## COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH NO. 02-16-00070-CV

HENRY F. COFFEEN III MANAGEMENT, INC., D/B/A COFFEEN MANAGEMENT COMPANY APPELLANT

V. THOMAS MUSGRAVE IV, CHRISTINA MORGAN, AND RICHARD W. DEWESE APPELLEES

---------- FROM THE 96TH DISTRICT COURT OF TARRANT COUNTY TRIAL COURT NO. 096-283020-15

---------- 

### MEMORANDUM OPINION 1

---------- Appellant Henry F. Co ffeen III Management, Inc., d/b/a Coffeen Management Company (CMC) appeals from the tria l court’s order denying its

1 See Tex. R. App. P. 47.4.2 application for a temporary injunction against Appellee Thom as Musgrave IV. 2 See Tex. Civ. Prac. & Re m. Code Ann. § 51.014( a)(4) (West Supp. 2016) (authorizing an interlocutory appeal from an order deny ing a request for a temporary injunction). We affirm. Background CMC is a licensed insurance agency t hat sells insurance products, such as extended warranty policies and GAP insurance, to ba nks, credit unions, and auto, boat, and recreational v ehicle dealerships. CMC al so provides dealerships with training on how to sell more vehi cles and more insurance products. Musgrave joined CMC in January 2011 as an independent contractor and was given the title of president. Musgrave’s duties included managing day-to-day operations, meeting clients, hiring and firing personne l, supervising and managing sales representatives, and a ssisting CMC in enfo rcing noncompete, antisolicitation, and confidentiality agreements signed by CMC’s personnel. Musgrave received confidential and pr oprietary information such as product information; pricing and cost info rmation; information regarding profits, markets, and sales; custom er lists; financial data; an d plans and strategies for further business development. In Decemb er 2012, at CMC’s request, Musgrave signed a “Non-Compete Agreement” in wh ich he agreed not to disclose CMC’s confidential information without CMC’s written cons ent. The agreement also

2 Christina Morgan and Rich ard W. Dewese are also listed as Appellees in the case style, but they are not parties to this appeal.3 contains noncompete and antisolicitation provisions that CMC claims prohibit Musgrave from competing wi th CMC or soliciting CMC’s clients or customers for two years following the termination of Musgrave’s employment with CMC. In August 2015, Musgrave began making trips to New Mexico to visit a CMC client, Tate Branch Automotive (TBA), which owns three automobile dealerships there. Initially , Musgrave’s trips to New Mexico were to ensure that CMC’s TBA account was proper ly serviced. Shortly t hereafter, Musgrave also began working with TBA’s ow ner, Tate Branch, on the acquisition of additional automobile dealerships in New Mexico. Advising customers on dealership acquisitions is not a part of CMC’s business, and neit her Branch nor TBA paid CMC for the acquisition assistance Musgrave pr ovided. CMC permitted Musgrave to work with Branch because if Branch acquired additional dealerships, CMC might ga in them as customers. Musgrave resigned from his role as independent contractor and president of CMC on December 17, 2015. Musgrave continued to advise Branch and TBA on the acquisition of dealerships and al so began offering advice on fixed operations, i.e. parts and service, at TB A’s existing dealerships. Musgrave and Branch had general discussions about Br anch employing Musg rave for continued work on the acquisitions and to overse e the operations at TBA’s automobile dealerships. CMC sued Musgrave for breach of contract, violations of the Texas Uniform Trade Secrets Act, misappropriation of confidential information and trade4 secrets, tortious interference for existing and prospective business relations, civil conspiracy, violations of the Texa s Theft Liability Act, and business disparagement. CMC also sought a temp orary restraining order, temporary and permanent injunctions, and attorney’s fees. The trial court granted CMC a temporary restraining order pr ohibiting Musgrave from dire ctly or indirectly calling upon, meeting with, communic ating with, or soliciting fo r the purpose of selling or marketing any products or se rvices that comprise any part of CMC’s business to specified CMC clients, including the thre e Tate Branch dealerships; using or disclosing CMC’s confidential informat ion and trade secrets; and altering, deleting, destroying, hiding, and secreting any document, record, disc, or other written or electronic media containing or describing CMC’s confidential information and trade secrets. The trial court then held a hearing on CMC’s app lication for temporary injunction. After the hearing, the trial court found (1) the Non-Compete Agreement was not supported by consideration; (2) there were no geographical boundaries in the Non-Compete Agreemen t; (3) Musgrave ha d not caused any current irreparable harm to CMC; (4) any future irreparable harm to CMC caused by Musgrave’s activities was speculat ive; and (5) there was no collateral agreement in connection with restrictions sought to be enforced under the NonCompete Agreement. The tr ial court therefore deni ed CMC’s application. CMC has appealed. In three issues, CM C argues the trial court abused its discretion by denying its application for temporary injunction because (1) the5 Non-Compete Agreement was supported by considerat ion, (2) the lack of geographic restriction did not re nder the Non-Co mpete Agreement unenforceable, and alternatively, the tr ial court should have reformed the agreement to apply to the clients with wh om Musgrave is familiar, and (3) CMC established a likelihood of success on the merits of its claims and that Musgrave’s conduct threat ened to cause CMC immine nt and irreparable injury. Standard of Review The purpose of a temporary injunction is to preserve the status quo of the litigation’s subject matter pendi ng a trial on the merits. Butnaru v. Ford Motor Co. , 84 S.W.3d 198, 204 (Tex. 2002) (citing Walling v. Metcalfe , 863 S.W.2d 56, 57 (Tex. 1993)). Whether to grant or deny a temporary injunction is within the trial court’s sound discretion. Id. A temporary injunction is an extraordinary remedy and will not issue as a matter of right. Id. To obtain a temporary inju nction, an applicant must plead and prove (1) a cause of acti on against the defendant, (2 ) a probable right to the relief sought, and (3) a probable, imminent, an d irreparable injury in the interim. Id. A probable right of recovery is sh own by alleging a ca use of action and presenting evidence tending to sustain it. Frequent Flyer Depot, Inc. v. Am. Airlines, Inc. , 281 S.W.3d 215, 220 (Tex. App. —Fort Worth 2009, pet. denied), cert. denied , 559 U.S. 1036 (2010). An injury is irreparable if damages would not adequately compensate the injured party or if they cannot be measured by any6 certain pecuniary standard. Butnaru , 84 S.W.3d at 204; Frequent Flyer Depot , 281 S.W.3d at 220. Whether to grant or deny a request for a temporary in junction is within the trial court’s discretion, and we will not reverse its decision absent a clear abuse of discretion. Butnaru , 84 S.W.3d at 204. When, as he re, no findings of fact or conclusions of law are filed, 3 the trial court’s determinat ion of whether to grant or deny a temporary injunction must be upheld on any legal theory supported by the record. LasikPlus of Tex., P.C. v. Mattioli , 418 S.W.3d 210, 216 (Tex. App.— Houston [14th Dist.] 20 13, no pet.). We review the ev idence submitted to the trial court in the light most favorable to th e court’s ruling, draw all legitimate inferences from the evidence , and defer to the trial cour t’s resolution of conflicting evidence. See IAC, Ltd. v. Bell Helicopter Textron, Inc. , 160 S.W.3d 191, 196 (Tex. App.—Fort Worth 20 05, no pet.). A reviewin g court will not reverse an order on a temporary injuncti on unless the trial court’s action was so arbitrary that it exceeded the bounds of reasonable discretion. EMSL Analytical, Inc. v. Younker , 154 S.W.3d 693, 696 (Tex . App.—Houston [14th Di st.] 2004, no pet.).

3 The trial court’s stated reasons for denying CMC’s application for temporary injunction do not meet the re quirements of civil procedure rule 299a and do not control the outcome of this case. See Tex. R. Civ. P. 299a (requiring findings of fact to be separ ately filed and not simply recited in the judgment); Tom James of Dallas, Inc. v. Cobb , 109 S.W.3d 877, 884 (T ex. App.—Dallas 2003, no pet.); see also Samuelson v. United Healthcare of Tex., Inc. , 79 S.W.3d 706, 710 (Tex. App.—Fort Worth 2002, no pet.) (“Where an abuse of discretion standard of review applies to a trial court’s ruling, findi ngs of fact and conclusions of law, while helpful, are not required.”) (citing Crouch v. Te nneco, Inc. , 853 S.W.2d 643, 649 & n.3 (Tex. App.—Wac o 1993, writ denied) (op. on reh’g)).7 The trial court does not abuse its discret ion when basing its decision concerning a temporary injunction on conflicting evid ence, nor does it abuse its discretion when some evidence of subs tantive and probative charac ter exists to support its decision. Wright v. Sport Supply Grp., Inc. , 137 S.W.3d 289, 292 (Tex. App.— Beaumont 2004, no pet.). Discussion To have obtained a temporary injuncti on, CMC was required to prove that it had a probable right to recovery on it s causes of action against Musgrave. See Frequent Flyer Depot , 281 S.W.3d at 220. CMC co uld have proven a probable right to recovery by alleging the existe nce of a right and pr esenting evidence tending to show that ri ght was being denied. See Anesthesiology Assocs., P.A. v. Tex. Anesthesia Grp., P.A. , 190 S.W.3d 891, 897 (T ex. App.—Dallas 2006, no pet.). The cause of action relevant to CMC’s request fo r a temporary in junction is CMC’s breach of contract claim against Musgrave, which is based upon the noncompete and antisolicitation provis ions in the Non-Compete Agreement. An appeal from an order denyin g a temporary injunction based on noncompete clauses does not present for app ellate review the ultimate question of whether the noncompete agreement is enforceable under section 15.50 of the business and commerce code. LasikPlus of Tex. , 418 S.W.3d at 216; Tom James of Dallas , 109 S.W.3d at 882–83; see Tex. Bus. & Com. Code Ann. § 15.50(a) (West 2011) (stating that a covenant not to compete is enforceable if it (1) is ancillary to or part of an otherw ise enforceable agreement and (2) contains8 reasonable limitations as to time, geographic area, and scope of activity that do not impose a greater restraint than is ne cessary). “We therefore look at the enforceability of the noncompe te, but only to the extent necessary to determine whether the requirements for a tem porary injunction have been met.” Tranter, Inc. v. Liss , No. 02-13-00167-CV, 2014 WL 12 57278, at *3 (Tex. App.—Fort Worth Mar. 27, 2014, no pet.) (mem. op.). In this case, however, it is unnecessary for us to eval uate the enforceability of the Non-Compete Agreement under section 15.50 because, as pointed out by Musgrave, the noncompete and antisolicitation provisions do not restrict Musgrave’s post-termination activities. The noncompete and antisolici tation provisions at issu e in this case are as follows: (b) Competitive Activities - Volunt ary Termination, Termination with Cause. During the Term [4] of this Agreement and for a period of two (2) years after the “CMC Account Development Sub Agent Agreement” is terminated , regardless of cause, Representative [5] shall not, directly or indirectly (whether for compensation or otherwise), alone or as an officer, dire ctor, shareholder (excepting not more than five percent (5%) stockholdings for investment purposes in securities of publicly-held and traded companies), partner, associate, creditor, employee, agent, principal, trustee, beneficiary of a trust, salesman, consultant, co-venturer, owner, representative, advisor or in any other capacity whatsoever, take any action in or participate with or become interested in or associated with any person, firm, partnership, corporation or other entity whatsoever that is engaged, or plans to engage in any manner

4 Despite being capitalized, the “Term” of the Non-Comp ete Agreement is not defined.

5 The agreement identified Musgrave as the Representative and CMC as the Corporation.9 in the business of the solicitation, negotiation, sale, installation and servicing of auto mobile warranties, finance reserve products, aftermarket, computer training products, credit life insurance and management consulti ng with automobile dealers, banks, credit unions, and/or affilia ted or associated companies at any time during the Term (or which is in development to be manufactured and/or marketed by the Corporation or any affiliate upon termination of this Agreement) or any other related business in which the Corporation and its subs idiaries and affiliates may engage during the Term of this Agreement, in any market served, in any state, either currently or at any time during the Term, by the Corporation and/or any of such subsidia ries and affiliates.

. . . . (c) Antisolicitation. Repr esentative agrees that during the Term of the CMC Account Development S ub Agent Agreement, and for a period of two (2) years after termination of the Agreement , he will not influence or attempt to in fluence clients/cu stomers of the Corporation (regardless of geographic region) or any of its present or future subsidiaries or a ffiliates, either directly or indirectly, to divert their business to any other indivi dual, partnership, firm, corporation or other entity. [Emphasis added.] CMC claims that the restrictions in these two provisions continue for two years following the termination of Musgra ve’s employment with CMC. However, both provisions state that t he restrictions expire two ye ars after the termination of the “CMC Account Developm ent Sub Agent Agreement.” Both Henry Coffeen, the owner of CMC, and Musgrave testified at th e temporary injunction hearing that Musgrave was not a su bagent for CMC and that he did not have a “CMC Account Development Sub Ag ent Agreement” with CMC. 6 Thus, the noncompete

6 A subagent is a sales representative, and the “CMC Account Development Sub Agent Agre ement” is an agreement CMC enters into with its sales representatives.10 and antisolicitation provisions do not restrict Musgrave’s post-termination activities, and CMC therefore did not show a probable right to recovery on its claim that Musgrave breached the N on-Compete Agreement. We therefore conclude and hold that the trial court did not abuse its discretion by denying CMC’s application for temporary injunction. See Rimes v. Club Corp. of Am. , 542 S.W.2d 909, 912 (T ex. Civ. App.—Dallas 1976, writ ref’d n.r.e.) (stating that a court cannot “exte nd the period provided in a rest rictive covenant contained in an employment contract ” and holding that the trial cour t abused its discretion by temporarily enjoining former employees because former em ployer could not show a probable right of recovery when the two-year restrictive covenant had expired); cf. Weatherford Oil Tool Co. v. Campbell , 340 S.W.2d 950, 952 (Tex. 1960) (indicating that the issue of refo rmation of a noncom petition covenant becomes moot after t he term of the covenant has expired); Leon’s Fine Foods, Inc. v. McClearin , No. 05-97-01198-CV, 2000 WL 277135, at *1 (Tex. App.— Dallas Mar. 15, 2000, pet. denied) (not designated for public ation) (“Once the non-competition period ends, the trial cour t’s ability to enforce the covenant by injunction becomes moot.”). Accordingly, we overrule the portion of CMC’s third issue in which it asserts that it established a likelihood of success on the merits of its claim. Conclusion Because we have determined that the trial court could have denied CMC’s application for temporary injunction becaus e it did not show a probable right to11 recovery, we need not address th e remainder of CMC’s issues. See Tex. R. App. P. 47.1. Accordingly, we affirm the trial court’s order denying CMC’s application for temporary injunction.

/s/ Anne Gardner ANNE GARDNER JUSTICE PANEL: LIVINGSTON, C.J.; DAUPHINOT and GARDNER, JJ. DELIVERED: October 27, 2016