Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg
SUPER STARR INTERNATIONAL, LLC, LANCE PETERSON, AND RED STARR, SPR DE R.L. DE C.V., Appellants,
FRESH TEX PRODUCE, LLC, INDIVIDUALLY AND DERIVATIVELY ON BEHALF OF TEX STARR DISTRIBUTING, LLC, Appellee.
appeal from the 92nd District Court of Hidalgo County, Texas.
Justices Rodriguez, Benavides, and Hinojosa
V. RODRIGUEZ Justice
trial court granted appellee Fresh Tex Produce, LLC,
Individually and Derivatively on behalf of Tex Starr
Distributing, LLC, a temporary injunction order against
appellants Super Starr International, LLC, Lance Peterson,
and Red Starr, SPR de R.L. de C.V., that mandates and
prohibits certain commercial conduct and requires the
preservation of electronic information.
seven issues, which we construe as three, appellants complain
that the trial court abused its discretion by signing the
temporary injunction order on the grounds that (1) there is
legally insufficient evidence of a probable right to relief
on some of the claims used as a basis to gain injunctive
relief or contractual provisions negate any right to
injunctive relief, (2) the parameters of the order
prohibiting certain commercial conduct are overbroad and
unspecific, and (3) there is legally insufficient evidence to
support an injunctive restriction relating to preservation of
sustain in part and overrule in part the first issue on the
grounds that there is legally insufficient evidence of a
probable right to relief on all but one of the claims that
have been asserted, and the trial court abused its discretion
by mandating certain commercial conduct. Furthermore, we
sustain the second and third issues. Therefore, we reverse
the temporary injunction order, render a denial in part, and
remand in part.
plaintiff in the underlying suit is Fresh Tex Produce, LLC
(the Distributor), a Texas entity that distributes produce
throughout the United States, who filed suit
"individually and derivatively on behalf of" Tex
Starr Distributing, LLC (the LLC). The defendants are: (1)
Super Starr International, LLC (the Importer), a Texas entity
that imports foreign grown produce into the United States;
(2) Lance Peterson, the current president of the Importer;
(3) Red Starr, SPR de R.L. de C.V. (the Grower), a Mexican
entity that grows produce in Mexico and exports it into the
United States through the Importer; and (4) Kemal Mert Gumus,
employee of the Importer.
understanding of the relationship of the parties, the
formation of the LLC and its operation, and the dispute comes
from the record of a temporary injunction evidentiary hearing
at which Kenneth Alford, president of the Distributor, Lance
Peterson, and George Garcia, an assistant manager in the
Distributor's shipping department, testified.
2010, the Grower, the Importer, and the Distributor, had a
distribution agreement for papayas. Under the distribution
agreement, the Distributor received a ten percent commission
on sales proceeds. Alford testified that he was approached by
David Peterson,  the then-president of the Importer.
According to Alford, David was "happy with the sales,
" and he "offered us a proposed partnership."
The Grower wanted to grow and sell, through the Importer, a
"hybrid papaya" that was smaller, longer lasting,
and more aromatic than existing papayas. The Importer
proposed that the Distributor forgo its customary ten percent
commission in exchange for a five percent commission, but
double the volume.
LLC's Organization, Structure, and History
December 2010, Alford, on behalf of the Distributor, and
Lance and David, on behalf of the Importer, executed an
operating agreement that created the LLC, a limited liability
company that is governed by the Texas Business Organizations
Code. See Tex. Bus. Orgs. Code Ann. §
101.001(3) (West, Westlaw through Ch. 49, 2017 R.S.).
the LLC's operating agreement and minutes from an
organizational meeting: the Distributor and the Importer were
the LLC's only members and owners of equal halves of the
LLC, Alford and David were the only managers, and Alford was
the president. The operating agreement included an
exclusivity provision. The exclusivity provision mandated
that the LLC serve as the "sole and exclusive
distributor of papayas exported into the United States by
[the Importer] and/or other existing or future companies of
Lance Peterson and/or David Peterson pertaining in whole or
in part to the growing, production, shipping or packaging of
papayas." Under the operating agreement, the exclusivity
provision lasted for three years, until the end of 2013.
business strategy for the LLC was, according to Alford, to
cultivate a "high end" customer base that would pay
between twenty and forty percent more per pound than ordinary
papayas. Alford testified that in order to generate sales,
the Distributor promoted the hybrid papaya to its existing
customer base and attended multiple trade shows on behalf of
the LLC. According to Alford, the LLC hired a marketing firm,
which developed the hybrid papaya's new brand
name-"Royal Star"-and its distinctive logos and
smaller, more appealing packaging. Lance testified that the
initial marketing program was split three ways between the
"seed company, " the LLC, and the Importer. Through
marketing efforts, the LLC, according to Alford, carved out a
luxury niche for Royal Star as a sweeter papaya with a longer
shelf-life and a higher selling price than an average papaya.
testified that the LLC's revenue came primarily from
commissions on hybrid papaya sales. The Distributor's
facility housed and its employees staffed the LLC's
papaya distribution operation. Alford testified that, the
Distributor provided the LLC with salespeople who were
familiar with the preferences and buying habits of the
Distributor's customers, which were mainly grocers. The
Distributor also allowed the LLC to use thirty to forty
warehouse employees to grade, sort, and age the papayas.
accounts, the LLC was profitable. According to Alford,
"net worth income" began at $264, 000, and it grew
to $1.3 million between 2011 to 2012, $700, 000 in 2013, $1.2
million in 2014, and $1.1 million in 2015. Lance testified
that, during the five-year period, total sales were
"somewhere around 77 million, " and the LLC was
compensated in the range of $7.7 million.
September 2013, David died. Thereafter, Lance replaced David
as president of the Importer. There is no evidence that Lance
was elected as a successor manager to replace David in
accordance with the terms of the operating agreement.
January 2014, a nearly identical operating agreement (the
revised operating agreement) took effect. The exclusivity
provision in the revised operating agreement was for a period
of two years, until the end of 2015.
an employee of the Importer, began working at the papaya
operation facility after David's death. Alford testified
that he believed Gumus was responsible for quality assurance
and that he needed access to only the warehouse and loading
areas. However, Alford and Garcia testified that as time
progressed, Gumus's presence in the LLC's sales
office, a room which was locked with a code known only to
managers, increased. Alford saw Gumus was taking photographs
of: (1) the Distributor's "sales board, " which
"had every customer that we were selling our limes, our
mangoes, our broccoli to;" and (2) "jackets, "
which are large envelopes that hold "bill of ladings,
invoices, truck information and so forth."
testified that roughly a month before Gumus's eventual
departure from the facility, he twice saw Gumus alone in the
sales office after business hours. According to Garcia, after
he reported Gumus's presence to a manager, the code to
the sales office was changed. Gumus was also observed
multiple times in the facility's shipping office taking
photographs of documents with data on customers, pricing, and
Pina was an employee of the Distributor who resigned early in
the spring of 2016. Alford testified that Pina took
information from the Distributor and the LLC. Specifically,
Alford testified that Pina "made [unauthorized] computer
copies of internal information from the shipping from truck
brokers to venders to other contacts." Garcia testified
that after Pina's resignation, he observed Pina at the
papaya facility on a Saturday morning copying phone numbers
from a Rolodex. Garcia testified that Pina went to work for
the Importer approximately two weeks later.
Expiration of Exclusivity Provision and Beginning of the
end of December 2015, the exclusivity provision under the
revised operating agreement expired. The parties did not
renegotiate renewal of the exclusivity provision in the
revised operating agreement. Alford testified that he and
Lance attempted to negotiate a new term of exclusive
distributorship, but the two sides were unable to reach an
January 2016 through March 2016, the Distributor and the
Importer continued working together under the same terms as
the revised operating agreement.
March 2016, Lance told Alford that beginning in July 2016,
the Importer would no longer supply the LLC with the newly
developed papayas. Instead, the Importer would distribute and
market the hybrid papayas to customers in the United States
on its own.
2016, an employee of the Importer sent a promotional email to
customers who had purchased hybrid papayas from the LLC
For the past 6 years, [the Importer] has been growing the
Royal Star Papaya. As of today, [the Importer] has started
its own sales team to handle the Royal Star Papaya as well as
other products we will be bringing out of Mexico. [The
Importer] brings over 20 years of farming experience out of
Mexico to the produce industry.
to Alford, the email incorporated a sales brochure for
papayas and other produce. Alford claimed that the
Importer's brochure mimicked the Distributor's
longtime sales brochure. Alford also took issue with the
Importer's phone number announced in the email, which had
the same area code and last four digits as the number for the
Distributor's sales department: 956-[ ]-8014.
October 2016, the Distributor filed an original petition and
application for injunctive relief. The Distributor asserted
the following claims against the corresponding defendants:
The Distributor then sought and the trial court signed, a
temporary restraining order. The trial court set the matter
for a temporary injunction hearing.
Evidentiary Hearing and Temporary Injunction Order
November 2016, the trial court held an evidentiary hearing,
at which the testimony summarized above was presented. Alford
argued that the LLC's customer lists contained trade
secrets. In responding to the Distributor's questions on
direct examination, Alford testified,
Q. Obviously, buyers of produce isn't something secret. I
know that H.E.B. buys limes. So, I mean, I'm not stealing
that from you, am I? How would you explain that to the Court?
A. Well, those are-certainly-those aren't unique clients.
You know, H.E.B. and Kroger might think that, but what about
the small guy in New Jersey or small guy in Newton, North
Carolina that no one has ever heard of? You talk about the
Blue Book. The Blue Book is a book of 10, 000 or 12, 000
customers. Of the 12, 000 customers, we have identified 50
for papayas and about 75 for other items. So to say that they
are readily available, to [weed] 100 customers out of 12, 000
is quite an advantage.
. . . .
Q. And as far as [the Distributor] was concerned, the
proprietary confidential information that is acquired or
owned, is that the customer list that it's built up over
its existence, specific as to what people buy, when they buy
A. Exactly. These are the customers that we've whittled
out. Whittled out the ones and used the ones that we deemed
worthy of our business for the last ten to twelve years.
the hearing, the trial court signed a temporary injunction
order that found the Distributor "had demonstrated a
probable right to relief through its claims" against the
defendants. It granted injunctive relief mandating that the
Importer, Lance, and the Grower (collectively appellants)
continue the exclusive business relationship with the LLC
(Restrictions 1 and 6 below), prohibiting conduct deemed
competitive against the LLC (Restrictions 2-5 and 7 below),
and mandating the preservation of electronic information
(Restrictions 8 below). Specifically, the temporary
injunction order restrained appellants from,
[1.] Distributing any [hybrid] papayas without such
distribution going through [the LLC] and dividing proceeds as
[2.] Soliciting or conducting business with [the
Distributor's] customers or growers;
[3.] Soliciting, directly or indirectly, accounts of [the
LLC] or [the Distributor];
[4.] Diverting any business opportunity away from [the LLC]
or [the Distributor];
[5.] Directing any business opportunity away from [the
LLC] or [the Distributor];
[6.] Refusing to supply [hybrid] papayas for [the LLC] orders
if such papaya is available;
[7.] Using trade secrets and confidential information owned
by [the LLC] or [the Distributor];
[8.] Destroying, deleting, erasing, losing, hiding, altering,
or modifying in any manner the electronic information,
including emails, text messages, recordings, and other
communications involving or mentioning [the Importer], [the
Grower], [the LLC], [the Distributor] or any of its
principals or employees, or accounts which have done business
through [the LLC].
interlocutory appeal followed.
appellants' first issue, they essentially challenge
either the legal sufficiency or the viability of all of the
claims asserted by the Distributor. The claims that form the
basis for most of the injunctive relief granted in this case
may be divided into two categories:
• The claims for breaches of joint venture agreement,
partnership agreement, and joint venture form the basis for
the "exclusivity restrictions" (Restrictions 1 and
6) in the injunctive order.
• The claims for breach of fiduciary duty, aiding and
abetting in the breach of fiduciary duty, Texas Uniform Trade
Secrets Act, Texas Theft Liability Act, and tortious
inference with contract form the basis for the
"non-competition restrictions" (Restrictions 2-5
and 7) in the injunctive order.
claims forming the basis for the exclusivity restrictions
(Restrictions 1 and 6) are addressed in subsection B below;
the claims forming the basis for the non-competition
restrictions (Restrictions 2-5 and 7) are addressed in
subsection C below.
appellants' second issue, they argue that the parameters
of the non-competition restrictions (Restrictions 2-5 and 7)
are overbroad and unspecific. In light of our holdings
regarding the first issue, we addressed this issue in
subsection D below.
appellants' third issue, they challenge the legally
sufficiency of the evidence supporting an injunctive
restriction relating to preservation of electronic
information (Restrictions 8). We address this issue in
subsection E below.
Temporary Injunction Elements
obtain a temporary injunction, the applicant must plead and
prove three elements: (1) a cause of action; (2) a probable
right to relief; and (3) a probable, imminent, and
irreparable injury in the interim. Butnaru v. Ford Motor
Co., 84 S.W.3d 198, 204 (Tex. 2002). To show a probable
right to relief, the applicant is not required to establish
that it will prevail at trial. Walling v. Metcalfe,
863 S.W.2d 56, 58 (Tex. 1993) (per curiam). The merits of the
applicant's suit are not presented for review. Davis
v. Huey, 571 S.W.2d 859, 861 (Tex. 1978); Frontera
Generation Ltd. P'ship v. Mission Pipeline Co., 400
S.W.3d 102, 108 (Tex. App.-Corpus Christi 2012, no pet.)
(combined appeal & orig. proceeding).
the third element, an injury is irreparable if the injured
party cannot be adequately compensated in damages or if the
damages cannot be measured by any certain pecuniary standard.
Butnaru, 84 S.W.3d at 204. "'Disruption to
a business can be irreparable harm. Moreover, assigning a
dollar amount to such intangibles as a company's loss of
clientele, goodwill, marketing techniques, and office
stability, among others, is not easy.'"
Intercont'l Terminals Co., LLC v. Vopak N. Am.,
Inc., 354 S.W.3d 887, 896 (Tex. App.-Houston [1st Dist.]
2011, no pet.) (quoting Frequent Flyer Depot, Inc. v. Am.
Airlines, Inc., 281 S.W.3d 215, 228 (Tex. App.-Fort
Worth 2009, pet. denied) (citations omitted)).
Standard of Review
assess the trial court's ruling under the abuse of
discretion standard. Butnaru, 84 S.W.3d at 204. The
test for abuse of discretion is whether the trial court ruled
arbitrarily, unreasonably, without regard to guiding legal
principles, or without supporting evidence. Bocquet v.
Herring, 972 S.W.2d 19, 21 (Tex. 1998). As to ruling
without supporting evidence, the trial court does not abuse
its discretion if some evidence in the record reasonably
supports the trial court's decision. Butnaru, 84
S.W.3d at 211. Under this standard, we draw all legitimate
inferences from the evidence in a manner most favorable to
the trial court's ruling. Allied Capital Corp. v.
Cravens, 67 S.W.3d 486, 489 (Tex.
App.-Corpus Christi 2002, no pet.). Under this standard, the
legal and factual sufficiency of the evidence are not
independent grounds of error, but are relevant factors in
assessing whether the trial court abused its discretion.
Stewart Beach Condominium Homeowners Ass'n, Inc. v.
Gili N Proper Inv., LLC, 481 S.W.3d 336, 343 (Tex. App.-
Houston [1st Dist.] 2015, no pet.)
The Exclusivity Restrictions in the Temporary Injunction
1 and 6 of the temporary injunction order include the
following exclusivity relief, ...