In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-20-00328-CV
NANCY WEBSTER AND EPIC INSURANCE BROKERS & ASSOCIATES,
APPELLANTS
V.
ARTHUR J. GALLAGHER & COMPANY, APPELLEE
On Appeal from the 345th
Travis County, Texas
Trial Court No. D-1-GN-20-004823, Honorable Scott Jenkins, Presiding
July 7, 2021
MEMORANDUM OPINION
Before QUINN, C.J., and PIRTLE and PARKER, JJ.
Nancy Webster voluntarily signed a contract with Arthur J. Gallagher & Company
when it first employed her. The agreement contained a confidentiality clause and other
restrictive covenants governing her actions if and when she left the company. She left
after a number of years and assumed a position with EPIC Insurance Brokers &
Associates. Apparently, Webster refused to abide by her prior agreement with Gallagher,
resulting in her earlier employer initiating suit and obtaining a temporary injunction against
her and those in concert with her.1 The aspects of the injunction in play here are those
1 Gallagher also sued EPIC but did not name it as a party to be enjoined. Nor did the temporary
injunction issued by the trial court expressly enjoin EPIC from doing anything.
which bar her from 1) “[u]sing, disclosing, or further acquiring Gallagher’s trade secrets
and other confidential information, including its financial data or its customer’s identities
and contact information”; 2) “[d]irectly or indirectly rendering any services for a Gallagher
client or prospective client with which [she] worked, provided services to, or
communicated” with; and 3) “[s]oliciting current or prospective Gallagher clients with
whom she worked, provided services to, or had contact with during the two-year period
prior to her resignation.” Both Webster and EPIC appealed issuance of that injunction.
Eight issues, some with multiple sub-issues, pend for our review. We affirm.2
Authority
The standard of review was discussed in Abbott v. Anti-Defamation League Austin,
Sw., & Texoma Regions, 610 S.W.3d 911 (Tex. 2020). It is one of abused discretion, id.
at 916–17, and we apply it here.
Under that standard, we cannot simply substitute our judgment for that of the trial
court. Butnaru v. Ford Motor Corp., 84 S.W.3d 198, 211 (Tex. 2002). Instead, the
appellant must illustrate that the trial court acted unreasonably, arbitrarily, or without
reference to guiding rules and principles. Id. That is, the order must be “‘so arbitrary
that it exceed[s] the bounds of reasonable discretion.’” Henry v. Cox, 520 S.W.3d 28,
33–34 (Tex. 2017) (quoting Butnaru v. Ford Motor Corp., supra). And discretion is not
abused if the evidence reasonably supports the court’s decision. Abbott, 610 S.W.3d at
916–17; Henry, 520 S.W.3d at 33–34; Butnaru, 84 S.W.3d at 211.
Furthermore, one seeking a temporary injunction must plead and prove 1) a cause
of action against the defendant, 2) a probable right to the relief sought, and 3) a probable
2 Because this appeal was transferred from the Third Court of Appeals, we are obligated to apply
its precedent when available in the event of a conflict between the precedents of that court and this Court.
See TEX. R. APP. P. 41.3.
2
imminent and irreparable injury in the interim. Abbott, 610 S.W.3d at 916. It must be
remembered, though, that the temporary relief of the injunction serves to maintain the
status quo pending final adjudication. Butnaru, 84 S.W.3d at 204; DHJB Dev., LLC v.
Graham, No. 03-18-00343-CV, 2018 Tex. App. LEXIS 9295, at *2–3 (Tex. App.—Austin
Nov. 15, 2018, pet. dism’d) (mem. op.). For this reason and to satisfy the element
concerning a probable right of success, the applicant need not establish that it will win at
trial. R & R Res. Corp. v. Echelon Oil & Gas, L.L.C., No. 03-05-00479-CV, 2006 Tex.
App. LEXIS 326, at *23 (Tex. App.—Austin Jan. 10, 2006, no pet.) (mem. op.). It is
enough to allege a cause of action and present evidence that tends to support it. Id. The
merits of the claim are not under review. Henry, 520 S.W.3d at 33–34.
Analysis
The general theme of Webster’s complaint is “[w]hether as a matter of law the
temporary injunction wrongly restrains Ms. Webster from accepting or providing services
to unsolicited health insurance clients who no longer want to do business with Gallagher.”
Multiple, and extended, arguments were proffered in support thereof. Our disposition of
them is not so extended. And, we so dispose of them by climbing the same ladder
Gallagher was required to climb below.
The first rung concerns a cause of action. Gallagher averred that Webster
breached her employment contract with it. The terms allegedly breached were found
under the category of “post-employment obligations.” One obligated her to forgo
“divulg[ing] the Company’s Confidential Information or make use of it for [her] own
purpose or the purpose of another” for “a period of two (2) years following the termination
of [her] employment.” Under another, she agreed to not:
(i) directly or indirectly, solicit, place, accept, aid, counsel or
consult in the renewal, discontinuance or replacement of any
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insurance or reinsurance by, or handle self-insurance
programs, insurance claims or other insurance administrative
functions (“insurance services”) for, any existing Company
account or any actively solicited prospective account of the
Company for which [s]he performed any of the foregoing
functions during the two-year period immediately preceding
such termination or (ii) provide any employee benefit
brokerage, consulting, or administration services, in the areas
of group insurance, defined benefit and defined contribution
pension plans, individual life, disability and capital
accumulation products, and all other employee benefit areas
(“benefit services”) the Company is involved with, for any
existing Company account or any actively solicited
prospective account of the Company for which [s]he
performed any of the foregoing functions during the two-year
period immediately preceding such termination.
The foregoing obligations allegedly were breached when Webster quit the employ
of Gallagher, assumed a position with a competitor, i.e., EPIC, and began soliciting clients
of Gallagher. Given these circumstances, the trial court had evidence before it of a cause
of action, that being breach of contract.
We now turn to the second rung, that being a probable right to relief. This seems
to be the element upon which Webster focused the brunt of her attack. Again, Gallagher
complains of Webster breaching the non-solicitation and non-disclosure clauses of her
agreement. That such clauses may be enforceable and their temporary enforcement the
legitimate subject of a preliminary injunction is clear. See, e.g., York v. Hair Club for Men,
L.L.C., No. 01-09-00024-CV, 2009 Tex. App. LEXIS 4866, at *14 (Tex. App.–Houston [1st
Dist.] June 25, 2009, no pet.) (mem. op.) (holding “that the non-solicitation and non-
disclosure agreements here are enforceable,” “Hair Club has a probable right to relief
under them,” and the trial court “did not abuse its discretion in granting a temporary
injunction on this ground”). Wester began her attack on this rung, though, by contending
that the trial court had before it no evidence of her soliciting Gallagher clientele. Yet, the
record illustrates otherwise. She notified her “professional contacts” of her departure and
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new employer; those notified included “prior Gallagher clients.” She did so because 1)
“[s]ome of those customers [were] nearing their renewal”; 2) “[t]hey were relying heavily
upon [her]”; and 3) “[she] felt it very important for them to know [she didn’t] work at
Gallagher anymore.” Those customers were also directed by her to where they could
obtain information about EPIC. Other evidence indicated her voluntary departure from
Gallagher was rather hasty and its timing rather fortuitous. She afforded the company
only brief prior notice, and her departure from and ensuing retention by EPIC transpired
when Gallagher’s “customers [were] nearing their renewal.” The coincidence between
policies coming up for renewal, Webster’s acknowledgement that her clients relied heavily
on her, the importance of letting them know she worked for a different company, telling
Gallagher clients where they could find information about her new employer EPIC, and
EPIC being a competitor of Gallagher are indicia sufficient to create a foundation from
which a fact-finder could reasonably infer that Webster solicited Gallagher customers. It
is all too true that successful salesmen know the art of subtlety and nuance to sway
customers. It is not unheard of for such art to be practiced on clients to entice them to
newer venues. Indeed, that has been observed by other jurists, such as the panel that
wrote “initial contact can easily be manipulated – say, by a targeted announcement that
piques customers’ curiosity.” See Corporate Techs., Inc. v. Harnett, 731 F.3d 6, 11 (1st
Cir. 2013). Given the foregoing evidence, we find no fault in the trial court inferring that
solicitation of Gallagher clients occurred here when Webster notified them of her
departure.
Another foray directed at the element of probable success implicated the serving
of Gallagher clients who purportedly left without solicitation by her. A “restrictive covenant
that purports to prohibit a former employee . . . from accepting or servicing clients when
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those clients voluntarily elect to move their business to the former employee’s new
employer . . . without any solicitation or use of the former employer’s confidential
information is unlawful,” she contended. It allegedly is so for several reasons. The first
is that “[t]he ‘no acceptance and no service’ restriction, in the absence of solicitation, does
not serve a legitimate purpose.” Yet, she admitted otherwise in the employment
agreement. For instance, affixing her signature to her accord with Gallagher back in 2004
gave life to paragraph 10. Through it, she expressly “recognize[d] the highly sensitive
nature of the Confidential Information to which [s]he will have access during [her]
employment, and acknowledge[d] the Company’s legitimate interest in safeguarding
same from disclosure.” (Emphasis added). The same was no less true regarding
paragraph 11. There, Webster “recognize[d] the Company’s legitimate interest in
protecting, for a reasonable period of time following the termination of the Executive’s
employment, those Company accounts and prospective accounts including the Acquired
Business with which the Executive has been and will be associated during [her]
employment.” (Emphasis added). One can hardly criticize the trial court for finding that
Gallagher had legitimate interests in the acts encompassed within the restrictive
covenants when Webster herself acknowledged it did.
Next, Webster suggested that Gallagher’s likelihood of success was minimal
because she “did not need or use Gallagher confidential information regarding any clients
who have sought her out.” Per the agreement, though, confidential information included
“lists of prospects,” “the identity, authority and responsibilities of key contacts at Company
accounts’” “policy expiration dates,” “the composition and organization of accounts’
businesses” and “the peculiar risks inherent in their operations.” It would not be
unreasonable to view the people with whom she dealt when selling Gallagher products
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as “key contacts.” Having sold them insurance products addressing their employer’s
needs suggests an awareness of the composition and organization of those employers
as well as the peculiar risks inherent in their operations. And, as noted earlier, Webster
solicited them. So, these are circumstances which the trial court could have viewed as
her use of “confidential information”; and that is the very “confidential information” in which
she acknowledged Gallagher had a “legitimate interest in safeguarding.”
Moreover, it defies common sense to suggest that an employee can scrub his mind
of all things learned from an employer over extended periods of employment. They may
want to, but it is reasonable to conclude they cannot. That is the situation with Webster
and her 16 years under the employ of Gallagher. We are not the first to observe that
individuals “might have difficulty preventing their knowledge” of confidential information
or trade secrets “from infiltrating their work” when later employed by a competitor. See
Hill v. McLane Co., No. 03-10-00293-CV, 2011 Tex. App. LEXIS 169, at *14 (Tex. App.—
Austin Jan. 5, 2011, no pet.) (mem. op.); accord Williams v. Compressor Eng’g. Corp.,
704 S.W.2d 469, 472 (Tex. App.—Houston [14th Dist.] 1986, writ ref’d n.r.e.) (stating that
“[e]ven when he operates in the best of good faith, the former employee working in a
similar capacity can hardly prevent his knowledge of his former employer’s confidential
methods from showing up in his work”). Additionally, pricing structures utilized by
Gallagher would be one category of information likely to be remembered and incorporated
into her efforts to win clients from Gallagher, whether solicited by her or not. Renewal or
expiration dates would be another.3 Knowing them would be to know aspects of
Gallagher’s “confidential information.” And, we reiterate that Webster agreed that
3 Other information given Webster, according to Gallagher, included “client lists, client contact
information, as well as who the decision-makers were . . . as well as [Gallagher’s] scope of services, our
pricing, our strategies with respect to how it is we go about delivering services.”
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Gallagher had a “legitimate interest” in protecting such. So, irrespective of whether
Gallagher clientele came to EPIC through her solicitations, she had information from
Gallagher to use to the advantage of her new employer, EPIC.4
Another aspect of Webster’s own conduct bears mention. It involves her twice
voluntarily signing a restrictive covenant limiting her ability to generally service clients of
a former employer. The first was that of Gallagher. The second was that of EPIC. Simply
put, EPIC utilized restrictive covenants akin to those of Gallagher, and Webster signed
both. Moreover, that of EPIC was signed after she discussed the Gallagher covenant
with her new employer. If nothing else, this scenario illustrates that the insurance industry
is fraught with competition. Insurers, along with their employees, are aware of this and
the need to maintain and protect competitive advantages. Those advantages can be lost
through employees leaving one employer for another and utilizing, innocently or not,
information garnered from the former for the latter. As we observed earlier, scrubbing
minds of all things learned from an earlier employer is no easy task, and that knowledge
can come to infiltrate an employee’s later work for clientele of a competitor, irrespective
of whether the employee solicited the competitor.
Webster also raises the specter of stifled competition in the age of COVID-19 to
attack the enforceability of the restrictive covenants. Yet, neither the restrictive covenants
nor the temporary injunction inhibit prospective customers from obtaining insurance
products from EPIC. Nor do they bar EPIC from soliciting business from anyone,
including Gallagher clientele. They simply regulate Webster’s role in the transaction and
the use of Gallagher’s confidential information garnered from her.
4 This also means that more than just “goodwill” between Gallagher and its clientele was at stake.
Assuming arguendo that Webster correctly suggests that goodwill ends when a client leaves, Gallagher still
had legitimate interests in it as we discuss infra.
8
Effort is made by Webster to also attack the third rung of the ladder. Purportedly,
Gallagher’s potential injuries arising from her violation of the restrictive covenants are
subject to adequate redress through damages and, consequently, non-irreparable. In
answer, we quote a passage from Tranter, Inc. v. Liss, No. 02-13-00167-CV, 2014 Tex.
App. LEXIS 3398 (Tex. App.—Fort Worth Mar. 27, 2014, no pet.) (mem. op.). “A highly
trained employee’s continued breach of a noncompete agreement creates a rebuttable
presumption that the employer is suffering an irreparable injury.” Id. at *21–22. Indeed,
in “Texas, injury resulting from the breach of non-compete covenants is the epitome of
irreparable injury.’” USI Sw., Inc. v. Edgewood Partners Ins. Ctr, No. 4:19-CV-04768,
2020 U.S. Dist. LEXIS 79537, at *8 (S.D. Tex. 2020) (quoting A & A Global Indus., Inc. v.
Wolfe, No. 3:01CV1515-D, 2001 U.S. Dist. LEXIS 18142 (N.D. Tex. Nov. 6, 2001)). As
the USI court said when issuing a temporary injunction against a former employee who
came to work for Edgewood:
the resultant harm to Plaintiff’s good will and reputation with
its customers are not easily quantifiable. In some aspects,
insurance brokerage companies ultimately provide the same
end product—insurance—to their clients. Therefore,
companies strive to differentiate their services by various
proprietary and confidential means. Randolph had access to
those proprietary aspects of USI’s business. Some of these
include client information (including names and decision-
makers), . . . and revenue information. Most of this information
is what gives a company its good will or competitive
advantages which enable it to retain its clients’ business and
acquire new clients. If this information is disclosed, an entity
would lose whatever edge it has in a very competitive
business sector. Moreover, if this information is disclosed to
a head-to-head competitor, the damage would be irreparable.
Id. at *8–9. The names Webster and Gallagher easily could be substituted for “Randolph”
and “USI,” respectively, given the similarities involved there and here. This seems
especially so when Gallagher’s representative answered “no” when asked “[d]o you have
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any way to estimate what [the company’s] . . . loss might look like in the future” due to
Webster’s activities at EPIC. Gallagher’s representative testified about how goodwill
developed with a client over time enhances the prospect of selling other products to those
clients.5 So, like in USI, finding a probable imminent and irreparable injury here would
fall within the realm of rationality.
In sum, our task is not to adjudicate the underlying merits of the fight between
Gallagher, Webster, and EPIC. Nor was it the obligation of the trial court. The latter was
called upon only to address whether the status quo should be maintained by issuing a
temporary injunction. Given the evidence before it and the elements described in Abbott,
we cannot say that the order granting the temporary injunction at bar is “so arbitrary that
it exceed[s] the bounds of reasonable discretion.”
The issues of Webster and EPIC are overruled. The order granting Gallagher the
temporary injunction is affirmed.
Brian Quinn
Chief Justice
5 The witness described the situation “more like a marathon, not a sprint, because it takes quite a
bit of time to develop the relationships and then sell the business over a period of time.” This leads to
developing “additional lines of revenue.” As he said, “[w]e bring in other services where we have other
practice areas, specialty practice areas, which creates additional revenue. Many times we get business
through referrals and simply from the goodwill and the client base that generates over a period of time.”
That over time, the relationship develops in a way leading to the opportunity of pursuing additional lines of
revenue depicts the value of maintaining goodwill with clients. Thus, one can reasonably infer that goodwill
is a legitimate interest in the mind of an insurance broker worthy of protection under the law.
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