Court Opinion

ID: 3083064
Source: CourtListenerOpinion
Date Created: 2015-10-16 02:16:16.344915+00
Date Added: 2024-06-11T11:42:15.632244
License: Public Domain

Opinion filed November 15, 2012

                                            In The

   Eleventh Court of Appeals
                                          __________

                                    No. 11-11-00315-CV
                                        __________

                              BENITO GARCIA, Appellant

                                               V.

          OILFIELD MUD & CHEMICAL SERVICES, INC., Appellee

                           On Appeal from the 358th District Court
                                    Ector County, Texas
                              Trial Court Cause No. D-132,193

                           MEMORANDUM OPINION

       This is an appeal from an order granting a temporary injunction against Benito Garcia.
As part of its suit against Garcia and other defendants not parties to this appeal, Oilfield Mud &
Chemical Services, Inc. (OMCS) sought to enjoin its former employee, Garcia, from competing
with OMCS. The trial court found that OMCS would suffer imminent harm without a temporary
injunction and that, based upon the noncompetition agreement, OMCS would probably recover
from Garcia in a trial on the merits. Garcia appeals. We modify and affirm.
       Garcia challenges the temporary injunction in four issues on appeal. In his first two
issues, Garcia contends that the trial court abused its discretion because the evidence is
insufficient to show that OMCS has a probable right of recovery on its claims or that OMCS will
suffer an irreparable injury without the issuance of a temporary injunction. In the third issue,
Garcia argues that the injunction is overly broad and constitutes an unreasonable restraint of
trade as a matter of law. In his final issue, Garcia contends that the injunction is void for failing
to specifically state how OMCS will suffer irreparable harm.
       A temporary injunction is an extraordinary remedy that may be obtained to preserve the
status quo of the litigation’s subject matter pending a trial on the merits. Butnaru v. Ford Motor
Co., 84 S.W.3d 198, 204 (Tex. 2002); Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993). To
obtain a temporary injunction, the applicant must plead and prove three specific elements: (1) a
cause of action; (2) a probable right on final trial to the relief sought; and (3) a probable,
imminent, and irreparable injury in the interim. Butnaru, 84 S.W.3d at 204. An injury is
irreparable if the injured party cannot be adequately compensated in damages or if the damages
cannot be measured by any certain pecuniary standard. Id. The decision to grant or deny a
temporary injunction lies within the trial court’s sound discretion, and we will reverse an order
granting temporary injunctive relief only if the trial court abused its discretion. Id. We may not
substitute our judgment for that of the trial court unless the trial court’s action was so arbitrary as
to exceed the bounds of reasonable discretion. Id.
       OMCS asserted numerous causes of action against Garcia, including misappropriation of
trade secrets, breach of contract, and breach of covenant not to compete. After a hearing on the
application for temporary injunction, the trial court found that OMCS had a probable right to
recover at trial for Garcia’s breach of at least one of the two noncompetition agreements. The
trial court found that OMCS had no probable right to recover on the cause of action for
misappropriation of trade secrets and did not rely on that cause of action in issuing the
injunction. Consequently, we need not reach the argument made by Garcia in his brief that,
because OMCS’s customer list, pricing information, and blend of corrosion inhibitor were not
confidential, the trial court abused its discretion in entering an injunction based upon OMCS’s
claim for misappropriation of trade secrets.
       With respect to injunctive relief based upon a noncompetition agreement, Garcia argues
that, for a covenant not to compete to be enforceable, the employer must provide the employee
with confidential information or trade secrets as consideration for the agreement. We disagree.
A covenant not to compete is enforceable if it is reasonable in time, scope, and geography and if
the covenant “is ancillary to or part of an otherwise enforceable agreement at the time the
agreement is made.” TEX. BUS. & COM. CODE ANN. § 15.50(a) (West 2011); Marsh USA Inc. v.
Cook, 354 S.W.3d 764, 771 (Tex. 2011). A company’s goodwill is a protectable interest.
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Section 15.50(a); Marsh, 354 S.W.3d at 777. The court in Marsh abrogated portions of an
earlier opinion, Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994), upon which
Garcia relies in this case. In Marsh, the court stated that there is no textual basis in
Section 15.50(a) to exclude “the protection of much of goodwill from the business interests” that
a noncompetition agreement may protect. 354 S.W.3d at 775. “Light’s requirement is contrary
to the language of the Act; thwarts the purpose of the Act, which was to expand rather than
restrict the enforceability of such covenants; and contradicts the Act’s intent . . . .” Id.
       The record in this case shows that Garcia and OMCS entered into two noncompetition
agreements. The first one, which was signed on October 28, 2009, as a condition of Garcia
being hired initially by OMCS, provided in part: “For good consideration and as an inducement
for [OMCS] to employ Ben Garcia (Employee), the undersigned Employee hereby agrees not to
directly or indirectly compete with the business of [OMCS] during the period of employment and
for a period of 2 years following termination of employment.” The consideration listed in this
agreement included providing Garcia “access to trade secrets, customers and other confidential
data and good will.” On December 22, 2009, the parties entered into a second noncompetition
agreement, at which time Garcia was provided with additional compensation and benefits.
       Garcia worked as a service technician in OMCS’s drilling department, servicing
customer’s drilling rigs with a chemical corrosion inhibitor. As such, he dealt with OMCS’s
customers and even procured some new customers for OMCS. OMCS presented evidence
indicating that, while still employed by OMCS, Garcia was taking steps to form a business
(International Chemical Technology) to directly compete with OMCS and was soliciting
OMCS’s customers. Before Garcia actually quit working for OMCS, he took his own service
trailers to a rig site. When Garcia left OMCS, several of OMCS’s customers left too and used
Garcia to service their drilling rigs. As Garcia explained to a coworker, “[E]verybody on the
rigs, they know [Garcia], they don’t know Oilfield Mud & Chemical. They don’t even know
who Randy is.” Randy Harris is the owner and president of OMCS. OMCS lost approximately
20% to 25% of its total sales based on its sales from the month prior to Garcia’s resignation.
       Based upon the evidence presented at the hearing, the trial court did not abuse its
discretion in determining that OMCS had a probable right to recover on its cause of action for
breach of a covenant not to compete. See Vaughn v. Intrepid Directional Drilling Specialists,
Ltd., 288 S.W.3d 931 (Tex. App.—Eastland 2009, no pet.); see also Marsh, 354 S.W.3d 764;
Butler v. Arrow Mirror & Glass, Inc., 51 S.W.3d 787 (Tex. App.—Houston [1st Dist.] 2001, no
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pet.). Nor did the trial court abuse its discretion in determining that OMCS would suffer an
irreparable injury without the issuance of a temporary injunction. An injury is irreparable if the
injured party cannot be adequately compensated in damages or if the damages cannot be
measured by any certain pecuniary standard. Butnaru, 84 S.W.3d at 204. The trial court could
have determined that OMCS’s damages could not be measured by any certain pecuniary
standard. See Vaughn, 288 S.W.3d at 937; Wright v. Sport Supply Group, Inc., 137 S.W.3d 289,
293 (Tex. App.—Beaumont 2004, no pet.); T-N-T Motorsports, Inc. v. Hennessey Motorsports,
Inc., 965 S.W.2d 18, 24 (Tex. App.—Houston [1st Dist.] 1998, pet. dism’d); Car Wash Systems
of Tex., Inc. v. Brigance, 856 S.W.2d 853 (Tex. App.—Fort Worth 1993, no writ). Garcia’s first
and second issues are overruled.
       In his third issue, Garcia contends that the injunction is overly broad and constitutes an
unreasonable restraint of trade as a matter of law because it prevents Garcia from conducting
related activities with businesses with whom Garcia and/or OMCS has had no prior contact. An
injunction issued to enforce a covenant not to compete should contain reasonable limitations as
to time, geographical area, and scope of activity to be restrained and should not impose a greater
restraint than is necessary to protect the goodwill or other business interest of the former
employer. See Section 15.50(a). The injunction is properly limited as to time and geographic
area: a term of two years from the date that Garcia terminated his employment with OMCS and a
125-mile radius.
       With respect to the scope of the activity to be restrained, however, the temporary
injunction provides:
              Garcia shall not . . . directly or indirectly, solicit, accept business from,
       perform services for, or disclose any of OMCS’s confidential and proprietary
       information, related to products and services substantially similar to the products
       and services provided by OMCS, [] for any individual or entity that OMCS had
       provided products and services for during the period of Garcia’s employment with
       OMCS . . . regardless of whether Garcia had any dealings with or performed any
       functions for the individual or entity during his employment with OMCS
       (emphasis added).
The trial court expressly provided that Garcia would not be prohibited from performing services
or providing products unrelated to the business of OMCS, including selling pumps or degreasing
rigs. Although the injunction is limited to the performance of work involving products and
services substantially similar to those provided by OMCS, it is not limited to customers with
whom Garcia had dealt while he was employed at OMCS. In that respect, the injunction is
                                                4
overbroad and constitutes an unreasonable restraint of trade. See Peat Marwick Main & Co. v.
Haass, 818 S.W.2d 381, 386–88 (Tex. 1991). Accordingly, we will modify the injunction so that
it will not be overbroad. See T-N-T Motorsports, 965 S.W.2d at 25–26; Posey v. Monier Res.,
Inc., 768 S.W.2d 915, 919 (Tex. App.—San Antonio 1989, writ denied). Garcia’s third issue is
sustained.
           In his final issue, Garcia contends that the injunction is void for failing to specifically
state how OMCS will suffer irreparable harm. TEX. R. CIV. P. 683 mandates that, in an order
granting a temporary injunction, a trial court must set out the reason for granting the injunction,
including why injury will be suffered if the court does not grant the injunction. State v. Cook
United, Inc., 464 S.W.2d 105, 106 (Tex. 1971). In its order, the trial court concluded that OMCS
would suffer imminent harm and would be irreparably injured if an injunction were not issued
because, “in spite of his non-competition agreement” with OMCS, Garcia will likely “continue
to solicit and take [OMCS]’s clients and will continue to unfairly and illegally compete with the
business of [OMCS].” We hold that the order is not void and that it sufficiently states how
OMCS would be harmed if an injunction were not granted. Garcia’s fourth issue is overruled.
           Paragraph b.2. of the trial court’s temporary injunction order is modified to read as
follows:
                  Garcia shall not, within a 125 mile radius of Odessa, Texas, for a period of
           two years following the date of termination of his employment with OMCS (such
           date of termination being August 15, 2011), directly or indirectly, solicit, accept
           business from, or perform services for any customer with whom Garcia had
           contact while he was employed by OMCS or disclose any of OMCS’s
           confidential and proprietary information, related to products and services
           substantially similar to the products and services provided by OMCS.
As modified, the order of the trial court is affirmed.

                                                                                   JIM R. WRIGHT
November 15, 2012                                                                  CHIEF JUSTICE
Panel consists of: Wright, C.J.,
McCall, J., and Gray, C.J., 10th Court of Appeals. 1

           1
               Tom Gray, Chief Justice, Court of Appeals, 10th District of Texas at Waco, sitting by assignment to the 11th Court of
Appeals.
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