Opinion
No. 05-19-00947-CV
05-11-2020
YOUNG GI KIM AND KI SIK CHOI, Appellants v. ICK SOO OH D/B/A GRACE BEAUTY SUPPLY, Appellee
On Appeal from the 380th Judicial District Court Collin County, Texas
Trial Court Cause No. 380-02664-2019
MEMORANDUM OPINION
Before Justices Schenck, Osborne, and Reichek
Opinion by Justice Schenck
In this interlocutory appeal, Young Gi Kim and Ki Sik Choi appeal the trial court's order granting appellee Ick Soo Oh d/b/a Grace Beauty Supply's request for a temporary injunction. In two issues, appellants argue the trial court abused its discretion in entering the injunction because there was no showing that Oh had a probable right of recovery against them or that Oh will likely suffer irreparable harm for which he has no adequate remedy at law. We affirm the trial court's order. Because all issues are settled in law, we issue this memorandum opinion. TEX. R. APP. P. 47.4.
BACKGROUND
Since approximately 2008, Oh has operated a business in which he purchased beauty supplies from manufacturers and sold them on to salons. In 2016, Oh approached Kim and Choi about their contracting to purchase beauty supplies from Oh d/b/a Grace Beauty Supply and sell them to the salons Oh had been selling to. The individuals then signed contracts that named the parties to the agreements as (1) "Grace Beauty Supply" and "YG Beauty" and (2) "Grace Beauty Supply" and "Niky Beauty Supply," with Kim signing as President of YG Beauty and Choi signing as President of Niky Beauty Supply. In December 2018, appellants informed Oh they were terminating the contracts. In January 2019, Oh resumed selling to his customers' salons directly and observed appellants in those salons on numerous occasions despite noncompetition provisions in the contracts between Grace Beauty Supply and YG Beauty and Niky Beauty Supply. On or about that time, Oh became suspicious that appellants also had violated the noncompetition provisions of the contracts by negotiating directly with the supplying manufacturers to sell products to salons rather than selling the products he had sold to appellants.
Each contract contained the following provision:
[Corporate defendant] agrees it will not engage in any commercial activities with any Hispanic beauty salons in Texas within 10 years from termination of the contract with Grace Beauty Supply. If [corporate defendant] causes any harm or damage to Grace Beauty Supply by the breach of this clause, it agrees to pay damages to Grace Beauty Supply including compensation for all foreseeable harm and damage of the future.
Each contract contained the following provision:
[Corporate defendant] is prohibited from making direct contacts and negotiations with any manufacturers of the products such as KUUL, HIDRA, and PUNKY JUNKY BRAND, and all of its sales and marketing activities shall be conducted only through Grace Beauty Supply.
In May 2019, Oh filed the instant suit for breach of contract and breach of a covenant not to compete against appellants, YG Beauty, and Niky Beauty Supply (collectively, defendants). Oh also filed applications for a temporary restraining order, a temporary injunction, and a permanent injunction against the defendants. The trial court conducted a hearing on Oh's application for temporary injunction. At the hearing, Oh and appellants testified and the trial court admitted copies of the contracts. The trial court signed an order granting Oh's request for a temporary injunction. Following defendants' objections to the order, the trial court signed an amended temporary injunction. Appellants filed a request for findings of fact and conclusions of law related to the amended temporary injunction, but none were filed. Appellants, but not YG Beauty or NG Beauty Supply, then timely filed this interlocutory appeal.
The amended temporary injunction enjoined all the defendants:
from soliciting business, directly or indirectly, negotiating the sale of beauty products, directly or indirectly, selling beauty products, directly or indirectly, facilitating the sale of beauty products, directly or indirectly, delivering beauty products, directly or indirectly or picking up proceeds of sales, directly or indirectly, from Hispanic beauty salons in Collin and adjacent counties, including Dallas, Denton, Grayson, Fannin, Hunt and Rockwall counties, until final trial in this case, or for a period of three years, whichever comes first.
DISCUSSION
We review a trial court's order granting or denying a request for a temporary injunction under an abuse of discretion standard. RWI Constr., Inc. v. Comerica Bank, 583 S.W.3d 269, 274 (Tex. App.—Dallas 2019, no pet.). The reviewing court should reverse an order granting injunctive relief only if the trial court abused its discretion in granting said relief. Id. The reviewing court must not substitute its judgment for that of the trial court unless the trial court's action was so arbitrary that it exceeded the bounds of reasonable discretion. Id.
In reviewing the trial court's decision, we draw all legitimate inferences from the evidence in the light most favorable to the trial court's judgment. Id. When the trial court considers genuinely conflicting evidence, there can be no abuse of discretion. See id. However, the trial court abuses its discretion when it misapplies the law to established facts or when the evidence does not reasonably support the trial court's determination of the existence of probable injury or probable right of recovery. Id. at 274-75.
The purpose of a temporary injunction is to maintain the status quo of the litigation's subject matter pending a trial on the merits. Id. at 275. A temporary injunction is an extraordinary remedy and does not issue as a matter of right. Id. To obtain a temporary injunction, an 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.
I. Probable Right of Recovery
In their first issue, appellants challenge the sufficiency of the evidence to support a probable right to recovery. That element does not require the applicant to show that it will prevail at trial, nor does it require the trial court to evaluate the probability that the applicant will prevail at trial. Smith v. Nerium Int'l, LLC, No. 05-18-00617-CV, 2019 WL 3543583, at *3 (Tex. App.—Dallas Aug. 5, 2019, no pet.) (mem. op.). Rather, it requires the applicant to present enough evidence to raise a bona fide issue as to its right to ultimate relief. Id. This requires the applicant to produce some evidence supporting every element of at least one valid legal theory. Id.
The record reflects Kim and Choi agreed with Oh to sell beauty products to salons pursuant to contracts, copies of which were admitted into evidence. The contracts contained noncompetition provisions prohibiting the corporate defendants from "engag[ing] in any commercial activities with any Hispanic beauty salons in Texas within 10 years from termination of the contract" or "making direct contacts and negotiations with any manufacturers of the products" and requires "all of [their] sales and marketing activities [to] be conducted only through Grace Beauty Supply." Oh testified to having seen appellants at his customers' salons "many times" after they terminated their contracts with him in December 2018. Kim testified he had dissolved the corporate defendant YG Beauty and that when Oh saw him at a salon, he was there as an employee of another company that sells beauty products to salons. Choi testified Niky Beauty Supply was "no longer in business" and that he was currently selling beauty products to salons as the sole employee of Bella Beauty Supply.
Appellants argue the evidence in the record establishes they signed the contracts with Oh in their corporate, not individual, capacities, and consequently there are no enforceable contracts on which Oh can recover against appellants. Appellants further assert that Oh lacks capacity to recover in this suit, noting he signed the contracts as "Grace Beauty Supply" and that Grace Beauty Supply is not a party to this suit. However, these arguments raise affirmative defenses and dilatory pleas, which may be addressed at a later proceedings on the merits and are not issues to be resolved at this stage of determining whether Oh has presented enough evidence to raise a bona fide issue as to his right to ultimate relief. See Smith, 2019 WL 3543583, at *3; see, e.g., Williams v. Nw. Bank Montana, No. 09-99-096 CV, 1999 WL 651072, at *3 (Tex. App.—Beaumont Aug. 26, 1999, no pet.) (per curiam).
Capacity, as a dilatory plea, does not challenge the merits of the case, but seeks to delay or defeat the action on procedural grounds. See Douglas-Peters v. Cho, Choe & Holen, P.C., No. 05-15-01538-CV, 2017 WL 836848, at *5 (Tex. App.—Dallas Mar. 3, 2017, no pet.) (mem. op.). Although appellants refer to their arguments as challenging their capacity to be held liable for breach of the contracts and their noncompetition provisions, they may also be interpreted as raising the affirmative defense of agency. See Wright Grp. Architects-Planners, P.L.L.C. v. Pierce, 343 S.W.3d 196, 200 (Tex. App.—Dallas 2011, no pet.) ("When an agent seeks to avoid personal liability on a contract he signs, it is his duty to disclose that he is acting in a representative capacity and the identity of his principal.").
Appellants further urge that the evidence established no breach of the contracts as alleged by Oh in his petition. Oh's petition alleged the defendants refused to purchase their inventory from him and continued to sell merchandise from other manufacturers in violation of their contracts with him. As to refusing to purchase inventory, appellants assert the corporate defendants were free to terminate the contracts and are no longer required to purchase inventory from Grace Beauty Supply. Appellants further assert the evidence demonstrated the corporate defendants are not competing with Grace Beauty Supply, presumably because appellants testified the corporate defendants are dissolved or otherwise no longer in business. Even assuming the record does not establish a probable right of recovery on Oh's breach of contract claim against the corporate defendants, Oh also asserted a claim of breach of covenant not to compete against appellants.
Reviewing the evidence in the light most favorable to the trial court's order and indulging every reasonable inference in its favor, we cannot say the trial court abused its discretion by concluding Oh met his burden to show a probable right to recovery. Accordingly, we overrule appellants' first issue.
II. Irreparable Harm and an Inadequate Remedy at Law
In their second issue, appellants complain the trial court abused its discretion in finding Oh would be irreparably harmed because he will "lose his business territory and financial resources and because Plaintiff, not being privy to the wrongful transactions between Defendants and his beauty salon contacts, will find it extremely difficult to measure damages."
An injury is irreparable if the injured party cannot be adequately compensated in damages or if the damages cannot be measured by a certain pecuniary standard. RWI Constr., Inc., 583 S.W.3d at 275. An adequate remedy at law is one that is as complete, practical, and efficient to the prompt administration of justice as equitable relief. Dass, Inc. v. Smith, 206 S.W.3d 197, 202 (Tex. App.—Dallas 2006, no pet.).
Oh's evidence of irreparable harm or injury and inadequate legal remedy is from his testimony as follows. Oh stated there had been many violations of the noncompetition provisions, but he could not estimate how many because there were "too many" to count. He saw appellants at his customers' salons "many times" after they terminated their contracts with him in December 2018. He believed appellants were competing with him for the same business and would continue to violate the noncompetition provisions. Oh testified it had been "very, very difficult" for him to rebuild his customer base and that he was expecting a "difficult time" when asked if he would be able to survive financially in the months between the hearing and the trial.
Appellants argue Oh's testimony amounts to a statement that he would lose customers without the temporary injunction and that a loss of customers is a form of injury that can be compensated with money damages. However, we have previously held that the interruption of business relations can constitute irreparable harm. See Smith, 2019 WL 3543583, at *15.
From the evidence admitted at the hearing, the trial court could reasonably conclude that a temporary injunction gave Oh more complete, practical, and efficient relief than would an attempt to calculate damages after the fact. Thus, Oh's evidence of irreparable injury was sufficient such that the trial court did not abuse its discretion.
Accordingly, we overrule appellants' second issue.
CONCLUSION
We affirm the trial court's order.
/David J. Schenck/
DAVID J. SCHENCK
JUSTICE 190947F.P05
JUDGMENT
On Appeal from the 380th Judicial District Court, Collin County, Texas
Trial Court Cause No. 380-02664-2019.
Opinion delivered by Justice Schenck. Justices Osborne and Reichek participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee ICK SOO OH D/B/A GRACE BEAUTY SUPPLY recover his costs of this appeal from appellants YOUNG GI KIM AND KI SIK CHOI. Judgment entered this 11th day of May 2020.