Gannon v. Payne

• Citation: 695 S.W.2d 741
• Decision Date: 24 July 1985
• Docket Number: No. 05-84-00826-CV,05-84-00826-CV
• Parties: Fred G. GANNON, Appellant, v. Robert B. PAYNE, Appellee
• Court: Texas Court of Appeals

Page 741

695 S.W.2d 741

Fred G. GANNON, Appellant, v. Robert B. PAYNE, Appellee.

No. 05-84-00826-CV.

Court of Appeals of Texas,

Dallas,

July 24, 1985.

Rehearing Denied Aug. 27, 1985.

Gerard B. Rickey, Dallas, for appellant.

Erich F. Klein, Jr., Ron Edmondson, Lyne & Klein, Dallas, for appellee.

Before AKIN, STEPHENS and GUILLOT, JJ.

STEPHENS, Justice.

This is an appeal from an interlocutory order in which the trial court entered a temporary injunction prohibiting Fred G. Gannon from prosecuting a lawsuit he filed against Robert B. Payne in Alberta, Canada. In our prior opinion, we held that the trial court abused its discretion, and we ordered that the temporary injunction be dissolved. After review and consideration of appellee's motion for rehearing, we conclude that our prior opinion was in error. Consequently, appellee's motion for rehearing is granted. Our prior opinion dissolving the trial court's temporary injunction is withdrawn, and this opinion, reinstating the trial court's temporary injunction, is substituted.

This extensive litigation ¹ stems from an agreement entered into between Robert B. Payne and Fred G. Gannon in 1965. Gannon and a firm called Paddon-Hughes acquired an oil and gas lease in Canada. Gannon owned 50% of the lease and Paddon-Hughes owned the other 50%. The contract between Gannon and Paddon-Hughes provided for a right of first refusal in favor of Paddon-Hughes, should Gannon decide to sell his interest. Unknown to Paddon-Hughes, Gannon committed 30% of his 50% interest (or 15% of the total leasehold interest) to John Carstairs and Michael Voelker, and had contracted with Payne to share equally with him in the costs and profits. Payne was aware of the interest committed to Carstairs and Voelker and that the percentage he was to receive equalled one-half of whatever interest Gannon retained in the lease.

Between June 1970 and December 1971, Gannon honored the agreement by paying 35% of the profits he received to Payne, retaining 35% for himself, and remitting 30% to Carstairs and Voelker. After that period of time, during which the venture became very profitable, Gannon unilaterally reduced the percentage of payment to Payne from 35% to 30%, claiming that he was entitled to do so because he had done the work while Payne had received a "free ride."

Payne disagreed with this reduction and instituted suit in Canada, claiming that he was entitled to 17.5% of the lease and that Gannon was holding this interest in trust for him. ² On September 20, 1979, the Canadian trial court rendered judgment that Payne was entitled to the 17.5% interest in Gannon, dissatisfied with this judgment, appealed to the Court of Appeal of Alberta, which on October 23, 1980, dismissed the appeal in Payne's favor. Gannon next applied to the Supreme Court of Canada for leave to appeal the judgment of the Court of Appeal. The application was denied by the Supreme Court of Canada on October 23, 1980, and the Canadian litigation was thus concluded.

the lease and the court ordered Gannon to transfer and convey that interest to Payne, together with all other property, rights, titles and interests he had acquired under his agreement with Paddon-Hughes. The judgment further ordered Gannon to account for any unpaid sums due Payne, together with interest.

On August 30, 1982, long after the conclusion of the Canadian litigation, Payne filed suit against Gannon in the 160th Judicial District Court of Dallas, Dallas County, Texas. Gannon filed an answer and, by doing so, submitted himself to the jurisdiction of the Texas court. In addition, Gannon filed a counterclaim, which was later nonsuited, in which he affirmatively invoked the jurisdiction of the Texas court. Since the filing of the suit, numerous preliminary matters have been presented to the trial court and disposed of.

On April 30, 1984, Payne filed his Third Amended Original Petition. By this petition, Payne seeks recovery from Gannon for fraudulent representations which induced him to originally enter into the Canadian oil lease; for concealing and misrepresenting the income received from the lease, both before and after the Canadian litigation; for an accounting of all expenses and income of the lease; for reimbursement of monies paid Gannon by Payne for legal fees charged for services rendered by Gannon, who the record does not show to be a licensed attorney in Canada; for repayment of damages incurred by Payne, which were occasioned by a fraudulent defense asserted in the Canadian suit; for specific performance by way of conveyance of an additional percentage of the Canadian lease, arising because of certain conveyances made by Gannon after the termination of the Canadian litigation, which directly affected Payne's interest in the lease; seeking a declaration that a conveyance by Gannon of Gannon's interest in the lease to a Canadian corporation is a sham because the corporation is the alter ego of Gannon; for exemplary damages; and for alternative relief on several counts.

Payne additionally filed a application for a temporary injunction prohibiting Gannon from prosecuting a suit he filed in Canada, in which he sought a declaratory judgment which would interfere with the Texas court's jurisdiction. Gannon answered this application for temporary injunction, on the grounds that the Canadian litigation was res judicata of all of Payne's claims in the Texas suit; that a plea in abatement in the Canadian suit is a proper and mandatory remedy; that Payne has neither pleaded why he has no other adequate remedy at law nor why he will suffer immediate irreparable harm; that the power of enjoining a party from proceeding in a foreign court should be sparingly exercised; that litigation in the Canadian court will dispense with a multiplicity of suits; that the corporation to which Gannon conveyed his interest in the lease is an indispensable party to this suit, and that it is a Canadian corporation and does no business in Texas; that an order of the Texas court would not be recognized by the Canadian court; that Payne's suit seeks to determine title to Canadian property, over which it has no jurisdiction; that the rule of forum non conveniens is applicable and should govern; and that litigation in Texas would be considerably more expensive than litigation in Canada. After a hearing, the trial court issued its temporary injunction. (See appendix.)

On an appeal from the entry of the temporary injunction, the sole question for determination by this court is whether the trial court abused its discretion by issuing the temporary injunction. Iranian Muslim Organization v. City of San Antonio, 615 S.W.2d 202, 208 (Tex.1981); Houston Independent School District v As to the question of res judicata raised by Gannon, the law is equally clear that a trial court is not authorized to determine the merits of a plea in bar in a hearing on an application for temporary injunction. Houston Belt & Terminal Ry. Co. v. Texas & New Orleans Ry. Co., 155 Tex. 407, 289 S.W.2d 217 (1956); DeVilbiss v. West, 600 S.W.2d 767 (1980). The only question before the trial court in a hearing on a temporary injunction is whether the movant is entitled to preservation of the status quo of the subject matter of the suit pending a trial on the merits. Davis v. Huey, 571 S.W.2d 859 (Tex.1978).

                City of Houston, 443 S.W.2d 49, 50 (Tex.1969).  It is undisputed that the 160th Judicial Court of Dallas County has jurisdiction over the parties to this suit.  It is further undisputed that after the Texas court had acquired jurisdiction of the parties, and had exercised that jurisdiction for a period of almost two years, Gannon filed suit in Canada, seeking to litigate claims which were before the Texas court and seeking to interfere with the jurisdiction of the Texas court.  It has long been Texas law that when suit is filed in a court having jurisdiction of the parties and the subject matter, that court may proceed to judgment and may protect its jurisdiction by enjoining the parties from prosecution of another suit subsequently filed in another court, involving the same subject matter.   Cleveland v. Ward, 116 Tex. 1, 285 S.W. 1063 (1926);  V.D. Anderson Co. v. Young, 128 Tex. 631, 101 S.W.2d 798 (1937);  PPG Industries, Inc. v. Continental Oil Co., 492 S.W.2d 297 (Tex.Civ.App.--Houston [1st Dist.] 1973, writ ref'd n.r.e.)
                

Next, Gannon raises the questions of forum non conveniens and comity, arguing essentially the same matters that were argued in New Process Steel v. Steel Corp. of Texas, 638 S.W.2d 522 (Tex.Civ.App.--Houston [1st Dist.] 1982, no writ). In that case, the appellant argued the question of multiplicity of suits, the doctrine of comity, irreparable harm resulting from the expense of litigation, and the doctrine of forum non conveniens. The trial court denied a temporary injunction sought to enjoin one of the parties from proceeding in a subsequent suit in Oklahoma. The appellate court affirmed, pointing out that trial courts have broad discretion in granting or denying temporary injunctions and that the appellate court cannot substitute its discretion for that of the trial court. New Process Steel, 638 S.W.2d at 524. Moreover, the court noted that the sole function of the appellate court is to determine whether there has been a clear abuse of discretion by the trial court. New Process Steel, 638 S.W.2d at 524.

In response to Gannon's argument concerning comity, we note that comity is not a rule of law but a principle of convenience, to be administered not as a matter of obligation, but only out of deference and respect, and then not as a matter of right, but as a courtesy if, in its discretion, the trial court so chooses. New Process Steel, 638 S.W.2d at 524. We conclude that the trial court's failure to apply the doctrine of comity under the facts of this case does not demonstrate an abuse of discretion.

With respect to the doctrine of forum non conveniens, we conclude...