NO. 12-10-00189-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
KEJZAR MOTORS, INC. d/b/a EASTEX § APPEAL FROM THE 159TH
TRACTOR & POWERSPORTS AND
JASPER FARM & RANCH SUPPLY,
APPELLANT
V. § JUDICIAL DISTRICT COURT
KUBOTA TRACTOR CORPORATION
AND MICHAEL HAMMER,
APPELLEES § ANGELINA COUNTY, TEXAS
OPINION
Kejzar Motors, Inc., d/b/a Eastex Tractor and Powersports and Jasper Farm and Ranch
Supply (Eastex), brings this interlocutory appeal from the trial court’s denial of its application
for a temporary injunction against Kubota Tractor Corporation and Michael Hammer. Relying
on the Texas Business Opportunities and Agreements Act (TBOA), Eastex raises six issues
contending the trial court erred in denying its application. We affirm.
BACKGROUND
Kubota manufactures farm, industrial, and outdoor equipment. Eastex is a Kubota tractor
dealer, with locations in Nacogdoches and Jasper, Texas. Owners Mark Kaiser and David Feron
purchased the two existing dealerships in 2007. They operate those two stores as one dealership
with two locations. In early 2010, Kubota granted a dealership to Michael Hammer, located in
Lufkin, between Eastex’s two dealership locations.
In May 2010, Eastex filed its original petition and application for injunctive relief to
prevent Kubota from contracting with Hammer to locate a dealership in the same trade area as
Eastex’s stores. Eastex asserted that the new location, which is less than twenty-five miles from
Eastex’s Nacogdoches location, would constitute a substantial change in the competitive
circumstances of Eastex’s contractual relationship with Kubota and lead to the eventual
destruction of Eastex’s dealership. Eastex asserted causes of action against Kubota for violation
of the TBOA, the Texas Deceptive Trade Practices and Consumer Protection Act, breach of
contract and the implied covenant of good faith and fair dealing, promissory estoppel, and unjust
enrichment. Additionally, it asserted tortious interference with contractual relations and
prospective economic advantage against both Kubota and Hammer.
The trial court immediately signed a temporary restraining order based on Eastex’s
statutory rights under the TBOA, ordering Kubota and Hammer to “desist and refrain from
opening a new Kubota dealership in Angelina or Nacogdoches [C]ounty.” Two weeks later,
after a two day hearing, the trial court denied Eastex’s application for a temporary injunction and
dissolved the temporary restraining order. Eastex brought this interlocutory appeal. See TEX.
CIV. PRAC. & REM. CODE ANN. § 51.014(a)(4) (Vernon 2008).
TEMPORARY INJUNCTION
In its first issue, Eastex contends the trial court erred when it denied Eastex’s application
for a temporary injunction. Eastex argues that the court erroneously concluded that Eastex had
no probable right of recovery. Specifically, Eastex argues that Kubota violated the TBOA
because it changed the prevailing conditions, surroundings, and background of the Dealer
Agreement when it placed a competing dealer in Lufkin after previously holding Eastex
responsible for Angelina County. In its second issue, Eastex asserts that the trial court erred
when it ruled that the act of placing a competing dealer in Lufkin could not constitute a
substantial change in the competitive circumstances of a dealer agreement that unambiguously
permits the dealer only a nonexclusive local market. Eastex further contends that the trial court’s
ruling constitutes a declaration that the Dealer Agreement trumps the TBOA, thus rendering the
statute meaningless. In its fifth issue, Eastex asserts that the trial court erred in not considering
extrinsic evidence in deciding whether Kubota substantially changed the Dealer Agreement.
Standard of Review
In an interlocutory appeal from a ruling on an application for a temporary injunction, we
do not review the merits of the applicant’s case. See Davis v. Huey, 571 S.W.2d 859, 861 (Tex.
1978). To obtain a temporary injunction, the applicant must plead a cause of action and show a
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probable right to the relief he seeks, and probable, imminent, and irreparable injury in the
interim. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). The applicant is not
required to establish that he will finally prevail in the litigation. State v. Sw. Bell Tel. Co., 526
S.W.2d 526, 528 (Tex. 1975). Whether to grant or deny a temporary injunction is within the trial
court’s sound discretion. Butnaru, 84 S.W.3d at 204. We limit our review to whether there has
been a clear abuse of discretion. Id. We may not substitute our judgment for that of the trial
court; we merely determine whether the court’s action was so arbitrary as to exceed the bounds
of reasonable discretion. Id. The trial court abuses its discretion when it misapplies the law to
the established facts, or when the evidence does not reasonably support the conclusion that the
applicant has a probable right of recovery. Sw. Bell Tel. Co., 526 S.W.2d at 528.
Applicable Law
Chapter 55 of the Texas Business and Commerce Code addresses industrial equipment
dealer agreements. See TEX. BUS. & COM. CODE ANN. §§ 55.001–.201 (Vernon 2009). Section
55.052 provides that “[a] supplier may not substantially change the competitive circumstances of
a dealer agreement without cause.” TEX. BUS. & COM. CODE ANN. § 55.052. Further, a supplier
may not terminate, cancel, or fail to renew a dealer agreement without cause. Id. § 55.056. A
person injured by a violation of Chapter 55 may bring an action for an injunction and damages.
Id. § 55.201.
Analysis
The trial court determined that, as a matter of law, Eastex does not have a probable right
to recover under Section 55.052 “because the Dealership Agreement, which has an entirety
clause, unambiguously provides Eastex with no exclusive territory.” The trial court concluded
that the Dealer Agreement provides that Kubota had the right, in its sole discretion, to enter into
Dealer Agreements with others at any location and that Eastex agreed to these terms. The court
also concluded that the parol evidence rule precluded it from considering evidence that
conflicted with the unambiguous provisions and terms of the Dealer Agreement. Further, the
court concluded that Eastex did not prove a probable right of recovery or relief on its cause of
action for violation of Section 55.056.
We first must consider the question of whether the Dealer Agreement is ambiguous.
Whether a contract is ambiguous is a question of law that must be decided by examining the
contract as a whole in light of the circumstances present when the contract was entered. Sacks v.
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Haden, 266 S.W.3d 447, 451 (Tex. 2008). A contract is not ambiguous if a court can give the
contract a definite or certain meaning as a matter of law. Columbia Gas Transmission Corp. v.
New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996). If a written contract’s terms are
unambiguous, then parol evidence is inadmissible to vary, add to, or contradict its terms. Sun
Oil Co. v. Madeley, 626 S.W.2d 726, 732 (Tex. 1981); Zapata County Appraisal Dist. v. Coastal
Oil & Gas Corp., 90 S.W.3d 847, 852 (Tex. App.–San Antonio 2002, pet. denied) (op. on reh’g).
Eastex argues that the trial court erroneously refused to consider evidence regarding what
the parties reasonably believed to be Eastex’s local market. Paragraph 6.D. of the Dealer
Agreement provides that Eastex shall “maintain an inventory of Products constituting adequate
stock to serve the competitive requirements of the local market surrounding [its] Retail Store.”
Paragraph 6.I. provides that Eastex “shall maintain the location(s) of the Retail Store(s) at the
location(s) set forth on the first page … of this Agreement” and “shall focus the sales, service,
and marketing efforts for the Retail Store(s) in the Local Market(s).” Eastex argues that
evidence related to the local market was needed to determine the competitive circumstances of
the dealer agreement. Eastex further argues that evidence of the local market is important
because it provides the baseline for evaluating the substantiality of the change in competitive
circumstances that will occur when Kubota authorizes placement of a new dealer in Eastex’s
local market.
The Dealer Agreement, however, is written in such a way that it can be given a definite
meaning without a definition or explanation of what the parties reasonably believed to be
Eastex’s local market. Paragraph 1.A. of the Dealer Agreement provides that Kubota “reserves
the right, in its sole discretion, to directly or indirectly sell Products to others and to enter into
Dealer Sales and Service Agreements with others at any location within or without the locale
wherein [Eastex] maintains the Retail store(s).” Regardless of what constituted Eastex’s local
market, Kubota had the right to enter into a dealer agreement with others at any location. We
agree with the trial court’s determination that the Dealer Agreement is not ambiguous. See New
Ulm Gas, Ltd., 940 S.W.2d at 589. Furthermore, as there was no change in the competitive
circumstances of the Dealer Agreement, the necessity for a baseline for evaluating the
substantiality of a change never arises. The trial court did not err in not considering extrinsic
evidence in deciding whether Kubota substantially changed the Dealer Agreement. See
Madeley, 626 S.W.2d at 732. We overrule Eastex’s fifth issue.
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To prove entitlement to the temporary injunction, Eastex needed to prove a probable right
to relief under the TBOA. Eastex alleged that Kubota violated Section 55.052, that is,
substantially changed the competitive circumstances of their Dealer Agreement without cause,
by appointing a new Kubota dealer in Eastex’s trade area. Paragraph 1.A. of the Dealer
Agreement clearly refutes that assertion. That paragraph unambiguously gives Kubota the right
to enter into dealer agreements “with others at any location within or without the locale wherein
[Eastex] maintains” its stores. Kubota’s right to do so is part of the competitive circumstances
contemplated by their Dealer Agreement. See Freightliner of Knoxville, Inc. v.
DaimlerChrysler Vans, LLC, 484 F.3d 865, 869-70 (6th Cir. 2007) (business relationship
between supplier and dealer did not amount to a change in the competitive circumstances of the
agreement in violation of statute where the relationship was anticipated by the dealer agreement).
Even though Section 55.056 is not mentioned either by name or by reference to its
subject matter in Eastex’s list of issues, Eastex seems to also attack the trial court’s
determination that Eastex has no right to relief under Section 55.056. However, it is difficult to
discern Eastex’s reasoning. Section 55.056 provides that the supplier may not terminate a dealer
agreement without cause. See TEX. BUS. & COM. CODE ANN. § 55.056. Eastex admits that
Kubota has never threatened to terminate Eastex and does not argue that Kubota actually
attempted to terminate their agreement. Instead, Eastex claims that appointing a new, competing
dealer in Eastex’s trade area would lead to Eastex’s “destruction” and constitute a de facto
termination of the Dealer Agreement by Kubota due to loss of business. Eastex claims that it
presented evidence predicting that “the gross margin would drop significantly” if a new Kubota
dealer opened in Lufkin. In its brief, Eastex refers to its own evidence as “common-sense
assumptions.”
One of the owners of Eastex testified that Eastex was currently operating “at break even”
and that it would not take much in lost sales to cause Eastex to go out of business. He testified
that, based on his calculations, Eastex’s sales would drop thirty-four percent if the new dealer
was allowed to open in Lufkin. Kubota did its own analysis and determined that the new Lufkin
dealer would have a potential impact on Eastex of eight percent of sales in Angelina County.
However, Kubota’s East Texas regional sales manager testified that, based on his experiences
with other dealers, he believed that placement of a new dealer in Lufkin would lead to an
improvement in Eastex’s sales.
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Assuming Section 55.056 includes de facto or constructive termination, a question we do
not address, Eastex did not show that placement of a new Kubota dealer in Lufkin would
constitute a constructive termination of the Dealer Agreement. Faced with conflicting evidence,
the trial court did not abuse its discretion in determining that Eastex did not prove a probable
right of recovery under Section 55.056.
The trial court’s ruling is not, as Eastex claims, a declaration that the Dealer Agreement
trumps the statute. Under the facts of this case, the statute is not implicated and cannot be used
to alter the terms of the parties’ binding agreement. Because Eastex did not show a probable
right to the relief sought, the trial court did not abuse its discretion in denying Eastex’s
application for a temporary injunction. See Butnaru, 84 S.W.3d at 204. We overrule Eastex’s
first and second issues.
CONCLUSION
Parol evidence was inadmissible to vary the terms of the unambiguous Dealer
Agreement. Eastex has not shown a probable right of recovery. Therefore, the trial court did not
abuse its discretion in denying Eastex’s application for a temporary injunction. We need not
reach the remainder of Eastex’s issues. See TEX. R. APP. P. 47.1.
We affirm the trial court’s order denying Eastex’s application for a temporary injunction.
BRIAN T. HOYLE
Justice
Opinion delivered January 19, 2011.
Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.
(PUBLISH)
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