                            ACCEPTED
                        06-15-00014-CV
             SIXTH COURT OF APPEALS
                   TEXARKANA, TEXAS
                   4/23/2015 3:13:11 PM
                       DEBBIE AUTREY
                                 CLERK




       FILED IN
6th COURT OF APPEALS
  TEXARKANA, TEXAS
4/23/2015 3:13:11 PM
    DEBBIE AUTREY
        Clerk
                     IDENTITY OF PARTIES AND COUNSEL

      Pursuant to Rule 38.1 (a) of the Texas Rules of Appellate Procedure,

Appellee lists below the names all parties to the trial court's final judgment

or order appealed from together with the names and addresses of all trial and

appellate counsel.

Parties:

   • William H. Scurlock/Defendant/ Appellant

   • John M. Hubbard, Plaintiff/Appellee

Trial and Appellate Counsel:

 Cory J. Floyd                               Brent M. Langdon
Norton & Wood, LLP                           Langdon*Davis, LLP
 315 Main Street                             5902 Summerfield, Ste. A
Texarkana, Texas 75505-1808                  Texarkana, TX 75503
 Trial and Appellant Counsel                 Trial and Appellee Counsel for
for William H Scurlock                       John M. Hubbard
Cammy R. Kennedy                             Kyle B. Davis
Norton & Wood, LLP                           Langdon*Davis, LLP
315 Main Street                              5902 Summerfield, Ste. A
Texarkana, Texas 75505-1808                  Texarkana, TX 75503
Appellant Counsel for                        Trial and Appellee Counsel for
 William H. Scurlock                         John M. Hubbard




                                     11
                                    TABLE OF CONTENTS

IDENTITY OF PARTIES ............................................................................... ii

TABLE OF CONTENTS ............................................................................... iii

INDEX OF AUTHORITIES ........................................................................... v

STATEMENT OF THE CASE ....................................................................... 1

STATEMENT OF FACTS .............................................................................. 2

SUMMARY OF THE ARGUMENT ............................................................ 10

         I.       Hubbard Re-urges His Motion to Dismiss and Motion
                  To Abate ................................................................................... 10

        II.       Scurlock's Complaints About The Appointment Of A
                  Receiver Have No Merit .......................................................... 10

        III.      Scurlock's Complaints About The Granting Of A
                  Temporary Injunction Have No Merit ..................................... 11

ARGUMENT ................................................................................................ 13

         I.      This Court Should Dismiss Or Abate Scurlock' s Appeal. ....... 13

        II.      Scurlock Has Waived His Complaints About The
                 Receivership ............................................................................ . 14

        III.     The Trial Court Properly Exercised Its Discretion
                 In Appointing A Receiver Because Evidence
                 Supports Appointment Of A Receiver .............. ....................... 17

                 A.      Appointment of a receiver must be affirmed on
                         appeal unless the record reveals a clear abuse of
                         discretion .......................................................................... 17




                                                     1ll
                   B.      The Texas Business and Organizations Code authorizes
                           the Trial Court to appoint a receiver ............................... 18

                   C.      Because the evidence supports a receivership, the Trial
                           Court properly appointed a receiver ................................ 20

                   D.      There is evidence that the managers were deadlocked .... 24

                   E.       The parties are not required to "attempt lessor
                            remedies" before a receiver can be appointed ................ 25

         IV.       The Trial Court Properly Exercised Its Discretion In
                   Granting A Temporary Injunction Because Evidence
                   Supports A Temporary Injunction ............................................ 27

                   A.       A temporary injunction must be affirmed on appeal
                            unless the record reveals a clear abuse of discretion ...... 27

                   B.       The Evidence Supports Probable Injury ......................... 28

                   C.       The Evidence Supports Probable Right Of Recovery ... 29

         V.        The Trial Court's Order Properly Requires The Payment of
                   Bonds For The Injunction and Receivership ............................ 31

PRAYER .............................................................................................. ......... 32

CERTIFICATE OF COMPLIANCE ............................................................ 33

CERTIFICATE OF SERVICE ..................................................................... 34

APPENDIX .................................................................................................. 35




                                                       IV
                                 INDEX OF AUTHORITIES

 Cases

Abella v. Knight Oil Tools, 945 S.W.2d 847, 849
(Tex. App.-Houston [1st Dist.] 1997, no writ) .......................................... . 17

Bay Fin. Sav. Bank, FSB v. Brown, 142 S.W.3d 586, 590
(Tex. App.-Texarkana 2004, no pet.) ......................................................... 23

Childre v. Great Sw. Life Ins. Co., 700 S.W.2d 284, 288-89
(Tex. App.-Dallas 1985, no writ) ............................................................... 32

Dayton Reavis Corp. v. Rampart Capital Corp. , 968 S.W.2d 529, 531
(Tex. App.-Waco 1998, pet. dism'd w.o.j.) ................................................ 17

In reMarriage ofDavis, 418 S.W.3d 684,689
(Tex. App. -Texarkana 2012, no pet.) .................................................. 14, 15

In re Talco-Bogata Consol. Indep. Sch. Dist. Bond Election,
994 S.W.2d 343, 345 (Tex. App.-Texarkana 1999, no pet.) .......... 27, 29,30

Johnson v. Barnwell Prod. Co., 391 S.W.2d 776, 785
(Tex.Civ.App.-Texarkana 1965, writ refd n.r.e.) ....................................... 15

Ritchie v. Rupe, 443 S.W.3d 856,871 (Tex. 2014) ...................................... 20

Rogers v. Rogers, 2002 WL 433052 at *1-2
(Tex. App.-Houston [14th Dist.] 2002, no pet.) ................................... l5, 16

Statutes

Tex. Bus. Orgs. Code § 11.404 ..................... ! 0, 14, 17, 18, 19, 20, 22, 24, 25

Rules

Tex.R.App. P. 33 .1(a)(l) ....................................................................... .. l5 , 16

Tex. R. Civ. Proc. 684 ............................................................................ 31, 32



                                                     v
Tex. R. Civ. Proc. 695a ................................................................................ 32




                                                   VI
                      STATEMENT OF THE CASE

      While Hubbard generally agrees with Scurlock's Statement of the

Case, Hubbard must point out to the Court that because he has not paid the

bonds required by the Trial Court's February 3, 2015 Order, the order which

Scurlock complains about in his appeal, there is no binding temporary

injunction or receivership currently in effect, and therefore, Scurlock's

appeal is premature, and the Court lacks jurisdiction to consider his appeal.




                                      1
                         STATEMENT OF FACTS

      Hubbard generally concedes Scurlock's characterization of the

background facts regarding their business relationship and their co-

ownership of two companies, Pecan Point Brewing Co., a Texas

Corporation, and Hubbard & Scurlock, LLC, a Texas limited liability

company. (See Appellant's Brief at 4.) However, Hubbard disagrees that

Scurlock properly removed Hubbard as a director of Pecan Point. (See

Appellant's Brief at 5.) Hubbard also disagrees that Scurlock properly

terminated Hubbard's employment. (!d.)

      Hubbard brought suit against Scurlock because of the disagreements

between them and sought a temporary injunction and receivership for Pecan

Point. (CR 4-14.) The Trial Court held a hearing on Hubbard ' s Motion for

Temporary Order on January 26, 2015 and received evidence at such

hearing. The following evidence is pertinent for this appeal:

      Hubbard was "Director 1" and Scurlock was "Director 2" when Pecan

Point Brewing Company ("Pecan Point") was incorporated. (CR 41.)

      Hubbard is the one with knowledge about the brewery side of the

business, and his management of the brewery side was part of the business

plan for Pecan Point. (RR 2:24-26.) The parties wanted the brewery to

represent Texarkana, so Hubbard designed the brewery equipment, rather



                                      2
than purchasing pre-fabricated equipment. (RR 2:24.) Hubbard wanted the

beer for the business to be unique, so he and his father grew their own hops.

(RR 2:25-26.) Hubbard's brewing techniques and recipes have been

developed over time. (RR 2:59-60.) His recipes are "in his head." (RR 2:59-

60.)

       Brewing beer is an essential part of the business. (RR 2:71.) The

micro brewery side of the restaurant makes Pecan Point unique. (RR 2:25-26;

2:130-133.) Hubbard's beer has made Pecan Point successful in the first

months of operation. (RR 2: 130-133.) Making new beer with new recipes is

important to keep customers returning to the restaurant. (RR 2:69.)

       Jason Williams, the restaurant general manager, testified that Pecan

Point's microbrewery sets Pecan Point apart from all the other restaurants in

town, and that Pecan Point requires beer, which up to this point was brewed

by Hubbard. (RR 2:130-133.) The only micro-brewed beer the restaurant has

on hand to serve its customers is beer brewed by Hubbard. (RR 2:130-133 .)

Pecan Point has not brewed any beer since Hubbard left. (RR 2: 136.)

       Scurlock has limited knowledge about beer brewing from using kits

purchased from home brew companies. (RR 2:25.) He has asked Hubbard to

teach him how to brew beer and write a detailed explanation of how to brew

beer, a process that took Hubbard years to develop. (RR 2:68-69.) When



                                     3
Scurlock terminated Hubbard as a director in Pecan Point, Scurlock offered

to keep Hubbard employed as a brew master. (RR 2: 190.)

         Scurlock' s role in the business was to finish remodeling the building

for restaurant. (RR 2:26.) However, the remodeling has yet to be finished.

(RR 2:26.) Scurlock arrived late, a couple of hours after opening, on the

restaurant' s opening day on October 27, 2014. (RR 2:31.) Scurlock also

arrived late on October 30, 2014, when the restaurant first opened to the

public. (RR 2:31.) Scurlock did not perform much work at the restaurant.

(RR 2:36.) Hubbard saw him occasionally speak to customers at their tables

and grab a few empty pint glasses. (RR 2:36.) Scurlock was not hands-on.

(RR 2:36.) Scurlock was at the restaurant only for a few hours, perhaps 6:00

pm to 8:00 or 8:30pm. (RR 2:36-37.)

         Hubbard was always at the restaurant when it opened at 4:00 pm to

help out in any way he could. (RR 2:35-36.) Sometimes Hubbard helped in

the kitchen, peeling potatoes or washing dishes, filling in when kitchen staff

was absent or late. (RR 2:36.) One time he churned the ice cream by hand so

the restaurant could serve ice cream desserts. (RR 2:36.) Hubbard and his

fiancee cleaned the beer equipment every day or every couple of days. (RR

2:34.)




                                       4
      Hubbard has not been paid in full for his work, and he does not know

if Scurlock has been paid because Scurlock has excluded Hubbard from the

books. (RR 2:30-31.)

      Jason Williams plays no role in the brewery side of the business. (RR

2:35.) He has a wife and two children; one them is an infant. (RR 2: 117.)

Pecan Point also employs his wife as an admin and kitchen manager. (RR

2:117-118.)

      Scurlock has a bad temper. When he and Hubbard had disagreements,

Scurlock threatened, in an angry voice, to buy Hubbard out. (RR 2:38.)

Scurlock "threw fits" when they had disagreements. (RR 2:38.) Two days

before opening day, in front of the building, Scurlock picked up a 2x4 board

and kicked it and screamed. (RR 2:38-39; RR 2:1 02.) The board nearly hit

Hubbard's dad's truck. (RR 2:102.) Scurlock yelled a lot. (RR 2:38-39.) His

temper caused Jason Williams to leave a meeting one time. (RR 2:39.)

Scurlock also screamed at Hubbard on another occasion and stormed off.

(RR 2:103.) Scurlock also yelled at Hubbard and an electrician on another

occasion. (RR 2: 103-104.) When he screamed, Scurlock would get within a

couple of feet in front of Hubbard's face. (RR 2:104.)




                                      5
      Scurlock asked Hubbard to leave the business on December 4, 2014.

(RR 2:49.) Pecan Point has brewed no beer since Scurlock terminated

Hubbard's employment. (RR2:130-133.)

      Scurlock offered to buy Hubbard out of Pecan Point but employ

Hubbard as the brewer, but Hubbard was not interested in that arrangement.

(RR 2:40-41.)

      Scurlock offered to buy Hubbard's interest in the LLC. (RR 2:44.)

The LLC agreement allows one member to offer to buy the interest of the

other, and the second member has a choice to either accept the first

member's offer or buy the first member's interest at the price the first

member offered. (RR 2:43-44.)

      Hubbard matched Scurlock' s offer and offered to buy Scurlock's

interest in the LLC for the price that Scurlock offered to Hubbard. (RR 2:47-

48 .) Scurlock acknowledges that Hubbard rejected Scurlock's offer to

purchase Hubbard's interest in the LLC and that Hubbard elected to

purchase Scurlock' s interest for the price Scurlock offered. (RR 2:192.)

However, Scurlock has refused to sell. (RR 2:47-48.)

      After Scurlock made his offer, Hubbard decided to stay away from the

restaurant for fear that Scurlock would get angry in front of the employees,




                                     6
which is not beneficial to the business. (RR 2:47.) Hubbard decided that the

issue needed to be addressed legally. (RR 2:47.)

         Hubbard did not have access to the books and records of the business.

(RR 2:51.) Hubbard has no employment other than Pecan Point. (RR 2:51.)

         The Trial Court wanted to hear evidence about how the parties dealt

with one another in order to make its determination about appointing a

receiver and/or granting temporary injunction. (RR 2:55-56.) Based on

Scurlock's acts thus far, Hubbard believes that irreparable injury has or will

occur unless a temporary injunction is granted and a receiver is appointed.

(RR 2:58.) Hubbard does not think anyone else can make beer for the

business, and he is concerned about the quality of beer made by anyone

other than him; all the recipes are in his memory. (RR 2:58-59.)

         Hubbard has not paid in full for his work. (RR 2:66.) He does not

know if Scurlock has because Hubbard does not have access to the books.

(RR 2:66.) Hubbard wants to be paid back wages if Scurlock received back

wages. (RR 2:66.) A receiver would be needed to make back wages. (RR

2:66.)

         If Jason Williams continues managmg the restaurant, Hubbard

continues making the beer, and a receiver maintains the books and handles




                                       7
the business' finances, there would be no role for Scurlock to play. (RR

2:71-72.)

       The work environment would not be productive if both Hubbard and

Scurlock are present at the restaurant, as evidenced by the last few days they

worked together. (RR 2:76-77.)

       Hubbard was not present at any meeting where the shareholders

supposedly voted remove him as a director; it would have been an

unannounced meeting. (RR 2:77-78.)

       Scurlock's wife Linda was Pecan Point's bookkeeper. (RR 2:60.)

Even though Hubbard requested to inspect Pecan Point's books and records,

Scurlock did not produce them to Hubbard until January 26, 2015, the date

of the temporary injunction hearing, and Scurlock produced only the

November 2014 books. (RR 2:60.) Scurlock failed to produce the December

2014 books. (RR 2:60.) Linda Scurlock testified that it typically takes her 45

days or longer from the end of a month to prepare reports for that month and

admitted that taking 45 days to prepare reports to determine how a business

is doing financially is not an acceptable business practice. (RR 2:156 and

2: 170.)

       Hubbard does not trust Scurlock with Pecan Point's books and wants

a receiver to maintain the books until the litigation is resolved. (RR 2:107-



                                      8
I 08.) Hubbard also wants a receiver to recreate Pecan Point's books from

the start of the business to ensure the records are correct. (RR 2:107-108.)




                                      9
                    SUMMARY OF THE ARGUMENT

       Scurlock appeals the Trial Court's February 3, 2015 Order for

Issuance of Temporary Injunction and Appointment of Receiver (CR 67-73.)

I.     Hubbard Re-urges His Motion to Dismiss and Motion To Abate

       Because Hubbard has not paid the bonds required by the Trial Court's

February 3, 2015 Order, there is no binding temporary injunction or

receivership currently in effect, and therefore, Scurlock's appeal of that

Order is premature. Thus, the Court lacks jurisdiction to consider his appeal

and should either dismiss or abate this appeal.

II.   Scurlock's Complaints About The Appointment Of A Receiver
      Have No Merit

      Scurlock makes four complaints about the Trial Court's appointment

of a receiver: (1) Hubbard failed to show he is entitled to a receivership

under Texas Business and Organizations Code section 11.404 because he did

not show that a deadlock existed, and he did not prove oppression; (2) lesser

remedies had not been attempted; (3) the Trial Court did not condition the

receiver's authority on the posting of appropriate bonds or receiver's

qualification; and (4) the Trial Court's Order does not require the receiver to

take an oath.




                                      10
         However, because Scurlock never raised these complaints with the

Trial Court after it executed the Order, Scurlock has deprived the Trial Court

of an opportunity to consider his complaints and revise or amend the Order,

or take other action, if the Trial Court determined it appropriate to do so.

Because Scurlock did not timely complain to the Trial Court, he has waived

his issues for appeal.

         Additionally, because the Trial Court has discretion in determining

appointment of a receiver for Pecan Point, and there is evidence in the

record to support appointment of a receiver, this Court should affirm the

Trial Court's appointment of a receiver.

III.     Scurlock's Complaints About The Granting Of A Temporary
         Injunction Have No Merit

         Scurlock makes two complaints about the Trial Court's granting of a

temporary injunction: (1) Hubbard failed to show he is entitled to a

temporary injunction; and (2) the Trial Court did not condition the injunction

on the posting of appropriate bonds.

         However, because the Trial Court has discretion in granting a

temporary injunction, and there is evidence in the record to support the need

for a temporary injunction, this Court should affirm the temporary injunction

order.




                                       11
       Also, because the Order provides: (1) "Hubbard shall post a corporate

bond in his individual capacity in the amount of $100,000 which will fully

protect Defendant's rights during pendency of this action"; (2) "Hubbard

shall post a corporate bond in his capacity as a shareholder in Pecan Point

Brewing Company in the amount of $50,000 which will fully protect

Defendant's rights during pendency of this action"; and (3) "Before the

issuance of the injunction, Plaintiffs [Hubbard] must post bond as ordered

payable to Defendants, conditioned and approved as required by law" (CR

72-73), the Trial Court did condition the injunction on the posting of

appropriate bonds, and thus, this Court should affirm the temporary

injunction order.




                                    12
                                ARGUMENT

I.     This Court Should Dismiss Or Abate Scurlock's Appeal

       Because Hubbard has not paid the bonds required by the Trial Court's

February 3, 2015 Order, there is no binding temporary injunction or

receivership currently in effect, and therefore, Scurlock's appeal of that

Order is premature, and the Court lacks jurisdiction to consider his appeal.

      Under the Trial Court's February 3, 2015 Order, no binding temporary

injunction or receivership is effective unless and until Hubbard pays the

requisite bonds. Hubbard has not paid the bonds, and he has made no

attempt to enforce the February 3, 2015 Order. (See Appendix 3, Affidavit

of Hubbard.) Because Hubbard wants a temporary injunction and

receivership in place and because he cannot pay the bonds required by the

Trial Court, Hubbard has asked the Trial Court to consider reducing the

bond requirements and amending its Order accordingly. (See CR 76-79.)

The Trial Court is scheduled to consider Hubbard's Motion to Amend Order

Setting Bond on April27, 2015. (See Appendix 3, Affidavit of Hubbard.)

      If the Trial Court amends its Order, and Hubbard is able to pay the

bonds, then the issues in Scurlock's appeal could change or Scurlock's

appeal may become moot in its entirety. Because Hubbard has properly and

timely raised his complaints about the Order with the Trial Court, this Court



                                     13
should dismiss or abate this appeal to give the Trial Court an opportunity to

consider Hubbard's complaints and amend its own order. For these reasons,

Hubbard re-urges his Motion to Dismiss and Motion to Abate.

II.    Scurlock Has Waived His Complaints About The Receivership

       Scurlock makes four complaints about the Trial Court's appointment

of a receiver: ( 1) Hubbard failed to show he is entitled to a receivership

under Texas Business and Organizations Code section 11.404 because he did

not show that a deadlock existed, and he did not prove oppression; (2) lesser

remedies had not been attempted; (3) the Trial Court did not condition the

receiver' s authority on the posting of appropriate bonds; and (4) the Trial

Court' s Order does not require the receiver to take an oath. However,

Scurlock cannot raise any of these complaints in this appeal.

      Because Scurlock did not raise these complaints with the Trial Court,

depriving the Trial Court of an opportunity to address his complaints,

Scurlock has failed to preserve his complaints for appeal. As this Court has

recently held in the context of interlocutory appeals of receivership

appointments, "[a]s a prerequisite to presenting a complaint for appellate

review, the record must show that: (1) the complaint was made to the trial

court by a timely request, objection, or motion .... " In re Marriage of Davis,

418 S.W.3d 684, 689 {Tex. App.-Texarkana 2012, no pet.) (quoting


                                      14
Tex.R.App. P. 33.1(a)(l )). If a party does not make a timely complaint about

the appointment of a receiver to the trial court, that party fai ls to preserve his

issue for appellate review. See In re Marriage of Davis, 418 S.W.3d at 689

(determining that party waives for appellate review any challenge to a trial

court's appointment of receiver without first requiring receiver to take oath

and any issue as to whether receiver was proven to be qualified under

receivership statute, if he does not timely complain to the trial court).

      Other com1s agree with this Court' s position in regards to the payment

of bonds to commence a receivership. If a party complains that an order

appointing a receiver is defective because it fails to require the payment of a

bond, that party must timely complain or object to the absence of a bond in

the trial court or he waives such complaint on appeal. Rogers v. Rogers,

2002 WL 433052 at *1-2 (Tex. App. -Houston [14th Dist.] 2002, no pet.).

The appointment of a receiver without a bond does not render the

appointment void, merely voidable. !d. (citing among others, Johnson v.

Barnwell Prod. Co., 391 S.W.2d 776, 785 (Tex.Civ.App.- Texarkana 1965,

writ refd n.r.e.)). Therefore, a party's failure to voice a timely objection

waives the complaint. Rogers, 2002 WL 433052 at *2.

      To preserve his complaint for appellate review, it is incumbent upon

the complaining party to present the trial court with a timely request,



                                       15
objection, or motion, stating the specific grounds for the ruling if the

grounds were not apparent from the context, and to obtain a ruling on the

request, objection, or motion. !d. (citing Tex.R.App. P. 33.1). If the

complaining party fails to bring the matter to the attention of the trial court,

he may not raise the complaint for the first time on appeal. !d. (citations

omitted).

      Because Scurlock failed to complain to the Trial Court about the

February 3, 2015 Order, this Court should overrule all points raised by

Scurlock in this interlocutory appeal. Even though Scurlock acknowledged

the necessity to file a motion to vacate or motion for reconsideration several

times (see R.R. 3:58, 3:64, and 3:78), he did not file either before asserting

this interlocutory appeal. While Hubbard filed a Motion to Amend Order

Setting Bond to complain about the Trial Court's February 3, 2015 Order

(see CR 76-79), Scurlock filed no complaints with the Trial Court about its

Order. Rather, Scurlock went straight to this interlocutory appeal, depriving

the Trial Court of knowing his specific complaints and the reasons for those

complaints, and an opportunity to address those complaints.

      Regardless of Scurlock's waiver, this Court should affirm the Trial

Court's appointment of receiver for Pecan Point because Hubbard has shown




                                      16
he is entitled to a receivership under Texas Business and Organizations Code

section 11.404.

III.   The Trial Court Properly Exercised Its Discretion In Appointing
       A Receiver Because Evidence Supports Appointment Of A
       Receiver

       A.    Appointment of a receiver must be affirmed on appeal
             unless the record reveals a clear abuse of discretion

       The appointment of a receiver, either as authorized by statute or

equity, will not be disturbed on appeal unless the record reveals a clear

abuse of discretion. Abella v. Knight Oil Tools, 945 S.W.2d 847, 849 (Tex.

App.-Houston [1st Dist.] 1997, no writ). The appellate court will not

substitute its judgment for that of the trial court, but will determine whether

the trial court's decision was either arbitrary or unreasonable. !d. Stated

somewhat differently, abuse of discretion occurs when a court acts "without

reference to any guiding rules and principles." Dayton Reavis Corp. v.

Rampart Capital Corp., 968 S.W.2d 529, 531 (Tex. App. -Waco 1998, pet.

dism'd w.o.j.). A corollary principle is that a court of appeals may not

reverse for abuse of discretion merely because it disagrees with the court's

decision, if that decision was within the court's discretionary authority. !d.




                                       17
       B.    The Texas Business and Organizations Code authorizes the
             Trial Court to appoint a receiver

      Here, Texas Business and Organizations Code section 11.404 is the

rule that guides appointment of a receiver for Pecan Point. Section 11.404

provides, in relevant part:

      § 11.404. Appointment of Receiver to Rehabilitate Domestic Entity

      (a)    Subject to Subsection (b), a court that has jurisdiction over the
             property and business of a domestic entity under Section
             11.402(b) may appoint a receiver for the entity's property and
             business if:

             ( 1)   in an action by an owner or member of the domestic
                    entity, it is established that:

                    (A)   the entity is insolvent or in imminent danger of
                          insolvency;

                    (B)   the governing persons of the entity are deadlocked
                          in the management of the entity's affairs, the
                          owners or members of the entity are unable to
                          break the deadlock, and irreparable injury to the
                          entity is being suffered or is threatened because of
                          the deadlock;

                    (C)   the actions of the governing persons of the entity
                          are illegal, oppressive, or fraudulent;

                    (D)   the property of the entity is being misapplied or
                          wasted; or

                    (E)   with respect to a for-profit corporation, the
                          shareholders of the entity are deadlocked in voting
                          power and have failed, for a period of at least two
                          years, to elect successors to the governing persons


                                     18
                         of the entity whose terms have expired or would
                         have expired on the election and qualification of
                         their successors;

Tex. Bus. Orgs. Code § 11.404 (emphasis added).

      The statute permits the Trial Court to appoint a receiver to manage

Pecan Point if any one of the five requirements is satisfied. Here, the Trial

Court concluded that (B), (C), and (D) are satisfied. Specifically, the Trial

Court made these conclusions:

         • there is evidence to support the appointment of a receiver

            because the governing persons of Pecan Point are deadlocked in

            the management of Pecan Point's affairs, they are unable to

            break the deadlock, and irreparable injury to Pecan Point is

            threatened because of the deadlock;

         • there is evidence that the actions of the govemmg person,

            Scurlock as the majority shareholder, is oppressive; and

         • appointment of receiver is necessary to conserve Pecan Point's

            property and business and to avoid damage to interested parties,

            such as other shareholders who have invested in Pecan Point,

            that without a receiver, the success, momentum, and good will

            that Pecan Point has acquired will devalue the interests of

            Pecan Point's shareholders.



                                     19
See Trial Court's February 3, 2015 Order. (CR 67-72.)

       Additionally, the Trial Court determined that all other requirements of

the law are complied with and that other available legal and equitable

remedies are inadequate.ld.

      C.     Because the evidence supports a receivership, the Trial
             Court properly appointed a receiver

      The Trial Court had discretion to evaluate the evidence and determine

whether Scurlock's action were oppressive under section 11.404. A

corporation' s directors or managers engage in "oppressive" actions under

section 11.404 when they abuse their authority over the corporation with the

intent to harm the interests of one or more of the shareholders, in a manner

that does not comport with the honest exercise of their business judgment,

and by doing so create a serious risk of harm to the corporation. Ritchie v.

Rupe, 443 S.W.3d 856, 871 (Tex. 2014).

      Here, the Trial Court's had discretion to weigh the evidence to

determine if Scurlock, as the managing shareholder, abused his authority

over Pecan Point with the intent to harm Hubbard' s interests as a

shareholder, in a manner that is not consistent with the exercise of business

judgment, and by doing so creates serious risk of harm to Pecan Point. The

Trial Court heard the following evidence:



                                     20
• Hubbard is the one with knowledge about the brewery side of

    the business, and his management of the brewery side was part

    of the business plan for Pecan Point. (RR 2:24-26.) Hubbard's

    brewing techniques and recipes have been developed over time.

    (RR 2:59-60.) His recipes are "in his head." (RR 2:59-60.)

• The microbrewery side of the restaurant makes Pecan Point

    unique. (RR 2:25-26; 2: 130-133.) Brewing beer is an essential

    part of the business. (RR 2:71.) Making new beer with new

    recipes is important to keep customers returning to the

    restaurant. (RR 2:69.)

• Hubbard's beer has made Pecan Point successful in the first

    months of operation. (RR 2:130-133.) Hubbard's beer is so

    good that Scurlock has asked Hubbard to teach him how to

    brew beer and write a detailed explanation of how to brew beer,

    which is a process that took Hubbard years to develop, and

    offered keep Hubbard employed as a brew master. (RR 2:68-69;

    2: 190.)

•   Scurlock has limited knowledge about brewing from using kits

    purchased from home brew companies. (RR 2:25.)




                             21
          •   Scurlock has a bad temper. Scurlock screamed at Hubbard and

              kicked things whenever the two had disagreements over

              business matters. (RR 2: 38-39; 2:102-1 04.) Two days before

              opening day, in front of the building, Scurlock picked up a 2x4

              board and kicked it and screamed. (RR 2:38-39; RR 2:1 02.)

              Scurlock's temper caused Jason Williams, the restaurant

              general manager, to leave a meeting one time. (RR 2:39.)

      Based on this evidence, the Trial Court was well within its discretion

to conclude that Scurlock abused his management position to the detriment

of Hubbard, the other shareholders, and Pecan Point, as well as conclude that

irreparable harm would come to Hubbard and Pecan Point (that is, Pecan

Point will lose customers and its foothold in the restaurant industry in

Texarkana) if a receiver is not appointed to manage the business and books,

to warrant the appointment of a receiver under section 11.404.

      It was within the Trial Court's discretion to determine if Hubbard's

service as Pecan Point's brew master benefited Pecan Point. Scurlock claims

that Hubbard was not a good brew master, but Scurlock contradicts himself

because he asked Hubbard to teach him how to make beer, asked for

Hubbard' s recipes, and offered to keep employing Hubbard as Pecan Point's




                                     22
brew master. (RR 2:68-69; 2: 190.) Consideration of Scurlock's self-

contradictions is the Trial Court' s province.

         The amount of weight given to Jason Williams' testimony is also

within the discretion of the Trial Court. In his brief, Scurlock puts a good

deal of weight on the testimony of Mr. Williams, Pecan Point' s general

restaurant manager and employee. However, the Trial Court, as the finder of

fact at the hearing, could have discounted Mr. Williams' testimony and

opinions because Scurlock was present in the courtroom during his

testimony, and it is difficult for an employee to testify negatively about his

boss, who gives him and his wife (Pecan Point also employs Jason

Williams' wife, RR 2:117-118) paychecks to support their family. The Trial

Court could have also determined that Mr. Williams' testimony about beer

quality and delay in beer production due to Hubbard's shortcomings was

speculative, since Mr. Williams did not play a role in beer production. (RR

2:35.)

         Unchallenged findings of fact in an accelerated appeal are binding on

the court of appeals "unless the contrary is established as a matter of law, or

if there is no evidence to support the finding." Bay Fin. Sav. Bank, FSB v.

Brown, 142 S.W.3d 586, 590 (Tex. App.-Texarkana 2004, no pet.)

(addressing an accelerated appeal from a temporary injunction). Because



                                       23
there is some evidence to support a receivership appointment in this present

case, the Trial Court' s injunction order must be affirmed.

       Because section 11.404 permits the Trial Court to appoint a receiver

to manage Pecan Point if any one of the five requirements is satisfied, the

inquiry into the propriety of the receiver appointment can end here. Thus,

Scurlock' s claim that no deadlock exists at Pecan Point is inconsequential to

the analysis, even if it is correct (which it is not).

      Additionally, the Trial Court could have concluded that Linda

Scurlock was not an adequate bookkeeper for Pecan Point and that a receiver

is better to manage the books, based on her admission that it takes her 45

days to prepare reports for any given month, which makes it difficult to

timely evaluate Pecan Point's financial well-being. Ms. Scurlock admitted

that taking 45 days to prepare reports for Pecan Point is not an acceptable

business practice. (RR 2:156 and 2:170.)

      D.     There is evidence that the managers were deadlocked

      There is no dispute that Scurlock and Hubbard were deadlocked in the

management of Pecan Point; Scurlock wanted Hubbard to leave the

restaurant, while Hubbard wanted to continue brewing the beer that had

made the restaurant successful. There is no dispute that the two could not

work together peacefully.



                                        24
       Scurlock claims there was no deadlock among the managers because

he obtained the votes to remove Hubbard as a director of Pecan Point,

putting Scurlock in charge, giving Scurlock unfettered power. However,

Scurlock did not notify Hubbard of the vote, depriving Hubbard of an

opportunity to defend himself. The Trial Court could have determined that

Scurlock's secret removal of Hubbard as a director was part of Scurlock's

underhanded oppression of Hubbard as a minority shareholder and found a

deadlock existed.

      E.     The parties are not required to "attempt lessor remedies"
             before a receiver can be appointed

      Scurlock's contention that the Trial Court erred in appointing a

receiver because "lessor remedies not attempted" (see Appellant's Brief at

31) is not a correct statement of the law because Texas Business and

Organizations Code section 11.404(b)(3) does not require the parties to have

actually attempted lessor remedies before a trial court can appoint a receiver.

Section 11.404(b)(3) provides:

      § 11.404. Appointment of Receiver to Rehabilitate Domestic Entity

      (b)    A court may appoint a receiver under Subsection (a) only if:

             (3)    the court determines that all other available legal and
                    equitable remedies, including the appointment of a
                    receiver for specific property of the domestic entity under
                    Section 11.402(a), are inadequate.


                                      25
Tex. Bus. Orgs. Code § 11.404.

       The statute does not require the parties to actually attempt lessor

remedies before a receiver can be appointed; the trial court's consideration

of lessor remedies is sufficient. Scurlock argues that the Trial Court did not

consider any alternate remedies before appointing a receiver; however, he

cannot point to anything in the record to demonstrate his theory.

      The Trial Court could have determined, after considering the evidence

and arguments of counsel, that there was no chance of reconciliation or

settlement between the parties. The evidence shows that Scurlock screams

and yells at Hubbard. The evidence shows that Scurlock terminated

Hubbard's employment and obtained votes to remove Hubbard as a director

of Pecan Point behind Hubbard's back, without any notice whatsoever to

Hubbard.

      The Trial Court could have concluded from Scurlock's actions and

disrespectful attitude towards Hubbard that no lessor remedies would be

sufficient. The parties, in fact, cannot settle their differences, as evidenced

by the failure of a mediation occurring on March 24, 2015. (See Appendix 3,

Affidavit of Hubbard.) It seems that the only way this case will be resolved

is through a trial on the merits and possibly exhaustion of appeals. Thus, the




                                      26
Trial Court was well within its power to appoint a receiver during the

pendency of this suit.

IV.    The Trial Court Properly Exercised Its Discretion In Granting A
       Temporary Injunction Because Evidence Supports A Temporary
       Injunction

       A.    A temporary injunction must be affirmed on appeal unless
             the record reveals a clear abuse of discretion

       Appellate review of an order granting a temporary injunction            IS


strictly limited to whether the trial court has clearly abused its discretion. In

re Talco-Bogata Consol. lndep. Sch. Dist. Bond Election, 994 S.W.2d 343,

345 (Tex. App.-Texarkana 1999, no pet.) (citations omitted). An abuse of

discretion occurs when the trial court acts without reference to any guiding

rules and principles. ld. The appellate court will not substitute its judgment

for that of the trial court, but must only determine whether the action was so

arbitrary as to exceed the bounds of reasonable discretion. !d. The appellate

court will draw all legitimate inferences from the evidence in a manner most

favorable to the trial court's judgment. ld. A trial court does not abuse its

discretion when it bases its decision on conflicting evidence. ld.

      To obtain a temporary injunction, the applicant need demonstrate only

a probable injury and a probable right of recovery. ld. One establishes a

probable right to recovery by alleging a cause of action and presenting



                                      27
evidence that tends to sustain it. !d. However, he is not required to establish

that he will ultimately prevail at trial. !d.

        B.      The Evidence Supports Probable Injury

        Here, the Trial Court made the following findings of fact:

        • Plaintiffs [Hubbard, individually and as .. ] have a cause of action

             for declaratory judgment, breach of fiduciary duty, breach of

             contract, demand for books and records, applications for temporary

             restraining order and temporary injunction and appointment of

             receiver against the Defendant [Scurlock].

        • Plaintiffs have a probable right of recovery against the Defendant

             upon a trial on the merits of this case.

        • The Court finds that Plaintiffs have demonstrated a probable and

             imminent harm or loss to Plaintiffs to an extent that unless this

             restraint as outlined below is not ordered immediately Plaintiffs

             will suffer irreparable injury for which there is neither other legal

             remedy nor adequate measure of damages by any certain pecuniary

             standard. (CR 67 - 68).

        On page 43 of Appellant's Brief, Scurlock's only argument that there

IS   no evidence of probable harm to Pecan Point is because Hubbard' s




                                          28
concern about lack of beer does not demonstrate probable injury because it

is only a fear.

       However, Jason Williams confirmed Hubbard's fear that no beer has

been brewed since Hubbard's employment was terminated. (RR 2: 130-13 3.)

The fact that no beer is being brewed at Pecan Point, and the fact that Pecan

Point's microbrewery is what sets Pecan Point apart from the numerous

other restaurants in Texarkana and gives it the success it has enjoyed,

supports the Trial Court's conclusion that there is probable harm to both

Hubbard and Pecan Point if Scurlock continues to manage Pecan Point and

exclude Hubbard from brewing beer.

       The Trial Court's conclusion of probable injury and irreparable harm

is further supported by Hubbard's testimony about Scurlock's temper and

behavior of yelling, screaming, and kicking things, the impasse between he

and Scurlock, and the fact they cannot work together anymore.

       C.    The Evidence Supports Probable Right Of Recovery

      As stated above, Hubbard establishes a probable right to recovery by

alleging a cause of action and presenting evidence that tends to sustain it. In

re Talco-Bogata Consol. Indep. Sch. Dist. Bond Election, 994 S.W.2d at

345. He is not required to establish that he will ultimately prevail at trial. !d.




                                        29
       In his brief, Scurlock' s argues that "Plaintiff failed to plead and prove

a probable right of recovery" (page 47, emphasis added) and claims that "no

breach of fiduciary duty was proven" (page 48, emphasis added). However,

Hubbard does is not required to prove any of his causes of action in order to

obtain a temporary injunction; he needs to only present some evidence

tending to support them. In re Talco-Bogata Consol. Indep. Sch. Dist. Bond

Election, 994 S.W.2d at 345

       Scurlock acknowledges on page 48 of his brief that he owes a

fiduciary duty to Pecan Point. However, he claims there is no evidence he

breached that duty by terminating Hubbard because there is no evidence that

Hubbard is good at brewing beer. However, Pecan Point opened for business

serving Hubbard's beer and has been successful with Hubbard' s beer. In

fact, the beer Hubbard brewed is so good that Scurlock wants Hubbard's

recipes, wants Hubbard to teach him how to brew beer, and offered to

continue employing Hubbard as Pecan Point's brew master after removing

him as a director. (RR 2:68-69; 2:190.) Scurlock cannot brew beer as well as

Hubbard can, even if Scurlock had Hubbard's recipes. (RR 2:84.) This

evidence tends to support Hubbard's claim that Scurlock breached his

fiduciary duty to Pecan Point by terminating Pecan Point' s founder who had

the idea in the first place and whose beer launched Pecan Point' s success.



                                      30
       Scurlock claims there is no evidence Hubbard had an employment

contract because Hubbard testified he did not have one. However, after

hearing evidence about Hubbard's hard work on the brewery and at the

restaurant (which he has not even been fully compensated for), his

partnership with Scurlock, and the way Scurlock has treated him, the Trial

Court could have concluded that there is some evidence that Hubbard is

entitled to work at Pecan Point.

      Additionally, on a related note, the Trial Court could have determined

that Hubbard has a probable right of recovery under the impasse-take-or-pay

provision in the LLC agreement, which gives Hubbard an interest in the real

property occupied by Pecan Point's restaurant, for which Pecan Point pays

no rent.

V.    The Trial Court's Order Properly Requires The Payment of
      Bonds For The Injunction and Receivership

      The Trial Court complied with Texas Rule of Civil Procedure 684 to

grant a temporary injunction for Hubbard because it required Hubbard to

post "a corporate bond in his individual capacity in the amount of $100,000

which will fully protect Defendant's rights during pendency of this action"

as well as "a corporate bond in his capacity as a shareholder in Pecan Point




                                    31
Brewing Company in the amount of $50,000 which will fully protect

Defendant' s rights during pendency of this action." (CR 72.)

      The payment of a single bond can satisfy both Texas Rule of Civil

Procedure 695a to appoint a receiver and Texas Rule of Civil Procedure 684

to grant a temporary injunction. See Childre v. Great Sw. Life Ins. Co., 700

S.W.2d 284, 288-89 (Tex. App.-Dallas 1985, no writ) (affirming trial court

order appointing receivership and granting temporary injunction when order

provided that the payment of a single bond was intended to satisfy Rules 684

and 695a).

      The Trial Court Order also specifically conditioned the injunction on

Hubbard 's payment of the bonds, by providing that "before the issuance of

the injunction, Plaintiffs must post bond as ordered payable to Defendants,

conditioned and approved as required by law." (CR 73.)

      Accordingly, the Trial Court's February 3, 2015 Order complies with

all the requirements for a temporary injunction order and must be affirmed.

                                 PRAYER

      Hubbard prays that this Court affirms the Trial Court' s February 3,

20 15 Order appointing a receiver and granting a temporary injunction.




                                     32
                              RESPECTFULLY SUBMITTED,

                              LANGDON*DAVIS, L.L.P.
                              5902 Summerfield, Ste. A
                              Texarkana, Texas 75505-5547
                              Tel: (903) 223-3246
                              Fax: (903)223-5227

                              By: Is/Brent M. Langdon
                              Brent M. Langdon
                              State Bar No. 11902250
                              Email: blangdon@ldatty.com
                              Kyle B. Davis
                              State Bar No. 24031995
                              Email: kdavis@ldatty.com

                              Attorneys for Appellee John M. Hubbard

                 CERTIFICATE OF COMPLIANCE

     I certify that I drafted Appellee's Brief using Microsoft Word using
Times New Roman 14-point font and that the Brief contains 6573 words.

                                    Is/ Brent M. Langdon
                                    Brent M. Langdon




                                   33
                      CERTIFICATE OF SERVICE

       I hereby certify that on this 23rd day of April, 2015, a true and correct
copy of the above and foregoing brief has been forwarded via the court's
electronic filing system to all counsel/parties of record listed below and to
the Trial Judge via First Class U.S. Mail:

Via E-Service
Cory J. Floyd
Cammy R. Kennedy
Norton & Wood, LLP
315 Main Street
P.O. Box 1808
Texarkana, Texas 75505-1808
Attorneys for Appellant William H. Scurlock

Via First-Class Mail
Honorable Bobby Lockhart
Bowie County District Court
102nd Judicial District
Bi-State Justice Building
100 North State Line, Box 10
Texarkana, Texas 75501

                                       /s/ Brent M. Langdon
                                       Brent M. Langdon




                                      34
         IN THE SIXTH COURT OF APPEALS
               TEXARKANA, TEXAS


              WILLIAM H. SCURLOCK,
                   APPELLANT

                            v.
                 JOHN M . HUBBARD,
                    APPELLEE


    ON APPEAL FROM CAUSE NO. 14C1653-102
        IN THE 102ND DISTRICT COURT
            BOWIE COUNTY, TEXAS


                 APPELLEE'S INDEX




ITEM 1    Texas Business Organizations Code§ 11.404

ITEM2     Texas Rules of Appeal, P. 33.1 (a)(l)

ITEM3     Affidavit of John M. Hubbard

ITEM4     Rogers v. Rogers, 2002 WL 433052
          (Tex. App.-Houston [14th Dist.] 2002, no pet.)

ITEMS     Texas Rules of Civil Procedure, Rule 684

ITEM6     Texas Rules of Civil Procedure, Rule 695a




                           35
