Texas Indus. Gas v. Phoenix Metallurgical Corp.

• Decision Date: 02 April 1992
• Docket Number: No. 01-91-00747-CV,01-91-00747-CV
• Citation: 828 S.W.2d 529
• Parties: TEXAS INDUSTRIAL GAS, Appellant, v. PHOENIX METALLURGICAL CORPORATION, Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 529

828 S.W.2d 529

TEXAS INDUSTRIAL GAS, Appellant, v. PHOENIX METALLURGICAL CORPORATION, Appellee.

No. 01-91-00747-CV.

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

April 2, 1992.

Pamela E. George, Houston, for appellant.

Samuel L. Walsh, Houston, for appellee.

Before TREVATHAN, C.J., and O'CONNOR and WILSON, JJ.

OPINION

O'CONNOR, Justice.

This court is asked to determine whether the trial court abused its discretion when it denied injunctive relief to plaintiff, Texas Industrial Gas (TIG). ¹ TIG sought an injunction to prohibit defendant, Phoenix Metallurgical Corporation (PMC), from purchasing Argon gas from other suppliers. We reverse and remand for additional evidence.

Fact summary

TIG is an industrial gas and welding equipment supplier. On October 18, 1989, TIG and PMC executed a contract in which TIG (as seller) and PMC (as buyer) agreed that PMC would purchase its entire requirement of Argon gas for five years from TIG. The evidence at the hearing was that the contract was repeatedly rewritten at the insistence of PMC. Paragraph four of the contract required TIG, if necessary to supply PMC's requirements, to install storage, control, and vaporization equipment. After executing the contract with PMC and based on that contract, TIG contracted with another company to install a $65,000 tank for use by PMC. To pay for the tank, TIG financed the tank with the company that installed it, with which TIG had been doing business for 20 years.

After TIG began supplying Argon gas to PMC, PMC fell into arrears. PMC paid down some of its balance, but, at trial, it owed over $16,000 of the balance due, which triggered a provision of the contract that allowed TIG to impose new payment terms, such as requiring cash on delivery.

TIG also provided PMC with VGL's (vessel gas liquid) for use in an emergency. Using Argon gas from the VGL's is more expensive than using gas from the large tank because the VGL's are a type of thermos container that keep the gas chilled and are delivered individually. In March or April of 1991, a driver for TIG noticed that PMC was using VGLs that belonged to Tech-Weld. TIG claims this was a breach of the contract because PMC was procuring Argon gas from another source. On April 29, 1991, the purchasing agent for PMC stated to Ms. Trail at TIG that PMC would no longer purchase small items from TIG so its bill would not get any bigger.

TIG sought an injunction requesting that PMC be enjoined from the following:

1. Moving or damaging the bulk storage tank belonging to TIG and upon premises of PMC;

2. Contracting for, purchasing, ordering, receiving, or taking delivery directly or indirectly, of Argon gas for use by or on behalf of PHOENIX METALLURGICAL CORP. from any company, firm, entity, person, supplier, or agency except plaintiff, TEXAS INDUSTRIAL GAS;

3. Interfering with the ingress of plaintiff's employees, agents, or any persons designated by plaintiff upon the premises of defendant during weekdays and Saturdays, between the hours of 9:00 a.m. and 5:00 p.m., at reasonable intervals, not less than weekly, or at any time in the event of emergency circumstances which in the sole discretion of plaintiff threaten destruction or damage to plaintiff's bulk storage tank, in order to conduct inspection, maintenance, and repair of plaintiff's bulk storage tank on defendant's premises; and

4. Interfering with the ingress of Plaintiff's employees, agents, or persons designated by Plaintiff upon the premises of Defendant during weekdays and Saturdays, between the hours of 9:00 a.m. and 5:00 p.m., for the purpose of removal of the bulk storage tank on defendant's premises.

After a hearing on this request for injunction, the parties agreed to the conditions of paragraphs 1, 3, and 4. The trial court entered an injunction as to the agreed paragraphs and, without stating a reason, granted PMC's motion for instructed judgment, and refused to temporarily enjoin PMC from purchasing Argon gas from other companies.

Standards of review

The applicant for an injunction must plead a cause of action, show a probable right to recover the relief sought, and a probable injury in the interim. Sun Oil Co. v. Whitaker, 424 S.W.2d 216, 218 (Tex.1968); David v. Bache Halsey Stuart Shields, Inc., 630 S.W.2d 754, 756 (Tex.App.--Houston [1st Dist.] 1982, no writ). The applicant must show also that it has no adequate legal remedy. Surko Enters., Inc. v. Borg-Warner Acceptance Corp., 782 S.W.2d 223, 225 (Tex.App.--Houston [1st Dist.] 1989, no writ). For a legal remedy to be adequate, it must give the applicant complete, final, and equal relief. David, 630 S.W.2d at 756.

At the hearing for a temporary injunction, the only question before the trial court is whether the applicant was entitled to an order to preserve the status quo pending trial on the merits. Davis v. Huey, 571 S.W.2d 859, 862 (Tex.1978); Martin v. Linen Sys. for Hosps., Inc., 671 S.W.2d 706, 709 (Tex.App.--Houston [1st Dist.] 1984, no writ). The status quo is defined as the last, actual, peaceable, noncontested status that preceded the controversy. State v. Southwestern Bell Tel. Co., 526 S.W.2d 526, 528 (Tex.1975).

A trial court may not issue a temporary injunction except to prevent a threatened injury. Dallas General Drivers, Warehousemen and Helpers v. Wamix, Inc., 156 Tex. 408, 295 S.W.2d 873, 879 (1956); see also Ginther-Davis Center v. Houston Nat'l Bank, 600 S.W.2d 856, 863 (Tex.Civ.App.--Houston [1st Dist.] 1980, no writ). The commission of the act to be enjoined must be more than just speculative, and the injury that flows from the act must be more than just conjectural. Otten v. Town of China Grove, 660 S.W.2d 565, 569 (Tex.App.--San Antonio 1983, writ dism'd); see also Manufacturers Hanover Trust Co. v. Kingston Investors Corp., 819 S.W.2d 607, 611 (Tex.App.--Houston [1st Dist.] 1991, no writ). The trial court will abuse its discretion if it grants a temporary injunction when the evidence does not clearly establish that the applicant is threatened with an actual, irreparable injury. Manufacturers Hanover, at 610.

Our review of the temporary injunction is limited to deciding whether the trial court abused its discretion; we are not to resolve the merits of the underlying case. Davis, 571 S.W.2d at 861-62; Moreno v. Baker Tools, Inc., 808 S.W.2d 208, 211 (Tex.App.--Houston [1st Dist.] 1991) (orig. proceeding). We will not substitute our judgment for that of the trial court, but will limit our review to whether the court's action was so arbitrary that it exceeded the bounds of reasonable discretion. Davis, 571 S.W.2d at 862; Moreno, 808 S.W.2d at 211.

If we find the trial court misapplied the law to established facts or if it concluded the applicant had a probable right of recovery and that conclusion is not reasonably supported by the evidence, we will find that the court abused its discretion. Southwestern Bell Tel. Co., 526 S.W.2d at 528; Miller v. K & M Partnership, 770 S.W.2d 84, 87 (Tex.App.--Houston [1st Dist.] 1989, no writ).

TIG argues the trial court abused its discretion in denying the temporary injunction. TIG claims PMC's arrearage hurt its relationships with its other customers and its suppliers because TIG was not able to pay its suppliers who then required cash on delivery. TIG argues if PMC does not pay it, TIG cannot pay its supplier and, therefore, TIG cannot service its other accounts.

1. Irreparable harm

In points of error one and two, TIG argues the trial court erred in denying the temporary injunction because without an injunction, TIG will suffer irreparable harm.

An irreparable injury is an injury for which the injured party cannot be adequately compensated in damages, or one for which the damages cannot be measured by any certain pecuniary standard. Southwestern Chem. & Gas Corp. v. Southeastern Pipe Line Co., 369 S.W.2d 489, 492 (Tex.Civ.App.--Houston 1963, no writ).

TIG offered proof that unless the court granted the temporary injunction, TIG would suffer irreparable harm because: 20 percent of its business is with PMC; TIG cannot pay for the tank it installed for PMC without the regular purchases of Argon from PMC, and the tank could be repossessed; if the tank is repossessed, it will ruin TIG's impeccable 20-year credit it had established with its suppliers; PMC is experiencing a cash flow problem and has greater liabilities than assets; and if PMC is insolvent when this case goes to trial, it will not be able to pay for the tank and for the gas already delivered. PMC offered no evidence at the hearing. There is no evidence that supports the trial court's conclusion that no irreparable harm would result; all the evidence tends to support the probability that of harm.

We find that TIG's evidence supports the conclusion of probable injury and it was an abuse of discretion to refuse to grant the injunction. We sustain points of error one and two.

2. Adequate remedy at law

In point of error three, TIG argues the trial court erred in denying the temporary injunction because it has no adequate remedy at law.

An applicant for a temporary injunction must establish it has no adequate remedy at law; if it does not, the court must refuse to grant an injunction. Recon Exploration, Inc. v. Hodges, 798 S.W.2d 848, 851 (Tex.App.--Dallas 1990, no writ). For the purposes of injunctive relief, there is no adequate remedy at law if damages are incapable of calculation or if the defendant is incapable of responding in damages. Bank of Southwest v. Harlingen Nat'l Bank, 662 S.W.2d 113, 116 (Tex.App.--Corpus Christi 1983, no writ). In Surko, we said a plaintiff does not have an adequate remedy of law if the defendant is going to be insolvent before trial. 782 S.W.2d at 225. In Surko, the defendant was not paying other creditors and was in a great deal of financial distress. Id.; see also Ballenger v. Ballenger, 694 S.W.2d 72, 77 (Tex.App.--Corpus Christi 1985, no writ) (the Corpus Court dissolved a temporary...