Opinion
NUMBER 13-14-00511-CV
02-11-2016
TESORO CORPORATION, Appellant, v. TESORO CORPORATION, D/B/A TESORO PETROLEUM CORP., Appellee.
On appeal from the 206th District Court of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Justices Garza, Benavides and Perkes
Memorandum Opinion by Justice Garza
This case concerns two Texas-based businesses that call themselves "Tesoro Corporation." Appellant, an electric commercial sign vendor in Donna ("Tesoro Signs"), sued appellee, an oil refining and marketing concern headquartered in San Antonio ("Tesoro Petroleum"), alleging common law trade name infringement. After a bifurcated trial, the trial court rendered a take-nothing judgment in favor of Tesoro Petroleum. On appeal, Tesoro Signs argues by five issues that the trial court erred. We affirm.
I. BACKGROUND
Tesoro Petroleum was formed as a Delaware corporation in 1968 and applied to do business in Texas as "Tesoro Petroleum Corporation" in 1969. It is now a Fortune 100 company with over $30 billion in annual revenue. Tesoro Signs was established by Paul Sullivan in 1975 as "Tesoro Corporation." Evidence at trial indicated that Tesoro Signs does business as "AAA Electrical Signs" but that it conducts banking and tax activities as Tesoro Corporation.
In 2004, Tesoro Petroleum intended to change its name to "Tesoro Corporation" because it had sold off its oil exploration and production businesses. It officially changed its name in Delaware to "Tesoro Corporation" but discovered that this name was already registered to another entity in Texas. A paralegal for Tesoro Petroleum's counsel contacted Sullivan and asked to license or purchase the "Tesoro Corporation" name. Sullivan refused. Nevertheless, Tesoro Petroleum later filed an assumed name certificate with the Texas Secretary of State as "Tesoro Corporation d/b/a Tesoro Petroleum, Inc." See TEX. BUS. ORGS. CODE ANN. § 5.051 (West, Westlaw through 2015 R.S.).
Later in 2004, Tesoro Signs began receiving complaints regarding railroad cars and oilfield employees that were intended to be directed to Tesoro Petroleum. Tesoro Signs alleged that, in the following years, it received multiple complaints, demands, and threats of sanctions and litigation from various private and governmental parties—all of which were intended to be directed to Tesoro Petroleum. It further alleges that, in 2010, one of its clients sued it in Hidalgo County for actions attributable to Tesoro Petroleum.
Tesoro Signs filed the instant lawsuit against Tesoro Petroleum in 2009, alleging that the name "Tesoro Corporation" was eligible for protection under common law, that Tesoro Signs was the senior user of the name, and that Tesoro Petroleum's decision to adopt the name has caused confusion and resulted in damages. Tesoro Signs further alleged that Tesoro Petroleum's name change violated provisions of the Texas Business Organizations Code. See id. § 5.053(a)(1) (West, Westlaw through 2015 R.S.) (prohibiting an entity from registering under a name "that is the same as, or that the secretary of state determines to be deceptively similar or similar to" the name of another existing entity). Tesoro Signs requested declaratory judgment, a permanent injunction, damages, and attorney's fees. Tesoro Petroleum answered the suit and counterclaimed for attorney's fees.
Specifically, Tesoro Signs sought a declaration that Tesoro Petroleum (1) violated the business organizations code, (2) infringed upon its trade name, and (3) "must change its name in order to be in[ ]compliance with the Code and so as to no longer infringe upon Plaintiff's name."
Specifically, Tesoro Signs requested that the trial court permanently enjoin Tesoro Petroleum, its agents, employees and representatives "from using the name 'Tesoro Corporation' in connection with its business."
Trial before a jury was set for March 25, 2013. Prior to the close of evidence, Tesoro Signs nonsuited its claim for money damages. Following the presentation of evidence, the trial court granted a partial directed verdict in favor of Tesoro Signs on the issue of whether it was the senior user of the name "Tesoro Corporation" in Texas. The trial court denied a motion for directed verdict filed by Tesoro Petroleum. After deliberating, the jury found unanimously by a preponderance of the evidence that (1) "Tesoro Corporation" is the trade name of Tesoro Signs and (2) "there exists a likelihood of confusion between [the two companies] by any consumer." Tesoro Petroleum then filed a "Motion for Judgment and to Disregard" (the "motion for JNOV") in which it argued that Tesoro Signs was not entitled to injunctive relief because (1) the jury did not make a finding that Tesoro Signs was irreparably harmed, (2) there was no evidence to support such a finding, (3) Tesoro Signs has an adequate remedy at law, (4) there was no evidence that Tesoro Signs was the senior user of the name "Tesoro," and (5) the evidence was insufficient to show that there was a likelihood of confusion. The trial court held a hearing on the motion for JNOV and took the matter under advisement, but it never explicitly ruled on the motion.
Tesoro Petroleum also argued in its motion that Tesoro Signs was not entitled to declaratory relief or attorney's fees.
Subsequently, beginning on June 18, 2013, a second phase of trial was held before the bench on the elements of injunctive relief. The trial court specifically considered: (1) whether Tesoro Signs had suffered irreparable harm; (2) whether Tesoro Signs had an adequate remedy at law; and (3) whether injunctive relief was equitable under the circumstances. Two days of additional testimony ensued, after which the trial court rendered a take-nothing judgment in favor of Tesoro Petroleum. The final judgment further provided that each party bear its own attorney's fees. The trial court did not state the grounds for its ruling, and no findings of fact or conclusions of law were requested. This appeal followed.
II. DISCUSSION
Tesoro Signs raises five issues on appeal. It contends that the trial court erred: (1) by granting Tesoro Petroleum's motion for JNOV if that ruling was based upon the lack of irreparable harm or the existence of an adequate remedy at law; (2) by granting Tesoro Petroleum's motion for JNOV if that ruling was based upon improper jury instructions; (3) by denying Tesoro Signs' request for injunctive relief after both phases of trial; (4) by denying Tesoro Signs' request for injunctive relief if that ruling was based on balancing of the equities or the unclean hands doctrine; and (5) by "vacating the Jury's Attorney Fee award."
We note that, although the final judgment stated that the trial court considered Tesoro Petroleum's motion for JNOV in making its ruling, the record contains no explicit ruling on that motion. Tesoro Signs' first two issues argue that the trial court erred in granting the motion for JNOV, but in order to complain on appeal that the trial court erred in granting a motion, the record must show that the trial court explicitly or implicitly granted the motion. TEX. R. APP. P. 33.1(a)(2)(A). Tesoro Signs appears to contend that, by rendering a take-nothing judgment, the trial court implicitly granted the motion for JNOV. We need not decide whether the issues have been preserved because we will conclude herein that the judgment was supported on grounds wholly separate from those raised in the motion for JNOV.
A. Applicable Law and Standard of Review
To succeed on a common law claim for trade name infringement, a plaintiff must show (1) the name it seeks to protect is eligible for protection, (2) it is the senior user of the name, and (3) there is a likelihood of confusion between its name and that of its competitor. Thompson v. Thompson Air Conditioning & Heating, Inc., 884 S.W.2d 555, 558 (Tex. App.—Texarkana 1994, no writ); Zapata Corp. v. Zapata Trading Int'l, Inc., 841 S.W.2d 45, 47 (Tex. App.—Houston [14th Dist.] 1992, no writ); see All Am. Builders, Inc. v. All Am. Siding of Dallas, Inc., 991 S.W.2d 484, 488 (Tex. App.—Fort Worth 1999, no pet.).
An applicant for permanent injunctive relief must demonstrate: (1) the existence of a wrongful act; (2) the existence of imminent harm; (3) the existence of irreparable injury; and (4) the absence of an adequate remedy at law. Noell v. City of Carrollton, 431 S.W.3d 682, 712 (Tex. App.—Dallas 2014, pet. denied); Webb v. Glenbrook Owners Ass'n, Inc., 298 S.W.3d 374, 384 (Tex. App.—Dallas 2009, no pet.); Montfort v. Trek Res., Inc., 198 S.W.3d 344, 350 (Tex. App.—Eastland 2006, no pet.). Whether to grant a permanent injunction is ordinarily within the sound discretion of the trial court and on appeal, review of the trial court's action is limited to the question of whether the trial court clearly abused its discretion. Noell, 431 S.W.3d at 712; Webb, 298 S.W.3d at 384. Because an injunction is an equitable remedy, a trial court must weigh the respective conveniences and hardships of the parties and balance the equities. Noell, 431 S.W.3d at 712; Webb, 298 S.W.3d at 383-84. A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law, or if it clearly fails to analyze the law correctly or apply the law correctly to the facts. In re Cerberus Capital Mgmt. L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam).
"Although a litigant has the right to a trial by jury in an equitable action, only ultimate issues of fact are submitted for jury determination. The jury does not determine the expediency, necessity, or propriety of equitable relief." State v. Tex. Pet Foods, Inc., 591 S.W.2d 800, 803 (Tex. 1979). Accordingly, when contested, a jury must decide the question of past wrongful conduct, but the trial judge decides the remaining equitable issues. See DiGiuseppe v. Lawler, 269 S.W.3d 588, 596 (Tex. 2008) ("When contested fact issues must be resolved before a court can determine the expediency, necessity, or propriety of equitable relief, a party is entitled to have a jury resolve the disputed fact issues."); Operation Rescue-Nat'l v. Planned Parenthood of Hous. & Se. Tex., Inc., 975 S.W.2d 546, 554 (Tex. 1998).
"When part of a cause is decided by a jury and part by the court, the party appealing the court-decided issue should request findings of fact and conclusions of law." Operation Rescue-Nat'l v. Planned Parenthood of Houston & Se. Tex., Inc., 937 S.W.2d 60, 82 (Tex. App.—Houston [14th Dist.] 1996), aff'd as modified, 975 S.W.2d 546 (citing Heafner & Assocs. v. Koecher, 851 S.W.2d 309, 313 (Tex. App.—Houston [1st Dist.] 1992, no writ); Shenandoah Assocs. v. J & K Props., Inc., 741 S.W.2d 470, 484 (Tex. App.—Dallas 1987, writ denied)). Where no findings of fact or conclusions of law are filed or requested, as here, it will be implied that the trial court made all the necessary findings to support its judgment. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992).
We review a trial court's implied findings of fact for legal and factual sufficiency of the evidence by the same standards applied when reviewing evidence supporting jury findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994); Barrera v. Hondo Creek Cattle Co., 132 S.W.3d 544, 547 (Tex. App.—Corpus Christi 2004, no pet.). When a party attacks the legal sufficiency of an adverse finding on an issue on which it has the burden of proof, that party must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (citing Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989)). In reviewing such a challenge, we must first examine the record for evidence that supports the finding, while ignoring all evidence to the contrary. Id. If there is no evidence to support the finding, we will then examine the entire record to determine if the contrary proposition is established as a matter of law. Id. The issue should be sustained only if the contrary proposition is conclusively established. Id. (citing Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983)). We view the evidence in the light most favorable to the finding, crediting favorable evidence if a reasonable fact finder could, and disregarding contrary evidence unless a reasonable fact finder could not. City of Keller v. Wilson, 168 S.W.3d 802, 822, 827 (Tex. 2005).
B. Analysis
We believe that the trial court did not abuse its discretion in denying Tesoro Signs' request for a permanent injunction because the evidence supported the trial court's implicit findings that Tesoro Signs suffered no irreparable injury as a result of the confusion. An irreparable injury exists if the party injured cannot sufficiently be compensated in damages or the amount of damages is immeasurable by pecuniary standards. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). However, the purpose of injunctive relief is to halt wrongful acts that are threatened or in the course of accomplishment, rather than to grant relief against past actionable wrongs or to prevent commission of wrongs not imminently threatened. See Tex. Health Care Info. Council v. Seton Health Plan, Inc., 94 S.W.3d 841, 853 (Tex. App.—Austin 2002, pet. denied). Although an injunction is a preventive device, injunctive relief is improper when the party seeking the injunction has mere fear or apprehension of the possibility of injury. Harbor Perfusion, Inc. v. Floyd, 45 S.W.3d 713, 716 (Tex. App.—Corpus Christi 2001, no pet.).
During the second phase of trial, Sullivan was asked how his business "suffers as a result of confusion" between the two entities. He replied:
Well, every time that we get a—an e-mail or a telephone call, we have to take the time out of our daily production and respond to it. We have to answer to them. There's no other way that I—but this has been—there's—you know, it keeps going on. I don't know how to stop it.
. . . .
Every time that we get these e-mails or we get phone calls, which there's a tremendous amount of phone calls still coming in, we have to explain to the parties who we are and why we are not them and where they should—who they should call. We even now have got the telephone number of San
Antonio Tesoro on each phone so the girls can automatically say you need to call this number.Sullivan testified that he could not predict when or how his company was going to "suffer harm" in the future as a result of the confusion, nor could he quantify or calculate the harm suffered in the past.
. . . .
I'm just getting tired of having to explain who I am all the time. I—I've had instance just recently where I had to explain that my paycheck comes from Donna, Texas Tesoro Corporation, not from San Antonio. It's things like that, that every day throughout my business I'm having to explain to people. And it's just—it's getting to the point where it's interrupting our business every day. I didn't take this—file this lawsuit lightly. I—I didn't want to—in fact, I tried to figure out a way to avoid it but it got to the point where I had no other choice. I had to put a stop to this.
To show how his business suffered harm, Sullivan produced evidence showing that Cortera, a website that provides credit information on businesses, lists his company as having had a multi-million-dollar judgment rendered against it in a discrimination suit—even though that judgment was actually rendered against Tesoro Petroleum. He conceded on cross-examination, however, that Tesoro Petroleum had the right to use the name "Tesoro Corporation" everywhere but in Texas, and he had no evidence that he ever lost any particular client's business because of the confusion. He agreed with Tesoro Petroleum's counsel that he is "afraid of something that hasn't happened in the past and you don't know if it's going to happen in the future."
Tesoro Petroleum presented the expert testimony of a forensic economist, Gene Trevino, who testified that it was possible to quantify the losses incurred by Tesoro Signs in the past as a result of confusion between the two entities. He stated that "a good approximation of what it cost [Tesoro Signs] on an ongoing basis to deal with this [confusion]" could be calculated by "document[ing] the time spent dealing with phone calls and letters and so forth" and multiplying that figure by the "$13 an hour, which is the average wage rate for an employee or administrative employee at [Tesoro Signs]." Taking as true Sullivan's estimate that 160 hours were spent by his employees addressing problems arising from the trade name confusion, Trevino opined that Tesoro Signs suffered roughly $2,080 in past losses as a result of the confusion, excluding any attorney's fees expended by Sullivan. Trevino further opined, based on Sullivan's testimony regarding the amount of hours previously expended addressing the problems, that approximately $2,300 would adequately compensate Tesoro Signs for any potential losses incurred in the future as a result of confusion. The trial court could have reasonably concluded from this testimony that Tesoro Signs' injury, if any, could be sufficiently compensated by the award of damages and that the amount of damages could be measured by pecuniary standards. See Butnaru, 84 S.W.3d at 204.
There was also evidence that Tesoro Signs began receiving communications intended for Tesoro Petroleum well before 2004. In particular, in a letter dated February 22, 2005 to his attorney, Sullivan acknowledged that Tesoro Signs had been receiving "many phone calls" and "several letters" "over the years" which were intended to be directed to Tesoro Petroleum. Here, Tesoro Signs is only seeking injunctive relief that would return to the pre-2004 status quo, at which point Tesoro Petroleum called itself "Tesoro Petroleum Corporation." Tesoro Signs was therefore required to show that it suffered irreparable harm from Tesoro Petroleum's 2004 name change specifically—harm arising from Tesoro Petroleum's post-2004 use of the name "Tesoro Corporation," not merely from its pre-2004 use of the name "Tesoro." The trial court could have reasonably found from Sullivan's letter—which acknowledged that confusion existed prior to 2004—that no irreparable harm came to Tesoro Signs arising specifically and directly from Tesoro Petroleum's 2004 name change.
Here, the jury already found that there was a likelihood of consumer confusion, and Tesoro Signs cites several cases in support of its argument that a trial court may infer irreparable harm from a finding of confusion. See Brennan's Inc. v. Brennan's Rest., L.L.C., 360 F.3d 125, 129 (2d Cir. 2004); Ty, Inc. v. Jones Gp., Inc., 237 F.3d 891, 902 (7th Cir. 2001); GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1209 (9th Cir. 2000); Circuit City Stores, Inc. v. CarMax, Inc., 165 F.3d 1047, 1056 (6th Cir. 1999); McDonald's Corp. v. Robertson, 147 F.3d 1301, 1310 (11th Cir. 1998); Pappan Enters., Inc. v. Hardee's Food Sys., Inc., 143 F.3d 800, 805 (3d Cir. 1998); Societe des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir. 1992); Black Hill Jewelry Mfg. Co. v. Gold Rush, Inc., 633 F.2d 746, 753 n.7 (8th Cir. 1980). These cases are distinguishable on three bases. First, they each involve lawsuits for trademark infringement under the federal Lanham Act, see 15 U.S.C.A. §§ 1111-1125 (West, Westlaw through P.L. 114-61), not under common law as here. Second, those cases each involve temporary injunctions, not permanent injunctions, and therefore the plaintiffs in those cases were burdened only with showing a "probable" irreparable injury. See Butnaru, 84 S.W. at 204. Third, the litigants in these cases were direct competitors; unlike here, where the two parties are engaged in entirely separate industries. It stands to reason that consumer confusion, if it exists, would be far more likely to lead to irreparable harm in cases involving direct competitors.
The trial court's judgment was further justified based on its balancing of the equities. The evidence was undisputed that, although Tesoro Signs conducts banking and tax activities as "Tesoro Corporation," it primarily does business as "AAA Electrical Signs." To the extent Tesoro Signs' customers know it as "Tesoro Corporation," it is only because that is the name Tesoro Signs was required to use in its formal banking and tax activities. On the other hand, Tesoro Petroleum purportedly intended to change its name to "Tesoro Corporation" because it sold off its oil exploration and production businesses—but there is no dispute that the company remains engaged only in activities related to the petroleum industry. In other words, neither party has established that its business would be detrimentally affected to any substantial degree if the other party were to obtain exclusive rights to the name "Tesoro Corporation." Nevertheless, there was evidence that Sullivan resisted discovery by refusing to answer certain deposition questions regarding the location of his clientele. Moreover, although the jury found that Tesoro Signs was the senior user of the name "Tesoro Corporation" in Texas, it is undisputed that Tesoro Petroleum used the name "Tesoro" from its inception in 1968, some seven years prior to Tesoro Signs' founding in 1975. Finally, as noted, evidence established that Sullivan had been aware as early as 2005 that Tesoro Petroleum sought to use the name "Tesoro Corporation," though Tesoro Signs did not file suit until 2009. Under these circumstances, we cannot say the trial court erred in implicitly finding that equitable considerations favored Tesoro Petroleum.
Tesoro Petroleum argues that "Tesoro Corporation" is not eligible for protection, but "Tesoro" is, and because Tesoro Petroleum is the senior user of the latter name by itself, Tesoro Signs' request for injunctive relief must fail. We do not specifically pass judgment on whether "Tesoro Corporation" is eligible for protection, but merely conclude that the trial court's denial of injunctive relief was not an abuse of discretion under the circumstances presented here.
Tesoro Petroleum argues that the trial court's judgment is supported on the basis of laches. "To invoke the equitable doctrine of laches, the moving party ordinarily must show an unreasonable delay by the opposing party in asserting it[s] rights, and also the moving party's good faith and detrimental change in position because of the delay." In re Laibe Corp., 307 S.W.3d 314, 318 (Tex. 2010) (citing Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 80 (Tex. 1989)). Tesoro Petroleum does not direct us to any evidence, and we find none, establishing that it detrimentally changed its position because of Tesoro Signs' delay in bringing suit; therefore, laches does not apply. Nevertheless, we believe that the delay in bringing suit is a fact relevant to the trial court's balancing of the equities.
For the foregoing reasons, we conclude that the trial court did not abuse its discretion by denying Tesoro Signs' request for permanent injunctive relief. We overrule Tesoro Signs' third issue. In light of our holding, we do not address Tesoro Signs' first, second or fourth issues.
Tesoro Signs requests, in its prayer for relief, that we render a judgment in its favor on its claim for declaratory relief. However, Tesoro Signs does not support this request with argument or references to authority; instead, the arguments in its brief pertain solely to its request for injunctive relief. See TEX. R. APP. P. 38.1(i). Accordingly, our analysis is confined to the issue of Tesoro Signs' entitlement to permanent injunctive relief.
C. Attorney's Fees
By its fifth issue, Tesoro Signs argues that the trial court erred by "vacating the jury's attorney fee's award." Tesoro Signs requested attorney's fees pursuant to the Uniform Declaratory Judgments Act. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (West, Westlaw through 2015 R.S.). The jury charge, however, did not contain an attorney's fees question, and no fee award was made. Tesoro Signs notes that the parties entered into a rule 11 agreement in which they stipulated as to the amount of fees incurred. However, the parties did not agree that either side would be entitled to an award of fees; the stipulation merely established the amounts that would be awarded should the trial court determine that such a reward was appropriate. Here, in light of our finding that the trial court's take-nothing judgment was supported by the record, we further conclude that the trial court did not err in denying Tesoro Signs' request for attorney's fees. We overrule Tesoro Signs' fifth issue.
Tesoro Petroleum's counsel recited the stipulation as follows: "In the event the court determines either side is entitled to attorneys' fees, the parties stipulate as to the amounts and the amounts only. For Plaintiff's non-economic claims, $100,000; for the rest of Plaintiff's claims, $100,000. For Defendant's non-economic defense, $100,000; for the rest of Defendant's defense, $100,000." --------
III. CONCLUSION
The trial court's judgment is affirmed.
DORI CONTRERAS GARZA,
Justice Dissenting Memorandum Opinion by Justice Gregory T. Perkes Delivered and filed the 11th day of February, 2016.