Autonation, Inc. v. Hatfield, 14-05-00350-CV.

• Decision Date: 10 November 2005
• Docket Number: No. 14-05-00350-CV.,14-05-00350-CV.
• Citation: 186 S.W.3d 576
• Parties: AUTONATION, INC. and Auto M. Imports North Ltd. d/b/A Mercedes-Benz of Houston-North, Appellants, v. Garrick HATFIELD and A-Rod OC, L.P., Appellees.
• Court: Texas Court of Appeals

186 S.W.3d 576

AUTONATION, INC. and Auto M. Imports North Ltd. d/b/A Mercedes-Benz of Houston-North, Appellants, v. Garrick HATFIELD and A-Rod OC, L.P., Appellees.

No. 14-05-00350-CV.

Court of Appeals of Texas, Houston (14th Dist.).

November 10, 2005.

Rehearing Overruled February 2, 2006.

COPYRIGHT MATERIAL OMITTED

Ruth Ann Norton Daniels, Amanda M. Inabnett, for appellants.

Andrew S. Golub, J. W. Beverly, Houston, for appellees.

Panel consists of Justices YATES, ANDERSON, and HUDSON.

OPINION

LESLIE BROCK YATES, Justice.

This is an accelerated appeal from a temporary injunction. Trial court proceedings have been stayed until disposition of the appeal. Appellants challenge the trial court's order granting a temporary injunction. We affirm.

Appellee Garrick Hatfield was formerly employed in Texas by appellant Auto M. Imports, which is owned by appellant Autonation.¹ When hired by Autonation, Hatfield signed an employment contract and a second contract that included a non-compete agreement. The non-compete agreement contained a forum selection provision requiring lawsuits to be filed in Broward County, Florida. In January 2005, Hatfield resigned from his position at Autonation and told management he was accepting a position with appellee A-Rod OC, Ltd., which is another auto dealership. After Hatfield began employment with A-Rod, Autonation filed suit against Hatfield in Florida, alleging breach of the non-compete agreement.

Approximately one month later, Hatfield filed suit against Autonation in Texas, seeking a declaratory judgment that the non-compete agreement was unenforceable. Hatfield also filed an application for a temporary injunction to prevent Autonation from enforcing the non-compete agreement in the Florida court. Autonation filed a response, requesting dismissal or a stay of the suit pending disposition of the Florida action. The trial court denied all requests but indicated that the case would be set for a quick trial. In a telephone hearing the next day, Hatfield claimed Autonation had filed a pleading in the Florida action that interfered with Texas's jurisdiction. The trial court signed an order granting the temporary injunction, which restrained Autonation from taking any further action in the Florida lawsuit. Autonation was also restricted from re-filing its non-compete suit in any court outside of Texas.

Autonation claims the trial court abused its discretion in granting the anti-suit injunction. Specifically, Autonation claims the trial court's ruling furthered improper invocation of the Texas Declaratory Judgment Act, ignored principles of comity, interfered with the Florida court's dominant jurisdiction, and failed to enforce the parties' selected forum. During oral argument, Autonation raised the additional argument that the trial court's order is void because it does not meet the requirements of Texas Rule of Civil Procedure 683.

The principle of comity requires courts to enjoin foreign suits "sparingly, and only in very special circumstances." Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex.1986). An anti-suit injunction is proper in four instances: "1) to address a threat to the court's jurisdiction; 2) to prevent the evasion of important public policy; 3) to prevent a multiplicity of suits; or 4) to protect a party from vexatious or harassing litigation." Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649, 651 (Tex.1996). The party seeking the injunction must show that clear equity entitles him to the injunction. Id. A single parallel proceeding in a foreign forum does not constitute a multiplicity of suits, nor does it constitute clear equity. Id.

The Texas Supreme Court has said that a mirror image proceeding does not constitute a special circumstance requiring an anti-suit injunction. Id. A parallel suit must be allowed to proceed "absent some other circumstances which render an injunction necessary `to prevent an irreparable miscarriage of justice.'" Id. at 652 (quoting Gannon v. Payne, 706 S.W.2d 304, 307 (Tex.1986)).² Appellees contend the anti-suit injunction was necessary to prevent evasion of fundamental Texas public policy regarding enforcement of non-competition agreements under DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990). Appellees argue that the Florida court will apply Florida law, which is sufficient to show that an irreparable miscarriage of justice would occur without an injunction.

In DeSantis, the supreme court held that the issue of whether non-compete agreements are reasonable restraints upon employees in this state is a matter of Texas public policy and that this policy is fundamental because it ensures a uniform rule for enforcement of such agreements in this state. Id. at 680-81. Because the enforcement of non-compete agreements involves a fundamental Texas policy and because applying another state's law would be contrary to that policy under the circumstances of the case, the DeSantis court held that Texas law must apply. Id. at 681.

Appellees presented the trial court with a Florida case that involved a non-competition agreement between Autonation and a Texas defendant. See AutoNation, Inc. v. Hankins, No. 03-14544 CACE (05), 2003 WL 22852206 (Fla.Cir.Ct.2003). In Hankins, the Florida court addressed the Texas defendant's claim that Texas law should apply. Id. at *7. Hankins argued that the parties' contractual choice of law should not be honored because, based on DeSantis, Texas has a materially greater interest in deciding whether the agreement should be enforced. Id. The Florida court noted that in Florida, a choice of law provision is presumptively valid unless the law of the chosen forum contravenes the strong public policy of the forum state. Id. The court, finding that Hankins had not proven that "applying Florida law to this dispute contravenes strong Florida public policy," held that the parties' choice of Florida law would control. Id. Applying Florida law, the court found that Autonation had met its prima facie burden of showing that the non-compete agreement was enforceable. Id. at *9-12.

Based on Hankins, appellees claim they have established that a Florida court will apply Florida rather than Texas law and that the Florida court will uphold the non-compete covenant. We agree with appellees that Hankins demonstrates the Florida court would apply Florida law to the suit concerning enforcement of the non-competition agreement. Furthermore, because the law of Florida rather than Texas would be applied in the Florida lawsuit concerning enforcement of the non-compete agreement, a fundamental Texas public policy, as enunciated in DeSantis, would be subverted. Thus, Autonation has not established that the trial court abused its discretion in enjoining the proceeding in Florida.³

Autonation also asserts that the trial court abused its discretion in issuing the injunction because the injunction allowed improper invocation of the Texas Declaratory Judgment Act and ignored principles of comity. These arguments were raised in Space Master International, Inc. v. Porta-Kamp Manufacturing Co., 794 S.W.2d 944 (Tex.App.-Houston [1st Dist.] 1990, no writ), a case involving three suits pending in Texas, New Jersey, and Massachusetts. The Texas suit was a declaratory judgment action asserting that the contracts were usurious. Id. at 945. In that case, on appeal from the trial court's grant of appellee's motion to dismiss, the appellate court affirmed and noted that in addition to comity, an action for declaratory judgment "`will not be entertained if there is pending, at the time it is filed, another action or proceeding between the same parties and in which may be adjudicated the issues involved in the declaratory action.'" Id. at 946-47 (quoting Tex. Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891, 895 (Tex.1970)). The court further noted that Space Master should not be allowed to use declaratory relief as a means of forum-shopping. Id. at 948.

Autonation argues that Space Master applies to this case and that we should find the injunction issued by the trial court improper because it violates the principles of comity⁴ and allows appellees to use declaratory relief as a means of forum shopping. Space Master, however, did not involve a matter of fundamental public policy, and we find this to be a crucial distinction. Because the Texas Supreme Court has held that fundamental Texas public policy requires application of Texas law to the question of enforceability of a non-compete agreement, we are unable to hold that the trial court abused its discretion in issuing an injunction to halt the Florida proceeding and allow the Texas case to proceed to trial.

Finally, we turn to AutoNation's argument that the trial court's order does not meet the requirements of Texas Rule of Civil Procedure 683, which governs temporary injunction orders. Appellees have filed a post-submission brief challenging this argument, claiming Autonation waived it by failing to preserve error in the trial court or raise this argument in its brief. Autonation responds that the failure to comply with the requirements of Rule 683 renders the trial court's order void and that defects that render an injunction order void cannot be waived.

This court has held that the failure of a temporary injunction order to meet the requirements of Rule 683 renders it void and requires reversal even if this issue is not timely raised. See, e.g., Arrechea v. Plantowsky, 705 S.W.2d 186, 189 (Tex. App.-Houston [14th Dist.] 1985, no writ). Thus, we agree with Autonation that we must address this issue.

To obtain a temporary injunction, a party must usually plead and prove the following elements: (1) a cause of action against the defendant, (2) a probable right to relief, and (3) a probable, imminent, and irreparable injury in the interim. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex.2002). However, the order need only state why injury will occur if a...