Charles M. Childers v. Pilares Oil & Gas, Inc.

11th Court of Appeals 11th Court of Appeals Eastland, Texas Opinion Charles M. Childers et al Appellants Vs. No. 11-01-00255-CV B Appeal from Taylor County Pilares Oil & Gas, Inc. Appellee The trial court granted Pilares Oil & Gas, Inc.=s application for a temporary injunction and ordered appellants to Adesist and refrain@ from taking any actions involving Pilares and from interfering with Norma Eltringham, the new president and director of Pilares, or Larry Schultz, the other new director of Pilares. Appellants Charles M. Childers and Edward Austin had been directors of Pilares, and appellant Nelson Quinn had been legal counsel for Pilares. The trial court also ordered appellants to produce Pilares=s records to Eltringham. We affirm. Pilares filed suit requesting the trial court to declare that: (1) Childers and Austin are no longer directors, officers, or agents of Pilares; (2) Quinn is no longer Pilares=s counsel; (3) Eltringham is president and treasurer of Pilares; (4) Schultz is vice president and secretary of Pilares; and (5) Pilares=s board of directors consists of Eltringham and Schultz. In this same pleading, Pilares asked the trial court to issue a temporary injunction requiring appellants Ato turn over all the books and records of Pilares...to Eltringham.@ The application for temporary injunction further requested that appellants be prohibited from transferring any of Pilares=s assets or acting in any way for or on behalf of Pilares. Appellants objected to Pilares=s application for temporary injunction on the ground that Pilares=s pleading failed to comply with TEX.R.CIV.P. 682 and 683. Pilares supplemented its original pleading but did not address appellants= objections. To obtain a temporary injunction, Pilares had to plead and prove three specific elements: (1) a cause of action against appellants; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Butnaru v. Ford Motor Company, 44 Tex.Sup.Ct.J. 808, 2001 WL 618149 at *7 (June 7, 2001). In its pleading, Pilares alleged that the sole shareholder of Pilares had removed Childers and Austin as officers and directors, that appellants were continuing to conduct business and pursue legal matters on behalf of Pilares, that appellants were transferring assets of Pilares, and that A[Pilares] believes that said [appellants=] actions are prejudicial to [Pilares] and that [Pilares] is entitled to the [injunctive] relief requested.@ Pilares pleaded a cause of action but did not mention a probable right to the relief sought or state why there existed a probable, imminent, and irreparable injury in the interim. Pleadings must set forth detailed facts about the alleged harm; general or conclusory allegations are insufficient to serve as a basis for injunctive relief. See Markel v. World Flight, Inc., 938 S.W.2d 74, 79 (Tex.App. B San Antonio 1996, no writ); Rawson v. Brownsboro Independent School Dist., 263 S.W.2d 578, 580-81 (Tex.Civ.App. B Dallas 1953, writ ref=d n.r.e.). Although appellants objected to Pilares=s pleading in their original answer, appellants never asserted in the trial court that there was a lack of notice or that they were not suitably informed of the cause of action against them or the relief sought. Texas is a notice pleading state. Only fair notice of the claim or allegations need be provided in pleadings. See TEX.R.CIV.P. 45(b) & 47(a). Appellants did not specially except or request a continuance; they appeared at the hearing on the temporary injunction and announced ready. No mention of pleading defect was raised at the hearing until appellants made their final argument. The temporary injunction was Atried by consent.@ See TEX.R.CIV.P. 67. An appellate court should only reverse the trial court=s order granting a temporary injunction if the trial court abused its discretion. Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex.1993). A trial court abuses its discretion where the law is misapplied to the facts or where the evidence does not support the findings. State v. Southwestern Bell Telephone Company, 526 S.W.2d 526, 528 (Tex. 1975); Ichiban Records, Inc. v. Rap-A-Lot Records, Inc., 933 S.W.2d 546, 551 (Tex.App. B Houston [1st Dist.] 1996, no writ). The appellate court must not substitute its judgment for that of the trial court and will not find that the trial court abused its discretion in granting the injunction unless the trial court=s action was so arbitrary that it exceeded the bounds of reasonable discretion. Davis v. Huey, 571 S.W.2d 859, 861-62 (Tex.1978). Additionally, the appellate court should draw all inferences from the evidence in a manner most favorable to the trial court=s judgment. Rugen v. Interactive Business Systems, Inc., 864 S.W.2d 548, 551 (Tex.App. B Dallas 1993, no writ). At a temporary injunction hearing, the applicant is not required to establish that it will prevail on final trial; the only question before the trial court is whether the applicant is entitled to preservation of the status quo pending a final trial on the merits. Walling v. Metcalfe, supra at 58; Double M Petroproperties, Inc. v. Frisby, 957 S.W.2d 594, 596 (Tex.App. B Eastland 1997, no pet=n). The applicant must present some evidence establishing a probable right of recovery and some evidence that probable harm will occur if the injunction does not issue. State v. Southwestern Bell Telephone Company, supra at 528; Double M Petroproperties, Inc. v. Frisby, supra. Based on the evidence at the hearing, the trial court determined that Pilares had presented a prima facie case that Tony Davidson was the sole shareholder of Pilares; that, as the shareholder, Davidson removed Childers and Austin as directors of Pilares and elected Eltringham and Schultz as the new directors of Pilares; that Eltringham was elected president and treasurer of Pilares and Schultz was elected vice president and secretary; that Childers and Edwards had continued to act as directors, officers, or agents of Pilares in transferring assets of Pilares; and that, unless appellants were enjoined, Pilares would be without an adequate legal remedy. There was adequate evidence to support the trial court=s findings. The corporate records reflected that Davidson was the sole shareholder of Pilares. In his bankruptcy filing, Childers stated that Davidson owned all of the stock of Pilares. A vehicle belonging to Pilares was transferred to Austin after the temporary injunction hearing began; however, Childers testified that this transfer was made Asome time back.@ Childers also testified that Pilares had zero value, yet Childers admitted that he and Austin were Arunning ten, twenty thousand dollars through [Pilares=s] checking account a month.@ The evidence showed that, a few months prior to the hearing, Pilares=s bank account contained over $10,000; the bank account contained only $500 at the time of the hearing. Childers also testified that Pilares was in the business of buying oil and gas leases and then selling the leases to Aseveral different companies.@ Childers admitted that he had formed other corporations Ato run assets through@ or A[p]ut oil deals together.@ Both Childers and Austin were evasive in their testimony at the hearing, repeatedly stating that they could not recall matters that the attorney for Pilares inquired about. The evidence contained in the record is sufficient to show that a temporary injunction is necessary to preserve the status quo and that, absent a temporary injunction, probable harm will occur to Pilares. The trial court was entitled to draw the inference that appellants= attempts to continue controlling the assets of Pilares may diminish the value of Pilares. The trial court did not abuse its discretion in granting a temporary injunction in favor of Pilares to maintain the status quo. Appellants= sole point of error is overruled. The judgment of the trial court is affirmed. TERRY McCALL JUSTICE April 4, 2002 Do not publish. See TEX.R.APP.P. 47.3(b). Panel consists of: Arnot, C.J., and McCall, J., and Dickenson, S.J.[1] [1]Bob Dickenson, Retired Justice, Court of Appeals, 11th District of Texas at Eastland sitting by assignment.