported trade secrets in MyAVM, HouseCanary cannot

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 42


establish the required “direct causal link” to harm or damages from a concept that has nothing to

do with AVMs, let alone MyAVM. See Lakeway Reg’l Med. Ctr., 2017 WL 672451, at *14.12

As with the other misappropriation claims, this one fails.

6. Failure to identify harm from each claimed misappropriation.

Not only did HouseCanary fail to show that Title Source acquired or used any of its

purported trade secrets, it failed to show any harm or damages resulting from the alleged

misappropriation of specific trade secrets. As discussed above, a claim for misappropriation

requires “a causal link between the improper use of trade secrets and [the claimant]’s damages,”

but HouseCanary did not offer any link between any allegedly improper use of its five trade

secrets and the damages it demanded. See Lakeway Reg’l Med. Ctr,, 2017 WL 672451, at *6, 14

(requiring a “direct causal link between the misconduct, the plaintiff’s injury, and the damages

awarded”).

12
To the extent the jury could have understood “complexity score” on the jury verdict form to
refer to the “property score” (also known as the “suitability score,” to make matters more
confusing), HouseCanary provided no evidence of misappropriation of that either. There was
no evidence that HouseCanary owned the property score model—Black Knight did. See
(Stroud 2/26/18 PM 32-33 (admitting that the “property score was obtained from Black
Knight”)). Even if HouseCanary had some right to sue for misappropriation of somebody
else’s property score, it never showed that Title Source acquired the model. There was
likewise no evidence that the generalized descriptions of the property score provided to Title
Source were a trade secret. HouseCanary pointed only to a series of emails in which Yang
said he wished to “[f]ind out what’s behind” the property score, DX128, and “estimate” the
“property complexity” score, DX118; see also DX695 (Title Source email claiming that
Yang was “making progress on developing our complexity model using HouseCanary data”),
but emails stating Yang intended to “[f]ind out what’s behind” the property score is not
evidence that Yang succeeded in doing so. See Trilogy Software, Inc. v. Callidus Software,
Inc., 143 S.W.3d 452, 465 (Tex. App.—Austin 2004, pet. denied) (programmer’s “mere
receipt of [an] email” telling him to “take a look” at trade secret information is “no evidence”
that “he did, in fact, [] look at the information” and use it). As with the other purported trade
secrets, there is no evidence that Title Source ever used the property score, and HouseCanary
failed to demonstrate any specific harm from any misappropriation of the property score.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 43


HouseCanary’s damages expert, Bratic, did not even purport to value the harm from

misappropriation of any specific trade secret, instead lumping them together into one

undifferentiated mass. Because Bratic and HouseCanary did not “attempt[] to measure” what

harm, if any, befell HouseCanary from the alleged misappropriation of any of the five trade

secrets specifically—each trade secret claim thus disintegrates. Hunter Bldgs. & Mfg., 436

S.W.3d at 21 (failing to “measure” harm from specific trade secret misappropriation mandates

judgment against claim).

* * *

Under Texas law, a misappropriation claim depends on improperly acquiring or

impermissibly using a bona fide trade secret, thereby causing harm or damages. HouseCanary’s

smoke and mirrors misled the jury into believing that some trade secret was somehow

misappropriated. But a careful, step-by-step analysis of the governing law and relevant evidence

leads to only one conclusion—that HouseCanary failed to carry its burden of establishing each

element of misappropriation for any of the five trade secrets, and that no legally sufficient

evidence supports the verdict. See TM Prods., Inc. v. Nichols, 542 S.W.2d 704, 707 (Tex. Civ.

App.—Dallas 1976, no writ) (“[T]he rule providing that the court may render judgment non

obstante veredicto if a directed verdict would have been proper, does not mean literally ‘no

evidence at all’ but comprehends those situations in which the evidence is deemed to be legally

insufficient to establish an asserted proposition of fact.”). Title Source never acquired and never

used any of HouseCanary’s supposed trade secrets—and what was purported to have been

acquired was no trade secret at all.

If even a single element of misappropriation is not satisfied, that trade secret claim

fails—and HouseCanary’s five trade secret misappropriation claims each independently fail as a

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 44


matter of law. Moreover, because the lump-sum damages award failed to differentiate the

supposed contribution of each purported misappropriation claim to the damages, if even one

claim fails, the entire verdict collapses. See supra p. 18. Judgment must be rendered for Title

Source on all of HouseCanary’s TUTSA claims.

B. HouseCanary’s fraud claims fail as a matter of law.

Because they are grounded in the same core theory of misappropriation, HouseCanary’s

fraud claims fail for the same basic insufficiency-of-the-evidence reasons that its TUTSA claims

do. But the fraud claims break down as a matter of law for two more independent reasons: (1)

they are preempted by TUTSA, and (2) there is zero evidence of fraudulent intent.

1. HouseCanary’s fraud claims are preempted by TUTSA.

TUTSA broadly preempts common-law tort claims that are based on misappropriation of

trade secrets. Tex. Civ. Prac. & Rem. Code Ann. § 134A.007(a) (“[T]his chapter displaces

conflicting tort, restitutionary, and other law of this state providing civil remedies for

misappropriation of a trade secret.”). The “plain language” of this “preemption provision

indicates that the law was intended to prevent inconsistent theories of relief for the same

underlying harm by eliminating alternative theories of common law recovery which are premised

on the misappropriation of a trade secret.” Super Starr Int’l, LLC v. Fresh Tex Produce, LLC,

531 S.W.3d 829, 843 (Tex. App.—Corpus Christi 2017, no pet.).

To escape preemption, HouseCanary had to show that its fraud claims are “based on facts

unrelated to the misappropriation of the trade secret.” 360 Mortg. Grp., LLC v. Homebridge Fin.

Servs., Inc., No. A-14-CA-00847-SS, 2016 WL 900577, at *6–7 (W.D. Tex. Mar. 2, 2016); see

also Embarcadero Techs., Inc. v. Redgate Software, Inc., No. 1:17-CV-444-RP, 2018 WL

315753, at *3 (W.D. Tex. Jan. 5, 2018) (preemption upheld where “both claims stem from the

same underlying harm—the taking of Plaintiffs’ confidential information”). It did not.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 45


To the contrary, HouseCanary repeatedly argued that its fraud claims overlapped with its

misappropriation claims. It explained at trial that the “same facts basically support . . . [its] fraud

claims” and its misappropriation claims. (HouseCanary closing 3/14/2018 PM 20; see also id. at

41 (claiming that Title Source’s purported use of HouseCanary’s information to build its own

model “turns out to be fraud . . . and it is also misappropriation of trade secrets”)); Ex. A

(HouseCanary’s 4th Am. Answer & Countercls.) ¶ 83 (alleging under “Count Three: Fraud and

Fraudulent Inducement” that “TSI misappropriated HouseCanary trade secrets”).

Without these allegations of misappropriation, HouseCanary’s fraud claims fail as a

matter of law. See Embarcadero Techs., 2018 WL 315753, at *3. Put another way,

HouseCanary failed to demonstrate “any harm” independent of misappropriation. See Moddha

Interactive, Inc. v. Philips Elec. N. Am., 92 F. Supp. 3d 982, 992 (D. Haw. 2015). As a result, its

fraud claims are preempted.

2. There is no evidence of fraud or fraudulent inducement.

Additionally, HouseCanary failed to carry its burden of establishing each element of

common law fraud or fraudulent inducement: (1) a material representation that was (2) false

and (3) known by the speaker to be false (or made recklessly) (4) with the intent that it should be

acted upon by the party, (5) the party acted in reliance upon it, and (6) thereby suffered injury.

DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990). Fraudulent inducement

requires additional proof that the misrepresentation induced a party to enter into a contract.

Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001). HouseCanary failed to prove any of

these types of fraud.

As explained above, HouseCanary’s fraud theory centers on its allegations that Title

Source misappropriated its trade secrets. But those allegations are completely unsupported. See

supra pp. 20-45. Furthermore, HouseCanary failed to demonstrate that Title Source intended to

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 46


misappropriate HouseCanary’s trade secrets when it entered into the contract. HouseCanary’s

counsel made vague and conclusory assertions that because Title Source supposedly “took [its]

trade secrets,” Title Source must have planned “to be doing this” all along. (HouseCanary

closing 3/14/2018 PM 20-21). But attorney argument is not evidence, and a verdict cannot be

based upon mere assertions. Nor did HouseCanary show any reliance on any particular

representation or inducement to enter the contract, as opposed to its own desire to make a sale.

C. HouseCanary’s claims sound—if at all—only in contract.

Both HouseCanary’s fraud and TUTSA claims fail as a matter of law for yet another

reason: they are not tort claims at all, but sound only in contract, because they depend on the

existence of a contract and seek to recover for economic loss. Further, under the one satisfaction

rule, HouseCanary can recover only under one of its three overlapping theories of liability.

Consequently, the verdict on Jury Question Nos. 11, 14, 38, and 41 should be set aside.

Texas law squarely prohibits plaintiffs from recovering tort damages “when damage

allegedly resulting from the defendant’s tortious conduct is limited to the loss of a contractual

benefit.” ConocoPhillips Co. v. Koopmann, 542 S.W.3d 643, 664 (Tex. App.—Corpus Christi

2016), aff’d on other grounds, No. 16-0662, 2018 WL 1440639 (Tex. Mar. 23, 2018), reh’g

denied (June 22, 2018) (citing Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445

S.W.3d 716, 718 (Tex. 2014) (per curiam); Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494

(Tex. 1991)). A two-prong test applies. First, “if the defendant’s conduct . . . would give rise to

liability only because it breaches the parties’ agreement, the plaintiff’s claim ordinarily sounds

only in contract.” DeLanney, 809 S.W.2d at 494. Second, “[w]hen the only loss or damage is to

the subject matter of the contract, the plaintiff’s action is ordinarily on the contract.” Id. Each

prong is independently sufficient to bar an action in tort. See Chapman, 445 S.W.3d at 718 .

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 47


Under the first prong, the question is whether HouseCanary’s claims depend on “the fact

that a contract exists between the parties.” DeLanney, 809 S.W.2d at 494. That is plainly the

case here. This dispute grew out of a $5 million contract between the parties. In HouseCanary’s

closing argument, its counsel asserted that “the same facts” supported its fraud, breach of

contract, and misappropriation claims against Title Source: “Basically we say that that they took

our trade secrets, information we disclosed to them about our models, they took our data that we

had given them.” (HouseCanary closing 3/14/2018 PM 20). Indeed, HouseCanary’s

overarching theory of the case is that Title Source misused its trade secrets in violation of the

“duty to maintain secrecy . . . to limit use” in the parties’ contracts. Id. at 42.

For instance, HouseCanary repeatedly argued that Title Source improperly reverse

engineered HouseCanary’s trade secrets. See, e.g., (HouseCanary closing 3/14/18 PM 22-25).

But even if true, which it is not, reverse engineering is expressly permitted by TUTSA. See Tex.

Civ. Prac. & Rem. Code Ann. § 134A.002(4) (“‘Proper means’ means discovery by . . . reverse

engineering unless prohibited”). HouseCanary’s real complaint is thus that Title Source

allegedly violated provisions of the parties’ contracts that prohibited reverse engineering. See

(HouseCanary closing 3/14/18 PM 42 (“Reverse engineering, when you’ve signed contract after

contract specifically agreeing not to reverse engineer, is improper.”)); see also DX1085

§ II(2)(A)(vi) (prohibiting reverse engineering of “Confidential Information”); PX3, Ex. C, ¶ 3

(prohibiting reverse engineering of “any analytics, metrics, or reports”).

As demonstrated above, Title Source did not reverse engineer HouseCanary’s

confidential information. But, in any event, because the alleged reverse engineering “give[s] rise

to liability only because it breaches the parties’ agreement,” HouseCanary’s claim “sounds only

in contract.” DeLanney, 809 S.W.2d at 494. Because HouseCanary’s TUTSA and fraud claims

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 48


are both based on alleged violations of the parties’ contracts—misuse of HouseCanary’s

purported trade secrets––they both fail as a matter of law and must be rejected.13

HouseCanary’s claims are also independently barred by the second prong of DeLanney

because they seek to recover for economic loss “to the subject matter of the contract.” 809

S.W.2d at 494-95. Based on the calculations of HouseCanary’s damages expert, the jury

awarded the exact same damages—$201.6 million for the value of the trade secrets or $64.1

million for use of the trade secret––for HouseCanary’s TUTSA and breach of contract claims.

See Ex. B (Jury Verdict Form), Qs. 39, 43–45. And the jury awarded the same damages—lost

profits of $33.8 million—for HouseCanary’s fraud and breach of contract claims. See id. Qs. 13,

28.

HouseCanary cannot, of course, recover twice for the same injury—let alone thrice (for

misappropriation, fraud, and breach of contract based on the same facts and alleged injury),

which is what it is seeking to do here. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7

(Tex. 1991). Where, as here, “any damages suffered” from misappropriation derive from

contractual obligations, the “claims sound only in contract,” Ally Fin., 2014 WL 261038, at *10,

and the “one satisfaction rule . . . limits a plaintiff’s recovery to one of several overlapping

theories,” Myriad Dev., Inc. v. Alltech, Inc., 817 F. Supp. 2d 946, 983 (W.D. Tex. 2011).

13
See e.g., Ally Fin., Inc. v. Gutierrez, No. 02-13-00108-CV, 2014 WL 261038, at *10 (Tex.
App.—Fort Worth Jan. 23, 2014) (affirming summary judgment because “the trade secret
was acquired through a breach of a confidential relationship,” which could not occur “apart
from [the] alleged breach of a contractual provision”); Educ. Mgmt. Servs., 2014 WL
12586781, at *2 (dismissing TUTSA claim “[b]ecause the Plaintiff has not alleged facts
establishing the breach of any legal duty independent of the non-disclosure agreement” and
the claim thus “sounds only in contract”).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 49


This dispute here arises out of a contract, is governed by a contract, and is limited by

principles of contract law. As a result, the misappropriation and fraud recoveries must be struck

on this additional ground, leaving only the contract claim.

D. HouseCanary’s contract claims fail as a matter of law.

HouseCanary also does not have legally sufficient evidence on its breach of contract

claims. HouseCanary claimed, and the jury found, that Title Source breached all three of the

parties’ agreements—the Non-Disclosure Agreement, the Master Software License Agreement,

and Amendment Number One to the Master Software License Agreement. See Ex. B (Jury

Verdict Form), Qs. 17, 23, 30, 36. Just like the TUTSA and fraud claims, each of

HouseCanary’s contract claims boils down to the same unproven theory of misappropriation

(which is again why the one satisfaction rule applies to prevent duplicative recovery).

(HouseCanary closing 3/14/2018 PM 20). As a fallback, HouseCanary also advanced the theory

that Title Source failed to comply with the agreements’ notice-and-cure provisions. See Ex. B

(Jury Verdict Form), Q. 36.

As demonstrated above, see supra pp. 20-45, there is no evidence of reverse engineering

or any other misuse of HouseCanary’s trade secrets in building MyAVM—in fact, the unrebutted

evidence conclusively establishes the opposite—with no evidence of any harm resulting from

any alleged misuse. See McLaughlin, Inc. v. Northstar Drilling Techs., Inc., 138 S.W.3d 24, 27

(Tex. App.—San Antonio 2004, no pet.) (breach of contract claims require proof of damages).14

14
HouseCanary did not separately prove breach of the MSLA, either, because that agreement
related only to the appraiser app. See PX2 § A (defining “Licensed Software” as the
“proprietary software application known as HouseCanary Appraiser”). The MSLA
prohibited reverse engineering of the appraiser app—not the value reports, which were not
included in the contract until Amendment One. Id., Ex. A, § 2.4 (prohibiting reverse
(Cont’d on next page)
PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 50
Nor is there any evidence that Title Source failed to comply with the notice-and-cure

provisions. Again, the evidence affirmatively forecloses that conclusion. Title Source was

entitled by contract to “immediately terminate” the parties’ agreements if the appraisal app’s

“uptime”—or the ability to use it to access and complete appraisals—fell below 90% for two

consecutive months. PX3, Ex. D, § 2. The evidence affirmatively demonstrated that at no point

during the parties’ two year relationship could Title Source’s appraisers use the app to access and

complete appraisals in the field, as it lacked key features required to complete appraisals. See

infra pp. 80-83. As a result, HouseCanary failed to satisfy the uptime requirement, allowing

Title Source to terminate the contract.

As evidence of “uptime,” HouseCanary pointed to a report that monitored whether

HouseCanary’s servers were responsive. DX182 (“Pingdom” report). Even assuming this report

was properly admitted (and Title Source respectfully submits that it was not), it at most

established that the server hosting the app’s Application Programming Interface was reachable.

As HouseCanary’s witnesses admitted, the report provided no information about whether the app

itself was functional. (Rhyne 3/6/18 AM 165-70). The evidence was thus another red-herring; it

is insufficient to establish that HouseCanary satisfied the “uptime” requirement, Title Source was

well within its rights to “immediately terminate” the agreements, and HouseCanary’s contract

claims fail for that reason, too.

(Cont’d from previous page)

engineering of the “Licensed Software”); see PX3 (Amendment One) § 2 (granting license in
“the HouseCanary Value Report”). All of HouseCanary’s purported evidence of reverse
engineering is based on the value reports. With no allegation that Title Source misused the
app—unsurprising given that Title Source could not “use” the app at all—there is necessarily
no evidence of any breach of the MSLA, either.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 51


II. The jury’s massive damages award is contrary to law and cannot stand.

HouseCanary failed to carry its burden of proving liability on any claim as to any trade

secret—much less all five—and liability is otherwise precluded as a matter of law. But the

record-breaking damages award fails for the independent reason that it is based solely on wildly

speculative opinion testimony that is no evidence of damages. See, e.g., Hunter, 436 S.W.3d at

17 (reversing and rendering based on legally insufficient evidence of damages even while

“presum[ing], without deciding, that the Trade Secrets were trade secrets” and “misappropriated”

by the defendants).

Texas courts routinely grant JNOV where, as here, “the underlying factual basis” of an

expert’s damages opinion is “merely speculative,” Aquila Sw. Pipeline, 48 S.W.3d at 246, or

“based on assumed facts that vary materially from the actual, undisputed facts,” Houston

Mercantile Exch. Corp. v. Dailey Petroleum Corp., 930 S.W.2d 242, 248 (Tex. App.—Houston

[14th Dist.] 1996, no writ). This Court should do the same.

A. The compensatory damages are speculative, unsupported, and contrary to


law.

Because HouseCanary had no evidence of any use of any alleged trade secret by Title

Source, see supra at pp. 20-22, its damages expert, Walter Bratic, was hard pressed to show any

harm to HouseCanary. Instead of relying on objective measures of value in the record, Bratic

resorted to wholly unsupported assumptions to conjure hundreds of millions dollars in supposed

damages. As demonstrated below, even minimal scrutiny shows that Bratic’s opinions are

legally erroneous, contrary to the record, and no evidence.

1. Bratic’s calculations are purely speculative and no evidence of


damages.

Bratic’s opinion is no evidence of damages because it is just the “ipse dixit of a

credentialed witness.” Coastal, 136 S.W.3d at 232.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 52


Bratic’s astronomical damages opinion was based on merely two years of expected use of

the trade secrets. (Bratic 3/9/18 PM 127-28 (“I then assumed it would be a two-year time period

for which they would be running these transactions to measure the value of the trade secrets to

TSI as an investor.”)). To support his claim that Title Source could expect to receive over $200

million in value from merely two years of use, Bratic conjured numbers out of thin air,

disregarded the actual contract price of merely $5 million, and committed other serious errors, in

an effort to maximize damages over this short two-year period. (E.g., Bratic 3/12/18 AM 80).

a. Bratic impermissibly ignored objective evidence of value.

Both of Bratic’s misappropriation opinions—the $201.6 million reasonably prudent

“investor” opinion, and the $64.1 million “reasonable royalty” opinion (Bratic 3/9/18 PM 183)—

woefully overvalue the purported trade secrets and fly in the face of the objective evidence and

market reality.15 This is a case where “damages may be ascertained with precision . . . because

the parties previously agreed on the value [and] an industry standard provides a clear measure.”

Sw. Energy Prod. Co., 491 S.W.3d at 711. The bargained-for contract price for Title Source’s

use of all of HouseCanary’s technology and data (not just its “trade secrets,” and including its

15
In addition, Bratic’s “reasonably prudent investor” opinion is legally barred by TUTSA,
which only allows for damages that reflect “the actual loss . . . and the unjust enrichment
caused by misappropriation,” or in the alternative, the “imposition of liability for a
reasonable royalty.” Tex. Civ. Prac. & Rem. Code Ann. § 134A.004; see also Sw. Energy,
491 S.W.3d at 711 n.7 (“Remedies available under the Act include injunctive relief; damages
measured by actual loss plus unjust enrichment not included in computing actual loss; a
reasonable royalty; and exemplary damages capped at two times actual damages.”).
Although the common law allowed damages for misappropriation to be measured by “the
value a reasonably prudent investor would have paid for the trade secret,” see Sw. Energy,
491 S.W.3d at 711, TUTSA “displaces conflicting tort, restitutionary, and other law of this
state providing civil remedies for misappropriation of a trade secret.” Tex. Civ. Prac. &
Rem. Code Ann. § 134A.007. Because the legislature chose to expressly list some—but not
all—of the measures of damages available under common law, this provision acts to prohibit
the recovery of the omitted measures, including the “reasonably prudent investor” theory.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 53


never-delivered, supposedly revolutionary app) was $5 million a year—nothing remotely

approaching Bratic’s figures. (See Bratic 3/12/18 AM 80). The record, moreover, shows that

competing AVMs are available for free (Bratic 3/12/18 AM 48-49), and that HouseCanary itself

licensed two different AVMs from Black Knight for unlimited use, along with all of Black

Knights’ data, for less than $1 million per year, id. at 27-29. The record further shows that Title

Source paid $1.2 million per year to FNC, another technology vendor, for use of Compinator, the

AVM that HouseCanary was supposed to replace, along with a suite of other products. Id. at 37,

120.

Bratic was not free to disregard this objective evidence of value, see Sw. Energy Prod.,

491 S.W.3d at 720-21, and yet that is precisely what he did. Bratic’s opinion that the alleged use

of HouseCanary’s trade secrets would be worth tens of millions, or even more than $100 million,

per year strains credulity—and his baseless opinion is no evidence. Without competent evidence

to support the damages, the verdict cannot stand.16

b. Bratic’s damages opinions were unconnected to any


purportedly harmful conduct.

In addition, Bratic’s opinions were fundamentally unsound because he failed to establish

any “causal link between the improper use of trade secrets and [his] damages” opinions.

Lakeway Reg’l Med. Ctr., 2017 WL 672451, at *14. HouseCanary’s witnesses and technical

experts only identified one purported “improper use” of trade secrets that they alleged caused

16
It is preposterous to think that the value of HouseCanary’s purported trade secrets to just one
customer (Title Source) is more than 100 times the total revenue that HouseCanary earned
for the sale of all of its products (not just those containing these alleged trade secrets) to all
of its customers over the same period. Indeed, the “the actual revenues that HouseCanary
made on [its] products containing the trade secrets was $627,095 . . . in 2016.” (Bratic
3/12/18 AM 86). And, for the first seven months of 2017, HouseCanary made a “little over”
$1 million in revenues for all of its products. Id.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 54


harm to HouseCanary—Title Source’s development of MyAVM.17 But Bratic did not value

MyAVM or otherwise claim to connect his damages opinion with this purported use of trade

secrets. Rather, Bratic claimed to value what Title Source would have paid (either as a

“reasonably prudent investor” or in a “reasonable royalty”) for the trade secrets in January of

2015. (E.g., Bratic 3/9/18 PM 132). But even if Bratic had record support for his speculative

claims about what Title Source was willing to pay in early 2015—and he did not—these claims

had no connection whatsoever to any purported harmful use of HouseCanary trade secrets.

Misappropriation damages must flow from the allegedly harmful use—an expert cannot

invent damages when none exist. Lakeway Reg’l Med. Ctr., 2017 WL 672451, at *14 (claimants

must show “a causal link between the improper use of trade secrets and the plaintiff's damages,”

and “[w]ithout that causal link, [claimants] cannot succeed on a claim for misappropriation of

trade secrets”). Thus, to support his damages opinion, Bratic was obligated to show “that the

alleged misappropriation of trade secrets, as opposed to other factors,” caused actual economic

loss to HouseCanary. Hunter Bldgs. & Mfg., 436 S.W.3d at 20 (citing Rusty’s Weigh Scales &

Service, Inc. v. North Texas Scales, Inc., 314 S.W.3d 105, 111 (Tex. App.—El Paso 2010, no

pet.)); Speedemissions, Inc. v. Capital C Enterprises, Ltd., No. 01-07-00400-CV, 2008 WL

4006748, at *6 (Tex. App.—Houston [1st Dist.] Aug. 28, 2008, no pet.) (claim that harm from

misappropriation “is not necessarily subject to exact quantification” was legally insufficient to

support trade secrets claim). He failed to do so.

Bratic did not offer any “causal link” between the alleged improper use in MyAVM and

his damages opinions—indeed, he did not connect his opinions to any improper trade secret use

17
Of course, as already explained, see supra pp. 20-45, HouseCanary’s own experts ultimately
admitted that no HouseCanary trade secrets were used in MyAVM after all.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 55


at all. See Lakeway Reg’l Med. Ctr., 2017 WL 672451, at *14 (claimant must show “a causal

link between the improper use of trade secrets and the [claimant]'s damages”). Bratic’s opinion

represented the hypothetical value that he believed Title Source would have expected to receive

if it had misappropriated all five trade secrets in early 2015. (Bratic 3/9/18 PM 132 (“I had to

measure the value to TSI at the time of the alleged misappropriation.”)). To support his claim

that Title Source would have paid hundreds of millions dollars for these secrets in January of

2015 (his erroneous “time of misappropriation”), he claimed that Title Source expected at that

time to use the HouseCanary trade secrets millions of times in the “generation of [a] values

report [sic],” either for itself or a third party, Quicken Loans. Id. at 126; (Bratic 3/12/18 AM 52-

53 (Bratic admits that “[a]ll of these numbers that [he] provided to the Jury were the

expectations” of Title Source at the time of misappropriation, not actual values)).

But there was no connection between these hypothetical “value reports,” or the purported

“expectations” of Title Source in early 2015, and any improper use of HouseCanary’s purported

trade secrets, let alone use in MyAVM. Indeed, Bratic admitted that he did not understand which

trade secrets even existed, much less what the harm from their improper use would be. For

example, when asked “[a]re any of your damage analysis based on the regression AVM,” he

answered “I don’t know what you’re referring to when you refer to ‘regression AVM’” (Bratic

3/12/18 AM 46)—despite HouseCanary’s claim that the “Regression AVM” is one of its trade

secrets.

Simply put, Bratic—and HouseCanary—did not even “attempt[] to measure” what harm,

if any, befell HouseCanary from the alleged misappropriation of its purported trade secrets.

Hunter Bldgs., 436 S.W.3d at 21 (failing to “measure” harm flowing from specific trade secret

misappropriation mandates judgment against trade secret claim). Thus, even if some trade secret

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 56


was misappropriated (and it was not), Bratic’s opinions are no evidence of any damages that

resulted. See Lakeway Reg’l Med. Ctr., 2017 WL 672451, at *14 (“Even if we assume that

[claimants] provided [defendants] with trade secrets, that a confidential relationship was

breached, and that a trade secret was used or disclosed improperly, . . . [claimants] did not show

a sufficient causal link between” misappropriation and damages, and “[w]ithout that causal link,

[claimants] cannot succeed on a claim for misappropriation of trade secrets”).

c. Bratic’s calculation of nearly 14 million uses in “value reports”


is pure speculation.

Bratic’s opinion was not only wholly divorced from HouseCanary’s theory of improper

use, but his patently unrealistic claims about the value Title Source purportedly expected to

derive from the trade secrets were based on a host of implausible and wildly speculative

assumptions. Each of these assumptions is now considered in turn.

Bratic first assumed, contrary to record evidence, that a reasonably prudent investor

would be willing to pay for high-volume use of an AVM on a per-use basis, even though a

HouseCanary executive testified that “[i]t doesn’t make sense to pay transaction by transaction”

for bulk uses of information. (Stroud 2/26/18 PM 200). Bratic then assumed—in a conjecture

this Court called “very speculative” and “a stretch” (Bratic Robinson 1/24/18 PM 89)—that Title

Source would expect to use the trade secrets to generate nearly 14 million “value reports” a year,

with 95 percent of those unsubstantiated uses attributed to Quicken Loans Inc., a separate

corporate entity that is not a party to this case. Ex. C (Bratic Presentation), at 15; (Bratic 3/9/18

PM 127; id. at 160). He arrived at that staggering number by adding: (1) his estimate that Title

Source “facilitates” 660,000 appraisals annually and (2) 13.2 million unsubstantiated expected

uses on behalf of Quicken Loans bankers. Ex. C (Bratic Presentation), at 15. But the evidence

supports neither figure.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 57


Although Bratic assumed that Title Source uses HouseCanary’s AVMs (and every other

trade secret) as part of every appraisal it completes, (Bratic 3/12/18 AM 59), the undisputed

evidence established that AVMs are never used when completing an appraisal. Indeed, the

record is clear that such use is prohibited by the professional rules and regulations governing

appraisers to protect the integrity of the appraiser’s thought process. (Brocker-Querio 2/6/18

AM 16). Bratic acknowledged this, but speculated that even if appraisers cannot “use the AVM

to prepare the final appraisal opinion,” “it doesn’t mean you wouldn’t use an AVM in the

appraisal process.” (Bratic 3/9/18 PM 98). But Bratic cannot rely solely on his own say-so in

asserting that each appraisal that Title Source facilitated would use automated valuation

technology. An expert cannot “improperly presume[] that every [product] sold”—i.e., every

appraisal estimate or appraisal report ever created—is the result of misappropriation based on his

mere ipse dixit. Hunter, 436 S.W.3d at 20. Indeed, Bratic admitted that approximately 90% of

the 660,000 appraisals that Title Source facilitates annually are performed by independent panel

appraisers over whom TSI has no control (Bratic 3/12/18 AM 66-68), and it was pure speculation

for Bratic to assume that any of these independent appraisers would use any of HouseCanary’s

trade secrets in performing their work. Bratic’s reliance on the speculative and unsupported

660,000 number renders his opinion no evidence from the outset.

Bratic’s 13.2 million figure is even more speculative. To reach this figure, Bratic started

with an internal HouseCanary document suggesting that HouseCanary intended its transmission

pipeline to be able to handle up to 50,000 Value Reports per day. DX499; (Bratic 3/9/18 PM

104-05; Sicklick 3/7/18 AM 122-23 (testifying this was the maximum capacity or bandwidth of

HouseCanary’s pipeline for value reports)). But even if this did represent the maximum number

of value reports that HouseCanary could produce, there is no evidence that anyone—Title

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 58


Source, HouseCanary, or anyone else—expected to actually use this maximum capacity each and

every day. By Bratic’s estimate, Title Source accounted for only 660,000 appraisals per year

(approximately 2,750 uses per business day);18 thus, Bratic had to turn to wild assumptions about

Quicken Loans to support his claim that Title Source somehow expected to use valuation trade

secret technology 13.8 million times a year.

Because there was no competent evidence of how and to what extent nonparty Quicken

Loans actually uses any AVM, let alone a Title Source AVM, Bratic could only speculate.

Based solely on an internal HouseCanary email suggesting that Quicken Loans’ bankers

sometimes process 2,000 bulk purchase leads per hour, DX988, Bratic assumed that Quicken

Loans’ bankers use an AVM for each bulk purchase lead and do so 24 hours per day. (Bratic

3/9/18 PM 106-07).19 But Bratic admitted that he had no basis for this claim other than his bare

“assum[ption] that Quicken Loans orders a value report every time [it] receives a customer

inquiry or buys bulk leads.” (Bratic 3/12/18 AM 54).20

18
Bratic calculated his usage numbers based on an assumption of “[t]wenty business days a
month,” i.e., 240 business days per year. (Bratic 3/9/18 PM 110).
19
A “bulk purchase lead” is a list of prospective customers purchased from “some other
company.” (Bratic 3/9/18 PM 105).
20
Bratic repeatedly agreed that his calculation of 13.2 million uses was nothing more than an
assumption. See, e.g., (Bratic 3/12/18 AM 54) (“Q. Well you assumed 55,000 per day? A.
Yes) (emphasis added); id. at 54-55 (“Q. Combined you included 55,000 purchased bulk
leads and customer inquiries that you assumed TSI would provide an AVM value or Value
Report for, right? A. Yes.”) (emphasis added); id. at 52 (“[F]or the other two transactions, the
bulk purchase leads and customer inquiries, I assumed that TSI would be generating the
Value Reports.”) (emphasis added).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 59


An expert cannot “assume” his way into hundreds of millions of dollars in liability.21

There is no evidence that Quicken Loans uses a Title Source AVM for any bulk purchase lead.

But Bratic would have this Court believe, based solely on his say-so, that every cold call to a

purchased lead results in a successful contact with someone who turns out to be actually

interested in a mortgage from Quicken Loans; that each discussion involves the use of an

AVM—and every other trade secret—regardless of whether there is any reason to do so; and that

this uninterrupted streak of success occurs with 2,000 new customers every hour of the day,

including in the middle of the night. See (Bratic 3/12/18 AM 116-17). This assumption is in fact

directly contrary to testimony from Title Source that it expected Quicken Loans to use an AVM

for only a small subset of prospective clients—only for refinance loans, and only for those that

reach the loan application stage. See, e.g., (Germany 2/26/18 AM 23-26) (explaining that there

is “a huge dip in people who are actually interested in doing a mortgage” between the lead

generation stage and the loan application stage)).22

But Bratic was not done assuming. He then piled on an assumption that Quicken Loans

would use the AVMs and other trade secrets an additional 5,000 times a day in response to

21
Bratic has previously been excluded as an expert for precisely this sort of sloppiness. See
Interplan Architects, Inc. v. C.L. Thomas, Inc., 2010 WL 4065465, at *7 (S.D. Tex. Oct. 9,
2010) (excluding Bratic’s damages testimony in copyright case because “Plaintiff is required
to do more than simply identify the Infringing Stores and designate all revenue from those
stores as a result of the alleged infringement”).
22
On top of that, Bratic’s 660,000 figure already covers actual appraisals involving all of Title
Source’s clients, including Quicken Loans. (Bratic Robinson 1/24/18 PM 19-24 (admitting
he could be “double-counting”)).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 60


“customer inquiries.”23 (Bratic 3/9/18 PM 109-10). This brings his total for Quicken Loans to

an “assumed 55,000 [uses] a day,” actually exceeding the 50,000 maximum system capacity that

was his lodestar. (Bratic 3/12/18 AM 54). But again, but there is no actual evidence that

Quicken asks Title Source to use an AVM when responding to any, let alone every, customer

inquiry.

Bratic’s speculation about Quicken Loans transactions is not only unfounded and

contrary to undisputed evidence—there is also no evidence showing that any transaction

benefiting Quicken Loans provides monetary gain to Title Source. Bratic never explained how

or why Title Source would expect to receive hundreds of millions of dollars in additional profit

for uses of trade secrets by “Quicken loan bankers” (Bratic 3/9/18 PM 99-100)—and there is no

evidence that Title Source receives even a penny of value for any transaction performed for

Quicken Loans. That is why the Court was precisely right when it observed that the inclusion of

transactions involving Quicken Loans was “very speculative” and “a stretch.” (Bratic Robinson

1/24/18 PM 89-90).

Implicitly recognizing that it cannot, and should not, recover damages here based on

Quicken Loans’ supposed use, HouseCanary has filed a separate lawsuit asserting the same

alleged misappropriation against Quicken Loans in federal court. HouseCanary, Inc. v. Quicken

Loans, Inc., No. 3:18-cv-01672-WHA (N.D. Cal. filed Mar. 16, 2018, voluntarily dismissed,

May 25, 2018, ECF No. 37); HouseCanary, Inc. v. Quicken Loans, Inc., No. 5:18-cv-00519-FB,

(W.D. Tex. filed May 25, 2018). Any liability on the part of Quicken Loans may be (and as a

23
“Customer inquiries” includes anybody who “logs on to the Quicken Loans web site on the
Internet or calls the 800-number and inquires, ‘What’s your interest rate?’ or ‘What’s your
loan terms?’” (Bratic 3/12/18 AM 53).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 61


matter of fundamental fairness and due process should be) resolved in that litigation, and such

speculative damages must be eliminated from the verdict here as a matter of law.

d. Bratic’s $11 per-transaction value is speculative and no


evidence.

Bratic then completed his inflated and unsupported damages calculation by multiplying

the nearly 14 million unsubstantiated uses of all five HouseCanary trade secrets by an $11 per

use figure that has no basis in evidence or reality and is contradicted by the undisputed evidence.

To invent his $11 figure, Bratic relied on a bullet point in an email indicating that in 2015 Title

Source was paying some unspecified “outside vendor $11 to get an AVM.” (Bratic 3/9/18 PM

116) (citing DX36)). But he ignored the uncontroverted record evidence that this was a limited,

highly specialized use of a composite of multiple AVMs “outside of the production workflow”

(i.e., the business of appraisals and mortgage lending) and was used only for an idiosyncratic,

limited purpose (defending against repurchase demands by investors challenging loans and the

removal of private mortgage insurance). (Petkovski 2/20/18 PM 16-17). Indeed, the very same

email on which Bratic relies goes on to say that “it would obviously be cost prohibitive to use

this service for each of the hundreds of thousands of leads bankers work,” but that is precisely

the use Bratic assumed for his hypothetical $11-per-transaction AVM. DX36.

Bratic’s claim is illogical. The fact that Title Source would pay a high $11 price for an

idiosyncratic, special-purpose AVM is not evidence that it would pay the same price for an

everyday AVM, just as a couple’s splurge on a special dinner for their anniversary is not

evidence that they spend as much for every meal, every day. Indeed, the fact that Title Source

was unwilling to pay $11 for an everyday AVM (a price it described as “cost prohibitive” for

such a use) affirmatively demonstrates that it did not value such an AVM at $11 per use. After

all, the standard Bratic was purporting to apply required him to assess what a reasonably prudent

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 62


investor would pay for the technology. Sw. Energy, 491 S.W.3d at 711 (claimant must show “the

value a reasonably prudent investor would have paid for the trade secret”). And his “evidence”

is an email stating that Title Source would not pay such a nonsensical amount for the bulk use of

an AVM.

The absurdity is further illustrated by comparison to market reality. See supra pp. 53-54.

Most importantly, as described above, Title Source paid merely $5 million per year to use

HouseCanary’s AVMs—along with the Appraiser App and other related products—an unlimited

number of times. See PX3 § 2.2 & Ex. E (providing license to “specified data and analytics in

the categories summarized in Exhibit E . . . for [Title Source’s] internal purposes” including

HouseCanary’s “Leading edge AVM’s”). The actual contract between the parties negates any

need for Bratic’s guesswork, because it proves the parties valued everything HouseCanary could

provide—including the (never-finished) app, not just the supposed trade secrets—at a bulk rate

of $5 million a year. (Bratic 3/9/18 PM 161). Where, as here, a contract offers “objective

evidence from which more certainty can be gleaned, it is incumbent on the [claimant] to produce

that evidence” and rely on it when calculating damages—and Bratic’s failure to do so is a

“critical misstep.” Sw. Energy, 491 S.W.3d at 720 (reversing trade secret damages award that

ignored evidence of the actual value paid under contract).

Even if the parties did expect that Title Source would use HouseCanary’s trade secrets

13.86 million times (and, as explained, they did not), that would mean each transaction was

impliedly valued at 36 cents—not $11. Either way, Bratic’s damages calculations are legally

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 63


erroneous and no evidence.24 As the Texas Supreme Court has held, “relying on imagination is

not justified when objective evidence is available,” and here the parties’ contract, as well as

record evidence on the market price for unlimited uses of AVM products, was “objective

evidence that . . . bears directly on ‘the amount that a person desiring to use the trade secret

would be willing to pay for its use.’” Sw. Energy, 491 S.W.3d at 721. Bratic instead based his

opinions on speculative assumptions that are not only untethered to the facts, but starkly at odds

with them, and with demonstrable market reality. His opinion is thus no evidence, and as there is

no legally sufficient basis for the damages award based on his opinion, it cannot stand.

e. Bratic’s alternative “reasonable royalty” calculation is


similarly speculative and no evidence.

As an alternative, Bratic opined that Title Source would have been willing to pay a

“reasonable royalty” of $64.1 million for two years of use of HouseCanary’s trade secrets. This

calculation suffers from the same fatal flaws as his primary measure. It was based on the same

speculative number of uses, as discussed above, and runs counter to the same objective evidence

demonstrating how the parties, in fact, valued a license for the alleged trade secrets. It also

suffers from numerous independent flaws.

Bratic began his alternative analysis with the acknowledgement that (despite his earlier

$11 figure) HouseCanary charges customers $3 to $4 per use for small volume purchases of

value reports (50 reports). (Bratic 3/9/18 PM 116-17). Using $3.50 per use as the midpoint

24
Bratic made no attempt to explain why each of the five trade secrets on the jury charge,
lumped together, were worth $11 every time they were used. He also admitted that he has no
evidence connecting the $11 to any current product. (Bratic 3/12/18 AM 76). As explained
above, see supra pp. 54-57, the calculations also combine all of the trade secrets into one
“value,” without any evaluation of the worth of any individual trade secret.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 64


figure (Bratic 3/12/18 AM 77), and the same number of uses, he then calculated what he called

“reasonable royalties” of $64.1 million (Bratic 3/9/18 PM 74).

If anything, Bratic’s alternative value-per-use figure of $3.50 further discredits the $11

per use figure, because it shows that not even HouseCanary values its trade secrets at that absurd

price. But even this $3.50 figure is itself speculative and disconnected from reality.

First, while HouseCanary’s website does offer members of the general public “50 value

reports” per month at a price that is “about 3.50 or so” per report (Bratic 3/12/18 AM 77), the

website also makes clear that “large volume” corporate users would be eligible for a customized

“enterprise plan” price. Id. at 79. Bratic admitted that Title Source would be eligible for one of

these bulk purchase plans, id., and thus would not be charged the $3.50. It belies record

evidence and common sense to equate, as Bratic does, the pricing offered for 50 uses with the

pricing for 14 million uses. Second, Bratic ignores the fact that this pricing is for entire Value

Reports—comprehensive reports containing up to eight pages of information—and he provided

no explanation as to why the various trade secrets (whose outputs make up only small pieces of a

Value Report) would be worth the same as a full Value Report itself. Id. at 17-18. And there is

no evidence that Title Source ever created and used value reports or ever planned to. Even

Bratic’s alternative royalty analysis is fatally flawed.

Further, since both the $11 and the $3.50 per use values conjured by Bratic are based on

other products, they provide no evidence of damages under Texas law. In Texas, an expert

cannot claim that the cost to license one product should be the “reasonable royalty rate” to

license another, unless those products are actually the same. Sw. Energy, 491 S.W.3d at 720.

Particularly important here, a royalty rate must be derived from evidence reflecting the actual

value of the trade secret at issue, and not the cost to license something else. Id. That is only

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 65


common sense—and this case proves the point. Why would the parties agree to $3.50—the

average retail cost for consumers to download a few Value Reports per month—when

negotiating a huge contract for hundreds of thousands of transactions a month involving different

products? Bratic’s speculation defies both controlling precedent and common sense.25

f. Bratic claimed every trade secret was misappropriated before


it existed.

Bratic’s two alternative damage theories—“investment value” and “reasonable

royalty”—both depend on calculating the value that Title Source would have paid for the trade

secrets at the time of the alleged misappropriation (either to own the trade secrets wholesale

under the “investor” theory, or to license the trade secrets under the “reasonable royalty” theory).

In Bratic’s own words, his job was “to measure the value [of the secrets] to TSI at the time of the

alleged misappropriation.” (Bratic 3/9/18 PM 132 (emphasis added)). “[B]ecause the precise

value of a trade secret may be difficult to determine, the proper measure is to calculate what the

parties would have agreed to as a fair price for licensing the defendant to put the trade secret to

the use the defendant intended at the time the misappropriation took place.” Sw. Energy, 491

S.W.3d at 711 (emphasis added) (quotations omitted); see also Univ. Computing Co. v. Lykes-

Youngstown Corp., 504 F.2d 518, 536 (5th Cir. 1974) (“the law looks to the time at which the

misappropriation occurred to determine what the value of the misappropriated secret would be

to a defendant”) (emphasis added).

25
Moreover, Bratic offered no evidence to support his claim that $3.50 represents the value of
using all (or some, or one) of HouseCanary’s alleged trade secrets—he never attempted to
value the trade secrets on an individual basis at all and thus had no support for his lump-sum-
together valuation. There is no evidence that whatever is included in the “$3 to $4” “value
reports” relied on by Bratic (Bratic 3/9/18 PM 116-17) is equal to the value of the five trade
secrets submitted to the jury, as Sw. Energy requires, 491 S.W.3d at 720.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 66


But Bratic did not determine when any trade secrets were misappropriated, and thus

could not properly value any of them. Instead, he simply assumed—with no explanation—that

the misappropriation of every alleged trade secret began in “January 2015.” (Bratic 3/9/18 PM

132, 144 (“I understood the alleged misappropriation occurred shortly after the Master Services

License Agreement was executed.”)). This flawed understanding formed the basis for his entire

valuation. But there is no basis in the record to suggest that any of HouseCanary’s trade

secrets—much less all five on the jury charge—were misappropriated in January 2015. The

record conclusively established just the opposite, because some alleged trade secrets indisputably

did not exist in January 2015––and Title Source did not receive information related to trade

secrets until months later.26

Even if each of HouseCanary’s trade secrets were misappropriated at some later time (and

they were not), and even if each trade secret had some value to Title Source at that later time,

Bratic did not calculate this value—and thus his opinion is no evidence of damages. Id.; Sw.

Energy, 491 S.W.3d at 711 (value must be based on what “the defendant intended at the time the

misappropriation took place”).

g. Bratic’s period for measuring damages is similarly erroneous.

Bratic, moreover, claimed that Title Source would have expected to begin using

HouseCanary’s trade secrets in January of 2017, and expected to continue using them through

the end of 2018. (Bratic 3/9/18 PM 127-28). But he had no basis for either of these dates. There

26
(See, e.g., Rhyne 3/6/18 AM 112 (AVM outputs were not disclosed to Title Source until July
28, 2015); Rhyne 3/6/18 AM 134-35 (identifying DX759, sent in late December 2015, as the
critical disclosure of the similarity score); (Stroud 2/26/18 AM 125-26) (complexity score
proposal not shared until March 18, 2016); Rhyne 3/6/18 AM 112 (first disclosure of tiny
piece of data compilation was not until July 2015); HouseCanary Opening 1/31/18 AM 86
(describing PX64, sent on June 19, 2015, as the email disclosing the data dictionary that
would be used)).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 67


were no exhibits, testimony, or anything else that indicated that Title Source expected, “at the

time the misappropriation took place” (i.e., in January of 2015, by Bratic’s speculation), to use

trade secrets in 2017 and 2018. See Sw. Energy, 491 S.W.3d at 711.

Bratic chose the date range seemingly at random. He vaguely asserted that he chose

January 2017 because “in late 2016 TSI announced that it was bringing a––its AVM making it

available to customers in early 2017.” (Bratic 3/9/18 PM 127-28). But this “early 2017”

MyAVM date is wrong—implementation and actual use of MyAVM did not begin until August

2017. (C. Wang 2/28/18 PM 76-77). And whatever Title Source “announced” about MyAVM

“in late 2016” has no bearing on what Title Source expected almost two years earlier in January

2015 at the time of the alleged misappropriation. See Sw. Energy, 491 S.W.3d at 711 (damages

must reflect “a fair price for licensing the defendant to put the trade secret to the use the

defendant intended at the time the misappropriation took place”).

And by the time Bratic offered his opinion, HouseCanary had already publicly disclosed

all of its supposed trade secrets in January 2018, during the trial in this case—permanently

destroying their value. Accordingly, even assuming misappropriation, the damages clock started

in August 2017 and stopped in January 2018, for there cannot be ongoing harm from using what

is public.

Bratic’s opinion fails to base the expected period of use on any facts in the record, and

thus is no evidence of damages. See Houston Mercantile Exch. Corp., 930 S.W.2d at 248

(damages opinion was no evidence where expert provided no evidentiary basis to determine

whether the allegedly misappropriated products “were, in fact, [profitably used] for all, part, or

none of any month or other time period”).

* * *

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 68


It is well established that “damages cannot be based on the ipse dixit of a credentialed

witness.” Coastal, 136 S.W. 3d at 232. As the above review of the key components of Bratic’s

opinion shows, that is all he proffered. Neither the facts nor the law permit HouseCanary to

pocket hundreds of millions in compensatory damages based on expert opinion founded on

millions of unsubstantiated transactions, with no evidence of actual use, at a per-use value that

flies in the face of objective evidence and reality. There may be difficult cases about where to

draw the line between competent expert opinion and unsupported assertions, but this is not one

of them. Bratic’s testimony is legally inadequate to support judgment for HouseCanary on its

trade secrets claims. The compensatory damages in Jury Question Nos. 39, 43, 44, and 45

cannot stand.

2. The lost profit damages awards are speculative, unsupported, and


contrary to law.

Bratic also offered an opinion—which the jury inexplicably adopted for both fraud and

breach of contract damages—calculating HouseCanary’s lost profits at $33.8 million for each

claim (after discounting to net present value). See Ex. B (Jury Verdict Form), Qs. 13 (fraud), 28

(breach of Amendment One). This opinion is as baseless as the others. “A party seeking to

recover lost profits must prove the loss through competent evidence with reasonable certainty.”

Atlas Copco Tools, Inc. v. Air Power Tool & Hoist, Inc., 131 S.W.3d 203, 206 (Tex. App.—Fort

Worth 2004, pet. denied). Lost-profits opinions “must be based on objective facts, figures, or

data from which the amount of lost profits can be ascertained.” Id. Bratic’s opinion, in contrast,

is sheer speculation and conjecture. It is no evidence, and the lost profits damages in Jury

Question Nos. 13 and 28 must be set aside.

Bratic calculated lost profits by adding together (1) what Title Source would have paid to

HouseCanary if the contract had remained in place for three years, minus his estimate of

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 69


HouseCanary’s costs, and (2) projected profits that HouseCanary would earn from independent

appraisers who, he believed, would adopt the (never-delivered) appraisal app merely because

Title Source chose to use it. Ex. C (Bratic Presentation), at 66-68.

Bratic’s calculation of alleged lost profits under the contract fails as a matter of law.

Bratic used a three-year contract term to calculate lost profits, reasoning that absent breach, Title

Source would have paid HouseCanary the $5 million per year contract price for the full term of

the contract. (Bratic 3/9/18 PM 164). But as he acknowledged, there was no guarantee the

contract would remain in effect that long. Id. To the contrary, Amendment One specifically

included a provision allowing either party to terminate the contract on purely discretionary

grounds after one year. PX3 § 7.3. It was thus impermissibly speculative for Bratic to calculate

lost profits beyond the contract’s first year, particularly given the fact that the parties’

relationship ended during the first year. See, e.g., Atlas Copco Tools, Inc., 131 S.W.3d at 206–09

(expert’s lost-profits calculation speculative because it assumed contract that automatically

renewed every year would be renewed for six consecutive years despite letter terminating

contract); United Way of San Antonio, Inc. v. Helping Hands Lifeline Found., Inc., 949 S.W.2d

707, 711–12 (Tex. App.—San Antonio 1997, writ denied) (“[T]he mere hope for funding

renewable at the discretion of another party will not support recovery of any future funds the

other party could withhold at its discretion.”).

There was no reason to assume that the contract would have continued for an additional

two years when, in fact, it ended during the first year. As a result, Title Source would have paid

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 70


HouseCanary, at most, $5 million for the first year of the contract, not the $15 million that Bratic

assumed.27

Bratic added an additional $29,357,641 to his already inflated damages calculation based

on profits he asserted HouseCanary would have obtained from independent contractors. Ex. C

(Bratic Presentation), at 67. The parties’ contract required Title Source to “make the Licensed

Software available” for use by its appraisers, including those appraisers that it hires as

independent contractors. PX2 (MSLA) § 5.1. Bratic assumed, without record support, that by

2018 50% of the independent appraisers who work with Title Source—10,000 appraisers—

would decide to use HouseCanary’s app to conduct appraisals for other clients (i.e., other

companies not including Title Source). (Bratic 3/9/18 PM 169-71; Bratic 3/12/18 AM 72-73).

He then estimated that these independent appraisers would conduct 4,079,167 additional

appraisals with HouseCanary’s app over three years, at an estimated profit of $7.20 per appraisal

completed on the app.28 Ex. C (Bratic Presentation), at 67; (Bratic 3/9/18 PM 171).

27
Bratic, moreover, assumed that HouseCanary would have a profit margin of 95% on the
contract. This assumption is contradicted by the very evidence from which he purportedly
derived it—an internal summary of HouseCanary’s projected revenue (DX245) that referred
to “95%+ marginal economics.” (Bratic 3/9/18 PM 173). The document itself (plus simple
math) conclusively establish that, at best, HouseCanary’s profit margin was projected to be
around 76-80%—not 95%. At worst—i.e., if HouseCanary was unable to obtain additional
contracts––its profit margin would be negative. See DX245.
28
To estimate the profit from the independent appraisers, Bratic took the $5 million contract
with Title Source (ignoring that the contract price covers a number of other products) and
divided it by the 660,000 appraisals a year conducted by Title Source to conclude that each
appraisal was worth $7.58. (Bratic 3/9/18 PM 176-77). Plugging in his speculative 95%
profit margin, Bratic calculated that HouseCanary would earn $7.20 of profit from each
appraisal conducted using the HouseCanary app. Multiplying this number by the 4.1 million
additional hypothetical appraisals, Bratic concluded that independent appraisers would
generate $29,357,641 in additional revenue for HouseCanary. Id. at 177; Ex. C (Bratic
Presentation), at 67.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 71


But Bratic’s reliance on the acts of third parties suddenly jumping on the HouseCanary

bandwagon is wholly unsupported. See, e.g., Ramco Oil & Gas Ltd. v. Anglo-Dutch (Tenge)

L.L.C., 207 S.W.3d 801, 824–25 (Tex. App.—Houston [14th Dist.] 2006 (pet. denied)

(concluding evidence of lost profits legally insufficient because “Plaintiffs’ proof of lost profits

is largely speculative, dependent on uncertain and changing market conditions, and based on

risky business opportunities and the success of an unproven enterprise”).29 The likelihood that

these 4 million appraisals would ever occur depends on a host of unknown factors—not the least

of which is how much the independent appraisers would actually like the app, a functional

version of which was never delivered to Title Source—not to mention the price HouseCanary

might charge the appraisers to use it.

Bratic’s calculation further assumed that the adoption by independent appraisers (and

thus the lost profits) would grow over three years, when as a matter of law it was improper for

him to assume continuation of the contract after the first year. And his calculation of profit per

appraisal is not only tenuous, but also rife with internal inconsistency.30

Title Source cannot be held liable for lost profits based on this wildly speculative and

legally infirm set of assumptions which turn on the behavior of third parties outside of its

control. Because Bratic’s lost-profits opinion lacks any “objective, evidence-based support for

its conclusions,” Merrell, 313 S.W.3d at 840, it is no evidence of damages.

29
His conjecture that “50%” of appraisers would start using the app is the ultimate example of
pulling assumptions and numbers out of thin air. (Bratic 3/9/18 PM 169-71). This is nothing
more than mere guesswork.
30
Bratic’s estimate of profit per appraisal (calculated by dividing the $5 million contract by
660,000 appraisals, see supra note 28) is entirely inconsistent with his prior argument that the
contract contemplated that Title Source could pull up to 50,000 value reports a day, which of
course would result in markedly less profit per use.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 72


3. The jury’s damages award for breach of contract and fraud cannot
exceed the contractual cap.

The parties’ contract contained a bargained-for damage cap that should be enforced in the

event that a verdict on liability stands (and it should not). The parties limited contract damages

to $2 million, and prohibited consequential damages. PX2, Ex. A, §§ 10.1-10.2; PX3 § 8.

HouseCanary offered no argument or explanation why the damage cap should not have been

enforced. While the cap does not apply in cases of misappropriation, there is no evidence such

conduct occurred here. And, in any event, HouseCanary cannot have it both ways. If

HouseCanary’s fraud and breach of contract claims are mere repackaging of its misappropriation

claim, which is indeed the case, all three theories cannot stand under the one satisfaction rule.

But if the breach and fraud claims are independent, they are limited to the contractual cap of $2

million.

4. The jury’s alternative measures of contract damages are legally


erroneous.

As discussed above, HouseCanary claimed, and the jury found, that Title Source

breached all three of the parties’ agreements—the Non-Disclosure Agreement, the Master

Software License Agreement, and Amendment One to the Master Software License Agreement.

At HouseCanary’s counsel’s suggestion, the jury awarded, as contract damages, the trade secret

damages of $201.6 million and $64.1 million for these alleged contractual breaches (in addition

to the $33.8 million separately awarded for breach of Amendment Number One in Question No.

28).31 See Ex. B (Jury Verdict Form), Qs. 28, 43–45. The $201.6 million and $64.1 million

figures represent, respectively, Bratic’s opinion on the investor “value” of the HouseCanary trade

31
Because each of these awards is also duplicative of the award for misappropriation, it is
undisputed that HouseCanary cannot recover this same amount on all four claims
(misappropriation and the three breach of contract claims)—it can at most recover for one.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 73


secrets to Title Source and his calculation of a “reasonable royalty” for the use of such trade

secrets, which are highly speculative and provide no evidence of damages as discussed above.

(Bratic 3/9/18 PM 183).

These sums are not recoverable as a matter of law as a measure of damages for breach of

contract. Indeed, such measures are inappropriate for valuing breach of contract damages

because they “are governed by different theories.” Smith v. Nelson, 53 S.W.3d 792, 795 (Tex.

App.—Austin 2001, pet. denied). Contract damages typically “restore the non-breaching party

to the same economic position in which it would have been had the contract not been breached––

thus giving the party the benefit of its bargain.” Statewide Bank & SN Servicing Corp. v. Keith,

301 S.W.3d 776, 785–86 (Tex. App.—Beaumont 2009, pet. abated). In other words, contract

damages focus on the value of the contract to the non-breaching party.

In contrast, the trade secret damages Bratic employed here––value of the trade secret and

reasonable royalty measures—focus on the value to the misappropriating party. See Sw. Energy,

491 S.W.3d at 711 (describing these damages theories as measuring “[v]alue to the defendant”

and “a proxy for the value of what the defendant appropriated”). As a result, these awards were

legally impermissible, because these calculations focus on different measures—one on the loss

of a contract expectancy, the other on the unrealized gain to the defendant. Compare Statewide

Bank, 301 S.W.3d at 785–86 (discussing expectation damages), with Sw. Energy, 491 S.W.3d at

711, 726 (discussing trade secret damages). The jury’s damages award in Question Nos. 28, 43,

44, and 45 must be set aside.

Even if liability were to stand (and it should not), HouseCanary cannot recover on its

numerous overlapping theories and its wildly speculative damages figures. Instead, what started

out as a contract case should end as a contract case, and at most HouseCanary should recover

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 74


damages caused by the alleged breach of the confidentiality provisions of the contract. The

alleged breach did not destroy the value of the purported trade secrets, and it did not reduce their

value in the market (as Title Source neither sells its AVM outputs to third parties nor prevents

HouseCanary from marketing theirs to other users). As a result, the entirety of the damages in

this action can be nothing more than the value HouseCanary would have received under the

contract—the contract price of $5 million per year for the two year useful life of its purported

trade secrets.

B. The jury’s grossly excessive punitive damages award violates Texas law and
the federal Constitution.

After awarding compensatory damages of $235.4 million, the jury added a whopping

$470.8 million in punitive damages. This record-breaking award is based on emotion and

caprice, violates both Texas law and the U.S. Constitution, and must be set aside.

1. The punitive damages award violates Texas law.

Punitive damages “are proper only in the most exceptional cases.” Transp. Ins. Co. v.

Moriel, 879 S.W.2d 10, 18 (Tex. 1994). TUTSA authorizes punitive damages only where a

plaintiff proves “willful and malicious misappropriation . . . by clear and convincing evidence.”

Tex. Civ. Prac. & Rem. Code Ann. § 134A.004. This demanding standard requires “intentional

misappropriation resulting from the conscious disregard of the rights of the owner of the trade

secret.” Id. § 134A.002(7). Punitive damages for fraud similarly require proof by clear and

convincing evidence that the harm results from fraud or malice. Tex. Civ. Prac. & Rem. Code

Ann. § 41.003(a). And malice requires evidence of “a specific intent by the defendant to cause

substantial injury or harm.” Id. § 41.001(7).

Texas law is clear that “the intent to commit the tort alone cannot justify an award of

exemplary damages.” Eagle Oil & Gas Co. v. Shale Expl., LLC, No. 01-15-00888-CV, --

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 75


S.W.3d --, 2018 WL 1870081, at *18 (Tex. App.—Houston Apr. 19, 2018) (“[I]ntentional

misappropriation and misuse of . . . trade secrets is not legally sufficient evidence of malice.”)

(emphasis added). Instead, a plaintiff must prove that the defendant “specifically intended” to

inflict “substantial injury that was ‘independent and qualitatively different’ from the

compensable harms associated with the underlying causes of action.” Horizon Health Corp. v.

Acadia Healthcare Co., 520 S.W.3d 848, 867 (Tex. 2017) (citation omitted). Without this

limitation, “exemplary damages would be recoverable as a matter of course in every

misappropriation case, rather than the exceptional case involving egregious misconduct and

injury.” Eagle Oil, 2018 WL 1870081, at *19.

HouseCanary failed to present any evidence—much less clear and convincing evidence—

that Title Source willfully and maliciously misappropriated HouseCanary’s trade secrets or

otherwise acted with malice. See Horizon Health, 520 S.W.3d at 867. HouseCanary’s counsel

told the jury that “this case is about lying and stealing and cheating,” (HouseCanary closing

3/14/18 PM 62), but lawyer’s argument is not evidence of anything, much less of malice. See

Smith v. O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009) (“the strict standard for proving malice

was not met” by “conclusory statements from [claimant’s] expert and . . . counsel”).

Beyond the alleged “evidence of the tort itself,” Horizon Health, 520 S.W.3d at 867,

HouseCanary “failed to pinpoint any evidence . . . that [Title Source] specifically intended to

harm [HouseCanary].” Myriad Dev., 817 F. Supp. 2d at 976 (emphasis added). There was no

evidence, for example, that Title Source was plotting to drive HouseCanary out of the market.

Nor did any such harm ever befall HouseCanary.

HouseCanary also failed to offer clear and convincing evidence that Title Source engaged

in intentionally fraudulent or malicious conduct in connection with Amendment One. It could

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 76


not because, as already demonstrated, the evidence conclusively establishes that before

Amendment One was signed, Title Source disclosed to HouseCanary that it was developing its

own model and was interested in finding out “what’s behind” the complexity valuation and

complexity score. See supra pp. 28-29. This evidence precludes any argument that Title Source

engaged in intentionally fraudulent or malicious conduct in connection with Amendment One.

Because “there is no evidence of a specific intent to harm [HouseCanary], much less of

an intent to cause substantial injury,” Rusty’s Weigh Scales, 314 S.W.3d at 112, the jury’s

punitive damages award violates Texas law and cannot stand.

2. The punitive damages award violates the U.S. Constitution.

The Due Process Clause “prohibits the imposition of grossly excessive or arbitrary

punishments on a tortfeasor” and requires “the measure of punishment [to be] both reasonable

and proportionate to the amount of harm to the plaintiff and to the general damages recovered.”

State Farm, 538 U.S. at 416, 426. See U.S. Const. amend. XIV, § 1. “Elementary notions

enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of

the conduct that will subject him to punishment, but also of the severity of the penalty that a

State may impose.” BMW N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996). Because “[p]unitive

damages pose an acute danger of arbitrary deprivation of property,” “[e]xacting review ensures

that an award of punitive damages is based upon an application of law, rather than a

decisionmaker’s caprice.” State Farm, 538 U.S. at 417–18.

Courts must be particularly vigilant to ensure that punitive damages do not violate the

Constitution when, as here, counsel inflames the jury and plays to their emotions.

HouseCanary’s counsel explicitly invited the jury to send a message to “Corporate America.”

(HouseCanary closing 3/14/18 PM 72). In urging the jury to “write in double the amount” of

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 77


compensatory damages as punitive damages, HouseCanary brazenly claimed that “this [case]

isn’t about settling the disputes between one party and another. This is about you telling the

United States of America . . . that this . . . is where we draw the line on corporate unethical

behavior.” Id. at 71-72. HouseCanary further asked the jury to “stand[ ] up and . . . tell[ ]

Corporate America, I’ve had enough of this” by putting this case “in the Wall Street Journal.”

Id. at 72. It is in circumstances precisely like these that punitive damages are most likely to cross

constitutional lines. Indeed, the Supreme Court has held that “[a] defendant should be punished

for the conduct that harmed the plaintiff, not for being an unsavory individual or business,” let

alone for perceived deficiencies of all of corporate America. State Farm, 538 U.S. at 423.

To determine whether a punitive damages award is unconstitutionally excessive, courts

must carefully consider three factors: “(1) the degree of reprehensibility of the defendant’s

misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and

the punitive damages award; and (3) the difference between the punitive damages awarded by

the jury and the civil penalties authorized or imposed in comparable cases.” State Farm, 538

U.S. at 418. The first two factors cut squarely against the jury’s massive punitive damages

award, while the third does not apply (as there are no civil penalties for TUTSA or fraud).

Title Source’s conduct lacks the requisite reprehensibility. In assessing reprehensibility,

courts weigh five factors. State Farm, 538 U.S. at 419. “The existence of any one of these

factors weighing in favor of a plaintiff may not be sufficient to sustain a punitive damages

award; and the absence of all of them renders any award suspect.” Id. While due process

requires courts to conduct an “[e]xacting review” of punitive damages awards, id. at 417–18, in

this case little analysis is needed to see that each State Farm factor cuts decisively against the

requisite finding of reprehensibility:

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 78


(1) The alleged harm was purely economic, not physical. See id. at 419.

(2) Title Source did not act with “indifference to or a reckless disregard of the health
and safety of others.” Id.

(3) HouseCanary lacks any special financial vulnerability—it is backed by


sophisticated and wealthy investors in Silicon Valley and across the nation. Id.;
(Sicklick 3/7/18 AM 25-28).

(4) There is no evidence that Title Source “repeatedly engaged in prohibited conduct
while knowing or suspecting that it was unlawful,” BMW, 517 U.S. at 576, as this
is the only misappropriation case ever brought against Title Source and there is no
prior trade secrets violation.

(5) There is no evidence of any specific intent to harm HouseCanary––much less to


cause substantial injury. See State Farm, 538 U.S. at 419.

Because there is no reprehensibility here, the punitive damages award cannot stand.

The punitive damages are otherwise excessive. State Farm holds that where

“compensatory damages are substantial, then a lesser ratio, perhaps only equal to compensatory

damages, can reach the outermost limit of the due process guarantee.” Id. at 425 (emphasis

added). That is the case here, where compensatory damages totaling $235.4 million are

“substantial” by any measure and—unless they are drastically reduced—will still be

“substantial.” See, e.g., Lompe v. Sunridge Partners, LLC, 818 F.3d 1041, 1073–75 (10th Cir.

2016) ($1.95 million substantial); Boerner v. Brown & Williamson Tobacco Co., 394 F.3d 594,

602–03 (8th Cir. 2005) ($4 million substantial despite “highly reprehensible conduct”). At a

bare minimum, the punitive damages must be no more than half of compensatory damages.

The factors that could justify a higher ratio—an “injury that is hard to detect” or a

“particularly egregious act [that] has resulted in only a small amount of economic damages”—

are conspicuously absent here. See BMW, 517 U.S. at 582. As those factors indicate, one

purpose of the ratio analysis is to ensure that punitive damages achieve their important purposes

while not veering into arbitrariness or caprice.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 79


Indeed, because this dispute arises out of a garden-variety commercial dispute about a $5

million contract with a $2 million damages cap—with zero evidence of any use of the alleged

trade secrets by Title Source, according to HouseCanary’s own expert, and zero evidence of

harm to HouseCanary—any punitive damages would be excessive so long as compensatory

damages are awarded. Such damages would already be sufficient to satisfy the twin purposes of

punitive damages—to punish and deter—and heaping punitive damages on top would be

arbitrary. See Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 21 (1991) (punitive damages awards

may “not exceed an amount that will accomplish society’s goals of punishment and deterrence”).

The punitive damages award violates principles of fair notice. Imposition of the

punitive damages aware would also violate principles of fair notice. Title Source could not

reasonably have known that the dissolution of its business relationship with HouseCanary would

subject it to nearly half a billion dollars in punitive damages imposed by the State of Texas over

alleged trade secrets that it never used, BMW, 517 U.S. at 574, let alone that it would be

punished to send a message to all of corporate America.

III. Title Source is entitled to JNOV on its claim that HouseCanary breached
Amendment One.

The only true breach of contract in this case is HouseCanary’s failure to deliver the

revolutionary product it promised. In its final act, HouseCanary again used smoke and mirrors to

distract the jury from reality—this time, by showing the jury a present-day version of the app

that is nothing like the non-functional product that existed when the contract required delivery.

But the record evidence shows that HouseCanary never delivered a functioning product to Title

Source.

Under Section 4 of Amendment One, HouseCanary committed to having its appraisal app

“deployed in [the] field” by November 1, 2015. PX3 § 4. As explained in Title Source’s partial

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 80


motion for summary judgment and motion for directed verdict, “deploy[ment]” required a

functional product that could be used by appraisers in the field––not just a test version. See Ex.

D, Pl’s. Directed Verdict Mot. 4-8, Mar. 12, 2018; Ex. E, Pl’s Partial Summ. J. Mot. 14-16, Dec.

29, 2017. Even if the deadline were some other “reasonable time,” see DeClaris Assocs. v.

McCoy Workplace Sols., L.P., 331 S.W.3d 556, 563 (Tex. App.—Houston [14th dist.] 2011, no

pet.), the undisputed evidence established that the app was never “deployed in [the] field” at any

point during the parties’ relationship: No appraiser ever used the app to complete and submit an

appraisal for Title Source. (Brocker-Querio 2/6/18 PM 28).

That is because HouseCanary never gave Title Source an app that could function to

complete appraisals in the field. “[W]hen one party to a contract commits a material breach of

that contract, the other party is discharged or excused from further performance.” Bartush-

Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432, 436 (Tex. 2017). The

materiality analysis should focus on “the nature of [the] agreement,” not the “various component

parts.” Computize, Inc. v. Longhorn Packaging Inc., No. 04-03-00138-cv, 2004 WL 86143 at *2

(Tex. App.—San Antonio Jan. 21, 2004) (mem. op.).

Here, the “nature” of the agreement was for HouseCanary to deliver an app that Title

Source’s appraisers could actually use to complete appraisals in the field, not to experiment with

in hopes of one day using. Because the app was intended to replace existing software employed

to complete the four most common forms used by appraisers and required by Fannie Mae, it is

hardly surprising that HouseCanary’s CEO admitted that he knew “having those [forms]

complete [would] be critical to rolling [the app] out across Title Source.” (Sicklick 3/8/18 AM

146 (emphasis added)); see PX133. Yet HouseCanary admittedly failed to deliver an app that

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 81


could complete three of the four forms, constituting an independent material breach. (Poindexter

3/2/18 AM 82-83; Rhyne 3/6/18 PM 140).

So too with the “mobile sketch” feature, which was needed for the appraiser to draw or

“sketch” floor plan drawings, without which “appraisals couldn’t be completed.” (Poindexter

3/2/18 AM 82; Rhyne 3/6/18 PM 140). Because the absence of that feature made it impossible

for the app to complete appraisals, it “prevent[ed] the parties from accomplishing the purpose of

the contract.” Noble Energy, Inc. v. ConocoPhillips Co., 532 S.W.3d 771, 777 (Tex. 2017).

HouseCanary’s failure to provide mobile sketch was another material breach.

HouseCanary did not deny that its appraisal app was incomplete and non-functional—it

even acknowledged (internally) that Title Source’s “criticisms [were] fair,” and that Title Source

should not be expected to pay for the app as it existed in March 2016. PX309. Implicitly

acknowledging that the deficiencies were material, HouseCanary tried to pin the blame for them

on anything but HouseCanary. Those excuses fail.

HouseCanary made much of the problems it had connecting the app to the system Title

Source used to manage appraisal assignments and submissions. See, e.g., (Rhyne 3/6/18 PM

143-44). But there was no evidence those problems prevented HouseCanary from delivering an

app that could complete appraisals. Indeed, HouseCanary’s own witnesses admitted that the

absence of a connection would not have prevented appraisers from completing an appraisal.

(Poindexter 3/1/18 PM 130).

HouseCanary also tried to excuse its breach by claiming it had deprioritized mobile

sketch and the three forms to perform additional requests from Title Source. E.g., (Poindexter

3/2/18 AM 32-34). But for that excuse to hold water, Title Source would had to have known

about HouseCanary’s claimed trade-off between the app’s foundational features and the

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 82


purportedly “extra” features. See R & R Marine, Inc. v. Max Access, Inc., 377 S.W.3d 789, 791

(Tex. App.—Beaumont 2012, no pet.) (“knowledge of all relevant facts” required). But

HouseCanary pointed to no evidence—because there is none—that Title Source understood it

was getting those “extra” features instead of mobile sketchwriting. PX2 at 12. Moreover, the

only “extra” features that HouseCanary identified at trial were things required by the contract all

along.32

The bottom line is that HouseCanary did not deliver a product that could be used to

complete and submit appraisals—thereby thwarting the basic purpose of the parties’ agreement

without any excuse for the failure to deliver. Title Source is entitled to judgment in its favor on

Jury Question No. 25, and to $8 million in damages for its breach-of-contract claim, (Ugone

2/28/18 AM 49); see also Ex. F (Ugone Presentation), at 68, as well as attorney’s fees.

PRAYER

For the foregoing reasons, Title Source respectfully requests that the Court disregard the

jury’s verdict on all issues submitted, render a take-nothing judgment against HouseCanary on its

counterclaims, render judgment in favor of Title Source on its breach of contract claim as to

Amendment One, and award Title Source damages in the amount of $8 million, plus interest and

costs as permitted by law. Title Source further requests the Court set for hearing the matter of

attorney’s fees to be awarded to Title Source. Title Source prays for such other relief to which it

may be entitled.

32
(See, e.g., Poindexter 3/1/18 PM 42; Poindexter 3/2/18 AM 33-34; Sicklick 3/9/18 AM 78).

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 83


Dated: July 11, 2018 Respectfully submitted,

/s/ Catherine M. Stone

David M. Prichard Catherine M. Stone


State Bar No. 16317900 State Bar No. 19286000
PRICHARD YOUNG LANGLEY & BANACK, INC.
10101 Reunion Place 745 E. Mulberry Avenue, Suite 700
Suite 600 San Antonio, TX 78212
San Antonio, TX 78216 Telephone: (210) 736-6600
Telephone: (210) 477-7401 Facsimile: (210) 735-6889
Facsimile: (210) 477-7450 cstone@langleybanack.com
dprichard@prichardyoungllp.com
Veronica S. Lewis
Peter S. Wahby State Bar No. 24000092
State Bar No. 24011171 Allyson N. Ho
Stephanie R. Smiley State Bar No. 24033667
State Bar No. 24066097 Andrew P. LeGrand
Samuel G. Davison State Bar No. 24070132
State Bar No. 24084280 GIBSON, DUNN & CRUTCHER, LLP
Allison M. Stewart 2100 McKinney Avenue
State Bar No. 24102538 Dallas, TX 75201-6912
GREENBERG TRAURIG, LLP Telephone: (214) 698-3100
2200 Ross Avenue, Suite 5200 Facsimile: (214) 571-2936
Dallas, TX 75201 vlewis@gibsondunn.com
Telephone: (214) 665-3673 alegrand@gibsondunn.com
Facsimile: (214) 665-3601
wahbyp@gtlaw.com Helgi C. Walker*
smileys@gtlaw.com GIBSON, DUNN & CRUTCHER, LLP
davisons@gtlaw.com 1050 Connecticut Avenue, N.W.
stewarta@gtlaw.com Washington, DC. 20036-5306
Telephone: (202) 955-8500
Manuel Peláez-Prada Facsimile: (202) 530-9595
State Bar No. 24027599 hwalker@gibsondunn.com
FLORES & PELÁEZ PRADA, PLLC *admitted pro hac vice
22211 IH-10 West, #1206
San Antonio, TX 78257 Jeffrey B. Morganroth*
Telephone: (210) 361-0070 MORGANROTH & MORGANROTH, PLLC
Facsimile: (210) 693-1312 344 North Old Woodward Ave., Suite 200
mpp@stormlex.com Birmingham, MI 48009
Telephone: (248) 864-4000
Facsimile: (248) 864-4001
jmorganroth@morganrothlaw.com
*admitted pro hac vice

Attorneys for Plaintiff Title Source, Inc.

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 84


CERTIFICATE OF SERVICE
I hereby certify that on the 11th day of July, 2018, the foregoing document was served on

the following counsel of record by email in accordance with the Texas Rules of Civil Procedure:

Max L. Tribble Wallace B. Jefferson


Matt Behncke ALEXANDER DUBOSE JEFFERSON
Rocco Magni TOWNSEND
SUSMAN GODFREY 515 Congress Avenue, Suite 2350
1000 Louisiana St., Suite 5100 Austin, Texas 78701-3562
Houston, TX 77002-5096 wjefferson@adjtlaw.com
mtribble@susmangodfrey.com
mbehncke@susmangodfrey.com Thomas R. Philips
rmagni@susmangodfrey.com BAKER BOTTS, LLP
98 San Jacinto Blvd., Suite 1500
Kalpana Srinivasan Austin, Texas 78701
SUSMAN GODFREY LLP tom.phillips@bakerbotts.com
1901 Avenue of the Stars, Suite 950
Los Angeles, CA, 90067-6029 Joshua A. Romero
ksrinivasan@susmangodfrey.com Megan Davis
JACKSON WALKER, LLP
Elisha Barron 100 Congress Avenue, Suite 1100
SUSMAN GODFREY LLP Austin, Texas 78701
1301 Ave. of the Americas, 32nd Floor jromero@jw.com
New York, NY 10019 Mndavis@jw.com
ebarron@susmangodfrey.com
Amanda Crouch
Ricardo Cedillo JACKSON WALKER, LLP
DAVIS, CEDILLO & MENDOZA, INC. 112 E. Pecan Street, Suite 2400
755 E. Mulberry, Suite 500 San Antonio, Texas 78205
San Antonio, TX 78212 Acrouch@jw.com
Telephone: (210) 822-6666
Facsimile: (210) 822-1151 J. Carl Cecere
rcedillo@lawdcm.com CECERE PC
6035 McCommas Blvd.
David M. Gunn Dallas, Texas 756206
BECK REDDEN LLP ccecere@cecerepc.com
1221 McKinney, Suite 4500
Houston, TX 77010
dgunn@beckredden.com

/s/ Catherine M. Stone


CATHERINE M. STONE

PLAINTIFF’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT Page 85