Flamingo Permian Oil & Gas, LLC, Flamingo Operating, LLC and Omar Minhaj v. Star Exploration, LLC , 569 S.W.3d 329 ( 2019 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
FLAMINGO PERMIAN OIL & GAS,
L.L.C., FLAMINGO OPERATING, § No. 08-18-00027-CV
L.L.C., and OMAR MINHAJ,
§ Appeal from the
Appellants,
§ 83rd District Court
v.
§ of Pecos County, Texas
STAR EXPLORATION, L.L.C,
§ (TC# P-7720-83-CV)
Appellee.
§
OPINION
In this interlocutory appeal, Flamingo Permian Oil & Gas, L.L.C.; Flamingo Operating,
L.L.C.; and Omar Minhaj (collectively Flamingo) challenge a temporary injunction issued in favor
of Star Exploration, L.L.C. We dismiss Flamingo’s first three appellate points and affirm the
judgment of the trial court.
BACKGROUND
Star Exploration and Flamingo are part of a joint operating agreement (JOA) with respect
to certain oil and gas leases located in Pecos County. Under the JOA, Flamingo served as operator
and Star Exploration was the majority non-operating interest holder. The JOA gave Star
Exploration as the majority non-operating interest holder the ability to call a vote to remove an
operator for violating the JOA. The majority interest vote of non-operators determines whether an
operator is retained or removed. The operator may not participate in the vote.
On January 24, 2018, Star Exploration called a meeting to vote on the removal of Flamingo
as operator. Omar Minhaj was in attendance at the meeting on behalf of Flamingo. The members
voted (1) to remove Flamingo as operator due to alleged violations of the JOA for, among other
things, allowing liens to be placed on the property, and (2) to install Star Exploration as operator.
Thereafter, Flamingo sued Star Exploration and others. Star Exploration countersued the
Flamingo entities and Minhaj as a third-party defendant, then filed an application for injunctive
relief. Star Exploration asked for Flamingo to be enjoined and restrained from: (1) refusing to
join in the immediate execution and delivery of a proper joint Form P-4 designating Star
Exploration as the Operator for the leasehold; (2) interfering, opposing, preventing, or refusing to
cooperate with the efforts of Star Exploration to obtain approval from the Texas Railroad
Commission of Form P-4 designating Star Exploration as operator; (3) further operating or
performing operations on the leaseholds following execution and delivery of the joint Form P-4;
(4) interfering, opposing, preventing, or refusing to cooperate with Star Exploration’s operation of
the leasehold once Star Exploration secured Texas Railroad Commission approval of the Form P-
4; and (5) refusing to deliver to Star Exploration upon Texas Railroad Commission approval of
Form P-4 operator status of well files, records, data, and all other documentation relating to the
previous operation of or necessary to continue to operate the leasehold.
At the temporary injunction hearing, Star Exploration called Howard Gaddis as a witness.
Gaddis testified generally as to the existence and terms of the joint operating agreement between
Flamingo and Star Exploration, as well as liens and judgments in Pecos, Harris, and Midland
counties that either encumbered the property outright or placed the property in jeopardy. Flamingo
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appeared through counsel and did not call any witnesses. Following the hearing, the trial court
issued an order of February 8, 2018, granting Star Exploration’s request for temporary injunctive
relief (the February 8 Order). The February 8 Order did not set a date for trial, nor did it require
Star Exploration to post a bond. Flamingo filed its notice of appeal of this order on February 20,
2018.
While the interlocutory appeal of the February 8 Order was pending in this Court, the trial
court issued a corrected order on March 7, 2018, that set a $50,000 bond, but that did not set a date
for trial (the March 7 Order). After briefs for Flamingo and Star Exploration were filed in this
Court, the trial court issued a second corrected order on July 12, 2018, that granted the same
temporary injunctive relief previously requested, set a $50,000 bond, and set a date for trial (the
July 12 Order).
We now address the merits of Flamingo’s interlocutory appeal.
DISCUSSION
In four issues on appeal, Flamingo attacks the various orders’ validity on formal and
substantive grounds. We will begin with Flamingo’s objections as to form.
Formal Defects
In Issues One and Two, Flamingo contends that the February 8, 2018, order granting
temporary injunctive relief was void because it (1) failed to include an order setting the cause for
trial on the merits, and (2) failed to fix the amount of the security to be paid by Star Exploration
as required by the Texas Rules of Civil Procedure. In Issue Three, Flamingo also contends that
the March 7, 2018, corrected order was void because it failed to include an order setting the cause
for trial on the merits.
These issues are all moot.
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The appellate record here shows that both the February 8 Order and the March 7 Order
were superseded by the July 12 Order. It is undisputed that the July 12 Order, which appears in
this appellate record and which was issued while this appeal was pending, sets a date for trial on
the merits and fixes the amount of security to be paid by Star Exploration. All complained of
formal defects have been corrected.
Issues One, Two, and Three are dismissed as moot.
Probable, Imminent, and Irreparable Injury
Although the July 12 Order mooted all of Flamingo’s challenges to the form of the
temporary injunction, the July 12 Order did not moot Flamingo’s challenge to the merits of the
February 8 and March 7 Orders, since the substantive relief granted by the original and two
subsequent corrected orders was the same. See TEX.R.APP.P. 27.3 (if trial court modifies order
that has been appealed, appellate court must treat appeal as from the subsequent order and may
treat actions relating to the appeal of the first order as relating to the appeal of the subsequent
order); see also Tex. Health & Human Servs. Comm’n v. Advocates for Patient Access, Inc., 399
S.W.3d 615, 625 (Tex.App.—Austin 2013, no pet.).
In Issue Four, Flamingo argues that both the February 8 and March 7 Orders were improper
on the merits because Star Exploration did not show it would suffer a probable, imminent, and
irreparable injury. Specifically, Flamingo maintains that the injury Star Exploration alleges is not
“irreparable” because even if Star Exploration’s claims are true, any harm can be remedied by
money damages.
We review the trial court’s decision to grant or deny an injunction for abuse of discretion.
Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). A temporary injunction’s purpose
is to preserve the status quo of the litigation's subject matter pending a trial on the merits. Id. To
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obtain a temporary injunction, the applicant must plead and prove three specific elements: (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. 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. Id.
Star Exploration asserts that injunctive relief is proper and that damages are an inadequate
remedy in the event the property is lost because the value of the minerals present on the leasehold
asset and the projected recovery in years to come is speculative. We are not sure this is enough to
meet the standard, and Star Exploration has not cited case law suggesting that the speculative
nature of mineral valuation definitively prevents quantification of damages such that injunctive
relief is warranted on that basis alone. Still, even if damages could be quantified, we believe that
Star Exploration has shown a likelihood that Star Exploration is unable to pay damages, which
would justify the grant of injunctive relief. See Bankler v. Vale, 75 S.W.3d 29, 39 (Tex.App.—
San Antonio 2001, no pet.)(no adequate remedy at law for plaintiff where defendant cannot pay
damages). Star Exploration presented evidence at the hearing that Flamingo repeatedly failed to
pay debts, allowed liens to accrue against the property in violation of the JOA, and did not
participate in legal proceedings such that several default judgments had been taken against
Flamingo. Flamingo did not offer any evidence to the contrary, nor did Flamingo challenge the
trial court’s fact-findings related to these issues. This evidence supports the rational inference that
Flamingo cannot pay damages. In light of this and the other evidence in the record, we cannot say
that the trial court abused its discretion in issuing the temporary injunction.
Issue Four is overruled.
CONCLUCION
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Issues One through Three are dismissed as moot. Issue Four presents no reversible error.
The judgment of the trial court is affirmed.
February 28, 2019
YVONNE T. RODRIGUEZ, Justice
Before McClure, C.J., Rodriguez, and Palafox, JJ.
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