Encore Enterprises, Inc., a Texas Corporation, Encore Borderplex, LLC, EMF Grand Mission Investments, LP, and Encore MF Sendero, L.P. v. Borderplex Realty Trust, a Maryland Real Estate Investment Trust, and BRT Realty Operating Limited Partnership

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS

§
ENCORE ENTERPRISES, INC.,
A TEXAS CORPORATION, §
ENCORE BORDERPLEX, LLC, No. 08-17-00153-CV
EMF GRAND MISSION §
INVESTMENTS, LP, AND Appeal from
ENCORE MF SENDERO, L.P., §
County Court at Law No. 6
Appellants, §
of El Paso County, Texas
v. §
(TC # 2016-DCV2446)
BORDERPLEX REALTY TRUST, A §
MARYLAND REAL ESTATE
INVESTMENT TRUST, AND §
BRT REALTY OPERATING LIMITED
PARTNERSHIP, §

Appellees. §

OPINION

Appellant, Encore Enterprises, Inc. and its related entities, have filed a motion for rehearing

of our September 28, 2018 decision in this case. We deny Appellants’ motion for rehearing,

withdraw our opinion dated September 28, 2018, and substitute the following opinion in its place.

This accelerated interlocutory appeal arises from a race to the courthouse. The winner of

that race, Borderplex Realty Trust and its related entity, obtained an anti-suit injunction from an

El Paso trial court that precluded litigation of several claims in a later filed Dallas lawsuit. The

loser of the race, Encore Enterprises, Inc. and its related entities, now raise several procedural and

substantive challenges to the anti-suit injunction. Under the record before us, we affirm.
 BACKGROUND

The underlying lawsuits involve a multi-million-dollar real estate transaction that never

came to fruition. Encore Enterprises, Inc., Encore Borderplex, LLC, EMF Grand Mission

Investments, LP, and Encore MF Sendero, LP (collectively, “Encore”) held five properties that

were in various stages of development as multi-family apartments. Borderplex Realty Trust and

its related entity BRT Realty Operating Limited Partnership (collectively, “Borderplex”)

supposedly had access to available capital. They both agreed that Encore would for the most part

sell or contribute its properties to a new entity that Borderplex would for the most part fund. The

new entity would then issue to both Encore and Borderplex ownership shares reflective of their

respective contributions. Designated members of both Encore and Borderplex would then

manage the new entity.

The parties’ agreement is memorialized in a December 17, 2015 “Contribution

Agreement.” Under the Contribution Agreement, on or before the date of an “initial closing,” the

new entity would be formed, and both parties would execute a separate “Operating Agreement,”

that as its name suggests, defined the logistics of developing and managing the properties. The

parties were obligated to execute the Operating Agreement “in substantially the form” as it was

attached to the Contribution Agreement. The Operating Agreement, however, as attached was

incomplete on its face. It contains a blank for an effective date (“Effective as of February ___,

2016”) and it omits several schedules, such as those including a budget, the calculation of incentive

fees, and employee compensation schedules.

The Contribution Agreement contemplated that there could be several closings, as each of

the five Encore properties were either sold or contributed to the new entity. The initial closing

involved the “Sendero Ranch Apartments,” and Borderplex contends its closing was a condition

2
precedent to the entire agreement. However, the initial closing never took place. Apparently, a

Borderplex investor failed to provide funding under a separate subscription agreement and

Borderplex declined to close on any of the properties.1 Unhappy with this state of affairs, Encore

on April 18, 2016, placed Borderplex on formal notice that it was in default under the Contribution

Agreement for failing to make the initial closing.

The El Paso Lawsuit

Borderplex responded by filing this declaratory judgment lawsuit in El Paso County on

June 29, 2016 (the “El Paso lawsuit”). The El Paso lawsuit principally alleges that the first closing

was prevented by third parties, or conditions precedent that were never met, and that Borderplex

did not breach the Contribution Agreement. The suit initially sought declarations that Borderplex

was under no obligation to close, that Encore was not entitled to recover damages, and that

Borderplex’s performance was excused by Encore’s material breach of the Contribution

Agreement and/or promissory estoppel.

Encore answered and later filed a motion to dismiss, or in the alternative, motion to abate

Borderplex’s case based on an arbitration clause in the Operating Agreement. The El Paso court

heard and denied that motion on April 3, 2017. Encore has appealed that decision which is

pending before this Court. Relevant to this case, however, Encore opened another front in this

battle by filing its own lawsuit in Dallas County, Texas.

The Dallas Lawsuit

On April 28, 2017, Encore filed a separate lawsuit in the 101st District Court of Dallas

County, Texas (the “Dallas lawsuit”). In the Dallas lawsuit, Encore alleges that individual

1
Failing the initial closing, Borderplex was obligated to pay a substantial break-up fee, which it contends that it has
paid to Encore.

3
members of Borderplex’s Board of Trustees2 committed acts of fraudulent inducement, fraud, and

fraudulent non-disclosure in the negotiation and implementation of the Contribution and Operating

Agreements. More specifically, the original petition in the Dallas lawsuit makes the following

factual allegations:

Beginning in 2014, William Sanders, a member of Borderplex’s board of trustees,

represented to Encore’s principals that he was personally able to raise more than enough money to

fund this project. Moreover, he assured Encore that when the transaction was complete, Encore

would have two representatives on the board of the new entity and that Borderplex would have

three; no other person or entity was being made such an offer. Any additional board slots would

be available only after a private placement memorandum distributed to institutional level investors

initially closed. Encore alleges that these representations were false, as Sanders was not able to

raise sufficient funds on his own, and that he intended to allow an undisclosed third party to control

appointments to the new board of managers. The suit claims that Sanders had enlisted a third

party, Daniel Burrell, to raise the funds and offered him representation on the board in proportion

to the funds raised.

Richard Moore, an advisor to the Borderplex board, allegedly made similar false

representations regarding Sanders’s ability and intention to raise sufficient funds. The suit alleges

that the Borderplex entities (though not parties to the Dallas litigation), also represented through

the Contribution Agreement, the Operating Agreement, and the exchange of drafts of both those

documents, that the new entity would have a five-person board of managers of which three were

appointed by Borderplex and two by Encore. The Borderplex entities similarly represented that

2
Encore names as individual defendants William D. Sanders, William David Bernard, J.A. Cardwell, Myriam G. De
La Vega, James C. Potts, Jeffrey Perea-Branch, M. Scott Schwartz, all members of the Board of Trustees, and A.
Richard Moore, an advisory member of the same board.
4
the Contribution Agreement and Operating Agreement were approved by the Borderplex board of

trustees.

Borderplex issued a private placement memorandum that it shared with Encore to raise the

$39,990,000 contemplated for the transaction. Just prior to the execution of the Contribution

Agreement, defendant Moore allegedly represented that the Contribution and Operating

Agreements were all agreed to. Defendant David Willian Bernard allegedly represented that all

the money for the first two closings had been raised, and that Borderplex was prepared to close at

any time. ) Encore contends that these representations were false, and that Borderplex always

intended to reopen the terms of the Operating Agreement for negotiation. Shortly after the

Contribution Agreement was signed, Borderplex issued a supplemental private placement

memorandum, allegedly stating that Borderplex had been in negotiations with a Burrell controlled

entity for several months, and at a time before when Borderplex signed the Contribution

Agreement. The supplemental placement memorandum contemplated that the new investor

would have rights to appoint persons to Borderplex’s board. Encore further claims that Burrell

was insisting on changes to the terms of the Operating Agreement. Consistent with its theory,

Encore alleges that Borderplex in fact proposed material changes to the Operating Agreement after

the Contribution Agreement was already executed.

The Anti-Suit Injunctions

Borderplex amended its petition in the El Paso lawsuit on June 5, 2017, and asked the

El Paso court to restrain and enjoin Encore from prosecuting the Dallas lawsuit. Borderplex set

a hearing on the injunction for June 21, 2017. On June 16, 2017, Bernard filed a motion to transfer

venue and answered Encore’s petition in the Dallas lawsuit. That same day, and without notice

5
to any of the trustee defendants, Encore sought and obtained an ex parte temporary restraining

order from the Dallas court.3

In its temporary restraining order, the Dallas court found “that unless restrained, the

Borderplex Parties are likely to proceed with a hearing on their application for temporary and

permanent injunction to restrain and enjoin the Encore Parties from prosecuting” the Dallas

lawsuit. Encore would then “suffer immediate and irreparable harm because they will be deprived

of the ability to prosecute” the Dallas lawsuit and “would be denied their right to seek appellate

review” from the Dallas Court of Appeals.

The Dallas court found that “ex parte relief is appropriate” because if notice was provided,

the Borderplex parties “could seek a temporary restraining order preventing the Plaintiffs from

seeking this order.” Based on these and additional findings, the Dallas court ordered as follows:

IT IS THEREFORE ORDERED that the Plaintiffs and their attorneys and all
persons in active concert or participation with them are immediately enjoined such
that the Encore Parties and their attorneys are permitted to continue prosecuting
this Dallas Fraud Suit regardless of any anti-suit order, restraining order, or any
other order that may be issued by another court interfering with this Court’s
jurisdiction or the Encore Parties’ right to prosecute their claims in this Court. (The
Dallas court set a hearing on a temporary injunction for June 22, 2017, a status
hearing a month later, and concluded by stating:
This Order is intended only to protect the jurisdiction of the 101st Judicial District
Court of Dallas County, Texas with respect to the Dallas Fraud Suit. It is not
intended to affect, and does not affect, the jurisdiction of the El Paso County Court
at Law Number Six from presiding over the El Paso Lawsuit or the parties or
attorneys therein. Meanwhile, back in El Paso, the El Paso court proceeded with
its temporary injunction hearing on June 21, 2017. At the hearing, the arguments
focused on (1) the TRO entered by the Dallas court (with its injunction hearing set
for the next day), (2) the propriety of the El Paso court entering an anti-suit
injunction before the Dallas court ruled on a plea in abatement, and (3) whether the
El Paso court had acquired dominant jurisdiction over the claims asserted in Dallas.
At the conclusion of the hearing, the El Paso court announced that it would enter

3
Borderplex notes that Encore had deposed Bernard as recently as June 15, 2017 in the El Paso lawsuit and learned
the identity of the firm that would be filing an answer on his behalf.
6
 the injunction as to claims related to the Contribution Agreement, and the court
dictated several findings to be included in the order.
Later that afternoon, the El Paso court signed an order enjoining and restraining Encore

from prosecuting the Dallas lawsuit in any manner or as to any issues relating to the negotiation,

validity, enforceability, interpretation, or the performance or non-performance of the parties under

the Contribution Agreement, but expressly permitted Encore to prosecute fraud claims in the

Dallas court that do not relate to the Contribution Agreement, and that are not inconsistent with

the temporary injunction. Encore quickly complained that it did not have an opportunity to

approve the order as to form. At a subsequent hearing before the El Paso court on July 6, 2017,

Encore asked the court to rescind its order. The court was also informed that in the interim, the

Dallas court had declined to issue a temporary injunction and its TRO had expired by its own

terms. Encore re-urged that an anti-suit injunction was improper, and that the only correct

procedure available to Borderplex was to file a motion to abate with the Dallas court. At the

conclusion of the hearing, the judge stated that she would take the matter under advisement.

Encore’s counsel gently pressed for a ruling, but at one point declared, “We’ll appeal the existing

order.” The trial court then advised, “Actually, if you’re going to do that, then there is nothing

for me to do. Go ahead and appeal it.”

The El Paso court’s temporary injunction order makes several findings, including that “the

facts and subject matter of the Dallas Lawsuit are interrelated to the facts and subject matter” of

the El Paso lawsuit. Though the parties are different, the El Paso court found that the “Dallas

Lawsuit is based on alleged actions by the trustees of [Borderplex] in their capacity as trustees and

is tantamount to a lawsuit directly against Plaintiff [Borderplex].” Additionally, the El Paso court

concluded that “Plaintiffs have also demonstrated a probable right to relief and imminent,

irreparable harm, for which there is no adequate remedy at law.” The order then commands:
7
 IT IS THEREFORE ORDERED, ADJUDGED and DECREED that
Defendants, their agents, employees, representatives, attorneys, and anybody acting
under their direction or control, or in concert with them, are hereby
IMMEDIATELY ENJOINED AND RESTRAINED from prosecuting the
Dallas Lawsuit, including without limitation, filing any motions or requesting any
relief (other than a motion for voluntary dismissal or non-suit), conducting
discovery, requesting a trial setting, or seeking adjudication of any legal or factual
issues, in any manner or as to any issues that relate to the negotiation, validity,
enforceability, interpretation, or the performance or non-performance of the parties
under the Contribution Agreement; provided, however, that Defendants may
prosecute fraud claims in Dallas that do not relate to or touch upon the Contribution
Agreement and that are not inconsistent with this Temporary Injunction.

DISCUSSION

In four issues, Encore appeals the El Paso court’s issuance of the anti-suit injunction. See

TEX.CIV.PRAC.&REM.CODE ANN. § 51.014(a)(4)(allowing appeal from an interlocutory order

granting or refusing temporary injunction). Encore’s first two issue are procedurally based--they

claim that an anti-suit injunction is available only in limited circumstances and upon certain

showings, and that procedurally, Borderplex should have first filed and obtained a ruling on a plea

in abatement in the Dallas lawsuit. Encore’s later two issues address the substantive issue of

dominant jurisdiction--the core requirement by which the El Paso suit might divest the Dallas court

of jurisdiction to hear its suit. In its third issue, Encore contends that dominant jurisdiction only

exists where suits are against adverse parties in the same capacity, something it contends is missing

here. In its fourth issue, Encore contends that there is no inherent interrelation between the subject

matter of the two lawsuits. It claims the Dallas suit involves fraudulent misrepresentation,

fraudulent nondisclosure, and fraud claims that require no contract interpretation, while the El Paso

suit seeks only to declare rights under a contract. We take the issues out of order and first address

whether the El Paso Court has dominant jurisdiction.

Principles of Dominant Jurisdiction

“In instances where inherently interrelated suits are pending in two counties, and venue is
8
proper in either county, the court in which suit was first filed acquires dominant jurisdiction.” In

re Red Dot Bldg. Sys., Inc., 504 S.W.3d 320, 322 (Tex. 2016); see also In re J.B. Hunt Transp.,

Inc., 492 S.W.3d 287, 294 (Tex. 2016)(orig. proceeding); Gonzalez v. Reliant Energy, Inc., 159

S.W.3d 615, 622 (Tex. 2005). The court hearing the second filed action is required to abate the

second suit. In re Red Dot Bldg. Sys., Inc., 504 S.W.3d at 322; In re J.B. Hunt Transp. Inc., 492

S.W.3d at 294. The necessity for such a rule is self-evident: two parallel lawsuits waste judicial

resources, create delay, and impair “an orderly procedure in the trial of contested issues.” Perry

v. Del Rio, 66 S.W.3d 239, 252 (Tex. 2001)(orig. proceeding), quoting Wyatt v. Shaw Plumbing

Co., 760 S.W.2d 245, 248 (Tex. 1988). “A further justification is simple fairness: in a race to the

courthouse, the winner’s suit should have dominant jurisdiction.” Perry, 66 S.W.3d at 252.

“The default rule thus tilts the playing field in favor of according dominant jurisdiction to the court

in which suit is first filed.” In re J.B. Hunt Transp., Inc., 492 S.W.3d at 294 (footnotes and

internal quotations omitted). “As long as the forum is a proper one, it is the plaintiff’s privilege

to choose the forum,” and a defendant is “simply not at liberty to decline to do battle in the forum

chosen by the plaintiff.” Wyatt, 760 S.W.2d at 248.

We conduct our dominant jurisdiction analysis under the deferential abuse of discretion

standard. In re J.B. Hunt Transp., Inc., 492 S.W.3d at 293. “A trial court abuses its discretion

when it acts ‘arbitrarily, unreasonably, or without regard to guiding legal principles.’” Id. at 294,

quoting Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). As to factual disputes, we will defer

to the trial court, particularly when “there are two permissible views of the evidence.” Goode v.

Shoukfeh, 943 S.W.2d 441, 446 (Tex. 1997), quoting Anderson v. City of Bessemer City, 470 U.S.

564, 574, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985). But with regards to questions of law,

“[a] trial court has no ‘discretion’ in determining what the law is or applying the law to the facts.”

9
Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992).

Inherent Interrelationship

We start with the fundamental question of whether the subject matter of the El Paso and

Dallas lawsuits are inherently interrelated. In determining whether the suits are inherently

interrelated, we are guided in part by the compulsory counterclaim rule, TEX.R.CIV.P. 97(a). In

re J.B. Hunt Transp., Inc., 492 S.W.3d at 292, citing Wyatt, 760 S.W.2d at 247.

A counterclaim is compulsory if it meets the following six characteristics: (1) it is within

the jurisdiction of the court; (2) it is not at the time of the filing of the answer the subject of a

pending action; (3) the action is mature and owned by the defendant at the time of filing the answer;

(4) it arises out of the transaction or occurrence that is the subject matter of the opposing party’s

claim; (5) it is against an opposing party in the same capacity; and (6) it does not require for its

adjudication the presence of third parties over whom the court cannot acquire jurisdiction. See

TEX.R.CIV.P. 97(a); see also Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 207

(Tex. 1999); Wyatt, 760 S.W.2d at 247. Of these six requirements, Encore challenges only the

fourth element (arises out of the transaction or occurrence) and fifth element (whether the Dallas

lawsuit is against the same opposing party and in the same capacity as in the El Paso lawsuit).

Same Transaction or Occurrence

To determine whether counterclaims arise out of the same transaction or occurrence, we

apply a logical relationship test. Moore v. First Fin. Resolution Enterprises, Inc., 277 S.W.3d

510, 516 (Tex.App.--Dallas 2009, no pet.), citing Jack H. Brown & Co. v. Nw. Sign Co., 718

S.W.2d 397, 400 (Tex.App.--Dallas 1986, writ ref’d n.r.e.). Application of this test requires that

at least some of the facts surrounding the causes of action arise from the same transaction or

occurrence. Jack H. Brown & Co., 718 S.W.2d at 400. The logical relationship test is met when

10
the same facts, which may or may not be disputed, are significant and logically relevant to both

claims. Id. When none of the facts are relevant to the various causes of action, there is no

“logical relationship.” Id.

The test is met on this record. Both lawsuits focus on the same transaction. Borderplex

asserts in the El Paso lawsuit that it did not breach the Contribution Agreement because one or

more conditions precedent were not met. The Dallas lawsuit arises out of claims that Borderplex

trustees made fraudulent representations (or omissions) about Borderplex’s ability to fulfill its

obligations under the same Contribution Agreement. But the connection runs deeper than that.

The El Paso lawsuit claims one of the conditions precedent involved “the failure of a key third

party investor to provide the agreed upon funding for the transaction.” The Dallas lawsuit alleges

the third-party investor demanded additional control and changes in the terms of the Operating

Agreement before making the investment. The El Paso lawsuit contends that the Operating

Agreement which would have governed a substantial part of the overall transaction “was only

partially negotiated, i.e., the parties had not agreed on all of the essential provisions and terms

thereof.” Conversely, the Dallas lawsuit maintains that Borderplex and its trustees had

represented that all the material terms of the Operating Agreement were agreed to. The Dallas

lawsuit further claims that Borderplex attempted to renegotiate the Operating Agreement, while

the El Paso lawsuit claims both parties were negotiating the unresolved terms of the Operating

Agreement, and in that process, Encore “made promises, representations and commitments to

[Borderplex] with respect to these matters which they subsequently failed to comply with and

honor.”

These deep connections distinguish this case from Freeman v. Cherokee Water Co., 11

S.W.3d 480 (Tex.App.--Texarkana 2000, pet denied), upon which Encore relies. In Freeman the

11
court decided that a suit to construe a single clause in a deed was not logically related to a

counterclaim seeking to set aside the entire deed based on the fraudulent execution of the same

deed. Id. at 483. The single clause at issue had nothing to do with the basis for the fraud claim.

Id. In the case before us, the fraud allegations in the Dallas lawsuit intertwine with the same

conditions precedent that form the basis of the El Paso litigation. Fraud and contract claims might

well share a logical relationship depending on the facts at issue. See Community State Bank v.

NSW Investments, L.L.C., 38 S.W.3d 256 (Tex.App.--Texarkana 2001, pet. dism’d w.o.j.)

(fraudulent inducement claims in executing guarantees were logically related to claim enforcing

guarantees); White Stores, Inc. v. Nowaski, 760 S.W.2d 53, 55 (Tex.App.--Fort Worth 1988, no

writ)(same). They do here, and the two suits meet the same transaction or occurrence element

under Rule 97(a). We overrule Issue Four.

Same Parties in the Same Capacity

In Issue Three, Encore contends that the two suits cannot be inherently interrelated because

the compulsory counterclaim rule requires an identity of opposing parties who are sued in the same

capacity. The El Paso lawsuit pits Borderplex against Encore. In the Dallas lawsuit, Encore sued

only Borderplex’s trustees and one advisor. In its temporary injunction order, however, the El

Paso court found that the Dallas suit is based on the alleged actions of Borderplex’s trustees in

their capacity as trustees, which renders Encore’s Dallas suit tantamount to a lawsuit directly

against Borderplex. Encore challenges this finding, claiming that the fraud claims necessarily

assert only individual liability.

The compulsory counterclaim rule itself does not explicitly use the phrase “opposing party

in the same capacity.” See TEX.R.CIV.P. 97(a). That was a gloss added by courts interpreting

the rule. The question arose when one party appeared in a representative capacity, but the person

12
fulfilling that role might have, or be subject to, a claim in their individual capacity. Several courts

have held that for the purposes of Rule 97(a) that they were effectively two different persons. See

Stevenson v. Reese, 593 S.W.2d 828, 830 (Tex.Civ.App.--Houston [14th Dist.] 1980, writ ref’d

n.r.e.)(trustee’s suit in his individual capacity was not compulsory counterclaim in suit against

trustee in his representative capacity arising out of the same transaction); Robertson v. Estate of

Melton, 306 S.W.2d 811, 813 (Tex.Civ.App.--Beaumont 1957, writ ref’d)(tort claim against

widow in her representative capacity as administratrix of estate was not compulsory counterclaim

in tort suit arising out the same transaction brought by widow in her individual capacity). When

the Supreme Court summarized the six-part test for compulsory counterclaims in Wyatt v. Shaw

Plumbing Co., it included the “same capacity” element as part of the requirement. 760 S.W.2d at

247.

Yet the same Wyatt court refers to Rule 97 as a guide to finding inherent interrelationship.

Id. (“In determining whether an inherent interrelationship exists, courts should be guided by the

rule governing persons to be joined if feasible and the compulsory counterclaim rule.) [Emphasis

added]. The court has not directed that we strictly apply the compulsory counterclaim rule as we

might if the issue were an actual application of Rule 97(a) to a true Rule 97(a) question. And in

using Rule 97(a) as a guide, courts have not required that the precise issues and all the parties be

included in the first suit, provided that the claims in the first suit can be amended to bring in all

the necessary parties and claims. In re Coronado Energy E & P Co., L.L.C., 341 S.W.3d 479,

482 (Tex.App.--San Antonio 2011, orig. proceeding), citing Wyatt, 760 S.W.2d at 246-47.

Moreover, Wyatt originally stated that the inherent interrelationship question was guided by both

Rule 97(a)(the compulsory counterclaim rule) and Rule 39(a)(the joinder of party rule). Wyatt,

760 S.W.2d at 247. Language in the opinion states the two rules as disjunctive options for

13
analyzing inherent interrelationship. Id. at 248 (“Moreover, the parties in the second suit were

either present in the first suit, or parties who should have been joined in the first suit.”). Rule

39(a) allows a party to be joined when among other things, the person’s absence would create a

substantial risk of an existing party incurring “inconsistent obligations.” TEX.R.CIV.P. 39(a).

We perceive that risk here. If the fraud claims are not litigated alongside the declaratory judgment

claim, then separate tribunals could reach different conclusions as to whether the essential terms

of the Operating Agreement were agreed, or whether all the conditions precedent to the closings

were met. While the doctrine of issue preclusion might ameliorate against outright conflicting

findings, the pendency of those common issues in both suits would only create a second footrace,

this time a race to see who can first set the case for trial. Of further note, the El Paso court is

empowered to bring any necessary parties before it, including the Borderplex trustees, and there

has been no showing that any necessary party cannot be joined. See Wyatt, 760 S.W.2d at 248.

The El Paso trial court also found that found that the Dallas suit is based on alleged actions

of Borderplex’s trustees in their capacity as trustees, and is thus tantamount to a lawsuit directly

against Borderplex. The El Paso court might have reached that conclusion based on the petition

in the Dallas lawsuit which alleges that Borderplex as an entity made fraudulent representations

through its approval of the Contribution Agreement, and sending earlier drafts of the document.

Borderplex could have done so only through its agents and employees. Borderplex also urged

below that its organic documents indemnify its trustees to the fullest extent of Maryland law.

Maryland law allows a corporation to “indemnify any director made a party to any proceeding by

reason of service in that capacity” unless one of several exceptions apply. MD. CODE ANN.,

Corporate Indemnification § 2-418(b)(1); see also Kramer v. Liberty Prop. Trust, 968 A.2d 120,

122 (Md. 2009)(applying Section 2-418 to trustee of real estate investment trust). Relevant here,

14
those exceptions include (1) actions “committed in bad faith” (2) “active and deliberate

dishonesty” or (3) the “director actually received an improper personal benefit in money, property,

or services.” Id. We do not find those specific allegations asserted in the Dallas lawsuit. The

suit only details specific representations of three of the eight named individuals. The other five

defendants would be included in general allegations against the “Board Defendants.” Those

general allegations include actions such as approving private placement memorandums, the

Contribution Agreement, and Operating Agreement As a factual matter, the El Paso trial court

could have found that at least some of the trustees could be indemnified by Borderplex, and that

the Dallas suit as those trustees was a suit against Borderplex.4

We overrule Issue Three.5

Dominant Jurisdiction

Based on the trial court’s finding of an inherent interrelation of the subject matter between

the El Paso and Dallas lawsuits, the remaining dominant jurisdiction analysis is straightforward.

Suit was first filed in El Paso. There is no claim that El Paso was an improper venue. The

Contribution Agreement itself provides that “[a]ny action or proceeding brought for the purpose

of enforcement of any term or provision of this Agreement shall be bought only in the federal or

state courts sitting in El Paso, Texas, or Dallas, Texas.” The general rule of dominant jurisdiction

provides that where a suit would be proper in more than one county, the county in which the suit

4
The trustees were entitled to ask not only for indemnification, but could seek funds “to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding . . . .” Borderplex could find itself paying for the entire
defense costs of its trustees until the Dallas lawsuit concludes, and a court then determines whether the fraud
allegations are the equivalent of “bad faith” or “deliberate dishonesty” under Maryland law.
5
Issue Three can also be read to complain that the trial court erred by concluding it had dominant jurisdiction without
first determining whether the subject matter of the two suits are inherently interrelated. The record does not show
that the court failed to consider Encore’s contentions as presented during hearings in the El Paso court and in Encore’s
brief in opposition prior to ruling on the matter of dominant jurisdiction.
15
was first filed acquires dominant jurisdiction to the exclusion of other counties of equal stature.

Wyatt, 760 S.W.2d at 248. “As long as the forum is a proper one, it is the plaintiff’s privilege to

choose the forum.” Id.

Was a Plea in Abatement a Prerequisite for the Injunction?

In Issue Two, Encore contends the proper procedure for determining a court’s dominant

jurisdiction is limited to a plea in abatement filed in the court where the second lawsuit was filed.

We could agree that as a matter of comity, or even courtesy between trial courts, the plea in

abatement process is preferable. See Atkinson v. Arnold, 893 S.W.2d 294, 298 (Tex.App.--

Texarkana 1995, no pet.)(“Absent a showing that peculiar circumstances exist in this case to make

the plea in abatement an inadequate remedy, a temporary injunction is inappropriate.”). Under

the unique procedural history of this case, however, we cannot say that it was required.

To be sure, most of the cases in this genre arise from rulings on a plea in abatement, and

the Texas Supreme Court has specifically alluded to abatement of the case in the court with non-

dominant jurisdiction. Perry, 66 S.W.3d at 252 (“As a rule, when cases involving the same

subject matter are brought in different courts, the court with the first-filed case has dominant

jurisdiction and should proceed, and the other cases should abate.”). While the problem of

duplicative litigation may be resolved by pleas in abatement filed in the subsequent court, this

is not always the rule. See Perry, 66 S.W.3d at 252; In re Henry, 274 S.W.3d 185, 193 (Tex.App.-

-Houston [1st Dist.] 2008, pet. denied).

The Texas Supreme Court has long recognized that Texas state courts are empowered to

restrain persons from proceeding with suits filed in other courts of this state. Gannon v. Payne,

706 S.W.2d 304, 305 (Tex. 1986). “The general rule is that when a suit is filed in a court of

competent jurisdiction, that court is entitled to proceed to judgment and may protect its jurisdiction

16
by enjoining the parties to a suit subsequently filed in another court of this state.” Id. at 305-06,

citing Cleveland v. Ward, 116 Tex. 1, 23, 285 S.W. 1063, 1072 (1926)(seeking abatement in the

subsequently filed case is not the only remedy in trial courts; upon proper showing, parties may

receive from court which first obtained jurisdiction an injunction enjoining parties to second action

from maintaining it). In Cleveland, the Texas Supreme Court determined that it was proper for

the Texas court with dominant jurisdiction to enjoin the parties in the second suit from maintaining

that action in the Texas court which did not have dominant jurisdiction. Cleveland, 116 Tex. at

23, 285 S.W. at 1072.

And in some ways, this case evokes the adage “what’s sauce for the goose is sauce for the

gander.” Lewis v. Peoples Sav. & Loan Ass’n, 463 S.W.2d 284, 287 (Tex.Civ.App.--Austin 1971,

writ ref’d n.r.e.). Borderplex drew first blood by filing a pleading seeking a temporary injunction.

Yet rather than simply object to that procedure, Encore obtained its own ex parte TRO from the

Dallas court. The Dallas court set a hearing on its own temporary injunction for the day after the

El Paso court heard its temporary injunction. The El Paso court could have concluded time that

the grant of the TRO threatened its jurisdiction. See In re Amoco Fed. Credit Union, 506 S.W.3d

178, 187 (Tex.App.--Tyler 2016, no pet.)(faulting second court’s decision to grant TRO rather

than on its own abate proceeding, when it had the relevant facts before it). To be sure, by the time

of the July 9 hearing on the form of the El Paso injunction order, the El Paso court was informed

that the Dallas TRO had expired and a temporary injunction was denied. The El Paso court,

however, was not informed of why the temporary injunction was denied, and Encore has

emphasized that the Dallas court has not yet decided the dominant jurisdiction question.6

6
Encore recently asked that this Court take judicial notice of a subsequent order from Dallas court that denied a
discovery request. The order states that its ruling on this or any other motion is not an indication that it has decided
the dominant jurisdiction question.
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 Under the unique procedural posture of this case, we cannot conclude that the El Paso trial

court abused its discretion by entering a temporary injunction before the Dallas court ruled on a

plea in abatement. Issue Two is overruled.

Propriety of Anti-Suit Injunction

In Issue One, Encore asserts that the El Paso court’s anti-suit injunction is improper

because Borderplex did not demonstrate that the limited circumstances for issuing an anti-suit

injunction, and failed to meet the evidentiary standards for such injunctions.

A temporary injunction is an extraordinary remedy. Walling v. Metcalfe, 863 S.W.2d 56,

57 (Tex. 1993). The trial court must determine whether the applicant is entitled to preserve the

status quo pending trial on the merits. Id. at 58. An anti-suit injunction is appropriate in four

instances: (1) to address a threat to the court’s jurisdiction; (2) to prevent the evasion of important

public policy; (3) to prevent a multiplicity of suits; or (4) to protect a party from vexatious or

harassing litigation. Gannon, 706 S.W.2d at 307; Chandler v. Chandler, 991 S.W.2d 367, 403

(Tex.App.--El Paso 1999, pet. denied). Citing Gannon, the Texas Supreme Court later explained

that a party seeking to enjoin an out-of-state lawsuit must show that “a clear equity demands” the

injunction. Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986). The court also

observed that “A single parallel proceeding in a foreign forum . . . does not constitute a multiplicity

nor does it, in itself create a clear equity justifying an anti-suit injunction.” Id. at 163, citing

Gannon, 706 S.W.2d at 307. The case before us does not involve a foreign jurisdiction. Rather,

it involves two lawsuits, each being filed in a different Texas county, subject to the same laws of

this state.7

7
In support of its contentions, Encore relies heavily on anti-suit injunction cases in which a lawsuit was filed in Texas
and another lawsuit was filed in a foreign jurisdiction, such as another state or nation. See Golden Rule Ins. Co. v.
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 This case falls within the first anti-injunction criteria. Gannon, 706 S.W.2d at 307. The

El Paso court could have concluded that its dominant jurisdiction was under threat of being

improperly usurped because of Encore’s second-filed lawsuit in Dallas County. Just a few days

before the El Paso injunction hearing, the Dallas court had entered an ex parte TRO that allowed

Encore to prosecute its suit regardless of how the El Paso court ruled on the injunction motion

before it. We conclude that threat is sufficient to support the El Paso County court’s injunction

enjoining Encore from proceeding with its Dallas suit. The El Paso court is entitled to proceed to

judgment and may protect its jurisdiction by enjoining Encore as a party to the subsequently-filed

suit in the Dallas County court. Gannon, 706 S.W.2d at 305-06. Moreover, the El Paso court

narrowly tailored its temporary injunction to the subject matter, claims, and parties relative to the

Contribution Agreement, and expressly declared that Encore may prosecute fraud claims in Dallas

that do not relate to or touch upon the Contribution Agreement. We review a trial court’s decision

to grant an “anti-suit injunction” under an abuse of discretion standard. In re Henry, 274 S.W.3d

at 189. We find no abuse of discretion in enjoining these acts.

Encores also contends that the trial court’s erred in finding that Borderplex proved the

traditional elements necessary for an 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. See Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002)(stating traditional

elements for injunction). The third requirement--probable, imminent and irreparable injury- is

the central focus for anti-suit injunctions. See In re Henry, 274 S.W.3d at 189-90 (noting

Harper, 925 S.W.2d 649, 650-651 (Tex. 1996)(concerning lawsuits filed in Texas and Illinois, and addressing limited
circumstances in which, under principle of comity, court may exercise its power to enjoin foreign suits); Christensen,
719 S.W.2d at 163 (Texas and California); Gannon, 706 S.W.2d at 306 (Texas and Canada); see also Rouse v. Texas
Capital Bank, N.A., 394 S.W.3d 1, 3, 7 (Tex.App.--Dallas 2011, no pet.)(concerning lawsuits filed in Texas and
Oklahoma, and recognizing that courts of sister states are considered foreign to each other).
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traditional elements, but primarily discussing imminent and impending threat from parallel

litigation). 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. Canteen Corp.

v. Republic of Tex. Props., Inc., 773 S.W.2d 398, 401 (Tex.App.--Dallas 1989, no writ).

Borderplex put on some evidence of the uncompensated loss its trustees might suffer if they were

forced to litigate parallel litigation in Dallas. The trial court did not abuse its discretion in finding

as a factual matter that Borderplex would be suffer a probable, imminent and irreparable injury if

the injunction did not issue.

Issue One is overruled.

MOTION TO STRIKE

The items still pending are: (1) Encore’s request that we take judicial notice of a pleading

in the Dallas case; and (2) Borderplex’s motion to strike what have we referred to as the

“declaration of non-liability” argument because it was new. We will take notice of the discovery

order issued in the Dallas litigation. See County of El Paso v. Navar, 08-17-00058-CV, 2018 WL

2715298, at *4 (Tex.App.--El Paso June 6, 2018, no pet. h.)(taking notice of deed record); Stephens

v. LNV Corp., 488 S.W.3d 366, 372 (Tex.App.--El Paso 2015, no pet.)(taking judicial notice of

federal pleading in case remanded from federal court). We deny Borderplex’s motion to strike

the “declaration of non-liability” argument as new because Borderplex raised this very issue in its

Appellees’ Brief. 8 Accordingly, Encore might naturally reply that a party cannot seek a

declaration of non-liability in a fraud case. While the response should have been in Encore’s

8
Borderplex advanced this argument in its brief as to why the suits are logically related:

The Dallas court and the trial court may also reach inconsistent judgments. Borderplex seeks a
declaration of no liability “of any kind,” which would effectively preclude any finding of fraud
against Borderplex (and by extension its Board of Trustees). Any recovery by Encore in the Dallas
case would be inconsistent with the non-liability declaration that Borderplex seeks in this case.
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Reply Brief, we decline to strike it from the post-briefing filings. But even if true, the argument

does not change our resolution of the issue because we look to the subject matter of the respective

suits, and thus whether the causes of action arose from the same transaction or occurrence, in

determining whether the claims are inherently interrelated.

CONCLUSION

The subject matter of the two lawsuits are inherently interrelated. Because suit was first

filed in El Paso County, the El Paso court is the court of dominant jurisdiction in these matters.

Because the El Paso court was authorized to issue a temporary injunction to protect its dominant

jurisdiction, the El Paso court’s issuance of the anti-suit temporary injunction does not constitute

an abuse of the El Paso court’s discretion. The trial court’s judgment is affirmed.

January 16, 2019
YVONNE T. RODRIGUEZ, Justice

Before McClure, C.J., Rodriguez, and Palafox, JJ.
McClure, C.J., not participating

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