NO. 12-16-00129-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

G-M WATER SUPPLY 

CORPORATION, 

APPELLANT

V.

CITY OF HEMPHILL, TEXAS,

APPELLEE

§

§

§

APPEAL FROM THE 1ST

JUDICIAL DISTRICT COURT

SABINE COUNTY, TEXAS

MEMORANDUM OPINION

G-M Water Supply Corporation appeals the trial court’s temporary injunction requiring it 

to pay the full amount of the City of Hemphill’s monthly invoices directly to the City until 

otherwise ordered. G-M raises three issues in this interlocutory appeal. We dissolve the 

temporary injunction and remand this case to the trial court for further proceedings. 

BACKGROUND

G-M is a nonprofit water supply company. Pursuant to a longstanding relationship, G-M 

purchases water from the City. In their most recent agreement, executed in 2011, G-M must 

purchase a minimum amount of water based on an annually adjusted rate determined by the City. 

Essentially, the City assesses the rate based on a projection of its annual costs to produce water 

divided by the quantity of treated water estimated to be produced that year, expressed in a dollar 

amount per 1,000 gallons.1

G-M recently completed construction of its own water treatment facility and began taking 

less water from the City under the contract. This action led to a much higher adjusted rate for 

 

1 Other than charging for administrative costs, the City does not include profit in its calculation. Since the 

rate is based on projections and estimates, the contract requires an independent audit at the end of each year, and any 

overpayment or underpayments by G-M during that year are accounted for in the following year’s rate calculation.
2

2015-16 because, according to the City, its costs are fixed, and since G-M takes less water, the 

City’s cost per gallon of water produced dramatically increased. In 2014-15, the City charged 

G-M $2.8333 per 1,000 gallons of water, but raised the rate in 2015-16 to $5.2137 per 1,000 

gallons of water. G-M disputed the City’s cost assumptions in computing the rate, calculated its 

own rate of $3.6492 per 1,000 gallons of water, and paid the City based on that rate for each 

monthly invoice. After negotiations proved unsuccessful, the City filed suit against G-M, 

alleging that it breached their contract by failing to pay the invoices at the contract rate set by the 

City. 

The City filed an application for temporary injunction requesting that G-M pay the 

accrued arrearages into the trial court’s registry, along with the full amount of future monthly 

invoices calculated at the $5.2137 per 1,000 gallon rate pending a resolution on the merits. After 

a hearing, the trial court granted the temporary injunction, concluding that the City will probably 

prevail on the merits because G-M has breached and intends to continue to breach the terms of 

the contract by failing to make the full payments invoiced by the City. Consequently, the trial 

court ordered that G-M deposit $87,663.11 into the registry of the court, which represented the 

amount of arrearages up until the time the injunction issued. Additionally, the trial court ordered 

that G-M pay all future invoices at the full $5.2137 per 1,000 gallon rate directly to the City until 

otherwise ordered. In its order granting the temporary injunction, the trial court found that

unless this Court grants the requested injunctive relief, [the City] will be without an adequate 

remedy at law in that [it] will have to file suit against [G-M] every month to recover the amounts 

due under the terms of the parties’ contract, in that [G-M’s] failure to make full payments has 

adversely impacted [the City’s] fiscal status, and in that [the City] may not be able to recover the 

full amount of a money judgment following trial on the merits.

G-M filed this interlocutory appeal challenging the trial court’s temporary injunction. 

Because some Texas courts, including this Court, have held that an order to deposit funds into 

the trial court’s registry is not properly characterized as an appealable temporary injunction, G-M 

filed a separate petition for writ of mandamus to resolve the issue pertaining to the registry 

funds.2 This interlocutory appeal relates only to the trial court’s order that G-M pay all future 

invoices directly to the City at the full $5.2137 per 1,000 gallon rate until otherwise ordered.

 

2 See, e.g., Zhao v. XO Energy LLC, 493 S.W.3d 725, 735 (Tex. App.—Houston [1st Dist.] 2016, no pet.); 

Structured Capital Res. Corp. v. Arctic Cold Storage, LLC, 237 S.W.3d 890, 894 (Tex. App.—Tyler 2007, no pet.).
3

TEMPORARY INJUNCTION

In its second issue, G-M contends that the trial court abused its discretion by issuing the 

temporary injunction because the evidence does not support a finding of a probable, imminent, 

and irreparable injury.

Standard of Review

In an interlocutory appeal from a ruling on an application for a temporary injunction, we 

do not review the merits of the underlying case. See Davis v. Huey, 571 S.W.2d 859, 861 (Tex.

1978). A temporary injunction is an extraordinary remedy, the purpose of which is to preserve 

the status quo of the litigation’s subject matter pending trial on the merits. Butnaru v. Ford 

Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). In this context, the status quo is the last, actual, 

peaceable, noncontested status between the parties to the controversy that preceded the pending 

suit. See In re Newton, 146 S.W.3d 648, 651 (Tex. 2004). 

We review a trial court’s decision to grant a temporary injunction for an abuse of 

discretion. Butnaru, 84 S.W.3d at 204. We must not substitute our judgment for the trial court’s 

judgment unless the trial court’s judgment was so arbitrary that it exceeded the bounds of 

reasonable discretion. Id. The trial court does not abuse its discretion if some evidence 

reasonably supports the trial court’s decision. Id. More specifically, the trial court does not 

abuse its discretion when it bases its decision on conflicting evidence, or when some evidence of 

substantive and probative character exists to support its decision. Health Care Serv. Corp. v. E. 

Texas Med. Ctr., 495 S.W.3d 333, 338 (Tex. App.—Tyler 2016, no pet.). An abuse of discretion 

arises when the trial court misapplies the law to the established facts of the case or when it 

concludes that the movant has demonstrated a probable injury or a probable right to recovery, 

and the conclusion is not reasonably supported by the evidence. Id. (citing Tri–Star Petroleum 

Co. v. Tipperary Corp., 101 S.W.3d 583, 587 (Tex. App.–El Paso 2003, pet. denied)). A trial 

court also abuses its discretion in granting a temporary injunction unless it is clearly established 

by the facts that the applicant is threatened with an actual irreparable injury if the injunction is 

not granted. Marketshare Telecom, L.L.C. v. Ericsson, Inc., 198 S.W.3d 908, 925 (Tex. App.—

Dallas 2006, no pet.).

Applicable Law

To obtain a temporary injunction, the 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, 
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imminent, and irreparable injury in the interim.3 Butnaru, 84 S.W.3d at 204. There are two 

general types of temporary injunctions: prohibitive and mandatory. Health Care Serv. Corp., 

495 S.W.3d at 337. A prohibitive injunction forbids conduct, and a mandatory injunction 

requires it. Id. A preliminary mandatory injunction is proper only if a mandatory order is 

necessary to prevent irreparable injury or extreme hardship. Id. at 338. Said another way, while 

granting a mandatory temporary injunction is within the sound discretion of the trial court, the 

application should be denied absent a clear and compelling presentation of extreme necessity or 

hardship. See Pharaoh Oil & Gas, Inc. v. Ranchero Esperanza, Ltd., 343 S.W.3d 875, 883 

(Tex. App.—El Paso 2011, no pet.).

To establish an irreparable injury, the applicant must show that he or she has no adequate 

remedy at law. Butnaru, 84 S.W.3d at 204. A legal remedy is adequate if it is as complete, 

practical, and efficient to the ends of justice and its prompt administration as is equitable relief. 

See Alert Synteks, Inc. v. Jerry Spencer, L.P., 151 S.W.3d 246, 254 (Tex. App.—Tyler 2004, no 

pet.). An injury is irreparable if the injured party cannot be adequately compensated, or one for 

which the damages cannot be measured by any certain pecuniary standard. Butnaru, 84 S.W.3d 

at 204. Evidence of fear, apprehension, and possibilities is not sufficient to establish any injury, 

let alone irreparable injury. See Marketshare Telecom, 198 S.W.3d at 925.

Lay opinion testimony is limited to those opinions or inferences that are rationally based 

on the witness’s perceptions and are helpful to clearly understanding the witness’s testimony or 

determining a fact in issue. See TEX. R. EVID. 701. “Rationally based” means that the opinion 

must be one that a person could normally form from observed facts. Health Care Serv. Corp., 

495 S.W.3d at 339. When an opinion is not rationally based on a witness’s perception, the 

purported evidence is only speculation. Id. Speculative testimony has no probative value. Id. 

“Speculate” means “to take to be true on the basis of insufficient evidence.” Id.

Mandatory Temporary Injunction

G-M contends that the evidence before the trial court did not permit it to rationally 

conclude that, without the temporary injunction, the City would suffer probable, imminent, and 

irreparable harm. It argues that the City has an adequate remedy at law available, namely, a 

money judgment against G-M. The City responds that (1) it will suffer irreparable injury without 

the injunction because G-M’s financial status makes satisfaction of a judgment uncertain, 

 

3 For purposes of this appeal, G-M challenges only the third element.
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rendering its remedy at law inadequate; (2) it and its residents will suffer imminent and 

irreparable injury because it has sustained a loss in its capital reserves resulting in a “freeze” for 

necessary capital expenditures, which adversely affects its ability to provide city services; and 

(3) the trial court was within its discretion to grant the injunction because G-M’s wrongful 

conduct was recurrent or continuous.

The last, actual, peaceable, noncontested status between the parties that preceded the 

controversy was when the parties operated under the contract rate for 2014-2015. The 

calculation of the correct rate under the contract for 2015-2016 is the subject of the controversy. 

The trial court’s injunction required that G-M pay all future invoices directly to the City at the 

full $5.2137 per 1,000 gallon rate for 2015-2016 until otherwise ordered, which is a mandatory 

temporary injunction altering the status quo. The issuance of such a temporary mandatory 

injunction under these circumstances was proper only if the City made a clear and compelling 

presentation that without the injunction, it would suffer an actual irreparable injury resulting in 

extreme hardship, or that the injunction is extremely necessary to prevent an actual irreparable 

injury. See Health Care Serv. Corp., 495 S.W.3d at 339; Pharaoh Oil & Gas, Inc., 343 S.W.3d 

at 883; Marketshare Telecom, L.L.C., 198 S.W.3d at 925.

G-M’s Ability to Satisfy a Judgment

The trial court found in its order that the City may not be able to recover the full amount 

of a money judgment following a trial on the merits. When a defendant is unable to pay 

damages, the plaintiff has no adequate remedy at law. See Bankler v. Vale, 75 S.W.3d 29, 39 

(Tex. App.—San Antonio 2001, no pet.); Tex. Indus. Gas v. Phoenix Metallurgical Corp., 828 

S.W.2d 529, 533 (Tex. App.—Houston [1st Dist.] 1992, no writ). 

Hemphill’s City Manager, Donald Iles, was the only witness who testified at the 

temporary injunction hearing. He testified that he did not have access to G-M’s financial 

records, and that he made an open records request concerning G-M’s financial status. His 

request was granted, and he discovered that the balance of one of G-M’s checking accounts was 

reduced by approximately $118,000.00 from January 2015 through July 2015. He also 

discovered that a separate G-M construction account showed an overdraft of approximately 

$15,000.00 at the end of one statement period. And he learned that G-M had a $5,000,000.00 

capital investment in its new water treatment plant, although he could not testify as to G-M’s 
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current debt balance on the project or how it was financed. Iles testified that these facts raised 

“some red flags that possibly they may not be able to pay.” 

When asked further about the accounts, he acknowledged that after the $118,000.00 

reduction, G-M had a remaining balance of approximately $689,000.00. Portions of the account 

statement were entered into evidence as Plaintiff’s Exhibit 11. Iles testified that he was unaware 

of the current status of the construction account. The City’s counsel asked, “Based on that and 

the other information you testified to, is there a legitimate concern about the solvency of [G-M], 

in terms of its ability to repay these continually accruing arrearages?” Iles responded, “That 

argument could be made, that conclusion could be drawn. I don’t have enough information 

about their financial situation to say yes or no; but I would be worried, yes, sir.” G-M chose not 

to offer any further evidence of its financial status. 

It is true that G-M spent significant funds to acquire its new water treatment plant, had a 

construction account that had been overdrawn during one month, and had a reduction in one of 

its checking accounts of approximately $118,000.00 at one point in time. However, the evidence 

available to the trial court when it issued the temporary injunction unequivocally shows that G-M 

had at least $689,000.00 in cash. The portions of the account statement submitted in Plaintiff’s 

Exhibit 11 show that the account balance was as high as approximately $807,000.00 on January 

1, 2015, and as low as approximately $637,000.00 on June 20, 2015. Plaintiff’s Exhibit 11 also 

showed that through several deposits, the account balance continued to increase to approximately 

$689,000.00 by June 30, 2015. Iles testified that the City maintains a capital reserve of 

approximately $1.2 million on average, although he testified that the reserve had declined by 

about $100,000.00. Iles also testified that the arrearages continue to accrue at approximately 

$10,000.00 per month while this dispute is pending.

Iles admitted that he did not have enough information concerning G-M’s solvency and 

ability to pay a judgment. Iles’s statements that he was worried about whether G-M could satisfy 

a judgment can only be viewed as speculative, which is not probative evidence of G-M’s alleged 

inability to satisfy a money judgment for this contractual dispute. See Health Care Serv. Corp., 

495 S.W.3d at 339; Marketshare Telecom, 198 S.W.3d at 925.

Here, the City has an adequate remedy at law, a money judgment for damages. It is 

measured by a certain pecuniary standard—essentially the difference between the full contract 

rate for 2015-2016 and what G-M actually paid during the disputed period at the time of 
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judgment. Moreover, based on the evidence before the trial court, it was unreasonable for it to 

conclude that G-M may be unable to satisfy a money judgment. 

G-M’s Impact on the City’s Fiscal Status

The trial court also found that G-M’s failure to pay the full amount of the invoices has 

adversely impacted the City’s fiscal status. The City contends that G-M’s actions have impacted 

its capital reserves and forced the City to freeze planned capital expenses, which adversely 

affected its ability to provide services to its citizens. G-M responds that the evidence does not 

reasonably lead to this conclusion, and that there is no evidence that its actions resulted in a 

threat of imminent or irreparable injury.

Iles testified that the City maintains an average capital reserve of approximately $1.2 

million that has been reduced by approximately $100,000.00 during this dispute. Consequently, 

Iles decided to freeze budgeted capital expenditures while this lawsuit was pending, including 

purchases of a bucket truck for the electric department, a “skid steer unit” and storage building 

for the utility department, a photocopier, a line extension project for the water department, and a 

construction project for general administration. The total budgeted cost of the items is 

$222,300.00. Iles testified that the City has very little debt and it budgeted these expenses to be 

paid through direct cash outlays out of the City’s pooled cash. Iles testified that he froze these 

capital expenses because of G-M’s failure to pay the invoices at the full rate, and that G.M.’s 

actions adversely affected the City’s ability to provide services. On cross-examination, when 

asked what service is not being provided, Iles cited the electric department’s need for a new 

bucket truck as an example. He stated that the current truck failed the dielectric test, and that the 

truck is old, expensive to operate, and needed to be replaced. But he admitted that the truck is 

still operational, and that if necessary, the City could have rented a newer truck. Iles also 

admitted that the City continues to provide all City services, including all utilities, and that to his 

knowledge, no one has suffered any property damage or personal injury as a result of G-M’s 

failure to pay the full amount of the disputed invoices.

The City contends that the interruption of business relations can constitute irreparable 

harm that entitles it to injunctive relief. See Miller v. Talley Dunn Gallery, LLC, No. 05-15-

00444-CV, 2016 WL 836775, at *6 (Tex. App.—Dallas Mar. 3, 2016, no pet.) (mem. op.). We 

generally agree that the interruption of business relations can constitute irreparable harm in 

certain circumstances, but the City has not met its burden to show that G-M’s actions will cause 
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imminent irreparable injury here. In Miller, after an acrimonious divorce, an ex-husband used 

confidential information pertaining to his ex-wife’s art gallery in an effort to harm her business 

by ruining her reputation in the community. See id. at *2. For example, the ex-husband 

distributed sensitive financial information and sent scathing communications to the ex-wife’s 

clients, artists she represented, and community leaders. See id. at *6. The ex-wife obtained a 

temporary injunction prohibiting this conduct, because it caused actual irreparable harm to her 

business, and the injunction was upheld on appeal. See id. 

This case is distinguishable. While this dispute has no doubt affected the City’s shortterm ability to make all of the budgeted capital purchases at the preferred time, the evidence 

shows that the City maintains capital reserves of over $1,000,000.00, it can negate the effects of

its postponed capital expenses, and that it is still able to provide all services until this matter can 

be resolved at trial. Based on this evidence, the City did not make a clear and compelling 

presentation that would allow the trial court to reasonably conclude that the City or its residents 

will suffer an imminent or irreparable injury resulting in extreme hardship without the mandatory 

temporary injunction. 

Recurring or Continuous Injury

The trial court also found that the City will have to file suit against G-M every month to 

recover the amounts due under the terms of the parties’ contract. The City argues that even if it 

has an adequate remedy at law, the injury is recurring or continuous, and consequently, equity 

authorized the trial court to grant a temporary injunction. See 183/620 Grp. Joint Venture v. 

SPF Joint Venture, 765 S.W.2d 901, 905 (Tex. App.—Austin 1989, writ dism’d w.o.j.) (citing 

Sinclair Ref. Co. v. McElree, 52 S.W.2d 679, 681 (Tex. Civ. App.—Dallas 1932, no writ)). The 

basis for the doctrine is as follows:

As a general rule, where an injury committed by one against another is continuous or is being 

constantly repeated, so that complainant’s remedy at law requires the bringing of successive 

actions, that remedy is inadequate and the injury will be prevented by injunction. The fact that an 

injured person has the right of successive actions for the continuance of the wrong does not make 

it an adequate remedy at law which bars the jurisdiction of a court of equity to grant an injunction 

to restrain the continuance of the injury.

Sinclair Ref. Co., 52 S.W.2d at 681. The City has not established the doctrine’s applicability 

here. It does not argue that the remedy at law requires the bringing of successive actions with 

each monthly breach of the contract. Moreover, the City will be made whole by a single money 
9

judgment. See Horton v. Robinson, 776 S.W.2d 260, 268 (Tex. App.—El Paso 1989, no writ)

(distinguishing Sinclair, noting that only in absence of adequate remedy at law can equitable 

injunctive relief be granted, and holding that once contract was breached, plaintiff was entitled to 

recover all past, present, and future damages, and consequently, money judgment was adequate 

remedy at law).

Conclusion

The City has an adequate remedy at law that will make it whole, namely, a money 

judgment. Although there are circumstances in which a party may obtain a mandatory temporary 

injunction requiring prejudgment preservation of disputed funds in a breach of contract action, 

the City has not met that burden here. We hold that the City has failed to make a clear and 

compelling presentation of evidence that would allow the trial court to reasonably conclude that 

the City or its residents will suffer an imminent or irreparable injury resulting in extreme 

hardship without the mandatory temporary injunction, or that the City demonstrated that an 

injunction was extremely necessary to prevent actual irreparable injury. See Health Care Serv. 

Corp., 495 S.W.3d at 341. The trial court abused its discretion in issuing the mandatory 

temporary injunction requiring G-M to pay the monthly invoices at the full $5.2137 per 1,000 

gallon rate until otherwise ordered.

G-M’s second issue is sustained. The City has not shown that it is entitled to mandatory 

temporary injunctive relief, and consequently, G-M’s second issue is dispositive. Therefore, we 

need not consider G-M’s remaining issues pertaining to whether the City was required to file a 

bond and whether the trial court improperly ordered full and final relief, because those issues 

presuppose that mandatory temporary injunctive relief was appropriate in these circumstances. 

See TEX. R. APP. P. 47.1; In re S.N., 272 S.W.3d 45, 60 (Tex. App.—Waco 2008, no pet.) 

(“[T]he cardinal principle of judicial restraint—if it is not necessary to decide more, it is 

necessary not to decide more—counsels us to go no further.”).

DISPOSITION

Because the trial court abused its discretion in ordering G-M to pay the monthly invoices 

at the full $5.2137 per 1,000 gallon rate until otherwise ordered, the April 5, 2016 temporary 

injunction is immediately dissolved, and the case is remanded to the trial court for further 

proceedings.
10

BRIAN HOYLE

Justice

Opinion delivered November 22, 2016.

Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

(PUBLISH)
COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

JUDGMENT

NOVEMBER 22, 2016

NO. 12-16-00129-CV

G-M WATER SUPPLY CORPORATION,

Appellant

V.

CITY OF HEMPHILL, TEXAS,

Appellee

Appeal from the 1st District Court 

of Sabine County, Texas (Tr.Ct.No. 13,200)

THIS CAUSE came to be heard on the appellate record and the briefs filed herein, 

and the same being considered, because it is the opinion of this court that there was error in the 

trial court’s temporary injunction dated April 5, 2016, it is ORDERED, ADJUDGED and 

DECREED by this court that the trial court’s temporary injunction of April 5, 2016, ordering GM WATER SUPPLY CORPORATION, to pay the monthly invoices at the full $5.2137 per 

1,000 gallon rate until otherwise ordered, be dissolved and the cause remanded to the trial court 

for further proceedings in accordance with the opinion of this court; and that this decision be 

certified to the court below for observance.

Brian Hoyle, Justice.

Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
THE STATE OF TEXAS

M A N D A T E

*********************************************

TO THE 1ST DISTRICT COURT OF SABINE COUNTY, GREETING:

Before our Court of Appeals for the 12th Court of Appeals District of Texas, on the 22nd

day of November, 2016, the cause upon appeal to revise or reverse your judgment between

G-M WATER SUPPLY CORPORATION, Appellant

NO. 12-16-00129-CV; Trial Court No. 13,200

Opinion by Brian Hoyle, Justice.

CITY OF HEMPHILL, TEXAS, Appellee

was determined; and therein our said Court made its order in these words:

“THIS CAUSE came to be heard on the appellate record and the briefs filed herein, and 

the same being considered, because it is the opinion of this court that there was error in the trial 

court’s temporary injunction dated April 5, 2016, it is ORDERED, ADJUDGED and DECREED 

by this court that the trial court’s temporary injunction of April 5, 2016, ordering G-M WATER 

SUPPLY CORPORATION to pay the monthly invoices at the full $5.2137 per 1,000 gallon 

rate until otherwise ordered, be dissolved and the cause remanded to the trial court for further 

proceedings in accordance with the opinion of this court; and that this decision be certified to 

the court below for observance.”

WHEREAS, WE COMMAND YOU to observe the order of our said Court of Appeals 

for the Twelfth Court of Appeals District of Texas in this behalf, and in all things have it duly 

recognized, obeyed, and executed.

WITNESS, THE HONORABLE JAMES T. WORTHEN, Chief Justice of our Court 

of Appeals for the Twelfth Court of Appeals District, with the Seal thereof affixed, at the City of 

Tyler, this the xx day of November, 2016.

PAM ESTES, CLERK

By: _______________________________

Chief Deputy Clerk