Hartwell v. Lone Star, PCA, 528 S.W.3d 750

Background

Lone Star made multiple cross‑collateralized and cross‑defaulted loans to Waymon Hartwell and HHH Farms, secured by cattle, crops, equipment, and proceeds. Appellants omitted prior judgments/liabilities on loan applications.
Appellants sold at least 119 head of cattle (and 21 more missing/sold), did not remit proceeds to Lone Star, commingled funds, and used proceeds to pay other creditors. Lone Star declined a requested loan restructuring.
Lone Star sued for breach of contract, breach of fiduciary duty, conversion, Texas Theft Liability Act misappropriation, and misapplication of fiduciary property, and sought a TRO and temporary injunction to preserve collateral.
The trial court issued a TRO and later a temporary injunction requiring turnover of collateral/proceeds, restricting disposition of collateral and use of bank accounts, and continued the TRO bond as the injunction bond ($10,000).
Appellants appealed raising six complaints (denial of continuance, insufficiency of evidence for the injunction, defects in application, overbroad/vague injunction terms, invalid mandatory relief, and improper bond handling).
The court of appeals affirmed: no abuse of discretion on continuance or bond; sufficient evidence for injunction (breach of contract and imminent irreparable harm); most procedural/pleading complaints were waived for lack of preservation.

Issues

Issue	Lone Star’s Argument	Appellants’ Argument	Held
Denial of continuance	Denial proper; counsel participated by phone and no good cause shown	Continuance required because lead counsel had a conflicting hearing	Affirmed — no abuse of discretion; late motion, no showing lead counsel was only available attorney, counsel participated by phone
Sufficiency of evidence for injunction	Evidence of loan defaults, sales of collateral, commingling, under‑secured loans, and risk of continued dissipation	Insufficient evidence of conversion and of imminent, irreparable injury	Affirmed — some evidence supports breach of contract and probable, imminent, irreparable injury; injunction aims to preserve Lone Star’s security interest
Defects in injunction application/affidavit	Application and affidavit sufficient; Appellants failed to obtain rulings on special exceptions	Application lacked grounds, relief did not mirror order, affidavit lacked personal knowledge	Affirmed — issues waived for failure to preserve (no written rulings on special exceptions/objections)
Vagueness/overbreadth of injunction	Injunction tailored to preserve collateral and permits routine business/living expenses	Injunction too broad, hinders lawful business, unclear scope	Affirmed — complaints not preserved in trial court; court had narrowed TRO before entry of injunction
Mandatory turnover provision	Turnover necessary to preserve status quo of Lone Star’s secured rights given defaults and dissipation	Mandatory turnover alters status quo and lacks extreme necessity; Rule 683 reasons insufficient	Affirmed — court found sufficient evidence to include mandatory provision; order states reasons as required by Rule 683
Use of TRO bond for injunction and bond amount	Continuing TRO bond as injunction bond permissible if court orders it; bond amount within discretion	Separate bond required because motion to dissolve filed; $10,000 inadequate	Affirmed — court may continue TRO bond by express order; bond amount not shown to be inadequate absent evidence of potential damages

Key Cases Cited

In re D.W., 353 S.W.3d 188 (Tex. App.—Texarkana 2011) (motion for continuance reviewed for abuse of discretion)
Villegas v. Carter, 711 S.W.2d 624 (Tex. 1986) (standard for abuse of discretion)
Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150 (Tex. 2004) (abuse of discretion requires clear arbitrary or unreasonable action)
BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (abuse of discretion discussion)
Gannon v. Payne, 706 S.W.2d 304 (Tex. 1986) (temporary injunction standard of review)
Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (some evidence supporting injunction is sufficient)
Ex parte Coffee, 328 S.W.2d 283 (Tex. 1959) (continuing or correcting bond security by court order)
InterFirst Bank San Felipe v. Paz Const. Co., 715 S.W.2d 640 (Tex. 1986) (Rule 683 reasons requirement for injunction orders)
Ex parte Lesher, 651 S.W.2d 734 (Tex. 1983) (injunction issued without bond is void)
Tri‑Star Petroleum Co. v. Tipperary Corp., 101 S.W.3d 583 (Tex. App.—El Paso 2003) (distinction between prohibitory and mandatory injunctions)