Universal Rehearsal Partners, Ltd. v. Vince Barnhill ( 2022 )

Affirm and Opinion Filed September 19, 2022
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-22-00296-CV
UNIVERSAL REHEARSAL PARTNERS, LTD., Appellant
V.
VINCE BARNHILL, Appellee
On Appeal from the 191st Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-22-00172
MEMORANDUM OPINION
Before Justices Myers, Pedersen, III, and Garcia
Opinion by Justice Myers
Universal Rehearsal Partners, Ltd. brings an interlocutory appeal of the trial
court’s denial of a temporary injunction against Vince Barnhill. Universal brings
four issues on appeal contending (1) the trial court erred by denying a temporary
injunction because it presented sufficient evidence to obtain a temporary injunction;
(2) Barnhill’s illegal conduct cannot constitute the status quo; (3) Barnhill should
not be allowed to continue drawing a salary; and (4) Barnhill should not be permitted
to deny the partnership and other partners access to partnership records. We affirm
the trial court’s order denying the temporary injunction.
BACKGROUND
Prior to September 2000, Barnhill operated a business providing rehearsal
space rented to musicians and bands. Barnhill and John Kirtland knew one another
because Kirtland had a band that rehearsed there. In September 2000, Kirtland and
Barnhill agreed to operate the rehearsal-space business as a limited partnership.
The partnership agreement provided that Barnhill was the general partner and
Kirtland was the limited partner. They each had a fifty-percent interest in the
partnership. All “Major Decisions” would have to be approved by both partners.
“Major Decisions” included the approval of the partnership budget, employee and
partner compensation and duties, the hiring and firing of partnership employees and
agents, and the terms on which they were hired. The general partner and the general
partner’s affiliates were not entitled to compensation from the partnership; however,
if the partners decided to compensate themselves, they were each to receive equal
compensation. The limited partner had the power to remove the general partner upon
giving the general partner written notice of removal due to the occurrence of certain
events, including the general partner’s acting in contravention of the terms or intent
of any provision in the partnership agreement or the application or appropriation of
partnership funds in an unauthorized manner. After the general partner is removed,
he becomes a limited partner with all the rights and duties of a limited partner. The
newly appointed general partner would then receive a one-percent interest in the
partnership taken from the previous general partner’s interest.
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On November 12, 2021, Kirtland gave Barnhill written notice that Barnhill
was removed from the position of general partner. The notice listed eleven areas
where Barnhill had failed in his duties as general partner, including making major
decisions without Kirtland’s consent by causing the partnership to pay Barnhill or
his affiliates compensation for Barnhill’s work managing the partnership, Barnhill’s
not paying property and income taxes timely, Barnhill’s using some of the rehearsal
space as his personal living space without compensating the partnership when the
space could have been rented out as rehearsal space, and Barnhill’s failing to keep
full and accurate books and records of all transactions of the partnership. The notice
stated that Q PM, LLC was now the general partner.
Universal filed suit against Barnhill on January 11, 2022, alleging causes of
action including breach of contract, breach of fiduciary duty, requests for declaratory
judgment, an action for accounting, and a request for injunctive relief. The trial
court entered a temporary restraining order against Barnhill. The court then held a
hearing on Universal’s application for a temporary injunction. Kirtland and Barnhill
testified at the hearing about their relationship and the partnership. After the hearing,
the trial court signed a written order denying the application for a temporary
injunction and dissolving the temporary restraining order.
TEMPORARY INJUNCTIONS
All of Universal’s issues concern the trial court’s order denying Universal’s
application for a temporary injunction.
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Section 51.014(a)(4) of the Texas Civil Practice and Remedies Code permits
an interlocutory appeal of a trial court’s grant or denial of an application for a
temporary injunction. TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(4). The
decision to grant or deny an application for a temporary injunction is within the
sound discretion of the trial court. See Butnaru v. Ford Motor Co., 84 S.W.3d 198,
204 (Tex. 2002). An appellate court will not reverse a trial court’s decision to deny
an application for a temporary injunction absent an abuse of discretion. See id. An
appellate court will not substitute its judgment for that of the trial court. See id. An
appellate court draws all legitimate inferences from the evidence viewed in the light
most favorable to the trial court’s order granting or denying the application for a
temporary injunction. See Tom James of Dallas, Inc. v. Cobb, 109 S.W.3d 877, 883
(Tex. App.—Dallas 2003, no pet.).
When a trial court denies an application for a temporary injunction, it abuses
its discretion if its decision is so arbitrary as to exceed the bounds of reasonable
discretion. See Wilson N. Jones Mem’l Hosp. v. Huff, 188 S.W.3d 215, 218 (Tex.
App.—Dallas 2003, pet. denied). A trial court abuses its discretion when it
misapplies the law to established facts or when the evidence does not reasonably
support its determination regarding the existence of a probable right of recovery or
a probable injury. See Tom James of Dallas, 109 S.W.3d at 883. However, a trial
court does not abuse its discretion in denying an application for a temporary
injunction based on its holding that the applicant failed to prove one of the
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requirements for a temporary injunction. See Wilson N. Jones Mem’l Hosp., 188
S.W.3d at 218. Also, there is no abuse of discretion when a trial court bases its
decision on conflicting evidence when there is some evidence that reasonably
supports its decision. See Butnaru, 84 S.W.3d at 211 (some evidence). As the
factfinder, the trial court is the sole judge of the credibility of the witnesses and the
weight to give their testimony; it may choose to believe one witness and disbelieve
another. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); see Loye v.
Travelhost, Inc., 156 S.W.3d 615, 620 (Tex. App.—Dallas 2004, no pet.).
A temporary injunction is an extraordinary remedy and does not issue as a
matter of right. Butnaru, 84 S.W.3d at 204. For a temporary injunction to issue, the
applicant must plead and prove: (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. Id.; see also CIV. PRAC. § 65.011.
To establish a probable right to the relief sought, an applicant is required to
allege a cause of action and offer evidence that tends to support the right to recover
on the merits. Dallas Anesthesiology Associates, P.A. v. Tex. Anesthesia Group,
P.A., 190 S.W.3d 891, 896–97 (Tex. App.—Dallas 2006, no pet.). An applicant is
not required to show he will prevail at the final trial because the ultimate merits of
the case are not before the trial court. Id. at 897. A probable right to recovery may
be proven by alleging the existence of a right and presenting evidence tending to
show that right is being denied. Id.–5–
For purposes of a temporary injunction, 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; Wilson N.
Jones Mem’l Hosp., 188 S.W.3d at 218. An adequate remedy at law is one that is as
complete, practical, and efficient to the prompt administration of justice as is
equitable relief. El Tacaso, Inc. v. Jireh Star, Inc., 356 S.W.3d 740, 744 (Tex.
App.—Dallas 2011, no pet.). 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 defined as, “the last, actual, peaceable,
non-contested status which preceded the pending controversy.” Pierce v. State, 184
S.W.3d 303, 308 (Tex. App.—Dallas 2005, no pet..) (quoting In re Newton, 146
S.W.3d 648, 651 (Tex. 2004) (orig.proceeding)).
The party applying for a temporary injunction has the burden of production,
which is the burden of offering some evidence that establishes a probable right to
recover and a probable interim injury. See Dallas Anesthesiology, 190 S.W.3d at
896; Wyly v. Preservation Dallas, 165 S.W.3d 460, 465 (Tex. App.—Dallas 2005,
no pet.). If an applicant does not discharge his burden, he is not entitled to such
extraordinary relief. Wyly, 165 S.W.3d at 465.
ANALYSIS
Universal states the temporary injunction it sought would have enjoined
Barnhill from:
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1. interfering with his removal as general partner;
2. acting as a signatory on the partnership’s bank accounts;
3. collecting partnership income, including rents from the tenants;
4. residing at the property;
5. not making available the partnership books and records; and
6. interfering with QPM’s ability to operate the business, including
payment of the ordinary business expenses.
Universal concedes that the second requested form of injunctive relief, that Barnhill
be enjoined from acting as a signatory on the partnership’s bank accounts, is now
“moot as the bank has removed Barnhill as a signatory and stated he will not ever be
allowed back onto the accounts.” Universal argues that for each of the other forms
of requested injunctive relief, it “produced substantial (if not uncontroverted)
evidence . . . meaning the trial court erred by denying the requested relief.”
Universal pleaded causes of action that Barnhill breached the partnership
agreement, breached his fiduciary duty to Universal, and an action for accounting.
Generally, a court will not enforce contractual rights by injunction because a party
can rarely establish an irreparable injury and an inadequate legal remedy when
damages for breach of contract are available. Butnaru, 84 S.W.3d at 211.
The trial court granted a temporary restraining order on February 11, 2022.
The restraining order provided:
1. Barnhill may not interfere with his removal as general partner
and the installation of Q PM, LLC as general partner;
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2. Barnhill may not be a signatory on the partnership’s bank
accounts;
3. Barnhill may not collect any rents due and must inform the
tenants that cash rent will not be accepted by the partnership;
4. Barnhill shall not be permitted to sleep at the premises or
maintain his personal effects there;
5. Barnhill shall make the books and accounts available to the
partnership, Kirtland, and Q PM, LLC;
6. No party shall make a distribution to Barnhill or his entities
without the written agreement of Barnhill and Kirtland;
7. Barnhill shall not interfere with Q PM, LLC’s ability to pay the
partnership’s ordinary business expenses;
8. “Q PM, LLC and the Limited Partner shall not interfere with
Barnhill’s ability to occupy his office at the Partnership’s
property, schedule, book, and manage band appointments, the
renting of Partnership band equipment, or to regularly observe
the Partnership’s property and bring up any issues to Q PM, LLC
for attention regarding the Property . . . .”
The trial court held a trial on the temporary injunction on February 24, 2022.
Although Universal asserts it proved its case overwhelmingly and that much of the
evidence was uncontroverted, review of the record shows much of the evidence was
disputed and little was uncontroverted.
At the trial, Kirtland testified that Barnhill had been drawing a salary from the
partnership of $96,000 a year since 2012. Kirtland testified he first learned of it in
2016 when Barnhill filed the 2012 income tax returns. He testified he did not
consent to Barnhill’s drawing a salary and repeatedly told Barnhill he could not do
so. Barnhill testified that from 2000 to 2012 he did not draw a salary. However, in
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2012, Barnhill told Kirtland that he needed $8,000 per month to live on and that
Kirtland agreed to his receiving the salary. Barnhill testified Kirtland worked with
him on classifying it as necessary to maintain their bank loan and to be appropriate
for the tax returns. At times, the salary was called a management fee paid either to
Barnhill or his entity, Soundhouse Management, or it was called a “distribution.”
Barnhill testified Kirtland never told him he could not take the money. The trial
court could conclude Universal was unlikely to prevail on this aspect of its breach-
of-contract and other claims concerning Barnhill drawing a salary.1
Universal also argues Barnhill breached the partnership agreement by failing
to make pro rata distributions to the partners. The court could conclude the evidence
failed to show irreparable injury to the partnership from Barnhill’s receiving $8,000
a month as salary and failing to pay Kirtland the same amount because the trial court
could find Barnhill’s allegedly wrongful receipt of the money can be remedied by
money damages. Universal argues that Barnhill’s receiving a salary sometimes left
the partnership without sufficient funds to pay the property taxes, federal income
taxes, and put the partnership in default with the bank concerning the mortgage.
However, Barnhill testified the partnership was no longer in default with the bank
and the property and income taxes were paid. There was no evidence that Barnhill
continues to draw a salary.
1
This assertion may also be moot since Barnhill no longer has access to the partnership’s bank
accounts. Kirtland, however, did not concede it was moot, and Barnhill did not address it in his brief.
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Kirtland also testified that when the bands paid in cash, he thought not all the
cash made it into the partnership’s accounts. He testified that after Barnhill was
removed as general partner, the cash deposits “dried up.” He said Barnhill had been
in charge of collecting the rent, including the rent payments that were made in cash.
He said he thought Barnhill was putting the cash payments in his pocket. Kirtland
said he did not know if Barnhill was collecting rents after the temporary restraining
order forbade him from doing so. Barnhill testified he accounted for all the cash
receipts. He stated he sometimes took some of the cash “to buy something for the
crew if they were working,” and he testified all the cash receipts went to the
partnership’s CPA. After Barnhill’s removal as general partner, the musicians were
told cash payments would no longer be accepted and that payments had to be by
credit card or Venmo. Some of the musicians asked Barnhill if that was serious, and
he told them it was. The trial court could conclude Universal was unlikely to prevail
on this aspect of its breach-of-contract and other claims because the court could find
the reduced cash payments were due to the partnership’s instructions not to pay in
cash. The court could also conclude the evidence failed to show irreparable injury
to the partnership because Barnhill’s alleged failure to account for cash payments
could be remedied by an award of damages.
Kirtland also testified Barnhill was keeping two sets of books with the
partnership’s books showing “total income” greater than what was reported on the
partnership’s federal income tax return. Barnhill testified he did not keep two sets
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of books. He agreed that there was a difference in the amounts shown on the
partnership’s accounts versus what was on the tax returns. Barnhill testified that
some of the income on the books may not have been treated as income on the tax
returns because it was for deposits that had not yet been used. Barnhill signed the
returns as general partner, but the returns were prepared by the partnership’s CPAs,
who did not testify. Barnhill testified he had not received anything from the IRS
indicating there was a problem with the income or the taxes. Universal presented no
evidence that the difference between total income shown on the partnership’s books
and the tax returns was not appropriate under the partnership’s circumstances. The
trial court could conclude Universal was unlikely to prevail on this aspect of its
claims. The court could also conclude the evidence failed to show irreparable injury
to the partnership.
Kirtland also testified that Barnhill had refused to produce records and
accounts as required by the partnership agreement. The agreement provided that the
“books and records shall, at all times, be maintained at the principal place of business
of the Partnership and the Limited Partner shall have the right to inspect and copy
any of them, at their his [sic] own expense, during normal business hours.” The
partnership agreement required that “[a]ll notices, demands, requests or other
communications that may be or are required to be given, served or sent . . . pursuant
to this Agreement shall be in writing and shall be mailed by first-class, registered or
certified mail . . . or transmitted by hand delivery, telegram or facsimile transmission
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. . . .” Kirtland did not testify that he sought to inspect or copy the books at the
partnership’s office. Barnhill testified that Kirtland sent him text messages asking
to see various documents. Barnhill said he did not understand many of the requests.
He also said that Kirtland did not make a demand for the documents complying with
the requirements of the partnership agreement. Barnhill also testified he had turned
over all the company’s books and records to the partnership’s CPA. The trial court
could conclude from this disputed evidence that Universal had failed to provide that
Barnhill violated the requirement to provide the partnership’s records and accounts
to Kirtland. Thus, the trial court could conclude Universal was unlikely to prevail
on this aspect of its breach-of-contract and other claims. The court could also
conclude the evidence failed to show irreparable injury to the partnership.
Universal also argued Barnhill breached the partnership agreement and his
fiduciary duty to the partnership by converting one of the rehearsal studios into
living quarters where Barnhill lived. Kirtland testified this cost the partnership
money because Barnhill was not paying rent and the studio could not be rented if
Barnhill was living there. Barnhill testified he did not live on the premises. He
testified he had a bed and a few personal possessions in one of the studios for when
he had to be there when a band was rehearsing after midnight. He testified that when
that studio was needed, he moved the bed out. Due to the controverted evidence, we
do not find Universal established the trial court abused its discretion.
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We conclude the trial court did not err by denying Universal’s motion for
temporary injunction. We overrule Universal’s first issue. We need not address
Universal’s second issue discussing what constitutes the status quo.
In the third issue, Universal contends Barnhill should no longer be allowed to
continue drawing a salary. As discussed above, the evidence was disputed
concerning whether Kirtland agreed to Barnhill’s drawing a salary. Universal did
not introduce evidence that Barnhill continued to draw a salary after he was removed
from the position of general partner or at the time of the trial. Furthermore, given
Universal’s acknowledgement that Barnhill is no longer a signatory on the
partnership’s bank accounts, it is not clear how he could continue to draw a salary.
We conclude Universal has not shown the trial court abused its discretion. We
overrule Universal’s third issue.
In its fourth issue, Universal contends, “Should Barnhill be permitted [to]
deny the Partnership and other partners access to partnership records, including, but
not limited to (1) rent rolls, (ii) leases of tenants, (iii) his personal VENMO accounts
(to which he has diverted rent payments), and (iv) other partnership records?” As
discussed above, based on the evidence before the court, the trial court could
conclude that Universal failed to prove that it made a request for the records
complying with the requirements of the partnership agreement. The trial court could
also conclude Universal failed to prove Barnhill did not make the records available
at the partnership’s business office during regular business hours as required by the
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partnership agreement. Concerning the assertion that Barnhill failed to turn over his
personal Venmo records, Universal presented no evidence that it requested Barnhill
to turn over his personal records, nor does it explain why Barnhill’s personal Venmo
records constitute the partnership’s books and records. We conclude Universal has
not shown the trial court abused its discretion. We overrule Universal’s fourth issue.
CONCLUSION
We affirm the trial court’s order denying the temporary injunction.
/Lana Myers//
220296f.p05 LANA MYERS
JUSTICE
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
UNIVERSAL REHEARSAL On Appeal from the 191st Judicial
PARTNERS, LTD., Appellant District Court, Dallas County, Texas
Trial Court Cause No. DC-22-00172.
No. 05-22-00296-CV V. Opinion delivered by Justice Myers.
Justices Pedersen, III and Garcia
VINCE BARNHILL, Appellee participating.
In accordance with this Court’s opinion of this date, the order of the trial
court denying a temporary injunction is AFFIRMED.
It is ORDERED that appellee VINCE BARNHILL recover his costs of this
appeal from appellant UNIVERSAL REHEARSAL PARTNERS, LTD.
Judgment entered this 19th day of September, 2022.
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