### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-17-00863- CV

SBI I nvestm ents, LLC, 2014-1; and L2 Cap ital LLC, App ellants

v. Quan tum Mate rials Corp., Appellee

F ROM TH E DISTRI CT COURT O F H AY S CO UNTY, 428 TH JUDICI AL DISTRICT NO. 17- 2033 , H ONO RAB LE GARY L. STEEL, JUDGE P RESIDING

M E M O R A N D U M O P I N I O N

This acc eler ated, interlocutory appea l is fro m t he trial court’s order g ranting temporar y injunction that enjoins Empire Stock Transf er, I nc., from convey

ing any shar es t h at it holds on behalf of appellee Quantum Materia ls Corporation to appellants SBI I nvest m en t s , L L C, 2014-1, and/or L 2 Capital L L C. See Tex. Civ. Prac

. & Rem. Code § 51.014(a) (4) (authorizing “per son” to a

ppeal from interlocutory order that g rants temporar y injunction). Be cause we cannot conclude that the trial court abused its discretion, we aff irm the trial court’s order g ranting temporar y injunction.

Background

Quantum is a publicly trade d company located in San Marc os, Texas. I n Marc h 2017, Quantum borrowe d money fro m and issued promissory notes to appellants and ag ree d that appellants c ould conver

t this debt int o equity

in the event that Quantum def aulted under

the termsof the notes. At th e s am e t i me, Quantum delivere d “irre vocable transfe r ag ent instructions” to

Empire, the holder/transf

er ag ent for the parties’ ag ree ments, authorizing and instructing Empire to “re serve a sufficie nt num ber of share s of common stock (“Common Stock”) of the Company [Quantum] (initially [a set amount of] share s of Common Stock which should be held in rese rve for the I nvestor[s] [appellants] pursuant to the Note[s] and Warrant[s] ) for issuance upon conver sion of the Note[s] and/or e x erc ise of the Warr ant[s] , in acc ordanc e with the ter ms thereof

.”
A f te r d is putes arose betwee n Quantum and appellants over pay ments on the n o te s a

n d other obliga tions of Quantum under th e t er m s of the parties’ ag ree ments, Quantum filed the underly ing suit ag ains t E m p i re at the end of September 2017 asser ting the cause of action of

conver sion. Quantum alleg ed that: (i) the notes wer e “not conver tible unle ss the re [was] an event of defa ult as define d in the notes”; (ii) in the event of a defa ult, appellants “[could] conver t their debt i n t o equity at a disproportionately favor able exchang e rate in favor of the appellants ”; an d (i i i ) ap p ellants “[were ] threa tening to hold Quantum in defa ult so that they [could] take these disproportionately more valuable equity stakes.” Ba sed on these fac tual asser tions, Quantum soug ht
to tem p o rar ily enjoin Empire from transfe rring share s to appellants “to preve nt conver sion of Quantum’s stock in this way .”

The trial court enter ed a temporar y restra ining order on October 2, 2017, restra ining Empire from convey

ing any share s that it held on behalf of Quantum to appellants. I n the order , the trial court found that, “without the temporar y restra ining order , Plaintiff’s equity will be arr og ated by two of its lender s under a unilatera lly decla red defa ult with no mecha

nism to return the equity to Plaintiff a nd/or to instantiate the debt obliga tion that the lender s are try ing to c onvert into equity .”

2The trial court also set bond and October 12, 2017, as the date for the temporar y injunction hear ing. Empire was serve d a few day s later with a copy of the orig inal petition and application for temporar y
restra ining order and temporar y injunction and the trial court’s temporar y restra ining order , but it did
not answer

or otherw ise make a

n appea ranc e in the under ly ing pr ocee ding.
On Oc t o b er 16, 2017, the trial court enter ed a subsequent order extending the temporar y restra ining order and rese tting the hear ing for October 26, 2017. By the time of the rese t hear ing, appellants had intervene d in the p ro ce eding , asser ted aff irmative claims for monetary damag es ag ainst Quantum, and opposed Quantum’s reque st for temporar y injunctive relief

. Shortly afte r the beg inning of the rese t hea ri ng , the trial court took judicial notice that Empire was in compliance with the temporar y restra ining order

. Quantum’s witnesses at the hear ing wer e an expert who was a fore nsic economist and the founder and CEO of Quantum. Appellants’ witness was a principal of L 2 Capital.

The parties provided contra ry evidenc e about whether Quantum was in defa ult under the parties’ ag ree ments, including the notes, and the eff ec t o n Quantum in the event that the trial
court denied its reque st for a temporar y inju nction ag ainst Empire. The principal of L 2 Capital testified about Quantum’s alleg ed def aults, including ma king untimely and incor rec t pay ments on the notes, failing to f

ile a reg istration sta tement as contra ctually require d, and re placing its a uditor witho u t s ee k ing or obtaining appellants’ consent. I t was his position that the notes had been

acc eler ated and wer e due in full beca use of Quantum’s defa

ults, explaining, “When a defa ult occur s in the ag ree ment, the whole note is a cce lera ted. So it’s due and pay able a t the time of the def

ault, which was ultimately in J une.” The founder and CEO of Quantum, howeve r, testified that Quantum

3had made the require d pay ments under the terms of the notes and that it was his understanding that there wer e no other defa

ults under the parties’ ag ree ments. Quantum’s expert testified that without the tem porar

y injunction to enjoin Empire from convey ing the share s at issue to appellants, Quantum’s damag es would be irrepa rable

. He explained about the ec onomic situation of a “death spiral” in these ty

pes of f inancial a rra ng ements whe n the lender conver ts debt for stock. 1
The exhibi ts at the hear ing included copies of the notes; the irrevoc able transfe r ag ent instructions to Empire; a re g istration rig hts ag ree ment and an equity purcha se agr eeme nt betwee n

When asked a

bout his conclusions about this case, the e x pert testified: 1
This case is like the g randson of many other case s that have come into being since the advent o f mortg ag e-ba cked secur ities and other specia liz ed secur ity instruments in the late 1980s. I f y ou sign the note wher e the lender has the rig hts to conver t, unde r cer

tain circ umstances, the stock and they can obtain larg e amounts of stock instead of cash, they can sell that stock and depre ss the price th er eby g etting more share s; cre ating more de faults; and g etting mor e shar es; cre ating more de faults and so on. And the nickna m e of that ty pe of arr ang ement in the g ener ally acc epted literature has come to be known as a death spiral. The more share s y ou g et, the more y ou can sell; the more y ou can control at a lower p ri ce ; cr ea te more defa ults; g et more share s. And eventua lly s h ar es have been known to trade at one thousandths of a cent in other case s

— n o t t h is one. And the literature has nicknamed that the death spira l. I n this case based upon the notes of what is being asked of Quantum to issue additio n al share s—Quantum or Empire—for some party to issue larg e amounts of share s instead of ca sh or to issue share s beca use they didn’t g et the cash on time or there ’s some sort of defa

ult which might not be a rea l defa ult—since I ’m not a judge or an a ttorney , I don’t know if it’s a r eal de fault or if it’s a n alleg ed def

ault. And if all these share s are i s s u ed and the price falls and the death spiral comes into being , then Quantum will suffe r irrepa rable damag es for something that might not be. Since I ’m not a j udg e, an attorney or a jury , I don’t know what it would be. But I do know that if what is be ing asked of Empire comes into being and it turns out that it’s wrong , there will be damag es that y ou cannot re co n s truct or overlook or tur

n the clock ba ck on. The nickname f or that is irrepa

rable damag es. 4the parties; corr espondenc e between Quantum, appell ants, and Empi re; and proof of pay ments by Quantum on the not es by chec k and wire transfe r. The c orre spondence included a r equest by SBI
I nvestments to Empire to conver t Quantum’s note into common share s and Quantum’s response to Empire, providing notice of its pay ments on the notes and its dispute over cer tain pre -p ay

ment penalty char g es and reque sting that Empire remove “60% of [appellants’] reque st for rese rvation of share s” from Empire’s sy stem. I n a l et t er d at ed October 2, 2017, the Chief Financ ial Offic er of Quantum als o advised appellants that two of the promissory notes had been “paid in full” and
reque sted that appe llants “unrese rve” any Quantum common share s relate d to the notes. Following the hear ing, the trial court enter ed its order temporar ily enjoining Empire from co n v ey i n g an y s hare s that it held on behalf of Quantum to appellants. I n its order , the trial court’s f indings include d the following :

1. Upon finding that Quantum Materia ls has car ried its burden of showing (1) a cause of action ag ainst the defe ndant; (2) a probable rig ht to relief soug ht; and (3) a probable , imminent, an d irrepa rable injury in the interim, this T em porar y I njunction is g rante d in acc ordanc e [wit h] Texas Rule of Civil Procedur e 683, and the inhere nt equitable powe rs of the Court.
2. Wit hout a temporar y injunction Quantum Materia ls Corporation’s stock will be conver ted with no mecha

nism for return of the stock to Quantum Materia ls Corporation.

5See Tex. R. Civ. P. 683 (addr essing form and scope of injunctions and restra ining order s). The trial

court also set the case for trial o n t h e m er its on April 16, 2018. Appellants t here afte r non-suit ed 2
their cla ims seeking aff

irmative re lief without prejudice and filed this interlocutory appea l. 3

Analysis Appellants raise three issues on appea l. They contend that the trial co u rt er re d in
enter ing the temporar

y injunction beca

use: (i) Empire was not provided notice of t h e t em p orar y inj u n ct i on hear ing; (ii) “Qua ntum g ave Empire the stock at issue in acc ordanc e with the contra ct such that there was no probable rig ht to relief for conver sion,” and (iii) there was no showing of imminent or irrepa

rable harm be cause “the damag es her e ar e monetar y .”

Stand ard of Review an d App licable Law

“A temporary injunction is an ex traordina ry reme dy and does not issue as a matter of rig ht.” Butnaru v. Ford Motor Co. , 84 S.W .3d 198, 204 (Tex. 2002) (citing W alling v. Metc alfe , 8 6 3 S

. W

. 2 d 5 6 , 57 (Tex. 1993)). The question befor e the trial court is whether the applicant is entitled to prese rve the status quo of the litigation’s subject matter pending a trial on the merits. Id. ;

see State v. Southwestern Bell Tel. Co. , 526 S.W .2d 526, 528 (Tex. 1975) (def ining status q uo as “last, ac tual, peac eable , non-conte sted status that prec eded the pending controve rsy ”); Tom James of Dall., Inc. v. Cobb , 109 S.W .3d 877, 882 (Tex. App.—Dallas 2003, no pet.) (noting that

The trial court’s orig inal order g ranting temporar

y injunction se t tr ial for April 16, 2017, 2 but the trial court enter ed a corr ecte d order g ranting temporar y injunction that set s t h e t ri al for April 16, 2018. Appellants’ pe tition i n intervention wa s not included in the appe llate re cord. 3 6underly ing merits of controve rsy are not leg al issues befor e trial court during temporar y injunction hear ing)

. “To be entitled to a temporar y injunction, the applicant must plead a cause of action and show a probable rig ht t o rec over on that cause of action and a probable , imminent, and irrepa rable injury in the interim.” Fox v. T r o p ical W arehouses, Inc. , 121 S.W .3d 853, 857 (Tex. App.—For

t Worth 2003, no pet.) (citing Butnaru , 84 S.W .3d at 204); see Southwestern Bell Tel. Co. , 526 S.W .2d at 528 (explaining that applicant seeking temporar y injunction is not require d to establish that it will ul timately preva il in li tiga tion).
We revie w a trial court’s orde r g ranting temporar y injunctive relief

under a n abuse of discre t i o n s t an d ar d

. See Butnaru , 84 S.W .3d at 204 (citing W alling , 863 S.W .2d at 57; State

v. W alker , 679 S.W .2d 484, 485 (Tex. 1984)). A trial court abuses its discretion when it ac t s

unrea sonably or in an arbitra ry manner or without ref

ere nce to any g uiding rules and principals. See id. at 211. We will not disturb the trial court’s decision to g rant injunctive relief absent a clea r abuse of discretion. Reagan Nat’l Adve rt. v. Vanderhoof Family Tr. , 82 S.W .3d 366, 370 (Tex. App.—Austin 2002, no pet.). The scope of revie w is limit ed to the validity of the order g ranting or deny ing temporar

y injunctive relief

. See id. (citing W

alling , 863 S.W .2d at 58; Universal Hea l t h Servs., Inc. v. Thompson , 24 S.W .3d 570, 576 (Tex. App.—Austin 2000, no pet.)). When revie wing such an order, we view the evidenc e in the light most favor able to the order , indulging ever y

rea sonable infere nce in its favor , and “dete rmine whether the order was so arbitra ry that it exceeds the bounds of reasonable discretion.” Fox , 121 S.W .3 d at 857; see Thompson , 24 S.W .3d at 576.
“A trial cour t d o es not abuse its discretion if it bases its decision on conflicting evidenc e and

7evidenc e in the rec ord rea sonably supports the trial court’s decision.” Fox , 121 S.W .3d at 857. Wit h

these standa

rds in mind, we turn to appe llants’ issues.

Notice to Em pire

I n their first issue, appellant s contend that the trial court err ed in enter ing the temporar y injunction beca

use Empire was never g iven notice of the hear ing. See Tex. R. Civ. P. 681 (“N o temporar

y injunction shall be issued without noti ce to the a dverse party .”).
As an initial matter, we addre ss Quantum’s jurisdictional arg uments challeng ing appellants’ standing to challeng e the temporar y injunction enter ed aga inst the t h i rd p ar t y Empire. See, e.g. , Hec kman v. W illiamson Cty. , 369 S.W .3d 137, 150 (Tex. 2012) (“Standing is a constitutional prer equisite to suit. A court has no jurisdiction over a claim made by a plaintiff who lacks standing to assert i t

. ”)

. Qu antum arg ues t hat appellants do not have standing relative to the temporar y injunction beca

use it does not aff

ect them with any injury and that they have no standing
to litigate any proce dural defe cts in service on Empire beca use they ful l y p ar t i ci p ated in the temporar y injunction hearing

. A litigant, howeve r, need not be a party to a temporar y injunction in order to have standing to appea l it. See Q’Max Am., Inc. v. Scree n Logix, LLC , No. 01-15-00319- CV, 2016 Tex. App. L EXI S 2136, at * 10–11 (Tex. App.—Houston [1st Dist.] Mar. 1, 2016, no pet.) (mem. op.) (citing Tex. Civ. Prac. & Rem. Code § 51.014(a) (4) (authorizing “per son” to appea l g rant or denial of temporar

y injunction)). A litigant has standing to appea l a temporar y injunction if it is “per sonally
ag g rieve d by the entry of a tem porar y injunction” so as to have a “justiciable interest in the
controve rsy .” Id. Her e appellants are persona lly ag g rieve d by the temporar y injunction beca

use it

8enjoins Empire from convey ing share s of stock to them. See id. (c o n cl u d i ng that contra ctual
counter party to enjoined p ar t y wa s persona lly ag g rieve d by entry of temporar y injunction and holding that contra ctual counter party had standing to appeal temporar y injunction). Thus, we conclude that appellants g ener ally have sta nding to a ppeal the te mporary

injunction. We, howeve r, cannot conclude that ap p el l ants have standing to complain about defe ctive service on Empire. Appellants have failed to show how they wer e “per sonally ag g rieve d” by the alleg ed lack of notice to E mpire—a third party —of the temporar

y injunction he aring

. See, 4

e. g
. , Hec kman , 369 S.W .3d at 154–55 (explaining that plaintiff’s alleg ed injury is startin g p o i n t for standing inquiry and th at “plainti ff must be personally injured—he must plead fac ts demonstrating that he, himself (ra ther than a third party or the public at larg e), suffe red the injury ”);
Eve rett v. TK-Tai to, L.L.C

. , 178 S.W .3d 844, 853 (Tex. App.—For t Worth 200 5 , n o pet.) (“The deter mination of whether

a plaintiff possesse s standing to a ssert a particula r cla im depends on the fac ts pleade d and the cause of action asser ted.”)

. As the trial court rec og nized during the temporar y injunction hear ing, Empire as the transfe r ag ent in rea lity “doesn’ t have a big dog in this fig ht,” and

Appellants rec og nize in their reply brief that “[a]t no point has Appellants ever repr esente d 4 Empire or se rved a s its prox y .” 9appellants we re pr esent and par ticipated in the tempora

ry injunction hearing

. On these ba ses, we 5

overr ule appe llants’ first issue.

P robable Right to Relief

I n their second issue, appellan t s arg ue that the trial court’s finding that Quantum demonstrated a probable rig ht to relief on its claim of conver sion ag ainst Empire was not rea sonably supported by the evidenc e. Appellants arg ue that “it was not possible for Empire to have conver ted the stock at issue” beca

use “Qua ntum had alre ady g iven that stock to Empire for safe keeping in the
event of a defa

ult”; “a contra ct specific ally require d that Empire acquir e and later transfe r the share s at issue”; and Q uantum had not aske d Empire to re turn the shar es to Quantum.

Fur ther, even if we wer e to conclude that appellants have standing to raise this complaint, 5 we cannot ag ree with appellants’ contention that notice to Empire was defe ctive. The rec ord ref lects that Empire was serve d with copie s of Quantum’s orig inal petition and application for temporar y restra ining order and temporar y injunction and the temporar y restra ining order ; the temporar y restra ining order noticed the orig inal hear ing date for the temporar y injunction hear ing; Empire did not answe r or appea

r at the orig inal setting for the hear ing; and, at the orig inal setting, the trial court announce d in open court that the hear ing was rese t to October 26, 2017, the date that the temporar y injunction hearing ultimately occur red. The recor d also ref

lects t hat Quantum’s attorney arr anged to serve the order t hat ex tended the temporar

y restra ining order and noticed October 26, 2017, as the rese t date for the tempo rary injunction hear ing and, at the rese t hea ri n g, Quantum’s attorney , as an office r of the court, repr esente d that Empire had been proper ly serve d with the order b y e- fi le and fac simil e. The attorney explained to the trial court that, if Emp i re h ad n o t b ee n serve d with the notice, the case “wouldn’t be g oing on rig ht now” and that there would have to be a “new case ” b ec au s e E m p i re alre ady would have convey ed the stock to appellants and “this company would be g one.” He further repr esente d to the trial court that “the [c] ourt announce d [t he rese t date] in open court and corpor ate counsel faxed [Empi re] a copy of t he order,” expl aining that they “wa nted t o g et i t to [Empi re] as fast as [t hey ] possibl[ y ] could beca use [t hey ] did not want [Empi re] destroy ing the company .” The trial court acc epted Quantum’s attorney ’s unref uted re p re s entation as an office r of the court about service on Empire and took judicial notice th at E m p i re h ad abided by the temporar y restra ining or der.

10“A probable rig ht of rec overy is shown by alleg ing a cause of action and prese nting

evidenc e tending to sustain it.” Fox , 121 S.W .3d at 857. “To establish a probable rig ht to rec over,

a party ‘is not re q u i re d t o p rove that [i t] will preva il on final trial in order to invoke the trial court’s discretion to g rant a temporar y injunction.’” University Interscho l a s t ic L eague v. Hatt en , No. 03-03-00691- CV, 2004 Tex. App. L EXI S 3372, at *6 (Tex. App.—Austin Apr. 15, 2004, no pet.) (mem. op.) (quoting Oil Field Haulers Ass’n v. Railroad Comm’n , 381 S.W .2d 183, 196 (Tex. 1964)). “We will aff

irm the trial court’s decision as long as there are g rounds to believe that the claim has merit.” Id. (citing 183/620 Grp. Joint Venture v. SPF Joint Venture , 765 S.W .2d 901, 904 (Tex. App.—Austin 1989, writ dism’d w.o.j.) (noting that “appe llee

. . . re q u ired only to adduce evidenc e that tends to support his rig ht to rec over on the merits”)) ; see Stewart Beac h Con d o. Homeowne rs Ass’n v. Gi l i N Prop. Invs., LLC , 481 S.W .3d 336, 346 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (explaining that tem p o ra ry i n j u n ction hear ing is not “ mini trial” and that, to show probable rig ht of rec overy , applicant “‘must plead a cause of action and prese nt some evidenc e that tends to sustain it’” and that applicant’ s “‘e vidence must be sufficie nt to raise a bona fide issue as to the applicant’s rig ht to ulti mate re lief’” (quoting Intercontinental Terminals Co. v. Vopak N. Am., Inc

. , 354 S.W .3d 887, 897 (Tex. App.—Houston [1s t Dist.] 2011, no pet.)))

.

Quantum’s asser

ted claim ag ainst Empire was conver sion. To preva il on a claim for

conver sion o f p ersonal proper ty , “a plaintiff must prove that: (1) the plaintiff owned or had leg al possession of the proper

ty or entitlement to possession; (2) the def endant unlawfully and without authorization assumed and exercised dominion and control over the proper ty to the exclusion of, or inconsistent with the plaintiff’s rig hts as an owner ; (3) the plaintiff demande d return of the proper ty ;

11and (4) the defe ndant ref used to r eturn the proper

ty .” Apple Imps., Inc. v. Koole , 945 S.W .2d 895,
899 (Tex. App.—Austin 1997, writ denied)

. T h e issue then is whether Quantum prese nted some evidenc e that tended to support its rig ht to rec over under thi s claim. See Gili N Prop. Invs., LL C , 481 S.W .3d at 346; SPF Joint Venture , 765 S.W .2d at 904.

Quantum prese nted testimony and documentar y evidenc e that it had paid two of the
notes in full and reque sted appellants to “unre serve any [Quantum] share s rela ted to these two notes” and “re turn the orig inal notes with a notation of Paid in Full”; that it had made pay ments when due in acc ordanc e with the t erms of the not es; that it was not in defa ult under the terms of the parties’
ag ree ments, including the pre- pay ment penalty provisions; that appellants had notified Empire that Quantum was in de f

a u lt and instructed Empire to conver t Quantum’s debt to appellants into common share s of Quantum; that Qu an t u m had notified Empire of pay ments on the notes and the i n ap p l i ca b i l i ty of the pre- pay ment penalty beca

use it had made the pay

ments on the note on th e maturity date; and that Quantum had instructed E m p i re that “60% of [appellants’] reque st for

rese rvation of sha

res should be r emoved f

rom [Empi re’ s] s y stem.” The documentar

y evidenc e also included the notes and transfe r ag ent instructions. The c onversion rig hts in the notes expressly wer e conting ent on an event of default: “The Holder shall have the rig ht at any time on or afte r an Event of Def ault (as define d here in) occur s under the Note, to conver

t all or any part of the outstanding and unpaid principal and amount and acc rued and unpaid interest of this Note into fully paid and non-asse ssable share s of Common Stock

. . . .” And the transf er a g ent instructions to Empire included the f ollowing:

12The share s shall be issued within t wo (2 ) b u siness day [s] of rec eipt of a notice of

conver sion w ith r espec t to the Note

. . . . A copy of the Conversion Notice shall be provided by [appellants] to both Empire, [Quantum] and its counsel.

. . . Upon y our firm’s rec eipt of the Conversion Notice

. . . , y o u r fi rm is here by irrevoc ably author i z ed and instructed to issue share s of Common Stock of [Quantum]

. . . to [appellants] at the reque st of [appellants]

. . . without any further action or confirma tion by

[Quantum]

.

. . . [Appell ants] and [Quantum] understand[] that Empire Stock Transf er, I nc. (the “Tra nsfer Ag ent”) shall be re quired to per form any issuances or transfe rs of share s pursuant to this letter unless the respe ctive issuance or transfe r of share s is prohibited by a valid cour

t order.

A lt h o u g h a p p e ll a n ts p r e s e n te d c o n tr ary evidenc e, the trial court c o u ld h a v e r e a s o n a

b ly found t hat Quantum had presented evidence tending to support its claim t hat i t wa s n o t in defa ult under the terms of the notes and the parties’ ag ree ments. And, based on that finding , the trial court could have rea sonably found that Quantum had prese nted some evidenc e that: (i) E mpire had assumed control over share s that it was holding on Quantum’s behalf inconsistent with Quantum’s rig hts as t he shares’ owner; (ii) Quantum had dem anded that Empire unreserve cer tain share s and ref rain fr om convey

ing sha res to appellants; (iii ) Empi re would ref use t o comply with Quantum’s demands without a co u rt o rd er prohibiting it from doing so; and, there fore , (iv) Quantum had
prese nted some evidenc e that tended to support its rig ht to rec over under its claim of conver sion
ag ainst Empire. See Gili N Prop. Invs., LL C , 481 S.W .3d at 346; SPF Joint Venture , 765 S.W .2d
at 904. Viewi n g the evidenc e in the light most favor able to the trial court’s order , we

co n clude that the trial court did not abuse its discretion by finding that Quantum had car ri ed i t s

13burden of showing that it had a probable rig ht of rec overy on its claim of conver sion ag ainst Empire.

See Fox , 121 S.W .3d at 857; see also Q’Max Am., Inc. , 2016 Tex

. Ap p . L E XIS 2136, at *17–18 (obser ving that trial court does not abuse discretion “in enter ing an injunction based on its resolution of a c onflict in the evidenc e”) . We overrule appellants’ se cond issue.

Im m inent and Irre parable Harm

I n their third issue, appellants arg ue that the trial co u rt ab used its discretion in
g ranting the temporar

y injunction beca

use “ther e was not a showin g o f imminent and irrepa rable harm—the only damag es to Quantum is the loss of value of the share s transfe rre d. ” An injury is irrepa rable i f d am age s would not adequately compensa te the injured party or if they cannot be

measure d by any cer

tain pecunia

ry standard. Butnaru , 84 S.W .3d at 204; Fox , 121 S.W .3d at 857. The claimed i n

j u ry must not be “mer ely specula tive; fea r and appre hension of injury are not sufficie nt to support a temporar y injunction.” Fox , 121 S.W .3d at 861. Although appellants prese nted a counter vailing theo ry at the injunction hear ing throug h the testimony of L 2 Cap i t al’s principal, Quantum prese nted evidenc e that supported a

rea sonable infere nce that, if the trial court did not enjoin Empire from convey ing share s of stock to appellants, Quantum’s business would be disrupted during the interim befor e the trial on the merits.
See Occ idental Chem. Corp. v. ETC NGL Transp. , L L C, 425 S.W .3d 354, 364 (Tex. App.—Houston [1st Dist.] 2011, pet. dism’d) (“Te x as courts have rec og nized that ‘business disruptions’ may result in irrepa rable harm for which a temporar y inj u n ct i o n is appropr iate.”) ; Liberty Mut. Ins. Co.

v. Mustang Tractor & Equip. Co. , 812 S.W .2d 663, 666 (Tex. App.—Houston [14t h Dist.] 1991, no writ) (stating that disruption of business can be irrepa rable harm and ty

pe of harm for which

14temporar

y injunction can issue); Miller v. K & M P’shi p , 770 S.W .2d 84, 85, 87–88 (Tex. App.—Houston [1st Dist.] 1989, no writ) (affi rming temporar y injunction to preve nt transfe r of disputed stock share s and reje cting arg ument t h at appellee s failed to show lack of adequate reme dy at law); see also Miller v. Talley Dunn Gallery, LLC , No. 05-15-00444- CV,
2016 Tex. App. L EXI S 2280, *24 (Tex. App.—Dallas Mar. 3, 2016, no pet.) (mem. op.) (“D isruption to a business can constitute irrepa rable harm.” ). Evidence showed that th e n otes authorize appellants in the event of a defa ult by Quantum to conver t debt to equity at a signific antly discounted rate , and Quantum’s expert testified about the economic situation of a “death spiral” and the dilution and devalua tion of Quan t u m ’s share s in that case . Viewing the evidenc e in the light
most favor able to the trial court’s o rd er , we conclude that the trial court did not abuse its discretion by finding that Quantum car ried it s burden of showing imminent and irrepa rable harm i n t h e interim befor e the trial on the merits. See Fox, 121 S.W .3d at 857; Q’Max Am., In c. , 2016 Tex. App. L EXI S 2136, at *17–18.

I n the last sentenc e of their briefing on the third issue, appellants also arg ue that the order g ranting temporar

y injunction does not comply with the specific ity require d under Texas Rule of Civil Procedur e 683. Rule 683 require s an order g ranting temporar y injunction to “set forth the

r e a s o n s f o r it s is s u a

n c e . ” T e x. R. Ci v . P. 6 8 3 ; s e e Q we s t Co m m c ’ r

s
. v
. A T& T, Co r

p
. , 2 4 S. W. 3 d 3 3 4 , 337 (Tex. 2000) (ex plaining that require ments of R ule 683 ar e manda tory and mus t be followed); Vopak N. Am ., Inc. , 354 S.W .3d at 899 (obser ving Texas Supre me Court’s holding that “Rule 683 mandates that a trial court g ranting a temporar y injunction must explain in the order its rea sons for believing that the applicant has shown that it will suffe r injury if interlocutory relief is not g rante d”).

15Appellants arg ue that the order is noncompliant with Rule 683 beca use it states only that, “[w]i thout a temporary injunction Quantum M ater ials Corporati o n ’s stock will be converted with no mecha

nism for return of the stock to Quantum Materia ls Corporation” and that “ther e is no imminent and irrepa

rable harm in stoc k being trade d from one entity to another .” The trial court’s stated rea son for g ranting the temporar y injunction to prese rve the status quo, howeve r, g oes to the

crux of the parties’ dispute about the nece ssity of temporar y injunctive relief and is supported by Quantum’s evidenc e about its “imminent” and “irre para ble” harm in the event that the trial court did
not enjoin Empire from following appellants’ instructions to conver t Quantum’s debt to equity prior to the trial on the merits. Thus, we conclude that the orde r is compliant with Rule 683.

For these re asons, we ove rrule a ppellants’ third issue.

Conclusion Having ov er ru led appellants’ issues, we aff irm the trial court’s order g ranting the temporar y injunction ag ainst Empire.

__________________________________________ Melissa Goodwin, Jus tice
Be fore Chief J ustice Rose, Jus tices Goodwin a nd Field Affir med Filed: Mar ch 8, 2018

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