Texas Courts May Not Issue Advisory Opinions: Temporary Injunction Appeal Dismissed As Moot

Although an order granting temporary injunctive relief may be appealed, a live controversy must remain. If the temporary injunction becomes inoperative and of no effect, the appeal is rendered moot. Dismissal of want of jurisdiction is thus required, as demonstrated in this case.

NW Enterprises, Inc. v. City of Houston (Tex.App. - Houston [14th Dist.] Feb. 4, 2010)(per curiam) (temporary injunction appeal dismissed as moot, court may not render advisory opinions)

M E M O R A N D U M O P I N I O N

This appeal is from an order signed June 9, 2009, in which the trial court granted a temporary injunction. Appellee filed a motion to dismiss the appeal as moot and appellant responded.

In the order on appeal, the trial court enjoined appellant from operating an adult arcade and ordered appellant to secure that section of the premises. Subsequently, in accordance with a lease termination agreement between appellant and the landlord, appellant vacated the premises. Appellee and the landlord of the premises then entered into an agreed interlocutory declaratory judgment and permanent injunction declaring the premises ineligible for the operation of any sexually-oriented business.

Appellee claims the appeal is moot because appellant no longer occupies or operates an adult arcade at the premises. Appellant argues the appeal is not moot because appellant has an interest in recovering damages, resuming operations at another location, and protecting the operation of a second store that is under threat of similar injunction.

We are prohibited from reviewing a temporary injunction that is moot because such a review would constitute an impermissible advisory opinion. Nat’l Collegiate Athletic Ass’n v. Jones, 1 S.W.3d 83, 86 (Tex. 1999). When a temporary injunction becomes inoperative, the issue of its validity is moot. Id. We must dismiss the case once it becomes moot on appeal. Isuani v. Manske-sheffield Radiology Group, P.A.,, 802 S.W.2d 235, 236 (Tex. 1991).

The temporary injunction on appeal has clearly become inoperative. Any opinion regarding whether the trial court erred in granting the temporary injunction would therefore be advisory and without any practical legal effect. Appellee’s motion is granted and the appeal is ordered dismissed.

DISMISSED: Per Curiam
Before Justices Frost, Boyce and Sullivan
14-09-00561-CV N.W. Enterprises, Inc d/b/a Gaslight News & Video v. City of Houston
Appeal from 133rd District Court of Harris County
Trial Court Judge: Jaclanel McFarland

Temporary Injunction Vacated: No Irreparable Harm Shown, Court of Appeals Says

In a dispute involving a doctor's partnership interest, the 14th Court of Appeals, in a panel opinion by Justice Kent Sullivan issued Aug. 4, 2009, holds that immediate injunctive relief was not warranted because the applicant failed to show that he could not be adequately compensated by monetary damages later.

Citing the criteria for the grant of a temporary injunction under established precedents, and stressing that the party seeking the relief has the burden to prove the elements, the appellate panel sets aside the trial court's temporary injunction order, against which the opposing party had brought a challenge by accelerated interlocutory appeal. The court also grants a cross-petition for mandamus relief, vacating an order requiring deposit of funds into the registry of the court.

North Cypress Med. Ctr. Operating Co, Ltd. v. St. Laurent, M.D. (Tex.App. - Houston [14th Dist.] Aug. 4, 2009)(Sullivan) (requirements for temporary injunction not satisfied, no irreparable injury shown that cannot be remedied through monetary compensation.)

O P I N I O N

This consolidated appellate proceeding, consisting of an accelerated appeal and petition for writ of mandamus, arises from a doctor's attempts to prevent the sale of his profits-only ownership interest in a hospital's limited partnership. In the accelerated appeal, the partnership challenges a temporary injunction preventing the sale or transfer of the doctor's shares. The trial court that issued the temporary injunction also ordered the partnership to deposit the doctor's future distributions into the court's registry, prompting the partnership to seek mandamus relief from this Court.

The doctor has not shown he has an inadequate remedy, at law, that is, that money damages would result in inadequate compensation for the loss of his profits-only share in the partnership. Thus, the record does not support a necessary finding that the doctor would suffer an irreparable injury but for the temporary injunction. Accordingly, we reverse the trial court's order granting a temporary injunction. We further hold that the record does not support a conclusion that disputed funds are likely to be lost or depleted, a necessary finding before a trial court may order a party to deposit money into the court's registry. Therefore, we conditionally grant the petition for writ of mandamus.

I.

Background

In January 2004, Matthew St. Laurent, M.D., the appellee/real party in interest, purchased four limited partnership shares, termed "units," in North Cypress Medical Center Operating Company, Ltd. (the "partnership").[1] Under the terms of the limited partnership agreement (the "Agreement"), St. Laurent was permitted to share in the partnership's net income and occasional distributions but had no right to manage or control the partnership's operation, business, or activities. The Agreement also provided that the partnership, "at its sole option," could sell St. Laurent's shares without his consent for a variety of reasons, including his breach of the Agreement.

In November 2007, the partnership notified St. Laurent that he had breached the Agreement's non-competition clause and that it intended to sell his shares. He responded by filing suit against North Cypress for breach of contract, conversion, breach of fiduciary duty, and conspiracy to commit breach of fiduciary duty. He sought money damages in excess of $250,000, and also asked for the equitable remedy of an injunction preventing the sale of his shares.

In February 2009, the trial court granted St. Laurent's request for a temporary injunction, thereby preventing the partnership from transferring or selling his shares. That ruling prompted North Cypress to file this accelerated appeal. See Tex. Civ. Prac. & Rem. Code Ann. ' 51.014(a)(4) (Vernon 2008). In addition, the trial court ordered North Cypress to pay into the court's registry St. Laurent's portion of any future partnership distributions. That order forms the basis for North Cypress's petition for writ of mandamus.

II.

Temporary Injunction

In the accelerated appeal, which we address first, North Cypress contends St. Laurent was not entitled to a temporary injunction because he failed to show that he would suffer an irreparable injury in the absence of injunctive relief.

We agree.

The purpose of a temporary injunction is to preserve the status quo of a lawsuit's subject matter pending a full trial on the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). However, a temporary injunction is an extraordinary remedy that does not issue as a matter of right. Id. Instead, the applicant bears the burden of pleading and proving that he has (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.

The party seeking injunctive relief - here, St. Laurent - carries the burden to demonstrate an irreparable injury. See Reach Group, L.L.C. v. Angelina Group, 173 S.W.3d 834, 838 (Tex. App.- Houston [14th Dist.] 2005, no pet.). An injury is considered irreparable if the party cannot be adequately compensated in damages, or if those damages are incapable of calculation. Butnaru, 84 S.W.3d at 204; Reach Group, L.L.C., 173 S.W.3d at 838. Generally, however, courts do not enforce contractual rights by injunction, because an applicant who may recover breach-of-contract damages can rarely establish an irreparable injury and accompanying inadequate legal remedy. Butnaru, 84 S.W.3d at 211; Reach Group, L.L.C., 173 S.W.3d at 838.

We review the grant or denial of a temporary injunction for an abuse of discretion. EMSL Analytical, Inc. v. Younker, 154 S.W.3d 693, 696 (Tex. App.- Houston [14th Dist.] 2004, no pet.). A trial court does not abuse its discretion if it bases its decision on conflicting evidence in the record. Law v. William Marsh Rice Univ., 123 S.W.3d 786, 792 (Tex. App.- Houston [14th Dist.] 2003, pet. denied). With respect to the resolution of factual issues, the appellant must establish the trial court reasonably could have reached only one decision. Emeritus Corp. v. Ofczarzak, 198 S.W.3d 222, 225B26 (Tex. App.- San Antonio 2006, no pet.). To the extent that we must consider the evidence to resolve this appeal, we review the evidence in the light most favorable to the trial court's order, indulging reasonable inferences in its favor. See EMSL Analytical, Inc., 154 S.W.3d at 696. Therefore, we will not disturb the trial court's ruling if some evidence in the record reasonably supports the decision. Butnaru, 84 S.W.3d at 211. However, a trial court abuses its discretion if it misapplies the law to the established facts of the case. Law, 123 S.W.3d at 792.

Here, St. Laurent contends that his partnership shares are “unique" such that money damages cannot fully compensate him for their loss. In the alternative, he suggests that the amount of such damages cannot be adequately measured. We will address each of these contentions, in turn.

A. “Uniqueness" of Profits-Only Limited Partnership Share

Generally, money damages may be inadequate to compensate an injured party for the loss of property deemed to be legally "unique" or irreplaceable. See, e.g., Patrick v. Thomas, No. 2-07-339-CV, 2008 WL 1932104, at *3 (Tex. App.- Fort Worth May 1, 2008, no pet.) (mem. op.) (discussing owner's sentimental, nonmonetary attachment to horses). The “uniqueness" rule is most commonly applied when the disputed property involves real estate. See Lavigne v. Holder, 186 S.W.3d 625, 629 (Tex. App.- Fort Worth 2006, no pet.); In re Stark, 126 S.W.3d 635, 640 (Tex. App.- Beaumont 2004, orig. proceeding [mand. denied]) (“We agree . . . that every piece of real estate is unique and that its uniqueness may, in an injunction case, constitute some evidence of an irreparable injury.").

Apparently hoping to invoke this common real-estate principle, St. Laurent claims that his partnership shares should be treated as an interest in real estate because one of the purposes of the partnership is to own and maintain a hospital, North Cypress Medical Center. We disagree. First, the limited partners, including St. Laurent, do not own the hospital real estate; only the partnership does. Second, under the Agreement, St. Laurent has no right to control the management or operation of the hospital. Instead, as a limited partner, St. Laurent's only interest in the hospital real estate is confined to whatever net income may be generated from the hospital's business. Therefore, we are not persuaded that St. Laurent's attenuated connection to the physical plant of the hospital is sufficient to constitute a “unique" interest in real estate. Cf. Lavigne, 186 S.W.3d at 629 (upholding land purchaser's right to injunctive relief to prevent foreclosure on real estate).

Alternatively, St. Laurent suggests that his shares are unique because they are irreplaceable. As he notes, the partnership's shares are not publicly traded and, under the terms of the Agreement, additional limited partners may not be admitted without the general partner's consent. Thus, St. Laurent is correct that, once he loses his shares, he cannot simply replace them with other partnership shares. However, he has not shown that money damages cannot take their place. That is, a subjective desire to keep one's shares does not, by itself, render money damages an inadequate substitute. See Pesch v. First City Bank of Dallas, 637 F. Supp. 1539, 1547 (N.D. Tex. 1986). This is particularly true here where, unlike the shares discussed in Pesch, St. Laurent's ownership interest gives him no voice in the control or management of the partnership. See Pesch, 637 F. Supp. at 1546. Instead, the Agreement provides:

The General Partner shall conduct, direct and exercise full control over all activities of the Partnership. Except as otherwise expressly provided herein, all management powers over the business and affairs of the Partnership shall be exclusively vested in the General Partner, and the Limited Partners shall not have any right of control or management power over the business and affairs of the Partnership. . . . [T]he General Partner shall have full power and authority to do all things deemed necessary or desirable by it to conduct the business of the Partnership without the consent or approval of the Limited Partners[.][2]

The undisputed evidence in the record indicates that St. Laurent is at risk for loss of only his proportionate share in the partnership's net income and any future distributions. Both of these items represent an interest in money. Therefore, St. Laurent has not shown that breach-of-contract damages would be inadequate to compensate him for any such monetary losses.

B. Calculation of Damages

Alternatively, St. Laurent acknowledges that damages may compensate for the loss of partnership shares but argues that, in this case, his damages are incapable of mathematical calculation. See Reach Group, L.L.C., 173 S.W.3d at 838. He reasons that, because no ready market exists for the sale and purchase of these privately held shares, the value of his ownership interest cannot be readily ascertained. However, the record does not support that argument.

The Agreement contains numerous provisions relative to the value of each limited partner's ownership interest in the partnership. Under its terms, the partnership must establish and maintain a “Capital Account" as to each partner, reflecting the current value of his ownership interest. That amount incorporates, among other things, (1) the cash amount or fair market value of all shares owned by the partner, (2) his proportionate share of the partnership's net income or loss, (3) the amount of partnership liabilities attributable to him, and (4) the cash amount or fair market value of all distributions of cash or property made to him. In addition, the Agreement contains several other provisions affecting the value of each partner's Capital Account, including interest, value following transfer of a partnership interest, and the effect of loans to the partnership. In the event a partner's shares are to be sold, the Agreement specifies, through mathematical formulas, the exact consideration to be paid.

St. Laurent acknowledges that he can determine the value of his current ownership interest. In fact, during the temporary-injunction hearing, he testified about the value of his Capital Account as of a specific date shortly before the hearing. However, he claims that his future damages cannot be measured once he is divested of his shares, at which point he will no longer be eligible to receive distributions or a proportionate share of net income. He notes that, under the Agreement, the general partner may declare distributions in its sole discretion, “from time to time." Drawing from that fact, St. Laurent argues in his brief that "[t]here is nothing in the record that establishes any reliable method of affirmatively establishing the value of future distributions."

St. Laurent's argument misstates the burden of proof. In a temporary-injunction hearing, the burden is on the applicant to prove that his damages cannot be calculated, not on the non-movant to disprove that notion. See Reach Group, L.L.C., 173 S.W.3d at 838. After reviewing the record, we conclude that St. Laurent failed to carry that burden because he produced no evidence, either express or implicit, that his future damages are simply too speculative to be calculated.[3]

To the contrary, expert witnesses frequently offer opinions about the value of a partnership interest,[4] even when, as here, some unspecified future revenue source remains pending. See, e.g., Von Hohn v. Von Hohn, 260 S.W.3d 631, 637-38 (Tex. App.- Tyler 2008, no pet.) (approving expert testimony as to value of partnership interest in a law firm, even though some of the firm's lawsuits had not yet settled or even been filed). That task calls upon expert witnesses, out of necessity, to make reasonable assumptions about a litigant's future damages resulting from some intervening event, such as the defendant's alleged wrongdoing. See, e.g., Columbia Med. Ctr. of Las Colinas, Inc. v. Hogue, 271 S.W.3d 238, 254-55 (Tex. 2008) (requiring expert's future-damage calculations to adhere to reasonable assumptions not inconsistent with undisputed facts); Checker Bag Co. v. Washington, 27 S.W.3d 625, 638-39 (Tex. App.- Waco 2000, pet. denied) (upholding future-damages testimony, based on reasonable assumptions, by expert economist). In that regard, this case is not unlike any other case involving the calculation of future damages. See Hughes v. Houston Nw. Med. Ctr., Inc., 680 S.W.2d 838, 842 (Tex. App.- Houston [1st Dist.] 1984, writ ref'd n.r.e.) ("Damages must be established with reasonable certainty, but the amount of damages need not be certain, or future damages would never be recoverable.") (citations omitted).

Here, although the Agreement introduces some degree of uncertainty about the precise timing of future distributions, it expressly requires the partnership to “use reasonable efforts to distribute annually at least an amount of Available Cash to the Partners sufficient to cover the federal, state and local income tax owing by the Partners as a result of Partnership allocations of income, gain, loss, deduction and credit to the Partners[.]"[5] Thus, the Agreement contemplates, at a minimum, annual distributions tied into the amount of the partnership's net income, if any. In addition, appropriate discovery should reveal the timing and amount of past distributions, facts that may offer insight into the predictability of future distributions. Moreover, St. Laurent's inability to predict the precise timing of the partnership's distributions of its assets does not mean that the net present value of his interest in those income-generating assets is incalculable. See, e.g., State v. Whataburger, Inc., 60 S.W.3d 256, 262 (Tex. App.- Houston [14th Dist.] 2001, pet. denied) (discussing valuation of income-generating property).

Thus, on the record presented, St. Laurent did not prove that money damages could not compensate him or that such damages are incapable of calculation. Absent proof of an irreparable harm, St. Laurent was not entitled to injunctive relief. See SRS Prods. Co. v. LG Eng'g Co., 994 S.W.2d 380, 386 (Tex. App.- Houston [14th Dist.] 1999, no pet.). Accordingly, we reverse the trial court's order, dissolve the temporary injunction, and remand.[6]

* * *

IV.

Conclusion

St. Laurent has not shown that, in the absence of a temporary injunction, he would suffer irreparable injury. Therefore, we reverse the trial court's ruling, dissolve the temporary injunction, and remand for further proceedings not inconsistent with this opinion.

In addition, we conditionally grant the petition for a writ of mandamus, and direct the trial court to vacate its order compelling North Cypress to deposit funds into the court's registry. We are confident the trial court will comply; therefore, the writ will issue only in the unlikely event that it fails to do so.

Anti-Suit Injunction Upheld on Appeal

Henry v. McMichael (Tex.App.- Houston [1st Dist.] Apr. 24, 2008)(Justice Hanks)
(dominant jurisdiction, temporary injunction appeal)
AFFIRM TC JUDGMENT: Opinion by Justice Hanks
Panel: Before Justices Taft, Hanks and Higley01-07-00622-CV
Case style: David Henry v. James McMichael and Elizabeth Ann Koehler Co-Independent Executors of The Estate of W.T. McMichael and Catherine McMichael
Appeal from County Court at Law No 1 & Probate Court of Brazoria County
Trial Court Judge: Hon. Jerri Lee Mills

Anti-Suit Injunction

In his second issue, Henry argues that the trial court erred in granting the anti-suit injunction because neither the McMichaels’ application nor the evidence submitted in support of the application established the requisite elements of a temporary injunction under the Texas Rules of Civil Procedure: a probable right to recovery, irreparable harm, and no adequate remedy at law. We disagree.

When a party files suit in a court of competent jurisdiction, that court is entitled to proceed to judgment and may protect its jurisdiction by enjoining the parties from proceeding in a suit subsequently filed in another court of this state. Perry v. Del Rio, 66 S.W.3d 239, 252 (Tex. 2001); Gannon, 706 S.W.2d at 305. Further, Texas courts are empowered to enjoin parties from going forward with litigation in another county. See Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986). Although courts of this state have that power, however, the principle of comity requires that courts exercise this equitable power sparingly and only in very special circumstances. See Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649, 651 (Tex. 1996); Christensen, 719 S.W.2d at 163.

The Texas Supreme Court has observed that an anti-suit injunction is appropriate to:

(1) address a threat to the court’s jurisdiction,
(2) prevent the evasion of important public policy,
(3) prevent a multiplicity of suits, or
(4) protect a party from vexatious or harassing litigation.

Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615, 623 (Tex. 2005). The party seeking the injunction must show that “a clear equity demands” the injunction because of one of those four circumstances. Id. Under the third category, a single parallel proceeding in another forum does not constitute a multiplicity of suits and cannot, by itself, justify the issuance of an anti-suit injunction. Golden Rule, 925 S.W.2d at 651–52. Before an anti-suit injunction can properly issue, the requesting party must demonstrate that “very special circumstances” exist such that an injunction is necessary to prevent an “irreparable miscarriage of justice.” See id. at 651.

Henry, relying on the holding in Manufacturers’ Hanover Trust Company v. KingdomInvestors Corporation, 819 S.W.2d 607 (Tex. App.—Houston [1st Dist.] 1991, nowrit), argues that a party seeking an anti-suit injunction is also required under TexasRule of Civil Procedure 680 to establish a probable right of recovery in the underlyinglawsuit, irreparable harm, and that no adequate remedy at law exists. His reliance onthis case for such a requirement is misplaced. Manufacturers Hanover Trust wasdecided before the Texas Supreme Court’s Gonzalez opinion, which does not requirea showing of these elements for an anti-suit injunction issued under the trial court’sequitable powers. See Gonzalez, 159 S.W.3d. at 623.

This case merits an anti-suit injunction for the first reason—the need to protect the Brazoria County court from the threat posed by the Harris County case to its jurisdiction. Because the Brazoria County action was the first filed and there has been no finding of estoppel, the Brazoria County court has dominant jurisdiction over the Harris County court. Thus, as found by the Brazoria County court in its order, if the injunction did not issue, the McMichaels could be irreparably harmed by the pending dispositive motions in the Harris County action. Without the injunction, Henry would proceed with the pending summary judgment hearing and trial on the merits in the Harris County action, thereby depriving the Brazoria County court of its jurisdiction to hear the case and depriving the McMichaels of their choice of forum without an effective remedy for this error. See Gonzalez, 159 S.W.3d. at 623.

Likewise, clear equity justifies an anti-suit injunction in this case. The fact that the McMicheals have correctly argued and established that the Harris County court does not have dominant jurisdiction and has not brought about a stay or abatement of the Harris County action. That action remains pending, and, absent an injunction, Henry could continue to pursue both state court actions, only one of which has dominant jurisdiction, requiring the McMichaels to defend both actions and pursue appeals in both, if necessary. To allow the Harris County action to proceed under these circumstances would be contrary to the longstanding public “policy of the courts and the legislature of this state to avoid a multiplicity of lawsuits.” See id.

Accordingly, we hold that the trial court did not err in granting the McMichaels’ temporary injunction, and we overrule issue two.

Judge Dorfman reversed in temporary injunction appeal

Grant or denial of temporary injunctive relief may be appealed immediately. Interlocutory appeal proved successful in this case.

EPG, Inc.v RDM, Inc. No. 14-07-00415-CV (Tex.App.- Houston [14th Dist.] Feb. 7, 2008)(Anderson) (temporary injunction appeal)

Opinion by Justice John Anderson
Panel members: Chief Justice Hedges, Justices Anderson and Seymore
Full case style: EPG, Inc. & Stanton Holt v. RDM, Inc.
Court below: 129th District Court of Harris County (Judge Grant Dorfman)
Disposition: Reversed and Dismissed
EPG's counsel: Diana E. Marshall
RDM, Inc.'s attorney: Leonard J. Meyer

MEMORANDUM OPINION BY JUSTICE JOHN ANDERSON

This is an accelerated, interlocutory appeal[1] from the granting of a temporary injunction against appellants, EPG, Inc. (EPG) and Stanton Holt, in favor of appellees, RDM, Inc. (RDM), Paul McElroy, Nick Incrapera, Peter Holt, and Judson Holt. After an evidentiary hearing, the trial court entered a temporary injunction requiring Stanton and EPG to turn over or release to RDM all assets and property maintained for and/or belonging to the limited partnerships including but not limited to marketing files and/or records, human relations files and/or record, accounting files and/or records, ledgers, checkbooks, computer equipment, management fees, general fees, and administrative fees. Additionally, Stanton and EPG were prohibited from interfering in any way with RDM's management and collection of fees.

In six issues, appellants contend the trial court abused its discretion by granting a temporary injunction because (1) the trial court altered the status quo between the parties; (2) appellee's suit was barred by the doctrine of unclean hands; (3) appellee failed to show a probable right of recovery; (4) the injunction awarded appellee all relief requested; (5) the injunction awarded appellee possessory rights; and (6) the trial court failed to balance the equities, burdens, and hardships of the parties.

Factual and Procedural Background

Stanton is the founder of a restaurant chain called Lupe Tortilla. Stanton began his business with one Lupe Tortilla restaurant. The restaurant was a success, so he began considering the idea of expanding his business. In 1995, Stanton formed EPG to serve as the general partner for his expansion restaurants. Stanton was the sole director and a shareholder of EPG. Judson Holt, Peter Holt, Paul McElroy, and Nick Incrapera were also shareholders of EPG and served as officers for the corporation. From approximately 1997 to 2006, EPG developed and opened six more Lupe Tortilla restaurants in the Houston vicinity. Each expansion restaurant was formed as a limited partnership with EPG serving as its general partner. Each limited partnership was named Tres Habaneros followed by a reference to its location.

Around March 2007, disagreements began to form between Stanton and Judson, Peter, McElroy, and Incrapera. On March 7, 2007, McElroy was removed from his position as Chief Executive Officer (CEO) and President of EPG. Each side presented conflicting stories as to why McElroy was terminated. Stanton and EPG alleged that at the meeting on March 7, Judson, Peter, McElroy, and Incrapera insisted Stanton give up his voting control of the corporation. Appellants claimed McElroy advised Stanton he would no longer go forward with the plan to build additional Lupe Tortilla restaurants unless Stanton gave up this control. After hearing this, Stanton felt he had no other choice but to remove McElroy as CEO and President of EPG, but Stanton testified he subsequently offered McElroy a lateral position as Chief Financial Officer, which McElroy refused to accept. According to RDM, McElroy never refused to go forward with the expansion plan, and Stanton unilaterally decided to fire McElroy for no reason during their meeting on March 7.

On March 8, 2007, one day after being removed as CEO and President of EPG, McElroy formed another corporation called RDM. That same day, Judson, Peter, and Incrapera signed the Certificate of Formation as officers of RDM, while still employed as officers of EPG. Judson admitted RDM was formed with the purpose of taking over EPG’s position as general partner. On March 9 and 10, McElroy held meetings with some of EPG’s limited partners, including Judson and Peter. During the meetings, McElroy discussed with the limited partners the idea of replacing EPG with RDM as general partner, and he presented a form for them to sign agreeing to remove EPG. Stanton, as a limited partner, and EPG, as the general partner, never received notice of the meetings. The following week, McElroy worked to secure enough limited partners’ signatures to effectuate the removal of EPG as the general partner for each of the Tres Habaneros limited partnerships.

EPG and Stanton were unaware of these actions until March 19, 2007, when RDM delivered a letter to EPG’s corporate office informing it that 75% of the sharing ratio of the limited partners for each Tres Habaneros partnership had voted to remove EPG and replace it with RDM. The letter also demanded EPG to turn over the limited partnerships’ assets and property to RDM. Stanton refused to turn over the property and assets. That same day, RDM filed suit against Stanton for conversion and also sought a temporary restraining order and temporary injunction. The trial court signed a temporary restraining order requiring Stanton and EPG to safeguard and maintain the assets and property belonging to the limited partnerships and requiring the information be available to RDM and its designated representatives for inspection. On April 26, 2007, the trial court signed a temporary injunction requiring Stanton and EPG to turn over or release to RDM all assets and property maintained for and/or belonging to the limited partnerships including but not limited to marketing files and/or records, human relations files and/or record, accounting files and/or records, ledgers, checkbooks, computer equipment, management fees, general fees, and administrative fees. The temporary injunction is the basis of this appeal.

Discussion

A. Did the Trial Court Fail to Maintain the Status Quo?

In their first issue, appellants claim the trial court abused its discretion because it altered the status quo by requiring EPG to turn over or release to RDM all of the limited partnerships’ assets and property.

1. Standard of Review

An applicant for a temporary injunction seeks extraordinary relief. In re Tex. Natural Res. Conservation Comm’n, 85 S.W.3d 201, 204 (Tex. 2002). The sole issue before the trial court in a temporary injunction hearing is whether the applicant may preserve the status quo of the litigation’s subject matter pending trial on the merits. Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978). The status quo is the last actual, peaceable, noncontested status which preceded the pending controversy. RP&R, Inc. v. Territo, 32 S.W.3d 396, 402 (Tex. App. - Houston [14th Dist.] 2000, no pet.). An applicant must plead and prove three elements to obtain a temporary injunction: (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. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002).

The applicant for the temporary injunction is not required to establish that he or she will prevail upon a final trial on the merits. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993). The merits of the applicant’s suit are not presented for review. Davis, 571 S.W.2d at 861.

Our review is strictly limited to whether the trial court clearly abused its discretion in granting the temporary injunction. Id. at 862. We may not substitute our judgment for that of the trial court by vacating or modifying an injunction simply because we would have decided the issue differently. Landry’s Seafood Inn & Oyster Bar-Kemah, Inc. v. Wiggins, 919 S.W.2d 924, 926 (Tex. App. - Houston [14th Dist.] 1996, no writ).

Further, we may not reverse the trial court’s order granting a temporary injunction unless its decision was so arbitrary that it exceeded the bounds of reasonable discretion. Butnaru, 84 S.W.3d at 204. However, it is an abuse of discretion for the trial court to issue a temporary injunction which alters the status quo. See Dyer v. Weedon, 769 S.W.2d 711, 715 (Tex. App. - Waco 1989, no writ). The trial court does not abuse its discretion if the applicant pleads a cause of action and presents some evidence tending to sustain that cause of action. RP&R, Inc., 32 S.W.3d at 400. Furthermore, as the trial court functions as the fact finder in a temporary injunction hearing, an abuse of discretion does not exist where the trial court based its decision on conflicting evidence. Davis, 571 S.W.2d at 862. As the reviewing court, we must draw all legitimate inferences from the evidence in the light most favorable to the trial court’s order granting a temporary injunction. T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 21 (Tex. App. - Houston [1st Dist.] 1998, pet. dism’d).

2. Analysis

We begin by noting that the status quo is not necessarily the situation as it existed at the time the trial court entered its order. See McLean v. Employers Cas. Co., 381 S.W.2d 582, 584 (Tex. Civ. App.-Dallas 1964, no writ). Rather, as stated above, the status quo is the last actual, peaceable, noncontested status which preceded the pending controversy. RP&R, Inc., 32 S.W.3d at 402.

Appellants contend the trial court abused its discretion because it altered the status quo by requiring EPG to turn over or release to RDM all of the limited partnerships’ assets and property. Appellees, on the other hand, assert the trial court properly granted the temporary injunction because the last actual, peaceable, noncontested status was when RDM took over as the general partner. We cannot agree with appellees. It is undisputed the parties hotly contest the status of RDM as the general partner. This status, therefore, cannot constitute the status quo to be protected pending a trial on the merits. See Benavides Indep. Sch. Dist. v. Guerra, 681 S.W.2d 246, 249 (Tex. App. - San Antonio 1984, writ ref’d n.r.e.). If an act of one party alters the relationship between that party and another, and the latter contests the action, the status quo cannot be the relationship as it exists after the action. Id. In this case, McElroy, Judson, Peter, and Incrapera formed RDM with the purpose of taking over EPG’s position as general partner, they failed to notify both EPG and Stanton of multiple meetings held with the other limited partners, and they subsequently replaced EPG with RDM as the general partner. These actions altered the relationship between the two parties, and appellants contest these actions on multiple grounds. Accordingly, the status quo cannot be the relationship as it existed after RDM took over as the general partner. See id. (rejecting school district’s argument that the status quo to be maintained was the part-time employment status of employee before the suit was filed because school district had altered the relationship by reducing employee’s status from full-time to part-time and employee properly contested this action).

Thus, the last actual, peaceable, noncontested status was when EPG served as the general partner and maintained the assets and property for each of the Lupe Tortilla limited partnerships. The temporary injunction ordered by the trial court required appellants to turn over or release to RDM all assets and property, which disturbs the status quo. We conclude the trial court abused its discretion by entering the temporary injunction and altering the status quo. Accordingly, we sustain appellant’s first issue. The judgment of the trial court is reversed, and the order granting the temporary injunction is dissolved. Because of our disposition on this point of error, we need not reach appellant’s remaining points. Tex. R. Civ. P. 47.1

Conclusion

Having sustained appellant’s first issue, we reverse the judgment of the trial court and dissolve the order granting the temporary injunction.

/s/ John S. Anderson
Justice

Judgment rendered and Memorandum Opinion filed February 7, 2008.
Panel consists of Chief Justice Hedges and Justices Anderson and Seymore.
--------------------------------------------------------------------------------
[1] Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(4) (Vernon Supp. 2007).