Morrison Supply Company, LLC and Patriot Supply Holdings, Inc. v. Scott Hilburn and Mike Anthony
12-15-00141-CV
Tex. App.Jul 24, 2015Background
- Morrison Supply Co. acquired American Supply in 1996; Anthony and Hilburn were long-time East Texas employees who later held regional management roles.
- Patriot acquired Morrison in 2011 and implemented new management policies, altering access to pricing and rebate information at stores.
- In 2012, Morrison executives offered Anthony and Hilburn stock option agreements containing a non-compete, presented at a Rockwall meeting; the documents were complex and not provided with the stock plan.
- Anthony and Hilburn signed the stock option agreements in December 2012 after being pressured at the meeting, without reading the documents or receiving the stock plan; they later questioned the enforceability of the non-compete.
- In 2015, Anthony, Hilburn, and others resigned from Morrison and national branches opened in East Texas and Shreveport; Morrison sought a temporary injunction to enforce the non-compete, which the trial court denied.
- The appellate court reviews the denial of a temporary injunction under a deferential standard, focusing on whether there is some evidence to support implied trial court findings and whether Morrison proved four traditional injunction elements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Challenge to trial court ruling | Morrison contends the ruling is improperly supported by implied findings. | Hilburn/Anthony argue Morrison failed to challenge implied findings. | Affirmed: failure to challenge implied findings bars reversal. |
| Existence of a valid contract | Consideration for the stock option/non-compete was illusory; no real consideration. | Patriot/Morrison contend consideration valid; the stock option was enforceable. | No valid contract due to illusory consideration. |
| Reasonableness of the non-compete geographic scope | Non-compete should be enforced for protection of goodwill. | Geographic scope too broad (United States); overbroad and unenforceable. | Overbroad; geographic scope unreasonable. |
| Performance and breach elements | Morrison performed by offering the stock option; defendants breached. | Anthony/Hilburn did not breach; no confidential information misused; no damages. | Court held Morrison failed to prove breach and damages; multiple defenses supported by record. |
| Reformation of non-compete before trial | Court should reform the non-compete and enforce as reformed. | No jurisdiction to reform in interlocutory appeal; or reform unnecessary. | No jurisdiction to review or reform; even if considered, reform not warranted; injunction denial upheld on other grounds. |
Key Cases Cited
- Davis v. Huey, 571 S.W.2d 859 (Tex. 1978) (absence of findings requires upholding order on any record-supported theory)
- BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (implied findings may be challenged for sufficiency when no findings exist)
- Layton v. Ball, 396 S.W.3d 747 (Tex. App. – Tyler 2013) (appellate review defers to trial court’s discretion if some evidence supports it)
- Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) (stock-option-based noncompetes may be enforceable; requires legitimate consideration)
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (injunction standards for breach of contract and related relief)
- Sills v. Excel Servs., Inc., 617 S.W.2d 280 (Tex. Civ. App. – Tyler 1981) (absence of findings requires upholding denial if record supports)
