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Communicon, Ltd. v. Guy Brown Fire & Safety, Inc.

COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH
Mar 22, 2018
NO. 02-17-00330-CV (Tex. App. Mar. 22, 2018)

Opinion

NO. 02-17-00330-CV

03-22-2018

COMMUNICON, LTD. D/B/A COMMUNICATION CONCEPTS APPELLANT v. GUY BROWN FIRE & SAFETY, INC. D/B/A GREAT SOUTHWESTERN FIRE & SAFETY, GUY BROWN III, INDIVIDUALLY, AND WESLEY TURNER, INDIVIDUALLY APPELLEES


FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY
TRIAL COURT NO. 067-293674-17 MEMORANDUM OPINION

I. INTRODUCTION

This is an accelerated appeal from an order denying Appellant Communicon, Ltd. d/b/a Communication Concepts's (Communication Concepts) application for a temporary injunction to enforce a five-year, seventeen-county covenant not to compete against a former employee, Appellee Wesley Turner, who had worked for Communication Concepts for less than three months when Communication Concepts terminated his employment. Turner was subsequently employed by Appellees Guy Brown III (Brown) and Guy Brown Fire & Safety, Inc. d/b/a Great Southwestern Fire & Safety (Great Southwestern).

Communication Concepts raises four issues challenging various aspects of the trial court's denial of its application for a temporary injunction. Because the trial court did not abuse its discretion by determining that Communication Concepts is not entitled to temporary injunctive relief pending final trial, or by limiting the temporary injunction hearing—even though Communication Concepts had not presented all of the evidence it desired—after hearing eleven hours and twenty-six minutes of testimony and evidence and after permitting closing argument by counsel, or by stating it was unable to reform the noncompete agreement pending trial on the merits, we will affirm the trial court's order denying Communication Concepts's application for a temporary injunction.

II. BACKGROUND

A. Pertinent Facts

Communication Concepts is a thirty-year-old company that provides products and services related to the design, installation, maintenance and servicing of technological and audio-visual systems, fire alarm and detection systems, mass notification systems, IP and public-address systems, security and camera systems, and structured cabling. Communication Concepts employs fifty people and generates over $10 million in annual revenue. Jeffrey Mauldin is the company's president and CEO.

Pursuant to a written distributorship agreement, Communication Concepts is one of a few companies in North Texas authorized to distribute and install Notifier-engineered fire alarm systems. Mauldin testified that Communication Concepts has other exclusive distributorship agreements, in addition to the one regarding Notifier-engineered fire alarm systems, but he also testified that he did not know of any overlapping exclusive distributorship agreements possessed by both Great Southwestern Fire & Safety and by Communication Concepts other than Notifier. These "exclusive" distributorship agreements are valuable to Communication Concepts because they provide Communication Concepts with various and unique pricing promotions and they allow Communication Concepts to avoid the inefficient "bid and chase" approach to customer acquisition which is common in this industry.

The other distributorship agreements are mentioned only tangentially in the record.

The trial court found Communication Concepts's use of the term "exclusive" distributorship agreement with regard to Notifier to be a misnomer because the product is also distributed by Great Southwestern, as well as several other North Texas companies, and thus, Communication Concepts's agreement is not exclusive.

For the past fifteen years, Turner has worked in the Dallas-Fort Worth area as a fire alarm salesman for six different fire-alarm-related companies. Turner has a wife and two children who live with him in Ellis County, Texas.

After being connected with Turner through a job recruiter, Communication Concepts hired Turner to be its "Director of Business Relationships and Account Management"—a position that Maudlin envisioned as focusing more on overall business development rather than simply managing the sales team. Turner's annual salary was to be $115,000.00; an $80,000.00 base salary with a separate $35,000.00 "draw." Turner and Communication Concepts entered into a written employment agreement, which included the following relevant provisions:

6. The Employee agrees that all customer, supplier, vendor and distributor lists, pricing strategies and methods, contract terms with vendors, sub-contractors and contractors, end users and school districts, sales, marketing and expansion strategies, technology and processes, advertising, designs and methods or techniques of doing business of Communication Concepts, as well as the confidential information referenced in Communication Concepts' Employee Handbook, as they may exist from time to time and information concerning the products, services, production, development, technology and all technical information, procurement and sales activities and procedures, promotions and pricing techniques and credit and financial data concerning customers, vendors, suppliers of Communication Concepts are valuable, special, invaluable
and unique confidential and trade secret information of Communication Concepts.

7. The Employee shall not use or disclose to others Communication Concepts' confidential and trade secret information prior to or after the termination of his employment with Communication Concepts.

8. The Employee shall not perform any function of selling, designing, installing, testing or repairing with any previous, current or future customer of Communication Concepts or utilize any valuable special, invaluable and unique confidential and trade secret information in Tarrant, Parker, Johnson, Dallas, Collin, Wise, Hunt, Rockwall, Kaufman, Erath, Somervell, Hood, Hamilton, Bosque, Hill, Ellis or Denton County Texas following his employment with Communication Concepts for a period of five years.

9. Following the termination of his employment with Communication Concepts for a period of five years, the Employee shall not as owner, contractor, operator, partner, officer, or shareholder, directly or indirectly, own, manage, operate, control, be employed by or participate in the ownership, management, operation or control of any business, enterprise, venture or operation in the business of selling, designing, installing, testing and repairing Sound Reinforcement, Audio-Visual, Public Address, Intercommunication, Security, Video Distribution, Voice-Data-Fiber Technology, Fire Alarm, Nurse Call, CCTV and Instructional Technology Systems within Tarrant, Parker, Johnson, Dallas, Collin, Wise, Hunt, Rockwall, Kaufman, Erath, Somervell, Hood, Hamilton, Bosque, Hill, Ellis or Denton County Texas.

10. This five-year restriction prohibits the Employee from competing with Communication Concepts utilizing Communication Concepts' confidential and trade secret information within Tarrant, Parker, Johnson, Dallas, Collin, Wise, Hunt, Rockwall, Kaufman, Erath, Somervell, Hood, Hamilton, Bosque, Hill, Ellis or Denton County Texas in the business of selling, designing, installing, testing and repairing Sound Reinforcement, Audio-Visual, Public Address, Intercommunication, Security, Video Distribution, Voice-Data-
Fiber Technology, Fire Alarm, Nurse Call, CCTV and Instructional Technology Systems or performing for any company providing services in Tarrant, Johnson, Parker, Dallas or Denton County Texas involving the selling, designing, installing, testing and repairing Sound Reinforcement, Audio-Visual, Public Address, Intercommunication, Security, Video Distribution, Voice-Data-Fiber Technology, Fire Alarm, Nurse Call, CCTV and Instructional Technology Systems.

11. The non-compete provisions of this agreement are designed to enforce the contractual obligations of the Employee associated with Communication Concepts' confidential and trade secret data and do not impose a greater restraint than is necessary to protect the goodwill and business interests of Communication Concepts.
Mauldin testified that the employment agreement, including the above-quoted provisions, is a standard agreement that Communication Concepts requires all of its employees to sign regardless of their job title or duties.

Turner acknowledges that as part of his job responsibilities, Communication Concepts provided him with a limited amount of training and access to information that Communication Concepts used in the operation of its business. Turner contends, however, that any training or pricing information he received from Communication Concepts concerning the Notifier system did not constitute confidential information because the information is known throughout the industry and is publicly available. The Notifier training materials, according to Turner, are publicly available online. Turner testified that, in fact, the only product training he received during his three-month employment with Communication Concepts concerning any products was publicly available on the internet. Finally, Turner testified that he had experience selling, installing, and servicing Notifier systems before beginning his employment at Communication Concepts.

Communication Concepts, on the other hand, claims Turner's training was far from "limited" and contends that Turner did obtain confidential information during his three-month employment and that Turner concedes as much. Mauldin testified that he had personally trained Turner in a one-to-one mentoring relationship that provided Turner with a "high-level" view of the business side of Communication Concepts. Mauldin testified that as part of Turner's employment responsibilities, he was given access to certain confidential information, which included customer lists. Mauldin also testified that Turner obtained confidential information about how Communication Concepts specially prices its bids to install the Notifier system that he could use against Communication Concepts.

"Q. Did you receive confidential trade secret information from Communication Concepts during your job?
A. Yes, sir."

Turner testified that after receiving his notice of termination, he offered Mauldin his laptop computer to remove any confidential or proprietary information. Turner further testified that he has not retained any documents from Communication Concepts. Mauldin testified that Communication Concepts did delete two programs from Turner's computer but that he did not "scour" Turner's computer for confidential information. Although Mauldin testified that he was suspicious that Turner may have subsequently used confidential information that he obtained while employed by Communication Concepts, he conceded that he had no evidence to support his suspicion.

Turner testified that since leaving Communication Concepts he has not retained any Communication Concepts documents and has not contacted any of Communication Concepts's customers. Brown likewise testified that since employing Turner, he has not learned anything from Turner about Communication Concepts's customer lists, distributorship lists, or pricing lists and strategies; Communication Concepts's marketing, expansion, or advertising strategies; or Communication Concepts's designs, methods, or techniques of doing business. Brown also testified that pricing and discounts for "exclusive" distributors of Notifier systems are publicly available.

Indeed, Communication Concepts conceded that it had no evidence that Turner violated the noncompete agreement:

THE COURT: Are you telling me that you have from the last hearing proof that he was violating the noncompete?

[COUNSEL]: I don't have proof that he violated it.

B. Procedural History

In August of 2017, Communication Concepts filed the underlying lawsuit against Appellees seeking, among other things, a temporary restraining order, a temporary injunction, and a permanent injunction. Communication Concepts obtained an ex parte temporary restraining order against Appellees and a temporary injunction hearing was scheduled for August 21, 2017. On the day of the temporary injunction hearing, Communication Concepts filed a supplemental petition and application for temporary injunction and permanent injunction in order to "limit the injunctive relief sought" by Communication Concepts because "the non-competition provisions of the Employment Agreement entered into between Communication Concepts and Turner may be overbroad[.]"

The first day of the temporary injunction hearing began on August 21, 2017, and lasted for seven hours and thirty-nine minutes. The first day of the temporary injunction hearing included live testimony from Mauldin and Brown. On August 22, 2017, the trial court continued the temporary injunction hearing, which lasted for three hours and forty-seven minutes. The second day included additional testimony from Brown and testimony from Turner. Each witness was called by Communication Concepts, and each witness testified via direct examination, cross examination, and redirect examination. During the first two days of the temporary injunction hearing, both parties offered and the trial court admitted into evidence numerous exhibits.

At the end of the second day of testimony, Communication Concepts's counsel stated that the parties had agreed "to continue this hearing into the future." Because the trial court could not reset the hearing before the existing temporary restraining order would expire, the parties agreed that it would remain enforceable for an extended period until the trial court could resume the hearing.

On August 24, 2017, the trial court signed an extended temporary restraining order, which extended any modified version of the temporary restraining order through September 15, 2017, pursuant to the agreement of the parties during the temporary injunction hearing. The extended temporary restraining order specifically stated that it would remain in force "until the conclusion of the [t]emporary [i]njunction hearing," which was "set to resume" on September 11, 2017 at 11:00 a.m.

The extension of the duration of the temporary restraining order was agreed to by the parties, but the extended temporary restraining order also included certain findings "based on the evidence presented," which were favorable to Communication Concepts. For example, the order included a finding that, based on "the evidence presented to date during the Temporary Injunction hearing[,]" Communication Concepts would likely suffer "immediate and irreparable injury" if Appellees were not restrained.

Three days before the temporary injunction hearing was scheduled to resume, the trial court coordinator sent an e-mail from the trial judge to counsel, which stated in relevant part, as follows:

The hearing scheduled for this Monday (Sept. 11) is solely for the purpose of this Court's decision regarding Plaintiff's request for a temporary injunction and not to receive additional evidence. . . . I see no reason for Monday's hearing to exceed a 60 minute time limit from start, so you should all plan accordingly.
(emphasis in original).

After the third day of the hearing was concluded, the trial court signed an order denying Communication Concepts's application for a temporary injunction. The order included the following findings:

a. The covenant not to compete found in the Plaintiff/Turner Employment Agreement (Exhibit 1) contains broad territorial (17 counties) and time (5 years) restrictions. Plaintiff admits such in its Supplemental Petition.

b. The restriction found in paragraph 8 of Exhibit 1 that prohibits Defendant Turner from performing listed functions "with any previous, current or future customers" is broadly restrictive.

c. Plaintiff is not the exclusive distributor for many of the products identified in its Petition. The Notifier product is also distributed by Defendant Great Southwestern and six other North Texas companies.

d. The only product identified by Plaintiff at the hearing [over] which Plaintiff had exclusive distribution in north Texas is the Carehawk product. There was no evidence presented at the hearing that Defendant Turner had access to Plaintiffs Carehawk information while employed by Plaintiff.

e. There was no evidence presented that Defendant Turner breached his Employment Agreement by divulging confidential and trade secret information.

f. Evidence at the hearing showed that Defendant Turner allowed his computer to be reviewed by Plaintiff to see if there was any confidential and trade secret information remaining on the computer and none was found.

g. There was no evidence that Defendant Turner took any confidential or trade secrets belonging to Plaintiff when he left Plaintiff[']s employment.

h. Some of the confidential information that Plaintiff is seeking to protect includes pricing information for work performed on government contracts with the federal government and local school
districts. Such information is public information subject to open records.

i. Jeff Mauldin admitted that he had pricing information of his competitors.

j. Defendant Turner was employed by Plaintiff for less than 90 days and was terminated for failure to produce and follow instructions. There was evidence that he was given access to computer information about existing customers but evidence also showed that he was charged with obtaining new customers and not working with existing customers. Evidence shows that Defendant Turner had limited dealings, if any, with existing customers.

k. There was no evidence presented that Plaintiff has lost any business from Defendant Turner's work with Defendant Great Southwestern including a Transwestern contract. In fact none of the parties have a contract with Transwestern.

l. At today's hearing Plaintiff[']s counsel revealed that Plaintiff had lost its contract for work at the Cabell Federal Courthouse but it was also noted that Defendant Brown's professional stickers were found on the Cabell equipment before Defendant Turner was terminated by Plaintiff.
The court's order further stated that while the court worked hard in an effort to reform the existing covenant not to compete language, the court was unable to do so. Communication Concepts timely noticed this accelerated appeal.

III. TEMPORARY INJUNCTION LAW AND STANDARD OF REVIEW

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 v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (citing Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993)). 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. Thus, the issues before the trial court at a temporary injunction hearing are whether the applicant showed a probability of success and irreparable injury; the underlying merits of the controversy are not presented. See Brooks v. Expo Chem. Co., Inc., 576 S.W.2d 369, 370 (Tex. 1979) (explaining that appellate review does not include "the merits of the underlying case" but is "strictly limited to a determination of whether there has been a clear abuse of discretion by the trial court in determining whether the applicant is entitled to a preservation of the status quo pending trial on the merits"); Tom James of Dallas, Inc. v. Cobb, 109 S.W.3d 877, 882-83 (Tex. App.—Dallas 2003, no pet.) (explaining that in an appeal of an order granting or denying a temporary injunction based on a covenant not to compete, the underlying merits of the "ultimate question of whether the covenant is enforceable under section 15.50 of the business and commerce code" are not presented). Indeed, because "the effect of a premature review of the merits is to deny the opposing party the right to trial by a jury . . . it will not be assumed that the evidence taken at a preliminary hearing on temporary injunction will be the same as the evidence developed at a trial on the merits." Brooks, 576 S.W.2d at 370.

A temporary injunction is considered an extraordinary remedy and does not issue as a matter of right. Id.; Bhd. of Locomotive Eng'rs v. Missouri-Kansas-Texas R. Co., 363 U.S. 528, 532, 80 S. Ct. 1326, 1329 (1960) ("The award of an interlocutory injunction by courts of equity has never been regarded as strictly a matter of right, even though irreparable injury may otherwise result to the plaintiff.") (quoting Yakus v. U. S., 321 U.S. 414, 440, 64 S. Ct. 660, 674 (1944)). The decision to grant or deny a temporary injunction lies within the trial court's sound discretion. Butnaru, 84 S.W.3d at 204.

When we review the trial court's order, we view the evidence in the light most favorable to the trial court's order, indulging every reasonable inference in its favor, and determine whether the order is so arbitrary that it exceeds the bounds of reasonable discretion. Amend v. Watson, 333 S.W.3d 625, 627 (Tex. App.—Dallas 2009, no pet.); Tri-Star Petroleum Co. v. Tipperary Corp., 101 S.W.3d 583, 587 (Tex. App.—El Paso 2003, pet. denied). When the trial court embeds findings of fact and conclusions of law in its order denying a temporary injunction, the findings and conclusions may be helpful in determining whether the trial court exercised its discretion in a principled fashion, however, they are not binding on this court. See, e.g., Tom James of Dallas, 109 S.W.3d at 884 (collecting cases). Given the abuse of discretion standard, we defer to the trial court's resolution of conflicting evidence. See IAC, Ltd. v. Bell Helicopter Textron, Inc., 160 S.W.3d 191, 196 (Tex. App.—Fort Worth 2005, no pet.).

We will not reverse an order on a temporary injunction unless the trial court's action was so arbitrary that it exceeded the bounds of reasonable discretion. EMSL Analytical, Inc. v. Younker, 154 S.W.3d 693, 696 (Tex. App.—Houston [14th Dist.] 2004, no pet.). The trial court does not abuse its discretion when basing its temporary-injunction decision on conflicting evidence, nor does it abuse its discretion when some evidence of substantive and probative character exists to support its decision. Wright v. Sport Supply Grp., Inc., 137 S.W.3d 289, 292 (Tex. App.—Beaumont 2004, no pet.).

IV. NO ABUSE OF DISCRETION BY DENYING COMMUNICATION CONCEPTS'S

APPLICATION FOR A TEMPORARY INJUNCTION

Applying the above-quoted law and standard of review, to obtain a temporary injunction, Communication Concepts was required to plead and prove (1) a cause of action against Appellees Turner, Brown, and Great Southwestern; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Butnaru, 84 S.W.3d at 204. Appellees assert, amongst other arguments, that Communication Concepts failed to plead or prove the third prong required to obtain a temporary injunction: a probable, imminent, and irreparable injury in the interim. See id. The trial court made findings of fact that no evidence existed that Turner had taken any confidential or trade secrets information belonging to Communication Concepts when he left employment there, that no evidence existed that Turner had breached his Employment Agreement by divulging confidential and trade secret information; and that no evidence existed that Communication Concepts had lost any business from Turner's work with Great Southwestern.

An employer seeking a temporary injunction to enforce a covenant not to compete must establish a substantial likelihood of prevailing on the merits of its claims regarding the underlying covenant not to compete, which includes a showing of probable, imminent, irreparable injury. Loye v. Travelhost, Inc., 156 S.W.3d 615, 620 (Tex. App.—Dallas 2004, no pet.). An injury is irreparable if damages would not adequately compensate the injured party or if they cannot be measured by any certain pecuniary standard. Butnaru, 84 S.W.3d at 204; Frequent Flyer Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215, 220 (Tex. App.—Fort Worth 2009, pet. denied).

Communication Concepts cites several cases, including one from our court, for the proposition that proof of a highly-trained employee's continued breach of a non-compete agreement creates a rebuttable presumption that the employer is suffering irreparable injury. See, e.g., Tranter, Inc. v. Liss, No. 02-13-00167-CV, 2014 WL 1257278, at *7 (Tex. App.—Fort Worth Mar. 27, 2014, no pet.) (mem. op.) (applying presumption to twelve-year employee); Wright, 137 S.W.3d at 294 (applying presumption to eight-year employee); Cardinal Health Staffing Network, Inc. v. Bowen, 106 S.W.3d 230, 236 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (holding two-year employee produced evidence rebutting presumption). Communication Concepts claims that presumption applies here.

A rebuttable presumption that an employer is suffering irreparable injury arises, however, only when the employer produces proof that the highly-trained employee is continually breaching his or her covenant not to compete. Cardinal Health Staffing Network, 106 S.W.3d at 236 (holding that "proof that a highly trained employee is continuing to breach a non-competition covenant gives rise to a rebuttable presumption that the applicant is suffering irreparable injury"). That is, the employer-movant for a temporary injunction in a suit to enforce a noncompete agreement must come forward with evidence that the high-level employee is actually breaching the noncompete agreement in order to trigger the presumption. See id. (citing Unitel Corp. v. Decker, 731 S.W.2d 636, 639, 641 (Tex. App.—Houston [14th Dist.] 1987, no writ) (relying on rebuttable presumption to support holding that employer had shown irreparable injury pending trial because it was "undisputed" that defendants were breaching non-compete agreement by using experience acquired from employer in direct competition with employer), Hartwell's Office World, Inc. v. Systex Corp., 598 S.W.2d 636, 639 (Tex. Civ. App.—Houston [14th Dist.] 1980, writ ref'd n.r.e.) (relying on rebuttable presumption along with employer's evidence that "show[ed] clearly" a fact supporting employer, and noting that employee had not "rebutted this evidence")).

Here, however, after hearing extensive testimony and evidence, the trial court found that no proof existed that Turner had breached or was continually breaching his covenant not to compete with Communication Concepts. The trial court made findings of fact that Communication Concepts was not the exclusive distributor for many of the products identified in its petition; that the Notifier product was also distributed by Great Southwestern; that no evidence supported that Turner had breached the covenant not to compete by divulging confidential or trade secret information; that Turner had allowed Mauldin to examine his computer and delete items from it and that no confidential or trade secret information remained on Turner's computer; that some of the information Communication Concepts seeks to protect is publicly available; that Turner had been employed for only 90 days with Communication Concepts and was charged with obtaining new customers, not working with existing customers and that Turner had limited dealings, if any, with existing customers; and that no evidence existed that Communication Concepts had lost any business from Turner's work with Great Southwestern.

Although these findings of fact are not binding on us, they are helpful in showing that the trial court exercised its discretion in a principled fashion. See, e.g., Tom James of Dallas, 109 S.W.3d at 884 (citing cases). That is, having closely examined the record before us, viewing the evidence submitted to the trial court in the light most favorable to the trial court's denial of Communication Concepts's application for a temporary injunction, drawing all legitimate inferences from the evidence in that light, and deferring to the trial court's resolution of any conflicting evidence, evidence of substantive and probative character exists in the record supporting the trial court's findings of fact upon which it premised its exercise of discretion to deny Communication Concepts's application for a temporary injunction. See, e.g., IAC, 160 S.W.3d at 196. Because—applying the required standard of review—the record supports the trial court's perspective that no evidence was presented that Turner had breached the covenant not to compete, the rebuttable presumption claimed by Communication Concepts—a presumption of irreparable injury based on proof that Turner had and was continuing to breach his covenant not to compete with Communication Concepts—did not arise. See Cardinal Health Staffing Network, 106 S.W.3d at 236; Wright, 137 S.W.3d at 292.

And even if Communication Concepts had presented evidence sufficient to trigger a rebuttable presumption of irreparable harm, the conflicting evidence in the record that the trial court obviously found credible rebutted the presumption. Indeed, when Communication Concepts's counsel was asked by the trial judge whether he had any evidence that Turner was in violation of the covenant not to compete, counsel stated that he had no such evidence. This echoed the testimony of Mauldin on cross-examination, when he admitted that other than information he suspected might be in Turner's mind, he had no evidence that Turner had retained any confidential information, no evidence that Turner had attempted to contact or actually contacted any of Communication Concepts's customers, and no evidence that Communication Concepts lost any job or bid to Appellees. Both Brown's and Turner's testimony likewise confirmed that Turner did not retain any documents from Communication Concepts and that neither Turner nor Brown contacted Communication Concepts's customers after Turner's termination.

Accordingly, we hold that the trial court did not abuse its discretion by denying Communication Concepts's application for a temporary injunction. See, e.g., Primary Health Physicians, P.A. v. Sarver, 390 S.W.3d 662, 664-66 (Tex. App.—Dallas 2012, no pet.). We overrule Communication Concepts's first issue.

V. ENTRY OF NEW FINDINGS WAS NOT AN ABUSE OF DISCRETION

In its second issue, Communication Concepts argues that the trial court abused its discretion by making new findings of fact in the order denying its motion for temporary injunction because the new findings conflict with the findings it had made in connection with its previous order extending the temporary restraining order until completion of the temporary injunction hearing. Communication Concepts essentially argues that an abuse of discretion occurred because the trial court changed its findings supporting the temporary restraining order to findings supporting denial of the temporary injunction without hearing additional evidence.

Communication Concepts provides no authority, and we are aware of none, that prohibits a trial court from reviewing the record after entering an order and then amending, vacating, or otherwise altering the first order while the trial court still enjoys plenary power. See, e.g., In re Provine, 312 S.W.3d 824, 829 (Tex. App.—Houston [1st Dist.] 2009, orig. proceeding) ("A trial court's power to modify its judgment is virtually absolute during the period of its plenary power"); Horseshoe Bay Resort Sales Co. v. Lake Lyndon B. Johnson Imp. Corp., 53 S.W.3d 799, 815 (Tex. App.—Austin 2001, pet. denied) (holding that "the court has authority sua sponte to modify the judgment within the duration of its plenary power").

Moreover, we resolve any conflicts between additional findings and original findings in favor of the additional findings. See Nw. Dodge, Inc. v. Woody, No. 01-02-00669-CV, 2003 WL 1848689, at *1 (Tex. App.—Houston [1st Dist.] Apr. 10, 2003, pet. denied) (mem. op.) ("Although the trial court's additional findings and conclusions are in conflict with the original findings and conclusions, the conflict must be resolved in favor of the later findings."). And, as discussed above, the record before us supports the trial court's denial of Communication Concepts's application for a temporary injunction. Therefore, we hold that the trial court did not abuse its discretion by denying the temporary injunction based on findings contrary to those in the order extending the temporary restraining order. See id. We overrule Communication Concepts's second issue.

VI. NO ABUSE OF DISCRETION LIMITING THE EVIDENCE PRESENTED

In its third issue, Communication Concepts argues that the trial court abused its discretion by limiting the duration of the temporary injunction hearing.

Communication Concepts relies upon Great Lakes Eng'g, Inc. v. Andersen, 627 S.W.2d 436 (Tex. App.—Houston [1st Dist.] 1981, no writ). The holding in Great Lakes, however, is predicated on facts not present here. Here, after hearing over ten hours of testimony and evidence, the trial court declined to permit more evidence but still asked counsel if any additional evidence was needed; counsel for Communication Concepts confirmed that there was enough evidence for the court to make a decision; and the trial court did not prevent Communication Concepts from filing a bill of exceptions.

A trial court is entitled to reasonably limit a temporary injunction hearing if the limitation neither deprives a party of its right to offer any evidence nor is arbitrary. See Elliott v. Lewis, 792 S.W.2d 853, 855 (Tex. App.—Dallas 1990, no writ); RRE VIP Borrower, LLC v. Leisure Life Senior Apartment Hous., Ltd., No. 14-09-00923-CV, 2011 WL 1643275, at *2 (Tex. App.—Houston [14th Dist.] May 3, 2011, no pet.) (mem. op.). The trial court heard two days' worth of testimony and evidence concerning Communication Concepts's application for a temporary injunction. The trial court's decision to limit the third day to arguments of counsel was not arbitrary and did not deprive either party of its right to offer evidence—in fact, the trial court heard over ten hours of testimony and evidence on the issue. And on the third and final day of the hearing, the trial court specifically asked counsel for Communication Concepts if there was any other evidence to present. Although counsel for Communication Concepts did state that Communication Concepts had additional evidence, he also affirmed that he believed the trial court had enough information to make a decision. Based on the record before us, in light of two days' of testimony and evidence, a third day of argument from counsel, and an assurance from Communication Concepts's counsel that the trial court had enough evidence to make a decision, we cannot agree that it was either arbitrary or unreasonable for the trial court to limit the third day of the temporary injunction hearing to arguments only. See R & R Unifs, Inc. v. Meischen, No. 01-96-00733-CV, 1997 WL 289191, at *3 (Tex. App.—Houston [1st Dist.] May 29, 1997, no writ) (not designated for publication) (overruling appellant's challenge to the trial court's thirty-minute limit of temporary injunction hearing when appellant failed to object until after the trial court entered an adverse ruling). We overrule Communication Concepts's third issue.

VII. NO ABUSE OF DISCRETION BY FAILING TO REFORM

Communication Concepts concedes that the covenants not to compete in its employment agreement are overly broad and, thus, are not reasonable. Consequently, in its fourth issue, Communication Concepts asserts that the trial court reversibly erred by failing to reform the scope of the covenant not to compete at the temporary injunction stage. The trial court's order denying the temporary injunction states,

Communication Concepts relies on our decision in Tranter for the proposition that section 15.51 of the Covenants Not to Compete Act requires reformation at the temporary injunction stage. Tranter, 2014 WL 1257278, at *10. As set forth above, we dispose of Communication Concepts's fourth issue not on the ground that a covenant not to compete is not reformable at the temporary injunction stage but on the ground that based on the record before us, Communication Concepts did not establish reformation was necessary to protect its legitimate business interests. --------

The Court has worked hard in an effort to make reformations to the existing covenant not to compete language and is unable to do so. The Court is of the opinion that the existing language as being applied in this lawsuit suggests more of a "restraint of trade" as opposed to a valid covenant not to compete.

When a covenant not to compete is not necessary to protect the employer's legitimate business interests, it cannot be reformed. See, e.g., Neurodiagnostic Tex, L.L.C. v. Pierce, 506 S.W.3d 153, 166 (Tex. App.—Tyler 2016, no pet.); Daytona Grp. of Tex. v. Smith, 800 S.W.2d 285, 290 (Tex. App.—Corpus Christi-Edinburg 1990, writ denied). Based on the trial court's evidentiary determinations at the temporary injunction stage that Communication Concepts is not the exclusive distributor for many of the products identified in its petition, that the Notifier product is also distributed by Great Southwestern and six other North Texas companies, that no evidence was presented that Turner breached the covenant not to compete, that no evidence was presented that Turner took confidential or trade secrets belonging to Communication Concepts, and that Communication Concepts sought in part to protect public information, the evidence presented to the trial court does not support reformation at the temporary injunction stage. See Wright, 137 S.W.3d at 298-99 (vacating an overbroad injunction and declining to reform the non-compete because it determined that further factual information was required); Poole v. U.S. Money Reserve, Inc., No. 09-08-00137CV, 2008 WL 4735602, at *9 (Tex. App.—Beaumont Oct. 30, 2008) (mem. op.) (dissolving temporary injunction without remanding for reformation of overbroad noncompete).

Accordingly, the trial court did not abuse its discretion by expressing an inability to reform the noncompete before final trial. After trial, based on the pleadings and evidence presented, the trial court may enter a reformation order or permanent injunction as dictated by the final resolution of the underlying claims. We overrule Communication Concepts's fourth issue.

VIII. CONCLUSION

Having overruled Communication Concepts's four issues, we affirm the trial court's order. See Tex. R. App. P. 43.2(a).

/s/ Sue Walker

SUE WALKER

JUSTICE PANEL: WALKER, MEIER, and KERR, JJ. DELIVERED: March 22, 2018


Summaries of

Communicon, Ltd. v. Guy Brown Fire & Safety, Inc.

COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH
Mar 22, 2018
NO. 02-17-00330-CV (Tex. App. Mar. 22, 2018)
Case details for

Communicon, Ltd. v. Guy Brown Fire & Safety, Inc.

Case Details

Full title:COMMUNICON, LTD. D/B/A COMMUNICATION CONCEPTS APPELLANT v. GUY BROWN FIRE…

Court:COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH

Date published: Mar 22, 2018

Citations

NO. 02-17-00330-CV (Tex. App. Mar. 22, 2018)

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