TOBY SHOR AND SEASHORE INVESTMENTS MANAGEMENT TRUST BY AND THROUGH TOBY SHOR, TRUSTEE, Appellants V. PELICAN OIL & GAS MANAGEMENT, LLC, PELICAN OIL & GAS, LP, SGW INTERESTS, LLC, BNP OPERATING, LLC, AND JAMES BLACK, AS TRUSTEE OF THE PAUL PATRICK BLACK HERITAGE TRUST, Appellees
NO. 01-11-01062-CV
In The Court of Appeals For The First District of Texas
February 26, 2013
On Appeal from the 12th District Court, Grimes County, Texas, Trial Court Case No. 32190
O P I N I O N
In this interlocutory appeal, appellants, Toby Shor and Seashore Investments Management Trust, by and through Toby Shor, trustee (collectively, “Shor“),
We affirm the temporary injunction order.
Background
Shor originally sued Paul Black, individually, and several entities owned, in whole or in part, by Black—PBF Investments, Ltd., BNP Holdings, Ltd., BNP Oil & Gas Properties, Ltd., BNP Commercial Properties, Ltd., Pagenergy Company, L.L.C., TSE Equities I, L.L.C., TSE Equities Company, Ltd., BNP Management, L.L.C., 500 Water Street Property, L.L.C., and 500 N. Water Street Property I, L.L.C.—for breach of contract, breach of fiduciary duties, conversion, fraud, fraudulent inducement, and conspiracy to defraud in the County Court at Law Number 3 of Nueces County (“the Nueces County suit“). On August 17, 2010, an
On August 11, 2011, Shor obtained a turnover order from the Nueces County Court which stated that the judgment debtors were the owners of “shares/stock/stock certificates/ownership interests” in twenty-three entities related to Paul Black. The turnover order required Black and certain other of the judgment debtors from the arbitration to turn over for levy to the sheriff in Corpus Christi “all documents and records related to” the “shares/stock/stock certificates/ownership interests” in the twenty-three entities and “all real and personal property located at 500 N. Water Street, Corpus Christi.” The order decreed that “Toby Shor, as Trustee for the Seashore Investments Management Trust, is owner of any and all of judgment debtors’ interests in the entities listed . . . above and all real and personal property located at 500 N. Water Street, Corpus Christi.” The headquarters of both the judgment debtors and the applicants
On October 4, 2011, Pelican filed an original petition in this case in the 12th District Court of Grimes County (“the Grimes County suit“) seeking a declaratory judgment that the applicants are, in fact, not owned by a judgment debtor but by a spendthrift trust, the Paul Patrick Black Heritage Trust (“the Trust“), which is also an applicant, and are not subject to execution to satisfy the debts of the judgment debtors. With its petition, Pelican filed an application for a temporary restraining order, a temporary injunction, and a permanent injunction, seeking to enjoin Shor from seizing any assets of any of the applicants until a legal determination is made in the underlying declaratory judgment action as to whether the assets of the applicants are subject to execution to satisfy the judgment debt Shor is attempting to enforce.
In this suit, Pelican alleged that, in an attempt to collect on the Nueces County judgment, Shor had filed an application for a turnover order seeking applicants’ interests in real property, including oil and gas leases, located in
Pelican sought a declaration (1) holding that the applicants are not liable for the debts of Paul Black, (2) holding that they are not liable to Shor “for any monies or debts,” (3) quieting and resolving title to and ownership of the applicants in favor of the Trust, and (4) quieting and resolving title to and ownership of the applicants’ properties, leases, and mineral interests in Grimes County. Pelican also requested that the trial court prevent Shor from “filing liens, interfering in the business relations of the [applicants], or taking any other action including seeking turnover relief in any court . . . concerning [applicants] and the [applicants‘] mineral interest and oil and gas properties.”
Pelican alleged that it was probable that it would prevail at a trial on the merits because the Nueces County judgment debtor, Paul Black, had no interest in either the applicants or in their Grimes County properties. It also alleged that harm was imminent because Shor had “expressly avowed that [she] will seek the
The Grimes County trial court granted an ex parte temporary restraining order (“TRO“) on the same day that Pelican filed its application and original petition. The order prohibited Shor from: (1) seeking turnover relief or proceeding with other collection efforts pertaining to the applicants; (2) seeking turnover relief or proceeding with other collection efforts pertaining to the applicants’ assets; (3) contacting or interfering in the contracts and business relations of the applicants; (4) taking any other action or instituting any legal action which may slander or cloud title to the “Pelican Oil and Gas Ltd. Wolk lease and/or the Walkoviak Gas Unit and Walkoviak No. 1 well“; and (5) taking any other action or instituting any legal action related to attempts to collect or recover from the applicants any oil and gas interests, leases, real property, or proceeds
On October 24, 2011, the trial court heard Pelican‘s application for a temporary injunction against Shor. At the beginning of the hearing, Shor argued that the Grimes County court lacked jurisdiction over the case pursuant to
At the hearing, James Black, Paul Black‘s brother, testified that he—not Paul—is the trustee of the Trust. James also testified that the Trust is a spendthrift trust, created by the brothers’ parents for the benefit of Paul, and that it has never had a judgment entered against it. James testified that the Trust is the sole owner
James testified that Shor had already pursued a garnishment proceeding in Live Oak County and obtained a writ of garnishment addressed to Mego Resources, LLC, garnishing any property or interests owned by SGW Interests and held by Mego. James also testified that he is the property manager for the building located at 500 N. Water Street in Corpus Christi. He stated that after Shor obtained her turnover order in Nueces County, she changed the locks on the offices of the entities at 500 N. Water Street related to Paul Black, and she then took possession of the applicants’ records and files located in the building. He testified that, after reading Shor‘s affidavit attached to the Live Oak County garnishment proceeding, it appeared to him that Shor had been reading SGW Interests’ records.2 James stated that it was “extremely important” that he regain access to these records because he needed them to file franchise and federal income tax returns for the
On cross-examination, James acknowledged that he took over the trustee position from Paul around the time of the Nueces County judgment. James agreed with Shor‘s counsel that Paul “is the one [who] actually controls where the money goes and what assets are purchased and the business dealings with the trust.” He further agreed that Paul is the one who is “involved in the oil and gas deals on behalf of the trust or any of the trust inventory on a day-to-day basis.”
Shor‘s attorney also testified at the temporary injunction hearing. He testified that he believed the TRO that was in effect was void, and, thus, he argued that he could “continue doing the things in violation of the letter of the order,” such as filing writs of garnishment, and not be in contempt because the TRO is not enforceable. He also testified, however, that he would not take such action in violation of the TRO or any other injunctive relief “as an officer of the Court.” Pelican‘s counsel asked whether he would agree to return the records and files of the Trust, SGW Interests, and the other applicants, and Shor‘s attorney responded that he would not. He stated that he believed, pursuant to the Nueces County turnover order, that Shor owns all personal property located at 500 N. Water Street that was “related to Paul Black entities.”
The temporary injunction ordered Shor to return all property, files, records, documents, and data of the applicants and prohibited Shor from retaining this information or copies of this information. The order also required Shor to take all necessary actions to dismiss the Live Oak County garnishment proceeding and to dissolve the writ of garnishment addressed to Mego Resources that had already issued in that proceeding. The temporary injunction order also included language
This interlocutory appeal followed. See
Subject Matter Jurisdiction
In her first issue, Shor contends that the Grimes County court lacked subject matter jurisdiction to enter Pelican‘s requested temporary injunctive relief pursuant to
In McVeigh, the 61st District Court of Harris County rendered a judgment in favor of McVeigh, and after Lerner, the judgment debtor, failed to satisfy the judgment, a writ of execution issued. 849 S.W.2d at 912–13. Lerner then filed an action in the 151st District Court of Harris County, seeking an injunction prohibiting the distribution of funds that Lerner had paid under protest and a declaration of the amount that she owed. Id. at 913. The 151st District Court granted a temporary restraining order and, subsequently, summary judgment in
We construe
section 65.023 to preclude a court from interfering in the execution of a judgment rendered by a sister court of this state . . . . We concludesection 65.023 barred the bringing of a claim for injunctive relief to stay execution of the 1987 legal malpractice judgment in any court but the 61st District Court of Harris County.
Id. We therefore concluded that
Shor contends that, under the rationale of McVeigh, the Grimes County court lacks jurisdiction over Pelican‘s application for temporary injunction because the original Nueces County judgment was not void. As a result, pursuant to
Pelican, however, cites the San Antonio Court of Appeals’ decision in Zuniga v. Wooster Ladder Co., 119 S.W.3d 856 (Tex. App.—San Antonio 2003, no pet.), for the proposition that
The Corpus Christi Court of Appeals reached a similar result in Williams v. Murray, 783 S.W.2d 233 (Tex. App.—Corpus Christi 1989, no writ). In Williams,
In determining whether Hughston had to bring her suit against Williams in Dallas County, where the underlying judgment was rendered, the Corpus Christi Court of Appeals noted that “[t]he object of
Shor argues that the cases that rely upon Van Ratcliff v. Call are not controlling because the predecessor statute to
has no application to parties who do not sue to stay or enjoin the execution previously of the judgment as contemplated by the statute, but who sue to prevent the sale of property alleged to belong to them, under a judgment, however valid and regular it may be, to which they are not parties, and for the satisfaction of which their property could in no event be subject.
We agree with Pelican that Butron and McVeigh—in which the courts of appeals held that the suits seeking injunctive relief from execution on a judgment had to be filed in the same courts in which the underlying judgments were originally rendered—are distinguishable from the present case. In both Butron and McVeigh, the party seeking an injunction to restrain execution on the underlying
In its Grimes County suit, Pelican does not attack the merits of the Nueces County judgment, it does not question the validity of that judgment, and it does not present defenses to that judgment that should have been adjudicated in the underlying suit. See Zuniga, 119 S.W.3d at 861 (noting that
We follow Williams and Zuniga and hold that
Shor argues that the applicants are not “strangers” to the judgment because, as James Black testified at the temporary injunction hearing, Paul Black actually controls the business dealings of the Trust, including determining which assets the Trust purchases, and is the one involved with the “day-to-day” oil and gas deals of the Trust. Shor further points out that two of the applicants—Pelican Oil & Gas Management, LLC and Pelican Oil & Gas, LP—were created after the arbitration panel awarded over $30 million to Shor from Black and other entities that he owns. At the hearing, however, Pelican presented evidence that the Trust, and not Paul Black, ultimately owns the applicants and that the Grimes County assets at issue
We hold that the Grimes County trial court properly exercised subject matter jurisdiction over Pelican‘s application for a temporary injunction.
We overrule Shor‘s first issue.
Propriety of Temporary Injunction
In her second issue, Shor contends that, if the trial court had subject matter jurisdiction, the court abused its discretion in granting injunctive relief in favor of
The purpose of a temporary injunction is to preserve the status quo of the subject matter of the litigation pending a trial on the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002); see also In re Newton, 146 S.W.3d 648, 651 (Tex. 2004) (defining “status quo” as “the last, actual, peaceable, non-contested status which preceded the pending controversy“). A temporary injunction is an extraordinary remedy and does not issue as a matter of right; therefore, an applicant must plead and prove three specific elements to obtain a temporary injunction: (1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim time period. Butnaru, 84 S.W.3d at 204 (citing Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993)).
Because the decision to grant or deny a temporary injunction falls within the trial court‘s sound discretion, we will reverse an order granting injunctive relief only if the trial court abused that discretion. Id. We must not substitute our judgment for that of the trial court unless the court‘s action “was so arbitrary that it exceeded the bounds of reasonable discretion.” Id. The trial court does not abuse its discretion by making a decision based on conflicting evidence, but it does abuse
Shor contends that the evidence presented at the temporary injunction hearing does not support the second and third elements necessary to obtain a temporary injunction: a probable right to the relief sought and a probable, imminent, and irreparable injury in the interim time period. She does not challenge the first element—whether Pelican has asserted a cause of action against her.
With regard to the second element, a probable right to the relief sought, the applicant is not required to prove, at this stage, that it will prevail on final trial; instead, the only question before the trial court is whether the applicant is entitled to preservation of the status quo pending trial. Sonwalkar, 2012 WL 3525384, at *5 (citing Walling, 863 S.W.2d at 58); INEOS Grp., 312 S.W.3d at 848 (“The sole issue presented to a trial court at a temporary injunction hearing is whether the applicant may preserve the status quo pending trial on the merits.“). The applicant must, at the very least, present some evidence that, under the applicable rules of law, tends to support its cause of action. INEOS Grp., 312 S.W.3d at 848; Tanguy v. Laux, 259 S.W.3d 851, 857 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (“A probable right to the relief sought is shown by alleging a cause of action and presenting evidence that tends to sustain it.“).
At the temporary injunction hearing, James Black testified that Paul Black does not have an ownership interest in any of the applicants and that he does not have an ownership interest in any of the applicants’ Grimes County properties. As further supporting evidence, Pelican presented the Nueces County judgment incorporating the earlier arbitration award, the trust declaration for the Trust reflecting that Paul Black is the sole beneficiary of this spendthrift trust, and the formation documents for each of the other applicant-entities. All of these
Shor contends that the evidence does not support the trial court‘s conclusion that Pelican established a probable right of recovery because the evidence reflects that Paul Black “actually controls” the business dealings of the Trust, including determining which assets are purchased by the Trust, that he is involved on a “day-to-day” basis with the Trust‘s oil and gas deals, and that two of the entities—
We therefore conclude that Pelican presented some evidence supporting its probable right to recovery on the merits of its claims against Shor.
B. Probable, Imminent, and Irreparable Injury
“Probable injury” includes the elements of imminent harm, irreparable injury, and no adequate remedy at law. El Tacaso, Inc. v. Jireh Star, Inc., 356 S.W.3d 740, 743 (Tex. App.—Dallas 2011, no pet.); Khaledi v. H.K. Global Trading, Ltd., 126 S.W.3d 273, 283 (Tex. App.—San Antonio 2003, no pet.) (“Probable injury in the interim is established by tendering evidence of imminent harm, irreparable injury, and inadequate legal remedy.“). An injury is irreparable if the injured party cannot be adequately compensated in damages or if the damages cannot be measured by any certain pecuniary standard. Butnaru, 84 S.W.3d at 204; Sharma, 231 S.W.3d at 427 (“That is, the applicant has to establish there is no adequate remedy at law for damages. An adequate remedy at law is one that is as complete, practical, and efficient to the prompt administration of justice as is equitable relief.“). Generally, money damages may be inadequate to compensate an injured party for the loss of property deemed to be legally “unique” or irreplaceable. Sonwalkar, 2012 WL 3525384, at *12 (quoting N. Cypress Med. Ctr. Operating Co. v. St. Laurent, 296 S.W.3d 171, 175 (Tex. App.—Houston [14th Dist.] 2009, no pet.)). A trial court may grant equitable relief when a dispute involves real property. Butnaru, 84 S.W.3d at 211. A trial court may also grant injunctive relief when the enjoined conduct threatens to disrupt an ongoing business. See Sonwalkar, 2012 WL 3525384, at *12; Frequent Flyer Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215, 228 (Tex. App.—Fort Worth 2009, pet. denied) (“Disruption to a business can be irreparable harm.“). A temporary injunction may not, however, be granted solely upon the mere speculation of
At the temporary injunction hearing, Shor‘s counsel testified that, before he received notice of the temporary restraining order that the trial court entered on October 4, 2011, he filed an application for a writ of garnishment in Live Oak County, seeking to garnish any interest that applicant SGW Interests, LLC, has in oil and gas leases in that county. James Black testified that, pursuant to the Live Oak County writ of garnishment, Mego Resources, the garnishee, withheld a “substantial amount of money” based on royalty payments owed to SGW Interests and refused to make these payments until the resolution of this dispute. Prior to the filing of Pelican‘s original petition and application for injunctive relief, Shor sought turnover relief in Nueces County. Shor also obtained a court order giving her title to property at 500 N. Water Street in Corpus Christi, which is where the headquarters of all of the Pelican entities are located. Shor took possession of the records of all of the entities, and her counsel refused to return their files, books, and records. James testified that it is “extremely important” for him to retrieve these records because he needs them for, among other things, filing franchise tax returns and federal tax returns. He also stated that the records contain information covered by the attorney-client privilege. Thus, Shor had already sought execution
James also testified that the applicants own “valuable” oil and gas interests, including “some leases,” in Grimes County. He agreed with the applicants’ counsel that the Trust “stands to lose substantial real property rights if its title does not apply.” He agreed that any liens that Shor placed on the applicants’ property would “cause significant financial harm” to the Trust. James testified that if the Trust lost its income stream, he would not receive compensation as the trustee and the Trust would not be able to make distributions to Paul Black.3
James‘s testimony concerning Shor‘s writ of garnishment filed in Live Oak County commanding Mego Resources to withhold funds payable to SGW Interests and his testimony and the testimony of Shor‘s attorney concerning Shor‘s retention of the applicants’ records and files, show that Shor has already pursued, and, in the absence of temporary injunctive relief pending trial on the merits of the underlying
By withholding the documents and records of the applicants and funds owed to SGW Interests by Mego Resources, Shor is interfering with the business relations of the applicants. See Sonwalkar, 2012 WL 3525384, at *12; see also Frequent Flyer Depot, Inc., 281 S.W.3d at 228 (holding that disruption to business can be irreparable harm). James testified that allowing Shor to continue pursuing garnishment remedies or to place liens on the applicants’ property would result in the Trust‘s losing “substantial property rights” and suffering “significant financial harm.” Although Shor‘s attorney testified that he would not pursue collection methods while temporary injunctive relief is in place, there is every indication that, if she were not restrained by injunctive relief, Shor would continue to pursue garnishment and turnover relief seeking the applicants’ assets, without a judicial determination that Paul Black fraudulently conveyed assets to the applicants or that the applicants are alter egos of Paul Black, which would permit execution against those assets. Under the status quo, which the applicants seek to preserve, the applicants’ assets are ultimately owned by the Trust, a valid spendthrift trust whose assets are not subject to “attachment, execution, garnishment, or other seizure” by Paul Black‘s creditors. See Burns, 948 S.W.2d at 322. The applicants have
We conclude that the temporary injunction order is supported by evidence establishing probable injury to the applicants.
We overrule Shor‘s second issue.
Conclusion
We lift the temporary stay of trial court proceedings entered on March 21, 2012, and affirm the order of the trial court granting a temporary injunction in favor of Pelican.
Evelyn V. Keyes
Justice
Panel consists of Justices Keyes, Massengale, and Brown.