Hernandez v. Combined Ins. Co. of Am.

• Decision Date: 11 February 2021
• Docket Number: No. 02-20-00225-CV,02-20-00225-CV
• Parties: STEVEN HERNANDEZ, FRANCISCO AZUERO, AND FAMILY HERITAGE LIFE INSURANCE COMPANY OF AMERICA, Appellants v. COMBINED INSURANCE COMPANY OF AMERICA, Appellee
• Court: Texas Court of Appeals

STEVEN HERNANDEZ, FRANCISCO AZUERO, AND FAMILY HERITAGELIFE INSURANCE COMPANY OF AMERICA, Appellants v. COMBINED INSURANCE COMPANY OF AMERICA, Appellee

No. 02-20-00225-CV

Court of Appeals Second Appellate District of Texas at Fort Worth

February 11, 2021

On Appeal from the 67th District Court Tarrant County, Texas

Trial Court No. 067-316824-20

Before Sudderth, C.J.; Bassel and Wallach, JJ.

Memorandum Opinion by Justice Bassel MEMORANDUM OPINION

I. Introduction

This is an interlocutory appeal in which Appellants Steven Hernandez, Francisco Azuero, and Family Heritage Life Insurance Company of America¹ challenge a temporary-injunction order entered at the request of Appellee Combined Insurance Company of America.

Individual Appellants are former district sales managers of Combined who terminated their employment with Combined and became affiliated with Family Heritage. Combined sued Appellants alleging various causes of action based on the claim that Individual Appellants had violated covenants in their employment agreements. Combined sought a temporary injunction to restrain Appellants from soliciting Combined's employees and policyholders and from using its confidential information. After a lengthy hearing, the trial court entered an order granting a temporary injunction (hereinafter the injunction order). Individual Appellants and Family Heritage perfected an appeal and filed separate briefs.

In nine issues, Individual Appellants launch a multifront attack on the injunction order. Individual Appellants' challenges to the injunction order fall into two categories. The first category asserts that the trial court abused its discretion because the recorddoes not support Combined's right to injunctive relief. Relying on the generous standard of review that applies to temporary-injunction appeals, we conclude that the trial court did not abuse its discretion. Specifically, the trial court acted within its discretion to find that Combined had a probable right to recovery based on preliminary determinations that the covenants were reasonable, that Individual Appellants had committed acts in violation of the covenants, and that Combined would likely experience an imminent and irreparable injury if the temporary injunction were not entered.

The second category of challenges involves the form of the injunction order and Individual Appellants' claims that the order does not describe its restraints in reasonable detail, restrains lawful activity, and grants relief beyond that requested by Combined. Because we sustain many of these challenges, we remand this case to the trial court to address the deficiencies that we identify in the order.

Family Heritage raises two issues. We hold that the trial court abused its discretion by restraining Family Heritage because the evidence does not support a finding that Family Heritage interfered with Combined's contractual relations with Individual Appellants and that Family Heritage is not vicariously liable for Individual Appellants' acts. Because Family Heritage should not have been enjoined, we vacate the portion of the injunction order restraining Family Heritage, dissolve the temporary injunction as to Family Heritage, and do not reach its second issue that challenges the form of the injunction order.

II. Factual and Procedural Background

A. Factual background

Individual Appellants started as sales agents at Combined and rose through the ranks to become district managers who supervised scores of agents on their respective sales teams. Their teams sold supplemental insurance policies and operated in Combined's Division 48 that marketed policies to a Spanish-speaking demographic.

When Individual Appellants began working at Combined, they signed employment agreements, and the covenants contained in those contracts underlie Combined's claims against them. The covenants contained in Individual Appellants' respective contracts are identical. In paragraph (19)(a) of the agreements, Individual Appellants affirmed that, for a period of two years after termination of the agreements, they would not

(i) solicit or attempt to solicit on behalf of another insurer, any insurance of the kind or character sold by the Company (including but not limited to, accident & health, Medicare Supplement[,] and life insurance) to any of the Company's policyholders in the Sales Territory covered by this Agreement, or (ii) induce, or attempt to induce, any of the Company's policyholders to cancel, lapse, or fail to renew their polic[i]es with the Company in said Sales Territory.

The agreements also provided that, for two years after the termination of the agreements, Individual Appellants would not

in any way directly or indirectly induce or attempt to induce any of the Combined Companies' directors, officers, sales representatives, agents[,] or other employees working in the state(s) in which the Employee's Sales Territory is located[] to terminate their employment with the Combined Companies[] or to sell insurance for any other company.

The covenant defined "Sales Territory" as that territory or territories in which Individual Appellants had been assigned to work. Though there was controversy at trial about the extent of the respective sales territories, in general terms, Hernandez's territory encompassed counties in the Dallas-Fort Worth metropolitan area, and Azuero's territory encompassed an area around Miami, Florida.

The agreements also noted that Individual Appellants would come into possession of confidential information. In the agreements, Individual Appellants promised not to disclose that information.

Combined presented evidence that Hernandez had been given or had access to a wide range of confidential information about Combined's operations in his roles as a sales agent and later as a district manager. Combined also presented evidence that Azuero had access to information about all the Combined policyholders in Florida where his sales territory was located. Hernandez acknowledged that he had received some confidential information, but he disputed both the type of information that he had received and whether he had ever actually accessed the information that Combined claimed that he could access. Combined acknowledged that it did not have direct evidence that Hernandez had retained confidential information when he had left Combined but claimed that he had unusually high usage of the information in the months before his departure.

Apparently, the impetus for Individual Appellants' departure from Combined came in late 2019. Azuero left Combined first, resigning in January 2020. Within a week of Azuero's resignation, he became affiliated with the other Appellant in this matter, Family Heritage. Hernandez left approximately one month later, in February 2020, and testified that his concerns about staying with Combined arose because its policies created a high turnover of agents and because other changes jeopardized his income.

One of Combined's claims focused on whether Individual Appellants had violated the covenants in their employment agreements by actions that occurred (1) after Azuero had become affiliated with Family Heritage and (2) at a February 18, 2020 meeting where Hernandez announced to his Combined sales team that he was resigning. Individual Appellants gave innocent explanations about what had occurred, while Combined portrayed the events as raising an inference that Individual Appellants had induced Combined's sales agents to leave Combined and to become affiliated with Family Heritage.

For example, Hernandez acknowledged that, before the February 18 meeting, he flew to Miami to meet with Azuero and another former agent of Combined who had moved to Family Heritage—Reineldo Urgelles. Hernandez acknowledged that the purpose of this meeting was for him to obtain more information about Family Heritage.

Combined argued that the Miami meeting was apparently a session to prepare for Hernandez's efforts to induce his sales team to follow him to Family Heritage. Forexample, Combined highlighted that after the Miami meeting, Azuero sent Hernandez a document to be given to Combined agents before they signed a contract to become affiliated with Family Heritage. The document stated that "they were never contacted or persuaded by [Family Heritage's] Regional Director, Francisco Azuero, to quit their employment at Combined" and that they had made their employment decisions "voluntarily and without any coercion." Hernandez testified that the document was prepared out of fear of possible "sanctions" from Combined and that its purpose was to document that Combined's agents had not been solicited by Individual Appellants to join Family Heritage.

The differing portrayals of events and motives carried forward as the parties described the events leading to and occurring at the February 18 meeting when Hernandez announced his resignation from Combined. As background, Hernandez called weekly meetings of his Combined sales team to discuss sales goals and to welcome new team members. But the February 18 meeting was apparently the first one that was not held at Combined's offices. One person who attended testified that she had understood that it would be a standard marketing meeting; instead, Hernandez announced his resignation from Combined but did not say that he was moving to Family Heritage. Another attendee testified that Hernandez stated during the meeting that he was moving to Family Heritage.

Also, Azuero and Urgelles appeared at the meeting. Individual Appellants explained Azuero and Urgelles's presence as coincidental, claiming that they had cometo Texas to discuss another line of insurance that they and Hernandez sold, and said that the meeting was not held at Combined's office because they met at the location of the broker for the other line of insurance. Though there was a photo of Azuero and Urgelles at the front of the room where the meeting with Hernandez's team occurred, Hernandez testified that...