On Appeal from the 281st District Court Harris County Trial Court Cause No. 2011-01323
The opinion of the court was delivered by: Jeffrey V. Brown Justice
In The Fourteenth Court of Appeals
Appellant Franlink, Inc., d/b/a Link Staffing Services (Link), sued its former franchisees for injunctive relief to prevent the breach of a non-compete provision in their franchise agreement. After a bench trial, the trial court granted a permanent injunction in favor of Link, but denied Link's request for attorney's fees. On appeal, Link contends the trial court abused its discretion by failing to award it attorney's fees. We affirm.
Link is a temporary-staffing company that operates through franchisees. Appellees Gloria and Jaime Salazar became Link franchisees in 1996 and remained franchisees until January 9, 2011, when the last franchise agreement between Link and the Salazars expired. The franchise agreement contained a non-compete provision prohibiting the Salazars from owning or operating a competing business within a designated market area or soliciting Link's clients for two years after its expiration.
The Salazars informed Link that they intended to open their own
staffing business through their company, GJMS Unlimited.*fn1
To prevent GJMS Unlimited from competing directly with Link,
Link preemptively filed suit against GJMS Unlimited and the Salazars,
seeking injunctive relief to enforce the non-compete provision. Link
also sought attorney's fees pursuant to chapter 38 of the Texas Civil
Practice and Remedies Code. The Salazars answered and counterclaimed,
alleging that the non-compete provision was overly broad and
unreasonable as to time, geographical area, and scope of activity, and
requesting that the court modify the restraints imposed.
After an evidentiary hearing on Link's request for temporary injunctive relief, the trial court signed an agreed order enjoining the Salazars and GJMS Unlimited from directly competing with Link pending the trial on the merits. In so doing, however, the trial court reformed the franchise agreement's non-compete provision to narrow its geographical area and scope. At the trial on Link's request for a permanent injunction, Link sought to expand the trial court's previously ordered restrictions on the non-compete provision. Link also presented one of its law firm's attorneys to provide expert testimony on its request for attorney's fees.
The Salazars objected to the attorney's testimony on the grounds that Link had failed to provide an expert report or any billing records in response to the Salazars' request for disclosures. Link responded that its expert was not going to rely on any billing records, but only on her knowledge about the work performed on the case and on her experience. The trial court took the Salazars' objection under advisement and allowed the expert to testify concerning attorney's fees. After the expert finished testifying, the Salazars did not request a ruling on their objection and the trial court did not make one.
After trial, the trial court sent a memorandum to the parties summarizing its findings and requesting that the parties submit a proposed judgment. In the memorandum, the trial court informed the parties that it intended to render a permanent injunction substantially similar to the temporary injunction previously ordered, continuing until January 9, 2013. The trial court also indicated that it was denying Link's request for attorney's fees.
Link filed a motion for entry of judgment arguing that it was entitled to an award of reasonable and necessary attorney's fees under section 38.001(8) of the Texas Civil Practice and Remedies Code. The Salazars filed a competing motion for entry of judgment. They argued that Link was not entitled to attorney's fees because section 15.52 of the Texas Business and Commerce Code preempts such an award when the trial court reforms a disputed covenant not to compete. The Salazars also contended Link's failure to respond timely and adequately to their request for disclosures precluded an award of attorney's fees.
On March 1, 2012, the trial court signed a final judgment, which did not include an award of attorney's fees to Link. No findings of fact and conclusions of law were requested or made. This appeal followed.
In a single issue, Link contends that the trial court erred in denying its request for attorney's fees because, as the prevailing party, Link was entitled to an award of attorney's fees under section 38.001(8) of the Texas Civil Practice and Remedies Code. Further, Link argues, the preemption provision of the Covenants Not to Compete Act does not bar an award of attorney's fees. See Tex. Bus. & Comm. Code §§ 15.50--.52 (the "Act"). Having carefully considered Link's arguments, the ...