Troy J. Shuttleworth v. G & a Outsourcing, Inc. D/B/A G & a Partners

Opinion issued February 5, 2009 In The Court of Appeals For The First District of Texas NO. 01-08-00650-CV TROY J. SHUTTLEWORTH, QUESTOCO, INC., AND U.S.A. STAFFING, INC, Appellants v. G&A OUTSOURCING, INC. D/B/A G&A PARTNERS, Appellee On Appeal from the 152nd Judicial District Court Harris County, Texas Trial Court Cause No. 2008-36860 MEMORANDUM OPINION In this accelerated appeal, Troy Shuttleworth, Questco, Inc., and U.S.A. Staffing, Inc. (the “Shuttleworth Defendants”), contend that the trial court improperly entered a temporary injunction requested by G&A Outsourcing, Inc. d/b/a G&A Partners (“G&A”). We affirm the trial court’s order granting injunctive relief. Background In 2005, Shuttleworth was a sales representative employed by G&A, a “professional employer organization” providing payroll administration, employee benefits, insurance, safety and human resources to its customers and their employees. Shuttleworth entered into an Employment Agreement with G&A. Among other provisions, the Employment Agreement contained a non-compete/non-solicitation provision. In 2008, Shuttleworth resigned from to work for U.S.A. Staffing, Inc. and Questco, Inc. G&A alleges that, during his employment with G&A, Shuttleworth had access to G&A’s confidential information, including client and prospective client contact information and G&A’s pricing policies and strategies. G&A also alleges that, shortly after Shuttleworth resigned from G&A, he began using confidential information he misappropriated from G&A to solicit clients for his new employers. According to G&A, Shuttleworth not only contacted prospective G&A clients but also contacted current G&A clients. Subsequently, G&A filed a “Verified Application for Temporary Restraining Order and Original Petition” in Harris County, seeking to prevent Shuttleworth’s use of its confidential information, which G&A argued violated an employment agreement he had signed with them in 2005. G&A pled that the acts upon which it sued were committed, in part or in whole, in Harris County, specifically that Shuttleworth signed the 2005 Employment Agreement in Harris County and worked for G&A in Harris County, and that the G&A clients whom Shuttleworth had solicited for his new employer were located in Harris County. G&A’s petition sought a temporary restraining order, temporary injunction, and permanent injunction. Based upon both the employment agreement and its rights under common law, G&A’s request for a injunctive relief sought to (1) prohibit Shuttleworth from continuing to breach the employment agreement by using G&A’s confidential information or soliciting business from G&A clients; (2) preserve G&A’s confidential information within the Shuttleworth Defendants’ possession, prevent further viewing or dissemination of it, and have such information produced in camera; and (3) preserve e-mails or electronic information by which Shuttleworth may have communicated confidential information to his new employers. In addition to requesting injunctive relief, G&A’s petition also raised claims for breach of contract, misappropriation of trade secrets, tortious interference with business relationships, tortious interference with prospective business relationships, unjust enrichment and attorneys’ fees. G&A also sought to enforce the covenant not to compete contained in the Employment Agreement that Shuttleworth signed as part of his employment in 2005. An agreed temporary restraining order was entered on June 18, 2008, with a hearing on the application for temporary injunction set for June 27, 2008. Shortly before the hearing on the temporary injunction on June 27, 2008, both parties filed additional pleadings with the trial court. The Shuttleworth Defendants filed a motion seeking to dismiss the suit on the grounds that the Harris County trial court lacked jurisdiction over G&A’s claims against them because G&A sought injunctive relief against the three defendants, who it had admitted in its petition were residents of Montgomery County. The Shuttleworth Defendants argued that section 65.023(a) of the Texas Civil Practice and Remedies Code mandates injunctive relief be sought in a defendant’s county of residence and that the Harris County trial court therefore lacked jurisdiction to consider G&A’s requests for injunctive relief against Montgomery County residents. See Tex. Civ. Prac.& Rem. Code Ann. § 65.023(a) (Vernon 2008). G&A filed a Supplemental Petition, asserting additional claims for fraud against Shuttleworth and claims for conversion and theft against the corporate defendants. In support of these claims, G&A alleged that Shuttleworth had improperly received a salary from his new employer while still employed by G&A, and that while he was employed by G&A, Shuttleworth had diverted a client of G&A’s to his new employers. Based mainly on its claims of fraud, conversion and tortious interference, G&A sought actual damages of no less than $179,000 from the Shuttleworth Defendants, as well as attorneys’ fees and exemplary damages. The trial court denied the Shuttleworth Defendants’ motion to dismiss for lack of jurisdiction and, after an evidentiary hearing, denied the Shuttleworth Defendants’ motion to dismiss and granted G&A’s request for a temporary injunction. On appeal, the Shuttleworth Defendants argue that the trial court erred by granting the temporary injunction. The Shuttleworth Defendants argue that, because G&A judicially admitted that all defendants at the time the entry of the temporary injunction were residents of Montgomery County, the temporary injunction was improper. The Shuttleworth Defendants have brought this accelerated interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(4) (Vernon 2008). Analysis The Shuttleworth Defendants contend that the district court lacked jurisdiction to enter the injunction because the defendants at the time of the injunction were all Montgomery County residents and section 65.023(a) of the Texas Civil Practice and Remedies Code deprives a trial court sitting in Harris County of jurisdiction to enter an injunction in this case. G&A responds by pointing out that the statute relied upon by the Shuttleworth Defendants for this argument is not a “jurisdictional” provision, but is instead merely a venue provision for suits whose main purpose is to obtain injunctive relief. G&A contends that its current suit is not brought for the primary purpose of obtaining such injunctive relief. Accordingly, G&A contends that (1) the Shuttleworth Defendants are improperly attempting to bring an interlocutory appeal regarding what is properly characterized as a venue determination and (2) even if section 65.023(a) was jurisdictional, it would not apply to G&A’s lawsuit because G&A’s request for injunctive relief was ancillary to its breach of contract and tort claims against the Shuttleworth Defendants. Whether a trial court has subject-matter jurisdiction is a question of law we review de novo. Westbrook v. Penley, 231 S.W.3d 389, 394 (Tex. 2007). Before we reach the issue of whether section 65.023(a) is jurisdictional or is merely relates to venue, we first must determine whether that section even applies to G&A’s claims in this lawsuit. The Shuttleworth Defendants characterize G&A’s petition as one primarily seeking injunctive relief and therefore argue for the section’s application. The Texas Supreme Court has held that section 65.023(a) “applies only to suits in which the relief sought is primarily or purely injunctive.” In re Continental Airlines, 988 S.W.2d 733, 736 (Tex. 1998). Where the main purpose of suit is for something other than injunctive relief and the injunction is ancillary, incidental or adjunctive, section 65.023(a) does not apply. O’Quinn v. Hall, 77 S.W.3d 452, 456 (Tex. App.— Corpus Christi 2002, orig. proceeding). To determine the main purpose of the suit for purposes of deciding whether the section applies, we examine the pleadings and the relief sought. See, e.g., Continental, 988 S.W.2d at 736; Howell v. Texas Workers’ Compensation Commission, 143 S.W.3d 416, 432 (Tex. App.—Austin 2004, pet. denied) (stating, “if a review of the allegations and the prayer demonstrates that issuance of a permanent injunction would be merely ancillary to a judgment awarding declaratory relief, [section 65.023(a)] does not apply.”); Karagounis v. Bexar County Hosp. Dist., 70 S.W.3d 145, 147 (Tex. App.—San Antonio 2001, pet. denied) (“The true nature of a lawsuit depends on the facts alleged in the petition, the rights asserted and the relief sought, and not on the terms used to describe the cause of action.”). The holdings of In re Continental Airlines and Hogg v. Professional Pathology Associates, P.A. are instructive to our analysis. See In re Continental Airlines, 988 S.W.2d at 736; Hogg, 598 S.W.2d 328 (Tex. App.—Houston [14th Dist.] 1980, writ dism’d). In Continental, the City of Fort Worth filed suit for a declaratory judgment to have a Tarrant County district court declare its rights under agreements with the City of Dallas as to three airlines attempting to fly out of Love Field in Dallas. 988 S.W.2d at 735. In its pleadings, the City of Fort Worth sought only a declaratory judgment and never sought any relief suggesting an injunction. Id. However, the airlines filed a petition for writ of mandamus asserting that venue was mandatory in Dallas County because the ultimate relief that the City of Fort Worth was seeking was injunctive, because they claimed that the City of Fort Worth would be able to obtain a declaratory judgment and then use injunctive remedies to enforce it. Id. Based upon the City of Forth Worth’s pleadings, the Supreme Court determined that venue was proper in Tarrant County, in part because the City of Fort Worth never prayed for any injunctive relief. Id. Here, unlike in Continental, G&A pled for both injunctive relief and damages as a result of its breach of contract and tort claims. We are therefore guided by the resolution of Hogg v. Professional Pathology Associates, P.A., a non-compete case involving a claim for both injunctive relief and damages. 598 S.W.2d 328 (Tex. App.—Houston [14th Dist.] 1980, writ dism’d). In that case, a pathologist allegedly violated a restrictive covenant with his former pathology group by providing services to a client hospital less than 18 months after he left the group. Id. at 329. The group’s contract with the hospital also contained a covenant in which the hospital had promised not to hire any of the group’s former employees for 12 months after the employee ceased to work for the group. Id. The group sued both the pathologist and the hospital, seeking $180,000 in damages from the pathologist and specific performance of the covenants with both the pathologist and the hospital. Id. In evaluating whether the lawsuit was primarily one for injunctive relief and thus subject to the predecessor of section 65.023(a), the Hogg court noted that the group’s suit was brought for the purpose of deterring future breaches of the non-competition covenants by other employees and clients, as well as to obtain compensation for the loss of the client hospital’s business. Id. at 330. Thus, the court concluded that the group’s damages claim against the pathologist was the “remedy of first importance” since it was “by far the greater deterrent” and would deter future breaches by other employees as well as compensate the group for the loss. Id. In this case, as in Hogg, the pleadings reveal that G&A’s requests for injunctive relief were merely ancillary to its suit for damages against Shuttleworth and his employers. In reaching this conclusion, we note that G&A’s requests for injunctive relief sought to prevent further diversion of G&A’s confidential information, as well as to (a) prevent further breaches of the employment agreement and tortious acts by the Shuttleworth Defendants and (b) to preserve evidence for discovery and trial. In addition, the actual damages sought by G&A are substantial, and are in no small part based upon the alleged actual diversion of G&A clients or prospects to the Shuttleworth Defendants. Accordingly, the injunctive relief sought by G&A was not the primary purpose of its suit and section 65.023(a) does not apply. Conclusion Because G&A’s request for injunctive relief was merely ancillary to its claims for damages arising from the alleged breach of contract and tortious acts committed by the Shuttleworth Defendants, section 65.023(a) does not apply to this case. Accordingly, we do not reach the issue of whether section 65.023(a) is jurisdictional or merely relates to venue. We overrule Appellant’s single issue, and affirm the temporary injunction entered by the trial court. George C. Hanks, Jr. Justice Panel consists of Chief Justice Radack and Justices Alcala and Hanks.