Court Opinion

ID: 9645718
Source: CourtListenerOpinion
Date Created: 2023-08-22 21:33:25.91692+00
Date Added: 2024-06-11T18:11:30.680161
License: Public Domain

TAFT, Justice,
dissenting.
I respectfully dissent.
The majority reverses the trial court’s order that temporarily enforced against Dennis and Ichiban the terms of an exclusive recording contract between RAL and Dennis. The majority holds that the trial court abused its discretion by holding that RAL had a probable right to recover. This holding is based on the majority’s opinion that the provisions in the recording contract most closely resemble those of an employment contract without a definite term, which under the authority of cases such as Hussong v. Schwan’s Sales Enter., Inc., 896 S.W.2d 320, 324 (Tex.App.-Houston [1st Dist.] 1995, no writ) and Webber v. M.W. Kellogg Co., 720 S.W.2d 124, 127 (Tex.App.-Houston [14th Dist.] 1986, writ refd n.r.e.) allow either party to such a contract to terminate it at will, as the majority impliedly holds Dennis has done. Thus, the majority holds that the contract is unenforceable against Dennis, and that it cannot serve as a basis for injunctive relief against him and Ichiban.
I disagree with this holding for two reasons, either one of which is a sufficient basis not to overrule the trial court’s order.
Failure to Preserve Complaint on Appeal
First, Dennis failed to preserve this ground of reversal for review. Nowhere in the record does Dennis argue to the trial court that the agreement is an employment contract without a definite term. In fact, *553Dennis firmly asserted to the trial court that the agreement was unenforceable because it was an invalid covenant not to compete.1
The majority acknowledges that even in their initial briefs, Dennis and Ichiban contended the contract is unenforceable because of the invalid covenant not to compete, citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex.1990). The majority acknowledges that it was only in its reply brief that Dennis, for the first time, alternatively asserted that this was an employment contract where the terms of the contract are indefinite or terminable at the discretion of one or both parties.
The extraordinary nature of injunctive relief requires the party seeking the injunction to show himself clearly entitled to such relief. Siddiqui v. West Bellfort Prop. Owners Ass’n, 819 S.W.2d 657, 658 (Tex.App.-El Paso 1991, no writ). A party seeking an injunction cannot rely on the verified pleading rules to limit the defense of the non-movant. Executive Tele-Commun. Sys., Inc. v. Buchbaum, 669 S.W.2d 400, 403 (Tex.App.-Dallas 1984, no writ). Nevertheless, in my opinion, the non-movant cannot show an abuse of the trial court’s discretion based on a theory presented for the first time on appeal. A trial court’s discretion must be evaluated on the basis of its decision upon the arguments presented to it.
The reason for requiring the parties to present their arguments to the trial court is so that the trial court and opposing parties are alerted to the respective positions of all parties. It is upon those respective positions that the trial court rules. A trial court does not abuse its discretion when its decision is correct based on the arguments presented to it. To hold otherwise would be to violate the rule that the appellate court cannot substitute its judgment for that of the trial court. See Davis v. Huey, 571 S.W.2d 859, 862 (Tex.1978).
I would hold that, faced with the choice between (1) the position of Dennis and Ichi-ban that this was a covenant not to compete and (2) the position of RAL that this was a personal service contract with a restrictive covenant, the trial court did not abuse its discretion by finding that it was the latter.
Contract Enforceable, Not Terminable at Will
Second, I disagree with the majority’s opinion that the agreement in question is an employment contract without a definite term, terminable at the will of either party. To support its conclusion, the majority cites Hussong and Webber. Those eases do not involve personal services contracts, such as the one here between Dennis, a rap star, and RAL, a recording company. Hussong was employed as a sales manager and Webber as an engineer-attorney.
The agreement in this case is much more like a personal service agreement with a negative covenant for a definite term than it is like an employment contract without definite terms, terminable at will. While it is true that this agreement does not have an explicit term stated in a number of years as in the usual personal service contract,2 its ending point is sufficiently ascertainable to be enforceable. Furthermore, it is not terminable at will simply because RAL had the option not to renew at the end of each term.
a. The Contract
The contract provides as follows:
1. TERM
1.01 The term of this Agreement shall commence on the date hereof and shall *554continue, unless extended as provided herein (such term, including any extensions, to be hereinafter referred to as the “Term”), for a first Contract Period ending nine (9) months after the earlier of the following:
(a) The date of completion of the lacquer, copper or equivalent Master Recordings to be used in manufacturing the disc Phonograph Record units to be derived from the last Masters made in fulfillment of your Recording Commitment for that Contract Period under paragraph 3.01 below; or
(b) The date thirty (30) days after you give us notice that you have completed the Delivery of those Masters, provided Delivery had in fact been completed.
1.02 You hereby grant us nine (9) separate options to extend the Term for nine (9) additional Contract Periods (“Option Periods”) on the same terms and conditions applicable to the first Contract Period except as provided herein. Each such option shall be deemed to be exercised by us and shall commence immediately upon expiration of the current Contract Period unless we shall give you written notice to the contrary at least ten (10) days prior to the date that the then current Contract Period would otherwise expire....
3. RECORDING COMMITMENT
3.01 During the first Contract Period you shall perform for the recording of Masters sufficient to constitute one (1) or more Singles (the total number of Masters of which shall be determined by us in our sole discretion), and Deliver such Masters to us, plus, during the first Contract Period, you shall record and deliver at our option, such additional Masters as shall in the aggregate constitute one (1) Album. During the second and each subsequent Contract Period you shall perform for the recording of Masters sufficient to constitute one (1) Album, and Deliver such Masters to us, plus, during the first Contract
Period and during each subsequent Contract Period, you shall record and deliver at our option, one (1) additional Album.
The aggregate number of Masters required to be recorded during each Contract Period shall be hereinafter referred to as the “minimum Recording Commitment” for each such Contract Period.
3.02 You shall fulfill the minimum Recording Commitment for each Contract Period within the first three (3) months of the Contract Period and, with respect to any additional Album we may require during the first Contract Period and each subsequent Contract Period, such Album shall be recorded and delivered to us within three (3) months of our notice to you of your obligation to record such Album.
(Emphasis added). The basic provisions pertinent here are:
1. Dennis shall record sufficient Masters for an album within the first three months;
2. RAL may require an additional album within an additional three-month period;3
3. Nine months after these recording commitments are fulfilled the contract period ends; and
4. RAL has the option to extend the contract for up to nine additional contract periods.
b. Terminability
The contract allows RAL to exercise an option not to renew at the end of term. It does not give RAL the option to terminate the contract at will, i.e., at any time it wants. There is nothing in the contract which allows Dennis to terminate. Therefore, I would hold that the contract is not terminable at the will of either party. Thus, even if Dennis and Ichiban had taken the position below that this was an employment contract terminable at will by either party, it would not have been an abuse of discretion for the trial court to have found otherwise.
*555c. Duration
As to being indeterminate in duration, the contract provides for a maximum of 10 terms of from 12 to 24 months,4 each successive term renewable at the option of RAL. The contract contemplates that: Dennis would provide an album within the first three months of the contract period; RAL could require a second album within the contract period to be recorded within three months; and the contract period would end nine months after the last recording. While this determination is conditioned upon performance by Dennis, it provides a sufficient basis upon which to enforce it for failure to perform. For example, assuming Dennis has provided two albums, he has at least eight contract periods left to perform. Assuming RAL exercises its options for an additional album as late in each contract period as possible, and assuming RAL’s exercise of its option to renew at the conclusion of each interim contract period, the time remaining for Dennis to perform is 16 years. This produces a ready measure of duration for injunction purposes.
Therefore, even if Dennis and Ichiban had taken the position below that this was an interminable employment contract, I would hold that the trial court would not have abused its discretion in holding that this is a restrictive covenant of a personal services contract which is sufficiently determinant to enforce by injunction.
Summary
Because I think the majority errs procedurally in considering a theory advanced for the first time on appeal, and substantively in finding the contract in question to be an employment contract terminable by either party and indeterminate in duration, I respectfully dissent.

. Counsel for Dennis stated it this way:
We have taken the position pretty consistently that it is an unenforcible [sic] covenant not to compete under Texas law. We took the position at the injunction hearing that’s what it was, and we will take the position before the Appellate Court that the plaintiff, the movants, never met their burden of establishing reasonableness in scope, geography or limitation, never asked the Court to modify the original contract, which the Court will recall covered the universe and was in perpetuity. As a result, under well established statutory and common law with respect to covenants not to compete, they never, with respect to restraining my client from competing with them, even established the prima facie facts required by the statute.

. See cases cited at footnote eight of the majority opinion; the cases concern personal service contracts with restrictive covenants that range in duration from three months to five years.

. It appears that RAL could wait nearly nine months after Dennis completed his first album before requiring a second album, after which another nine months must pass before the contract period terminated.

. The shortest contract period would consist of 12 months where Dennis recorded an álbum in three months and RAL did not require an additional album. The contract period would terminate nine months later. The longest contract period would consist of 24 months where Dennis recorded an album in three months, RAL waited nearly nine months to request an additional album, Dennis recorded it within three months, and the contract period would terminate nine months later.