Christopher M. Propst and Stride Investments, LLC v. Gregory K. Propst, Individually and Derivatively on Behalf of Riostar Solutions, Inc. ( 2019 )

NUMBER 13-18-00291-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI–EDINBURG
CHRISTOPHER M. PROPST AND
STRIDE INVESTMENTS, LLC, Appellants,
v.
GREGORY K. PROPST,
INDIVIDUALLY AND DERIVATIVELY
ON BEHALF OF RIOSTAR
SOLUTIONS, INC., Appellees.
On appeal from the 275th District Court
of Hidalgo County, Texas.
MEMORANDUM OPINION ON REHEARING
Before Justices Benavides, Hinojosa, and Perkes
Memorandum Opinion on Rehearing by Justice Perkes
In September 2016, Appellees RioStar Solutions, Inc. (RioStar) and RioStar co-
owner Gregory K. Propst (Greg) filed suit and application for injunctive relief against
appellants RioStar co-owner Christopher M. Propst (Chris) and his management and
consultant company Stride Investments, LLC (Stride), alleging breach of fiduciary duty,
civil conspiracy, violations of the Texas Civil Theft Act, and tortious interference with
contract. In October 2016, the trial court entered a temporary injunction order (October
2016 order). In June 2018, the trial court signed an order (June 2018 order) extending
the October 2016 order following hearings on appellees’ request for enforcement of the
October 2016 order and appellants’ motion to dissolve the October 2016 order.
Appellants timely appealed the trial court’s June 2018 order, see TEX. CIV. PRAC. & REM.
CODE ANN. § 51.014, arguing that the trial court (1) entered an invalid temporary injunction
order, and (2) abused its discretion in denying appellants’ motion to dissolve the
temporary injunction.
On June 26, 2019, we issued a memorandum opinion dismissing appellants’
appeal for want of subject-matter jurisdiction. See Propst v. Propst, No. 13-18-00291-
CV, 2019 WL 2622337, at *1 (Tex. App.—Corpus Christi–Edinburg June 27, 2019, no
pet.) (mem. op.). Appellants and appellees thereafter filed motions for rehearing and for
en banc reconsideration, and appellees requested to supplement the record with
evidence of a pending motion for contempt. We granted appellees’ request to
supplement the record. We now grant appellees’ motion for rehearing, withdraw our
June 26, 2019 memorandum opinion, and substitute the following in its place. 1 We
reverse and remand.
1 All other motions pending before the court are hereby denied.
2
I. BACKGROUND
On July 31, 2013, RioStar, a Texas corporation, was created by relatives, Chris
and Greg. On August 23, 2013, RioStar entered into an “Independent Contractor/Sales
Agent Agreement” with Patterson Freight Systems, Inc. (Patterson). Under the contract,
Patterson provided RioStar with sales and operational materials, including an email
domain and computer software that tracked RioStar’s business transactions and
customer lists. On October 1, 2013, RioStar entered into a “Management Services
Agreement” with Stride.
By mid-2016, the relationship between Chris and Greg had deteriorated, which
adversely affected RioStar. On August 31, 2016, RioStar received a termination notice
from Patterson. Chris and Greg, on behalf of RioStar, requested a termination extension
date, and Patterson agreed to extend the termination date until September 26, 2016.2
On September 20, 2016, Greg filed suit and an application for temporary injunction
against Chris and his company, Stride.3 Meanwhile, on behalf of Stride, Chris executed
a new contract with Patterson on September 27, 2016; Stride then subsumed use of
RioStar’s former software and email account.
On October 19, 2016, the trial court entered a temporary injunction order requiring
Chris to: (1) “pay RioStar a royalty of 10% of the gross brokerage or $10,000, whichever
is greater, during the term of the Temporary Injunction”; (2) provide “weekly reports to
2 Pursuant to the contract’s termination terms, RioStar was required to discontinue use of all of
Patterson’s materials, including software.
3 The suit also named individuals and companies associated with Patterson and Stride, whom are
not parties to this appeal: Sweet Life Logistics, Inc., Sweet Life Transportation, Inc., George Garcia (aka
Jorge Garcia, aka Roberto Vasquez), J Brokerage Corp, Daniel Diaz, Frank Diaz, Tim O’Bannon, S
Katzman Produce, Inc., Katzman Berry Corporation., Top Katz Brokers, LLC, JMS Top Katz Texas, LLC,
Stephen Katzman, Joseph Palumbo and Mario Andreani.
3
RioStar of all brokerage activity”; (3) resign as RioStar’s director and officer; (4) terminate
Stride’s contract with RioStar; and (5) turn over electronics used by former RioStar
employees, including his personal laptop and cell phones, to counsel for a forensic
sweep. The court additionally ordered that the October 2016 order would “remain
effective until the trial on the merits set for 9:00 o’clock a.m., on the 1st day of May,
2017 . . . unless dissolved or modified sooner by Order of this Court.” (emphasis added.)
Appellants did not appeal the October 2016 order, and the case did not proceed
to trial on May 1, 2017. The parties dispute whether the October 2016 order expired by
its own prescribed terms on the May 1st date. On May 24, 2017, appellees filed a motion
to hold appellants in contempt for failure to comply with the October 2016 order and to
extend and enforce the order. Appellants responded by filing a motion to dissolve, deny
removal, or modify the temporary injunction, and alternatively, appellants requested a
bond increase. Although the court held the evidentiary injunction hearing on May 30,
2017, and multiple hearings thereafter on this matter, the second temporary injunction
order was not signed until June 19, 2018.
The trial court took “judicial notice of all prior proceedings, the pleadings, including
the evidence presented, the pleadings, responses and arguments of counsel, [and found]
that the Temporary Injunction issued on October 19, 2016 should be extended.” The
June 2018 order contained multiple revisions to the October 2016 order, including
removing paragraph four altogether and changing the royalty requirement to “10% of the
gross brokerage or $7,500, whichever is greater,” with said payments expiring upon its
stated “effective until” date. The trial court provided that the June 2018 order would
4
“remain effective until the trial on the merits set for 10:00 o’clock a.m., on the 24th day of
September, 2018.” This appeal followed.4
II. JURISDICTION
A. Substantive Changes
On appeal, our review is generally limited to the narrow question of whether the
trial court abused its discretion in its issuance of a temporary injunction order, and the
trial court’s injunction orders are strictly construed to ensure compliance with the law.
See Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (“A reviewing court
should reverse an order granting injunctive relief only if the trial court abused that
discretion.”); Super Starr Int’l, LLC v. Fresh Tex Produce, LLC, 531 S.W.3d 829, 838 (Tex.
App.—Corpus Christi–Edinburg 2017, no pet.).
However, a subsequent temporary injunction order which simply extends the initial
temporary injunction is not an appealable interlocutory order. See TEX. CIV. PRAC. &
REM. CODE ANN. § 51.014(a)(4); see also Ludewig v. Houst. Pipeline Co., 737 S.W.2d 15,
16 (Tex. App.—Corpus Christi–Edinburg 1987, no writ) (“Appellants may not now ‘tack’ a
non-appealable order to an otherwise appealable order in order to readjust the appellate
time table so as to secure our review of the case.” (citing City of Arlington v. Tex. Electric
Service Co., 540 S.W.2d 580 (Tex. Civ. App.—Ft. Worth 1976, writ ref’d n.r.e.))). A
subsequently issued temporary injunction order is an extension of the first order if it
(1) seeks only to extend the duration of the injunction, and (2) no substantive changes
were made. See In re Graybar Elec. Co., Inc., No. 13-08-00073-CV, 2008 WL 3970865,
4 We note that the aforementioned co-defendants not parties to this appeal have a separate
accelerated interlocutory appeal pending out of this Court involving the trial court’s August 2018 order
denying the defendants’ special appearances. The trial court thereafter granted the defendants’ motion
for statutory stay of proceedings on September 18, 2018.
5
at *11-12 (Tex. App.—Corpus Christi–Edinburg Aug. 26, 2008, no pet.) (mem. op.) (citing
examples of substantive modifications). Therefore, we only have jurisdiction to review
the appeal if we conclude that changes to the June 2018 order were substantive. See
TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(4); see also In re Graybar, 2008 WL
3970865, at *13 (holding that where an extension order made no substantive modification
to the original temporary injunction, the order fell “outside the ambit of section
51.014(a)(4) of the civil practice and remedies code,” and our court lacked jurisdiction to
review it); City of Lancaster v. Tex. Motor Transp. Ass’n, Inc., No. 05-05-00169-CV, 2005
WL 2303415, at *1 (Tex. App.—Dallas Sept. 22, 2005, no pet.) (mem. op.) (same).
Appellees concede that the June 2018 order “did contain a substantive change,”
but nonetheless maintain that the June 2018 order was an “extension.” 5 We agree only
that the changes were substantive. The percentage of royalties and flat fee per month
owed by appellant have changed, and other directives, such as Chris’s entitlement to
ownership in RioStar, have been removed altogether. See Ahmed v. Shimi Ventures,
L.P., 99 S.W.3d 682, 689 (Tex. App.—Houston [1st Dist.] 2003, no pet.); cf. In re Graybar,
2008 WL 3970865, at *11-12; City of Lancaster, 2005 WL 2303415, at *1. Having found
that the changes amounted to a substantive modification, we proceed to the second
jurisdictional hurdle that this case poses: is the June 2018 order moot?
5 Appellees cite no support for its contention that a subsequent temporary injunction order
containing a substantive change is therefore merely an extension—in name or effect—and caselaw,
although sparse, indicates the contrary. See Ahmed v. Shimi Ventures, L.P., 99 S.W.3d 682, 689 (Tex.
App.—Houston [1st Dist.] 2003, no pet.); see also In re Graybar Elec. Co., Inc., No. 13-08-00073-CV, 2008
WL 3970865, at *11-12 (Tex. App.—Corpus Christi–Edinburg Aug. 26, 2008, no pet.) (mem. op.); City of
Lancaster v. Tex. Motor Transp. Ass’n, Inc., No. 05-05-00169-CV, 2005 WL 2303415, at *1 (Tex. App.—
Dallas Sept. 22, 2005, no pet.) (mem. op.).
6
B. Mootness
When an injunction becomes inoperative because it has expired, its validity
becomes moot for appellate review. 6 Parr v. Stockwell, 322 S.W.2d 615, 616 (Tex.
1959). A temporary injunction order may expire (1) at a fixed time, or (2) contingent on
an event, such as a final judgment. See Isuani v. Manske-Sheffield Radiology Grp., P.A.,
802 S.W.2d 235, 236 (Tex. 1991) (providing that, if not otherwise specified, a final
judgment acts as finality for a temporary injunction); see also Yardeni v. Torres, 418
S.W.3d 914, 917 (Tex. App.—El Paso 2013, no pet.) (providing that “before [the appellate
court] had the opportunity to dismiss the appeal for mootness, [the applicant] moved to
amend and renew her initial temporary injunction order,” extending the expiration date);
see generally 44 Tex. Jur. 3d Injunctions § 114.
By its own prescribed terms, the June 2018 order expired on the date it ceased
effect: “[the] [t]emporary Injunction shall remain effective until the trial on the merits set
for 10:00 o’clock a.m., on the 24th day of September, 2018.” Though rule 683 of the
Texas Rules of Civil Procedure requires language setting the trial of the merits, the rule
does not dictate that the setting act as an injunction terminus date. TEX. R. CIV. P. 683;
see, e.g., Electrolux Home Care Prods., Ltd. v. Int’l Mfg. Sols. Corp., 247 S.W.3d 239,
241–42 (Tex. App.—El Paso 2007, no pet.) (holding the order specified the end-date of
6 Mootness is a threshold issue that implicates a reviewing court’s subject-matter jurisdiction, and
appellate courts are prohibited from reviewing an injunction that has become moot. Nat’l Collegiate
Athletic Ass’n v. Jones, 1 S.W.3d 83, 86 (Tex. 1999) (“This prohibition . . . prohibits courts from rendering
advisory opinions.”) (citations omitted); see also Arroyo v. Garza, No. 13-17-00496-CV, 2018 WL 3764236,
at *1 (Tex. App.—Corpus Christi–Edinburg Aug. 9, 2018, pet. denied) (mem. op.). Although mootness was
not raised by the parties, “[w]e are obligated to determine, sua sponte, our jurisdiction to hear and consider
an appeal.” Parks v. DeWitt Cty. Elec. Coop., 112 S.W.3d 157, 161 (Tex. App.—Corpus Christi–Edinburg
2003, no pet.) (citing Underwriters Ins. Co. v. Sanchez, 799 S.W.2d 677, 678 (Tex. 1990) (per curiam)).
7
enjoinment: “60 days from the date of this order”); see also Trice v. State, 712 S.W.2d
842, 852 (Tex. App.—Waco 1986, writ ref’d n.r.e.) (same).
Although the June 2018 order was not amended to extend the duration of the
injunction, 7 cf. Yardeni, 418 S.W.3d at 917, appellees have since supplemented the
record with evidence of a pending motion for contempt. See Employers Mut. Cas. Co.
v. Coxsey, 718 S.W.2d 426, 428 (Tex. App.—Fort Worth 1986, writ dism’d) (providing that
where an order “imposing restraint on action for a certain period of time becomes moot
on expiration of the period fixed in the order,” appellate courts may nonetheless “find that
the pending contempt motion prevents us from concluding that the appeal before us has
become moot”); see also Cool World & Can, Inc. v. State, No. 01-01-00966-CV, 2002 WL
31319965, at *2 (Tex. App.—Houston [1st Dist.] Oct. 17, 2002, no pet.) (mem. op.) (“[I]f
the injunction is valid, appellants are subject to being held in contempt of court.
Therefore, the appeal is not moot.”). The motion for contempt was filed against
appellants on October 24, 2018, alleging in part that appellants failed to abide by the trial
court’s June 2018 order.
We find that the existence of the pending contempt motion forestalls a mootness
determination, see Coxsey, 718 S.W.2d at 428, and we review appellant’s first issue on
appeal.
III. TEMPORARY INJUNCTION
To be entitled to a temporary injunction, an applicant must plead and prove three
specific elements: (1) a cause of action against the defendant; (2) a probable right to the
7 We also note that because the unrelated appeal out of the same trial court case number resulted
in a stay of the proceedings below, appellees were precluded from seeking an extension of the injunction.
8
relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Butnaru,
84 S.W.3d at 204; see TEX. CIV. PRAC. & REM. CODE ANN. § 65.011. Should the trial court
decide to grant injunctive relief, the order itself must contain the reasons for its issuance,
be specific in terms, and describe in reasonable detail and not by reference to the
complaint or other document, the act or acts sought to be restrained. See TEX. R. CIV.
P. 683; Transp. Co. of Tex. v. Robertson Transports, Inc., 261 S.W.2d 549, 553 (Tex.
1953); Reliant Hosp. Partners, LLC v. Cornerstone Healthcare Group Holdings, Inc., 374
S.W.3d 488, 495, 502 (Tex. App.—Dallas 2012, pet. denied). The procedural
requirements of rule 683 are mandatory, and a temporary injunction that fails to abide by
the requirements “is subject to being declared void and dissolved.” Qwest Commc’ns
Corp. v. AT&T Corp., 24 S.W.3d 334, 337 (Tex. 2000); see Sargeant v. Al Saleh, 512
S.W.3d 399, 409 (Tex. App.—Corpus Christi–Edinburg 2016, no pet.).
Appellants argue that the June 2018 order’s written reference to the October 2016
order is insufficient to maintain a valid order. We agree. The pertinent parts of the June
2018 order reads as follows:
On this 28 day of September, 2016, came on for consideration Plaintiff’s
Application for Temporary Injunction. After notice and hearing, and based
upon the application and the evidence and arguments presented, the Court
granted a Temporary Injunction. Thereafter, the Court held an evidentiary
hearing on May 30, 2017 on Plaintiff’s Motion for Contempt and Defendant’s
Motion to Dissolve Temporary Injunction. Testimony and additional
exhibits were admitted into evidence. Further, on February 1, 2018, the
temporary injunction record was supplemented by agreed leave of court
with deposition testimony of Steve Howard and Roberto Vasquez (aka
Defendant George Garcia). The Court, having taken judicial notice of all
prior proceedings, including the evidence presented, the pleadings,
responses and arguments of counsel, finds that the Temporary Injunction
issued on October 19, 2016 should be extended. Incorporating the Court’s
findings set forth in the Temporary Injunction, the Court hereby EXTENDS
the TEMPORARY INJUNCTION dated October 19, 2016.
9
A subsequent order which only superficially states that material facts from a
previous temporary injunction order have been incorporated, although the subsequent
order has been substantially changed, does not comply with the specificity requirement
of rule 683.8 TEX. R. CIV. P. 683; see Arrechea v. Plantowsky, 705 S.W.2d 186, 189
(Tex. App.—Houston [14th Dist.] 1985, no writ) (“[T]he modified order cannot be read in
conjunction with the original order to supply the necessary facts. A temporary injunction
which merely states that a previous temporary restraining order is continued as a
temporary injunction does not comply with the requirement of Rule 683.”); Ahmed, 99
S.W.3d at 689 (explaining that a modified temporary injunction acts as a replacement of
the original order); see also McDowell v. McDowell, No. 02-16-00038-CV, 2016 WL
4141029, at *1 (Tex. App.—Fort Worth Aug. 4, 2016, no pet.) (mem. op.) (“An amended
or modified temporary injunction supersedes and implicitly vacates a prior temporary
injunction.”).
We therefore conclude that the language of the June 2018 order does not comply
with rule 683, and the order is therefore void. See TEX. R. CIV. P. 683; Arrechea, 705
S.W.2d at 189; see, e.g., In re Chaumette, 456 S.W.3d 299, 305 (Tex. App.—Houston
[1st Dist.] 2014, no pet.) (“[W]here the only part of the [temporary-injunction order] that
can be construed as setting forth the reasons for its issuance reads as follows: ‘The
Court finds . . . Plaintiff will suffer irreparable injury for which he has no legal remedy if
this injunction is not granted.’ . . . [the order] does not comply with the specificity
requirements of Rule 683.”). We sustain appellant’s first issue and need not address
8 Although the October 2016 order is not before the court and we make no finding regarding the
order’s compliance with rule 683, we note that the portion of the October 2016 order which dictates several
reasons for its issuance spans five pages. See TEX. R. CIV. P. 683.
10
appellant’s second issue. See Qwest Commc’ns, 24 S.W.3d at 337; see also TEX. R.
APP. P. 47.1.
IV. CONCLUSION
The order granting the temporary injunction is reversed, the temporary injunction
is dissolved, and this cause is remanded to the trial court.
GREGORY T. PERKES
Justice
Delivered and filed the
31st day of October, 2019.
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