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Daugherty v. Highland Capital Management, L.P.

Court of Appeals of Texas, Fifth District, Dallas

May 23, 2019

PATRICK DAUGHERTY, Appellant
v.
HIGHLAND CAPITAL MANAGEMENT, L.P., Appellee

          On Appeal from the 68th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-12-04005

          Before Justices Schenck, Osborne, and Reichek

          MEMORANDUM OPINION

          DAVID J. SCHENCK, JUSTICE

         Patrick Daugherty appeals the trial court's entry of a modified permanent injunction. In his first issue, Daugherty challenges the modified permanent injunction as overbroad and lacking in requisite specificity and clarity. In his second issue, Daugherty contends the trial court erred by modifying the original permanent injunction without the requisite showing of changed circumstances. In his third issue, Daugherty argues the trial court lacked jurisdiction to modify the original permanent injunction. We vacate the trial court's order modifying the original permanent injunction. Because all issues are settled in law, we issue this memorandum opinion. Tex.R.App.P. 47.4.

         Background

         The underlying conflict that led to this current dispute has been described in multiple opinions.[1] Accordingly, we will limit our recitation to the facts necessary to resolve this current dispute.

         Daugherty resigned from his employment with appellee Highland Capital Management, L.P. ("Highland") in 2011. Highland brought suit against Daugherty in the 68th Judicial District Court of Dallas County and, in 2014, obtained a jury verdict against him for breaches of contract and fiduciary duty. The trial court entered judgment on the verdict and issued a permanent injunction ("Original Injunction") barring Daugherty from using or disseminating Highland's confidential information. Since that time, Highland brought additional actions against Daugherty for alleged violations of the Original Injunction, and the trial court found violations and entered criminal contempt orders, which were reversed or vacated on appeal.[2]

         In 2016, Highland learned Daugherty had been in contact with an investigative reporter for the Wall Street Journal ("Journal"), and in October of that year, the Journal published an article covering various lawsuits against Highland Capital.[3] Highland sought the issuance of a new order modifying or supplementing the Original Injunction to require Daugherty to self-report within 48 hours to Highland and the trial court any violations of the Original Injunction. On March 10, 2017, the trial court signed an order granting that relief. On March 23, 2017, the trial court signed an amended order requiring Daugherty to self-report violations of the Original Injunction and prohibiting all parties from engaging in ex parte communications.[4] On June 23, 2017, the trial court signed the Second Amended Order Requiring Patrick Daugherty to Self-Report Violations of the Permanent Injunction and Prohibiting Ex Parte Communications with the Court ("Modified Permanent Injunction"), which required Daugherty to self-report violations of the Original Injunction, prohibited ex parte communications, and added a statement that the Modified Permanent Injunction superseded the March 10 and March 23 orders. Approximately one month later, Daugherty filed a motion to reconsider and vacate or set aside the Modified Permanent Injunction, which was overruled by operation of law. Daugherty then filed his notice of appeal of the Modified Permanent Injunction.

         Discussion

         Trial courts have broad discretion in the enforcement of their judgments. Rose v. Bonvino, No. 05-14-00702-CV, 2015 WL 4736837, at *2 (Tex. App.-Dallas Aug. 11, 2015, pet. denied). We review the trial court's order using an abuse of discretion standard. Id. The test for abuse of discretion is whether the court acted without reference to guiding rules and principles. Id.

         In his first issue, Daugherty challenges the Modified Permanent Injunction, which contains the same language as the Original Injunction, as overbroad and lacking in requisite specificity and clarity and thus requests this Court vacate the Modified Permanent Injunction and the challenged language from the Original Injunction.

         A trial court generally retains jurisdiction to review, open, vacate, or modify a permanent injunction upon a showing of changed conditions. Smith v. O'Neill, 813 S.W.2d 501, 502 (Tex. 1991). The authority to exercise that jurisdiction, however, must be balanced against principles of finality and res judicata. See System Fed'n No. 91 v. Wright, 364 U.S. 642, 647-48 (1961); see also Rose, 2015 WL 4736837, at *2. Whether right or wrong, an injunction is not subject to impeachment in its application to the conditions that existed at its making. United States v. Swift & Co., 286 U.S. 106, 119 (1932).

         Res judicata bars the relitigation of claims that have been finally adjudicated or that could have been litigated in the prior action. Engelman Irrigation Dist. v. Shields Bros., Inc., 514 S.W.3d 746, 750 (Tex. 2017). Here, Daugherty attempts to challenge the language of the Original Injunction by virtue of the fact that the trial court incorporated it into the Modified Permanent Injunction. Daugherty has previously appealed the trial court's judgment and challenged the Original Injunction. See Daugherty v. Highland Capital Mgmt., L.P., No. 05-14-01215-CV, 2016 WL 4446158 (Tex. App.-Dallas Aug. 22, 2016, no pet.). He did not in the trial court or on appeal challenge the language of the Original Injunction as overbroad and lacking in requisite specificity and clarity. See Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010) (holding res judicata requires party prove (1) prior final determination on merits by court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) second action based on same claims as were or could have been raised in first action).

         Daugherty responds that res judicata cannot bar this issue because it is an affirmative defense that Highland failed to raise below. See Tex. R. Civ. P. 94 (requiring res judicata and other affirmative defenses be pleaded); MAN Engines & Components, Inc. v. Shows, 434 S.W.3d 132, 137 (Tex. 2014) (requiring affirmative defenses be pleaded in trial court to avoid waiver on appeal). However, ...


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