Reverse and Remanded and Opinion Filed January 29, 2020




                                                                       In The
                                              Court of Appeals
                                       Fifth District of Texas at Dallas
                                                           No. 05-19-00499-CV

RENOVATION GURUS, LLC, SADLER HOLDINGS SERIES, LLC, GLAZING GURUS,
  LLC, ALEX SADLER, RONALD CARLSON, ROMAN ROSALES, JUSTIN WARE,
                 AND BANK OF AMERICA, N.A., Appellants
                                 V.
               LAKE POINT ASSISTED LIVING, LLC, Appellee

                                   On Appeal from the 134th Judicial District Court
                                                Dallas County, Texas
                                        Trial Court Cause No. DC-19-04013

                                             MEMORANDUM OPINION
                                    Before Justices Pedersen, III, Reichek, and Carlyle
                                             Opinion by Justice Pedersen, III
           This is an interlocutory appeal from the trial court’s order granting a temporary injunction

that froze a bank account belonging to appellant Renovation Gurus, LLC.1 Appellant contends that

(1) the frozen account funds were not sufficiently traced to an adequate interest of appellee Lake

Point Assisted Living, LLC; (2) the contract between the parties prohibited Lake Point’s obtaining

a refund of contract payments in any event; and (3) it was denied due process in the injunction

proceedings. We agree that the trial court abused its discretion in granting the injunction. We

reverse the court’s order, dissolve the temporary injunction, and remand the case for further

proceedings.


     1
       Although all appellants identified in the caption were included in the notice of appeal, that notice also stated that “[t]he interests of the other
defendants do not appear to be affected by the language of the injunction order.” Accordingly, our opinion addresses only the “interests” of
Renovation Gurus.
                                           Background

       Lake Point acquired a property in Frisco, Texas and planned to have it renovated for use

as a nursing home. Lake Point contracted with Renovation Gurus to perform the renovations. The

original contract price was $559,628.37. That amount was to be paid over five phases: four

“deposit” payments of $125,000 over the course of the renovations and a final payment of

$59,628.37, which was due upon completion of the work. During the contract’s term, the parties

agreed in writing to a series of change orders that brought the total contract price to $719,936.53.

       Disagreements arose between the parties concerning the work to be done and costs of the

work; the facts regarding these developments are in dispute. But the record establishes that shortly

after Lake Point made the fourth $125,000 payment, it delivered a written notice to Renovation

Gurus that it was terminating the contract. The notice made a number of demands, including “[t]he

immediate refund of the [fourth] $125,000.00 which was paid on January 14, 2019.” Renovation

Gurus did not comply with those demands.

       Lake Point sued appellants alleging breach of contract, theft, and fraud. At the same time,

Lake Point requested a temporary restraining order and a temporary injunction freezing all

accounts belonging to Renovation Gurus and other defendants at Bank of America, including a

specific account identified by number. The trial court granted the requested temporary restraining

order and denied subsequent motions by the defendants to dissolve the order. Ultimately, the trial

court granted Lake Point’s request for the temporary injunction. The order stated in relevant part

that the defendants:

       be, and hereby [are], commanded forthwith to desist and refrain from and are
       enjoined from removing funds or monies from the bank account of [Renovation
       Gurus, LLC] held by Bank of America, N.A. specifically being Account No. [x].

The order called for a $15,000 bond, and—after Lake Point posted the bond—the district clerk

issued the writ.


                                                –2–
       Appellants bring this interlocutory appeal.

                          Injunction Freezing a Party’s Bank Account

       In its first issue, Renovation Gurus argues that the trial court abused its discretion by

freezing its bank account without tracing the funds to Lake Point or establishing that the frozen

funds served as collateral, or some other adequate basis for connecting the funds to Lake Point.

We review an order granting a temporary injunction for a clear abuse of discretion. Henry v. Cox,

520 S.W.3d 28, 33 (Tex. 2017). A trial court abuses its discretion when it misapplies the law to

established facts. Loye v. Travelhost, Inc., 156 S.W.3d 615, 619 (Tex. App.—Dallas 2004, no pet.).

       A temporary injunction is proper when the applicant pleads and proves: (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. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002).

“An injury is irreparable if the injured party cannot be adequately compensated in damages or if

the damages cannot be measured by any certain pecuniary standard.” Id. When an injury is

compensable through monetary damages, it is “by definition not irreparable.” See In re S. Foods

Group, LLC, No. 05-13-01348-CV, 2013 WL 5888255, at *1 (Tex. App.—Dallas Oct. 31, 2013,

no pet.) (mem. op.).

       Lake Point argued in its initial pleading that if Renovation Gurus’ account was not frozen

immediately, then

       [Appellants] will continue to remove and utilize the cash of [Lake Point] for its own
       or other improper uses inconsistent from the purpose for which it was paid and to
       otherwise harm [Lake Point] in a manner than cannot be calculated and which will
       be irreparable to an ongoing basis.

The pleading asserts briefly—and without explanation—that Lake Point’s business reputation and

goodwill will be irreparably injured absent a freezing of the account, but it goes on to assert that it

can have no adequate remedy at law because:



                                                 –3–
           [Lake Point] is further concerned that if a Temporary Restraining Order is not
           issued, cash and property of [Lake Point] will be removed.

This is the crux of the debate held in the trial court: whether the cash in the specific account to be

enjoined was “the cash and property of [Lake Point]” and whether Lake Point was entitled to

prevent Renovation Gurus from exercising control over the funds based on Lake Point’s claims of

breach of contract, fraud, and theft. 2 It was Lake Point’s burden to establish that absent freezing

the account it would suffer an injury that could not be adequately remedied by monetary damages.

See Butnaru, 84 S.W.3d at 204.

           Lake Point’s efforts to meet that burden necessitate discussion of the longstanding rule

forbidding a trial court to issue an injunction freezing a defendant’s assets in order to assure the

satisfaction of a possible future judgment. We addressed this rule recently, concluding that “the

ancient and controlling rule forecloses resort to injunctive relief simply to sequester a source of

funds to satisfy a future judgment.” RWI Constr., Inc. v. Comerica Bank, 583 S.W.3d 269, 277

(Tex. App.—Dallas 2019, no pet.). In this case Lake Point has only claims, not a judgment

representing resolution of those claims. Accordingly, the general rule would prohibit granting an

injunction merely to prevent Renovation Guru from withdrawing the funds in the relevant account.

Id.

           Lake Point correctly points out that RWI also addresses an exception to this rule:

           That general rule would not control where there is a logical and justifiable
           connection between the claims alleged and the acts sought to be enjoined, or where
           the plaintiff claims a specific contractual or equitable interest in the assets it seeks
           to freeze.

Id. In support of this statement, we cited Grupo Mexicano de Desarrollo S.A. v. Alliance Bond

Fund, Inc., 527 U.S. 308, 310 (1999) (distinguishing transfer of assets in which lien or equitable



     2
       Given the parties’ framing of the injury and remedy issues below as matters of the ownership of the funds in the relevant account, we reject
Lake Point’s assertion that Renovation Gurus did not preserve its complaint concerning failure to establish irreparable injury or the lack of an
adequate remedy at law.

                                                                      –4–
interest is claimed) and Texas Black Iron, Inc. v. Arawak Energy International Ltd., 527 S.W.3d

579, 587 (Tex. App.—Houston [14th Dist.] 2017, no pet.) (distinguishing transfer of specific assets

at issue, drilling equipment that had been returned to seller and was necessary to prove mitigation

of claim).

        The facts and resolution of RWI clarify both the general rule and its exception. In that case,

RWI entities defaulted on a loan from Comerica Bank; the entities’ accounts receivable, inventory,

and other personal property served as collateral for the loan. 583 S.W.3d at 272. Lone Star

Opportunities Fund V. LP guarantied the loan. Id. Comerica Bank filed suit and sought injunctive

relief to freeze Lone Star funds that included, inter alia, $800,000 in RWI’s accounts receivable

and the product of a general capital call on Lone Star’s partners. Id. at 277. The trial court enjoined

the funds, finding that otherwise the RWI/Lone Star defendants would “receive, hide, secrete or

dissipate” those funds. Id. at 274. We concluded that the trial court misapplied the law by freezing

Lone Star’s funds “simply to assure their future availability to satisfy a judgment based solely on

concerns about Lone Star’s future liquidity.” Id. at 277. We reversed the temporary injunction,

excepting the $800,000 of accounts receivable in which Comerica Bank held a secured interest.

Id. at 278.

        RWI refers to Comerica Bank’s evidence that “traced” the accounts receivable as collateral

for the loan. Lake Point urges that its fourth deposit payment was deposited in the named Bank of

America account, and thus it has similarly “traced” the funds, entitling it to relief. In this context,

“tracing” means more than merely identifying a deposit of contested funds. It means identifying

an established right in the funds, or equipment, or other asset at issue. But Lake Point has not

established any right to the funds in Renovation Guru’s Bank of America account. Instead, this

injunction mirrors the RWI injunction on general capital call funds, which served only the improper

purpose of assuring future satisfaction of a subsequent judgment. Id. at 277.

                                                 –5–
           Lake Point did not establish it lacked an adequate remedy at law in this case, and hence

that it would suffer an irreparable injury absent injunctive relief. We conclude the trial court

misapplied the law, and thus abused its discretion, by entering the temporary injunction. We

sustain Renovation Guru’s first issue.3

                                                                Conclusion

           We reverse the trial court’s order granting the temporary injunction, dissolve the temporary

injunction, and remand this case to the trial court for further proceedings consistent with this

opinion.




                                                                          /Bill Pedersen, III//
                                                                          BILL PEDERSEN, III
                                                                          JUSTICE




190499f.p05




     3
       Given our resolution of this first issue, we need not address Renovation Gurus’ second and third issues, which pose alternative grounds for
opposing the temporary injunction.

                                                                      –6–
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

 RENOVATION GURUS, LLC, SADLER                      On Appeal from the 134th Judicial District
 HOLDINGS SERIES, LLC, GLAZING                      Court, Dallas County, Texas
 GURUS, LLC, ALEX SADLER,                           Trial Court Cause No. DC-19-04013.
 RONALD CARLSON, ROMAN                              Opinion delivered by Justice Pedersen, III.
 ROSALES, JUSTIN WARE, AND BANK                     Justices Reichek and Carlyle participating.
 OF AMERICA, N.A., Appellants

 No. 05-19-00499-CV         V.

 LAKE POINT ASSISTED LIVING, LLC,
 Appellee

        In accordance with this Court’s opinion of this date, the order of the trial court is
REVERSED, the temporary injunction is DISSOLVED, and this cause is REMANDED to the
trial court for further proceedings consistent with this opinion.

       It is ORDERED that appellant RENOVATION GURUS, LLC, SADLER HOLDINGS
SERIES, LLC, GLAZING GURUS, LLC, ALEX SADLER, RONALD CARLSON, ROMAN
ROSALES, JUSTIN WARE, AND BANK OF AMERICA, N.A. recover their costs of this
appeal from appellee LAKE POINT ASSISTED LIVING, LLC.


Judgment entered this 29th day of January, 2020.




                                              –7–
