Texas Mut. Ins. Co. v. Surety Bank, N.A.

• Decision Date: 06 January 2005
• Docket Number: No. 2-04-233-CV.,2-04-233-CV.
• Citation: 156 S.W.3d 125
• Parties: TEXAS MUTUAL INSURANCE COMPANY, Appellant, v. SURETY BANK, N.A. Individually and d/b/a Surety Premium Finance, Appellee.
• Court: Texas Court of Appeals

156 S.W.3d 125

TEXAS MUTUAL INSURANCE COMPANY, Appellant, v. SURETY BANK, N.A. Individually and d/b/a Surety Premium Finance, Appellee.

No. 2-04-233-CV.

Court of Appeals of Texas, Fort Worth.

January 6, 2005.

Graves, Dougherty, Hearon & Moody, P.C., Peter D. Kennedy, James A. Hemphill, Texas Mutual Insurance Company, Mary B. Nicols, Austin, Brown, Dean, Wiseman, Liser, Proctor & Hart, L.L.P., Michael L. Peck, Fort Worth, for appellant.

Chappell, Hill & Lowrance, L.L.P., David Chappell, Marcus C. Marsden, Jr., Surety Bank, N.A., Talya Bernstein Galaganov, Fort Worth, for appellee.

Panel A: HOLMAN, WALKER, and McCOY, JJ.

OPINION

SUE WALKER, Justice.

I. INTRODUCTION

In this accelerated, interlocutory appeal, Appellant Texas Mutual Insurance Company ("Texas Mutual") challenges a single provision in a temporary injunction obtained by Appellee Surety Bank, N.A., individually and doing business as Surety Premium Finance ("Surety Bank"). Texas Mutual claims that the challenged temporary injunction provision constitutes a prior restraint on speech that is unconstitutional under article one, section eight of the Texas Constitution and under the First Amendment of the United States Constitution. See TEX. CONST. art. I § 8; U.S. CONST amend. I. Because we hold that the challenged provision is unconstitutional, we will modify the trial court's temporary injunction to delete it; as modified, we will affirm the temporary injunction.

II. FACTUAL AND PROCEDURAL BACKGROUND

Texas Mutual is an insurance company that issues workers' compensation insurance policies to employers. Surety Bank provides financing for insurance policies, including workers' compensation insurance.

As a result of a dispute concerning whether Texas Mutual was required to refund unearned premiums Surety Bank had paid to Texas Mutual on behalf of a particular company, Surety Bank sued Texas Mutual. Because of this litigation, Texas Mutual decided to cease doing business with Surety Bank. In accordance with this decision, Texas Mutual notified insurance agents in Texas by a faxed letter that Texas Mutual would no longer accept Surety Bank premium finance agreements.¹ Surety Bank then filed the present lawsuit against Texas Mutual, alleging tortious interference with prospective business relationships and business disparagement.

In connection with its lawsuit, Surety Bank sought a temporary injunction. Following an evidentiary hearing, the trial court entered a June 25, 2004 temporary injunction enjoining Texas Mutual from "(1) refusing to issue insurance or canceling insurance due to the purchasers' financing the premiums in part or in whole through Surety [Bank]; (2) discouraging the financing of the purchase of insurance through Surety [Bank]; or (3) defaming Surety [Bank] in any way." Texas Mutual moved to modify the temporary injunction, arguing that provisions two and three of the injunction, which prohibited Texas Mutual from "discouraging" Surety Bank financing and from "defaming Surety [Bank] in any way," were vague, unconstitutional, and should be removed from the temporary injunction. The trial court granted Texas Mutual's motion to modify the injunction to the extent that it modified the temporary injunction to delete provision two and to alter provision three as set forth below and to renumber it to become provision two:

Defendant Texas Mutual Insurance Company, its officers, agents, and employees are enjoined from ... (2) Communicating or implying to any insurance agent or broker or any business known to be a customer or potential customer of Surety, or an entity or individual who utilizes Surety's financial services or such services of other financial companies or recommends such services to others (including all employees and agents of all of the foregoing businesses or individuals) that Surety is in some sort of financial trouble or that Surety has committed a misfeasance or malfeasance or was somehow unfit or unable to finance insurance premiums.²

Texas Mutual perfected this interlocutory appeal challenging the constitutionality of this modified provision.

III. CONSTITUTIONALITY OF TEMPORARY INJUNCTION'S SECOND PROVISION

Texas Mutual argues that the temporary injunction's second provision is unconstitutional as a prior restraint on speech. Surety Bank does not dispute that the temporary injunction does prospectively enjoin speech, but contends that the enjoined speech is private, commercial speech subject to a lower level of constitutional protection.³ Because Texas Mutual does not challenge provision one of the temporary injunction and because Surety Bank does not dispute that modified provision two of the temporary injunction constitutes a prior restraint on speech, we accept the trial court's unchallenged findings of fact that Surety Bank satisfied the elements necessary to obtain a temporary injunction. See Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex.2002) (recognizing litigant must plead and prove three specific elements to obtain a temporary injunction: (1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim). Therefore, we address whether the prior restraint on speech set forth in provision two of the temporary injunction is unconstitutional in light of the facts supporting issuance of the injunction.

A prior restraint on speech is an "administrative and judicial order[ ] forbidding certain communications when issued in advance of the time that such communications are to occur." Alexander v. United States, 509 U.S. 544, 550, 113 S.Ct. 2766, 2771, 125 L.Ed.2d 441 (1993). Article one, section eight of the Texas Constitution provides that "[e]very person shall be at liberty to speak, write or publish his opinions on any subject, being responsible for the abuse of that privilege...." TEX. CONST. art. I § 8. This portion of the Texas Constitution "provides greater rights of free expression than its federal equivalent." Davenport v. Garcia, 834 S.W.2d 4, 10 (Tex.1992). Thus, prior restraints on speech are presumptively unconstitutional. See id.; San Antonio Express-News v. Roman, 861 S.W.2d 265, 267 (Tex.App.-San Antonio 1993, orig. proceeding).

The Texas Constitution protects the right to speak, even to speak defamatory words, although damages are recoverable for such defamatory speech. Ex parte Tucker, 220 S.W. 75, 76, 110 Tex. 335, 337-38 (1920). In Tucker, the supreme court explained this concept:

There can be no justification for the utterance of a slander. It cannot be too strongly condemned. The law makes it a crime. But there is no power in courts to make one person speak only well of another. The Constitution leaves him free to speak well or ill; and if he wrongs another by abusing this privilege, he is responsible in damages or punishable by the criminal law.

Id. "It is well settled that Texas courts will not grant injunctive relief in defamation or business disparagement actions if the language enjoined evokes no threat of danger to anyone, even though the injury suffered often cannot easily be reduced to specific damages." Brammer v. KB Home Lone Star, L.P., 114 S.W.3d 101, 107 (Tex.App.-Austin 2003, no pet.). Thus, even defamatory statements, with the exception of those that threaten others, are provided constitutional protection in most cases. See Hajek v. Bill Mowbray Motors, Inc., 647 S.W.2d 253, 255 (Tex.1983) (dissolving temporary injunction as violative of article one, section eight of Texas Constitution); Brammer, 114 S.W.3d at 106-09 (modifying temporary injunction to delete portions enjoining speech based on content); Markel v. World Flight, Inc., 938 S.W.2d 74, 79-81 (Tex.App.-San Antonio 1996, no writ) (holding temporary injunction unconstitutional prior restraint on free expression); Pirmantgen v. Feminelli, 745 S.W.2d 576, 578-79 (Tex.App.-Corpus Christi 1988, no writ) (holding temporary injunction violated Texas Constitution); Strang v. Biggers, 252 S.W. 826, 827 (Tex.Civ.App.-Dallas 1923, no writ) (affirming dissolution of temporary injunction that violated appellee's freedom of speech); see also Stansbury v. Beckstrom, 491 S.W.2d 947, 947-50 (Tex.Civ.App.-Eastland 1973, no writ) (dissolving temporary injunction infringing on appellant's freedom of speech).

Simply put, it is generally unconstitutional for courts to require one to acquire permission to speak before speaking:

It has never been the theory of free institutions that the citizen could say only what courts or legislatures might license him to say, or that his sentiments on any subject or concerning any person should be supervised before he could utter them. Nothing could be more odious, more violative or destructive of freedom, than a system of only licensed speech or licensed printing.

Tucker, 220 S.W. at 76. Accordingly, an injunction enjoining future speech is permissible under article one, section eight of the Texas Constitution only if the trial court makes specific findings supported by the evidence that (1) an imminent and irreparable harm to the judicial process will deprive litigants of a just resolution of their dispute, and (2) the judicial action represents the least restrictive means to prevent that harm. See Davenport, 834 S.W.2d at 10.

We begin our analysis under the second prong set forth in Davenport; that is, we examine the terms of the injunction to determine whether the "injunctive relief granted encompasses the least restrictive means of protecting against the alleged harmful effect." See Ex parte Tucci, 859 S.W.2d 1, 6 (Tex.1993). The temporary injunction enjoins Texas Mutual from "communicating or implying" that Surety Bank is "in some sort of financial trouble, has "committed a misfeasance or malfeasance," or "was somehow unfit or unable to finance insurance premiums." Texas Mutual cannot "communicat[e] or imply [ ]" the above information to "any insurance agent or broker," "any business known to...