Zurovec v. Rueben
| Decision Date | 25 August 2022 |
| Docket Number | 09-21-00379-CV |
| Parties | LARONDA ZUROVEC, JEREMY CHAFFIN AND COLLABORATIVE SERVICES, LLC, Appellants v. NEHEMIAS RUEBEN, Appellee |
| Court | Texas Court of Appeals |
Submitted on June 16, 2022.
On Appeal from the 457th District Court Montgomery County, Texas Trial Cause No. 21-10-14352-CV.
W SCOTT GOLEMON Chief Justice.
Appellee Nehemias Rueben sued Appellants Laronda Zurovec, Jeremy Chaffin, and Collaborative Services, LLC (CS) asserting multiple causes of action.[1] Rueben sought equitable relief prohibiting Appellants from transferring certain property or assets to a new entity Zurovec and Chaffin formed with other individuals, Collaborative Generators and Power Solutions, LLC (CGPS), including a temporary injunction which the trial court granted. In this interlocutory appeal, Appellants raise six issues challenging the trial court's temporary injunction. See Tex. Civ. Prac. &Rem. Code Ann. § 51.014(a)(4) (). We hold that, while the trial court did not abuse its discretion in granting a temporary injunction to preserve the status quo, it abused its discretion in crafting the temporary injunction order. We declare the temporary injunction order void and dissolve the order since it is overly broad and fails to comply with Texas Rule of Civil Procedure 683. See Tex.R.Civ.P. 683.
I. Background
Rueben, an electrician by trade, and Chaffin, an instrument technician, met in 2012 while working on an oil rig. At the end of 2018, the two of them and Chaffin's wife, Zurovec, discussed starting a new business and splitting everything fifty-fifty. In early 2019, Zurovec filed a dba (doing business as) form with Montgomery County and began operating CS, which provided electrical services and specialized in generator installation in Houston and the surrounding areas. In approximately March of 2019, Rueben began working as a project manager for CS. In October 2019, Zurovec filed a Certificate of Formation with the Texas Secretary of State for CS. The Certificate of Formation listed Zurovec as the sole managing member.
In 2019, Rueben received a 1099 from CS showing total payments of $14,000. In 2020, Rueben received a W-2 from CS, which showed he received a salary of $59,000, and in May 2021, Rueben received a raise, which increased his salary to $9,000 per month. In October 2021, CS severed its relationship with Rueben. According to Zurovec and Chaffin, Rueben began causing problems on jobs, behaving erratically, and was using drugs, so they terminated his at-will employment with CS.
Rueben argues he made multiple monetary contributions to CS, the parties agreed prior to CS's formation they were going into business together and would split everything down the middle, and he owned an interest in the business. Zurovec and Chaffin countered that Rueben's monetary contributions to the company were loans, which were repayable on demand, and in consideration for these loans, he received an increased salary in 2021. There was no written documentation memorializing the terms of these loans.
On September 30, 2021, a Certificate of Formation was filed with the Texas Secretary of State for CGPS, naming Zurovec, Chaffin, Rebecca Dahlberg, Justin Dahlberg, Josh Paninski, and Michael Guest as managing members. CGPS provides similar services as CS but serves an expanding market in North Texas. On October 2, 2021, Rueben received a text message from Chaffin notifying him they were going to part ways with him. On October 5,2021, Rueben filed a Certificate of Formation for Mr. Watts Electrical naming himself and Stacy Doll as managing members. Mr. Watts provides electrical and generator installation services in the Houston area like the services CS provides.
Rueben pleaded causes of action for breach of contract, fraud, breach of fiduciary duty, conspiracy, conversion, and he also filed claims based on promissory estoppel, quantum meruit, unjust enrichment, specific performance, and he asked for a declaratory judgment.[2] In his claim seeking a declaratory judgment, Rueben asked the court to determine the rights of the parties based on their oral partnership agreement, and he asked the court to declare that Zurovec and Chaffin had breached the partnership agreement. Rueben also sought a temporary and permanent injunction. Rueben supported his First Amended Petition with a verification. He also attached CGPS's Certificate of Formation, a copy of CGPS's Facebook page, and CS's Certificate of Formation as exhibits.
At the hearing's outset, Rueben argued that he wanted to enjoin CS from transferring their goods, services, and assets to CGPS. Appellants countered that Rueben is a former employee who started another business, Mr. Watts, that is now a "direct competitor" of CS, and he is trying to prevent CS from expanding its business. Appellants further argued that CGPS was started to service CS customers who have needs outside Montgomery County. Appellants also contended that Rueben was not entitled to a temporary injunction for three reasons, because: money could remedy the harm that resulted from their alleged breach of the alleged agreement; Rueben could not demonstrate he would probably succeed on the merits; and Rueben could not show the parties had reduced the alleged agreement to writing.
Rueben testified that he met Chaffin on an oil rig in 2012. Rueben has been an electrician for twenty-five years. Rueben said that before he left his previous employer, he, Zurovec, and Chaffin discussed starting a business together toward the end of 2018. When the three of them had that discussion, they agreed "Hey, let's get together and we'll just split everything down the middle, 50/50."Rueben agreed that they never created a written business plan or formally discussed a business plan or a specific process for their business. Rueben testified that before 2019, Chaffin and Zurovec had never provided electrical services to the public.
Rueben explained that he provided operating capital to the business the three of them established. He also testified that he received proceeds from their business. Rueben denied the contributions he made to the business were loans; instead, he said: "I invested." According to Rueben, no one characterized his contributions as loans, terms for the alleged loans were never discussed and he was never provided any documents for any alleged loans.
While Rueben acknowledged he knew a dba filing occurred in Montgomery County for the CS name in early 2019, Chaffin and Zurovec never discussed the filing with Rueben or told him it was Chaffin and Zurovec's company, not his. Over nine months passed between CS's dba filing and the filing of the Certificate of Formation in October 2019. Ruben said that Zurovec and Chaffin never discussed the fact they filed a Certificate of Formation with him. When Rueben learned the LLC paperwork excluded him in May 2020, he spoke to Zurovec and Chaffin and then brought the subject up every couple of months. Ultimately, Rueben said he retained an attorney to help him. After Rueben retained an attorney, the law firm he hired prepared a partnership agreement and questionnaire, which he forwarded to Chaffin and Zurovec. When they responded, they said there were too many legal terms in the documents, and they told Rueben to provide them with documents they could all understand. Rueben testified that Chaffin and Zurovec never told him he would not be a member of CS or they did not believe he would be a good partner.
Rueben said he filed his petition to protect his interest in the company. When asked why he felt the company needed to be restrained, Rueben responded, "Because I accidentally found out that they opened up another company when Rebecca and Justin tagged me on a Facebook post, and then in there, I figured they were going to be running our assets out of that company into the other."
He received a text message from Chaffin on October 2, 2021, which said, "We're making some changes and I think it's best if we just part ways." Rueben testified he spoke to Chaffin the same day or the next day and asked him what was going on, what were they going to do, and told Chaffin they needed to go through the books. Rueben said Chaffin responded that they would go through the books and inventory, and Rueben would get fifty percent of everything. Rueben testified that three days after Chaffin sent the text message, CS sent him a check signed by Zurovec with a memo noting it was a partial return on investment.
Rueben alleged that CS began transferring materials and assets to CGPS at a loss. He provided spreadsheets he prepared with material costs that he said he obtained from C S's vendors.
Zurovec testified she is the controller of CS and has a BS in accounting and an MBA. Zurovec testified that CS began in January 2019 as a dba, and in October 2019, she converted it to an LLC. She said that Rueben became involved in CS in February or March 2019 as a project manager and contract employee, and they did not discuss him becoming a member or owner of CS. In October 2019, when she converted CS to an LLC, she did not consider making Rueben a member. Zurovec is the sole member, manager, and owner of CS, and she testified CS's Company Agreement shows her as the sole member.
Zurovec testified Rueben never purchased a membership interest in CS never received profit distributions from CS, and never made capital contributions to CS, but he loaned CS money. According to Zurovec, when Rueben loaned CS money, it was not for an...
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