Morrison Supply Company, LLC and Patriot Supply Holdings, Inc. v. Scott Hilburn and Mike Anthony
12-15-00141-CV
| Tex. App. | Aug 13, 2015Background
- Morrison Supply and Patriot (Appellants) sought a temporary injunction to enforce confidentiality, non‑compete, and non‑solicit covenants signed by two former managers, Anthony and Hilburn.
- Appellants allege Anthony and Hilburn received confidential pricing, customer, and branch performance materials and were granted valuable stock options after signing the Agreements.
- Anthony and Hilburn resigned and began working for competitor National Wholesale Supply; counsel later admitted to the trial court they were working at National despite earlier testimony suggesting they were unemployed.
- Morrison contends the departures and solicitation caused loss of workforce, harm to goodwill, disrupted operations, and risk of disclosure/use of confidential information.
- The trial court denied the temporary injunction, citing an adequate remedy at law (based in part on Anthony and Hilburn’s earlier testimony). Appellants appeal, asking reversal, entry of a temporary injunction, and reformation of overbroad contract terms.
Issues
| Issue | Plaintiff's Argument (Morrison) | Defendant's Argument (Anthony & Hilburn) | Held / Relief Sought by Appellant |
|---|---|---|---|
| Whether the trial court’s May 13 letter can be treated as findings of fact/conclusions of law | The letter was filed and explains the basis for the ruling; under precedent it can be construed as findings and should be reviewed | Letter is not formal findings; Appellants failed to challenge implied findings properly | Appellants ask the court to treat the letter as findings and review abuse of discretion regarding irreparable harm and reformation |
| Enforceability: whether Agreements had consideration (confidential info and stock options) | Appellants: managers received confidential materials after signing and were awarded stock options — both constitute adequate consideration | Defendants: claim no confidential info was provided after signing; stock options illusory or not vested | Appellants argue evidence supports enforceability; ask reversal if trial court found otherwise |
| Breach: whether Anthony and Hilburn violated non‑compete/non‑solicit covenants | Morrison: credible evidence of solicitation, meetings with National, and employment with National in same region | Defendants: deny recruiting employees and contend they were not working for National at relevant times | Appellants assert record and counsel admission prove breaches and that trial court erred in finding no breach |
| Irreparable harm & remedy at law (temporary injunction standard) | Morrison: breaches and possession of confidential info create rebuttable presumption of irreparable harm; lost workforce and goodwill are not easily remedied by money | Defendants: argue fear of future violation insufficient; contend Morrison has adequate remedy at law | Appellants argue trial court relied on misleading testimony and abused its discretion; request injunction and reformation to prevent ongoing harm |
| Reformation at interlocutory stage: jurisdiction and propriety to reform overbroad covenants now | Morrison: statute and authorities permit reformation when covenant is ancillary but overbroad; reformation now prevents inability to obtain meaningful relief | Defendants: claim reformation is a final remedy and not appropriate at temporary injunction stage | Appellants ask this Court to order reformation on remand so injunction/recovery is practical |
Key Cases Cited
- Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011) (holding grant/award of stock options can furnish consideration to support a non‑compete)
- Alex Sheshunoff Mgmt. Servs., LP v. Johnson, 209 S.W.3d 644 (Tex. 2006) (confidential information provided to employee supports enforceability of restrictive covenants)
- In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002) (contract may be enforceable though one party reserves limited power to amend/terminate; illusory‑contract principles)
- In re Estate of Miller, 446 S.W.3d 445 (Tex. App.—Tyler 2014) (trial court letters filed of record may be treated as findings of fact and conclusions of law in appropriate circumstances)
- Frequent Flyer Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215 (Tex. App.—Fort Worth 2009) (business disruption, loss of clientele and goodwill can constitute irreparable harm)
- TransPerfect Translations, Inc. v. Leslie, 594 F. Supp. 2d 742 (S.D. Tex. 2009) (federal court reformed an overbroad covenant at the temporary injunction stage and discussed state authority permitting interlocutory reformation)