Court Opinion

ID: 8207906
Source: CourtListenerOpinion
Date Created: 2022-09-21 06:11:39.349668+00
Date Added: 2024-06-11T16:41:28.320460
License: Public Domain

Affirm and Opinion Filed September 19, 2022

                                      In The
                            Court of Appeals
                     Fifth District of Texas at Dallas
                               No. 05-22-00296-CV

          UNIVERSAL REHEARSAL PARTNERS, LTD., Appellant
                              V.
                    VINCE BARNHILL, Appellee

               On Appeal from the 191st Judicial District Court
                            Dallas County, Texas
                    Trial Court Cause No. DC-22-00172

                        MEMORANDUM OPINION
                 Before Justices Myers, Pedersen, III, and Garcia
                            Opinion by Justice Myers
      Universal Rehearsal Partners, Ltd. brings an interlocutory appeal of the trial

court’s denial of a temporary injunction against Vince Barnhill. Universal brings

four issues on appeal contending (1) the trial court erred by denying a temporary

injunction because it presented sufficient evidence to obtain a temporary injunction;

(2) Barnhill’s illegal conduct cannot constitute the status quo; (3) Barnhill should

not be allowed to continue drawing a salary; and (4) Barnhill should not be permitted

to deny the partnership and other partners access to partnership records. We affirm

the trial court’s order denying the temporary injunction.
                                 BACKGROUND
      Prior to September 2000, Barnhill operated a business providing rehearsal

space rented to musicians and bands. Barnhill and John Kirtland knew one another

because Kirtland had a band that rehearsed there. In September 2000, Kirtland and

Barnhill agreed to operate the rehearsal-space business as a limited partnership.

      The partnership agreement provided that Barnhill was the general partner and

Kirtland was the limited partner. They each had a fifty-percent interest in the

partnership. All “Major Decisions” would have to be approved by both partners.

“Major Decisions” included the approval of the partnership budget, employee and

partner compensation and duties, the hiring and firing of partnership employees and

agents, and the terms on which they were hired. The general partner and the general

partner’s affiliates were not entitled to compensation from the partnership; however,

if the partners decided to compensate themselves, they were each to receive equal

compensation. The limited partner had the power to remove the general partner upon

giving the general partner written notice of removal due to the occurrence of certain

events, including the general partner’s acting in contravention of the terms or intent

of any provision in the partnership agreement or the application or appropriation of

partnership funds in an unauthorized manner. After the general partner is removed,

he becomes a limited partner with all the rights and duties of a limited partner. The

newly appointed general partner would then receive a one-percent interest in the

partnership taken from the previous general partner’s interest.

                                         –2–
      On November 12, 2021, Kirtland gave Barnhill written notice that Barnhill

was removed from the position of general partner. The notice listed eleven areas

where Barnhill had failed in his duties as general partner, including making major

decisions without Kirtland’s consent by causing the partnership to pay Barnhill or

his affiliates compensation for Barnhill’s work managing the partnership, Barnhill’s

not paying property and income taxes timely, Barnhill’s using some of the rehearsal

space as his personal living space without compensating the partnership when the

space could have been rented out as rehearsal space, and Barnhill’s failing to keep

full and accurate books and records of all transactions of the partnership. The notice

stated that Q PM, LLC was now the general partner.

      Universal filed suit against Barnhill on January 11, 2022, alleging causes of

action including breach of contract, breach of fiduciary duty, requests for declaratory

judgment, an action for accounting, and a request for injunctive relief. The trial

court entered a temporary restraining order against Barnhill. The court then held a

hearing on Universal’s application for a temporary injunction. Kirtland and Barnhill

testified at the hearing about their relationship and the partnership. After the hearing,

the trial court signed a written order denying the application for a temporary

injunction and dissolving the temporary restraining order.

                          TEMPORARY INJUNCTIONS
      All of Universal’s issues concern the trial court’s order denying Universal’s

application for a temporary injunction.

                                          –3–
      Section 51.014(a)(4) of the Texas Civil Practice and Remedies Code permits

an interlocutory appeal of a trial court’s grant or denial of an application for a

temporary injunction. TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(4). The

decision to grant or deny an application for a temporary injunction is within the

sound discretion of the trial court. See Butnaru v. Ford Motor Co., 84 S.W.3d 198,

204 (Tex. 2002). An appellate court will not reverse a trial court’s decision to deny

an application for a temporary injunction absent an abuse of discretion. See id. An

appellate court will not substitute its judgment for that of the trial court. See id. An

appellate court draws all legitimate inferences from the evidence viewed in the light

most favorable to the trial court’s order granting or denying the application for a

temporary injunction. See Tom James of Dallas, Inc. v. Cobb, 109 S.W.3d 877, 883

(Tex. App.—Dallas 2003, no pet.).

      When a trial court denies an application for a temporary injunction, it abuses

its discretion if its decision is so arbitrary as to exceed the bounds of reasonable

discretion. See Wilson N. Jones Mem’l Hosp. v. Huff, 188 S.W.3d 215, 218 (Tex.

App.—Dallas 2003, pet. denied).        A trial court abuses its discretion when it

misapplies the law to established facts or when the evidence does not reasonably

support its determination regarding the existence of a probable right of recovery or

a probable injury. See Tom James of Dallas, 109 S.W.3d at 883. However, a trial

court does not abuse its discretion in denying an application for a temporary

injunction based on its holding that the applicant failed to prove one of the

                                          –4–
requirements for a temporary injunction. See Wilson N. Jones Mem’l Hosp., 188

S.W.3d at 218. Also, there is no abuse of discretion when a trial court bases its

decision on conflicting evidence when there is some evidence that reasonably

supports its decision. See Butnaru, 84 S.W.3d at 211 (some evidence). As the

factfinder, the trial court is the sole judge of the credibility of the witnesses and the

weight to give their testimony; it may choose to believe one witness and disbelieve

another. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); see Loye v.

Travelhost, Inc., 156 S.W.3d 615, 620 (Tex. App.—Dallas 2004, no pet.).

      A temporary injunction is an extraordinary remedy and does not issue as a

matter of right. Butnaru, 84 S.W.3d at 204. For a temporary injunction to issue, the

applicant must plead and prove: (1) a cause of action against the defendant; (2) a

probable right to the relief sought; and (3) a probable, imminent, and irreparable

injury in the interim. Id.; see also CIV. PRAC. § 65.011.

      To establish a probable right to the relief sought, an applicant is required to

allege a cause of action and offer evidence that tends to support the right to recover

on the merits. Dallas Anesthesiology Associates, P.A. v. Tex. Anesthesia Group,

P.A., 190 S.W.3d 891, 896–97 (Tex. App.—Dallas 2006, no pet.). An applicant is

not required to show he will prevail at the final trial because the ultimate merits of

the case are not before the trial court. Id. at 897. A probable right to recovery may

be proven by alleging the existence of a right and presenting evidence tending to

show that right is being denied. Id.

                                          –5–
      For purposes 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; Wilson N.

Jones Mem’l Hosp., 188 S.W.3d at 218. An adequate remedy at law is one that is as

complete, practical, and efficient to the prompt administration of justice as is

equitable relief. El Tacaso, Inc. v. Jireh Star, Inc., 356 S.W.3d 740, 744 (Tex.

App.—Dallas 2011, no pet.). The purpose of a temporary injunction is to preserve

the status quo of the litigation’s subject matter pending a trial on the merits. Butnaru,

84 S.W.3d at 204. The status quo is defined as, “the last, actual, peaceable,

non-contested status which preceded the pending controversy.” Pierce v. State, 184

S.W.3d 303, 308 (Tex. App.—Dallas 2005, no pet..) (quoting In re Newton, 146

S.W.3d 648, 651 (Tex. 2004) (orig.proceeding)).

      The party applying for a temporary injunction has the burden of production,

which is the burden of offering some evidence that establishes a probable right to

recover and a probable interim injury. See Dallas Anesthesiology, 190 S.W.3d at

896; Wyly v. Preservation Dallas, 165 S.W.3d 460, 465 (Tex. App.—Dallas 2005,

no pet.). If an applicant does not discharge his burden, he is not entitled to such

extraordinary relief. Wyly, 165 S.W.3d at 465.

                                     ANALYSIS
      Universal states the temporary injunction it sought would have enjoined

Barnhill from:

                                          –6–
          1. interfering with his removal as general partner;

          2. acting as a signatory on the partnership’s bank accounts;

          3. collecting partnership income, including rents from the tenants;

          4. residing at the property;

          5. not making available the partnership books and records; and

          6. interfering with QPM’s ability to operate the business, including
             payment of the ordinary business expenses.

Universal concedes that the second requested form of injunctive relief, that Barnhill

be enjoined from acting as a signatory on the partnership’s bank accounts, is now

“moot as the bank has removed Barnhill as a signatory and stated he will not ever be

allowed back onto the accounts.” Universal argues that for each of the other forms

of requested injunctive relief, it “produced substantial (if not uncontroverted)

evidence . . . meaning the trial court erred by denying the requested relief.”

      Universal pleaded causes of action that Barnhill breached the partnership

agreement, breached his fiduciary duty to Universal, and an action for accounting.

Generally, a court will not enforce contractual rights by injunction because a party

can rarely establish an irreparable injury and an inadequate legal remedy when

damages for breach of contract are available. Butnaru, 84 S.W.3d at 211.

       The trial court granted a temporary restraining order on February 11, 2022.

The restraining order provided:

          1. Barnhill may not interfere with his removal as general partner
             and the installation of Q PM, LLC as general partner;

                                         –7–
         2. Barnhill may not be a signatory on the partnership’s bank
            accounts;

         3. Barnhill may not collect any rents due and must inform the
            tenants that cash rent will not be accepted by the partnership;

         4. Barnhill shall not be permitted to sleep at the premises or
            maintain his personal effects there;

         5. Barnhill shall make the books and accounts available to the
            partnership, Kirtland, and Q PM, LLC;

         6. No party shall make a distribution to Barnhill or his entities
            without the written agreement of Barnhill and Kirtland;

         7. Barnhill shall not interfere with Q PM, LLC’s ability to pay the
            partnership’s ordinary business expenses;

         8. “Q PM, LLC and the Limited Partner shall not interfere with
            Barnhill’s ability to occupy his office at the Partnership’s
            property, schedule, book, and manage band appointments, the
            renting of Partnership band equipment, or to regularly observe
            the Partnership’s property and bring up any issues to Q PM, LLC
            for attention regarding the Property . . . .”
      The trial court held a trial on the temporary injunction on February 24, 2022.

Although Universal asserts it proved its case overwhelmingly and that much of the

evidence was uncontroverted, review of the record shows much of the evidence was

disputed and little was uncontroverted.

      At the trial, Kirtland testified that Barnhill had been drawing a salary from the

partnership of $96,000 a year since 2012. Kirtland testified he first learned of it in

2016 when Barnhill filed the 2012 income tax returns. He testified he did not

consent to Barnhill’s drawing a salary and repeatedly told Barnhill he could not do

so. Barnhill testified that from 2000 to 2012 he did not draw a salary. However, in

                                          –8–
2012, Barnhill told Kirtland that he needed $8,000 per month to live on and that

Kirtland agreed to his receiving the salary. Barnhill testified Kirtland worked with

him on classifying it as necessary to maintain their bank loan and to be appropriate

for the tax returns. At times, the salary was called a management fee paid either to

Barnhill or his entity, Soundhouse Management, or it was called a “distribution.”

Barnhill testified Kirtland never told him he could not take the money. The trial

court could conclude Universal was unlikely to prevail on this aspect of its breach-

of-contract and other claims concerning Barnhill drawing a salary.1

       Universal also argues Barnhill breached the partnership agreement by failing

to make pro rata distributions to the partners. The court could conclude the evidence

failed to show irreparable injury to the partnership from Barnhill’s receiving $8,000

a month as salary and failing to pay Kirtland the same amount because the trial court

could find Barnhill’s allegedly wrongful receipt of the money can be remedied by

money damages. Universal argues that Barnhill’s receiving a salary sometimes left

the partnership without sufficient funds to pay the property taxes, federal income

taxes, and put the partnership in default with the bank concerning the mortgage.

However, Barnhill testified the partnership was no longer in default with the bank

and the property and income taxes were paid. There was no evidence that Barnhill

continues to draw a salary.

   1
     This assertion may also be moot since Barnhill no longer has access to the partnership’s bank
accounts. Kirtland, however, did not concede it was moot, and Barnhill did not address it in his brief.
                                                 –9–
      Kirtland also testified that when the bands paid in cash, he thought not all the

cash made it into the partnership’s accounts. He testified that after Barnhill was

removed as general partner, the cash deposits “dried up.” He said Barnhill had been

in charge of collecting the rent, including the rent payments that were made in cash.

He said he thought Barnhill was putting the cash payments in his pocket. Kirtland

said he did not know if Barnhill was collecting rents after the temporary restraining

order forbade him from doing so. Barnhill testified he accounted for all the cash

receipts. He stated he sometimes took some of the cash “to buy something for the

crew if they were working,” and he testified all the cash receipts went to the

partnership’s CPA. After Barnhill’s removal as general partner, the musicians were

told cash payments would no longer be accepted and that payments had to be by

credit card or Venmo. Some of the musicians asked Barnhill if that was serious, and

he told them it was. The trial court could conclude Universal was unlikely to prevail

on this aspect of its breach-of-contract and other claims because the court could find

the reduced cash payments were due to the partnership’s instructions not to pay in

cash. The court could also conclude the evidence failed to show irreparable injury

to the partnership because Barnhill’s alleged failure to account for cash payments

could be remedied by an award of damages.

      Kirtland also testified Barnhill was keeping two sets of books with the

partnership’s books showing “total income” greater than what was reported on the

partnership’s federal income tax return. Barnhill testified he did not keep two sets

                                        –10–
of books. He agreed that there was a difference in the amounts shown on the

partnership’s accounts versus what was on the tax returns. Barnhill testified that

some of the income on the books may not have been treated as income on the tax

returns because it was for deposits that had not yet been used. Barnhill signed the

returns as general partner, but the returns were prepared by the partnership’s CPAs,

who did not testify. Barnhill testified he had not received anything from the IRS

indicating there was a problem with the income or the taxes. Universal presented no

evidence that the difference between total income shown on the partnership’s books

and the tax returns was not appropriate under the partnership’s circumstances. The

trial court could conclude Universal was unlikely to prevail on this aspect of its

claims. The court could also conclude the evidence failed to show irreparable injury

to the partnership.

      Kirtland also testified that Barnhill had refused to produce records and

accounts as required by the partnership agreement. The agreement provided that the

“books and records shall, at all times, be maintained at the principal place of business

of the Partnership and the Limited Partner shall have the right to inspect and copy

any of them, at their his [sic] own expense, during normal business hours.”         The

partnership agreement required that “[a]ll notices, demands, requests or other

communications that may be or are required to be given, served or sent . . . pursuant

to this Agreement shall be in writing and shall be mailed by first-class, registered or

certified mail . . . or transmitted by hand delivery, telegram or facsimile transmission

                                         –11–
. . . .” Kirtland did not testify that he sought to inspect or copy the books at the

partnership’s office. Barnhill testified that Kirtland sent him text messages asking

to see various documents. Barnhill said he did not understand many of the requests.

He also said that Kirtland did not make a demand for the documents complying with

the requirements of the partnership agreement. Barnhill also testified he had turned

over all the company’s books and records to the partnership’s CPA. The trial court

could conclude from this disputed evidence that Universal had failed to provide that

Barnhill violated the requirement to provide the partnership’s records and accounts

to Kirtland. Thus, the trial court could conclude Universal was unlikely to prevail

on this aspect of its breach-of-contract and other claims. The court could also

conclude the evidence failed to show irreparable injury to the partnership.

      Universal also argued Barnhill breached the partnership agreement and his

fiduciary duty to the partnership by converting one of the rehearsal studios into

living quarters where Barnhill lived. Kirtland testified this cost the partnership

money because Barnhill was not paying rent and the studio could not be rented if

Barnhill was living there. Barnhill testified he did not live on the premises. He

testified he had a bed and a few personal possessions in one of the studios for when

he had to be there when a band was rehearsing after midnight. He testified that when

that studio was needed, he moved the bed out. Due to the controverted evidence, we

do not find Universal established the trial court abused its discretion.

                                         –12–
      We conclude the trial court did not err by denying Universal’s motion for

temporary injunction. We overrule Universal’s first issue. We need not address

Universal’s second issue discussing what constitutes the status quo.

      In the third issue, Universal contends Barnhill should no longer be allowed to

continue drawing a salary.       As discussed above, the evidence was disputed

concerning whether Kirtland agreed to Barnhill’s drawing a salary. Universal did

not introduce evidence that Barnhill continued to draw a salary after he was removed

from the position of general partner or at the time of the trial. Furthermore, given

Universal’s acknowledgement that Barnhill is no longer a signatory on the

partnership’s bank accounts, it is not clear how he could continue to draw a salary.

We conclude Universal has not shown the trial court abused its discretion. We

overrule Universal’s third issue.

      In its fourth issue, Universal contends, “Should Barnhill be permitted [to]

deny the Partnership and other partners access to partnership records, including, but

not limited to (1) rent rolls, (ii) leases of tenants, (iii) his personal VENMO accounts

(to which he has diverted rent payments), and (iv) other partnership records?” As

discussed above, based on the evidence before the court, the trial court could

conclude that Universal failed to prove that it made a request for the records

complying with the requirements of the partnership agreement. The trial court could

also conclude Universal failed to prove Barnhill did not make the records available

at the partnership’s business office during regular business hours as required by the

                                         –13–
partnership agreement. Concerning the assertion that Barnhill failed to turn over his

personal Venmo records, Universal presented no evidence that it requested Barnhill

to turn over his personal records, nor does it explain why Barnhill’s personal Venmo

records constitute the partnership’s books and records. We conclude Universal has

not shown the trial court abused its discretion. We overrule Universal’s fourth issue.

                                  CONCLUSION
      We affirm the trial court’s order denying the temporary injunction.

                                           /Lana Myers//
220296f.p05                                LANA MYERS
                                           JUSTICE

                                        –14–
                             Court of Appeals
                      Fifth District of Texas at Dallas
                                   JUDGMENT

 UNIVERSAL REHEARSAL                            On Appeal from the 191st Judicial
 PARTNERS, LTD., Appellant                      District Court, Dallas County, Texas
                                                Trial Court Cause No. DC-22-00172.
 No. 05-22-00296-CV           V.                Opinion delivered by Justice Myers.
                                                Justices Pedersen, III and Garcia
 VINCE BARNHILL, Appellee                       participating.

       In accordance with this Court’s opinion of this date, the order of the trial
court denying a temporary injunction is AFFIRMED.

      It is ORDERED that appellee VINCE BARNHILL recover his costs of this
appeal from appellant UNIVERSAL REHEARSAL PARTNERS, LTD.

Judgment entered this 19th day of September, 2022.

                                         –15–