The injunction disturbs the status quo, awards DSC full and final relief, constitutes a ruling on the merits of the case and effectively awards DSC ownership rights in Brown's idea.
At a hearing on a temporary injunction, "the only question before the trial court is whether the applicant was entitled to an order to preserve the status quo pending trial on the merits." Henderson v. KRTS, Inc., 822 S.W.2d 769, 773 (Tex. App.--Houston [1st Dist.] 1992, no writ)(emphasis added); see also Miller Paper, 901 S.W.2d at 597 ("In reviewing the issuance of a preliminary injunction, we must decide whether the trial court correctly opted to preserve the status quo pending final hearing on the merits"); University of Texas Medical School v. Than, 834 S.W.2d 425, 428 (Tex. App.--Houston [1st Dist. 1992, no writ). As another court has stated, "[t]he purpose of a temporary injunction is to maintain the status quo, not to adjudicate a case on the merits." NRG Exploration v. Rauch, 905 S.W.2d 405, 410 (Tex. App.--Austin 1995, no writ); see also G. Richard Goins Constr. Co. v. McLaughlin Associates, Inc., 930 S.W.2d 124130 (Tex. App.--Tyler 1996, writ denied)("The purpose of a temporary injunction is to preserve the status quo of the subject matter of the litigation pending a final trial of the case on its merits"). The status quo is defined as "the last, actual, peaceable, noncontested status that preceded the pending controversy." State v. Southwestern Bell Telephone Co., 526 S.W.2d 526, 528 (Tex. 1975); see also Henderson, 822 S.W.2d at 773; University of Texas Medical School, 834 S.W.2d at 428.
A trial court abuses its discretion when it enters a temporary injunction which alters the status quo. See, e.g., Voss v. Clark, 671 S.W.2d 580, 582 (Tex. App.--Beaumont 1984, no writ); Dallas Independent School Dist. v. Daniel, 323 S.W.2d 639, 643 (Tex. Civ. App.--Dallas 1959, writ ref'd n.r.e.). In Voss, the plaintiffs brought suit to set aside a substitute trustee's sale of 26 acres of real property. The trial court entered an injunction which prevented the purchasers of the property from transferring title to the property, taking possession of the property or changing the condition of the property. On appeal, the court noted that the effect of the injunction was to oust the purchasers from the property and prevent them from exercising their rights of ownership. Id. at 582. The court concluded that "the trial judge, by issuing a writ of temporary injunction, disturbed and upset the status quo" and therefore ordered that the injunction be dissolved. Id at 582-83.
In the case of Edgewood Independent School Dist. v. Paiz, 856 S.W.2d 269 (Tex. App.--San Antonio 1993, no writ), the parent of a high school senior brought suit seeking to allow the student to participate in graduation ceremonies even though the student had not passed the TAAS test. The trial court entered an injunction preventing the school district from excluding students who had not passed the TAAS test from participating in the graduation ceremonies. The court of appeals held that the trial court committed an abuse of discretion by entering an injunction which disturbed the status quo:
The order must be set aside for another reason. At the hearing on a request for a temporary injunction, the only issue before the trial court is whether the movant is entitled to the preservation of the status quo of the suit's subject matter pending trial on the merits. The status quo to be preserved is "the last, actual, peaceable, non- contested status that preceded the pending controversy." The status quo in this case is the district's decision to prohibit students who have not passed the TAAS test from participating in graduation ceremonies. The trial court's order reverses the status quo and, in so doing, it provides plaintiff the complete relief he seeks and deprives the school district of any right to contest the matter before the passage of time renders it moot and unremediable. The trial court abused its discretion in rendering such an order.
Id. at 270-71.
The Temporary Injunction Order entered by the Trial Court is similar to the injunctions in Voss and Edgewood in that it disturbs the status quo. The last, actual, peaceable, non-contested status that preceded the pending lawsuit consists of Brown's knowledge of the idea and his refusal to disclose the idea to DSC without some form of compensation. By ordering Brown to disclose the idea and allowing DSC to patent the idea, the Temporary Injunction Order disturbs, rather than preserves, the status quo. This Court should therefore decline to enforce the injunction through contempt.
As previously stated, the purpose of a temporary injunction is to preserve the status quo. A related concept is that a temporary injunction should not, in effect, decide the ultimate issues to be determined at trial. In Ballenger v. Ballenger, 668 S.W.2d 467 (Tex. App.--Corpus Christi 1984, writ dismissed), the trial court entered an injunction preventing Robert Ballenger from continuing to farm part of his family's estate which he allegedly had a legal right to farm. On appeal, the court stated that "a court will not decide disputed ultimate fact issues in a hearing on an application for a temporary injunction...." Id. at 469. Based on these principles, the court of appeals held that the trial court abused its discretion in "finding, in advance of a trial on the merits, that Robert Ballenger did not have a present legal right to farm part of Ballenger Farms" and in "bas[ing] a temporary injunction on such a finding." Id; see also Henderson v. KRTS, Inc., 822 S.W.2d 769, 773 (Tex. App.--Houston [1st Dist.] 1992, no writ)("An order granting a temporary injunction should not adjudicate the issues"); Miller Paper, 901 S.W.2d at 597 (another guideline in reviewing a trial court's grant or denial of a temporary injunction is "that admonishing the court to forego attempts to resolve factual disputes"). Like the injunction in Ballenger, the injunction entered in this case effectively ruled on the merits of DSC's claims by awarding DSC relief (disclosure of the idea and the right to patent it) to which it would be entitled only if it prevailed at trial.
Just as a court should not enter an injunction which effectively rules on the merits of the case, it should not enter an injunction which provides a party with full and final relief. In the case of Dallas Independent School Dist. v. Daniel, 323 S.W.2d 639, 643 (Tex. App.--Dallas 1959, writ ref'd n.r.e.), the trial court in a wrongful termination case entered a temporary mandatory injunction requiring the defendant to reinstate the terminated employee pending trial. On appeal, the court stated that "a court will not decide disputed ultimate fact issues in a hearing on an application for a temporary injunction; nor will a temporary injunction ordinarily issue if the applicant would thereby obtain substantially all the relief which is properly obtainable in a final hearing." Id at 641. The court of appeals also noted that "it is error for a trial court to grant a temporary injunction, the effect of which would be to accomplish the object of the suit. To do so would be to determine rights without a trial." Id. The court held that the foregoing rule is "applicable to both prohibitive and mandatory injunctions, but it is especially applicable to mandatory injunctions." Id. The court of appeals concluded that the trial court committed reversible effort in issuing the injunction:
Thus the ultimate issues of this case were decided against appellants in a preliminary hearing. Appellants were condemned in advance of a trial on the merits. The order of the court went far beyond the mere maintenance of the status quo. It awarded appellees before a trial of the case the relief which was the main object of their suit. We believe it was effort to issue the temporary injunction.
Id. at 643; see also Global Natural Resources v. Bear, Sterns & Co., 642 S.W.2d 852, 855 (Tex. App.--Dallas 1982, no writ)(it was error to grant temporary restraining order the effect of which was "to give Bear, Stems most of the relief it could ever obtain after trial on the merits all without an adversary evidentiary hearing"); Ballenger, 668 S.W.2d at 469 ("nor will a temporary injunction ordinarily issue if the applicant would thereby obtain substantially all the relief which is properly obtainable in a final hearing"). The Temporary Injunction Order granted by the Trial Court effectively awarded DSC the final relief it seeks in its lawsuit by ordering disclosure of the idea to DSC and allowing DSC to patent the idea. As such, the Trial Court erred in granting the injunction.
Finally, a temporary injunction should not effectively award a party ownership rights in the property which is the subject of the suit. In Texas National Bank v. Dempsey, 674 S.W.2d 493 (Tex. App.--El Paso 1984, no writ), the court of appeals held that a trial court erred in granting a temporary mandatory injunction awarding title to an automobile. The court of appeals noted that "an injunction is not the proper remedy to try title or legal right of possession of property." Id. at 495. Similarly, in Voss, the court of appeals held that the trial court erred in entering an injunction which prevented the purchaser of real property from exercising ownership rights over the property. The court stated that "[a] court, generally speaking, is without authority to divest a party or diminish a party's property rights in real estate without a trial." Voss, 671 S.W.2d at 580. Although the Trial Court's injunction order did not expressly transfer ownership in Brown's solution to DSC, it had the same practical effect. By requiring Brown to disclose the idea and allowing DSC to patent the idea, the Trial Court gave DSC the right to exercise dominion and control over the idea and prevented Brown from doing the same. In essence, the injunction order clothes DSC with ownership rights in the idea by stripping those same rights from Brown, all well in advance of a trial on the merits. In entering such an order, the Trial Court committed reversible error.
In ordering disclosure of the solution, and allowing DSC to patent the solution, the Trial Court disturbed the status quo and provided DSC with full and final relief. Moreover, it awarded DSC relief it could only achieve if it demonstrated that the idea rightfully belongs to DSC and not Brown, the ultimate issue in this case. Finally, by allowing DSC to patent the idea, the Trial Court deprived Brown of a valuable property right which he can never recover. For these reasons, this Court should decline to enforce the injunction through contempt. [Note:2]
The contract on which DSC bases its right to injunctive relief is not supported by consideration and is therefore unenforceable as a matter of law.
Consideration is a fundamental element of every valid contract. Smith v. Renz, 840 S.W.2d 702, 704 (Tex. App.--Corpus Christi 1992, writ denied); Garcia v. Villarreal, 478 S.W.2d 830, 832 (Tex. Civ. App.--Corpus Christi 1971, no writ). As such, "[i]t is elementary that every contract must be supported by consideration." Fourticq v. Fireman's Fund Ins. Co., 697 S.W.2d 562, 564 (Tex. App. -- Dallas 1984, no writ); see also Echols v. Bloom, 485 S.W.2d 798, 800 (Tex. Civ. App.-- Houston [14th Dist] 1972, writ ref'd n.r.e.)("It is axiomatic that to be valid and enforceable a contract establishing an option must be supported by consideration"). Consideration can consist of either a benefit to the promisor or a loss or detriment to the promisee. See, e.g., Smith, 840 S.W.2d at 703; Garcia, 478 S.W.2d at 832; Hoagland v. Finholt, 773 S.W.2d 740, 743 (Tex. App.--Dallas 1989, no writ). Whether a contract is supported by consideration is a question of law. Brownwood Ross Company v. Maverick County, 936 S.W.2d 42, 45 (Tex. App.--San Antonio 1996, writ denied); Williams v. Hill, 396 S.W.2d 911, 913 (Tex. Civ. App.--Dallas 1965, no-writ).
In order to be valid and enforceable, a bilateral contract must have been supported by consideration at the time of its formation. See, e.g., TPS Freight Distributors, Inc. v. Texas Commerce Bank - Dallas, 788 S.W.2d 456, 460 (Tex. App.--Fort Worth 1990, writ denied)("The mutuality of obligation requirement in a contract is satisfied at the time of its formation, provided that the contract is based on valid consideration"); Roark v. Stallworth Oil and Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991)("Consideration is a present exchange bargained for in return for a promise"); CRC - Evans Pipeline International, Inc. v. Myers, 927 S.W.2d 259, 263 (Tex. App.--Houston [1st Dist] 1996, no writ)(Relevant point in determining whether a covenant not to compete is ancillary to an otherwise enforceable agreement is "the moment the agreement is made"). Where there is no consideration, there is no contract and, consequently, there can be no breach of contract. See, e.g., Gary Safe Co. v. A. C. Andrews Co., 568 S.W.2d 166, 168 (Tex. Civ. App.--Dallas 1978, writ ref'd n.r.e.)("In the absence of any benefit to the promisor or detriment to the promisee legally derived from the promise sought to be enforced, there is no consideration, and hence no contract"); Hoagland, 773 S.W.2d at 744 ("The point to be made is axiomatic -- consideration for a contract must precede any breach of contract"); Fourticq, 679 S.W.2d at 564 (Defendant could not be held liable for breach of agreement because agreement was unenforceable for lack of consideration).
The Agreement clearly states that the only consideration provided to Brown, who had been employed for one week when he signed the Agreement, was his continued employment by DSC:
In consideration of my employment (or continued employment in the event I am already in the employ of the Company at the time of execution hereof) with DSC Communications Corporation or any subsidiary or affiliate thereof (the "Company") and of the salary or wages paid for my services in such employment, the Company and I agree as follows ...
Exh. A, exh. 1 (emphasis added). This promise of continued employment was illusory, as DSC could terminate Brown at any time. Brown's employment by DSC, the only consideration to Brown, was merely at-will employment. The Agreement contains no term of employment, no salary and no other provisions typically found in employment agreements. Moreover, the Agreement specifically states that it is not an employment agreement, but rather, an at-will agreement:
The Company and I acknowledge that this Agreement does not constitute a contract of employment and that either the Company or I can terminate the employment relationship at any time subject to any applicable employment policies of the Company then in effect.
Id. (emphasis added).
DSC contends that the Agreement obligates Brown to disclose to DSC inventions made or conceived while at DSC which are in DSC's line of business and which result from work Brown performed for DSC. Exh. A. Furthermore, the Agreement allegedly obligates Brown to assist DSC in obtaining patents on such inventions during and subsequent to his employment by DSC. Exh. A, exh. 1. These two alleged contractual obligations -- the only consideration for which was Brown's at-will employment by DSC -- are the obligations upon which DSC bases its claim to injunctive relief. Because these alleged contractual obligations were not supported by valid consideration, they are unenforceable, and the Trial court erred in basing its injunction upon such obligations.
There can be no question that an employer's promise of at-will employment is illusory and does not constitute valid consideration. In Martin v. Credit Protection Association, Inc., 793 S.W.2d 667 (Tex. 1990), the court was called on to determine whether a covenant not to compete contained in an employment agreement was enforceable against a former employee. In beginning its analysis, the court stated the now-familiar rule that a covenant not to compete must be ancillary to an otherwise enforceable agreement in order to be enforceable. In order to determine whether the covenant not to compete at issue was enforceable, therefore, the court examined the employment agreement to determine whether it was itself enforceable. The court first noted that although the employee signed an employment agreement which prohibited his competition with his employer for at least three years, "he remained an employee-at-will and was subject to termination at any time." Id. at 669. Moreover, the court noted, the covenant not to compete was not signed until some three years after the employee first began working for the Plaintiff. The court concluded that "since an employment at-will relationship is not binding upon either the employee or the employer and either may terminate the relationship at any time, continuation of an employment at-will relationship does not constitute independent valuable consideration to support the covenant." Id. For the foregoing reasons, the court held that the covenant not to compete was not ancillary to an otherwise enforceable agreement or supported by independent valuable consideration and was therefore not enforceable against the employee. Id. at 670; see also Travel Masters. Inc. v. Star Tours, Inc., 827 S.W.2d 830, 833 (Tex. 1991)(covenant not to compete was unenforceable against at-will employee because "an employment-at-will relationship, although valid, is not an otherwise enforceable agreement").
In Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994), an employee signed an agreement wherein she promised to provide fourteen days notice if she desired to terminate her employment, promised to provide an inventory of all property of the employer upon termination and promised not to compete against her employer for one year after termination. In analyzing the enforceability of this agreement, the court reiterated the principal that at-will employment provides no consideration:
Consideration for a promise, by either the employee or the employer in an at-will employment, cannot be dependent upon a period of continued employment. Such a promise would be illusory because it fails to bind the promisor who always retains the option of discontinuing employment in lieu of performance. When illusory promises are all that support a purported bilateral contract, there is no contract
Id. at 644-45. Expanding on its analysis, the court stated that "any promise made by either employer or an employee that depends on an additional period of employment is illusory because it is conditioned upon something that is exclusively within the control of the promisor." Id. at 644, Fn.5 Finally, the court noted that the employer's promises to pay the employee's salary and commissions as well as a package of employee benefits were also illusory, since "each is dependent upon some interval of continued at-will employment." Id. at 646, Fn.9. The court concluded that the covenant not to compete was not ancillary to or part of an otherwise enforceable agreement and was therefore unenforceable. Id. at 648.
In CRC-Evans, the court analyzed a covenant not to compete which was part of an employment agreement which required the employee to disclose and convey to his employer all inventions related to his employer's business and to assist in obtaining and maintaining patents and copyrights on such inventions. This disclosure provision, much like the disclosure provision in the Agreement between Brown and DSC, was given in return for promised employment and the payment of a salary or other remuneration. CRC-Evans, 927 S.W.2d at 263. Unlike the Brown-DSC Agreement, the agreement in CRC-Evans also obligated the employer to give the employee trade secrets and proprietary information necessary to perform his duties. In order to determine whether the covenant not to compete was ancillary to an otherwise enforceable agreement, the court first had to determine whether the promises made by the employee -- other than the covenant not to compete -- constituted an enforceable agreement to which the covenant not to compete could be ancillary. In analyzing this issue, the court stated that if the employer's promises are illusory, "then they do not constitute valid consideration for appellees' promises made in addition to the covenants not to compete, meaning no otherwise enforceable agreement would have existed at the time each agreement was made." Id. at 263-64 (emphasis original). The court noted that the employer's promise to provide initial specialized training was illusory because at the time the employment agreement, the employer could fire the employee and escape the obligation to perform. Id. at 265. Further, the court noted, the other promises of the employer, to employ at-will and to provide a base salary and other remuneration, were also illusory. Id. Based on the foregoing, the court concluded that the trial court did not abuse its discretion when it held that the covenants not to compete were unenforceable because they were not ancillary to or part of otherwise enforceable agreements. Id.; see also Burgess v. Permian Court Reporters, Inc., 864 S.W.2d 725, 729 (Tex. App.--El Paso 1993, writ dism'd w.o.j.)(employment agreement which was terminable at-will by either party was not an otherwise enforceable agreement which could sustain a covenant not to compete).
Finally, at least one Texas court has had an occasion to consider whether at-will employment provides valid consideration to support an agreement other than a covenant not to compete. In Ichiban Records v. Rap-A-Lot Records, 933 S.W.2d 546 (Tex. App.--Houston [Ist Dist.] 1996, no writ), Willie Dennis signed a recording contract with Rap-A-Lot Records ("RAL"). According to the terms of the contract, he was to render his exclusive services as a performing artist for RAL. Id. at 548-49. In return, RAL was to pay the costs of recording sessions conducted in accordance with the terms of the agreement. When RAL learned that Dennis had performed on albums released by other recording companies, it brought suit against him and sought a temporary injunction preventing him from making and distributing unauthorized recordings and performances. The court of appeals agreed with RAL that the restrictive terms in the recording contract were more like a negative restriction in a personal services contract than a covenant not to compete. Id. at 551. Because RAL could terminate the recording contract at any time without cause, the court held that the contract was effectively a contract for employment at-will and was unenforceable. Id. at 552. As such, the court held, RAL did not establish a probable right to recovery and the trial court therefore erred in granting RAL injunctive relief. Id. at 552.
Although the majority of the cases cited above involve covenants not to compete, they are equally applicable to the Agreement which is the basis of DSC's claims in this case. In order to determine whether the covenants not to compete at issue were enforceable, the courts in the cases cited above first had to determine whether they were ancillary to an otherwise enforceable agreement. As such, the courts were called upon to determine whether an agreement between an employer and an employee was supported by valid consideration when the only consideration from the employer to the employee was at-will employment. The question, then, was not whether the covenant not to compete was enforceable but, rather, whether the agreement to which it was ancillary was enforceable. The courts in the cases cited above universally held that at-will employment provides no consideration and is merely an illusory promise. As such, these courts concluded, an at-will employment agreement is not an otherwise enforceable agreement to which a covenant not to compete may be ancillary. This principle that at-will employment provides no consideration for an agreement is equally applicable to this case and renders the Agreement between Brown and DSC unenforceable as a matter of law.
As set forth above, at-will employment is a merely illusory promise which provides no legal consideration to a contracting party. See, e.g., Ichiban Records, 933 S.W.2d at 552; Light, 883 S.W.2d at 644-45. Without valid consideration, there can be no valid, enforceable contract. See, e.g., Gary Safe Co., 568 S.W.2d at 168; Hoagland, 773 S.W.2d at 744. As such, the Agreement between Brown and DSC is invalid and unenforceable. Brown has made this very argument to the Trial Court in a Motion for Summary Judgment filed on July 3, 1997 which is set for hearing on August 5, 1997. This Court should defer ruling on DSC's Motion for Contempt until the Trial Court has had an opportunity to rule on the motion for summary judgment. In the alternative, the Court should decline to enforce through contempt an injunction the effect of which is to enforce the provisions of the unenforceable Agreement.
DSC failed to demonstrate that it had no adequate remedy for its breach of contract claim or that it would suffer an irreparable injury in the absence of a mandatory injunction ordering disclosure of the idea.
In order to demonstrate entitlement to an injunction, DSC was required to demonstrate both the existence of an irreparable injury and the absence of an adequate remedy of law. See, e.g., Green v. Unauthorized Practice of Law Committee, 883 S.W.2d 293, 296 (Tex. App.--Dallas 1994, no writ); Garth v. Staktek Corp., 876 S.W.2d 545, 548 (Tex. App.--Austin 1994, writ dismissed w.o.j.). As the Texas Supreme Court has stated, "[a] temporary injunction will not be granted where there is a plain and adequate remedy at law." McGlothlin v. Kliebert, 672 S.W.2d 231, 232 (Tex. 1984); see also LeFaucheur v. Williams, 807 S.W.2d 20, 22 (Tex. App.--Austin 1991, no writ)("An applicant for a temporary injunction must show that he has no adequate remedy at law and so is entitled to preservation of the status quo"). An injunction should not be granted if the movant has "failed to establish an inadequate legal remedy or that they will suffer irreparable injury." Chevron U.S.A., Inc. v. Stoker, 666 S.W.2d 379, 382 (Tex. App.--Eastland 1984, writ dismissed); see also Maryland Casualty Co. v. Culpepper, 369 SW.2d 533, 535 (Tex. Civ. App.--El Paso 1963, no writ)(trial court properly denied injunction where movant failed to show "the absence of adequate remedies at law" or "that it might suffer irreparable harm or loss"). An irreparable injury is "an injury of such nature that the injured party cannot be adequately compensated therefor in damages, or that the damages which result therefrom cannot be measured by any certain pecuniary standard." Chevron, 666 S.W.2d at 382.
The Trial Court erred in ordering Brown to disclose the solution pending trial because DSC failed to demonstrate either that it would suffer an irreparable injury absent such disclosure or that it had no adequate remedy at law. DSC offered no evidence that money damages are inadequate to compensate it for any damages suffered as a result of Brown's actions. Nor did DSC offer any evidence that it would suffer an irreparable injury if Brown were not forced to disclose the Solution prior to trial. The Order itself merely states that "any delay to DSC's ability to exploit the Solution or to take action to protect its rights in the Solution, such as patent applications on the Solution, will irreparably harm DSC." The Order contains no explanation of what this irreparable harm may be, and the record is devoid of any evidence presented by DSC which would justify such a conclusion.
The mandatory portion of the Temporary Injunction Order is especially objectionable since DSC's only claims against Brown are for breach of contract. Several courts have held that breach of contract claims generally do not give rise to an injunction since they are compensable by money damages. In Chevron, for example, the court held that "contractual rights are not enforced by writs of injunction absent exceptional circumstances, since an inadequate remedy at law and irreparable injury are rarely shown when a suit for damages for breach of contract is available." Chevron, 666 S.W.2d at 382. Similarly, in Grayson Enterprises, Inc. v. Texas Key Broadcasters, Inc., 388 SW.2d 204, 207 (Tex. Civ. App.--Eastland 1965, no writ), the court held that "generally speaking, contractual rights will not be enforced by writs of injunction. It is well settled that this rule prevails in a suit for damages for breach of a contract when there is no showing of irreparable injury, or when an adequate remedy at law is available." Because DSC's claims are merely for breach of contract, it cannot demonstrate irreparable harm or the absence of an adequate remedy at law. As such, the Trial Court erred in entering the temporary injunction and this Court should therefore decline to enforce the injunction by contempt.
Back to Evan Brown's Home Page
