Court Opinion

ID: 4214490
Source: CourtListenerOpinion
Date Created: 2017-10-25 09:09:55.289674+00
Date Added: 2024-06-11T14:41:50.341408
License: Public Domain

STATE OF MICHIGAN

                             COURT OF APPEALS

RED D FREIGHT, INC,                                                  UNPUBLISHED
                                                                     October 24, 2017
                Plaintiff-Appellee,

v                                                                    No. 330834
                                                                     Monroe Circuit Court
STEVEN A. SEXTON, TS TRANSIT, LLC, GST                               LC No. 15-138267-CB
LOGISTICS, LLC, and GREG E. MORRISON,

                Defendant-Appellants.

Before: SAAD, P.J., and SERVITTO and GADOLA, JJ.

Servitto, J. (dissenting).

        I respectfully dissent. First, I disagree with the majority’s conclusion that the issuance of
a temporary restraining order (TRO) requires only the minimal standard that “it clearly appears
from specific facts shown by affidavit or by a verified complaint that immediate and irreparable
injury, loss, or damage will result to the applicant from the delay required to effect notice.”
MCR 3.310(B)(1)(a).

         MCR 3.310 is entitled “Injunctions” and a TRO and preliminary injunction are both
included under this heading. They are thus both injunctions. As the 1985 staff comment to
MCR 3.310 states, “The rule adopts the terminology used in the federal rule, distinguishing
between the temporary restraining orders, which are entered without notice, and preliminary
injunctions, which are granted with notice and after hearing.” The only significant distinction,
then, is procedural; i.e., how one may obtain one versus the other of these injunctions.

        MCR 3.310 provides, in relevant part:

        (A) Preliminary Injunctions.

        (1) Except as otherwise provided by statute or these rules, an injunction may not
        be granted before a hearing on a motion for a preliminary injunction or on an
        order to show cause why a preliminary injunction should not be issued.

                                              * * *

        (B) Temporary Restraining Orders.

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       (1) A temporary restraining order may be granted without written or oral notice to
       the adverse party or the adverse party's attorney only if

       (a) it clearly appears from specific facts shown by affidavit or by a verified
       complaint that immediate and irreparable injury, loss, or damage will result to the
       applicant from the delay required to effect notice or from the risk that notice will
       itself precipitate adverse action before an order can be issued;

       (b) the applicant's attorney certifies to the court in writing the efforts, if any, that
       have been made to give the notice and the reasons supporting the claim that notice
       should not be required; and

       (c) a permanent record or memorandum is made of any nonwritten evidence,
       argument, or other representations made in support of the application.

        According to the majority, a preliminary injunction requires much more intense
consideration before issuance than a TRO. That consideration encompasses four factors: “(1) the
likelihood that the party seeking the injunction will prevail on the merits, (2) the danger that the
party seeking the injunction will suffer irreparable harm if the injunction is not issued, (3) the
risk that the party seeking the injunction would be harmed more by the absence of an injunction
than the opposing party would be by the granting of the relief, and (4) the harm to the public
interest if the injunction is issued.” Michigan AFSCME Council 25 v Woodhaven-Brownstown
Sch Dist, 293 Mich App 143, 148; 809 NW2d 444 (2011). I have not located any authority
stating or suggesting that the consideration to be undertaken by a judge to issue a TRO is or
should be less than that undertaken in issuing a preliminary injunction. Indeed, even in its
request for the TRO, plaintiff related the four factors, indicating that all four leaned in favor of
issuance of a TRO. Because a TRO may be entered without notice and a hearing, and a
preliminary injunction may not, imposing lesser considerations for the issuance of a TRO would
not make sense. It is far more plausible that MCR 3.310(B)(1)(a) is a requirement additional to
the four factors that must be considered when issuing a preliminary injunction.

       As succinctly stated by the Supreme Court, in looking at FR Civ P 65 (the rule upon
which our MCR 3.310 is based) an ex parte TRO serves a limited purpose:

       “The stringent restrictions imposed . . . by Rule 65[ (b) ], on the availability of ex
       parte temporary restraining orders reflect the fact that our entire jurisprudence
       runs counter to the notion of court action taken before reasonable notice and an
       opportunity to be heard has been granted both sides of a dispute. Ex parte
       temporary restraining orders are no doubt necessary in certain circumstances, but
       under federal law they should be restricted to serving their underlying purpose of
       preserving the status quo and preventing irreparable harm just so long as is
       necessary to hold a hearing, and no longer.”[Granny Goose Foods, Inc v
       Teamsters, 415 US 423, 438–39; 94 S Ct 1113, 39 L Ed.2d 435 (1974)] (internal
       citation omitted).

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        In AFT Michigan, AFT, AFL-CIO v State, 493 Mich 884; 822 NW2d 226 (2012), Justice
Markman, in his dissent stated, “In determining whether to issue a TRO, a trial court should
consider four factors: (1) whether the applicant will suffer irreparable harm if the TRO is not
granted, (2) the likelihood that the applicant will prevail on the merits, (3) harm to the public
interest if the TRO issues, and (4) whether the harm to the applicant in the absence of a TRO
outweighs the harm to the opposing party if a TRO is granted.” While this is a dissent and not
binding, I do not believe this approach is inconsistent with the intent of MCR 3.310, as it was
stated in the 1985 staff comment.

         Utilizing the four factors, I would find that the trial court abused its discretion in issuing
the TRO. It can be ascertained from the complaint that this case involves, at its core, whether
defendant Sexton violated a term of an agreement, between him and plaintiff, by contacting or
soliciting customers or clients on plaintiff’s client list for a period of one year following the
termination of his independent contractor relationship with plaintiff. The issue of whether
Sexton misappropriated trade secrets for his own benefit in a competing business is also at issue.
The injuries appear to be economic in nature. Economic injuries are not irreparable, as they can
be remedied at law. See, e.g., Thermatool Corp v Borzym, 227 Mich App 366, 377; 575 NW2d
334 (1998). Thus, factor one weighs against the issuance of a TRO.

        To determine whether factor two, the likelihood that plaintiff will succeed on the merits,
weighs in favor of issuing the TRO requires the trial court to look at the 2011 and 2013
contracts. There are several differences between the two agreements. The 2011 contract
provides for compensation to be paid to the agent (Sexton) at 40% of the net transportation
revenue received by broker (plaintiff) on a bi-weekly basis. The 2013 contract provides for a
40% payment of net transportation profit on a weekly basis. The 2013 contract adds a provision
whereby the agent is responsible for the total cost of operating his facilities “if in a remote
location” when that limitation was not in the 2011 contract. The 2013 contract also adds a
provision making the agent responsible for expenses or fines resulting from the gross negligence
on the part of his employees, which changes the 2011 provision requiring daily submission of
broker’s paperwork to weekly submission in the 2013 contract, and changes the provision
concerning the agent providing service to a customer whose credit has not been approved by the
main office. Given the differences between the two documents, particularly given the change in
compensation, it is highly unlikely that the two documents can stand together, as argued by
plaintiff.
        “If parties to a prior agreement enter into a subsequent contract that completely covers
the same subject, but the second agreement contains terms that are inconsistent with those of
the prior agreement, and the two documents cannot stand together, the later
document supersedes and rescinds the earlier agreement.” Omnicom of Michigan v Giannetti Inv
Co, 221 Mich App 341, 347; 561 NW2d 138 (1997). Moreover, the 2013 contract contained the
following provision:

               10. Entire Agreement of Parties. This agreement cannot be changed
       orally and constitutes the entire contract between the parties hereto. This
       agreement may not be changed, modified or amended, in whole or in part, except
       in writing, signed by the parties hereto.

                                                 -3-
“If a written document, mutually assented to, declares in express terms that it contains
the entire agreement of the parties . . . this declaration is conclusive as long as it has itself not
been set aside by a court on grounds of fraud or mistake, or on some ground that is sufficient for
setting aside other contracts . . . . It is just like a general release of all antecedent claims.” UAW-
GM Human Res Ctr v KSL Recreation Corp, 228 Mich App 486, 494; 579 NW2d 411 (1998),
quoting 3 Corbin, Contracts, § 578, pp. 402-411. In Archambo v Lawyers Title Ins Corp, 466
Mich 402, 414 n 16; 646 NW2d 170 (2002), our Supreme Court stated:

       We note that it is not always necessary for a later contract to contain an
       integration clause in order for this later contract to supersede an earlier contract.
       Rather, if the later contract covers the same subject matter as the
       earlier contract and contains terms that are inconsistent with the terms of the
       earlier contract, the later contract may supersede the earlier contract, unless it
       appears that this is not what the parties intended. Joseph v Rottschafer, 248 Mich
       606, 610-611; 227 NW 784 (1929). However, where the later contract contains an
       integration clause, it cannot be said that the later contract does not supersede the
       earlier contract on the basis that that is not what the parties intended. Obviously,
       in such a situation, the integration clause provides clear evidence to the contrary,
       i.e., that the parties did intend the later contract to supersede the earlier contract.
       Therefore, the existence of an integration clause in the later contract necessarily
       indicates that the parties intended the later contract to supersede the
       earlier contract, and thus provides dispositive evidence with regard to
       which contract is controlling.

Due to the differences in the two contracts, most specifically, the lack of the addendum
containing the “Back Solicitation” clause in the 2013 contract and the existence of the integration
clause in the 2013 contract, I would find that factor two, the likelihood that plaintiff will succeed
on the merits, weighs against issuing the TRO.

        I find that factor three, harm to the public interest if the TRO issues, does not weigh in
favor of or against the TRO, because public interest is not at issue. As to factor four, whether the
harm to plaintiff in the absence of a TRO outweighs the harm to defendants if a TRO is granted,
I would find that were plaintiff likely to prevail on the merits, this factor would weigh in favor of
issuing the TRO. After all factors considered, I would find that the trial court abused its
discretion in issuing the TRO.

        Even if a TRO requires only the minimal showing that “it clearly appears from specific
facts shown by affidavit or by a verified complaint that immediate and irreparable injury, loss, or
damage will result to the applicant from the delay required to effect notice,” MCR
3.310(B)(1)(a), I do not believe that showing was made here. Whether or not Sexton was held to
the back solicitation provision, the relevant court rule requires that plaintiff show that immediate
and irreparable injury would result from the delay required to effect notice on Sexton. It is not
enough that plaintiff has suffered or will continue to suffer injury from the defendants’ actions.
Rather, plaintiff must demonstrate that it will suffer immediate and irreparable injury resulting
from a delay in bringing notice upon defendants. Plaintiff has not alleged or shown that any
delay required to effect notice would result in immediate and irreparable injury. Thus, the

                                                 -4-
requirement of MCR 3.310(B)(1)(a) has not been met and I would find that the trial court abused
its discretion in issuing the TRO.

        I would also find that the trial court abused its discretion when it denied defendants’
motion to dissolve the TRO after it held a hearing. Pursuant to MCR 3.310(B)(5), “At a hearing
on a motion to dissolve a restraining order granted without notice, the burden of justifying
continuation of the order is on the applicant for the restraining order . . . .” At the motion
hearing, defendants argued that the 2013 contract executed between the parties contained no
addendum and thus the 2011 back solicitation clause relied upon by plaintiff was null. Plaintiff,
on the other hand, argued that the 2013 agreement was executed to reflect that Sexton was to be
paid on a percentage of profit as opposed to the percentage of revenue that the 2011 contract
stated, but that the rest of the 2011 contract, including the addendum is in full force and effect.
The trial court stated that the contracts were basically identical with the exception that the
addendum was not included in the 2013 contract and opined that whether the two contracts stood
side by side and both remained effective or whether the 2013 superseded the 2011 contracts was
a question of law or possibly one of fact and upheld the continuation of the TRO. As explained
above, there were several key distinctions between the contracts that make it highly unlikely that
the 2011 contract, including the back solicitation clause, remains valid. I would have found that
plaintiff did not justify continuation of the TRO. Accordingly, I would thus vacate the TRO. I
would not find, however, as defendants request, that the 2011 contract is unenforceable as a
matter of law. Instead, I would remand to the trial court and order discovery to proceed.

                                                            /s/ Deborah A. Servitto

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