In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-19-00346-CV
___________________________
EQUINE SPORTS MEDICINE & SURGERY WEATHERFORD DIVISION,
PLLC, Appellant
V.
TYLER TIPTON, DVM, DACVS AND TIPTON EQUINE, LLC, Appellees
On Appeal from the 43rd District Court
Parker County, Texas
Trial Court No. CV19-0408
Before Gabriel, Kerr, and Wallach, JJ.
Memorandum Opinion by Justice Kerr
MEMORANDUM OPINION
In this suit to enforce a covenant not to compete against a former employee,
Equine Sports Medicine & Surgery Weatherford Division, PLLC appeals from the
trial court’s order denying its request to temporarily enjoin Tyler Tipton, DVM,
DACVS from practicing veterinary medicine within a 50-mile radius of ESMS’s
Weatherford facility. Because ESMS failed to prove irreparable injury and the trial
court thus did not abuse its discretion by denying ESMS injunctive relief, we affirm.
Background
ESMS is an equine sports-medicine and surgery veterinary practice
headquartered in Weatherford, Texas. Tipton—a licensed veterinarian since May
2009—was accepted into ESMS’s equine-surgery residency program in June
2010 after completing a one-year internship at an equine hospital in Oklahoma. After
Tipton completed his residency in June 2013, ESMS hired him to be an associate
veterinarian. A year later, after taking his board examinations, Tipton left ESMS to
practice veterinary medicine in Oklahoma.
Shortly after Tipton left, ESMS recruited him to return to ESMS as an associate
veterinarian because Dr. Chris Ray, ESMS’s highest-producing surgeon, announced
that he was resigning from ESMS and moving to Montana. ESMS hired Tipton to
“take over” Ray’s cases. By this time, Tipton had been a veterinarian for five years and
was a board-certified equine surgeon.
2
Upon Tipton’s return in August 2014, he and ESMS entered into a one-year
employment agreement that automatically renewed each year unless it was replaced by
a new contract or terminated as provided in the contract. In August 2015, Tipton and
ESMS entered into another employment agreement. As part of this agreement, ESMS
agreed to provide Tipton with confidential information, and Tipton agreed not to
disclose or use this information outside of his employment with ESMS:
Upon [Tipton]’s execution of this Agreement, [ESMS] shall, and is
obligated to, provide [Tipton] immediately with the right and ability to
access certain confidential and proprietary information belonging to
[ESMS], which is necessary for [Tipton] to perform [Tipton]’s duties
under this Agreement. Such confidential and proprietary information
includes, but is not limited to, information that is not readily available to
the general public and which relates to or reflects [ESMS]’s business and
its clients such as business and marketing plans, patient lists, software,
case histories, client contact information, x-ray films and personal and
regular patient files, price lists, and methods of operation (the
“Confidential Information”). [Tipton] acknowledges that this
Confidential Information constitutes valuable, special and unique
property of [ESMS]. Except in accordance with [Tipton]’s job duties for
[ESMS], [Tipton] shall not, unless first authorized by [ESMS] in writing,
disclose or use any Confidential Information by any means whatsoever
during the term of this Agreement or in the future. Upon the cessation
of [Tipton]’s employment with [ESMS], [Tipton] shall promptly return
all originals and all copies of the Confidential Information to [ESMS].
[Tipton]’s execution of this Agreement shall serve as an acknowledgment
of [Tipton]’s receipt of Confidential Information. This Section shall
survive the termination of this Agreement.
In exchange for ESMS’s providing him with confidential and proprietary
information, Tipton agreed he would not compete with ESMS for 18 months after his
3
employment ended within a 50-mile radius of any ESMS location at which he had
worked during the last 12 months of employment1:
Ancillary to this otherwise enforceable Agreement, and in [ESMS]’s
agreement to provide [Tipton] with Confidential Information which
[ESMS] desires to protect: . . . during the period [Tipton] is employed by
[ESMS] and for a period of eighteen (18) months thereafter,[2] [Tipton]
shall not directly or indirectly, on [his] own behalf, on behalf of or with
any other party, person or entity, including but not limited to, any
relationship as a partner, joint-venturer, director, shareholder, owner,
employee or independent contractor, market or provide services similar
to the services which [ESMS] provides to its patients or customers at any
location within 50 miles of any location, including any race track
practices, in which [Tipton] has provided services for [ESMS] during the
last twelve (12) months of [Tipton]’s employment by [ESMS] . . . . This
provision shall survive the termination of this Agreement.
The employment agreement also provided for injunctive relief if Tipton
breached the covenant not to compete:
[Tipton] agrees that [ESMS] shall be entitled to injunctions, both
temporary and permanent, in addition to any other appropriate relief, at
any time to prevent [Tipton] or others from violating, or cause [Tipton]
to cease from violating, or to observe the agreements . . . pertaining to
the protection of [ESMS]’s business, inasmuch as [Tipton] and [ESMS]
1
Tipton’s employment agreement also contained a nonsolicitation clause
prohibiting him from soliciting or recruiting ESMS employees and independent
contractors. ESMS has not alleged that Tipton has violated that provision.
Tipton’s 2014 employment agreement with ESMS contained identical
confidential-information, noncompetition, and nonsolicitation clauses. Tipton and
ESMS had also entered into employment agreements with similar clauses before
Tipton’s residency and before his employment as an associate veterinarian in 2013.
2
The noncompetition and nonsolicitation covenants included a tolling
provision in which Tipton agreed that the 18-month time period would be extended
“for an amount of time equal to the period during which [Tipton] is in breach.”
4
agree that without such protection [ESMS]’s business would be
irreparably harmed and the remedy of monetary damages or other
remedies at law would be wholly inadequate and not readily ascertainable.
[Tipton] acknowledges and stipulates that [ESMS] is entitled to any and
all relief available to it under Texas law or the common law of the State
of Texas (to the extent such actions by [Tipton] occur in Texas). . . . This
provision shall survive the termination of this Agreement.
On March 23, 2018, Tipton notified ESMS that he was resigning from his
employment, effective April 25, 2018. ESMS offered to let Tipton buy out his
noncompete for $500,000. Tipton countered with $100,000, which ESMS rejected.
After leaving ESMS, Tipton formed Tipton Equine, LLC and became a mobile
veterinarian, mainly working out of his vehicle and using space at veterinary clinics in
Eastland and Whitesboro as needed. About two weeks after Tipton left ESMS, its
board of directors heard that he was working at a ranch within 50 miles of ESMS’s
Weatherford facility. ESMS’s CEO Kirk Eddleman called Tipton and asked if he had
worked on horses at the ranch. Tipton admitted to treating the ranch’s horses but told
Eddleman that the horses had been hauled to Eastland (more than 50 miles from
ESMS’s Weatherford facility) and that he had treated them there.
After hearing more rumors that Tipton was working in the area, ESMS hired a
private investigator in August 2018. The investigator followed Tipton several times
but was unable to confirm that Tipton was working within 50 miles of ESMS’s
Weatherford facility. ESMS hired another private investigator who reported to ESMS
in late November 2018 that Tipton was providing equine veterinary services within
50 miles of ESMS’s Weatherford facility.
5
After interviewing several attorneys before retaining its current counsel, ESMS
sued Tipton and Tipton Equine on April 1, 2019, to enforce the employment
agreement, asserting a breach-of-contract claim against Tipton3 and a tortious-
interference claim against Tipton Equine.4 ESMS pleaded for monetary damages and
for declaratory and injunctive relief.5 But ESMS did not ask for a temporary
restraining order.
Over four months after ESMS filed suit, the trial court held an evidentiary
hearing on ESMS’s request for an order temporarily enjoining Tipton from competing
with ESMS in violation of the noncompete clause.6 Tipton testified, as did Dr. Martin
J. Ivey (an ESMS owner and veterinarian); Dr. Laslo Hunyadi (an ESMS veterinarian);
Dr. Chad Marsh (an ESMS veterinarian); Eddleman; Dawn Owens (a software
specialist); Dr. Reese Hand (an ESMS owner and its chief medical officer); and Kody
3
ESMS’s breach-of-contract claim is limited to Tipton’s alleged breach of the
employment agreement’s noncompete clause. ESMS does not allege that Tipton has
breached the employment agreement’s confidential-information or nonsolicitation
clauses.
4
ESMS later amended its petition to assert its breach-of-contract claim against
Tipton Equine. Tipton Equine successfully moved under Rule 91a to dismiss that
claim, as well as ESMS’s tortious-interference claim. See Tex. R. Civ. P. 91a.
5
ESMS initially pleaded for an injunction prohibiting Tipton from competing
with ESMS, from soliciting or recruiting ESMS employees and contractors, and from
using or disclosing ESMS’s confidential information. ESMS’s live pleading does not
seek to enjoin Tipton from soliciting or recruiting ESMS employees and contractors.
6
At the hearing, ESMS did not seek to enjoin Tipton from using or disclosing
its confidential information.
6
Porterfield (a cutting-horse trainer). Eddleman testified that during Tipton’s last
12 months of employment with ESMS, Tipton had provided services for ESMS at its
Weatherford facility; at ranches in and around Parker and surrounding counties; at a
racetrack in Ruidoso, New Mexico; and at shows in Fort Worth. Even though the
noncompete as written would bar Tipton from working within 50 miles of each of
these locations, Eddleman stated that ESMS was asking the trial court to reduce the
noncompete area to 50 miles from just ESMS’s Weatherford facility.
During the hearing, various ESMS witnesses testified that ESMS had trained
Tipton, furnished him with confidential information, and provided him with ESMS’s
business goodwill by allowing him to take over treating Ray’s patients. But according
to Tipton, the information ESMS provided him was not confidential and the training
he received at ESMS during his residency was not valuable, special, or unique. Tipton
admitted to violating the noncompetition agreement within two weeks of leaving
ESMS but claimed he did not recall signing his employment agreement and could not
unequivocally say whether he had in fact signed it.
After a nearly day-long hearing, the trial court denied ESMS’s temporary-
injunction request and made separate findings of fact and conclusions of law
ultimately concluding that ESMS had failed to prove (1) a substantial likelihood that it
would prevail on the merits and (2) that it would suffer a probable, imminent, and
irreparable injury in the interim. ESMS has appealed, see Tex. Civ. Prac. & Rem. Code
Ann. § 51.014(a)(4); Tex. R. App. P. 28.1, and raises six issues: (1) the trial court
7
abused its discretion by denying ESMS’s temporary-injunction request; (2) the
noncompete was enforceable because it was ancillary to or part of an otherwise
enforceable agreement at the time the agreement was made; (3) the covenant not to
compete contained reasonable limitations regarding time, geographical area, and scope
of activity to be restrained; (4) the noncompete’s tolling provision was valid and
enforceable; (5) alternatively, the trial court abused its discretion by failing to reform
the noncompete and to enforce it as reformed; and (6) Tipton’s admitted breach of
the noncompete caused probable, imminent, and irreparable harm for which ESMS
has no adequate legal remedy.
Standard of Review and Law Applicable to Temporary Injunctions
A temporary injunction is an extraordinary remedy and does not issue as a
matter of right. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (op. on
reh’g). Its purpose is to preserve the status quo of the litigation’s subject matter
pending a trial on the merits. Clint ISD v. Marquez, 487 S.W.3d 538, 555 (Tex. 2016).
To obtain a temporary injunction, an applicant must plead and prove (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. Butnaru, 84 S.W.3d at 204;
Frequent Flyer Depot, Inc. v. Am. Airlines, Inc., 281 S.W.3d 215, 220 (Tex. App.—Fort
Worth 2009, pet. denied).
Whether to grant or deny a temporary injunction is within the trial court’s
sound discretion. Butnaru, 84 S.W.3d at 204. In determining whether the trial court
8
abused its discretion in granting or denying relief, we do not review the underlying
case’s merits. See Davis v. Huey, 571 S.W.2d 859, 861–62 (Tex. 1978). Under this
standard, 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. See IAC, Ltd. v. Bell
Helicopter Textron, Inc., 160 S.W.3d 191, 196 (Tex. App.—Fort Worth 2005, no pet.).
We will not reverse a temporary-injunction order unless the trial court’s action was so
arbitrary that it exceeded the bounds of reasonable discretion. EMSL Analytical, Inc. v.
Younker, 154 S.W.3d 693, 696 (Tex. App.—Houston [14th Dist.] 2004, no pet.). The
trial court does not abuse its discretion when basing its temporary-injunction decision
on conflicting evidence nor does it abuse its discretion when some evidence of
substantive and probative character supports its decision. Wright v. Sport Supply Grp.,
Inc., 137 S.W.3d 289, 292 (Tex. App.—Beaumont 2004, no pet.).
Analysis
Because ESMS’s sixth issue—whether ESMS established a probable, imminent,
and irreparable injury—is dispositive, we will address it first.7 See Butnaru, 84 S.W.3d at
7
The common law requires a showing of a probable, imminent, and irreparable
injury as a prerequisite for injunctive relief. Tranter, Inc. v. Liss, No. 02-13-00167-CV,
2014 WL 1257278, at *7 (Tex. App.—Fort Worth Mar. 27, 2014, no pet.) (mem. op.).
Although the Texas Business and Commerce Code preempts this requirement for
permanent injunctive relief enforcing a covenant not to compete, a showing of
probable, imminent, and irreparable injury is still required for temporary injunctive
relief enforcing the covenant. Id.; see Tex. Bus. & Com. Code Ann. §§ 15.51, .52.
9
204. Our focus will be on the final component: whether Tipton’s competing with
ESMS would cause ESMS irreparable injury. 8 See id. An injury is irreparable if damages
would not adequately compensate the injured party or if they cannot be measured by
any certain pecuniary standard. Id.; Frequent Flyer Depot, 281 S.W.3d at 220.
Relevant to irreparable harm, the trial court made the following findings and
conclusions:
• “Proof that a highly trained employee is continuing to breach a non-
competition covenant gives rise to a rebuttable presumption that the applicant
is suffering irreparable injury.”
• “Sufficient evidence was not presented at the hearing that Dr. Tipton was
provided highly specialized training.”
• “Sufficient evidence was not presented at the hearing that ESMS will suffer
irreparable harm.”
• “At the time of his departure, ESMS offered Dr. Tipton a buy-out of
$500,000.”
• “ESMS has permitted other departing veterinarians to buy out of their non-
competes.”
8
In support of its request for injunctive relief, ESMS pleaded that it “does not
have an adequate remedy at law because monetary damages alone are either
impossible to calculate or will not sufficiently or adequately compensate [it] for its
injuries and losses, including losses associated with [its] name, goodwill, prestige, and
loss of current and prospective clients, patients, and trainers.”
10
• “ESMS failed to put forth sufficient evidence that it would suffer a probable,
imminent, irreparable injury in the interim.”
ESMS argues that it established that Tipton’s breach of the noncompete
irreparably injured ESMS because Tipton failed to rebut the presumption that a highly
trained employee’s continued breach of a noncompete irreparably damages his
employer. See, e.g., Tranter, 2014 WL 1257278, at *7 (“A highly trained employee’s
continued breach of a noncompete agreement creates a rebuttable presumption that
the employer is suffering an irreparable injury.”). ESMS asserts that Tipton’s use of
ESMS’s confidential information to compete with ESMS is inevitable and that the
harm Tipton has caused cannot be measured with certainty. ESMS also points to
Hand’s testifying that it was not possible to quantify the damages Tipton’s breach
caused ESMS. ESMS asserts that this testimony is consistent with Tipton’s
representations in the employment contract that his breach of the noncompete would
cause irreparable harm and that “the remedy of monetary damages or other remedies
at law would be wholly inadequate and not readily ascertainable.” Tipton counters that
ESMS was not entitled to rely on the irreparable-harm presumption because ESMS
did not provide Tipton with training in exchange for the noncompete, and that even if
the presumption did apply, he rebutted that presumption with evidence of ESMS’s
$500,000 buy-out offer.
Regarding the buyout, Eddleman and Hand testified that after Tipton gave his
30-day resignation notice, ESMS’s board offered to let Tipton buy out his
11
noncompete for $500,000. According to Eddleman, ESMS had allowed other
veterinarians to buy out their noncompetes, and while the buyout in this case would
not have “remedied everything” in terms ESMS’s loss of revenue and goodwill,
ESMS’s board “was willing to accept a buyout to for[]go all this.” Hand testified that
he could not quantify ESMS’s damages, but the board would have released Tipton
from his noncompete for $500,000. He explained that the buyout offer was a board
decision prior to Tipton’s leaving and ESMS’s involving legal counsel to “settle” the
“situation.”
ESMS argues that the buyout was a settlement offer and thus any evidence
regarding the buyout was inadmissible to prove the amount of a disputed claim. See
Tex. R. Evid. 408(a); Vinson Minerals, Ltd. v. XTO Energy, Inc., 335 S.W.3d 344,
351 (Tex. App.—Fort Worth 2010, pet. denied) (“Offers of settlement are not
admissible to prove liability or invalidity of a claim or its amount.”). But ESMS did
not object to any of the evidence regarding the buyout and has thus failed to preserve
any error regarding its admissibility. See Tex. R. Evid. 103(a)(1); Tex. R. App. P.
33.1(a)(1)(A); Bechtel Corp. v. City of San Antonio, No. 04-04-00910-CV,
2006 WL 228689, at *6 (Tex. App.—San Antonio Feb. 1, 2006, no pet.) (mem. op.).
Assuming without deciding that the irreparable-harm presumption applies here,
we agree with Tipton that ESMS’s $500,000 buyout offer was sufficient evidence to
rebut that presumption because the buyout was some evidence that damages would
adequately compensate ESMS and that its damages could be measured by a pecuniary
12
standard. As the party seeking injunctive relief, ESMS had the burden to prove
irreparable injury. See Lifeguard Benefit Servs., Inc. v. Direct Med. Network Sols., Inc.,
308 S.W.3d 102, 111 (Tex. App.—Fort Worth 2010, no pet.). Damages attributable to
a former employee’s competition and appropriation of goodwill can be difficult to
calculate. See, e.g., Tranter, 2014 WL 1257278, at *9 (noting that “[i]n Texas, injury
resulting from the breach of non-compete covenants is the epitome of irreparable
injury” (quoting Daily Instruments Corp. v. Heidt, 998 F. Supp. 2d 553, 569 (S.D. Tex.
2014))); Frequent Flyer Depot, 281 S.W.3d at 228 (stating that business disruption can be
irreparable harm and that “assigning a dollar amount to such intangibles as a
company’s loss of clientele, goodwill, marketing techniques, and office stability,
among others, is not easy”). Here, Eddleman testified that the buyout would not have
“remedied everything,” and Hand testified that ESMS’s damages could not be
quantified. But they also testified that before Tipton left ESMS and started
competing, ESMS was willing to release Tipton from his noncompete for $500,000,
which the trial court could have concluded was a reasoned measure of ESMS’s
anticipated damages and would have adequately compensated ESMS for any damages
caused by Tipton’s competition. Because we must defer to the trial court’s resolution
of conflicting evidence, we conclude that the trial court could have concluded that
ESMS failed to prove that it would suffer irreparable harm if Tipton was not enjoined
from competing with ESMS. 9
9
As ESMS points out, for a covenant not to compete relating to the practice of
13
ESMS also points to Tipton’s representations in his employment contract that
his breach of the noncompete would cause irreparable harm and that “the remedy of
monetary damages or other remedies at law would be wholly inadequate and not
readily ascertainable.” ESMS notes that this court “gives weight to an employee’s
contractual representations regarding irreparable harm and the inadequacy of money
damages.” See Bellefeuille v. Equine Sports Med. & Surgery, Weatherford Div., PLLC,
No. 02-15-00268-CV, 2016 WL 1163364 (Tex. App.—Fort Worth Mar. 24, 2016, no
pet.) (mem. op.). Bellefeuille involved an appeal from an order granting temporary
injunctive relief. Id. at *1. Viewing the evidence in the light most favorable to the trial
court’s granting injunctive relief, we determined that the “trial court’s findings, which
were supported by the evidence adduced at the hearing, and Bellefeuille’s
medicine to be enforceable against “a person licensed as a physician by the Texas
Medical Board,” the covenant must provide for a “buy out of the covenant by the
physician at a reasonable price or, at the option of either party, as determined by a
mutually agreed upon arbitrator or, in the case of an inability to agree, an arbitrator of
the court whose decision shall be binding on the parties.” Tex. Bus. & Com. Code
Ann. § 15.50(b)(2); see Greenville Surgery Ctr., Ltd. v. Beebe, 320 S.W.3d 850, 853 (Tex.
App.—Dallas 2010, no pet.) (concluding physicians’ covenants not to compete were
unenforceable because they did not contain a buyout clause). Of course, this
enforceability requirement does not apply here because Tipton is not a physician. See
Greenville Surgery Ctr., 320 S.W.3d at 853 (noting that the statutory “buy-out clause
requirement provides physicians with the unique opportunity to buy out their
covenants that is not available to any other employee subject to a covenant”).
Unsupported by any authority, ESMS states that “the existence of the statutory
buyout requirement as a prerequisite for injunctive relief against a medical doctor
demonstrates a buyout offer does not negate irreparable harm.” But because a buyout
provision is not a prerequisite to enforceability here, we see no reason why the trial
court could not consider ESMS’s $500,000 buyout offer as evidence of the damages
ESMS anticipated it would suffer if Tipton were allowed to compete with ESMS.
14
acknowledgement of the necessity for injunctive relief in her residency agreement
justif[ied] the trial court’s conclusion that the failure to issue a temporary injunction
would result in immediate and irreparable injury to ESMS.” Id. at *4 (footnote
omitted).
ESMS has not pointed us to any case holding that the parties’ agreement
proves—for temporary-injunction purposes—that remedies at law will be inadequate
or that any injuries suffered will be irreparable. See Malone v. PLH Grp., Inc., No. 01-
19-00016-CV, 2020 WL 1680058, at *6 (Tex. App.—Houston [1st Dist.] Apr. 7, 2020,
pet. denied) (mem. op.) (noting that “[t]rial courts are afforded discretion in granting
equitable relief” and stating that “a contracting party’s acknowledgment that the other
contracting party has a right to equitable relief does not bind judicial actors or require
a court to grant the equitable relief ultimately requested”); Shoreline Gas, Inc. v.
McGaughey, No. 13-07-364-CV, 2008 WL 1747624, at *11 & n.8 (Tex. App.—Corpus
Christi–Edinburg Apr. 17, 2008, no pet.) (mem. op.) (noting that although contract
stated that appellee’s breach would cause appellant irreparable injury that could not be
adequately compensated by money damages, appellant “pointed [the court] to no
Texas case holding that an agreement such as this establishes, for injunction purposes,
that remedies at law will be inadequate or that irreparable injury will necessarily be
suffered”). Applying the applicable review standard to the trial court’s order denying
injunctive relief here, we conclude that although Tipton’s employment contract might
be some evidence of irreparable harm, the evidence regarding ESMS’s
15
$500,000 buyout offer supports the trial court’s denial of ESMS’s request for
temporary injunctive relief based on ESMS’s failure to establish irreparable injury. See
Argo Grp. US, Inc. v. Levinson, 468 S.W.3d 698, 702 (Tex. App.—San Antonio 2015, no
pet.) (op. on reh’g) (stating that although contractual provision providing that
employee’s breach of noncompete clause might cause employer irreparable injury and
that money damages would be inadequate “may be some evidence” that employee’s
breach might cause irreparable injury, “we must review the entire record, and we must
do so in the light most favorable to the trial court’s order denying the temporary
injunction”).
Because some evidence supports the trial court’s conclusion that ESMS failed
to prove irreparable injury, the trial court did not abuse its discretion by denying the
temporary injunction. See Midstate Envtl. Servs., LP v. Atkinson, No. 13-17-00190-CV,
2017 WL 6379796, at *5 (Tex. App.—Corpus Christi–Edinburg Dec. 14, 2017, no
pet.) (mem. op.) (citing Butnaru, 84 S.W.3d at 204). We overrule ESMS’s sixth issue,
along with its first, which generally contends that the trial court abused its discretion
by denying ESMS’s temporary-injunction request. We thus need not address ESMS’s
remaining issues. 10 See Tex. R. App. P. 47.1.
Conclusion
Having overruled ESMS’s dispositive issues, we affirm the trial court’s order.
To be clear, we are expressing no opinion on the merits of ESMS’s claims
10
against Tipton.
16
/s/ Elizabeth Kerr
Elizabeth Kerr
Justice
Delivered: October 22, 2020
17