James L. Manheim v. Adam Development Properties, L.P. ( 2009 )

IN THE
TENTH COURT OF APPEALS
No. 10-09-00259-CV
JAMES L. MANHEIM,
Appellant
v.
ADAM DEVELOPMENT PROPERTIES, L.P.,
Appellee
From the 272nd District Court
Brazos County, Texas
Trial Court No. 09-001549-CV-272
MEMORANDUM OPINION
In this interlocutory appeal, Appellant James L. Manheim complains that the trial
court erred in granting Appellee Adam Development Properties, L.P.’s (ADP) request
for a temporary injunction. We agree with Manheim and therefore reverse the trial
court’s order, dissolve the temporary injunction, and remand the case for further
proceedings consistent with this opinion.
ADP sued Manheim d/b/a Manheim Antiques and WYSIWYG Company, L.C.
d/b/a The Gathering (collectively, the Defendants), alleging breach of contract/breach
of warranty, fraud/fraudulent inducement, conspiracy, and money had and received.
ADP also sought a temporary restraining order and temporary injunction against
Manheim.
ADP made the following allegations: ADP and the Defendants entered into a
contract in which the Defendants agreed to design, produce, and deliver custom
furniture for ADP’s offices in College Station, Texas. Although ADP fully complied
with the contract, the Defendants did not. The Defendants also made material
misrepresentations to ADP in an effort to obtain funds to which the Defendants were
not entitled. ADP relied on such representations to its detriment and paid money to the
Defendants to which they were not entitled. Manheim admitted to ADP’s
representative that he took the money paid by ADP and used it to purchase some
inventory for his business rather than for the purpose for which ADP paid the funds.
Because the funds were obtained by fraud and misrepresentations, Manheim does not
have any equitable interest in the inventory purchased by him with ADP’s money.
Furthermore, based on information provided by Manheim, and to the best of ADP’s
knowledge, Manheim does not have sufficient non-exempt assets to satisfy any
judgment that may be obtained by ADP against him. As a result, ADP has an equitable
ownership interest or right to such inventory, and such interest is superior to any
interest that Manheim may claim in such inventory. ADP needs the inventory to be
placed under court supervision immediately to prevent it from being forever lost.
The trial court granted a temporary restraining order against Manheim and
thereafter held a hearing on ADP’s request for a temporary injunction. Manheim did
Manheim v. Adam Dev. Props., L.P. Page 2
not appear at the hearing. The court granted the temporary injunction based on its
findings that
Plaintiff [ADP] will probably prevail on the trial of this cause; that
Defendant [Manheim] has or had possession of property or money
belonging to Plaintiff that should be returned to Plaintiff before the Court
can render judgment in this cause; that if Defendant does not return
Plaintiff’s property or money, or transfers the property or money in any
way to someone other than Plaintiff, Defendant will alter the status quo
and tend to make ineffectual a judgment in favor of Plaintiff; and that
unless Defendant is deterred from possessing or transferring the property
or money, Plaintiff will be without any adequate remedy at law.
The court ordered Manheim (1) to immediately deliver any and all of his inventory to
ADP for safekeeping until further order of the court and (2) “not to destroy, sell,
encumber, secret [sic] or in any way harm” any of his inventory without the court’s
written permission.
Several days later, Manheim filed an original answer and then a motion to
dissolve the temporary injunction or, in the alternative, to increase bond. The trial court
subsequently modified the temporary injunction to include an order setting the matter
for trial. Two days later, the trial court again modified the temporary injunction,
striking the order that Manheim immediately deliver any and all of his inventory to
ADP for safekeeping but ordering instead that Manheim permit ADP to photograph or
take video of his inventory.
The decision to grant or deny a temporary injunction lies within the sound
discretion of the trial court. 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. Id. The reviewing court must not substitute its judgment for the
Manheim v. Adam Dev. Props., L.P. Page 3
trial court’s judgment unless the trial court’s action was so arbitrary that it exceeded the
bounds of reasonable discretion. Id.
The purpose of a temporary injunction is to maintain the status quo of the
litigation’s subject matter pending a trial on the merits. Id. Status quo has long been
defined as “the last, actual, peaceable, non-contested status which preceded the
pending controversy.” State v. Sw. Bell Tel. Co., 526 S.W.2d 526, 528 (Tex. 1975). The
applicant must plead and prove three elements to obtain a temporary injunction: (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. Butnaru, 84 S.W.3d at 204.
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.
In his first issue, Manheim contends that the temporary injunction is either void
or voidable because ADP did not plead an irreparable injury, nor was one described in
the trial court’s order. More specifically, Manheim argues that ADP seeks to recover
only monetary damages and, thus, injunctive relief is improper. Within this issue,
Manheim also argues that ADP never offered any evidence of irreparable injury.
The Texas Supreme Court has stated that, although unusual, circumstances can
arise in which a temporary injunction is appropriate to preserve the status quo even
though the applicant for the temporary injunction asks only for damages as ultimate
relief. See Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (citing Roland Mach. Co. v.
Dresser Indus., Inc., 749 F.2d 380, 386 (7th Cir. 1984)). For instance, even if the only
remedy sought at trial is damages, a plaintiff does not have an adequate remedy at law
Manheim v. Adam Dev. Props., L.P. Page 4
if the defendant is insolvent. Loye v. Travelhost, Inc., 156 S.W.3d 615, 621 (Tex. App.—
Dallas 2004, no pet.); Tel. Equip. Network, Inc. v. TA/Westchase Place, Ltd., 80 S.W.3d 601,
611 (Tex. App.—Houston [1st Dist.] 2002, no pet.). But in this case, although ADP
pleaded that Manheim was financially unable to satisfy a judgment against him, it
produced no evidence supporting the allegation.
The party applying for the injunction has the burden of production, and evidence
must be adduced under standard rules of evidence; testimony by affidavit does not
suffice, nor does a sworn petition constitute evidence. Millwrights Local Union No. 2484
v. Rust Eng’g Co., 433 S.W.2d 683, 687 (Tex. 1968). At the temporary injunction hearing,
the only mention of Manheim’s financial ability to satisfy a judgment came from ADP’s
counsel. When Manheim did not appear at the hearing, the trial court asked ADP’s
counsel, “Have you been in touch with him?” ADP’s counsel replied:
Friday I talked to his friend who happens to be a lawyer, and told me he
was got [sic] going to represent him, but he had spoken with him and
didn’t know if he was going to show up or not, but that he had
recommended to him to show up. But he said that he wasn’t going to
appear on his behalf and that he has no money to pay for it, so it would be
difficult for him to possibly show up.
Also, immediately before the trial court ruled on the injunction request, ADP’s counsel
argued that the temporary injunction was appropriate “[b]ecause otherwise he doesn’t
have any funds or assets to be able to satisfy a judgment, and so we would be
irreparably harmed in that manner.” Nevertheless, ADP did not present any evidence
to support these statements by counsel.
Manheim v. Adam Dev. Props., L.P. Page 5
ADP called only one witness to testify, the Adam Corporation’s senior vice-
president of administrative services. He testified that, through the Adam Corporation,
he had been involved with ADP and the purchase of some furniture from Manheim.
He stated that he was present during a conversation in which Manheim stated that he
would use the funds from ADP to purchase inventory items, i.e., antiques and some
other items that he sells in his store. Although ADP argues in its brief that this
testimony indicates that Manheim’s business “is hardly in strong financial shape,” we
do not agree.
Moreover, as of the time of the injunction, Manheim had not admitted that he
was insolvent or financially unable to satisfy a judgment obtained against him. We thus
conclude that ADP did not establish an irreparable injury based on Manheim’s alleged
inability to satisfy a judgment obtained against him.
ADP contends that it nevertheless established an irreparable injury for several
other reasons, but the cases cited by ADP do not support a finding of irreparable injury
in this case. Manheim’s inventory is not the basis of this suit. 1 Cf. Lavigne v. Holder, 186
S.W.3d 625, 629 (Tex. App.—Fort Worth 2006, no pet.) (in suit involving rights to certain
unique real property, a temporary injunction enjoining foreclosure on the property was
proper). ADP is not seeking to preserve assets or their proceeds that are subject to a
pled equitable remedy such as rescission, constructive trust, or restitution. Cf. Crossland
1 This is highlighted by the fact that ADP did not identify the specific antiques that Manheim
allegedly bought with ADP’s money and that allegedly will be lost if Manheim sells them. Instead, ADP
pleaded for and obtained a temporary injunction enjoining Manheim from destroying, selling,
transferring, encumbering, secreting, or in any way harming any of his inventory without the court’s
written permission.
Manheim v. Adam Dev. Props., L.P. Page 6
Sav. FSB v. Constant, 737 S.W.2d 19, 22 (Tex. App.—Corpus Christi 1987, no writ)
(temporary injunction was proper because appellees’ claim for rescission of the contract
would be lost without it). Nor has ADP shown that the damages in this case cannot be
measured by any certain pecuniary standard. See Mabrey v. SandStream, Inc., 124 S.W.3d
302, 318-19 (Tex. App.—Fort Worth 2003, no pet.); AIG Risk Mgmt., Inc. v. Motel 6
Operating L.P., 960 S.W.2d 301, 309 (Tex. App.—Corpus Christi 1997, no pet.).
For these reasons, we conclude that ADP failed to show an irreparable injury and
thus sustain Manheim’s first issue. Because we have sustained Manheim’s first issue,
we need not address his second issue. See TEX. R. APP. P. 47.1.
We reverse the trial court’s order, dissolve the temporary injunction, and remand
the case for further proceedings consistent with this opinion.
REX D. DAVIS
Justice
Before Chief Justice Gray,
Justice Reyna, and
Justice Davis
Reversed and remanded
Opinion delivered and filed December 30, 2009
[CV06]
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