Recon Exploration, Inc. v. Hodges, 05-90-00627-CV

• Decision Date: 10 October 1990
• Docket Number: No. 05-90-00627-CV,05-90-00627-CV
• Citation: 798 S.W.2d 848
• Parties: RECON EXPLORATION, INC. and Recon Air, Inc., Appellants, v. Edward L. HODGES and Kenneth W. Montgomery, Appellees.
• Court: Texas Court of Appeals

Page 848

798 S.W.2d 848

RECON EXPLORATION, INC. and Recon Air, Inc., Appellants, v. Edward L. HODGES and Kenneth W. Montgomery, Appellees.

No. 05-90-00627-CV.

Court of Appeals of Texas,

Dallas.

Oct. 10, 1990.

Robert E. Sheeder, Dallas, for appellants.

Stephen C. Porter, Dallas, for appellees.

Before HOWELL, BAKER and LAGARDE, JJ.

OPINION

BAKER, Justice.

Recon Exploration, Inc. and Recon Air, Inc. appeal from the trial court's denial of their request for a temporary injunction. Recon sued to enforce a secrecy and noncompete agreement against Edward L. Hodges and Kenneth W. Montgomery. Recon contends that the trial court abused its discretion in (1) denying Recon's request for a temporary injunction and (2) reaching certain findings of fact and conclusions of law. We affirm the trial court's order.

THE FACTS

1. Undisputed Evidence

a. The Dispute Between the Parties

Recon engages in exploration for petroleum reserves throughout the world. It uses a process known as microwave spectrometry to detect seepages of hydrocarbon gas. Recon employed Hodges as a "microwave spectrometer operator" and Montgomery as a helicopter pilot. Recon required each to execute a secrecy and noncompete agreement. After June 15, 1989, Hodges and Montgomery formed a partnership to perform hydrocarbon gas surveys using airborne microwave spectroscopy. Amoco Production Company, a Recon customer, contracted for their services. This suit resulted.

b. The Secrecy and Noncompete Agreements

Hodges began working for Recon in 1983 as a helicopter mechanic. He signed a confidentiality agreement shortly after starting work. ¹ After Recon trained him to use its equipment, Hodges signed a second secrecy and noncompete agreement as a condition of continued employment. He received a ten percent raise the month following his execution of the agreement, although his duties did not change. Facing business reversals, Recon terminated Hodges as a full-time employee on June 15, 1989. He continued to work for Recon part time.

Recon hired Montgomery as a helicopter pilot in 1982. He left Recon in 1984 but continued to fly surveys for Recon as a charter pilot. He returned to Recon as a full-time employee in 1986. As a condition of full-time employment, Recon required him to sign a secrecy and noncompete agreement. Recon terminated Montgomery at the same time as Hodges. Montgomery also continued to work part time.

The secrecy and noncompete agreements contain the following provision:

Employee will not for a period of ten (10) years from the termination of employment pursuant to this Agreement, directly or indirectly, own, manage, operate, control, be employed by or participate in the ownership, management, operation or control of, or be connected in any manner with any business of the type and character engaged in and competitive with that conducted by EMPLOYER at the time of such termination.

The agreements do not contain a geographic limitation.

2. Conflicting Evidence

a. Recon's Equipment and Procedures

At the temporary injunction hearing, Recon introduced evidence that its business interest in its equipment and procedures is entitled to protection. Recon began using microwave spectroscopy technology in 1975. It spent over a million dollars in research and development of its equipment and procedures. The process uses helicopter-mounted marine radar equipment. Hydrocarbon gas appears as a cloud or "ghost" on the radar screen. The radar operator identifies and notes the position of hydrocarbon gas from the images on the screen. The operator plots the information on maps. A geophysicist then reviews the maps to determine the likelihood of oil reserves at the locations shown. Recon's process is unique because it detects methane gas. Recon treats its equipment and procedures as trade secrets.

Hodges and Montgomery responded with evidence that Recon's interest is not entitled to protection. Microwave spectroscopy technology has existed since the end of World War II. ² Hodges and Montgomery bought the same radar unit on the open market. Montgomery used plans provided by the helicopter manufacturer to mount the equipment on Recon's helicopter. Several companies use microwave spectroscopy to detect hydrocarbon gas. Articles about the use of microwave spectroscopy to detect hydrocarbon gas seepages have appeared in several trade journals. A dispute exists within the petroleum industry as to whether microwave spectroscopy can detect methane gas. Neither Hodges nor Montgomery determined whether images on the radar screen were methane gas or some other hydrocarbon gas. Analysis of the data required a trained geophysicist.

b. Hodges and Montgomery's Training

Recon introduced evidence that both Hodges and Montgomery received specialized and unique training. Proficient use of the equipment required many months of intensive training. In response, Hodges and Montgomery elicited testimony about their training and duties. Hodges operated the radar equipment, identified the images he saw on the screen, and plotted the information onto maps. His training took about forty hours. A person with no technical background can master Recon's equipment and procedures in about two weeks. Montgomery piloted the helicopter. He received his flight training in the Army and did not get any additional training from Recon. He occasionally helped Hodges by drawing lines, coloring or shading maps, and trimming the edges of maps.

c. Recon's Loss of Goodwill and Clientele

Recon's evidence showed that it had a significant business relationship with Amoco. After the end of 1989, Recon got no further business from Amoco. Hodges and Montgomery's contract with Amoco provided for $6,500 a day in fees. At the time of the hearing, the partnership had received $86,500 on the contract.

THE ISSUE

The only issue before the trial court in a temporary injunction hearing is whether the applicant is entitled to preservation of the status quo of the subject matter of the suit pending trial on the merits. Davis v. Huey, 571 S.W.2d 859, 862 (Tex.1978); Bethke v. Polyco, Inc., 730 S.W.2d 431, 434 (Tex.App.--Dallas 1987, no writ).

THE STANDARD OF REVIEW

Appellate review of the grant or denial of a temporary injunction is strictly limited to determining whether there has been a clear abuse of discretion by the trial court in granting or denying the interlocutory order. Davis, 571 S.W.2d at 862; Bethke, 730 S.W.2d at 434. The appellate court may not substitute its judgment for that of the trial court. Davis, 571 S.W.2d at 862; Ballenger v. Ballenger, 694 S.W.2d 72, 75 (Tex.App.--Corpus Christi 1985, no writ). An abuse of discretion does not exist where the trial court bases its decision on conflicting evidence. Zmotony v. Phillips, 529 S.W.2d 760, 762 (Tex.1975).

DISPOSITION OF RECON'S ARGUMENTS

1. Injunctive Relief

a. At Common Law

In its first two points, Recon contends the trial court abused its discretion because Recon is entitled to preservation of the status quo pending a full trial on the merits. Recon also asserts that the appropriation of its business will result in continued interim injury to Recon. To secure a temporary injunction at common law, a party must plead and prove a probable right to recovery and probable irreparable injury if the court denies temporary equitable relief. Ballenger, 694 S.W.2d at 76. Injunctive relief will not be granted unless the applicant also shows that it has no adequate remedy at law for interim damages which may result while the suit is pending. Ballenger, 694 S.W.2d at 76. The test for determining if an existing remedy is adequate is whether the remedy is as complete, practical, and efficient to the ends of justice and its prompt administration as is equitable relief. Brazos River Conservation & Reclamation Dist. v. Allen, 141 Tex. 208, 171 S.W.2d 842, 846 (1943). No adequate remedy at law exists if damages are incapable of calculation or if a defendant is incapable of responding in damages. Bank of the Southwest N.A., Brownsville v. Harlingen Nat'l Bank, 662 S.W.2d 113, 116 (Tex.App.--Corpus Christi 1983, no writ).

Although an applicant for a temporary injunction need not prove that it will win on the merits, it has the burden of establishing a probable right to final recovery and a probable interim injury. See Keystone Life Ins. Co. v. Marketing Management, Inc., 687 S.W.2d 89, 92 (Tex.App.--Dallas 1985, no writ). The common law clothes the trial court with broad discretion in determining whether an applicant has met its burden. See Executive Tele-Communication Sys., Inc. v. Buchbaum, 669 S.W.2d 400, 403 (Tex.App.--Dallas 1984, no writ).

Recon argues that it showed a probable right of recovery in two respects. First, it argues that the evidence showed that Recon's equipment and procedures were trade secrets entitled to protection. Second, Recon maintains that it showed that the training and knowledge gained by Hodges and Montgomery were of such a specialized nature as to require protection. Recon also asserts that it proved probable interim injury. It contends that the Amoco contract evidence showed that the injury suffered by Recon was such that it had no adequate remedy at law and that the interim harm to Recon was irreparable. The record reflects that the evidence conflicts on these points. Hodges and Montgomery adduced evidence that the equipment and procedures are well known in the trade. They elicited testimony that a person could use the equipment and perform the procedures after one or two weeks of instruction. They showed that no particular scientific training is necessary. Also, the evidence established that trained geophysicists interpreted the data compiled by Hodges and Montgomery. Finally, there is evidence that Recon's interim damages can be measured and readily calculated.

Abuse of discretion does not exist if the trial court heard conflicting evidence and evidence appears in the record which reasonably supports the trial court's...