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Midstate Environmental Services L.P. v. Atkinson

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

December 14, 2017


         On appeal from the 94th District Court of Nueces County, Texas.

          Before Chief Justice Valdez and Justices Contreras and Hinojosa


          DORI CONTRERAS Justice

         This is an appeal of the denial of a temporary injunction. Appellant Midstate Environmental Services, LP (Midstate) sued its former employee, appellee John Atkinson, and Atkinson's company, appellee 5A Environmental Services, LLC (5A), claiming that Atkinson violated a non-compete agreement. By one issue on appeal, Midstate argues that the trial court erred by denying its request for a temporary injunction. We affirm.

         I. Background

         Midstate provides environmental waste management and related services. Beginning around 1998, Atkinson worked as a route driver for Midstate, collecting used oil, oil filters, antifreeze, and other materials from customers.

         On June 1, 2012, Atkinson and Midstate executed an "Employment Signing Incentive and Retention Agreement" (the Retention Agreement). The Retention Agreement stated that, in exchange for Atkinson's continued employment with Midstate and "conditional upon his agreement to and signing of" a "Non-Disclosure, NonCompetition, Non-Solicitation and Limitation Agreement" (the Non-Compete Agreement), Midstate would pay Atkinson a $15, 000 signing incentive. The Retention Agreement further provided that Atkinson would be paid a separate $15, 000 retention payment if he remained employed by Midstate until June 1, 2014.

         Atkinson and Midstate executed the Non-Compete Agreement, as contemplated in the Retention Agreement, on June 5, 2012. The Non-Compete Agreement generally provides that, in consideration for his employment with Midstate, the signing incentive, and Midstate's obligation to provide Atkinson with confidential information and trade secrets, Atkinson agreed that he would not compete with Midstate or solicit its customers during the period of his employment and for one year thereafter. The Non-Compete Agreement defined "trade secret" to include lists of Midstate's customers, suppliers, and prices. The Non-Compete Agreement further contained the following clause: "This Agreement shall constitute the entire understanding between the Parties with respect to the subject matter hereof and supersedes and replaces all prior communications, understandings and agreements between the parties, whether written or oral, express or implied, relating to the subject matter hereof." Both the Retention Agreement and the Non-Compete Agreement explicitly provided that Atkinson remained an at-will employee of Midstate.

         In March 2017, Atkinson's supervisor Robert Staton discovered a business card identifying Atkinson as the owner of 5A and stating that 5A was in the business of "Used Oil/Filters/Antifreeze." Staton also found that Atkinson had applied for a DOT number, which would allow 5A to transport hazardous materials. According to Staton, when he confronted Atkinson with this information, Atkinson did not deny that he was attempting to start a company to compete against Midstate. Staton reported this to Ned Murray, Midstate's president. Believing that this action violated the Non-Compete Agreement, Midstate sued Atkinson and 5A (collectively referred to as Atkinson) for breach of contract, misappropriation of trade secrets under the Texas Uniform Trade Secrets Act, see Tex. Civ. Prac. & Rem. Code Ann. ch. 134A (West, Westlaw through 2017 1st C.S.), and tortious interference with existing contract and prospective business relationships. The trial court then rendered a temporary restraining order which (1) enjoined Atkinson from competing with Midstate in certain Texas counties until April 6, 2017, and (2) and set a temporary injunction hearing for April 3, 2017.

         After the hearing, the trial court denied Midstate's request for temporary injunction. Pursuant to Midstate's request, the trial court issued findings of fact and conclusions of law, including the following:

1. Plaintiff failed to prove that it suffered a substantial threat of irreparable injury as a result of conduct by Atkinson.
2. Plaintiff could prove any loss it suffered as a result of actions by Atkinson without the necessity of receiving a restraining order.
3. Plaintiff is not entitled a temporary injunction based on the evidence presented at the hearing.
4. Paragraph 10 of the non-disclosure, non-competion [sic], non-solicitation and limitation agreement signed by Atkinson states that it is the only document that defines the rights of the parties and all [sic] replaces all prior agreements between the parties thereby ...

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