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Hughes v. Age Industries, Ltd.

Court of Appeals of Texas, Fourth District, San Antonio

March 8, 2017

Christopher Michael HUGHES, Appellant
v.
AGE INDUSTRIES, LTD., Appellee

         From the 25th Judicial District Court, Guadalupe County, Texas Trial Court No. 16-1893-CV Honorable W.C. Kirkendall, Judge Presiding

          Sitting: Sandee Bryan Marion, Chief Justice Marialyn Barnard, Justice Patricia O. Alvarez, Justice

          MEMORANDUM OPINION

          Sandee Bryan Marion, Chief Justice

         Christopher Michael Hughes appeals the trial court's order granting a temporary injunction in favor of Age Industries, Ltd. ("AI"). Hughes contends the trial court erred in granting the temporary injunction because: (1) AI's petition failed to meet the requirements of Tex.R.Civ.P. 682; (2) the temporary injunction does not maintain the status quo; (3) AI failed to plead a proper cause of action under the Texas Uniform Trade Secrets Act or, if properly pled, AI failed to offer proof of the elements of that cause of action; (4) AI has not shown a probable, imminent, irreparable injury; and (5) the temporary injunction order does not satisfy the requirements of Tex.R.Civ.P. 683. We overrule each of these contentions and affirm the trial court's order.

         Background

         Hughes was employed by AI for almost twenty years. AI is a manufacturer of corrugated packaging material, and Hughes was employed as the general manager of one of AI's branch facilities. Hughes is also a limited partner of AI.

         Hughes resigned from the board of directors of AI's general partner on May 16, 2016, and from his employment with AI on June 22, 2016. Before submitting his resignations, Hughes was engaged in discussions with John J. Bradley, Jr. and John W. McLeod, Jr. regarding the formation of a business to compete with AI. McLeod filed a certificate with the Texas Secretary of State on June 7, 2016, to form Diamondback Corrugated Container, LLC. After resigning from AI, Hughes was employed by Diamondback as its operations manager.

         On August 30, 2016, AI sued Hughes, Bradley, and Diamondback asserting various claims including a claim for misappropriation of trade secrets. AI obtained a temporary restraining order that same day. The temporary restraining order was subsequently extended to the date scheduled for the hearing on AI's temporary injunction application.

         At the temporary injunction hearing, Diamondback agreed to an order requiring it to deliver to AI a copy of all documents and proprietary information belonging to AI that were in Diamondback's possession. Diamondback further agreed to refrain from directly or indirectly disclosing or using AI's proprietary or trade secret information.

         AI's chief operating officer, William Allen, and Hughes testified at the temporary injunction hearing. At the conclusion of the hearing, the trial court granted a temporary injunction against Hughes. The temporary injunction order requires Hughes to deliver a list describing all documents belonging to AI or containing proprietary information belonging to AI in Hughes's possession, "including but not limited to [AI's] customer and prospective customer lists and contact information, pricing lists, sales journals, financial reports, vendor lists, engineering diagrams, customer presentation material, specialized pricing programs, business strategies, and specially developed programs for specific customers." The order further enjoins Hughes from directly or indirectly disclosing or using AI's proprietary or trade secret information, "including making use of [AI's] customer and prospective customer lists and contact information, pricing lists, sales journals, financial reports, vendor lists, engineering diagrams, customer presentation material, specialized pricing programs, business strategies, and specially developed programs for specific customers." Hughes appeals the trial court's order granting the temporary injunction.

         Temporary Injunction Elements and Standard of Review

         "To obtain a temporary injunction, the applicant must plead and prove three specific elements: (1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim." Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). We review a trial court's order granting a temporary injunction under an abuse of discretion standard. Id. Under an abuse of discretion standard, we "cannot overrule the trial court's decision unless the trial court acted unreasonably or in an arbitrary manner, without reference to guiding rules and principles." Id. at 211. We also cannot substitute our judgment for the judgment of the trial court, including with regard to the credibility of witnesses, and we draw all legitimate inferences from the evidence in the manner most favorable to the trial court's judgment. Id. at 211; Menna v. Romero, 48 S.W.3d 247, 252 (Tex. App.-San Antonio 2001, pet. dism'd w.o.j.). "The trial court does not abuse its discretion if some evidence reasonably supports the trial court's decision." Butnaru, 84 S.W.3d at 211.

          Adequacy of AI's Petition

         Hughes first contends the trial court erred in granting the temporary injunction because AI's petition does not satisfy the requirements of Tex.R.Civ.P. 682. Hughes specifically challenges Allen's verification of the petition. See Tex. R. Civ. P. 682 (requiring petition to be verified by an affidavit). "A verified petition for injunctive relief is not required to grant a temporary injunction, however, when a full evidentiary hearing on evidence independent of the petition has been held." Mattox v. Jackson, 336 S.W.3d 759, 763 (Tex. App.-Houston [1st Dist.] 2011, no pet.); see also Salas v. Chris Christensen Sys., Inc., No. 10-11-00107-CV, 2011 WL 4089999, at *5 (Tex. App.-Waco Sept. 14, 2011, no pet.) (mem. op.) (same); Georgiades v. Di Ferrante, 871 S.W.2d 878, 882 (Tex. App.-Houston [14th Dist.] 1994, writ denied) (same). Because the trial court held a full evidentiary hearing in the underlying cause, Hughes's complaint regarding AI's petition is overruled.

         Status Quo

         Hughes next contends the trial court erred in granting a temporary injunction that does not maintain the status quo. Hughes's contention is based on his status as a limited partner of AI. As a limited partner, Hughes asserts he is entitled to receive information regarding AI under the terms of the partnership agreement. Therefore, Hughes contends requiring him to account for the information in his possession changes the status quo.

         The purpose of a temporary injunction "is to preserve the status quo of the litigation's subject matter pending a trial on the merits." Butnaru, 84 S.W.3d at 204. "The 'status quo' is the last, actual, peaceable, non-contested status which preceded the pending controversy." Clint Indep. Sch. Dist. v. Marquez, 487 S.W.3d 538, 555 (Tex. 2016) (internal quotations omitted).

         At the temporary injunction hearing, Hughes testified the only information he received as a limited partner was audited financial statements. Hughes admitted he did not receive sales journals, customer lists, or pricing information in his capacity as a limited partner. From this testimony, the trial court could reasonably infer that in his capacity as a limited partner, Hughes did not receive any of the following information specifically referenced in the trial court's order: AI's "customer and prospective customer lists and contact information, pricing lists, sales journals, financial reports [other than audited financial statements], vendor lists, engineering diagrams, customer presentation material, specialized pricing programs, business strategies, ...


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