07-19-00003-CV
Tex. App.Apr 12, 2019Background
- Eskimo Hut Worldwide (Worldwide) franchises frozen daiquiri "to-go" stores; South Plains Sno, Inc. (South Plains) operates three franchises in Lubbock.
- Franchise agreement requires use of Worldwide’s base mix, flavors, and specified preparation methods; franchisees supply alcohol but must follow Worldwide’s recipes and approved suppliers for base mix.
- South Plains admitted it was not following Worldwide’s recipe: using a different batch formula with only two ounces of Worldwide base mix instead of the specified three gallons.
- Worldwide sued for breach and sought a temporary injunction to stop South Plains from using non-Eskimo Hut base mix and from preparing drinks other than as specified in Worldwide’s manuals; the trial court granted the injunction.
- South Plains appealed, arguing Worldwide lacked a probable right of recovery, failed to prove probable, imminent, and irreparable injury, the extraordinary-relief clause could not substitute for proof of irreparable harm, and contract provisions violated Tex. Alcoholic Beverage Code §109.53.
Issues
| Issue | Plaintiff's Argument (Worldwide) | Defendant's Argument (South Plains) | Held |
|---|---|---|---|
| 1. Probable right of recovery (breach of contract) | Evidence showed franchise terms required base mix and methods; South Plains admitted noncompliance, supporting probable breach | Agreement provisions illegal or inapplicable; Worldwide offered insufficient evidence of breach | Court: Enough evidence supported probable right of recovery; issue overruled |
| 2. Probable, imminent, and irreparable injury | Brand harm and loss of goodwill from nonconforming product is incalculable and not fully compensable by money; extraordinary-relief clause underscores this | No irreparable harm because alcohol variation among franchisees makes consistency impossible; damages (e.g., lost base-mix profits) are calculable | Court: Credible testimony supported imminent, irreparable injury to brand; injunction appropriate |
| 3. Sufficiency of extraordinary-relief clause to show irreparable harm | Clause that violations cause incalculable, irreparable damage supports injunction | Clause alone insufficient to prove irreparable injury | Court: Clause by itself not dispositive, but it supported trial court’s finding when coupled with evidence; issue overruled |
| 4. Alleged violation of Alcoholic Beverage Code §109.53 (illegality) | Contract controls preparation methods without unlawfully surrendering permittee control; no persuasive showing of illegality | Section 109.53 makes control by franchisor over alcoholic drink recipe unlawful, rendering provisions unenforceable | Court: South Plains failed to show §109.53 rendered provisions unenforceable; issue overruled |
Key Cases Cited
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (standard for appellate review of temporary injunction; abuse-of-discretion and elements for injunctive relief)
- Walling v. Metcalfe, 863 S.W.2d 56 (Tex. 1993) (temporary injunction is extraordinary relief)
- Camp v. Shannon, 348 S.W.2d 517 (Tex. 1961) (temporary injunction preserves status quo pending trial)
- Marketshare Telecom, L.L.C. v. Ericsson, Inc., 198 S.W.3d 908 (Tex. App.—Dallas 2006) (irreparable injury requirement for temporary injunction)
- Wright v. Sport Supply Grp., Inc., 137 S.W.3d 289 (Tex. App.—Beaumont 2004) (contractual clause claiming irreparable harm is not alone dispositive)