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Reiss v. Hanson

Court of Appeals of Texas, Fifth District, Dallas

April 22, 2019

DAVID REISS AND SPY GAMES, LLC, Appellants
v.
JASON R. HANSON, Appellee

          On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-02498-J

          Before Justices Bridges, Partida-Kipness, and Carlyle

          MEMORANDUM OPINION

          ROBBIE PARTIDA-KIPNESS JUSTICE.

         David Reiss and Spy Games, LLC filed this accelerated interlocutory appeal pursuant to Texas Civil Practice and Remedies Code section 51.014(a)(4) challenging the trial court's denial of their motion to dissolve an agreed temporary injunction. In two issues, appellants argue the trial court abused its discretion in refusing to dissolve the temporary injunction because (1) it fails to comply with the mandatory requirements of rule 683 of the Texas Rules of Civil Procedure and (2) Reiss is the majority interest holder in Spy Games as a matter of law and therefore has the right to control the company under applicable corporate governance laws. We conclude the agreed temporary injunction is void because the order fails to set the cause for trial on the merits as required by rule 683. Accordingly, we reverse the trial court's order denying appellants' motion and dissolve the temporary injunction.

         BACKGROUND

         This case arises out of a dispute over the ownership and control of Spy Games, a limited liability company formed under the laws of Wyoming. After the relationship deteriorated between David Reiss and Jason R. Hanson, the two interest holders in the company, appellants sued Hanson and others[1] for various causes of action seeking both monetary and injunctive relief. The trial court signed a temporary restraining order in February 2018. On March 28, the trial court held a hearing on appellants' request for a temporary injunction. At the conclusion of the hearing, the trial court signed a temporary injunction based upon the agreement of the parties and not the result of the trial court's findings regarding the evidentiary hearing. Among other things, the agreed temporary injunction enjoined the parties from changing passwords or access to Spy Games' software or accounts, diverting funds from merchant accounts for daily deposits, or making any bill payment to an account other than Spy Games' company account at Iberiabank in Dallas. The agreed temporary injunction also provided that the "[d]efendants shall have the sole responsibility and authority to pay Spy Games' usual and customary business expenses" and that "Reiss shall not interfere with the payment of those expenses."

         Hanson filed a motion to modify the agreed temporary injunction on May 2. On May 10, appellants moved to dissolve the agreed temporary injunction. The trial court held a hearing on the motions on June 22. Rather than the trial court ruling on the motion to modify based on that evidentiary hearing, the parties once again reached an agreement. On July 13, the trial court signed an agreed order modifying the March 28 agreed temporary injunction.[2] Later, the trial court signed an order denying appellants' motion to dissolve.[3] Appellants filed this appeal.

         ANALYSIS

         In their first issue, appellants contend the trial court should have granted their motion to dissolve because the agreed temporary injunction fails to set forth the reasons for its issuance and fails to set the cause for trial on the merits as required by rule 683 of the Texas Rules of Civil Procedure.

         A motion to dissolve a temporary injunction is a way to show changed circumstances, changes in the law, or fundamental error has occurred in the issuance of the injunction. See Kassim v. Carlisle Interests, Inc., 308 S.W.3d 537, 540 (Tex. App.-Dallas 2010, no pet.). We review the trial court's ruling on a motion to dissolve a temporary injunction for an abuse of discretion. See id. A trial court abuses its discretion only if it reaches a decision so arbitrary and unreasonable that exceeds the bounds of reasonable discretion. See Henry v. Cox, 520 S.W.3d 28, 33-34 (Tex. 2017).

         In relevant part, rule 683 provides every order granting a temporary injunction shall set forth the reasons for its issuance and shall include an order setting the cause for trial on the merits with respect to the ultimate relief sought. Tex.R.Civ.P. 683. The procedural requirements of rule 683 are mandatory and must be strictly followed. Interfirst Bank San Felipe, N.A. v. Paz Constr. Co., 715 S.W.2d 640, 641 (Tex. 1986) (per curiam). A temporary injunction that fails to set the cause for trial on the merits "is subject to being declared void and dissolved." Qwest Commcn's Corp., 24 S.W.3d 334, 337 (Tex. 2000) (per curiam) (citing Interfirst Bank, 715 S.W.2d at 641). Likewise, a temporary injunction that fails to set forth the reasons for its issuance is fatally defective and void. See IPSecure, Inc. v. Carrales, No. 04-16-00005-CV, 2016 WL 3342108, at *2 (Tex. App.-San Antonio 2016, no pet.) (mem. op.). A trial court abuses its discretion by not dissolving a temporary injunction order that does not comply with the requirements of rule 683. See id.

         Because the agreed temporary injunction before us fails to set the cause for trial on the merits, it does not comply with the mandatory requirements of 683 and is therefore void and must be dissolved. See Interfirst Bank, 715 S.W.2d at 641; Indep. Capital Mgmt., L.L.C. v. Collins, 261 S.W.3d 792, 795 (Tex. App.-Dallas 2008, no pet.). We are not persuaded by Hanson's contention that the lack of a trial date in the agreed temporary injunction was cured by the parties' subsequent scheduling order setting the case for trial. To support his position, Hanson cites Leighton v. Rebeles, 343 S.W.3d 270, 273 (Tex. App.-Dallas 2011, no pet.) for the unremarkable proposition that the reason for requiring a trial date is to prevent the temporary injunction from effectively becoming permanent. But Leighton does not address whether a subsequent scheduling order can cure the defect caused by the lack of a trial date in a temporary injunction order. See Leighton, 343 S.W.3d at 273-74. On the contrary, Leighton acknowledges that the failure to include a date setting the case for trial on the merits mandates dissolution of the injunction. Id. at 273.

Although the record establishes that a trial on the merits has already taken place, the entry of a final judgment with respect to the ultimate relief sought was postponed, pending receipt of the special master's report. The interlocutory order requires the special master to report to the trial court by September 3, 2010, but the order does not indicate that September 3, 2010 is the "trial date" for purposes of the injunction. The interlocutory order also orders the parties to mediate the case within fourteen days following receipt by the trial court and parties of the special master's report. However, the interlocutory order does not include an order setting the cause for trial on the merits with respect to the ultimate relief sought.
We find nothing in the business organizations code and revised partnership act to excuse temporary injunctions ordered in furtherance of the winding up of a partnership from the statutory requirements set forth in rule 683. See Garza v. Trevino, No. 04-03-00477-CV, 2004 WL 1102826, at *2 (Tex. App-San Antonio May 19, 2004, no pet.) (mem. op., not designated for publication) (temporary injunction to prevent depletion of partnership assets during litigation void for failure to set cause for trial or provide for bond); Rubin v. Gilmore,561 S.W.2d 231, 234-35 (Tex.Civ.App-Houston [1st Dist.] 1977, no writ) (injunction restraining partner from interfering with operation of business by other partners invalid for failure to describe in reasonable detail the acts sought to be restrained in ...

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