Labor & Employment Law

Texas Trial Court Abused Discretion By Denying Temporary Injunction

By Robert Wood

In a recent case in Houston, a state trial court's denial of an application for a temporary injunction was overturned.  In denying the requested temporary injunction, the court had failed to receive any testimony that might have supported the issuing of an injunction.  The court of appeals held that failing to receive testimnony necessitated reversal of the trial court's ruling, for the following reasons:

First,  the trial court found that the noncompete provision was not "ancillary to an otherwise enforceable agreement."  The court based this finding on the fact that the agreement did not contain an explicit promise by the employer to provide confidential information.  However, the court of appeals noted that, as a result of the Supreme Court's decision in the Mann Frankfort case, a promise to provide confidential information can be implied.  The trial court erred by not receiving testimony on whether the circumstances of the defendant's employment "necessarily involved the provision of confidential information."

Second, the trial court erred in holding that the agreement's restriction on solicitation of customers was overly broad.  The trial court based its ruling on the fact that the restriction applied to all of the employer's customers, and not merely the particular customers with which the defendant dealt.  However, as the court of appeals noted, without hearing any testimony, the trial court could not have known whether the defendant dealt with all of the employer's customers--it is possible that he did so.

The trial court's denial of the application for temporary injunction was reversed and remanded.

Full post as published by Texas Non-Compete Law Blog on May 18, 2010 (boomark / email).