Opinion issued February 26, 2013
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-11-01062-CV
———————————
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
On Appeal from the 12th District Court
Grimes County, Texas
Trial Court Case No. 32190
OPINION
In this interlocutory appeal, appellants, Toby Shor and Seashore Investments
Management Trust, by and through Toby Shor, trustee (collectively, “Shor”),
sought execution on a prior judgment awarded in their favor from the assets of
appellees, 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 (collectively, “the applicants” or “Pelican”). Pelican
moved for a temporary injunction to prevent further execution attempts by Shor
pending resolution of the issues in the underlying declaratory judgment action, and
the trial court granted the requested injunctive relief. In two issues, Shor contends
that (1) the trial court lacked subject matter jurisdiction over the case and (2) if the
trial court had jurisdiction, it abused its discretion in granting the temporary
injunction.
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
2
arbitration panel found in favor of Shor on all of her claims against the defendants
in the arbitration (collectively, “the judgment debtors”) and awarded her over $30
million in damages. On April 6, 2011, the Nueces County court confirmed the
arbitration panel’s award and entered judgment in favor of Shor (“the Nueces
County judgment”). Black and the other judgment debtors, none of whom are
parties to this suit, appealed to the Corpus Christi Court of Appeals, but they did
not file a supersedeas bond or otherwise supersede execution on that judgment. 1
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
1
This appeal remains pending before the Corpus Christi Court of Appeals in
appellate cause number 13-11-00715-CV.
3
are located at 500 N. Water Street. Pursuant to this turnover order, Shor changed
the locks on the offices of the entities related to Paul Black that have their
headquarters at 500 N. Water Street, and she took possession of the business
records and files of the applicants—none of which were named in the turnover
order and none of which have been shown to be owned by a judgment debtor or
subject to execution.
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
4
Grimes County. Pelican alleged that none of the applicants were parties to the
Nueces County judgment, and, therefore, Shor could not use their assets to satisfy
that judgment. Pelican alleged that, although Paul Black, one of the judgment
debtors in the Nueces County suit, was the sole beneficiary of the Trust, Black
does not own an interest in any of the parties to this suit, which are all ultimately
wholly owned by the Trust, or in any of the assets sought by Shor in her
application for turnover relief.
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
5
turnover of the [applicants] and their assets, which will damage and cloud the title
of [applicants’] oil and gas properties situated in Grimes County.” And it alleged
that the harm was irreparable because Shor’s actions would slander the applicants’
title to their mineral interests, would interrupt and interfere with the operation of
oil and gas wells, and would make it impossible for the applicants to obtain
financing for future drilling operations while the cloud remains on their title.
Pelican argued that it had no adequate remedy at law because “the damages from
loss of a lease position may be incalculable” and the “real property and mineral
estate is unique and cannot be reasonably replaced if lost.”
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
6
from production on land located in Grimes County. Ten days later, on October 14,
2011, the trial court extended and modified the TRO to prohibit Shor from
“retaining, possessing, copying, reviewing or otherwise using in any manner the
property, files, records, documents, and data” of the applicants.
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 Civil
Practice and Remedies Code section 65.023(b). See TEX. CIV. PRAC. & REM. CODE
ANN. § 65.023(b) (Vernon 2008). Shor argued that an injunction relating to
execution on a judgment has to be heard in the court in which the judgment was
originally rendered. Therefore, because the judgment upon which she was
attempting to execute was rendered in Nueces County, only the Nueces County
court had jurisdiction to grant an injunction restraining her from executing on the
judgment, if appropriate. The trial court took the jurisdictional issue under
advisement, and it heard testimony concerning the propriety of granting the
temporary injunction.
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
7
of the other applicants and that no judgments have been entered against any of
these entities. He further testified that Paul Black has never owned any interest in
any of the applicants, and no court has ever determined that the applicants are the
alter ego of Paul Black or that Black used the applicants to defraud his creditors.
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
2
Shor states, in her affidavit, “I have reason to believe and do believe that [Mego
Resources] has property belonging to, or is indebted to, Defendant Paul Black,
through SGW Interests, LLC. This belief is based on the fact that I have seen
documents which show that Paul Black is the owner of SGW Interests, LLC, and
that SGW Interests LLC owns an interest in oil and gas wells/leases in Grimes
County, Texas.”
8
applicants. James also stated that the records and files contain communications
protected by the attorney-client privilege.
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.”
9
Ultimately, the Grimes County court granted the temporary injunction. The
court found that Pelican had provided sufficient evidence that the applicants are
not judgment debtors of and do not owe any money to Shor; that Paul Black has
never owned any of the applicants or any of their assets; that Shor presented no
evidence to support an assertion that Paul Black transferred assets to the applicants
or used these entities to defraud Shor; that the applicants own real and personal
property in Grimes County, including oil and gas leases that run the risk of
expiring; that Shor has threatened to or has actually clouded the title of the
applicants’ property; that Shor’s collection attempts have resulted in the
withholding of funds to the applicants; and that the applicants are likely to suffer
permanent and irreplaceable loss of real and personal property without a temporary
injunction pending a determination of the parties’ rights. The court then ordered
Shor to refrain from participating in the same acts that were prohibited in the two
previous TROs.
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
10
stating that it should not be construed as prohibiting Shor from attempting to
satisfy the Nueces County judgment from the assets of Paul Black or any of the
named judgment debtors in that suit.
This interlocutory appeal followed. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 51.014(a)(4) (Vernon Supp. 2012) (allowing interlocutory appeal from order of
district court that grants temporary injunction).
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 Civil Practice and Remedies Code section 65.023(b).
Civil Practice and Remedies Code section 65.013 permits a suit for an
injunction to stay execution on a judgment. See TEX. CIV. PRAC. & REM. CODE
ANN. § 65.013 (Vernon 2008); Butron v. Cantu, 960 S.W.2d 91, 94 (Tex. App.—
Corpus Christi 1997, no pet.); McVeigh v. Lerner, 849 S.W.2d 911, 914 (Tex.
App.—Houston [1st Dist.] 1993, writ denied). Section 65.023(b) provides,
however, that “[a] writ of injunction granted to stay . . . execution on a judgment
must be tried in the court in which . . . the judgment was rendered.” TEX. CIV.
PRAC. & REM. CODE ANN. § 65.023(b). We have previously held that this section
“is intended to ensure that comity prevails among the various trial courts of Texas”
because “[o]rderly procedure and proper respect for the courts will require
11
that . . . attacks upon their judgment should be made in the court rendering such
judgment, rather than in other courts indiscriminately.” McVeigh, 849 S.W.2d at
914 (quoting Lloyds Alliance v. Cook, 290 S.W.2d 716, 718 (Tex. Civ. App.—
Waco 1956, no writ)). We further held that not only does section 65.023(b) control
venue in a suit for an injunction seeking to stay execution on a judgment, it also
controls “jurisdiction as well, so long as the judgment in question is valid on its
face.” Id. (citing Int’l Sec. Life Ins. Co. v. Riley, 467 S.W.2d 213, 214 (Tex. Civ.
App.—Amarillo 1971, writ ref’d n.r.e.)); see also Butron, 960 S.W.2d at 94 (“This
requirement that an action to enjoin execution on a judgment must be brought in
the court in which the judgment was rendered is jurisdictional, and does not relate
merely to venue.”). The requirement of facial validity is a requirement that the
underlying judgment is not void. Butron, 960 S.W.2d at 95; McVeigh, 849 S.W.2d
at 914.
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
12
favor of Lerner. Id. On appeal, McVeigh argued that the summary judgment was
“outside the scope of the 151st District Court’s jurisdictional authority under
[section] 65.023.” Id. In determining whether the 151st District Court had
jurisdiction to enter the injunction, we held that the fact that Lerner’s suit was not,
on its face, a claim for an injunction to stay execution on the original judgment but
was, instead, a claim to enjoin the distribution of funds paid under protest to
prevent execution was an “immaterial” distinction. Id. at 915. We held:
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 conclude section 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 section 65.023 deprived the 151st District Court
of “subject matter jurisdiction on Lerner’s claim for injunctive relief” because that
court did not render the underlying judgment. Id.; see also Butron, 960 S.W.2d at
95 (“In the instant case, the 138th District Court rendered the $1,019,840.53
judgment against Mark Cantu. . . . Accordingly, Cantu had to bring his application
for writ of injunction in the 138th District Court because that court had rendered
the judgment. No other court had jurisdiction over that issue.”).
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 section
13
65.023(b), only the Nueces County court has jurisdiction to enter an injunction
restraining Shor from executing on that judgment.
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 section 65.023(b) does not apply to cases in which
a stranger to the underlying judgment seeks injunctive relief from execution on that
judgment. In Zuniga, Wooster assigned a legal malpractice cause of action to the
Zunigas and the parties also entered into a consent agreement in the 73rd District
Court which provided that (1) Wooster could transfer all of its assets, except the
legal malpractice cause of action, to a new corporation, (2) the Zunigas waived all
rights to the new corporation’s assets, (3) the Zunigas released all claims against
Wooster, and (4) Wooster’s transfer of assets was not fraudulent. See id. at 859–
60. Ten years later, the Zunigas sued the new corporation and threatened to
execute on the consent judgment against the assets of the new corporation. Id. at
860. In the 224th District Court, Wooster sought a declaration that it was the only
judgment debtor under the original consent judgment and applied for a temporary
injunction to “prevent the Zuniga children from executing on the judgment against
any entity other than Wooster.” Id. The 224th District Court granted the requested
injunctive relief. Id.
14
In addressing whether the 224th District Court had jurisdiction to grant the
requested injunctive relief, the San Antonio Court of Appeals noted that, in most
circumstances, “a suit to enjoin enforcement of a judgment must be brought in the
court which rendered the judgment.” Id. at 861. However, it then held that “this
jurisdictional limitation only applies to a suit ‘attacking the judgment, questioning
its validity, or presenting defenses properly connected with the suit in which it was
rendered, and which should have been adjudication therein.’” Id. (quoting Kruegel
v. Rawlins, 121 S.W. 216, 217 (Tex. Civ. App.—Dallas 1909, writ ref’d)). The
court observed that Wooster was not attempting to attack the underlying judgment,
question its validity, or present defenses that it should have raised in the previous
suit; instead, it was “attempting to prevent the misuse of the judgment—its
execution against a stranger to the judgment.” Id. According to the San Antonio
court, “The jurisdictional limitation of section 65.023 does not require a claim
seeking to prevent the misuse of a judgment to be brought in the court that
rendered judgment.” Id. (citing Kruegel, 121 S.W. at 217 (injunction to prevent
stranger from enforcing judgment is not required to be filed in original court
rendering judgment)). The court held that the 224th District Court had jurisdiction
to issue the temporary injunction. Id.
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,
15
the 134th District Court of Dallas County entered a judgment in favor of First City
Bank of Dallas, which subsequently assigned that judgment to Williams. 783
S.W.2d at 234. Williams then obtained a writ of execution on some real property
owned by one of the judgment debtors in Cameron County. Id. Janie Hughston,
who was another judgment creditor of the defendant on whose property Williams
sought execution but was not a party to the Dallas County judgment, filed suit
against Williams in Cameron County, seeking an order restraining Williams from
executing on the property and a determination that the assignment of the judgment
to Williams was void. Id. The trial court granted the order, and Williams sought
mandamus relief.
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 § 65.023 is to protect the judgment and
processes of one court from interference by another court.” Id. (citing Carey v.
Looney, 251 S.W. 1040, 1041 (Tex. Comm’n App. 1923)). The court noted that,
one hundred years previously, the Texas Supreme Court had held that the
predecessor statute to section 65.023 was “inapplicable to suits by non-parties to a
judgment who seek to enjoin execution upon property in which they have an
interest.” Id. at 235 (citing Van Ratcliff v. Call, 10 S.W. 578, 579 (Tex. 1889)).
The court reasoned that Hughston was not seeking to set aside the underlying
16
judgment or seeking to set aside an execution on the judgment; instead, she
requested a stay of execution on the judgment until the rights of the parties with
regard to the property could be determined in her declaratory judgment action. Id.
The court ultimately concluded that section 65.023 was not applicable because
Hughston was a stranger to the underlying Dallas County judgment. Id. In the
Cameron County suit, the trial court “was not attempting to interfere with the
Dallas court’s judgment. Rather, the granting of the temporary restraining order
was merely a way of preserving the status quo until a determination of the parties’
rights could be made.” Id. The Corpus Christi court held that the Cameron County
court had jurisdiction to determine Hughston’s declaratory judgment action. Id.
Shor argues that the cases that rely upon Van Ratcliff v. Call are not
controlling because the predecessor statute to section 65.023, article 4656, was a
mandatory venue statute and not a jurisdictional statute. See 10 S.W. at 578–79.
In support, Shor cites two cases referring to article 4656 as a venue provision. See
Williams, 783 S.W.2d at 235; Flewellen v. Brownfield State Bank & Trust Co., 517
S.W.2d 384, 388 (Tex. Civ. App.—Amarillo 1974, no writ). Shor ignores the fact,
however, that article 4656 was entitled “[j]urisdiction for trial” and provided that
“[w]rits of injunction granted to stay proceedings in a suit, or execution on a
judgment, shall be returnable to and tried in the court where such suit is pending,
or such judgment was rendered . . . .” Act to Regulate Proceedings in District
17
Courts, 1st Leg., R.S., § 152, 1838–46 Laws of Tex. 1669, 1711–12, repealed by
Act of May 17, 1985, 69th Leg., R.S., ch. 959, § 9(1), 1985 Tex. Gen. Laws 3242,
3294. Section 65.023(b) is almost identical: “A writ of injunction granted to stay
proceedings in a suit or execution on a judgment must be tried in the court in
which the suit is pending or the judgment was rendered.” TEX. CIV. PRAC. & REM.
CODE ANN. § 65.023(b) (Vernon 2008). In analyzing section 65.023(b) in
McVeigh, we noted that it “controls not just venue of such a suit, but also
jurisdiction . . . .” 849 S.W.2d at 914. Thus, although article 4656 was primarily
considered a mandatory venue provision, it also controlled jurisdiction. As such,
Van Ratcliff and the cases that rely upon it are applicable. In Van Ratcliff, the
Texas Supreme Court explicitly held that article 4656
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.
10 S.W. at 579.
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
18
judgment was the original judgment debtor. See Butron, 960 S.W.2d at 93;
McVeigh, 849 S.W.2d at 913. Here, in contrast, none of the applicants were parties
to the original Nueces County judgment and none have been determined to be
owned by a judgment debtor. The allegation in the underlying suit is that none of
the applicants are owned by a judgment debtor.
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 section 65.023 applies
to suits “attacking the judgment, questioning its validity, or presenting defenses” to
judgment arising from original court). Instead, Pelican seeks declarations that the
entities are not liable for the debts of Paul Black, the original judgment debtor, that
they are not liable to Shor for any debts, and that Black has no ownership interest
in the entities or in the Grimes County assets owned by the Trust. Pelican’s
application for a temporary injunction seeks only to preserve the status quo by
preventing the garnishment and turnover of its Grimes County assets until the trial
court can determine the proper ownership of the assets. The trial court’s temporary
injunction order also does not interfere with Shor’s ability to execute on the assets
of Paul Black and the other judgment debtors to satisfy the Nueces County
judgment; the order includes language stating that it should not be construed as
19
prohibiting Shor from collecting from the assets of Black or the other named
debtors.
We follow Williams and Zuniga and hold that section 65.023(b) does not
apply to situations in which a non-party to the underlying judgment seeks to
prevent execution on that judgment from its assets. See Zuniga, 119 S.W.3d at
861; Williams, 783 S.W.2d at 235; see also Van Ratcliff, 10 S.W. at 579 (holding
that predecessor to section 65.023(b) “has no application” to non-party who seeks
to prevent execution on judgment). We therefore conclude that section 65.023(b)
does not require Pelican and the other applicants, who are not parties to the original
Nueces County judgment, to bring their declaratory judgment action and
applications for injunctive relief in Nueces County.
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
20
are owned by the Trust. Although Paul Black is the beneficiary of the Trust, the
Trust is a spendthrift trust, and spendthrift trusts “protect the beneficiary’s interest
in the trust corpus and income from claims of a beneficiary’s creditors while the
corpus and income remain in the trust and are held by the trustee.” Burns v. Miller,
Hiersche, Martens & Hayward, P.C., 948 S.W.2d 317, 321 (Tex. App.—Dallas
1997, writ denied). Spendthrift trusts are “exempt from attachment, execution,
garnishment, or other seizure.” Id. at 322. Furthermore, Shor presented no
evidence that Black transferred assets to the Trust in an attempt to defraud her and
protect his assets from execution on the Nueces County judgment, and no court has
yet determined that the applicants are alter egos of Paul Black. Thus, the “status
quo,” pending resolution of the underlying Grimes County declaratory judgment
action, is that the Trust and the other applicant entities are separate from Paul
Black, and his involvement with the management of these entities does not compel
the conclusion that he owns an interest in the assets of these entities.
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
21
Pelican because the evidence in the record does not support the court’s conclusions
that Pelican has a probable right of recovery or that Pelican will suffer imminent
harm and irreparable injury without a temporary injunction.
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
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its discretion when the evidence does not reasonably support the court’s
determination of the existence of probable injury. Marketshare Telecom, L.L.C. v.
Ericsson, Inc., 198 S.W.3d 908, 916 (Tex. App.—Dallas 2006, no pet.); Tri-Star
Petroleum Co. v. Tipperary Corp., 101 S.W.3d 583, 587 (Tex. App.—El Paso
2003, pet. denied). We review the evidence submitted to the trial court in the light
most favorable to the trial court’s ruling, draw all legitimate inferences from the
evidence, and defer to the trial court’s resolution of conflicting evidence. INEOS
Grp. Ltd. v. Chevron Phillips Chem. Co., 312 S.W.3d 843, 848 (Tex. App.—
Houston [1st Dist.] 2009, no pet.). Our review is limited to determining whether
the trial court abused its discretion in its ruling on the application for a temporary
injunction; we do not reach the merits of the underlying case. Sonwalkar v. St.
Luke’s Sugar Land P’ship, L.L.P., No. 01-11-00473-CV, 2012 WL 3525384, at *5
(Tex. App.—Houston [1st Dist.] Aug. 16, 2012, no pet.); INEOS Grp., 312 S.W.3d
at 848 (“On appeal, the scope of review is limited to the validity of the temporary
injunction order. We do not review the merits of the underlying case.”).
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.
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A. Probable Right to Relief Sought
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
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formation documents indicate that the Trust or an entity wholly-owned by the
Trust is the sole owner of each of the entities and that Paul Black does not have an
ownership interest in the entities. James further testified that the Grimes County
oil and gas leases and other mineral interests are all Trust assets and are not owned
by Paul Black. He also testified that none of the applicants have been involved in
litigation with Shor, and Shor does not have a judgment against any of these
entities. This is some evidence, therefore, that Black does not have an ownership
interest in any of the applicants or their assets, and, therefore, that the applicants
are not parties to the Nueces County judgment and their assets are not susceptible
to execution on that judgment. See INEOS Grp., 312 S.W.3d at 848 (holding that,
to establish probable right of recovery, applicant must present at least some
evidence that tends to support its cause of action); see also Intercontinental
Terminals Co., LLC v. Vopak N. Am., Inc., 354 S.W.3d 887, 897 (Tex. App.—
Houston [1st Dist.] 2011, no pet.) (“The evidence must be sufficient to raise a bona
fide issue as to [the applicant’s] right to ultimate relief.”).
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—
25
Pelican Oil & Gas Management, LLC, and Pelican Oil & Gas, LP—were formed
after the arbitration panel rendered an award against Black in favor of Shor,
suggesting that the entities were formed to fraudulently transfer Black’s assets to
avoid execution on the Nueces County judgment, entered several months later.
Shor has, however, presented no evidence of specific assets that Black transferred
to the Pelican entities or to the Trust after either the arbitration award or the
Nueces County judgment was entered against him. Moreover, in a case of
conflicting evidence, such as this one, when reviewing the trial court’s decision to
grant injunctive relief, we view the evidence in the light most favorable to the trial
court’s ruling and defer to the trial court’s resolution of conflicting evidence. See
INEOS Grp., 312 S.W.3d at 848. The trial court does not abuse its discretion when
some evidence reasonably supports its decision. Butnaru, 84 S.W.3d at 211;
Sharma v. Vinmar Int’l, Ltd., 231 S.W.3d 405, 419 (Tex. App.—Houston [14th
Dist.] 2007, no pet.).
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
26
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
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injury, based only on fear or apprehension. Fox v. Tropical Warehouses, Inc., 121
S.W.3d 853, 861 (Tex. App.—Fort Worth 2003, no pet.).
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
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on the applicants’ assets before the applicants sought injunctive relief prohibiting
this conduct.
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
3
In the absence of an agreement by the parties, the affidavit of James Black, filed
with Pelican’s application for injunctive relief, does not constitute evidence
supporting the issuance of the temporary injunction. See Millwrights Local Union
No. 2484 v. Rust Eng’g Co., 433 S.W.2d 683, 686 (Tex. 1968); Ahmed v. Shimi
Ventures, L.P., 99 S.W.3d 682, 684 n.2 (Tex. App.—Houston [1st Dist.] 2003, no
pet.) (“[A]bsent the parties’ agreement, affidavits attached to pleadings and not
admitted into evidence do not constitute evidence.”); see also Pierce v. State, 184
S.W.3d 303, 307 (Tex. App.—Dallas 2005, no pet.) (“We conclude a trial court
may issue a temporary injunction based on affidavit testimony admitted into
evidence at the hearing thereon.”) (emphasis in original). James’s affidavit was
not entered into evidence during the temporary injunction hearing, and, therefore,
we do not consider it when determining whether evidence supports the temporary
injunction.
29
dispute, is likely to continue pursuing, attempts to satisfy her judgment against
Paul Black from the assets of the applicants without a judicial determination that
the applicants are, in fact, liable for Paul Black’s debts, to their harm.
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
30
presented evidence that Shor has already disrupted the status quo by seeking
execution on their assets and that she will likely continue to do so in the future,
thus demonstrating probable injury in the absence of injunctive relief.
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.
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