Court Opinion

ID: 9412385
Source: CourtListenerOpinion
Date Created: 2023-07-30 08:10:37.037414+00
Date Added: 2024-06-11T16:41:14.607320
License: Public Domain

Affirmed and Memorandum Opinion filed July 27, 2023

                                    In The

                   Fourteenth Court of Appeals

                            NO. 14-22-00386-CV

      BRYAN JASON ST. LUCE, MONTRELL RYDELL LOWE,
 INDIVIDUALLY AND DERIVATIVELY ON BEHALF OF JUST TOUCH
       HOLDINGS, LLC, AND JUST TOUCH U, LLC, Appellants
                                      V.

    CARLOS J. VITAL, VITA BOOT TECH, LLC AND BRADFORD C.
                        MOYE, Appellees

                  On Appeal from the 113th District Court
                          Harris County, Texas
                    Trial Court Cause No. 2022-09984

                        MEMORANDUM OPINION

      This is an appeal from the trial court’s May 4, 2022 order denying an
application for temporary injunction seeking to prevent appellees’ takeover. We
affirm.

                 I. FACTUAL AND PROCEDURAL BACKGROUND
      Appellants Lowe and St. Luce founded appellant Just Touch U, LLC, d/b/a
Just Touch Interactive (“Just Touch U”) on February 28, 2018. Just Touch U was
created to assist students in their college application process. In its inception,
Lowe owned 75% of Just Touch, his wife, Joelle, owned 15% and St. Luce owned
the remaining 10%.

      Lowe and St. Luce sought outside investors, and found appellee Carlos
Vital, owner of appellee Vita Boot Tech (“Vita Boot”). The parties struck a deal,
giving Vital part ownership in Just Touch U in exchange for capital. To make this
deal happen, Lowe reduced his ownership percentage, and Joelle Lowe gave up
hers. Additionally, the parties agreed to form a holding company, Just Touch
                                   Holdings (“JTH”) that would own 100% of Just
                                   Touch U.        In June 2020, a Contribution
                                   Agreement was executed, giving life to appellee
                                   JTH; the ownership percentages were as
                                   follows: Montrell Lowe at 62%, Vita Boot at
                                   28%, and Bryan St. Luce at 10%. The
                                   Contribution Agreement provided that Vita Boot
                                   could increase its ownership percentage upon
                                   contribution of additional capital. Up to June
2020, the parties are generally in agreement as to the facts. Thereafter, however,
the two sides’ versions of the facts depart dramatically.

      Later in 2020, discussions arose for additional amendments to the limited
liability company agreement, one that would change the ownership percentages to
Lowe at 38%, Vita Boot at 52%, and St. Luce at 10%. In November 2020, two
competing versions of an agreement titled “Amended and Restated Limited
Liability Company Agreement” were circulated: a rough draft containing redlined

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changes, the “Moore Agreement” and a subsequent version with significant
differences, the “Moye Agreement”.

      St. Luce and Lowe allege they were involved in preparing the Moore
Agreement with attorney Justin Moore on or about November 8, 2020. Moore
prepared a redlined version of the proposed amended agreement and circulated it
amongst the members of JTH. After the Moore Agreement was circulated, Vital
retained Bradford Moye on behalf of JTH to redraft operating agreements for the
entities. Moye prepared the Moye Agreement.

      Under the Moye Agreement the parties retained ownership interests in JTH
as in the Moore Agreement, but the Moye Agreement was substantially different in
several respects: it reduced the meeting and voting requirements to 51 percent,
modified notice requirements for meetings, contained new provisions requiring
mandatory contributions, and caused an effective forfeiture of the ownership
interests of members who did not make that contribution.

      Though the circumstances of its execution were disputed, the Moye
Agreement was signed by the parties in November 2020. Lowe and St. Luce
contend that they were merely shown a signature page of an agreement and that
they were told they were signing the Moore Agreement whereas in fact they signed
the Moye Agreement. Vital, on the other hand, contends that Lowe and St. Luce
fully understood that they were signing the Moye Agreement and agreed to its
terms. Over the next 13 months, acting under the provisions of the Moye
Agreement, Vital/Vita Boot, through significant capital contributions, unmatched
by Lowe and St. Luce, took over management of JTH. In December 2021, Vital
made a cash call to Lowe and St. Luce demanding that they contribute capital to
cover costs. Lowe and St. Luce did not so contribute. In January 2022, Moye, on
behalf of JTH, emailed Lowe and St. Luce telling them that their failure to make

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additional capital contributions resulted in their ownership interests being reduced
to zero.

       On February 17, 2022, appellants St. Luce and Lowe filed their original
petition and jury demand (“Petition”). The Petition was accompanied by St. Luce
and Lowe’s application for temporary restraining order, temporary injunction, and
permanent injunction (“First Application”) filed the same day seeking to prevent
appellees from exercising managerial control of the Just Touch entities. The
petition and application were amended, responses filed, and the court held an
evidentiary hearing on the temporary injunction.                 Additionally, appellants
requested that the trial court appoint a receiver to run the various Just Touch
entities.

                             Temporary Injunction Hearing

       Prior to the hearing, Vita Boot offered bank statements showing it
contributed a total of $384,508 to the Just Touch entities, through wire transfers,
beginning August 22, 2019 and continuing through November 12, 2020. The total
contributions by Vita Boot to the Just Touch entities beginning in August 2019 and
extending through November 30, 2021, exceeded $1,500,000.1

       At the hearing on appellant’s application for temporary injunction, only
Moye and St. Luce testified. Each gave their historical accounts of the events
surrounding the formation of the late 2020 “Amended and Restated Limited
Liability Company Agreement”.

       On November 19, 2020, Moye emailed his version to Dr. Vital. The email

1
  Vita Boot also provided account statements showing it contributed more than $100,000 to JTH,
including through JTH’s wholly owned operating subsidiary, JTU, in June and July 2020, to
meet its obligations under the Contribution Agreement.

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stated, “[p]lease find the final JTH Agreement for execution tonight.” Moye
testified that he delivered the JTH Agreement by hand to St. Luce and Lowe:

      Q. Now, when you met with Mr. St. Luce and Mr. Lowe, did you go
      over the document with them?
      A. I presented them with the document and I told them that there had
      been some changes in the document prior to that Justin -- one of the
      Justin Moore drafts I had seen. I told them that they had -- you know,
      they could ask me general questions, but I also specifically told them,
      you know, if you want any changes, you know, if you -- or if you
      want anything further than just a high-level explanation, you should
      consult your own attorney.
      St. Luce and Lowe allege that on November 19, 2020, they were only
presented a signature page and that they were led to believe the signature page was
associated with the Moore Agreement.

      Q. (BY MR. MASSEY) What do you think you were signing on
      November 19th?
      A. Could you pull up the document?
      Q. Absolutely. All right. So is this your signature down here at the
      bottom?
      A. Yes, it is.
      Q. And what did you think you were signing when you added that
      signature?
      A. The redline agreement from Justin Moore.
      Q. Did you get the complete document with this signature page that
      you executed?
      A. No. I was rushed to sign this document. This document was
      brought to me at my house and when I asked Dr. Vital, is this the
      same document? Yeah, the same document as, you know, Justin did,
      everything’s good, da, da, da, da. So me being a trusting person,
      trusting your brother, trusting somebody that you believed in, trusting
      somebody that you felt had your back, you signed it. I did.
                                       ...

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      Q. So -- but you had -- at this point -- by the time you had signed this
      signature page, you had not met with Mr. Moye; is that correct?
      A. No.
                                          ...
      Q. What document did you think you were signing with this signature
      page?
      A. The redline agreement that Justin Moore had sent me.
      Q. And are you certain that you had not been presented with the whole
      document that defendants are saying is the first amended company
      agreement?
      A. I’m certain I wasn’t presented it. I was presented this signature
      page, because I read through the redline agreement thoroughly.
      Q. And that was the night before?
      A. Yes.
      Moye, in an unsworn declaration, specifically denied the allegation that
Lowe and St. Luce were only provided a signature page of the Moye Agreement.
Between the two agreements drafted by the parties’ counsel and offered into
evidence, the only agreement offered as signed by the parties is the Moye
Agreement.

      On May 4, 2022, the trial court signed an order denying the application for
temporary injunction and appointment of a receiver and this appeal followed.

                             II. ISSUES AND ANALYSIS

      In their sole issue, appellants challenge the trial court’s order denying their
application for temporary injunction.

      A temporary injunction’s purpose is 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). A temporary injunction is an extraordinary
remedy and does not issue as a matter of right. Id. An applicant for a temporary

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injunction is not required to establish that it will prevail on final trial. Walling v.
Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993). Where, as here, no applicable statute
provides otherwise, to obtain a temporary injunction, the applicant must plead and
prove three elements: (1) a claim against the defendant; (2) a probable right to the
relief sought; and (3) a probable, imminent, and irreparable injury in the interim.
Butnaru, 84 S.W.3d at 204.

       Whether to grant or deny a temporary injunction is within the trial court’s
sound discretion, and we reverse the trial court’s grant or denial only if the trial
court abused its discretion. Id. We must not substitute our judgment for the trial
court’s judgment unless the trial court’s action was so arbitrary that it exceeded the
bounds of reasonable discretion. Id. An abuse of discretion occurs when a court
acts in an arbitrary or unreasonable manner, or without reference to guiding rules
and principles. Downer v. Aquamarine Operators, 701 S.W.2d 238, 241–42 (Tex.
1985). In resolving evidentiary matters, a trial court does not abuse its discretion if
some evidence reasonably supports the court’s ruling. See Abbott v. Anti-
Defamation League Austin, Southwest, and Texoma Regions, 610 S.W.3d 911,
916–917 (Tex. 2020); Breitburn Operating, LP v. Parsons, No. 14-21-00310-CV,
2023 WL 2257782, at *5 (Tex. App.—Houston [14th Dist.] Feb. 28, 2023, no pet.
h.).   A clear failure by the trial court to analyze or apply the law correctly
constitutes an abuse of discretion. See Abbott, 610 S.W.3d at 916–917.

       In seven counts, appellants’ amended lawsuit asserted causes of action for
breach of fiduciary duty, tortious interference, money had and received, legal
malpractice, fraudulent inducement, and breach of contract. The lawsuit also seeks
declarations regarding the ownership interests in JTH and fiduciary duties.

       Appellants contend that the temporary injunction is supported by one bona
fide dispute, which appellants describe as follows: “Whether appellant signed a

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signature page for the [Moore Agreement] or the [Moye Agreement].”                      In
appellants’ view, the answer to this question does not matter, because regardless of
the outcome, they prevail, as they explain:

      If the document [Lowe and St. Luce] signed was the signature page
      for the [Moore Agreement], then Appellee Vital/Vita Boot had no
      authority to require the members of JTH to contribute to the company
      or face forfeiture of their ownership interest. On the other hand, if the
      document signed by Lowe and St. Luce was the signature page for the
      Moye Company Agreement, then Vital/Vita Boot tricked them into
      signing it. [Vital] did not have the authority to make the contribution
      call because the contract was invalid.
      Appellants misstate the issue. The issue is not whether appellants signed the
Moore Agreement or signed the Moye Agreement. There’s little question that the
only signed agreement is the Moye Agreement. The issue, rather, is whether
appellants knowingly signed the Moye Agreement or whether they were tricked
into signing it, believing that they were signing the Moore Agreement.                  If
appellants knowingly signed the Moye agreement, then Vital/Vita Boot had the
contractual authority to do what it did, i.e., divest appellants of their ownership
interest upon appellants’ failure to contribute capital in response to the cash call.

      The trial court was presented with ample evidence that appellants knowingly
signed the Moye Agreement.         Moye testified that he presented the complete
agreement to appellants and told them that if they wanted to make changes or ask
anything other than high level questions about the document that they should
consult their own attorney. Indeed, in their verified Original Petition, appellants
acknowledged that Moye provided his agreement to appellants before they signed
it and told them to consult their own attorney if they wished to change it.

      The trial court was presented with two contrasting versions of events.
However, an abuse of discretion does not exist if the trial court is presented with

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conflicting evidence, one side of which reasonably supports the trial court’s ruling.
Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978); De Los Salmones v. Anchor
Devel. Group, LLC, 2022 WL 1218541, *3 (Tex. App.—Houston [14th Dist.] April
26, 2022). A party challenging the trial court’s ruling on the requested relief must
establish that, with respect to resolution of factual issues, the trial court reasonably
could have reached but one decision. Washington DC Party Shuttle, LLOC v.
IGuide Tours, 406 S.W.3d 723, 740 (Tex. App.—Houston [14th Dist.] 2013, pet.
denied). Appellants have not established that the trial court abused its discretion in
denying the requested relief.

                                Probable Right to Relief

      Appellants’ focus on appeal mirrors their presentation of evidence at the
temporary injunction hearing as it is centrally concerned with the signing of the
Moye Agreement in late 2020. Virtually no evidence was offered in support of
showing a probable right to relief on many of the claims asserted in its petition,
which principally relate to events occurring after Vital/Vita Boot took control of
the company. Today we do not disturb the trial court’s finding that evidence was
lacking to show a probable right to recovery with respect to the remaining claims
that relate to the signing of the agreement, which include a derivative claim for
legal malpractice against Moye, breach of fiduciary duties by Vital and Vita Boot
and fraudulent inducement by all.

      Appellants’ legal malpractice claim required a showing of negligence on
Moye’s part with respect to his duties to the company. See Zive v. Sandberg, 644
S.W.3d 169, 174 (Tex. 2022) (a claim for legal malpractice is one for negligence,
the malpractice plaintiff must establish the traditional elements of duty, breach,
causation, and damages). Appellants made no such showing. The only testimony
concerning Moye’s duty to the Just Touch entities was Moye’s testimony that

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Vital, who funded the operations of JTH through Vita Boot, wanted specific
changes in a new operating agreement and if St. Luce and Lowe did not agree to
those changes Vital was no longer going to fund JTH. Moye testified that thus he
understood, as JTH’s attorney, it was in the JHT’s best interest to make Vital’s
desired changes to what became the Moye Agreement.               St. Luce and Lowe
provided no testimony or other evidence about Moye’s duty to JTH or any breach
of that duty.

      Appellants contend that the Moye Agreement was executed but procured by
fraudulent misrepresentations. To prove fraudulent inducement, the appellants
were required to show, among other elements, “actual and justifiable reliance.”
Mercedes-Benz USA, LLC v. Carduco, Inc., 583 S.W.3d 553, 558 (Tex. 2019).
Whether a party’s actual reliance is justifiable is ordinarily a fact question, but may
be decided as a matter of law when circumstances exist under which reliance
cannot be justified. Id. But a party cannot justifiably rely on a misrepresentation
that conflicts with the terms of a signed contract. Id. The signed Moye Agreement,
a writing that was materially different, constitutes a “red flag” that defeats
justifiable reliance as a matter of law. Id.

      With respect to the fiduciary duty claim, no evidence was presented as to a
breach of any duty to JTH, and as a matter of law there was no duty owed by Vita
Boot or Vital to St. Luce or Lowe. See Matter of Est. of Poe, No. 20-0178, ___
S.W.3d ___, 2022 WL 2183306, at *7 (Tex. June 17, 2022).

      The trial court was free to make its own credibility determinations and
disregard conflicting evidence as to the signature of the Moye Agreement. See
Kehoe v. Pollack, 526 S.W.3d 781, 793-794 (Tex. App.—Houston [14th Dist.]
2017, no pet.) (“When a party signs a contract after having an opportunity to read
the contract, the law presumes that the party knows and accepts all of the contract’s

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terms, even if the party chose not to read the contract.”).

      Even if we or another court may arrive at a different conclusion, the trial
courts’ order denying the temporary injunction was not an act “so arbitrary that it
exceeded the bounds of reasonable discretion.” See Butnaru, 84 S.W.3d at 204.
Because some evidence supports the trial court’s conclusion, appellants failed to
establish a probable right to the relief sought and the trial court did not abuse its
discretion by denying the temporary injunction. See Insgroup, Inc. v. Langley, No.
14-18-01071-CV, 2020 WL 1679401, at *6 (Tex. App.—Houston [14th Dist.] Apr.
7, 2020, no pet.)(affirming denial of temporary injunction based on failure to show
probable right of recovery).     Having so concluded, we need not address the
question whether appellants showed a probable, irreparable harm.

      We therefore overrule appellants’ sole point of error.

                                  III. CONCLUSION

      Having overruled appellants’ sole point of error, we affirm the trial court’s
order denying the temporary injunction.

                                        /s/    Randy Wilson
                                               Justice

Panel consists of Chief Justice Christopher, Justice Bourliot and Justice Wilson

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