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CAUSE NO. 2023-77937
STEWART TITLE COMPANY, IN THE DISTRICT COURT OF
Plaintiff,
vs. § HARRIS COUNTY, TEXAS
QUALIA LABS, INC. d/b/a QUALIA, §
SOFTWARE, INC.
Defendant § 11 JUDICIAL DISTRICT
PLAINTIFF STEWART TITLE COMPANY
REPLY IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT
Pursuant to Rule 166a of the Texas Rules of Civil Procedure, Plaintiff Stewart Title
Company ( Plaintiff” or STC ) hereby files this Reply (“Reply”) in Support of its Traditional
Motion for Summary Judgment (“Motion”) on its causes of action for permanent injunctive and
declaratory relief against Defendant Qualia Labs, Inc. d/b/a Qualia Software, Inc. (“Defendant” or
“Qualia”), as follows:
NTRODUCTION
STC filed its Motion on January 12, 2024, to which Qualia filed a Response (“Response”)
on February 5, 2024.
Throughout its Response, Qualia urges the Court repeatedly to abate this lawsuit in favor
of an arbitration of the instant disputes. As STC has thoroughly rebutted these arguments, it
incorporates by reference its Response to Qualia’s Motion to Abate and Cross Motion to Stay and
Enjoin Arbitration, filed January 24, 2024,for the purpose of countering any assertion in Qualia’s
Response that these matters should be determined by arbitration, which is contrary to the express
language of the parties’ License Agreement.
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Regarding the merits of Qualia’s Response, the following discussion will demonstrate that
Qualia has failed to rebut any of the elements supporting STC’s application for a permanent
injunction barring Qualia from an at-will termination of the License Agreement.
Further, Qualia’s attempts to respond to STC’s application for declaratory relief fail
because Qualia misconstrues the case law it presents and misstates the plain text of the License
Agreement. Qualia may not re write the License Agreement to support its wrongful threat of
terminating the fully paid up, perpetual and irrevocable License Agreement. Moreover, the new
case law cited by Qualia actually supports STC’s position.
Consequently, the assertions in Qualia’s Response are unavailing and STC respectfully
requests that this Court enter summary judgment as requested in its Motion on its claims for
injunctive and declaratory relief.
ARGUMENT & AUTHORITIES
Qualia’s Response Fails to Rebut Any of the Elements Supporting STC’s Application
for Injunctive Relief.
At the outset, it is necessary to counter Qualia’s assertion that Section 13.3 of the License
Agreement’s statement that a party need not show imminent harm, irreparable injury, and no
adequate remedy at law to obtain injunctive relief is “insufficient under Texas law to support a
finding of irreparable harm for injunctive relief.” Response at 15. Actually, multiple courts have
found that, while not necessarily conclusive, “language in an agreement stating that breach of that
agreement will cause irreparable harm is some evidence of irreparable harm.” BioTE Med., LLC
v. Medcalf, No. 05-20-00661-CV, 2022 Tex. App. LEXIS 9604, at *18 (Tex. App.Dallas Dec.
30, 2022, no pet. h.) (reversing summary judgment because an agreement's injunctive relief
provisions, together with the company's officer's affidavit, were sufficient evidence); Argo Gr. US,
Inc. v. Levinson, 468 S.W.3d 698, 702 (Tex. App.San Antonio 2015, no pet.) (concluding
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language in agreement is some evidence that violation of noncompete may cause irreparable
injury); Poole v. U.S. Money Reserve, Inc., No. 09 CV, 2008 WL 4735602, at *8 (Tex.
App. Beaumont Oct. 30, 2008, no pet.) (mem. op.) (concluding language of agreement is one
consideration in analysis when reviewing temporary injunction).
e following discussion show that Qualia has failed to rebut any of the elements
supporting STC’s application for a permanent injunction barring Qualia from an at will
termination of the License Agreement.
Qualia Fails to Rebut the Fact that it Committed Wrongful Act By Threatening
To Terminate Irrevocable And Perpetual License
In its Response, Qualia argues that it “has not threatened to terminate the Agreement at
will but merely is seeking the guidance of an arbitration panel through a declara tory action as to
its right to potentially terminate the License Agreement. Response at 18 19. This revisionist history
does not fit the facts. As noted in STC’s Motion, Qualia informed STC by letter on January 24,
that desired to modernize Adeptive s agreements and was therefore giving notice of
termination and nonrenewal of the current License Agreement effective one year later on January
seeExhibit B, which was later moved by Qualia to July 24, 2024. Exhibit C at ¶ 7.
Only after STC protested that the License Agreement’s plain text stated that it was
“perpetual and irrevocable” did Qualia decide to pursue arbitration. Indeed, there would be no
arbitrable case or controversy had Qualia not threatened to terminate the License Agreement.
Qualia also paradoxically protests that it did not threaten to terminate the License
Agreement at will because the License Agreement is perpetual and thus terminable at will as it
alleges that it plans to prove in arbitration. Response at 18. It is a strange argument indeed to
Contrary to Qualia’s implications, STC filed its lawsuit in Harris County District Court unaware of the arbitration
demand, which STC did not receive notice of until after the lawsuit was filed
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assert that one has not threaten an act and then state that one has a legal right to commit that
very act and are currently engaged in arbitration with the goal of getting official relief to commit
that act.
th regard to the merits of Qualia’s strained interpretation of the durational term of the
License Agreement, this has already been addressed in STC’s Motion and is addressed further in
Section II.B.2 below.
Qualia Fails to Rebut the Fact that STC Faces Imminent Harm From Qualia’s
Threat To Terminate n “Irrevocable And Perpetual” License.
Regarding the imminent harm element Qualia argues that “Stewart’s fear or apprehension
of the possibility of injury is not sufficientStewart must prove that Qualia has attempted or
intends to harm Stewart. Response at 19. Again, like the tenant that reasonably fears imminent
harm approaching when in receipt of an eviction notice and an arbitration demand to rewrite a
lease to allow for eviction, here the imminent harm STC reasonably fears is a loss of access to
already purchased software STC uses to effectively operate its business
As Qualia notes, but apparently ignores, the imminent harm element is not legally
established through a showing that harm is mere seconds or hours away, but instead through a
showing that “Qualia will otherwise engage in the activity [to be] enjoined.” Response at 19 (citing
State v. Morales, 869 S.W.2d 941, 946 (Tex. 1994 While it is true that Qualia has not threatened
to turn the lights off next week, but instead in a few months in July 2024, that does not negate the
fact that STC faces the imminent loss of its rights to the already purchased, irrevocable and
perpetual license to use the software, and that Qualia has demonstrated through its letters,
arbitration demand, and pleadings in this matter that it has every intention of “otherwise engaging
in the activity” of terminating the License Agreement This litigation would not exist if Qualia had
no intention of terminating the License Agreement.
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Given the size and scope of STC’s business operations, and the deeply intertwined
dependency of those operations on Qualia’s software, a few months is far too little time for STC
to research, purchase, install, and train nearly 4,000 personnel on the use of an entirely new
software platform. Exhibit C at ¶¶ 34, 6 Such a transition would take years to implement.
Thus, while the harm is not imminent in the narrow sense Qualia apparently requiresa ticking
time bomb set to go off later todaythe timer is nevertheless set and, absent this Court’s
intervention, will go off causing incalculable damages, monumental harm, and enormous
disruption to its business if the License Agreement is terminated at will by Qualia prohibiting STC
from effectively operating its title and escrowbusiness
Qualia Fails to Rebut the Fact that STC Faces Irreparable Injury that Cannot
Be Adequately Compensated by Monetary Damages if Qualia Terminates the
“Irrevocable And Perpetual” License.
Qualia argues in its Response that STC does not provide competent summary judgment
evidence to prove its grandiose claims” that the harm STC would suffer in the wake of the License
Agreement’s termination would be “incalculable.” Response at 21 (emphasis in original). “An
irreparable injury is defined as an injury for which compensation cannot be made, or for which
compensation cannot be measured by any certain pecuniary standard TriStar Petroleum Co. v.
Tipperary Corp., 101 S.W.3d 583, 591 (Tex.App.El Paso 2003, pet. denied) (emphasis added)
First, the parties’ agreement clearly states that “in the event the affected party would be
unable to effectively operate its business, the affected party will be entitled to obtain injunctive
and all other similar relief from a court of competent jurisdiction, without being required to: (i)
show any actual damage or irreparable harm, (ii) prove the inadequacy of its legal remedies, or
(iii) post any bond or other security.” Exhibit A at ¶ 13.3(emphasis added).
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To the extent that Qualia demands a precise calculation of damages to show irreparable
injury or the lack of an adequate remedy at law (which again is not required under the License
Agreement), that contradicts the very purpose of injunctions to address harms that cannot be
monetarily compensated and are thus, by definition, are not to “be measured by any certain
pecuniary standard.” Id.
Secondly, the evidence submitted by STC in support of its Motion is not conclusory, but
explains clearly, by company officer Brad Rable under oath, why it would suffer irreparable harm
lack an adequate remedy at law if the License Agreement is terminated. As noted above and
at length in the Motion, Mr. Rable details in depth exactly how dependent STC is on the ResWare
software system and how devastating and disruptive a termination would be for the company. See
generally Exhibit C see also BioTE Med., 2022 Tex. App. LEXIS 9604, at *18 (reversing
summary judgment because an agreement's injunctive relief provisions, together with the
company's officer's affidavit, were sufficient evidence) Disruption to a business can be irreparable
harm. Lavigne v. Holder, 186 S.W.3d 625, 629 (Tex. App.Fort Worth 2006, no pet.) Occidental
Chem. Corp. v. ETC NGL Transp., LLC, 425 S.W.3d 354, 364 (Tex. App.Houston [1st Dist.]
2011, pet. dism'd) Liberty Mut. Ins. Co. v. Mustang Tractor & Equip. Co., 812 S.W.2d 663, 666
(Tex. App. Houston [14th Dist.] 1991, no writ); Miller v. Talley Dunn Gallery, LLC, No. 05
CV, 2016 Tex. App. LEXIS 2280, *24 (Tex. App. Dallas Mar. 3, 2016, no pet.)
("Disruption to a business can constitute irreparable harm.").
Moreover, the irreparable harm that cannot be adequately monetarily compensated that
STC would suffer is self evident in much the same way that a tenant does not need to marshal a
mountain of quantifiable data to prove that an eviction is an irreparable harm. Here, Qualia does
not deny that STC has widely implemented and integrated the ResWare software into its business
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operations for many years. The monumental harm that a sudden termination of access to that
software would cause to STC’s business is manifest to any reasonable observer, and further is
supported by an express provision in the text of the License Agreement and Mr. Rable’s affidavit
Exhibit C at ¶ 8; Exhibit A at § 13.3.
Qualia’s Response to STC’s Application for Declaratory Relief Misconstrues Case
Law and the License Agreement.
The Case Law Cited By Qualia in its Response Further Supports STC’s
Argument that the License Agreement is Not Terminable at Will.
In its Response, Qualia argues, in reference to Trient Partners I Ltd. v. Blockbuster
Entertainment Corp., 83 F.3d 704, 709 (5th Cir. 1996) (the case upon which Qualia primarily
relies), that STC’s case law analysis “misses … the public policy reason why contracts with
indefinite terms of duration are terminable at willperpetual contracts lock parties into
relationships and obligations that may become undesirable as facts or circumstances change.”
Response at 26.
Apparently Qualia overlooked the second paragraph on page 21 of STC’s Motion, which
squarely addresses this concern, noting that:
the public policy foundation of the Texas doctrine disfavoring indefinite contracts
to avoid the absurd outcome of forcing a business to stay in business against its will
identified by the Trient court does not exist here. STC simply desires to continue
the use of software upon which its business operations rely and for which it has
already paid and installed. This places no burden upon Qualia to stay in business
in perpetuity against its will. Instead, the circumstances are more akin to Nano
Proprietary, because granting a perpetual license to use software does no more to
interfere with a business’s decisions regarding its future operations than does a
license to use patents.
Motion at 21.
Similarly, in a new case cited by Qualia for the first time in any of its papers and
letters, Qualia cites Fluorine On Call, Ltd. v. Fluorogas Ltd., 380 F.3d 849, 855 (5th Cir.
LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE
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2004), for the proposition that the License Agreement is terminable at will. However, the
facts of Fluorogas are clearly distinguishable from the case at bar. Like Trient and
FirstBank, addressed in STC’s Motion, Fluorogas is distinguishable as it involved a
contract that “contained no express duration term,” whereas the License Agreemen
expressly states it is “irrevocable and perpetual.” Fluorogas, 380 F.3d at 853. Moreover,
the agreement in Fluorogas was an “exclusive” license to use the technology of Flourogas,
and “imposed significant obligations on Flourogas.” Id. at 857. By contrast, here there are
no continuing obligations of Qualia to do anything (as it is undisputed that STC does not
dispute Qualia’s right to terminate the “maintenance” services), and the License Agreement
is non exclusive. STC merely desires to continue using ResWare which it has paid millions
to use, and which has been installed and implemented across STC’s entire business
platform, used by STC’s approximate 4,000 employees. STC’s business could not
effectively operate without use of the software. See scussion at 3 4 of the Motion.
Indeed, the present facts far more closely match those of University Computing Co.
v. Leader Corp., 371 F.Supp. 86 (N.D. Tex. 1974), a case cited in Fluorogas (but not
mentioned by Qualia) to distinguish the circumstances when Texas law permits perpetual
contracts (as in Leader) and when it does not (as in Fluorogas). According to Fluorogas
the court in Leader determined that, “despite its indefinite duration, the contract was not
terminable at will.” Fluorogas, 380 F.3d at 857 (citing Leader, 371 F.Supp. at 89). Thus,
the non exclusive right to use the technology “does not impose any obligations on [the
licensor] for an indefinite period of time.” Id. (citing Leader, 371 F.Supp. at 88). The
Fluorogas court also noted that in the Leader the parties clearly “did not intend to create
an agreement terminable at the will of either party.”
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Like Leader and unlike Fluorogas, here the License Agreement is “nonexclusive,”
and there are no “significant obligations” on Qualia to do anything. The only continuing
obligation on the part of Qualia was found in the Maintenance Agreement addendum that
STC does not contest Qualia’s right to terminate. As in Leader, “[t]here is nothing in the
language of these contracts nor has there been any showing that the parties intended to limit
the duration of [the licens’s] use of the system.” Leader , 371 F.Supp. at 89. Moreover,
the term “perpetual and irrevocable” in the License Agreement clearly shows the parties
did not intend to create an agreement terminable at will. See Leader at 88 (license
agreement allowing use of the software “for an indefinite period of time” makes clear the
parties “did not intend to create an agreement terminable at the will of either party.”). Thus,
the key facts upon which the holdings in Fluorogas Leader turned starkly demonstrate
that the License Agreement in this matter is not terminable at will under Texas law.
Contrary to Qualia’s Strained Efforts to Rewrite the License Agreement, it
Expressly States that the Term of Duration is Irrevocable and Perpetual.
Qualia argues on page 28 of its Response that the “irrevocable and perpetual” language in
Section 2.1 of the License Agreement is “indefinite,” because
Adeptive granted an irrevocable and perpetual license to Stewart subject to the
‘Term’ in Section 9.1, but Section 9.1 fails to define the specific parameters of that
‘Term.’ Id. at §§ 2.1, 9.1. Without a definite term, the Agreement is terminable at
will under Texas law.”
Response at 28.
But Qualia misstates the language of the License Agreement. Section 2.1 does not state
that it is “subject to the ‘Term’ in Section 9.1.” Rather Section 2.1 states in part that:
Adeptive grants Customer and its Affiliates a world wide, non exclusive,
nonconcurrent, non transferable (except as provided herein), irrevocable and
perpetual (except as provided in Section 9 of this Agreement) license to: (i) install
and run the Software . . . .
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Exhibit A at § 2.1.
Qualia attempts to transform the phrase “except as provided in Section 9” into “subject to
the ‘Term’ in Section 9.1”. But Qualia cannot rewrite the agreement. The term of duration
irrevocable and perpetualis clearly stated in 2.1, whereas the provisions of Section 9 pertain to
termination for cause (by either party, which has not been triggered or alleged) and termination
for convenience by STC (which STC has not invoked). In other words, Section 2.1 is stating that
the License Agreement has an irrevocable and perpetual term of duration, except for instances
under Section 9.1 where it may be terminated for cause or for STC’s convenience. Thus, Section
9 does not have a term of duration because that term is enumerated in Section 2.1, and Section 9
instead pertains to termination. The fact that Section 9 does not repeat again the term of duration
or provide a second definition for the term of duration does not make the entire agreement
indefinite. To make such an interpretation is to improperly excise or ignore Section 2.1.
Qualia also asserts that a “perpetual” durational term cannot be a “term” by definition.
Response at 25 26. However, if this lay understanding of the word “perpetual” was as absolute in
the law as Qualia claims,there would be no cases in which a contract containing a perpetual term
was upheld in court. That is clearly not the case. See e.g., Nano Proprietary, Inc. v. Canon, Inc.
537 F.3d 394, 400 (5th Cir. 2008) (“Based upon the unambiguous meaning of ‘irrevocable,’ we
find that the PLA could not be terminated, notwithstanding a material breach of the agreement.
Otherwise, the terms of ‘irrevocable’ and ‘perpetual’ would be rendered superfluous, in
contravention of established rules of contract interpretation.”) Matter of Provider Meds, L.L.C.
907 F.3d 845, 856 (5th Cir. 2018) (“RPD is arguably correct that because the License granted
under the License Agreement was ‘perpetual,’ under Texas law, it was therefore not revocable at
will.”); City of Big Spring v. Bd. of Control, 404 S.W.2d 810, 815 (Tex. 1966) (holding that a
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perpetual contract was not of indefinite duration nor subject to termination at will); Leader
F.Supp.at 89 (the court held that the perpetual contract was nevertheless for a “definite duration”
and thus not terminable at will because there were no continuing successive obligations on the part
of the licensor).
Finally, Qualia’s efforts to revoke STC’s access to software it has already paid for flies in
the face of common sense and everyday experienceno one would tolerate a software company
suspending access to a word processor and demanding an exorbitant ransom in return for simply
using a program that is fully paid for and requires no further updates to function. Yet this is exactly
the position Qualia has taken, which is audaciously improper and contrary to law. See, e.g., In re
Pomerantz, No. 00CV0143, 2001 WL 514352, at *3 (Colo. Dist. Ct. Jan. 29, 2001), aff'd sub nom.
Pomerantz v. Microsoft Corp., 50 P.3d 929 (Colo. App. 2002) (license to use software in
perpetuity, in return for a single fixed payment, is the “functional equivalent of a sale”).
CONCLUSION AND PRAYER
In light of the foregoing and in consideration of the arguments presented in Plaintiff’s
Motion, Plaintiff respectfully requests that the Court grant summary judgment in favor of its
application for permanent injunctive and declaratory relief Plaintiff further requests that the Court
grant all such other and further relief, both general and special, in law or in equity, to which
may be justly entitled.
Dated: February 9, 2024 Respectfully submitted,
REENBERG RAURIG
/s/ Roland Garcia________
Roland Garcia
SBN 7645250
garciar@gtlaw.com
Steven Higginbotham
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SBN 24125274
higginbothams@gtlaw.com
1000 Louisiana Street, Suite 6700
Houston, Texas 77006
Tel. 713-374-3500
Fax 713-374-3505
ATTORNEYS FOR PLAINTIFF
STEWART TITLE COMP
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing was
forwarded to counsel of record via the Court’ - filing system onFebruary 9
__/s/ Roland Garcia________
Roland Garcia
LAINTIFF S EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE
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CAUSE NO. 2023-77937 STEWART TITLE COMPANY, IN THE DISTRICT COURT OF Plaintiff, vs. § HARRIS COUNTY, TEXAS QUALIA LABS, INC. d/b/a QUALIA, § SOFTWARE, INC. Defendant § 11 JUDICIAL DISTRICT PLAINTIFF STEWART TITLE COMPANY REPLY IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT Pursuant to Rule 166a of the Texas Rules of Civil Procedure, Plaintiff Stewart Title Company ( Plaintiff” or STC ) hereby files this Reply (“Reply”) in Support of its Traditional Motion for Summary Judgment (“Motion”) on its causes of action for permanent injunctive and declaratory relief against Defendant Qualia Labs, Inc. d/b/a Qualia Software, Inc. (“Defendant” or “Qualia”), as follows: NTRODUCTION STC filed its Motion on January 12, 2024, to which Qualia filed a Response (“Response”) on February 5, 2024. Throughout its Response, Qualia urges the Court repeatedly to abate this lawsuit in favor of an arbitration of the instant disputes. As STC has thoroughly rebutted these arguments, it incorporates by reference its Response to Qualia’s Motion to Abate and Cross Motion to Stay and Enjoin Arbitration, filed January 24, 2024,for the purpose of countering any assertion in Qualia’s Response that these matters should be determined by arbitration, which is contrary to the express language of the parties’ License Agreement. LAINTIFF S EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE 1 ACTIVE 693437828v3 Regarding the merits of Qualia’s Response, the following discussion will demonstrate that Qualia has failed to rebut any of the elements supporting STC’s application for a permanent injunction barring Qualia from an at-will termination of the License Agreement. Further, Qualia’s attempts to respond to STC’s application for declaratory relief fail because Qualia misconstrues the case law it presents and misstates the plain text of the License Agreement. Qualia may not re write the License Agreement to support its wrongful threat of terminating the fully paid up, perpetual and irrevocable License Agreement. Moreover, the new case law cited by Qualia actually supports STC’s position. Consequently, the assertions in Qualia’s Response are unavailing and STC respectfully requests that this Court enter summary judgment as requested in its Motion on its claims for injunctive and declaratory relief. ARGUMENT & AUTHORITIES Qualia’s Response Fails to Rebut Any of the Elements Supporting STC’s Application for Injunctive Relief. At the outset, it is necessary to counter Qualia’s assertion that Section 13.3 of the License Agreement’s statement that a party need not show imminent harm, irreparable injury, and no adequate remedy at law to obtain injunctive relief is “insufficient under Texas law to support a finding of irreparable harm for injunctive relief.” Response at 15. Actually, multiple courts have found that, while not necessarily conclusive, “language in an agreement stating that breach of that agreement will cause irreparable harm is some evidence of irreparable harm.” BioTE Med., LLC v. Medcalf, No. 05-20-00661-CV, 2022 Tex. App. LEXIS 9604, at *18 (Tex. App.Dallas Dec. 30, 2022, no pet. h.) (reversing summary judgment because an agreement's injunctive relief provisions, together with the company's officer's affidavit, were sufficient evidence); Argo Gr. US, Inc. v. Levinson, 468 S.W.3d 698, 702 (Tex. App.San Antonio 2015, no pet.) (concluding LAINTIFF S EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE 2 ACTIVE 693437828v3 language in agreement is some evidence that violation of noncompete may cause irreparable injury); Poole v. U.S. Money Reserve, Inc., No. 09 CV, 2008 WL 4735602, at *8 (Tex. App. Beaumont Oct. 30, 2008, no pet.) (mem. op.) (concluding language of agreement is one consideration in analysis when reviewing temporary injunction). e following discussion show that Qualia has failed to rebut any of the elements supporting STC’s application for a permanent injunction barring Qualia from an at will termination of the License Agreement. Qualia Fails to Rebut the Fact that it Committed Wrongful Act By Threatening To Terminate Irrevocable And Perpetual License In its Response, Qualia argues that it “has not threatened to terminate the Agreement at will but merely is seeking the guidance of an arbitration panel through a declara tory action as to its right to potentially terminate the License Agreement. Response at 18 19. This revisionist history does not fit the facts. As noted in STC’s Motion, Qualia informed STC by letter on January 24, that desired to modernize Adeptive s agreements and was therefore giving notice of termination and nonrenewal of the current License Agreement effective one year later on January seeExhibit B, which was later moved by Qualia to July 24, 2024. Exhibit C at ¶ 7. Only after STC protested that the License Agreement’s plain text stated that it was “perpetual and irrevocable” did Qualia decide to pursue arbitration. Indeed, there would be no arbitrable case or controversy had Qualia not threatened to terminate the License Agreement. Qualia also paradoxically protests that it did not threaten to terminate the License Agreement at will because the License Agreement is perpetual and thus terminable at will as it alleges that it plans to prove in arbitration. Response at 18. It is a strange argument indeed to Contrary to Qualia’s implications, STC filed its lawsuit in Harris County District Court unaware of the arbitration demand, which STC did not receive notice of until after the lawsuit was filed LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 assert that one has not threaten an act and then state that one has a legal right to commit that very act and are currently engaged in arbitration with the goal of getting official relief to commit that act. th regard to the merits of Qualia’s strained interpretation of the durational term of the License Agreement, this has already been addressed in STC’s Motion and is addressed further in Section II.B.2 below. Qualia Fails to Rebut the Fact that STC Faces Imminent Harm From Qualia’s Threat To Terminate n “Irrevocable And Perpetual” License. Regarding the imminent harm element Qualia argues that “Stewart’s fear or apprehension of the possibility of injury is not sufficientStewart must prove that Qualia has attempted or intends to harm Stewart. Response at 19. Again, like the tenant that reasonably fears imminent harm approaching when in receipt of an eviction notice and an arbitration demand to rewrite a lease to allow for eviction, here the imminent harm STC reasonably fears is a loss of access to already purchased software STC uses to effectively operate its business As Qualia notes, but apparently ignores, the imminent harm element is not legally established through a showing that harm is mere seconds or hours away, but instead through a showing that “Qualia will otherwise engage in the activity [to be] enjoined.” Response at 19 (citing State v. Morales, 869 S.W.2d 941, 946 (Tex. 1994 While it is true that Qualia has not threatened to turn the lights off next week, but instead in a few months in July 2024, that does not negate the fact that STC faces the imminent loss of its rights to the already purchased, irrevocable and perpetual license to use the software, and that Qualia has demonstrated through its letters, arbitration demand, and pleadings in this matter that it has every intention of “otherwise engaging in the activity” of terminating the License Agreement This litigation would not exist if Qualia had no intention of terminating the License Agreement. LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 Given the size and scope of STC’s business operations, and the deeply intertwined dependency of those operations on Qualia’s software, a few months is far too little time for STC to research, purchase, install, and train nearly 4,000 personnel on the use of an entirely new software platform. Exhibit C at ¶¶ 34, 6 Such a transition would take years to implement. Thus, while the harm is not imminent in the narrow sense Qualia apparently requiresa ticking time bomb set to go off later todaythe timer is nevertheless set and, absent this Court’s intervention, will go off causing incalculable damages, monumental harm, and enormous disruption to its business if the License Agreement is terminated at will by Qualia prohibiting STC from effectively operating its title and escrowbusiness Qualia Fails to Rebut the Fact that STC Faces Irreparable Injury that Cannot Be Adequately Compensated by Monetary Damages if Qualia Terminates the “Irrevocable And Perpetual” License. Qualia argues in its Response that STC does not provide competent summary judgment evidence to prove its grandiose claims” that the harm STC would suffer in the wake of the License Agreement’s termination would be “incalculable.” Response at 21 (emphasis in original). “An irreparable injury is defined as an injury for which compensation cannot be made, or for which compensation cannot be measured by any certain pecuniary standard TriStar Petroleum Co. v. Tipperary Corp., 101 S.W.3d 583, 591 (Tex.App.El Paso 2003, pet. denied) (emphasis added) First, the parties’ agreement clearly states that “in the event the affected party would be unable to effectively operate its business, the affected party will be entitled to obtain injunctive and all other similar relief from a court of competent jurisdiction, without being required to: (i) show any actual damage or irreparable harm, (ii) prove the inadequacy of its legal remedies, or (iii) post any bond or other security.” Exhibit A at ¶ 13.3(emphasis added). LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 To the extent that Qualia demands a precise calculation of damages to show irreparable injury or the lack of an adequate remedy at law (which again is not required under the License Agreement), that contradicts the very purpose of injunctions to address harms that cannot be monetarily compensated and are thus, by definition, are not to “be measured by any certain pecuniary standard.” Id. Secondly, the evidence submitted by STC in support of its Motion is not conclusory, but explains clearly, by company officer Brad Rable under oath, why it would suffer irreparable harm lack an adequate remedy at law if the License Agreement is terminated. As noted above and at length in the Motion, Mr. Rable details in depth exactly how dependent STC is on the ResWare software system and how devastating and disruptive a termination would be for the company. See generally Exhibit C see also BioTE Med., 2022 Tex. App. LEXIS 9604, at *18 (reversing summary judgment because an agreement's injunctive relief provisions, together with the company's officer's affidavit, were sufficient evidence) Disruption to a business can be irreparable harm. Lavigne v. Holder, 186 S.W.3d 625, 629 (Tex. App.Fort Worth 2006, no pet.) Occidental Chem. Corp. v. ETC NGL Transp., LLC, 425 S.W.3d 354, 364 (Tex. App.Houston [1st Dist.] 2011, pet. dism'd) Liberty Mut. Ins. Co. v. Mustang Tractor & Equip. Co., 812 S.W.2d 663, 666 (Tex. App. Houston [14th Dist.] 1991, no writ); Miller v. Talley Dunn Gallery, LLC, No. 05 CV, 2016 Tex. App. LEXIS 2280, *24 (Tex. App. Dallas Mar. 3, 2016, no pet.) ("Disruption to a business can constitute irreparable harm."). Moreover, the irreparable harm that cannot be adequately monetarily compensated that STC would suffer is self evident in much the same way that a tenant does not need to marshal a mountain of quantifiable data to prove that an eviction is an irreparable harm. Here, Qualia does not deny that STC has widely implemented and integrated the ResWare software into its business LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 operations for many years. The monumental harm that a sudden termination of access to that software would cause to STC’s business is manifest to any reasonable observer, and further is supported by an express provision in the text of the License Agreement and Mr. Rable’s affidavit Exhibit C at ¶ 8; Exhibit A at § 13.3. Qualia’s Response to STC’s Application for Declaratory Relief Misconstrues Case Law and the License Agreement. The Case Law Cited By Qualia in its Response Further Supports STC’s Argument that the License Agreement is Not Terminable at Will. In its Response, Qualia argues, in reference to Trient Partners I Ltd. v. Blockbuster Entertainment Corp., 83 F.3d 704, 709 (5th Cir. 1996) (the case upon which Qualia primarily relies), that STC’s case law analysis “misses … the public policy reason why contracts with indefinite terms of duration are terminable at willperpetual contracts lock parties into relationships and obligations that may become undesirable as facts or circumstances change.” Response at 26. Apparently Qualia overlooked the second paragraph on page 21 of STC’s Motion, which squarely addresses this concern, noting that: the public policy foundation of the Texas doctrine disfavoring indefinite contracts to avoid the absurd outcome of forcing a business to stay in business against its will identified by the Trient court does not exist here. STC simply desires to continue the use of software upon which its business operations rely and for which it has already paid and installed. This places no burden upon Qualia to stay in business in perpetuity against its will. Instead, the circumstances are more akin to Nano Proprietary, because granting a perpetual license to use software does no more to interfere with a business’s decisions regarding its future operations than does a license to use patents. Motion at 21. Similarly, in a new case cited by Qualia for the first time in any of its papers and letters, Qualia cites Fluorine On Call, Ltd. v. Fluorogas Ltd., 380 F.3d 849, 855 (5th Cir. LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 2004), for the proposition that the License Agreement is terminable at will. However, the facts of Fluorogas are clearly distinguishable from the case at bar. Like Trient and FirstBank, addressed in STC’s Motion, Fluorogas is distinguishable as it involved a contract that “contained no express duration term,” whereas the License Agreemen expressly states it is “irrevocable and perpetual.” Fluorogas, 380 F.3d at 853. Moreover, the agreement in Fluorogas was an “exclusive” license to use the technology of Flourogas, and “imposed significant obligations on Flourogas.” Id. at 857. By contrast, here there are no continuing obligations of Qualia to do anything (as it is undisputed that STC does not dispute Qualia’s right to terminate the “maintenance” services), and the License Agreement is non exclusive. STC merely desires to continue using ResWare which it has paid millions to use, and which has been installed and implemented across STC’s entire business platform, used by STC’s approximate 4,000 employees. STC’s business could not effectively operate without use of the software. See scussion at 3 4 of the Motion. Indeed, the present facts far more closely match those of University Computing Co. v. Leader Corp., 371 F.Supp. 86 (N.D. Tex. 1974), a case cited in Fluorogas (but not mentioned by Qualia) to distinguish the circumstances when Texas law permits perpetual contracts (as in Leader) and when it does not (as in Fluorogas). According to Fluorogas the court in Leader determined that, “despite its indefinite duration, the contract was not terminable at will.” Fluorogas, 380 F.3d at 857 (citing Leader, 371 F.Supp. at 89). Thus, the non exclusive right to use the technology “does not impose any obligations on [the licensor] for an indefinite period of time.” Id. (citing Leader, 371 F.Supp. at 88). The Fluorogas court also noted that in the Leader the parties clearly “did not intend to create an agreement terminable at the will of either party.” LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 Like Leader and unlike Fluorogas, here the License Agreement is “nonexclusive,” and there are no “significant obligations” on Qualia to do anything. The only continuing obligation on the part of Qualia was found in the Maintenance Agreement addendum that STC does not contest Qualia’s right to terminate. As in Leader, “[t]here is nothing in the language of these contracts nor has there been any showing that the parties intended to limit the duration of [the licens’s] use of the system.” Leader , 371 F.Supp. at 89. Moreover, the term “perpetual and irrevocable” in the License Agreement clearly shows the parties did not intend to create an agreement terminable at will. See Leader at 88 (license agreement allowing use of the software “for an indefinite period of time” makes clear the parties “did not intend to create an agreement terminable at the will of either party.”). Thus, the key facts upon which the holdings in Fluorogas Leader turned starkly demonstrate that the License Agreement in this matter is not terminable at will under Texas law. Contrary to Qualia’s Strained Efforts to Rewrite the License Agreement, it Expressly States that the Term of Duration is Irrevocable and Perpetual. Qualia argues on page 28 of its Response that the “irrevocable and perpetual” language in Section 2.1 of the License Agreement is “indefinite,” because Adeptive granted an irrevocable and perpetual license to Stewart subject to the ‘Term’ in Section 9.1, but Section 9.1 fails to define the specific parameters of that ‘Term.’ Id. at §§ 2.1, 9.1. Without a definite term, the Agreement is terminable at will under Texas law.” Response at 28. But Qualia misstates the language of the License Agreement. Section 2.1 does not state that it is “subject to the ‘Term’ in Section 9.1.” Rather Section 2.1 states in part that: Adeptive grants Customer and its Affiliates a world wide, non exclusive, nonconcurrent, non transferable (except as provided herein), irrevocable and perpetual (except as provided in Section 9 of this Agreement) license to: (i) install and run the Software . . . . LAINTIFF S EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE 9 ACTIVE 693437828v3 Exhibit A at § 2.1. Qualia attempts to transform the phrase “except as provided in Section 9” into “subject to the ‘Term’ in Section 9.1”. But Qualia cannot rewrite the agreement. The term of duration irrevocable and perpetualis clearly stated in 2.1, whereas the provisions of Section 9 pertain to termination for cause (by either party, which has not been triggered or alleged) and termination for convenience by STC (which STC has not invoked). In other words, Section 2.1 is stating that the License Agreement has an irrevocable and perpetual term of duration, except for instances under Section 9.1 where it may be terminated for cause or for STC’s convenience. Thus, Section 9 does not have a term of duration because that term is enumerated in Section 2.1, and Section 9 instead pertains to termination. The fact that Section 9 does not repeat again the term of duration or provide a second definition for the term of duration does not make the entire agreement indefinite. To make such an interpretation is to improperly excise or ignore Section 2.1. Qualia also asserts that a “perpetual” durational term cannot be a “term” by definition. Response at 25 26. However, if this lay understanding of the word “perpetual” was as absolute in the law as Qualia claims,there would be no cases in which a contract containing a perpetual term was upheld in court. That is clearly not the case. See e.g., Nano Proprietary, Inc. v. Canon, Inc. 537 F.3d 394, 400 (5th Cir. 2008) (“Based upon the unambiguous meaning of ‘irrevocable,’ we find that the PLA could not be terminated, notwithstanding a material breach of the agreement. Otherwise, the terms of ‘irrevocable’ and ‘perpetual’ would be rendered superfluous, in contravention of established rules of contract interpretation.”) Matter of Provider Meds, L.L.C. 907 F.3d 845, 856 (5th Cir. 2018) (“RPD is arguably correct that because the License granted under the License Agreement was ‘perpetual,’ under Texas law, it was therefore not revocable at will.”); City of Big Spring v. Bd. of Control, 404 S.W.2d 810, 815 (Tex. 1966) (holding that a LAINTIFF EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 perpetual contract was not of indefinite duration nor subject to termination at will); Leader F.Supp.at 89 (the court held that the perpetual contract was nevertheless for a “definite duration” and thus not terminable at will because there were no continuing successive obligations on the part of the licensor). Finally, Qualia’s efforts to revoke STC’s access to software it has already paid for flies in the face of common sense and everyday experienceno one would tolerate a software company suspending access to a word processor and demanding an exorbitant ransom in return for simply using a program that is fully paid for and requires no further updates to function. Yet this is exactly the position Qualia has taken, which is audaciously improper and contrary to law. See, e.g., In re Pomerantz, No. 00CV0143, 2001 WL 514352, at *3 (Colo. Dist. Ct. Jan. 29, 2001), aff'd sub nom. Pomerantz v. Microsoft Corp., 50 P.3d 929 (Colo. App. 2002) (license to use software in perpetuity, in return for a single fixed payment, is the “functional equivalent of a sale”). CONCLUSION AND PRAYER In light of the foregoing and in consideration of the arguments presented in Plaintiff’s Motion, Plaintiff respectfully requests that the Court grant summary judgment in favor of its application for permanent injunctive and declaratory relief Plaintiff further requests that the Court grant all such other and further relief, both general and special, in law or in equity, to which may be justly entitled. Dated: February 9, 2024 Respectfully submitted, REENBERG RAURIG /s/ Roland Garcia________ Roland Garcia SBN 7645250 garciar@gtlaw.com Steven Higginbotham LAINTIFF S EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3 SBN 24125274 higginbothams@gtlaw.com 1000 Louisiana Street, Suite 6700 Houston, Texas 77006 Tel. 713-374-3500 Fax 713-374-3505 ATTORNEYS FOR PLAINTIFF STEWART TITLE COMP CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the foregoing was forwarded to counsel of record via the Court’ - filing system onFebruary 9 __/s/ Roland Garcia________ Roland Garcia LAINTIFF S EPLY IN UPPORT OF ITS OTION FOR UMMARY UDGMENT AGE ACTIVE 693437828v3