Three Sisters Petroleum, Inc. v. Langley

• Decision Date: 11 April 2002
• Docket Number: No. 02-162.,02-162.
• Parties: THREE SISTERS PETROLEUM, INC.; Larry Oswald; James Morris; and Union Producing, L.L.C. v. Jerry LANGLEY, Individually and d/b/a Jerry Langley Oil Company; Jerry Langley Oil Company, L.L.C.; J.C. Langley; Gary Sewell; Richard Hill; Russell Clay Murphy; Rodney Landes Sr.; Steve Rogers; John Milam; and Glenn Sams.
• Court: Arkansas Supreme Court

72 S.W.3d 95

348 Ark. 167

THREE SISTERS PETROLEUM, INC.; Larry Oswald; James Morris; and Union Producing, L.L.C. v. Jerry LANGLEY, Individually and d/b/a Jerry Langley Oil Company; Jerry Langley Oil Company, L.L.C.; J.C. Langley; Gary Sewell; Richard Hill; Russell Clay Murphy; Rodney Landes Sr.; Steve Rogers; John Milam; and Glenn Sams.

No. 02-162.

Supreme Court of Arkansas.

April 11, 2002.

Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Marcella J. Taylor, Sherry P. Bartley, and L. Kyle Hefley, Little Rock; Patton, Haltom, Roberts, McWilliams & Greer, L.L.P., by: David P. Cotten, Texarkana, TX; and, Of Counsel, Wiener, Weiss & Madison, A Professional

Corporation, by: John M. Madison, Jr., and Mark L. Hornsby, Shreveport, LA, for appellants.

Compton, Prewett, Thomas & Hickey, L.L.P., by: William I Prewett, Little Rock, for appellees.

DONALD L. CORBIN, Justice.

This is an interlocutory appeal of a temporary restraining order. Appellants Three Sisters Petroleum, Inc.; Larry Oswald; James Morris; and Union Producing, L.L.C., argue that the Union County Circuit Court abused its discretion in granting an ex parte restraining order in favor of Appellees Jerry Langley, individually and doing business as Jerry Langley Oil Company; Jerry Langley Oil Company, L.L.C.; J.C. Langley; Gary Sewell; Richard Hill; Russell Clay Murphy; Rodney Landes Sr.; Steve Rogers; John Milam; and Glenn Sams. This case was originally submitted to us on Three Sisters's motion to expedite the appeal and to stay the lower court proceedings. This court granted the motion on February 21, 2002. Our jurisdiction over this interlocutory appeal is pursuant to Ark. R.App. P.—Civ. 2(a)(6). For reversal, Appellants argue that the trial court abused its discretion in granting the temporary restraining order because Appellees failed to show (1) that they would suffer irreparable harm if an injunction was not granted, and (2) that there was a likelihood that they would succeed on the merits of their case. We agree with Appellants, and we reverse.

Facts and Procedural History

The subject of this litigation is a dispute over the ownership of oil leases on wells located in Arkansas. The leases were previously owned by Phillips Petroleum, and were purchased in October 1999 by Appellant Three Sisters, a Louisiana corporation. Thereafter, Three Sisters assigned its rights in the leases to Appellant Union Producing, a Louisiana limited-liability company, which Three Sisters or its principals, including Appellants Oswald and Morris, own or control. On March 3, 2000, Appellee Jerry Langley, by and through his attorney, sent a letter to Three Sisters claiming that he had a contract with Three Sisters to purchase the leases from Phillips. The letter proposed that Three Sisters sell some of the leases to Langley for $9,000 per net barrel. Three Sisters rejected the proposal and maintained that they had no valid contract with Langley regarding the leases.

On March 15, 2000, Appellants filed suit in state court in Caddo Parish, Louisiana, seeking a declaratory judgment as to whether any contract existed between Three Sisters and Appellee Langley. On May 18, 2000, Appellees removed that case to federal district court in Louisiana, based on a claim of diversity of citizenship. That same date, Appellees filed suit in federal district court in Arkansas. On March 29, 2001, the Louisiana federal court granted Appellees' motion to transfer the declaratory-judgment action to the Arkansas federal court.

About one month later, on April 23, 2001, Appellants took a voluntary nonsuit of their declaratory-judgment action, which had been transferred to the Arkansas federal court. The decision to nonsuit was based on Appellants' discovery that one of Langley's partners, Appellee Richard Hill, was a resident of Louisiana. Because there was no longer diversity of citizenship, Appellants filed a new declaratory-judgment action in Louisiana state court on April 24, 2001.

Appellees, once again, removed the Louisiana state-court case to federal court in Louisiana. Eventually, however, the Louisiana federal court concluded that jurisdiction was in state court, and it granted Appellants' motion to transfer the case back to the Louisiana state court. The Arkansas federal court also concluded that jurisdiction belonged in Louisiana state court, and it likewise granted Appellants' motion to dismiss Appellees' federal suit. One week later, Appellees filed the present suit in Union County, Arkansas. At that point, there were only two cases pending: (1) the declaratory-judgment action filed by Appellants on April 24, 2001, in Louisiana state court and (2) the civil complaint filed by Appellees on September 26, 2001, in the Union County Circuit Court.

On November 21, 2001, Appellants filed a motion to dismiss the Union County case or, alternatively, to stay that case until the Louisiana state case was resolved. Appellants urged that under principles of comity, the Arkansas court should allow the Louisiana court, which was the first to acquire jurisdiction over the parties and the subject matter, to conclude its proceedings first. The circuit court denied the motion on December 13, 2001. On February 8, 2002, Appellees filed a petition for an ex parte injunction in the circuit court, asking the court to restrain and enjoin Appellants from proceeding further in their suit in Louisiana. The circuit court granted the petition that same date, without a hearing, and issued a temporary restraining order. Appellants timely filed a notice of appeal from that order, and we granted a stay of the proceedings pending our resolution of this appeal.

Before we reach the merits of this case, we must first address Appellees' motion to dismiss this appeal. Appellees contend that an interlocutory appeal will not lie from the grant of a temporary restraining order issued pursuant to Ark. R. Civ. P. 65. Appellants argue that such an appeal is specifically authorized by Ark. R.App. P.—Civ. 2(a)(6), which provides that an appeal may be taken from "[a]n interlocutory order by which an injunction is granted, continued, modified, refused, or dissolved, or by which an application to dissolve or modify an injunction is refused." Appellees acknowledge this rule, but they contend that a temporary restraining order is not the equivalent of an injunction. Rather, they urge that a temporary restraining order is a lesser order that may ripen into an injunction following a hearing in the trial court. Thus, according to Appellees, there can be no appeal from a temporary restraining order issued under Rule 65 until the restrained party first exercises its right to apply for a hearing in the trial court. We are not persuaded by Appellees' arguments.

In the first place, we disagree that application for a hearing to dissolve a temporary restraining order is a prerequisite to appeal. Rule 2(a)(6) is clearly written in the alternative, providing for an interlocutory appeal from the grant of an injunction and also for an interlocutory appeal from an order refusing to dissolve an injunction. Obviously, the second alternative anticipates that application has been made in the trial court to set aside or dissolve the injunction, but the first alternative does not. Accordingly, the argument on this point lacks merit.

In the second place, this court's decisions have not drawn a distinction between temporary restraining orders and injunctions when accepting appeals. See, e.g., Amalgamated Clothing v. Earle Indus., Inc., 318 Ark. 524, 886 S.W.2d 594 (1994); American Trucking Ass'n v. Gray, 280 Ark. 258, 657 S.W.2d 207 (1983); Kreutzer v. Clark, 271 Ark. 243, 607 S.W.2d 670 (1980); and Boyd v. Dodge, 217 Ark. 919, 234 S.W.2d 204 (1950). For example, in Gray, 280 Ark. 258, 657 S.W.2d 207, this court concluded that the interlocutory order granting a temporary or preliminary injunction was appealable pursuant to Rule 2(a)(6), and it proceeded to apply the standard of review for the granting or denial of a "temporary restraining order." Id. at 260, 657 S.W.2d at 208 (emphasis added). Similarly, in Boyd, 217 Ark. 919, 234 S.W.2d 204, this court used the terms "temporary restraining order" and "injunction" interchangeably:

[A] majority of the Justices are of the opinion that the petition filed herein should be treated as an appeal from the interlocutory order of the Chancellor granting a temporary restraining order.. . . Ark. Stats. 27-2102 provides that an appeal may be taken to the Supreme Court from an interlocutory order granting or refusing an injunction.

Id. at 922, 234 S.W.2d at 205-06 (emphasis added). These cases demonstrate that this court has not heretofore differentiated between temporary or preliminary injunctions or restraining orders for purposes of determining jurisdiction on appeal. Interestingly, Appellees do not even differentiate between the two; their motion is styled "Petition for Injunction," but the body of the motion asks the court to issue a "preliminary restraining order."

Finally, we conclude that Appellees' argument must be rejected based on the Reporter's Notes (as modified by this court) to Rule 65, which clearly reflect this court's intention to treat temporary restraining orders the same as preliminary injunctions:

1. Rule 65 marks a significant departure from [Federal Rule of Civil Procedure] 65. Whereas the latter makes a distinction between preliminary injunctions and temporary restraining orders, this rule treats them equally insofar as the procedures are concerned for obtaining either remedy. [Emphasis added.]

Based on the foregoing authorities, we conclude that we have jurisdiction of this interlocutory appeal, and we deny Appellees' motion to dismiss. We now turn to the issues on appeal.

Appellants argue that the trial court abused its discretion in granting the temporary restraining order because (1) the allegations and findings of irreparable harm are insufficient as a matter of...