Opinion
No. 05-07-00390-CV
Opinion Filed October 23, 2007.
On Appeal from the 298th District Court, Dallas County, Texas, Trial Court Cause No. 07-01850-M.
Before Justices MORRIS, MOSELEY, and O'NEILL.
MEMORANDUM OPINION
Appellant Arthur J. Porcari appeals from the trial court's grant of a temporary injunction. The temporary injunction enjoins four types of actions. The first two involve restrictions on speech, and the second two involve restrictions on property rights. Because Porcari challenges only the restrictions to his free speech, we address these arguments and not the propriety of the court's restrictions on property rights.
In seven points, Porcari alleges (1) the trial court abused its discretion by terminating the temporary injunction hearing before he presented his case; (2) the trial court abused its discretion by allowing OMDA Oil Gas, Inc. to present expert testimony; (3) the trial court erred in granting an injunction that constituted a prior restraint of constitutionally protected speech; (4) the trial court erred in finding Porcari's statements were commercial speech; (5) the trial court erred in finding a fiduciary relationship between the parties; (6) the trial court erred in finding Porcari's statements were based on confidential information; and (7) the trial court erred in finding OMDA made a showing of a probable right to permanent relief for defamation and business disparagement. We reverse in part and affirm in part the trial court's temporary injunction order.
Factual Background
OMDA is a publicly traded corporation that invests in oil and gas development projects throughout the United States. Porcari first purchased one million shares of OMDA stock in June 2004. Over the next few months, Porcari and several acquaintances purchased over one hundred million shares of stock. Because of his position as a large shareholder, Porcari contacted OMDA's chairman Adam Barnett and told Barnett he believed the stock was undervalued. Porcari then explained his substantial experience in the oil and gas industry and offered to help the company expand. Barnett accepted his offer, and Porcari took over corporate communications, which included preparing press releases, newsletters, and correspondence to investors. However, Porcari did not become an officer, director, or employee of the company. Porcari and Barnett later disagreed about Barnett's management of OMDA. As a result, Barnett no longer asked Porcari for advice regarding the company.
Both before and after Porcari's involvement with Barnett, Porcari routinely posted messages on private investor boards including the Yahoo! OMDA Investor Chat Board. This particular board consisted of two hundred members who applied for membership and then received access through a particular password. See Footnote In some cases, Porcari either criticized OMDA's management or replied to Barnett's posts. On March 1, 2007, OMDA filed suit alleging certain posts on the board by Porcari constituted actionable defamation and business disparagement. It further alleged certain posts disclosed confidential information received by Porcari while in a fiduciary relationship. OMDA further requested and received an ex parte temporary restraining order restricting Porcari's speech and property rights involving stock. At a later temporary injunction hearing, the court granted a temporary injunction and specifically ordered the following:
Of the approximate ten thousand OMDA shareholders, only a small percentage had access to the board.
It is therefore ORDERED that Arthur J. Porcari, individually or through any business entity he controls or operates, and all persons or entities acting in concert with him or at his direction, suggestion or control, who receive actual notice of this order by service or otherwise, SHALL NOT commit the following acts and that they are hereby ENJOINED and PROHIBITED from doing any of the following:
a.
Making, publishing, posting, stating, or communicating, by any means whatsoever, through electronic, written, oral, or any other means, to any party or entity, any statement which tends to defame, disparage, cast aspersion on, or refer negatively to OMDA Oil Gas, Inc. or any officer director, member, shareholder, subsidiary or affiliate of OMDA Oil Gas, Inc.
b.
Disclosing, making, publishing, posting, stating, or communicating, by any means whatsoever, through electronic, written, oral, or any other means, to any party or entity, any information relating to OMDA Oil Gas, Inc., or its subsidiaries or affiliates, that Porcari obtained or became aware of between June 1, 2004 and March 31, 2006.
c.
Transferring any asset, real or personal, tangible or intangible, liquid or unliquidated, of any kind or character, traceable to any profits made on the trading of OMDA Oil Gas, Inc. stock, whether by purchase, sale, or short selling, warrant, option, securization, hypothecation, or alienation, or by any other means, including any such profits made by any person or entity at his direction, insistence, suggestion, or control.
d.
Erasing, deleting, encrypting, destroying, or otherwise damaging any papers, documents, computer files, hard disks, electronic storage media, or any other information source that consists of or relates to any of the actionable statement or Internet posts described herein or the trading, sale, or purchase of any OMDA Oil Gas, Inc. stock.
Porcari appeals from this temporary injunction.
Termination of Temporary Injunction Hearing Prior to Presentment of Defense
In his first point, Porcari alleges the trial court abused its discretion by terminating the temporary injunction hearing before he presented his defenses and rested his case. OMDA responds Porcari waived his argument by failing to file a bill of exception or make an offer of proof on the excluded evidence. Alternatively, the trial court acted within its discretion in limiting testimony.
We conclude Porcari has waived his argument. To challenge exclusion of evidence by the trial court on appeal, the complaining party must present the excluded evidence to the trial court by offer of proof or bill of exception. Tex. R. App. P. 33.2 ("To complain on appeal about a matter that would not otherwise appear in the record, a party must file a formal bill of exception."); Tex. R. Evid. 103(a)(2); Langley v. Comm'n for Lawyer Discipline, 191 S.W.3d 913, 915 (Tex.App.-Dallas 2006, no pet.). Here, Porcari has not cited us to the record nor does the record show he made a bill of exception, formal or informal, regarding the excluded evidence. Because the excluded evidence is not preserved in the record, Porcari has waived his complaint. Langley, 191 S.W.3d at 915. We overrule Porcari's first point.
Use of Expert Testimony
In his second point, Porcari contends the trial court abused its discretion in allowing expert testimony because he learned of the expert the evening before the temporary injunction hearing, which came as a complete surprise, and he had inadequate time to prepare a cross examination. OMDA responds the testimony was relevant to an essential element of its claim, and Porcari fails to establish how he was in fact unfairly surprised.
Before obtaining a temporary injunction, one of the elements OMDA had to prove was a probable, imminent, and irreparable injury. Tom James of Dallas, Inc. v. Cobb, 109 S.W.3d 877, 883 (Tex.App.-Dallas 2003, no pet.). To establish this element, OMDA retained an expert the day before the temporary injunction hearing and then notified Porcari. OMDA offered the expert's testimony for the limited purpose of showing damages would be hard to ascertain.
Because OMDA notified Porcari about its expert within a reasonable time of retaining him and Porcari could have anticipated testimony regarding a necessary element of the temporary injunction claim, we cannot conclude the trial court abused its discretion in allowing the expert's testimony. Further, Porcari failed to identify any prejudice or harm in his ability to cross examine the expert or how such cross examination was affected by any alleged surprise. Thus, the trial court did not abuse its discretion in allowing expert testimony. We overrule Porcari's second point.
Restraining Constitutionally Protected Speech
In his third point, Porcari asserts the trial court erred in granting an injunction that constituted a prior restraint of constitutionally protected speech. The purpose of the temporary injunction is to preserve the status quo until the case can be tried on its merits. Tom James of Dallas, Inc., 109 S.W.3d at 883. An applicant for a temporary injunction 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.
We reverse a temporary injunction order only if we determine the record shows the trial court clearly abused its discretion. Id. In making this determination, we do not substitute our judgment for that of the trial court, but determine only whether the court's action was so arbitrary as to exceed the bounds of reasonable discretion. Id. When the trial court bases its decision on conflicting evidence, there is no abuse of discretion. 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. Paragraphs (a) and (b) of the temporary injunction enjoins the content of Porcari's speech. According to the district court's order, OMDA is entitled to the injunction in part because Porcari's internet postings are "clearly defamatory or disparaging, or both."
A temporary injunction that constitutes a prior restraint on free speech comes before a court with a "heavy presumption" against its constitutional validity. Davenport v. Garcia, 834 S.W.2d 4, 10 (Tex. 1992) (noting a prior restraint will withstand scrutiny only under the most extraordinary circumstances); Brammer v. KB Home Lone Star, L.P., 114 S.W.3d 101, 107 (Tex.App.-Austin 2003, no pet.). It is well-settled Texas courts will not grant injunctive relief in defamation or business disparagement actions if the language enjoined evokes no threat of danger to anyone, even though the injury suffered cannot easily be reduced to specific damages. Hajek v. Bill Mowbray Motors, Inc., 647 S.W.2d 253, 255 (Tex. 1983) (holding language enjoined evoked no threat of danger to anyone and defamation alone is not sufficient justification for restraining an individuals right to speak freely); Brammer, 114 S.W.3d at 107; see also Tex. Const. art. I, § 8.
Prior restraints may withstand constitutional scrutiny only when a trial court makes specific findings supported by the evidence that (1) an imminent and irreparable harm will deprive litigants of a just resolution of their dispute, and (2) the judicial action represents the least restrictive means to prevent that harm. Davenport, 834 S.W.2d at 10. Here, the broad language of paragraphs (a) and (b) constitutes an unconstitutional prior restraint of free speech, to which no exception applies.
Paragraph (a) enjoins Porcari from "making, publishing, posting, stating, or communicating, by many means whatsoever, . . ., any statement which tends to defame, disparage, cast aspersion on, or refer negatively to OMDA Oil Gas, Inc. . . ." Defamation alone is not sufficient justification for restraining an individual's right to speak freely. Hajek, 647 S.W.2d at 255. Further, a trial court may not prevent a person from referring negatively about a company. Id. at 254 (holding trial court could not prevent a party from driving a vehicle with a defamatory message that the car company sold him a "lemon"). Thus, the trial court abused its discretion by failing to narrow the language in paragraph (a) to the least restrictive means to prevent any imminent and irreparable harm. See Tex. R. Civ. P. 683 (noting order granting temporary injunction should be specific in terms).
Paragraph (b) is likewise an unconstitutional prior restraint of free speech. By enjoining Porcari from "disclosing, making, publishing, posting, stating or communicating, by any means whatsoever, . . ., any information relating to OMDA Oil Gas, Inc. . ." that Porcari obtained between June 1, 2004 and March 31, 2006, the trial court limited all speech, regardless of whether such information was known by the general public. Such broad restraints on speech will not pass constitutional muster. See Davenport, 834 S.W.2d at 11 ("By stopping not only the purported miscommunications but any communications, the broadly worded injunction certainly fails the second part of our test.") (emphasis added). Therefore, by including the expansive language in paragraph (b) of the temporary injunction order, the trial court again failed to use the least restrictive means to prevent harm. Thus, the trial court abused its discretion.
Because these two paragraphs constitute unconstitutional prior restraints of free speech and the trial court's order does not represent the least restrictive means to prevent harm, we sustain Porcari's third point. Having sustained Porcari's third point, we need not address points 4, 5, 6, and 7. Tex. R. App. P. 47.1.
Conclusion
We affirm the injunctive provisions in paragraphs (c) and (d) of the district court's order because Porcari did not challenge them. We reverse the order as to paragraphs (a) and (b) because they constitute an unconstitutional prior restraint on free speech.