Opinion

Q'Max America. Inc., D/B/A Q' Max America Solutions, Inc., D/B/A Q'Max Solutions, D/B/A Q'Max Solutions, Inc. v. Screen Logix, LLC

Court: Texas Court of Appeals, 1st District (Houston)
Filed: Mar 1, 2016
Status: Published
Cited by: 0 cases
Authority: More cited than 43.1%

to establish standing, appellant must show personal stake in controversy

How later courts described this case

to establish standing, appellant must show personal stake in controversy
to support entry of temporary injunction, movant must show, among other things, probable, imminent, and irreparable injury before trial on the merits
standing is a component of subject-matter jurisdiction
issue of standing concerns whether a person was personally aggrieved and, therefore, has a justiciable interest in controversy

Written by the judges who cited it.

The opinion

Opinion issued March 1, 2016

In The

Court of Appeals

For The

First District of Texas

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NO. 01-15-00319-CV

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Q’MAX AMERICA, INC. D/B/A Q’MAX AMERICA SOLUTIONS, INC.

D/B/A Q’MAX SOLUTIONS D/B/A Q’MAX SOLUTIONS, INC., Appellant

SCREEN LOGIX, LLC, Appellee

On Appeal from the 125th District Court

Harris County, Texas

Trial Court Case No. 2015-05002

MEMORANDUM OPINION

Screen Logix, LLC sued Jack Baker, David Schulte, Jr., and Q’Max America,

Inc. d/b/a Q’Max America Solutions, Inc. d/b/a Q’Max Solutions d/b/a Q’Max

Solutions, Inc., alleging that Schulte and Baker, former employees and officers of

Screen Logix, conspired with Q’Max to misappropriate Screen Logix’s trade secrets

and confidential information via a consulting agreement to assist Q’Max in building

a shaker screen manufacturing facility. Screen Logix sued and sought a temporary

injunction enjoining Schulte and Baker from performing under the consulting

agreement, and the trial court granted relief.

In this interlocutory appeal, Q’Max argues that the trial court abused its

discretion in entering the temporary injunction because (1) the alleged usurpation of

the Q’Max “business opportunity” happened in the past and therefore Screen Logix

could not demonstrate that it threatened imminent and irreparable harm, (2) Screen

Logix did not demonstrate that it had a probable right to relief on its breach of

fiduciary duty claim because Screen Logix did not demonstrate that the consulting

agreement constituted a “business opportunity” that belonged to it, and (3) the

temporary injunction is overbroad because it completely restricts Schulte and Baker

from performing under the consulting agreement.1 We affirm.

Background

Screen Logix manufactures shaker screens, which are used to separate

impurities from drilling mud after it is pumped into the ground and back out again

for re-use. From December 2009 to January 2014, Schulte served as Screen Logix’s

Vice President of Engineering and Baker served as Screen Logix’s Vice President

Schulte and Baker have not appealed.

of Sales. Both Schulte and Baker had written employment agreements.2 Relevant

to the underlying dispute, the agreements provided that Schulte and Baker must

present to Screen Logix in writing any business opportunities related to or connected

to Screen Logix’s business:

Business Opportunities. For as long as the Employee shall be employed

by the Employer and thereafter with respect to any business

opportunities learned about during the time of the Employee’s

employment by the Employer, the Employee agrees that with respect to

any future business opportunity or other new and future business

proposal which is offered to, or comes to the attention of the Employee

during the Term of this Agreement or any renewal term thereof, and

which is specifically related to, or connected with, the Business, the

Employer shall have the right to take advantage of such business

opportunity or other business proposal for its own benefit. The

Employee agrees to promptly deliver notice to the Board in writing of

the existence of such opportunity or proposal, and the Employee may

take advantage of such opportunity only if the Employer does not elect

to exercise its right to take advantage of such opportunity.

Also relevant to the underlying dispute, the agreements prohibited Schulte and Baker

from disclosing Screen Logix’s confidential information:

Confidential Information. The Employee acknowledges that in the

course of his employment with the Employer, he may receive certain

trade secrets, know-how, lists of customers, employee records and other

confidential information and knowledge concerning the Business

(“Confidential Information”), which the Employer desires to protect.

The Employee understands that such Confidential Information is

confidential and agrees not reveal [sic] such Confidential Information

to anyone outside the Employer. The Employee further agrees not to

use such Confidential Information during the term of this Agreement

and thereafter to compete with the Employer. Upon termination of this

The two agreements are identical in all relevant respects.

Agreement, the Employee shall surrender to the Employer all papers,

documents, writings, and other property produced by him or coming

into his possession by or through this Agreement and relating to the

information referred to in this Section . . ., which are not general

knowledge in the industry, and the Employee agrees that all such

materials will at all times remain the property of the Employer.

Schulte and Baker also each signed a separate Memorandum of Agreement

Regarding Invention and Confidential Information in which they agreed not to

disclose Screen Logix’s confidential information and agreed that all information

regarding Screen Logix’s business, including “technical data, cost estimates,

proposals, forecasts, financial data, general correspondence, and the scope, the

content or the results of research and development work” was presumed confidential.

Q’Max sold shaker screens bearing the Q’Max label, but which were not

manufactured by Q’Max. Q’Max, however, was interested in building its own

manufacturing facility to produce its own shaker screens. In October 2014, Simon

Tyldsley, a director of operations at Q’Max, approached Schulte and Baker about

assisting Q’Max with building a shaker screen manufacturing facility in Dubai.

Shortly after their discussion, Baker emailed Tyldsley and told him “[i]n regards to

screen facility, keep that between us and your top management.”

Baker testified at the temporary injunction hearing that he and Schulte told

the president of Screen Logix, Jeff Walker, about Q’Max’s proposal to build a plant,

and that Walker said Screen Logix was not interested. But Walker disputed that; he

testified that he knew nothing about the proposal until after Schulte and Baker had

left Screen Logix. It is undisputed that the Q’Max opportunity was never presented

to Screen Logix in writing.

On November 4, 2014, Tyldsley, Schulte, Baker, and a Q’Max Vice President,

Pete Mackenzie, had dinner together in Houston. At the dinner, the men discussed

Schulte and Baker helping Q’Max build the Dubai manufacturing facility and

manufacture and sell screens. The following day, Schulte used his personal email

account to send Tyldsley and Mackenzie two documents, one titled “Key

Employees” and the other a “Startup List Given to QMAX.” Baker prepared the

“Key Employees” list, which described Baker’s and Schulte’s goals in joining

Q’Max. The “startup list,” prepared by Schulte, contained detailed cost breakdowns

and projections for the first three years of operation at the proposed Q’Max plant.

A few days after the dinner, Schulte and Baker traveled to Dubai to meet with

Q’Max. Schulte and Baker secured a $140,000 order from Q’Max for screens from

Screen Logix, but also discussed leaving Screen Logix to assist Q’Max in building

the manufacturing facility. After returning from Dubai, Schulte sent a “rough draft

of contract for the technology”—a draft consulting agreement delineating Schulte’s

and Baker’s responsibilities with respect to the Dubai facility—to Tyldsley and to

Baker at Baker’s wife’s personal email address. 3

Schulte and Baker did not use their Screen Logix email accounts to communicate

about the Q’Max manufacturing facility. Schulte used his personal email account,

and Baker used his wife’s personal account.

A week later, Schulte sent Tyldsley and Baker an email regarding

“Information Required from Legal Dept.” Among other things, Schulte wrote

“Many people manufacture screens, but none have been able to exceed the quality

of the products we designed, but we can. We will teach this process to your

employees.” Schulte also emphasized the “urgency” with which he and Baker

needed to get a signed contract from Q’Max because their current employment

agreements would expire soon and they did not want to walk away “without a

contract in hand.”

On December 11, 2014, in response to Tyldsley’s question regarding whether

Q’Max should wait to make changes to the consulting agreement until after Schulte’s

and Baker’s lawyers reviewed the draft, Schulte responded, “Please don’t wait,

timing is critical.” He also noted that “[a] start date of Jan 15th as you had proposed

would be better for us than Jan 2nd at this point. It will allow us to spread out our

departures from present company.”

On December 12, 2014, Schulte resigned from Screen Logix, effective

January 11, 2015. On December 15, 2015, Schulte and Baker signed the consulting

agreement with Q’Max effective January 2, 2015. The agreement provided for

staggered payments beginning with an initial payment of $300,000 and totaling $1

million in exchange for their assistance in building the Dubai facility and

manufacturing and selling screens. Schulte and Baker also would each receive

$15,000 per month for the duration of the agreement.

Schulte’s resignation from Screen Logix was effective January 11, 2015, and

Baker resigned effective January 12, 2015. Neither informed Screen Logix that he

was leaving to assist Q’Max with the building and running of a shaker screen

manufacturing facility.

On January 22, 2015, an executive assistant at Q’Max inadvertently emailed

a copy of the invoice for the initial $300,000 consulting agreement payment to the

Screen Logix Operations Manager. A week later, Screen Logix sued Baker, Schulte,

and Q’Max, asserting claims for breach of contract, breach of a covenant not to

compete, breach of fiduciary duty, tortious interference with employment contracts,

misappropriation of trade secrets, civil conspiracy and fraud. Screen Logix

subsequently sought a temporary injunction prohibiting Schulte and Baker from

performing under the consulting agreement until trial.

The trial court granted the temporary injunction, stating in its order:

Screen Logix has pled and proven a probable, imminent, and

irreparable injury from prior to the February 24, 2015 Temporary

Restraining Order, until trial on the merits. If the Court does not issue

the temporary injunction order, Screen Logix will be imminently and

irreparably injured because without such relief, Schulte and Baker may

and probably will misappropriate and disseminate the rights and

property of Screen Logix to Q’Max and other third parties, with whom

Screen Logix has no confidentiality agreement. Screen Logix as no

adequate remedy at law because the amount of the resulting damages

from Baker’s and Schulte’s use, revealing, misappropriating and

dissemination of trade secrets and confidential information owned by

Screen Logix will be difficult, if not impossible, to fully and accurately

assess.

Among other things, the order prohibited Schulte and Baker from

Performing in any way [their] duties or services under the Consulting

Agreement, fully described above in relevant part; and/or providing

Q’Max with improved mesh combinations, structural designs, and

equipment designs; and/or training Q’Max’[s] sales force to market

shaker screens; because all (1) such duties or services require Schulte

and Baker to use, reveal, or disclose trade secrets or confidential

information owned by Screen Logix; and (2) the Q’Max Opportunity

belonged to Screen Logix.

Q’Max appealed.

Jurisdiction

Screen Logix re-urges in its appellate brief an argument first made in an earlier

motion to dismiss that this Court denied—that Q’Max does not have standing to

appeal the temporary injunction because it enjoins Schulte and Baker only, and not

Q’Max. We address this argument first because it implicates our jurisdiction. See

Tex. Dep’t of Transp. v. City of Sunset Valley, 146 S.W.3d 637, 646 (Tex. 2004)

(standing is a component of subject-matter jurisdiction).

An appellant need not be a party to a temporary injunction in order to have

standing to appeal it, so long as the appellant is personally aggrieved by the entry of

the temporary injunction and therefore, has a justiciable interest in the controversy.

See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(4) (authorizing a “person” to

appeal from the grant or denial of a temporary injunction); Nootsie, Ltd. v.

Williamson Cty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996) (issue of standing

concerns whether a person was personally aggrieved and, therefore, has a justiciable

interest in controversy); In re B.I.V., 923 S.W.2d 573, 574 (Tex. 1996) (to establish

standing, appellant must show personal stake in controversy); see also Landry v.

Burge, No. 05-99-01217-CV, 2000 WL 1456471, at *4 (Tex. App.—Dallas 2000,

no pet.) (not designated for publication) (non-parties that are personally aggrieved

by temporary injunction have standing to appeal). Here, the temporary injunction

prohibits Schulte and Baker from performing their agreement with Q’Max. Thus,

Q’Max, as the contractual counterparty to the enjoined parties, is personally

aggrieved by the entry of the temporary injunction. We therefore hold that Q’Max

has standing to appeal the temporary injunction and that we have jurisdiction over

the appeal. See Bell v. Craig, 555 S.W.2d 210, 211–12 (Tex. App.—Dallas 1977,

no writ) (party adversely affected by temporary injunction had standing to appeal

despite fact that order did not expressly enjoin him from doing anything).

Discussion

In two issues, Q’Max contends that the trial court erred in granting the

temporary injunction because (1) the alleged usurpation of the Q’Max “business

opportunity” happened in the past and therefore Screen Logix could not demonstrate

that it threatened imminent and irreparable harm, (2) Screen Logix did not

demonstrate that it had a probable right to relief on its breach of fiduciary duty claim

because Screen Logix did not demonstrate that the consulting agreement constituted

a “business opportunity” that belonged to it, and (3) the injunction is overbroad

because it completely prohibits Schulte and Baker from performing the consulting

agreement.

A. Standard of Review

The decision to grant or deny a temporary injunction lies in the sound

discretion of the trial court, and the court’s ruling is subject to reversal only for a

clear abuse of discretion. TMC Worldwide, L.P. v. Gray, 178 S.W.3d 29, 36 (Tex.

App.—Houston [1st Dist.] 2005, no pet.). We do not substitute our judgment for the

trial court’s judgment unless the trial court’s action was so arbitrary that it exceeded

the bounds of reasonable discretion. Id. (citing Johnson v. Fourth Ct. App., 700

S.W.2d 916, 918 (Tex. 1985), disapproved in part on other grounds by In re

Columbia Med. Ctr., 290 S.W.3d 204 (Tex. 2009)). In reviewing an order granting

or denying a temporary injunction, we draw all legitimate inferences from the

evidence in a manner most favorable to the trial court’s order. Id. (citing CRC–

Evans Pipeline Int’l v. Myers, 927 S.W.2d 259, 262 (Tex. App.—Houston [1st Dist.]

1996, no writ)). Abuse of discretion does not exist if the trial court heard conflicting

evidence and evidence appears in the record that reasonably supports the trial court’s

decision. Id. (citing Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978); Myers, 927

S.W.2d at 262).

A temporary injunction’s purpose is to preserve the status quo of the

litigation’s subject matter pending a trial on the merits. Id. at 36 (citing Walling v.

Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993). To obtain a temporary injunction, the

applicant must plead and prove three specific elements: (1) a cause of action against

the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent,

and irreparable injury in the interim. Id. (citing Butnaru v. Ford Motor Co., 84

S.W.3d 198, 204 (Tex. 2002)).

B. Q’Max’s “Business Opportunity Theory” Arguments

In its first issue, Q’Max argues that the temporary injunction must be

dissolved in part because “[t]emporary injunctive relief could not properly have been

based on the theory that Mr. Schulte and Mr. Baker usurped a ‘Business

Opportunity’ by agreeing to provide consulting services, because no imminent or

irreparable harm could be threatened by this past event.” Q’Max also argues that

Screen Logix did not establish a probable right to relief on its breach of fiduciary

duty claim because Screen Logix did not demonstrate that the consulting agreement

constituted a “business opportunity” that belonged to it. Q’Max concludes that “the

trial court’s order granting temporary injunctive relief on this [business opportunity]

theory must be reversed and the temporary injunction dissolved in part.” Q’Max

does not specify which portions of the injunction should be reversed.

1. Probable, imminent, and irreparable injury

Q’Max’s argument with respect to probable, imminent, and irreparable injury,

in essence, is that because the consulting agreement was signed in the past, any harm

caused by the usurpation of this “business opportunity” occurred in the past at the

moment the agreement was signed. Thus, Q’Max argues, Screen Logix did not

demonstrate that it was probable that it would be imminently and irreparably injured

between the time the injunction was entered and trial, as required to support the entry

of a temporary injunction. See Gray, 178 S.W.3d at 36 (to support entry of

temporary injunction, movant must show, among other things, probable, imminent,

and irreparable injury before trial on the merits).

But with respect to imminent and irreparable injury, the temporary injunction

order states: