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Morrison Supply Company, LLC and Patriot Supply Holdings, Inc. v. Scott Hilburn and Mike Anthony
12-15-00141-CV
Tex. App.
Jul 24, 2015
Read the full case

Background

  • 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)
Read the full case

Case Details

Case Name: Morrison Supply Company, LLC and Patriot Supply Holdings, Inc. v. Scott Hilburn and Mike Anthony
Court Name: Court of Appeals of Texas
Date Published: Jul 24, 2015
Citation: 12-15-00141-CV
Docket Number: 12-15-00141-CV
Court Abbreviation: Tex. App.