Myrtle Consulting Grp., LLC v. Resulting Partners, Inc.
| Decision Date | 03 June 2021 |
| Docket Number | NO. 01-20-00095-CV,01-20-00095-CV |
| Parties | MYRTLE CONSULTING GROUP, LLC, Appellant v. RESULTING PARTNERS, INC., Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 11th District Court Harris County, Texas
In this case, Myrtle Consulting Group, LLC, initiated arbitration proceedings against Resulting Partners, Inc., and its principal, Javier Rodriguez Lojo, who is not a party to this interlocutory appeal. Resulting Partners filed suit and sought a declaratory judgment that it was not a party to any arbitration agreement with Myrtle and therefore was not required to arbitrate Myrtle's claims against it. Resulting Partners applied for a temporary restraining order and a temporary injunction to prevent the arbitration proceedings from moving forward while the trial court determined whether Resulting Partners was subject to arbitration. The trial court granted both the temporary restraining order and the temporary injunction in favor of Resulting Partners.
In three issues, Myrtle contends that (1) the trial court abused its discretion when it failed to grant Myrtle's motions for expedited discovery prior to the temporary injunction hearing; (2) the trial court abused its discretion by finding that Resulting Partners would suffer irreparable injury if the temporary injunction did not issue; and (3) Resulting Partners was not entitled to a temporary injunction under the doctrine of unclean hands. We affirm.
Myrtle Consulting Group is an operations consulting company headquartered in Houston. It has clients in numerous industries throughout the world. In October 2016, Myrtle hired Javier Lojo as a business development executive. Almost immediately thereafter, Lojo created Resulting Partners, a Florida corporation.Resulting Partners performs consulting work similar to the work that Myrtle performs.
On February 20, 2017, Lojo signed a "Confidentiality and Non-Compete Agreement." This agreement stated that it was between Myrtle Consulting Group, LLC, and "the Employee signed below," Lojo. In this agreement, Lojo agreed to work solely for Myrtle and "not engage in any other business interest or activities." He agreed not to disclose or publish any of Myrtle's confidential information during his employment "and perpetually thereafter." He further agreed that, for two years after the end of his employment with Myrtle, he would not accept employment or enter into a business relationship with any company that provides similar goods and services to Myrtle's clients.
The agreement also included an arbitration provision, in which Myrtle and Lojo agreed that any dispute or claim arising from or relating to the agreement shall be settled by binding arbitration conducted by the American Arbitration Association (AAA). Resulting Partners did not sign this agreement, nor was it mentioned in the agreement.
In November 2018, Myrtle sued Lojo, and the suit was assigned to the 80th District Court of Harris County. Resulting Partners is not a party to this suit. Myrtle asserted causes of action against Lojo for breach of contract related to theconfidentiality and non-compete agreement, conversion, violations of the Federal Defend Trade Secrets Act and the Texas Uniform Trade Secrets Act, and tortious interference with existing and prospective contracts. Lojo moved to dismiss the suit under the Texas Citizens Participation Act (TCPA). That motion was overruled by operation of law. Lojo appealed the denial of his motion to dismiss, and that appeal remains pending before the Fourteenth Court of Appeals.
In October 2019, Myrtle filed a demand for arbitration with the AAA and named Lojo and Resulting Partners as respondents. In the demand, Myrtle provided a brief description of the dispute and stated:
Claimant and Respondent entered into an Employment and Confidentiality and Non-Compete Agreements. Claimant alleges Respondent breached said agreements and alleges violations of the Federal Defend Trade Secrets Act (DTSA), Texas Uniform Trade Secrets Act (TUTSA), breach of contract, conversion, tortious interference with prospective contracts, unjust enrichment, and exemplary damages.
Myrtle sought monetary damages, attorney's fees, exemplary damages, and other equitable relief. Myrtle also filed a "Statement of Claims in Arbitration" and provided specific factual allegations for each of its claims against Lojo and Resulting Partners. Specifically, Myrtle alleged that, during Lojo's employment, he had several meetings in June and July of 2017 with representatives of a company called Ecopetrol, a potential client. Lojo quit working for Myrtle at the end of July 2017.Several months later, Myrtle learned that Ecopetrol hired Resulting Partners for consulting services similar to those Myrtle had offered.
Counsel for Lojo and Resulting Partners informed the AAA of the stay in place in Lojo's pending appeal before the Fourteenth Court of Appeals and argued that Myrtle's demand for arbitration violated the stay. See TEX. CIV. PRAC. & REM. CODE § 51.014(b) (). Counsel stated that because of the stay, Lojo and Resulting Partners would not be filing an answer to Myrtle's arbitration demand unless they are compelled to arbitrate. Finally, counsel stated that "Resulting Partners, Inc. is not a party to the arbitration agreement and has not been ordered by any court to arbitrate . . . ."
The AAA's Manager of ADR Services asked Myrtle to "comment on the request to stay the arbitration and arbitrability as to Resulting Partners, Inc." Myrtle filed a brief with the AAA in support of arbitrating its claims against Resulting Partners. The AAA requested that Resulting Partners provide any reply by December 17, 2019.
On December 17, 2019, Resulting Partners filed suit against Myrtle, and the suit was assigned to the 11th District Court of Harris County. Lojo is not a party tothis suit. Resulting Partners sought a declaratory judgment that it was not a party to any arbitration agreement with Myrtle and that, therefore, it was not subject to arbitration. Resulting Partners sought a temporary restraining order and a temporary injunction "to stay the arbitration until this Court can rule on whether [Resulting Partners] is subject to any arbitration with Myrtle." Resulting Partners argued that, if the trial court did not grant temporary relief, it would suffer irreparable injury because Myrtle would continue with the arbitration proceedings "with the risk that the arbitrator will attempt to determine arbitrability as between [Resulting Partners] and Myrtle." Resulting Partners further argued that an anti-suit injunction was appropriate because allowing arbitration to proceed "presents a threat to this Court's jurisdiction to determine arbitrability" and "subjects [Resulting Partners] to harassing and vexatious litigation." Resulting Partners also sought a permanent injunction permanently enjoining Myrtle from continuing any arbitration proceeding against it.
On December 18, 2019, the Harris County ancillary judge granted a temporary restraining order enjoining Myrtle from continuing with the arbitration proceedings against Resulting Partners or filing any other demand for arbitration against Resulting Partners arising out of the same transaction or occurrence. In this order, the ancillary judge expressly found that no arbitration agreement exists between Myrtle and Resulting Partners. The ancillary judge also found that Resulting Partnerswould be irreparably injured if the temporary restraining order did not issue because Myrtle's arbitration demand "creates a threat to this Court's jurisdiction and/or constitutes vexatious or harassing litigation" and threatens Resulting Partners' opportunity to have the issue of arbitrability decided by the trial court as opposed to the arbitrator. The order set Resulting Partners' application for temporary injunction for a hearing on January 6, 2020. Due to a scheduling conflict, the trial court later reset the date for the hearing to January 13, 2020.
On December 19, 2019, Myrtle filed a motion for expedited discovery, stating that Myrtle "needs and requests limited discovery to adequately prepare for the temporary injunction hearing." Myrtle attached twelve requests for production and two requests for admissions and requested that the court order Resulting Partners to respond this written discovery by December 27, 2019. Myrtle also requested that the court order the deposition of Resulting Partners' corporate representative for December 30, 2019. This motion was not set for a hearing. Resulting Partners filed a motion to quash the deposition of its corporate representative, arguing that the deposition and expedited discovery was not necessary in advance of the temporary injunction hearing. The trial court did not rule on Myrtle's motion or Resulting Partners' motion to quash.
Myrtle filed an amended motion for expedited discovery on December 30, 2019. Myrtle stated that it believed Resulting Partners was required to arbitratebecause Resulting Partners was Lojo's alter ego. Myrtle argued that it must introduce evidence to establish alter ego and its discovery requests "are the minimum necessary to show the relationship between [Lojo] and Resulting Partners." Myrtle requested that the trial court order Resulting Partners to comply with the written discovery requests by January 7, 2020, and order the deposition of Resulting Partners' corporate representative for January 9, 2020. This motion was not set for a hearing, and the trial court did not rule on it.
In advance of the temporary injunction hearing, Myrtle filed a brief arguing that the trial court lacked the...
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