W.R. Grace & Co.-Conn v. James R. Taylor

Affirmed and Memorandum Opinion filed May 17, 2007

Affirmed and Memorandum Opinion filed May 17, 2007.

In The

Fourteenth Court of Appeals

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NO. 14-06-01056-CV

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W. R. GRACE & CO. - CONN, Appellant

V.

JAMES R. TAYLOR, Appellee

On Appeal from the 10th District Court

Galveston County, Texas

Trial Court Cause No. 06-CV1215

M E M O R A N D U M   O P I N I O N

W.R. Grace & Co. - Conn. (AWRG@) appeals the denial of its request for a temporary injunction against James R. Taylor on the grounds that: (1) after ending his employment with WRG, Taylor used WRG=s proprietary information; and (2) the trial court=s decision not to enjoin Taylor from soliciting WRG customers after leaving WRG=s employment was based on an incorrect determination that the non-solicitation obligation in Taylor=s employment agreement is unenforceable.  We affirm.

Background

In February of 2000, WRG, a manufacturer and seller of chemical additives used in cement and concrete manufacturing, hired Taylor to market its products.  As a condition of that employment, Taylor signed an Employment Agreement (the Aagreement@) that prohibited Taylor from, as relevant to this appeal: (1) using or disclosing WRG=s confidential information outside of his employment with WRG; and (2) soliciting any WRG customer or sales prospect for two years after leaving WRG=s employment.  

In October of 2006, Taylor left WRG and went to work for SIKA Corporation, one of WRG=s competitors.  Soon after, WRG sued Taylor for breach of contract, breach of fiduciary duty, and misappropriation of confidential and proprietary information and sought an ex parte temporary restraining order, which was granted.  However, after a hearing on WRG=s application for a temporary injunction, the trial court denied the application. 

Standard of Review

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 v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002).  Because  an order denying a temporary injunction is interlocutory,^[1] the merits of the underlying case are not within the scope of the interlocutory appeal.^[2]  Davis v. Huey, 571 S.W.2d 859, 861B62 (Tex. 1978).^[3]  Appellate review of an order denying a temporary injunction is therefore strictly limited to deciding whether the trial court abused its discretion in determining whether the applicant is entitled to preservation of the status quo pending trial on the merits.  See Butnaru, 84 S.W.3d at 204; Brooks v. Expo Chem. Co., 576 S.W.2d 369, 370 (Tex. 1979); Davis, 571 S.W.2d at 861B62. 

An abuse of discretion does not exist where the trial court bases its decision on conflicting evidence, some of which reasonably supports the trial court=s decision.  See In re Epic Holdings, Inc., 985 S.W.2d 41, 57 (Tex. 1998); Davis, 571 S.W.2d at 862.  A trial court=s decision to deny a temporary injunction must be upheld on any legal theory supported by the record.  Davis, 571 S.W.2d at 862.  To obtain a temporary injunction, an 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^[4] in the interim.  See Butnaru, 84 S.W.3d at 204.

Confidential Information

WRG=s first issue challenges the trial court=s decision not  to enjoin Taylor from using or disclosing its confidential information^[5] on the ground that Taylor was using confidential information regarding WRG=s pricing, rebates, and product mixtures while soliciting WRG customers.  However, the evidence shows that before the hearing on the temporary injunction, Taylor had returned to WRG all physical forms of information he had received relating to his employment there, and WRG cites no evidence showing that Taylor had actually used or disclosed any of WRG=s confidential or proprietary information while working for SIKA. Because some basis therefore exists for concluding that WRG was not entitled to a temporary injunction on the use and disclosure of confidential information, WRG=s first issue is overruled.   See Davis, 571 S.W.2d at 863.

Non-Solicitation Agreement

WRG=s second issue challenges the denial of its request to enjoin Taylor from soliciting WRG=s customers because the trial court incorrectly concluded that the non-solicitation provision of Taylor=s agreement is unenforceable as a matter of law.  Specifically, WRG contends that agreements not to compete, such as the non-solicitation provision in issue here, are enforceable if they are Aancillary to or part of an otherwise enforceable agreement.@^[6]

Although Taylor admitted that, while working for SIKA, he has had discussions with several WRG customers, there is no evidence that WRG lost sales, marketing advantage, or goodwill, or otherwise suffered an irreparable injury; or that it has no adequate remedy at law for any such violation.  Under these circumstances,^[7] there is some basis upon which the trial court could have properly concluded that a temporary injunction on the non-solicitation claim was not necessary to maintain the status quo.^[8]  See Brooks, 576 S.W.2d at 371; Davis, 571 S.W.2d at 863.  Accordingly, WRG=s second issue is overruled, and the trial court=s order denying the temporary injunction is affirmed.

/s/        Richard H. Edelman

Justice

Judgment rendered and Memorandum Opinion filed May 17, 2007.

Panel consists of Justices Anderson, Fowler, and Edelman.       

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^[1]           See Tex. Civ. Prac. & Rem. Code Ann. ' 51.014(a)(4) (Vernon Supp. 2006).

^[2]           Because the evidence adduced at the temporary injunction hearing might differ from that developed at a trial on the merits, a premature review of the merits in an appeal of a temporary injunction would essentially deny the parties their right to a jury trial.  See Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978).  

^[3]           But see Ass=n of Tex. Prof=l Educators v. Kirby, 788 S.W.2d 827 (Tex. 1990) (reversing the denial of a temporary injunction upon a determination that House Bill 2566 was unconstitutional); Burch v. City of San Antonio, 518 S.W.2d 540 (Tex. 1975) (reversing the denial of a temporary injunction upon a determination that home rule cities do not have the authority to delegate power of eminent domain to subordinate agencies); Daniel v. Goesl, 161 Tex. 490, 341 S.W.2d 892 (1960) (reversing the denial of a temporary injunction to prohibit a retired partner from violating a covenant not to compete).

^[4]           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.  See Butnaru, 84 S.W.3d at 204.  Because company's loss of goodwill, clientele, marketing techniques, and office stability are not easily assigned a dollar value, they qualify as Aprobable injury@ for purposes of injunctive relief.  Graham v. Mary Kay Inc., 25 S.W.3d 749, 753 (Tex. App.CHouston [14 Dist.] 2000, pet. denied).  However, the evidence must show an actual loss of goodwill, clientele, marketing techniques, or office stability to obtain injunctive relief.  See id. (holding that loss of goodwill and business stability was established by evidence that Graham actively sought Mary Kay salespersons who were willing to breach their contracts and sell products to Graham); see also Armendariz v. Mora, 526 S.W.2d 542, 543 (Tex. 1975) (holding that applicant has the burden of offering some evidence establishing probable injury).

^[5]           The parties do not dispute that the agreement=s prohibition on use and disclosure of confidential information was enforceable, only whether it was violated.

^[6]           See Tex. Bus. & Com. Code Ann. ' 15.50(a) (Vernon 2002) (stating Aa covenant not to compete is enforceable if it is ancillary to or part of an otherwise enforceable agreement at the time the agreement is made . . .@).

^[7]           Although the agreement contains language that stipulates irreparable injury if a breach of the agreement occurs, WRG does not rely on this provision in this appeal, and such stipulations have been held insufficient to support a finding of irreparable harm for injunctive relief.  See Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 1266 (10th Cir. 2004); Smith, Bucklin & Assocs., Inc v. Sonntag, 83 F.3d 476, 481 (D.C. Cir. 1996); Baker's Aid, Inc. v. Hussmann Foodservice Co., 830 F.2d 13, 16 (2d Cir. 1987); Traders Int=l, Ltd. v. Scheuermann, No. H‑06‑1632, 2006 WL 2521336, at *8 (S.D. Tex. Aug. 30, 2006) (not designated for publication); Sec. Telecom Corp. v. Meziere, No. 05‑95‑01360‑CV, 1996 WL 87212, at *2 (Tex. App.CDallas Feb. 28, 1996, no writ.) (not designated for publication).

^[8]           Whereas a presumption of irreparable damage has been held to apply to the breach of a covenant not to compete in the sale of a business, no such presumption attaches to restrictive covenants for discharged employees.  See Daniel v. Goesl, 341 S.W.2d at 896.