Court Opinion

ID: 9681489
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:51:27.498102+00
Date Added: 2024-06-11T18:17:34.209246
License: Public Domain

AKIN, Justice,
dissenting.
I cannot agree that the entry of the temporary injunction was not an abuse of discretion. Although the majority has chosen not to address the primary question of whether Payne established a probable right of recovery, I would hold that he did not. Indeed, Payne neither pleaded nor proved that he had no adequate remedy at law nor why he would suffer irreparable harm. Additionally, I would hold that the trial court abused its discretion because under the doctrines of forum non conveniens and of comity the Texas court should defer to the Canadian courts for a resolution of’ this dispute instead of enjoining Gannon from proceeding in the Canadian court. Additionally, I would dissolve the injunction because it fails to comply with TEX.R. CIV.P. 683. Accordingly, I must dissent.
The majority apparently rests its affirmance of the temporary injunction on the ground that the trial court had jurisdiction of the parties and that Gannon’s Canadian suit would interfere with the Texas court’s disposition of this litigation. A secondary ground, which is recited as a reason in the trial court’s order, is that Payne has expended more than $24,000 in litigation expenses in Texas. These grounds, in my view, are insufficient to justify the injunction imposed on Gannon. Indeed, if grounds did exist for imposition of an injunction, equity would require that both Gannon and Payne be enjoined from pursuing the Canadian litigation. If permitted to stand, the trial court’s injunction places Gannon in an untenable situation if Payne chooses to also proceed against him in the Canadian court.
For a complete understanding of the present appeal, it is necessary to review all of the facts preceding Payne’s current suit, including the prior Canadian litigation concerning this same Canadian mineral lease between these parties.
In December 1964, Gannon and Payne first discussed acquiring a lease on the mineral interest to a tract of land located in Canada. Both agreed to equally share the acquisition and development costs associated with this prospective leasehold interest. Pursuant to their agreement, Gannon contacted Paddon Hughes Development Company, Ltd., concerning his and Payne’s desire to obtain an interest in a lease of this property’s mineral rights. However, for reasons not revealed in the record, Paddon Hughes would deal only with Gannon. Consequently, Payne agreed that Gannon would hold in trust his half-interest in any mineral interest they might acquire in order to facilitate Gannon’s negotiations with Paddon Hughes.
On April 23, 1965, Paddon Hughes agreed that if it was successful in obtain*748ing the mineral lease to this property, it would convey one-half of its interest to Gannon. The agreement also provided that Paddon Hughes’ interest would be subject to the carried interest owner’s fifteen percent interest in the mineral lease, and further stipulated that Gannon could not dispose of any portion of the interest received under the agreement without first offering it to Paddon Hughes.
Later that year, Hambly, the property owner, granted Paddon Hughes an option to acquire a petroleum and natural gas lease on his land. However, Hambly had already conveyed a similar lease to another lessee. As a part of its arrangement with Hambly, Paddon Hughes agreed to institute legal proceedings to declare that the previous lease had expired. Under Gan-non’s agreement with Paddon Hughes, Gannon and Payne each contributed $10,-000 for their interest in the option and would pay $10,000 each when the lease was obtained.
Litigation to terminate the previous lease commenced. In a December 11, 1967, letter, Gannon requested that Payne compensate him for the legal services which Gan-non had rendered in connection with this litigation. Payne responded that he did not think their agreement to share equally the costs of acquiring the Hambly lands and bringing them into production included reimbursing Gannon for his legal work; however, he did agree to pay one-fourth of Gannon’s fee.
In May 1970, Paddon Hughes successfully concluded its litigation to declare the previous lease void and, exercising its option, acquired the Hambly property’s mineral rights to any underlying petroleum or natural gas. Through Gannon, Gannon and Payne each paid $10,000 for their combined thirty-five percent interest in the Hambly lease. Paddon Hughes brought the lease into production and from June 1970 through December 1971 Gannon distributed to Payne his 17½ percent share of the proceeds.
Gannon then traveled to Dallas and informed Payne that he was reducing Payne’s interest to fifteen percent because Payne had enjoyed a “free ride” while Gan-non had been actively working on the project. Payne refused to agree; nevertheless, Gannon unilaterally reduced Payne’s interest without Payne’s knowledge that he was doing so. Between January and May, 1972, Payne received only fifteen percent of the proceeds from the production on the Hambly property. When Payne discovered the reduction, Payne confronted Gannon and Gannon refused to make further payments to Payne. Gannon also reduced and ultimately discontinued payments to Car-stairs and Voelcker, the carried interest owners. Consequently, Payne and the carried interest owners sued Gannon in two independent actions in Canadian courts to recover their interests in the Hambly lease.
Gannon settled the Carstairs and Voelcker action in 1979. In addition to his action to compel Gannon to convey legal title to his 17 V2 percent interest in the Hambly lease, Payne also sought to recover one-half of the interest Gannon received from the Carstairs and Voelcker settlement. In defense to Payne’s action to force Gannon to convey legal title, Gannon asserted that any conveyance would be subject to Pad-don Hughes’ first refusal rights. Instead of litigating the validity of this claim, Payne offered to convey to Paddon Hughes a two percent interest in the Hambly lease when he recovered from Gannon if Paddon Hughes waived its first refusal rights. Paddon Hughes accepted this offer and later Payne conveyed two percent of his interest to Paddon Hughes. The validity of Paddon Hughes’ right of first refusal as well as Payne’s agreement were before the Canadian court by Payne’s trial amendment in that suit.
At the conclusion of the Canadian litigation, Payne recovered his share of the proceeds which Gannon had withheld. The Canadian court also ordered Gannon to convey legal title to Payne’s 17V2 percent equitable interest in all rights Gannon received under his agreements with Paddon Hughes. However, the Canadian court expressly denied Payne’s claim to one-half of *749the interest Gannon acquired through his settlement with Carstairs and Voelcker, and Payne’s claim that Gannon reimburse him for the two percent interest he granted to Paddon Hughes in exchange for its waiving its first refusal rights. The court reasoned that this proviso in the Gannon-Pad-don Hughes agreement did not preclude Gannon from having partners when he executed the agreement. Because Payne did not further appeal this judgment, it became final.
Payne has now filed suit in Texas seeking in part to recover half of the interest Gannon received from the Carstairs and Voelcker settlement, the two percent interest Payne transferred to Paddon Hughes for its waiving the right of first refusal, and reimbursement for the amounts paid for Gannon’s legal work in clearing title to the Hambly mineral lease. In response, Gannon and Denton Energy, Ltd., filed a declaratory judgment action in the Canadian court seeking to enforce that court’s earlier judgment. In addition to Payne, Gannon and Denton Energy also named Paddon Hughes and the successors in interest to Carstairs and Voelcker as defendants. The Texas court below then temporarily enjoined Gannon from proceeding with his suit in Canada.
In an appeal from a temporary injunction, the merits of the underlying cause of action are not presented for our review. DeVilbiss v. West, 600 S.W.2d 767, 768 (Tex.1980). Instead, our review is limited to a determination of whether there has been a clear abuse of discretion by the trial court in granting or denying the interlocutory injunction. Davis v. Huey, 571 S.W.2d 859, 861 (Tex.1978). The purpose of a temporary injunction is to preserve the status quo of the subject matter of the suit pending final trial on the merits. Camp v. Shannon, 162 Tex. 515, 348 S.W.2d 517, 519 (1961). Thus, a trial judge has broad discretion to temporarily enjoin when the pleadings and the evidence show that the applicant has a probable right of recovery and that he will probably suffer an irreparable injury if the injunction is not granted; however, the trial court abuses that discretion when granting injective relief pending trial if the evidence fails to furnish some reasonable basis for concluding that the applicant will probably prevail on the merits of his action. Camp, 348 S.W.2d at 519.
With respect to whether Payne has established a probable right of recovery in this suit, I conclude that he has not shown a probable right of recovery. In this respect, Payne is seeking in this action to recover from Gannon one-half of the interest Payne had previously transferred to Paddon Hughes prior to the conclusion of the earlier Canadian litigation, as well as one-half of the interest Gannon received from Carstairs and Voelcker as a result of their settlement of another prior Canadian suit. Because the Canadian courts had previously ruled on these claims adversely to Payne, I would hold that Payne has failed to establish a probable right of recovery in this action.
With respect to the evidence adduced at the hearing on the application for a temporary injunction, Payne introduced the entire record from the previous Canadian litigation, the contract between Payne and Paddon Hughes dated March 24, 1977, whereby Payne contracted to assign to Paddon Hughes 2% of his total Yllk% of the Hambly lease for which Paddon Hughes waived its right of first refusal in its 1964 contract with Gannon, the statement of claim asserted by Gannon and Den-ton Energy in the Canadian court against Payne, Webb Patroleum, and other Canadian corporations, and the assignment of Payne’s interest in the Hambly lease to Webb Petroleum as well as a reassignment dated June 1, 1984, from Webb Petroleum back to Payne of any cause of action or claim which Payne may have against Gan-non.
Apart from these exhibits, Payne testified briefly concerning the entire transaction that was the subject matter of the prior Canadian litigation. Payne also testified that, after consultation with his Canadian attorney, his attorneys negotiated the contract with Paddon Hughes, for which *750Payne now sues in Texas claiming that the right of first refusal in the 1964 Gannon-Paddon Hughes contract was fraudulently asserted thus causing Payne to enter into the above-mentioned contract with Paddon Hughes whereby Paddon Hughes waived its right of first refusal with respect to Payne only in exchange for 2% of Payne’s 17½% per cent of the Hambly lease. Payne also testified that he sued in Texas to recover from Gannon the 2% which he transferred to Paddon Hughes and “for other reasons.” The above is the entire evidence upon which the trial judge granted the temporary injunction. This evidence shows neither a probable right of recovery nor that Payne will suffer injury if the injunction were not granted. Indeed, if anything, it is an admission by Payne that he voluntarily entered into the agreement with Paddon Hughes in anticipation that Gannon would assert the Paddon Hughes’ right of first refusal in the prior Canadian litigation.
Furthermore, the record in the prior Canadian litigation shows that Payne pleaded his contract with Paddon Hughes by way of a trial amendment. Thus, undisputedly that contract was before the Canadian court; later, however, the Alberta Supreme Court held that the right of first refusal in the 1964 Gannon Paddon Hughes contract did not apply to Payne. What is clear, however, from the statement of facts on the application for temporary injunction is that Payne and his Canadian attorney considered the 1964 right of first refusal to be an impediment to Payne’s prior Canadian suit and voluntarily entered into the agreement with Paddon Hughes without Gan-non’s knowledge. Under these circumstances, it bends credulity to assert that Payne has established a probable right of recovery because Gannon “fraudulently asserted the right of first refusal clause in his 1964 contract with Paddon Hughes.” With respect to this assertion, a Canadian court would be better qualified to determine whether such a cause of action existed under Canadian law. Nevertheless, in our statement of facts Payne does not even suggest that Gannon’s Canadian pleadings with respect to the Paddon Hughes’ right of first refusal in the prior litigation were fraudulently pleaded. Thus, Payne failed to show a probable right of recovery and did not even attempt to show any injury. In my view, this evidence shows that a Canadian court would likely hold that Payne had no cause of action and, if not, that the action he now advances in Texas would be barred by res judicata.
Gannon also asserts that granting the injunction was an abuse of discretion because the doctrine of forum non conve-niens compels that all issues be tried in the Canadian court which rendered the prior judgment. I agree. Under the doctrine of forum non conveniens, the trial court abuses its discretion if it enjoins a proceeding concerning the same subject matter in a convenient foreign jurisdiction. PPG Industries Inc. v. Continental Oil Company, 492 S.W.2d 297, 300 (Tex.Civ.App.—Houston [1st Dist.] 1973, writ ref’d n.r.e.). In deciding whether the suit would be more appropriate if heard in another forum, the trial court must compare itself with the other forum in the following respects: (1) the ability to better serve the litigant’s private interest; (2) accessibility to evidence and witnesses; (3) ability to compel unwilling witnesses’ attendance and the cost of presenting willing witnesses; (4) the ability to give effective relief; (5) whether it must apply foreign law and, if so, whether the other jurisdiction’s law is so dissimilar to Texas law that it would be difficult or impossible to enforce in a Texas court. Flaiz v. Moore, 359 S.W.2d 872, 874 (Tex.1962).
Gannon next argues that Payne is not a real party in interest because he assigned his rights in the Hambly lease to Webb Petroleum, Ltd., and that Gannon’s interest in the Hambly property is now owed by Denton Energy, Ltd. Both of these Canadian corporations have their corporate headquarters in Canada. If Gannon is correct, it would be difficult for a Texas court to enforce its orders in furtherance of Payne’s suit. Additionally, it may be necessary to call officials of Denton Energy *751and Webb Petroleum, Hughes, Carstairs, Voelcker or their successors in interest as witnesses. All of the potential witnesses reside in Canada. Furthermore, the contracts and records of the prior litigation are in Canada. Thus, because all witnesses and evidence are located in Canada, the forum non conveniens doctrine mandates that this case be tried there. Furthermore, it is questionable whether the Canadian courts would enforce Texas’ judgment affecting ownership interests to a mineral lease situated in Canada. In this respect, although we cannot consider the affirmative defense of res judicata in reaching our decision in this appeal, Canadian jurisprudence may dictate that the doctrine of res judicata precludes Payne from prevailing on the merits of his claims, as it would in Texas. Under these facts, I would hold that the trial court abused its discretion in temporarily enjoining Gannon’s prosecution of the Canadian action.
The trial court also abused its discretion in issuing the temporary injunction under the doctrine of comity. Comity is a principle of mutual convenience whereby one jurisdiction gives effect to another’s laws and judicial decisions. New Process Steel Corp. v. Steel Corp. of Texas, 638 S.W.2d 522, 524 (Tex.App.—Houston [1st Dist.] 1982 no writ). This principle operates not because of an obligation but rather a result of our deference to, and respect for, another sovereign nation’s judicial processes. New Process Steel Corp., 638 S.W.2d at 524. Accordingly, Texas should defer to Canada’s courts to resolve the present controversy.
The injunction should also be dissolved because the order fails to comply with TEX.R.CIV.P. 683, which provides:
Every order granting an injunction and every restraining order shall set forth the reasons for its issuance; shall be specific in terms; shall describe in reasonable detail and not by reference to the complaint or other document, the act or acts sought to be restrained; and is binding only upon the parties to the action, their officers, agents, servants, employees, and attorneys, and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise. [emphasis added]
These provisions are mandatory. E.G. Transport Co. of Texas v. Robertson Transports, Inc., 152 Tex. 551, 261 S.W.2d 549 (1953). In this respect, the only reasons set forth in the order as a basis for the injunction are that the Canadian suit would likely interfere with the Texas court’s jurisdiction, that the $24,000 in costs expended by Payne will be wasted, and that “a multiplicity of suits will result.” The order further states that:
... 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 and Plaintiffs costs of conducting this proceeding mil 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 ...
(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. [emphasis added]
These reasons are, as a matter of law, insufficient to comply with rule 683. See State v. Cook United, Inc., 464 S.W.2d 105, 106 (Tex.1971). Indeed, the trial court recognized that the Canadian court might render a judgment inconsistent with the Texas court with no means of resolving the conflict. In this respect, since the Texas suit concerns interests in a Canadian oil and gas lease owned by Canadian corporations, Denton Energy and Webb Petroleum, it is highly unlikely that a Canadian court would enforce a Texas judgment which *752may be inconsistent with the prior Canadian judgment and with Canadian law. In my view, this recognition of the problem mandates that, under the doctrines of forum non conveniens and comity, Texas courts should defer to the Canadian court. Certainly, this is not a ground which comports with rule 683 justifying enjoining Gannon from seeking to enforce the prior final Canadian judgment and is not a valid reason for the necessity of the injunction.
Indeed, the conclusory recitals of “no adequate remedy at law” and “irreparable harm” are meaningless without legally sufficient reasons to support them. Charter Medical Corporation v. Miller, 554 S.W.2d 220 (Tex.Civ.App.—Dallas 1977, no writ). At best, the order delineates that the costs expended in the Texas suit by Payne would be wasted and that inconsistent judgments may result are, as a matter of law, not grounds to enjoin Gannon from pursuing his Canadian declaratory judgment action. Thus, the injunction is void because these reasons are not legally sufficient to merit the granting of the temporary injunction.
In conclusion, for any of the reasons stated, I would dissolve the temporary injunction because the grant of that injunction was a clear abuse of discretion.