Anderson, William B. v. CMPG Inc. D/B/A Cranemann, Cranemann, Inc. SID Mann and Steve Sofoul, Individually and As Representative of the Interest of CMGP, Inc. D/B/A Craenmann and Cranemann, Inc.--Appeal from 165th District Court of Harris County

Affirmed and Opinion filed June 27, 2002

Affirmed and Opinion filed June 27, 2002.

In The

Fourteenth Court of Appeals

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NO. 14-01-01259-CV

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WILLIAM R. ANDERSON, Appellant

V.

CMGP, INC. D/B/A CRANEMANN, CRANEMANN, INC., SID MANN AND STEVE SOFOUL, INDIVIDUALLY AND AS REPRESENTATIVE OF THE INTEREST OF CMGP, INC. D/B/A CRANEMANN AND CRANEMANN, INC., Appellees

On Appeal from the 165th District Court

Harris County, Texas

Trial Court Cause No. 01-55208

O P I N I O N

This is an interlocutory appeal from a temporary injunction. See Tex. Civ. Prac. & Rem. Code Ann. ' 51.014(a)(4) (Vernon Supp. 2002). In three points of error, appellant claims (1) the temporary injunction is void ab initio, (2) appellees were not entitled to the temporary injunction as a matter of law, and (3) the trial court abused its discretion in granting the temporary injunction. We affirm.

Factual and Procedural History

AppelleesCMGP, Inc. d/b/a CraneMann, (ACMGP@), CraneMann, Inc. (ACraneMann@), Sid Mann and Steve Sofoul, individually and as representatives of CMGP and CraneMann, filed suit against appellant William R. Anderson, for misappropriation of corporate assets, usurping corporate opportunities, self dealing, breach of fiduciary duty and fraud.

CMGP is a Texas corporation in the business of selling an engineered-product-type crane. Anderson is the president. Mann is a vice president and regional sales manager, and Sofoul is a vice president, a member of the board of directors and a director of sales. Initially, Anderson, Mann and Sofoul each held an equal one-third of CMGP shares. In December 1998, in a deal handled by Anderson, CMGP bought an 8-acre section of a 21-acre tract and Anderson bought the remaining 13-acres in his own name. In the summer of 1999, CMGP experienced financial troubles and Anderson pledged part of his 13-acres as additional collateral in order to restructure a CMGP loan at Sterling Bank. Based upon representations by Anderson that he was pledging personal real estate to secure the loan, Mann and Sofoul entered into an Agreement of Shareholders, signed January 2001, in which each conveyed 13 percent of his one-third interest in the CMGP shares to Anderson, reducing their individual holdings to 20 percent and increasing Anderson=s to 60 percent. Mann and Sofoul allege that in October 2001 they discovered that Anderson had paid a much lower price for the land than he had told them and that he used CMGP funds to pay for his personal 13 acres. In addition, they alleged that Anderson negotiated a lease agreement between CMGP and JAB Metal Fabricator=s Sandblasting & Painting (AJAB@) while secretly holding an undisclosed interest in the JAB partnership, and then took no action against JAB when it failed to make the lease payments to CMGP.

Mann and Sofoul allege that when they confronted Anderson, he fired them. Sofoul testified that Anderson said Ahe could not work under these conditions of the accusations that were being made.@ Anderson then scheduled a Aspecial meeting of the shareholders@ for October 30, 2001, Ato elect a slate of Directors to serve on the company=s Board of Directors, and such other business as may come before the board.@

Mann and Sofoul filed suit October 25, 2001, and sought a temporary injunction. The trial court heard evidence and granted a temporary injunction prohibiting Anderson from convening the special meeting of the shareholders or from voting to elect any slate of directors until adjudication on the merits of the suit. The order further prohibits Anderson from restricting Mann and Sofoul=s access to daily reports or from making transactions outside the ordinary course of business. This interlocutory appeal followed.

Texas Rule of Civil Procedure Section 683

In his first point of error, Anderson argues that the order is void ab initio for failure to satisfy section 683 of the Texas Rules of Civil Procedure. A valid order for a temporary injunction must (1) state the reasons for the injunction=s issuance by defining the injury and describing why it is irreparable; (2) define the acts sought to be enjoined Ain clear, specific and unambiguous terms so that such person will readily know exactly what duties or obligations are imposed upon him;@and (3) set the cause for trial on the merits and fix the amount of the bond. See Tex. R. Civ. P. 683; InterFirstBank San Felipe, N.A. v. Paz Constr. Co., 715 S.W.2d 640, 641 (Tex. 1986). An injunction decree must be as definite, clear and precise as possible and, when practicable, it should inform the person enjoined of the acts he is restrained from doing, without calling for inferences or conclusions about which persons might well differ and without leaving anything for further hearing. San Antonio Bar Ass=n v. Guardian Abstract & Title Co., 291 S.W.2d 697, 702 (1956). However, the injunction must be broad enough to prevent repetition of the evil sought to be stopped, whether the repetition be in a form identical to that employed prior to the injunction or in a somewhat different form calculated to circumvent the injunction as written. Id.

Anderson argues that the order concludes that Aharm is imminent@ without providing any specific rationale for the finding. However, the order states:

Irreparable injury will result due to the loss of sales equipment by Sid Mann and Steve Sofoul which will in all likelihood lead to critical financial problems and potential bankruptcy of the company. There is a strong likelihood that Sterling Bank will call the outstanding note resulting in the loss of unique and irreplaceable real property.

The order further details the acts enjoined: Anderson could not proceed with a special meeting on December 4, 2001; or any other special meeting to elect a slate of directors to serve on the company=s board of directors; could not interfere with Mann or Sofoul=s obtaining daily CMPG reports; could not make any financial or business transactions outside the normal course of business, all until there had been an adjudication on the merits in this action. The order includes a set date for trial and fixed the bond amount.

We find that the order provides a specific rationale for its issuance and lists the prohibited actions in accordance with the requirements of section 683. Accordingly, Anderson=s first point of error is overruled.

The Temporary Injunction

In Anderson=s second and third points of error he argues that appellees were not entitled to the temporary injunction as a matter of law and that the trial court abused its discretion in granting the order. The purpose of a temporary injunction order is to preserve the status quo pending a trial on the merits. Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993). The party requesting the temporary injunction must show (1) a viable cause of action; (2) a probable right to recovery; and (3) a probable, imminent, and irreparable injury in the interim. Id. The decision to grant or deny a temporary writ of injunction lies in the sound discretion of the trial court, and the court=s grant or denial is subject to reversal only for a clear abuse of that discretion. Id. at 58. The trial court abuses its discretion when it acts arbitrarily and unreasonably acts without reference to guiding rules or principles, or misapplies the law to the established facts of the case. See Baywood Country Club v. Estep, 929 S.W.2d 532, 535 (Tex. App.CHouston [1st Dist.] 1996, writ denied). In reviewing the trial court=s action, we draw all legitimate inferences from the evidence in a manner most favorable to the trial court=s judgment. Resolution Trust Corp. v. Chair King, Inc., 827 S.W.2d 546, 548 (Tex. App.CHouston [14th Dist.] 1992, no writ). The merits of the underlying case are not presented for review, and this court may not substitute its judgment for that of the trial court. See Davis v. Huey, 571 S.W.2d 859, 861 62 (Tex. 1978). The burden of proof is on the litigants attacking the trial court=s action. Garcia Marroquin v. Nueces County Bail Bond Bd., 1 S.W.3d 366, 379 (Tex. App.CCorpus Christi 1999, no pet.)

In this case, Mann and Sofoul brought suit individually and as representatives of CMGP and CraneMann against Anderson for misappropriation of corporate assets, usurping corporate opportunities, self dealing, breach of fiduciary duty and fraud. Our analysis begins by determining whether Mann and Sofoul pled a viable cause of action. See Walling, 863 S.W.2d at 57; see also Davis, 571 S.W.2d at 862 (finding Athe trial court judgment must be upheld on any legal theory supported by the record.@). The elements of common law fraud include (1) a material representation; (2) made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion; (3) made with the intention that it should be acted on by the other party; and (4) under circumstances in which the other party acted in reliance on the representation and thereby suffered injury. See Johnson & Higgins v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex. 1998). The trial court heard evidence that Anderson misrepresented the facts surrounding his personal acquisition of 13-acre tract.[1] Additionally, the court heard that Anderson claimed the land used as collateral for the loan was his personal property in order to have Mann and Sofoul enter into the shareholder=s agreement. Moreover, the language of the shareholder=s agreement shows that Mann and Sofoul acted in reliance on Anderson=s representation that his personal land was used for collateral in consideration for conveying their shares, causing them to suffer the loss of their equal shares. The trial court does not abuse its discretion in issuing a temporary injunction when, as in this case, the original petition alleges a cause of action and the party seeking the injunction presents evidence tending to sustain the cause of action. See RP&R, Inc. v. Territo, 32 S.W.3d 396, 400 (Tex. App.CHouston [14th Dist.] 2000, no pet.).

Further, Mann and Sofoul are entitled to preservation of the status quo pending trial on the merits. See Walling, 863 S.W.2d at 57-58. The trial court was presented evidence that appellees will suffer a probable and irreparable injury if Anderson is permitted to hold a special meeting of shareholders for the purpose of electing a slate of directors that would be under his control. They sought to prevent Anderson from conducting financial affairs that would bankrupt CMGP; specifically that Athere is a strong likelihood that Sterling Bank will call the outstanding note resulting in the loss of unique and irreplaceable real property@Bin DecemberBbefore the trial on the merits. The irreparable injury is the permanent loss of the land. While a cause of action for damages may exist, however, such a remedy at law does not prevent the issuance of a temporary injunction when the ownership of real estate is at issue. AWhen ownership of real estate is at issue, existence of a cause of action for damages is no basis for denying equitable relief.@ El Paso Development Co. v. Berryman, 729 S.W.2d 883, 888 (Tex. App.CCorpus Christi1987, no writ); see Irving Bank & Trust Co. v. Second Land Corp., 544 S.W.2d 684, 688 (Tex. App.CDallas1976, writ ref=d n.r.e.).

Finally, Anderson argues that the trial court abused its discretion by issuing an order that exceeds the requested relief. The record shows that the trial court refined the temporary injunction to deny some of the relief that appellees had requested. The trial court deleted the requested provision that would have preserved Mann and Sofoul=s employment and pending sales, but added the provision that gave them access to the daily reports. The trial court also deleted a portion of the requested order that would have granted Mann and Sofoul additional powers over CMGP=s business affairs, but added language that limited Anderson=s ability to make financial transactions except those made in the ordinary course of business. Generally, a court is without jurisdiction to grant relief beyond and in addition to that particularly specified. See Fairfield v. Stonehenge Ass=n Co., 678 S.W.2d 608, 611 (Tex. App.CHouston [14th Dist.] 1984, no writ). However a trial court does not abuse its discretion if it grants a temporary injunction that exceeds the relief the applicant seeks as long as the items complained of are necessary to give full effect to the injunction sought. See Biodynamics, Inc. v. Guest, 817 S.W.2d 128, 130 (Tex. App.CHouston [14th Dist.]1991, writ dism=d by agr.).

We find that the injunctive relief granted was necessary to preserve the status quo and to give full effect to the injunctive relief sought. Thus the trial court did not abuse its discretion. Accordingly, Anderson=s second and third points of error are overruled.

The judgment of the trial court is affirmed.

/s/ Leslie Brock Yates

Justice

Judgment rendered and Opinion filed June 27, 2002.

Panel consists of Justices Yates, Seymore, and Guzman.

Do Not Publish CTex. R. App. P. 47.3(b).

[1] Anderson argues in his brief the merits of the transactions. However, we are not permitted to review the merits of the underlying case. Davis, 571 S.W.2d at 862. Further, an abuse of discretion does not exist if the trial court heard conflicting evidence, and substantive, probative evidence appears in the record that reasonably supports the trial court=s decision. Id.