Joseph LaRocque v. Flagco, LLC D/B/A Gridiron Football

In The
Court of Appeals
Seventh District of Texas at Amarillo

No. 07-25-00068-CV

JOSEPH LAROCQUE, APPELLANT

V.

FLAGCO, LLC D/B/A GRIDIRON FOOTBALL, APPELLEE

On Appeal from the 96th District Court
Tarrant County, Texas1
Trial Court No. 096-350891-24, Honorable J. Patrick Gallagher, Presiding

December 18, 2025
MEMORANDUM OPINION
Before QUINN, C.J., and DOSS and YARBROUGH, JJ.

In three issues, Appellant, Joseph LaRocque, challenges the trial court’s no-

answer default judgment awarding damages, attorney’s fees, and injunctive relief to

Appellee, Flagco, LLC d/b/a Gridiron Football. We hold the evidence is legally insufficient

to support the lost-profits award; that by failing to answer, LaRocque waived any

1 This cause was originally filed in the Second Court of Appeals and was transferred to this Court

by a docket-equalization order of the Supreme Court of Texas. See TEX. GOV’T CODE § 73.001. In the
event of any conflict, we apply the transferor court’s case law. TEX. R. APP. P. 41.3.
statutory-preemption challenge to the injunction and fee award and any challenge to the

contract’s remedial terms; and that the current fee award cannot stand because there is

no prevailing party until damages are properly determined. We therefore reverse the

awards of damages and attorney’s fees and remand those issues for further proceedings.

BACKGROUND

LaRocque founded a company that owned two youth flex football leagues2 and

manufactured football equipment. He sold the company to Gridiron through an Asset

Purchase Agreement that, in relevant part, prohibited him from competing or soliciting

employees until October 26, 2025.

Gridiron alleged LaRocque breached his promise not to compete. According to a

lawsuit petition, LaRocque owned and operated a competing league called Phenom

FTBL, LLC in Gridiron’s territories; hired away at least one Gridiron employee; and

encouraged at least one operator to leave.

Gridiron sued LaRocque for breach of contract, seeking damages, attorney’s fees,

and injunctive relief. LaRocque was served with the petition and a temporary restraining

order but did not answer. He also failed to appear at a hearing on a temporary injunction.

Almost seven months after service, Gridiron moved for a no answer default

judgment. It attached a declaration of Scott Dillon, its CEO, to prove unliquidated

damages, as well as an attorney fee affidavit. Gridiron asked the court to award damages

2 Flex football is a limited-contact version of American football.

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and fees and to sign an injunction tolling the APA’s restrictive-covenant period for the

period of time LaRocque was in breach.

Dillon’s declaration asserted that LaRocque’s league diverted participants from

Gridiron and caused lost profits. Without submitting any supporting data, Dillon stated a

“conservative” projected league growth from 2023 to 2024 of 10%. He compared that

projection to actual revenues, claiming: (1) Arizona market revenues declined by 37%,

resulting in $276,799.50 in “estimated lost profits;” (2) California revenues declined 1%

resulting in $44,826.40 “estimated lost profits;” and (3) Texas revenues grew, but only by

8% resulting in $3,355.20 in “estimated lost profits.” Gridiron submitted no evidence of

expenses during this period.

The trial court signed a default judgment awarding Gridiron $324,981.10 in

damages and $80,552.53 in attorney’s fees and conditional appellate fees. The court

also signed an injunction extending the restrictive covenants to October 26, 2026,

prohibiting LaRocque from competing, soliciting, employing Gridiron personnel, and using

Gridiron’s confidential information. LaRocque moved to set aside the judgment and for

new trial, which was denied.

ANALYSIS

LaRocque raises three challenges on appeal:

1. The legal sufficiency of the evidence supporting the lost-profits award;

2. The propriety of the permanent injunction extending the restrictive
covenants by one year; and

3. The propriety of the attorney’s fees award.

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We review the legal sufficiency of the evidence supporting damages awarded after

a no-answer default judgment under the usual legal-sufficiency standard, viewing the

evidence in the light most favorable to the challenged finding, crediting favorable evidence

if a reasonable factfinder could, and disregarding contrary evidence unless a reasonable

factfinder could not. See Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.

1992). Evidence is legally insufficient if it is conclusory, speculative, or no more than a

scintilla. Id. at 84–85.

We review the grant and scope of a permanent injunction for an abuse of

discretion. Huynh v. Blanchard, 694 S.W.3d 648, 673, 690 (Tex. 2024). A trial court

abuses its discretion if it misapplies the law to the established facts or acts without

reference to guiding rules and principles. Id.; Downer v. Aquamarine Operators, Inc., 701

S.W.2d 238, 241–42 (Tex. 1985).

We review entitlement to attorney’s fees under a contract de novo and the amount

awarded for abuse of discretion, subject to the limits of the parties’ agreement and any

applicable statutes. Nathan A. Watson Co. v. Employers Mut. Cas. Co., 218 S.W.3d 797,

802 (Tex. App.—Fort Worth 2007, no pet.).

A. Evidence of Lost Profits

In his first issue, Appellant argues there is no evidence to support the award of

$324,981.10 in lost profits. We agree.

Upon a no-answer default, the defendant is deemed to admit the petition’s properly

pleaded factual allegations and liability, but the plaintiff must still present evidence to

establish unliquidated damages. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 86
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(Tex. 1992); see also TEX. R. CIV. P. 243. Unliquidated damages can come in the form

of lost profits. Lucas v. Clark, 347 S.W.3d 800, 803 (Tex. App.—Austin June 15, 2011,

pet. denied). “Lost profits are damages for the loss of net income to a business measured

by reasonable certainty.” Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002). In turn, net

income is determined by calculating the excess of all revenues and gains for a period

over all expenses and losses of the period. Kellmann v. Workstation Integrations, Inc.,

332 S.W.3d 679, 684 (Tex. App.—Houston [14th Dist.] 2010, no pet.); INOVA

Diagnostics, Inc. v. Strayhorn, 166 S.W.3d 394, 401, n.6–7 (Tex. App.—Austin 2005, pet.

denied). It is different from revenues:

We note that the concept of gross receipts or gross income is quite distinct
from net income. Gross income or gross receipts do not take a
corporation’s expenses into account, while net income is defined as the
“excess of all revenues and gains for a period over all expenses and losses
of the period.” BLACK’S LAW DICTIONARY 1040 (6th ed.1990). Thus, a
corporation may have considerable gross receipts or gross income, yet
have no net income.

IINOVA Diags., 166 S.W.3d at 401 n.6. “Calculation of lost-profits damages must be

based on net profits, not gross revenue or gross profits.” Kellmann, 332 S.W.3d at 684.

The fact and amount of lost profits must be proven with “reasonable certainty.”

Am. Midstream (Alabama Intrastate), LLC v. Rainbow Energy Mktg. Corp., 714 S.W.3d

572, 583–84 (Tex. 2025); Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002). At a

minimum, calculating lost profits “must be based on objective facts, figures, or data from

which the amount of lost profits can be ascertained.” Mid Continent Lift & Equip., LLC v.

J. McNeill Pilot Car Serv., 537 S.W.3d 660, 665 (Tex. App.—Austin 2017, no pet.). A

party may not recover lost profits “where there is no evidence from which they may be

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intelligently estimated.” Horizon Health Corp. v. Acadia Healthcare Co., Inc., 520 S.W.3d

848, 860 (Tex. 2017) (citations omitted).

When proving lost profits due to future business opportunities on account of lost

customers, a plaintiff must “adduce evidence establishing that prospective customers

would have done business with the plaintiff absent the defendant’s misconduct.” Wylie v.

Simmons, No. 02-19-00241-CV, 2020 Tex. App. LEXIS 10461, at *45 (Tex. App.—Fort

Worth Dec. 31, 2020, pet. denied) (quoting Horizon Health Corp., 520 S.W.3d at 861).

With those principles in mind, we turn to the only evidence Gridiron offered: the

declaration of its CEO, Scott Dillon.

1. Dillon’s declaration never proves net lost income

Dillon’s declaration asserts that LaRocque’s competition caused Gridiron to incur

“estimated lost profits” of $324,981.10 across three markets: Arizona, California, and

Texas. He reaches that figure by (1) positing a “conservative projected league growth

from 2023 to 2024 of 10%,” and (2) comparing that projection to actual revenues in those

markets.

However, the declaration identifies no expenses for any of these markets or

periods. It does not describe Gridiron’s profit margins, cost structure, or overall

profitability. It simply takes changes in gross revenues (or deviations from a revenue

target) and labels the resulting amounts “lost profits.”

That methodology fails as a matter of law. Lost profits are measured by net

income, not gross receipts. See Univ. Gen. Hosp., LP v. Prexus Health Consultants, LLC,

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403 S.W.3d 547, 555 (Tex. App.—Houston [14th Dist.] 2013, no pet.); INOVA, 166

S.W.3d at 401 n.6. Because Dillon never identifies what portion, if any, of the claimed

revenue shortfalls would have remained after expenses, his figures do not permit any

“intelligent estimate” of lost net income. See Horizon Health, 520 S.W.3d at 860; Univ.

Gen. Hosp., LP, 403 S.W.3d at 555. See also Wiese v. Pro Am Services, Inc., 317

S.W.3d 857, 863 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (holding that evidence

of lost gross revenues is insufficient as evidence to prove lost net income); South Plains

Switching, Ltd. v. BNSF Ry. Co., 255 S.W.3d 690, 696 (Tex. App.—Amarillo 2008, pet.

denied) (holding that testimony regarding revenues was insufficient to prove lost profits

in the absence of evidence concerning expenses). They show, at most, that revenues

did not perform as he had hoped.

2. The 10% “league growth” assumption is undefined and unsupported

Gridiron’s response relies heavily on a keystone assumption: that Dillon stated a

10% “conservative projected league growth from 2023 to 2024.” But that declaration

never explains:

• what “league growth” measures (Number of leagues? Operators?
Teams? Participants? Spectators? Revenue?);

• how that metric relates to Gridiron’s net income; or

• what foundational facts support the belief that 10% growth is
applicable for the Arizona, California, and Texas markets;

Even if we assume the 10% figure is accurate as a revenue forecast, Dillon never links

that percentage to Gridiron’s actual past performance in Arizona, California, or Texas, or

to any established profit margins in those markets. He does not show that those territories

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historically grew revenue at 10%, that comparable leagues did so, or how any operations

translated such growth into the profit anticipated. As in Prexus, a free-floating percentage

derived from unspecified prior experience cannot, without more, serve as the basis for a

lost-profits calculation on the particular business allegedly harmed. Univ. Gen. Hosp., LP

v. Prexus Health Consultants, LLC, 403 S.W.3d 547, 556–57 (Tex. App.—Houston [14th

Dist.] 2013, pet. denied). We therefore hold that Dillon’s 10% remark is not an “objective

fact” but bare ipse dixit. See Mid Continent, 537 S.W.3d at 665 (requiring “objective facts,

figures, or data”).

3. No evidence connects LaRocque’s conduct to any lost customers or lost profit

Separate from the failure to prove any amount, Dillon’s declaration also fails to

show any connection to LaRocque’s conduct. We take as true the statement that Phenom

FTBL “diverted participants.” But, without more, the fact that a reduction in revenue

followed a defendant’s misconduct is insufficient to prove the reduction was caused by

the defendant. See Hancock v. Variyam, 400 S.W.3d 59, 70–71 (Tex. 2013) (applying

equal-inference rule to find insufficient evidence of damages because factfinder 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” (quoting Hammerly

Oaks, Inc. v. Edwards, 958 S.W.2d 387, 392 (Tex. 1997))); Prexus Health Consultants,

LLC, 403 S.W.3d at 556–57 (holding anticipated 32% profit margin derived from prior-

year financials for a different prospective hospital project could not support lost profits on

the contracts at issue when the margin was not linked to those contracts or the plaintiff’s

past performance on them).

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As part of its damages proof, Gridiron offers no evidence identifying any league,

team, operator, or participant who left Gridiron for Phenom, quantifying how many

participants supposedly defected, showing that any Phenom participants were previously

Gridiron’s customers, or otherwise demonstrating that, absent LaRocque’s conduct, the

decisions of any such team, operator, or participant would have affected Gridiron’s net

income. Texas law requires more: recovery of lost profits must be predicated on one

complete calculation, supported by objective facts, figures, or data, not a series of partial

assumptions about lost business. See Heine, 835 S.W.2d at 84–85 (“Recovery of lost

profits must be predicated on one complete calculation.”); Barton v. Resort Dev. Latin

Am., Inc., 413 S.W.3d 232, 238 (Tex. App.—Dallas 2013, pet. denied) (holding evidence

of damages of lost business to be insufficient because “we would be required to stack

assumption upon assumption, which we will not do.”).

Because Gridiron’s evidence of lost profits is legally insufficient, we sustain

LaRocque’s first issue. We therefore remand the cause to the trial court for a new trial

on Gridiron’s claim of unliquidated damages. Heine, 835 S.W.2d at 86 (“[W]hen an

appellate court sustains a no evidence point after an uncontested hearing on unliquidated

damages following a no-answer default judgment, the appropriate disposition is a remand

for a new trial on the issue of unliquidated damages.”).

B. Extension of Injunction

In his second issue, LaRocque challenges the permanent injunction extending his

non-compete obligations by one year. Specifically, the APA contains two key provisions.

First, it tolls the restrictive covenants during any breach:

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The time period during which the covenants contained in this Section 5.01
shall apply shall be tolled and suspended for a period equal to the aggregate
time during which any Seller Party . . . violate[s] such covenants.

Second, it authorizes cumulative remedies:

The Seller Parties specifically recognize that any breach . . . will cause
irreparable injury to Buyer and that actual damages may be difficult to
ascertain and, in any event, may be inadequate. Accordingly . . . Buyer will
be entitled to injunctive relief in addition to such other legal and equitable
remedies that may be available.

LaRocque agreed to these terms. On appeal, he raises three arguments: the Covenants

Not to Compete Act preempts such relief, damages provide an adequate remedy at law,

and the extension constitutes double recovery. For the reasons stated below, we

disagree with LaRocque.

1. LaRocque waived affirmative defenses

LaRocque first contends Texas Business & Commerce Code §§ 15.50–15.52

preempt such an injunction. But preemption pertaining to the availability of applicable law

(when jurisdiction is proper) operates as an affirmative defense. Int. of E.A.C., No. 07-

21-00145-CV, 2021 Tex. App. LEXIS 9306, at *3 (Tex. App.—Amarillo Nov. 16, 2021,

pet. denied) (citing Toyota Motor Sales, U.S.A., Inc. v. Reavis, 627 S.W.3d 713, 727–28

(Tex. App.—Dallas 2021, pet. granted, judgm’t vacated w.r.m.)).

LaRocque was required to assert an affirmative defense of preemption to preserve

it. See TEX. R. CIV. P 94. He never pleaded preemption because he never filed an

answer. Accordingly, his preemption defense was forfeited.

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2. LaRocque contracted for cumulative remedies

LaRocque alternatively argues Gridiron cannot simultaneously obtain damages

and an injunction. But as noted above, LaRocque agreed to these terms in the APA. The

contract explicitly provides for injunctive relief “in addition to” other remedies, language

that contemplates cumulative, not alternative, relief. LaRocque offers no compelling

reason why he should not be bound by terms he freely negotiated and signed.

Texas public policy favors freedom of contract. Atmos Energy Corp. v. Paul, 598

S.W.3d 431, 445 (Tex. App.—Fort Worth 2020, no pet.). We enforce contracts as written.

In re Whataburger Rests. LLC, 645 S.W.3d 188, 194–95 (Tex. 2022) (orig. proceeding).

Unless there is a compelling reason, “we must respect and enforce the terms of a contract

that the parties have freely and voluntarily entered.” Paul, 598 S.W.3d at 445.

The contract here reflects a common structure in non-compete agreements. The

tolling provision ensures the buyer receives the full benefit of the restrictive period it

bargained for, preventing a breaching seller from running out the clock through violations.

The injunctive-relief provision recognizes that monetary damages may not adequately

compensate for ongoing competitive harm. Together, these provisions protect Gridiron’s

legitimate business interests, the same interests LaRocque acknowledged when he

accepted valuable consideration for his company.

We overrule LaRocque’s second issue.

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C. Attorney’s Fees

In his third issue, LaRocque argues the attorney’s fees award violates the

Covenants Not to Compete Act. However, it is unnecessary to address this issue in light

of the remand of this cause to consider Gridiron’s claim for damages.

The APA entitles the prevailing party to recover reasonable attorney’s fees.

Gridiron obtained a default judgment and was deemed the prevailing party. But as held

above, we have reversed the damages award; this was Gridiron’s sole measure of

recovery on its breach claim. A party recovering zero damages loses prevailing-party

status. Intercontinental Grp. P’ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 655–

56 (Tex. 2009).

The remand creates uncertainty. On retrial, Gridiron might prove damages and

prevail. It might recover nothing and lose. Or the trial court might award nominal

damages, raising questions about whether either party truly prevailed. Until we know who

prevails and on what basis, it is unnecessary to determine whether the Covenants Not to

Compete Act limits the fee award.

Rather than issue an advisory opinion on hypothetical fee awards, we reverse the

current attorney fee award and remand for reconsideration after the damages retrial. This

permits the trial court to determine the prevailing party and, if necessary, address any

statutory limitations on fee recovery based on the actual outcome.

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CONCLUSION

We reverse the default judgment on the award of damages and attorney’s fees

and remand the cause to the trial court for further proceedings.

Lawrence M. Doss
Justice

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