Case Name: Fred G. GANNON, Appellant, v. Robert B. PAYNE, Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1985-07-24
Citations: 695 S.W.2d 741
Docket Number: No. 05-84-00826-CV
Parties: Fred G. GANNON, Appellant, v. Robert B. PAYNE, Appellee.
Judges: Before AKIN, STEPHENS and GUIL-LOT, JJ.
Reporter: South Western Reporter Second Series
Volume: 695
Pages: 741–752

Head Matter:
Fred G. GANNON, Appellant, v. Robert B. PAYNE, Appellee.
No. 05-84-00826-CV.
Court of Appeals of Texas, Dallas,
July 24, 1985.
Rehearing Denied Aug. 27, 1985.
Gerard B. Rickey, Dallas, for appellant.
Erich F. Klein, Jr., Ron Edmondson, Lyne & Klein, Dallas, for appellee.
Before AKIN, STEPHENS and GUIL-LOT, JJ.

Opinion:
STEPHENS, Justice.
This is an appeal from an interlocutory order in which the trial court entered a temporary injunction prohibiting Fred G. Gannon from prosecuting a lawsuit he filed against Robert B. Payne in Alberta, Canada. In our prior opinion, we held that the trial court abused its discretion, and we ordered that the temporary injunction be dissolved. After review and consideration of appellee's motion for rehearing, we conclude that our prior opinion was in error. Consequently, appellee's motion for rehearing is granted. Our prior opinion dissolving the trial court's temporary injunction is withdrawn, and this opinion, reinstating the trial court's temporary injunction, is substituted.
This extensive litigation stems from an agreement entered into between Robert B. Payne and Fred G. Gannon in 1965. Gan-non and a firm called Paddon-Hughes acquired an oil and gas lease in Canada. Gannon owned 50% of the lease and Pad-don-Hughes owned the other 50%. The contract between Gannon and Paddon-Hughes provided for a right of first refusal in favor of Paddon-Hughes, should Gannon decide to sell his interest. Unknown to Paddon-Hughes, Gannon committed 30% of his 50% interest (or 15% of the total leasehold interest) to John Carstairs and Michael Voelker, and had contracted with Payne to share equally with him in the costs and profits. Payne was aware of the interest committed to Carstairs and Voelker and that the percentage he was to receive eq-ualled one-half of whatever interest Gan-non retained in the lease.
Between June 1970 and December 1971, Gannon honored the agreement by paying 35% of the profits he received to Payne, retaining 35% for himself, and remitting 30% to Carstairs and Voelker. After that period of time, during which the venture became very profitable, Gannon unilaterally reduced the percentage of payment to Payne from 35% to 30%, claiming that he was entitled to do so because he had done the work while Payne had received a "free ride."
Payne disagreed with this reduction and instituted suit in Canada, claiming that he was entitled to 17.5% of the lease and that Gannon was holding this interest in trust for him. On September 20, 1979, the Canadian trial court rendered judgment that Payne was entitled to the 17.5% interest in the lease and the court ordered Gannon to transfer and convey that interest to Payne, together with all other property, rights, titles and interests he had acquired under his agreement with Paddon-Hughes. The judgment further ordered Gannon to account for any unpaid sums due Payne, together with interest.
Gannon, dissatisfied with this judgment, appealed to the Court of Appeal of Alberta, which on October 23, 1980, dismissed the appeal in Payne's favor. Gannon next applied to the Supreme Court of Canada for leave to appeal the judgment of the Court of Appeal. The application was denied by the Supreme Court of Canada on October 23, 1980, and the Canadian litigation was thus concluded.
On August 30, 1982, long after the conclusion of the Canadian litigation, Payne filed suit against Gannon in the 160th Judicial District Court of Dallas, Dallas County, Texas. Gannon filed an answer and, by doing so, submitted himself to the jurisdiction of the Texas court. In addition, Gan-non filed a counterclaim, which was later nonsuited, in which he affirmatively invoked the jurisdiction of the Texas court. Since the filing of the suit, numerous preliminary matters have been presented to the trial court and disposed of.
On April 30, 1984, Payne filed his Third Amended Original Petition. By this petition, Payne seeks recovery from Gannon for fraudulent representations which induced him to originally enter into the Canadian oil lease; for concealing and misrepresenting the income received from the lease, both before and after the Canadian litigation; for an accounting of all expenses and income of the lease; for reimbursement of monies paid Gannon by Payne for legal fees charged for services rendered by Gan-non, who the record does not show to be a licensed attorney in Canada; for repayment of damages incurred by Payne, which were occasioned by a fraudulent defense asserted in the Canadian suit; for specific performance by way of conveyance of an additional percentage of the Canadian lease, arising because of certain conveyances made by Gannon after the termination of the Canadian litigation, which directly affected Payne's interest in the lease; seeking a declaration that a conveyance by Gan-non of Gannon's interest in the lease to a Canadian corporation is a sham because the corporation is the alter ego of Gannon; for exemplary damages; and for alternative relief on several counts.
Payne additionally filed a application for a temporary injunction prohibiting Gannon from prosecuting a suit he filed in Canada, in which he sought a declaratory judgment which would interfere with the Texas court's jurisdiction. Gannon answered this application for temporary injunction, on the grounds that the Canadian litigation was res judicata of all of Payne's claims in the Texas suit; that a plea in abatement in the Canadian suit is a proper and mandatory remedy; that Payne has neither pleaded why he has no other adequate remedy at law nor why he will suffer immediate irreparable harm; that the power of enjoining a party from proceeding in a foreign court should be sparingly exercised; that litigation in the Canadian court will dispense with a multiplicity of suits; that the corporation to which Gannon conveyed his interest in the lease is an indispensable party to this suit, and that it is a Canadian corporation and does no business in Texas; that an order of the Texas court would not be recognized by the Canadian court; that Payne's suit seeks to determine title to Canadian property, over which it has no jurisdiction; that the rule of forum non conveniens is applicable and should govern; and that litigation in Texas would be considerably more expensive than litigation in Canada. After a hearing, the trial court issued its temporary injunction. (See appendix.)
On an appeal from the entry of the temporary injunction, the sole question for determination by this court is whether the trial court abused its discretion by issuing the temporary injunction. Iranian Muslim Organization v. City of San Antonio, 615 S.W.2d 202, 208 (Tex.1981); Houston Independent School District v. City of Houston, 443 S.W.2d 49, 50 (Tex.1969). It is undisputed that the 160th Judicial Court of Dallas County has jurisdiction over the parties to this suit. It is further undisputed that after the Texas court had acquired jurisdiction of the parties, and had exercised that jurisdiction for a period of almost two years, Gannon filed suit in Canada, seeking to litigate claims which were before the Texas court and seeking to interfere with the jurisdiction of the Texas court. It has long been Texas law that when suit is filed in a court having jurisdiction of the parties and the subject matter, that court may proceed to judgment and may protect its jurisdiction by enjoining the parties from prosecution of another suit subsequently filed in another court, involving the same subject matter. Cleveland v. Ward, 116 Tex. 1, 285 S.W. 1063 (1926); V.D. Anderson Co. v. Young, 128 Tex. 631, 101 S.W.2d 798 (1937); PPG Industries, Inc. v. Continental Oil Co., 492 S.W.2d 297 (Tex.Civ.App.—Houston [1st Dist.] 1973, writ ref'd n.r.e.).
As to the question of res judicata raised by Gannon, the law is equally clear that a trial court is not authorized to determine the merits of a plea in bar in a hearing on an application for temporary injunction. Houston Belt & Terminal Ry. Co. v. Texas & New Orleans Ry. Co., 155 Tex. 407, 289 S.W.2d 217 (1956); DeVilbiss v. West, 600 S.W.2d 767 (1980). The only question before the trial court in a hearing on a temporary injunction is whether the movant is entitled to preservation of the status quo of the subject matter of the suit pending a trial on the merits. Davis v. Huey, 571 S.W.2d 859 (Tex.1978).
Next, Gannon raises the questions of forum non conveniens and comity, arguing essentially the same matters that were argued in New Process Steel v. Steel Corp. of Texas, 638 S.W.2d 522 (Tex.Civ.App.—Houston [1st Dist.] 1982, no writ). In that case, the appellant argued the question of multiplicity of suits, the doctrine of comity, irreparable harm resulting from the expense of litigation, and the doctrine of forum non conveniens. The trial court denied a temporary injunction sought to enjoin one of the parties from proceeding in a subsequent suit in Oklahoma. The appellate court affirmed, pointing out that trial courts have broad discretion in granting or denying temporary injunctions and that the appellate court cannot substitute its discretion for that of the trial court. New Process Steel, 638 S.W.2d at 524. Moreover, the court noted that the sole function of the appellate court is to determine whether there has been a clear abuse of discretion by the trial court. New Process Steel, 638 S.W.2d at 524.
In response to Gannon's argument concerning comity, we note that comity is not a rule of law but a principle of convenience, to be administered not as a matter of obligation, but only out of deference and respect, and then not as a matter of right, but as a courtesy if, in its discretion, the trial court so chooses. New Process Steel, 638 S.W.2d at 524. We conclude that the trial court's failure to apply the doctrine of comity under the facts of this case does not demonstrate an abuse of discretion.
With respect to the doctrine of forum non conveniens, we conclude that the facts are not so heavily weighted toward either court as to reflect an abuse of discretion. New Process Steel, 638 S.W.2d at 525. In our case, the Texas court had in personam jurisdiction and, contrary to the Gannon's argument, readily admits that it has no jurisdiction to determine title to real property in Canada.
Finally, after considering Gannon's argument of the expense of litigation in Texas, we hold that the record does not reflect such a degree of expense and hardship as to warrant a finding of abuse of discretion by the trial court. To the contrary, we note that the extensive litigation in this suit, participated in between the parties, prior to the instigation of the Canadian action have already resulted in untold expense to the parties that would be fruitless if now discontinued.
Our search of the record fails to disclose an abuse of discretion exercised by the trial court. Consequently, we conclude that the issuance of our original opinion was in error. We now withdraw our original opinion and reinstate the temporary injunction of the trial court.
AKIN, J., dissenting.
APPENDIX
TEMPORARY INJUNCTION
ORDER
On the 29th day of June, 1984, came on to be heard the Application for Writ of Injunction filed herein by the Plaintiff, and came also to be heard Defendant's Motion For Continuance and Defendant's Amended Motion For Stay; and after receiving evidence and hearing argument of counsel, the Court is of the opinion that the Application should be granted and the Court makes the following findings and orders:
The Court finds:
(a) Defendant's Motion For Continuance was no longer urged after Plaintiff agreed to waive, for the purpose of this hearing only, the requirement of thirty (30) day notice of the content of certain Canadian law upon which Defendant proposed to rely.
(b) The Application has been properly filed herein and, pursuant to order of the Court, due and proper notice has been given to the Defendant.
(c) The Special Exceptions of Defendant contained in his Amended Response to Application for Injunction should be, and they are hereby, overruled.
(d) This case was filed by the Plaintiff against the Defendant on August 30, 1982. Personal service was duly perfected in Dallas, Texas on the Defendant. The Defendant appeared and filed his Original Answer on September 2, 1982, followed by the filing of a Counterclaim against the Plaintiff on October 8,1982. Subsequently, Defendant has appeared and taken many affirmative actions in this cause including: a Request for Production of Documents filed on October 18, 1982, filing Interrogatories on January 12, 1983, agreeing to an Order respecting Special Exceptions on January 17, 1983, filing Interrogatories on January 24, 1983, filing an amended Counterclaim on January 31, 1983, moving for sanctions on February 16, 1983, filing a Motion for Summary Judgment and Affidavit in connection therewith on March 8, 1983, filing an Amended Answer on April 25, 1983, changing his trial counsel in May of 1983, moving for modification of the Agreed Order in May of 1983, filing a Motion and Order for Non-Suit on his Counterclaim, filing Special Exceptions to Plaintiff's Petition, filing a Plea in Abatement on June 9, 1983, filing a Second Amended Answer on June 9, 1983, filing a Third Amended Answer on June 13, 1983, filing a Notice to take the Deposition of Plaintiff on June 22, 1983 and actually taking such deposition, filing a Motion for Protective Order on June 24, 1983, filing a Brief in Support of his Motion for Protective Order, filing a Request for Admissions on July 12, 1983, filing a Plea in Abatement on August 22, 1983, substituting counsel on December 9, 1983, filing a Fourth Amended Original Answer on December 27, 1983, filing a Motion to Dismiss on December 27, 1983, filing an Affidavit in Support of the Motion to Dismiss on December 27, 1983, filing a Third Plea in Abatement on December 27, 1983, filing an Affidavit in Support of the Third Plea in Abatement on December 27, 1983, filing a Third Motion for Summary Judgment on December 27, 1983, filing an Affidavit in Support of such Motion for Summary Judgment, filing a Motion to Determine the Laws of a Foreign Country on January 6, 1984, filing Notice of Intention to Take Depositions of Milvain, Crawford, Evans and Robert B. Payne, filing a Motion to Dismiss Federal Security Allegations, filing a Motion to Dismiss Mail Fraud Allegations, filing a Supplemental Answer on Jaunary 17, 1984, filing a Request for Admission on January 18, 1984, and agreeing to various Orders heretofore issued and taking other steps to take issue with the Plaintiff on the merits of this cause.
(e) Notwithstanding the fact that this cause has been pending since August of 1982 and is now specially set as the number one case for trial on the merits on October 8, 1984, Defendant, on June 8, 1984, has caused to be filed in the Court of Queen's Bench of Alberta, Judicial District of Calgary, Canada, a certain cause of action entitled "Fred G. Gannon, et al. vs. Robert B. Payne, et al.'' Such cause of action is herein called the "Canadian Action." A copy of the Statement of Claim therein is a part of the record of this cause.
(f) After first requesting the same, the Defendant has recently requested the discontinuance of the second deposition of Plaintiff Robert B. Payne. Such deposition was scheduled by attorneys for both Plaintiff and Defendant for June 21, 1984.
(g) The primary purpose of the Canadian Action is to litigate the issues which have already been placed in issue before this Court by Fred G. Gannon and by Plaintiff, and to otherwise interfere with the processes and jurisdiction of this Court.
(h) Plaintiff was handed a copy of the Statement of Claim and a document entitled "Order for Service Ex Juris" by a person who is an attorney who shares an office with Defendant's attorney, Gerald Rickey.
(i) The contracts and agreements upon which many of the issues herein rest were negotiated between the Plaintiff and the Defendant by one of two methods: (i) by telephone calls and correspondence between the parties while Defendant was in Canada and Plaintiff was in Dallas, Texas, and (ii) by personal conversations between the parties occurring in Dallas, Texas. The primary breach of these contracts and agreements occurred during a conversation during a meeting of Plaintiff and Defendant held in Dallas, Texas.
(j) Plaintiff has incurred at least $24,-000.00 in prosecuting this cause of action. Defendant has also incurred costs herein. Defendant or Plaintiff will be responsible for court costs herein. If Defendant is not enjoined as prayed for by Plaintiff, (i) the sums previously spent by Plaintiff and Defendant herein will have been wasted; (ii) no real offsetting recoupment of litigation costs will be obtained by either party in the Canadian litigation but, instead, additional costs will be incurred; (iii) the court costs herein may not be paid should they be assessed against Defendant Gannon; and (iv) multiplicity of suits will result.
(k)The Court has proper jurisdiction over the person of the Defendant, Fred G. Gannon. The acts of Defendant sought to be restrained by Plaintiff are as set out below. Unless Defendant is so restrained, Plaintiff will suffer irreparable injury in that Plaintiff has no adequate remedy at law, valuable time will be lost by Plaintiff, Plaintiff's costs of conducting this proceeding will have been lost, Plaintiff will be forced to travel to Canada to try issues that are properly before this Court; and Defendant's actions will cause the Court to lose jurisdiction of this cause.
(Z) The action of the Defendant threaten to alter the status quo of the parties; and the granting hereof will maintain the status quo.
(m) Unless the Court grants the injunction sought by Plaintiff, there is the risk of inconsistent judgments rendered by a Court in Texas, and by a Court in Canada, with no means of resolving the conflict. Therefore, Plaintiff is without an adequate remedy at law; and, in light of the expenses already incurred, even if Plaintiff can seek to abate or stay the suit in Canada, such a remedy is inadequate.
IT IS THEREFORE ORDERED that the Special Exceptions contained in the Response to Application For Injunction should be, and they are hereby, overruled; and
IT IS FURTHER ORDERED that the Defendant, Fred G. Gannon, his agents, servants, employees and attorneys and those persons in active concert or participation with him who receive actual notice of the Writ of Injunction by personal service or otherwise, be, and they are hereby, commanded forthwith to desist and refrain from: (1) taking any action whatsoever in that cause of action styled "Fred G. Gan- non, et al. vs. Robert B. Payne, et al." in the Court of Queen's Bench of Alberta, Canada, Calgary Judicial District, save and except to dismiss the same, if Defendant so chooses; (2) assisting in the prosecution of the same by any means including but not limited to filing any pleadings, requesting any action of such Court, making any appearance therein or continuing the prosecution of such cause of action, counselling or encouraging others to continue the prosecution thereof, and (3) commencing any other court action which seeks to interfere with the jurisdiction of this Court or attempts to deal with any issues raised in this cause; such restraint upon Defendant shall continue in full force and effect pending final hearing and determination of this cause.
The Clerk shall forthwith, on the filing by Plaintiff of the bond hereinafter required, and on approving the same according to law, issue a writ of injunction in conformity with the law and the terms of this Order.
Service of such writ of injunction on the Defendant Fred G. Gannon may be had by service upon Defendant's counsel of record herein, including Gerald B. Rickey.
This Order shall not be effective until Plaintiff executes and files with the Clerk a bond, in conformity with the law, in the amount of Five Thousand and NO/lOO ($5,000.00) Dollars.
. The record consists of four volumes of transcript, six volumes of records of proceedings in Canadian courts, statements of facts, exhibits, briefs and reply briefs — coupled with a motion for rehearing, accompanied by briefs and reply briefs.
. The 17.5% reflects 50% of Gannon's interest in the lease, taking account of the 15% committed to Carstairs and Voelker.