David v. Bache Halsey Stuart Shields, Inc.

• Decision Date: 04 February 1982
• Docket Number: No. 01-81-0781-CV,01-81-0781-CV
• Citation: 630 S.W.2d 754
• Parties: Fed. Sec. L. Rep. P 98,640 J. Michael DAVID, Appellant, v. BACHE HALSEY STUART SHIELDS, INC., Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 754

630 S.W.2d 754

Fed. Sec. L. Rep. P 98,640

J. Michael DAVID, Appellant, v. BACHE HALSEY STUART SHIELDS, INC., Appellee.

No. 01-81-0781-CV.

Court of Appeals of Texas, Houston (1st Dist.).

Feb. 4, 1982.

Charles A. Gall, Jenkins & Gilchrist, Dallas, Frank Pinedo, David Beale, Pinedo, Cezeaux & Hughes, Houston, for appellant.

Foreman & Dyess, Nancy S. Polis, Houston, for appellee.

Before WARREN, DUGGAN and PRICE, JJ.

PRICE, Justice.

This an appeal from an order granting a temporary injunction enjoining appellant from engaging in the securities business in and around Harris County, Texas.

Appellant, Michael David, went to work on August 1, 1979 for appellee, Bache Halsey Stuart Shields, Incorporated (Bache). He signed an employment contract that contained the following covenant:

Not to accept employment in a sales or sales trainee capacity with a firm engaged in the securities and/or commodity brokerage business anywhere within the territories specifically delineated and described as follows: The City of Houston, County of Harris, State of Texas, and the territory adjacent to and surrounding each of such counties for a distance of twenty-five (25) miles in every direction from the boundaries of such county within one hundred and eighty (180) days after employee voluntarily terminates his employment at Bache....

During his employment, appellant received extensive and costly training in the area of securities brokerage, commodities, and specifically, in sales. Appellant received certain confidential information during his employment with Bache concerning customer lists, marketing techniques, investment strategy and the Bache commission schedules. It was stipulated that upon his termination with Bache on September 11, 1981, appellant immediately went to work for Shearson American Express (Shearson), performing the same type of sales work that he performed at Bache. It was further stipulated that the appellant had taken with him Bache's customer lists. Appellant contacted from 75 to 119 of these customers, causing some of Bache's former customers to begin doing their securities business with Shearson. Due to this, appellee filed this suit and sought a temporary injunction preventing appellant from violating the covenant not to compete.

Findings of fact and conclusions of law were neither requested nor filed.

In points of error one, four, six, and seven, the appellant is asserting that the trial court judge abused his discretion in granting the temporary injunction for the following reasons:

1) appellee failed to show it had no adequate legal remedy or that it would suffer irreparable harm,

2) that the harm to the appellant as a result of the injunction greatly outweighs any harm to the appellee,

3) appellee failed to sustain its burden of showing the reasonable necessity of the restraint, and

4) the remedy enjoins appellant from more than is reasonably necessary to protect appellee.

In a hearing on an application for a temporary injunction, the applicant, to be entitled to the issuance of a writ, must plead a cause of action and show a probable right on final trial to the relief he seeks and probable injury in the interim. Sun Oil Company v. Whitaker, 424 S.W.2d 216 (Tex.1968); Millwright Local Union No. 2484 v. Rust Engineering Co., 433 S.W.2d 683, 686 (Tex.1968); Drever and Associates v. Batey, 572 S.W.2d 30 (Tex.Civ.App.-Houston (1st Dist.) 1978), aff'd and reformed, 576 S.W.2d 35 (Tex.1979). The applicant must further show that no adequate legal remedy exists. In order for a legal remedy to be adequate, it must give the applicant complete, final and equal relief. King v. Miller, 280 S.W.2d 331 (Tex.Civ.App.1955, writ ref'd n. r. e.); Drever and Associates v. Batey, 572 S.W.2d 30, 33 (Tex.Civ.App.-Houston (1st Dist.) 1978), aff'd and reformed, 576 S.W.2d 35 (Tex.1979).

A trial court has great discretion in granting or denying a temporary injunction and its action will not be reversed unless the appellate courts are convinced that it represents a clear abuse of discretion. Texas Foundries v. International Moulders and Foundry Workers' Union, 151 Tex. 239, 248 S.W.2d 460 (1952); Hartwell's Office World v. Systex Corporation, 598 S.W.2d 636 (Tex.Civ.App.-Houston (14th Dist.) 1980, writ ref'd n.r.e.). In determining whether there has been such an abuse of discretion, the Court of Appeals must draw all legitimate inferences from the evidence in the light most favorable to the trial court's judgment. Smith Protective Services v. Robertson, 560 S.W.2d 174, 176 (Tex.Civ.App.-Houston (1st Dist.) 1977, no writ). Hartwell's Office World v. Systex Corporation, 598 S.W.2d 636, 639 (Tex.Civ.App.-Houston (14th Dist.) 1980, writ ref'd n.r.e.).

A review of the evidence reveals that Bache showed a probable right to relief on a final hearing. The appellant admitted that he had access to Bache's customer lists containing confidential information regarding the customers' financial assets and preferences in securities. The appellant also had access to confidential information relating to commission schedules, fee schedules, Bache's policies and other confidential communications. The appellant testified that he took copies of this material from Bache's office when he resigned and began to utilize it for his new employer, Shearson. Appellant further testified that he had begun to divert Bache's customers for his new employer.

The record also establishes that there would be probable harm to Bache if the Appellant were allowed to take the confidential customer lists and confidential information and use them in his new employment with Shearson. This harm would not only disrupt the organized business dealings of Bache but would also threaten customer confidence in Bache's handling of their private affairs, and probably cause Bache to lose not only customers but profits as well. The probable injury would also accrue in Bache's loss of a valuable broker both in terms of the reassignment of customers to other brokers with whom they are not familiar and have not established a trust relationship and in Bache's loss of time and money expended in its extensive training of a broker.

To demonstrate harm, a party must show a noncompensable injury, for which there can be no real legal measure of damages, or none that can be determined with a sufficient degree of certainty. One cannot assign a dollar value to a company's loss of clientele, good will, office stability, commission schedules, marketing techniques, and investment strategies.

Appellant asserts that appellee could not demonstrate precise losses that the company incurred through the actions of the appellant due to appellee's admission that there was no drop in profits in the month after appellant terminated his employment with appellee. However, looking at only the month the appellant quit working for appellee and comparing it to the next month is not conclusive. In securities trading, there are any number of reasons why a loss would not show up the very next month. Market fluctuation and customer activity are two reasons why a loss might not show up. In arguing that any harm the appellee may have sustained is negligible, as the appellant's harm is greater, the appellant fails to recognize two things: First, a court must determine whether the restrictions are reasonably necessary to protect the business and goodwill of the employer; Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (1960); and second, a court must protect the employee by enforcing such restrictions...