Brandom Manufacturing Company, Inc. v. Carmen Marie Guerra--Appeal from 18th District Court of Johnson County

IN THE

TENTH COURT OF APPEALS

No. 10-95-081-CV

BRANDOM MANUFACTURING COMPANY,INC.,

Appellant

v.

CARMEN MARIE GUERRA,

Appellee

From the 18th District Court

Johnson County, Texas

Trial Court # 328-93

O P I N I O N

Brandom Manufacturing Co., Inc. (Brandom) appeals an order granting a temporary injunction in favor of Carmen Guerra. // The temporary injunction orders Brandom to refrain from disbursing proceeds from the sale or lease of any of its assets or property, other than for valid security interests or liens, and requires it to deposit such proceeds into the registry of the court during the pendency of Guerra's personal-injury and fraudulent-conveyance action. The order provides that Brandom will be allowed to disburse proceeds only upon application and approval of the court, except that any assets or proceeds may be expended to reduce or extinguish valid liens, security interests encumbering the property, or taxes thereon without the court's approval. Brandom argues that the court abused its discretion in granting the temporary injunction because Guerra failed to show that she was entitled to it.

STANDARD OF REVIEW

A temporary injunction is an equitable remedy that is designed to prevent harsh and unjust results. McCullars v. Van Winkle-Hooker Co., 611 S.W.2d 453, 455 (Tex. Civ.App. Dallas 1980, no writ). Therefore, to ensure that justice prevails, the judge has broad discretion in deciding whether to grant or deny a temporary injunction. Id. The court's decision is subject to reversal only for a clear abuse of discretion. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993).

An abuse of discretion occurs when the trial court misapplies the law to the facts, or when the evidence does not reasonably support the conclusion that the applicant has a probable right of recovery. State v. Southwestern Bell Tel. Co., 526 S.W.2d 526, 528 (Tex. 1975). However, all legitimate inferences from the evidence will be indulged in favor of the trial court's ruling. Miller v. K and M Partnership, 770 S.W.2d 84, 87 (Tex. App. Houston [1st Dist.] 1989, no writ).

BURDEN OF PROOF

Brandom contends the evidence at the temporary-injunction hearing failed to prove that Guerra will probably recover at trial and that Guerra has not established a probable injury. However, "to warrant issuance of the writ . . . [an applicant] needs only to plead a cause of action and to show a probable right on final trial to the relief he seeks and probable injury in the interim." Sun Oil Company v. Whitaker, 424 S.W.2d 216, 218 (Tex. 1968).

In this case, Guerra is seeking a temporary injunction that affects a subject matter (Brandom's rental income or other income) separate from her underlying personal-injury lawsuit. The pendency of the personal-injury suit, considered alone, would be insufficient to warrant restricting Brandom's right to dispose of its assets. See Nowak v. Los Patios Investors, Ltd., 898 S.W.2d 9, 11 (Tex. App. San Antonio 1995, n.w.h.); Harper v. Powell, 821 S.W.2d 456, 457 (Tex. App. Corpus Christi 1992, no writ). However, Guerra has also alleged fraudulent conveyance and argued to the trial court that Brandom is intentionally disposing of its assets to defeat her right to recover on her personal-injury claim. The underlying personal-injury suit, coupled with the fraudulent-conveyance claim, may be the basis for a temporary injunction. See Nowak, 898 S.W.2d at 10-11; Teradyne v. Mostek Corp., 797 F.2d 43 (1st Cir. 1986). Therefore, to establish her right to a temporary injunction, Guerra must demonstrate not only a probable right to recover on her underlying personal-injury claim, but also on her fraudulent-conveyance claim; she must also demonstate that she would probably suffer injury in the time before trial if the injunction were not granted. Walling, 863 S.W.2d at 58.

Courts have often looked to the pleadings and (or) arguments of counsel as a basis for exercising their discretion and in determining whether a litigant has shown a probable right and probable injury. See Sun Oil, 424 S.W.2d at 217-19; Minexa Arizona, Inc., v. Staubauch, 667 S.W.2d 563, 567 (Tex. App. Dallas 1984, no writ); Birds Const., Inc. v. Gonzalez, 595 S.W.2d 926, 928-29 (Tex. Civ. App. Corpus Christi 1981, no writ) (affirming the granting of a temporary injunction based on the evidence and arguments of counsel).

The evidence, reasonable inferences from the evidence, the pleadings, and the arguments of counsel support the following rendition of facts, which is consistent with the court's findings of fact and conclusions of law and shows Guerra's probable right to recover and probable injury in the time before trial.

FACTS WARRANTING TEMPORARY-INJUNCTION PROTECTION

On July 16, 1992, Carmen Guerra was injured during the course and scope of her employment with Brandom. The injury occurred when a co-worker unexpectedly started the press on which Guerra was working, resulting in Guerra's hand being crushed. Guerra received treatment through Brandom's benefit plan until November 18, 1993, when the company terminated her employment and discontinued her benefits under the plan. // Guerra alleged that she has suffered severe and continuing damages to her hand and neck as a result of the injury.

Guerra filed suit against Brandom and one of its employees on November 23, 1993, alleging that her injury was proximately caused by Brandom's failure to provide a safe workplace. She claims that as a result of the injury she has incurred medical expenses, has lost wages, and has suffered a loss of earning capacity. Further, she alleged that Brandom treated her in a discriminatory and unfair manner, in violation of the Texas Worker's Compensation laws, by placing her on an unpaid leave of absence and informing her that she would receive no further benefits for her injuries. Finally, she alleged intentional infliction of emotional duress, false imprisonment, and fraud arising out of Brandom's calling her to the front office, and not permitting her to place any telephone calls or leave until she executed settlement documents, which allegedly were misrepresented to her as being approved by her attorney. She also sought punitive damages based on the foregoing conduct.

On February 18, 1994, less than three months after Guerra filed suit, Brandom sold all of its operating assets to Brandom Acquisition Corporation, a Nevada company. In the sale, Brandom received a promissory note in the amount of $2.5 million and preferred stock in Brandom Acquisition valued at $1 million. Brandom, however, retained liability for Guerra's suit, as well as for two other personal-injury suits, but did not establish any reserve fund or other means to ensure its ability to satisfy the potential judgments.

Brandom's real property and buildings were not included in the sale because Brandom Acquisition was not in a position to purchase those assets, which are valued at $2.5 million. However, negotiations to sell the property and buildings are on-going, and Brandom is willing to sell them. Currently, Brandom is leasing the property and buildings to Brandom Acquisition for more than $20,000 per month.

Upon learning of Brandom's sale of its operating assets and the negotiations to sell all of its remaining assets, Guerra amended her original petition to include a claim for fraudulent conveyance. See Tex. Bus. & Com. Code Ann. 24.005 (Vernon 1987 & Supp. 1995). She also sought a temporary injunction, requesting that any proceeds from the sale or lease of any of Brandom's remaining assets be paid into the registry of the court during the pendency of the action, rather than distributed to Brandom's owners. // The pleading also informed the court that, upon proper presentment of a valid lien or security interest encumbering the property, Guerra would agree to allow a distribution of proceeds for its payment.

On February 23, 1995, the court held a hearing on Guerra's application for a temporary injunction. Counsel for Brandom testified that he had told Guerra's attorney on one occasion that he was considering withdrawing from Brandom's representation because he had not been paid. He also admitted telling Guerra's counsel that, "if he were fortunate enough to get a judgment, I [Brandom's counsel] was not sure what he'd be able to execute against." Guerra's counsel testified that Brandom's counsel had informed him that he was withdrawing because Brandom "was disposing of its assets and there was nothing left."

Guerra's counsel represented to the court that she was not seeking to have the sale of the operating assets set aside. Further, counsel reiterated his intention that the temporary injunction not affect all rent or sales proceeds from the property, as disbursement for valid liens and security interests would be permitted with the court's approval, or with the agreement of the parties.

The attorney for Brandom told the court that the promissory note and preferred stock received in exchange for the operating assets were pledged to a Canadian bank, and that all proceeds from the lease of its land and buildings were also pledged. However, no proof of the encumbrance was offered.

After the close of the hearing, the court granted the temporary injunction as prayed for and directed the parties to draft an order that afternoon. However, counsel for Brandom requested additional time, until February 27, so that he could consult with his client in Canada and protect his client's interests.

On March 13, 1995, eighteen days after the court orally granted the temporary injunction, the court and parties continued the hearing because the parties could not agree on the language of the court's order granting the temporary injunction. Although requested by Guerra's counsel, Brandom's counsel had not produced any security agreements validly encumbering the proceeds derived from lease or sale of the land and buildings.

However, at the continuation of the hearing, Brandom asserted that its pledge of the proceeds from the land and buildings to the bank in Canada was a valid security interest and that it should be able to make payments to satisfy that debt without prior approval from the court or agreement of the parties. Brandom presented documents purportedly evidencing the security interest that were executed and dated February 24 the day after the hearing at which the judge had orally ordered the temporary injunction. Brandom did not show that the company had received any consideration or benefit in exchange for the attempted pledge of its remaining assets to the Canadian bank; rather, it only argued that Brandom's owner was indebted to the bank.

There is ample evidence from which the court could reasonably conclude that Brandom was attempting to dispose of its assets in such a manner that would preclude Guerra from recovering damages if she prevailed on her claims. Further, the court could have reasonably determined that Brandom fraudulently attempted to encumber the only property it had remaining in Texas the land and buildings so that the proceeds from the lease or sale would be exempted from deposit into the registry. Moreover, the court could reasonably infer that Brandom had a reason for selling or pledging its assets without receiving compensation, namely to avoid liability it thought likely existed on three pending personal-injury cases, including Guerra's.

The court found that if Brandom were not enjoined it would have no assets to satisfy a judgment, resulting in Guerra having an inadequate remedy at law. TCA Bldg. Co. v. Northwestern Resources, 890 S.W.2d 175, 179 (Tex. App. Waco 1994, no writ). After reviewing the record on appeal, and given the court's broad discretion to prevent injustices, we cannot say that the court abused its discretion in granting the temporary injunction. Walling, 863 S.W.2d at 58. We overrule Brandom's points of error and affirm the order granting the temporary injunction.

BOB L. THOMAS

Chief Justice

Before Chief Justice Thomas,

Justice Cummings, and

Justice Vance

Affirmed

Opinion delivered and filed November 1, 1995.

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