                        COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-13-00167-CV


TRANTER, INC.                                                         APPELLANT

                                        V.

JAMES A. LISS AND PAUL                                                APPELLEES
MUELLER COMPANY


                                    ------------

         FROM THE 30TH DISTRICT COURT OF WICHITA COUNTY

                                     ----------

                        MEMORANDUM OPINION 1

                                     ----------

     Appellant Tranter, Inc. appeals the trial court’s order denying its application

for a temporary injunction against appellees James A. Liss and Paul Mueller

Company (PMC). 2 We reverse and remand.

     1
      See Tex. R. App. P. 47.4.
     2
      This is an accelerated interlocutory appeal. See Tex. Civ. Prac. & Rem.
Code Ann § 51.014(a)(4) (West Supp. 2013).
                               Background Facts

      Tranter develops, manufactures, and sells “heat exchangers,” which are

machines used in various industries to heat or cool fluids. Liss began working at

Tranter on September 17, 2001.         He held a number of positions, but he

eventually became a regional sales manager in 2008. Tranter claims that as a

regional sales manager, Liss received confidential information such as sales

strategies, financial information, service rates, and technical knowledge.

      On his first day of employment with Tranter, Liss signed an “Employee

Technology Agreement” in which he agreed not to disclose Tranter’s confidential

information without Tranter’s consent.       The agreement also contained the

following provisions:

            6.      A.    I agree, for 3 years following the end of my
      employment with [Tranter,] not to engage in or contribute my
      knowledge to any work which is competitive with or similar to a
      product, process, apparatus[,] or service on which I worked while at
      [Tranter] at any time during the period of 5 years immediately before
      my employment ended.

             B.    I understand that I will be permitted to engage in the
      work or activity described in this subparagraph if I provide [Tranter]
      with clear and convincing written evidence (including assurances
      from my new employer and me) that the contribution of my
      knowledge to that work or activity will not cause me to disclose, base
      judgment upon, or use any Confidential Information. [Tranter] will
      furnish me a written consent to that effect if I provide the required
      written evidence. I agree not to engage in such work or activity until
      I receive the written consent from [Tranter].

      In early July 2012, Liss accepted a position with PMC. PMC also sells

heat exchange products. Liss resigned from Tranter on July 8, 2012 and began


                                         2
working for PMC. On July 9, 2012, Liss requested Tranter’s consent to work for

PMC.

       On July 19, 2012, PMC terminated Liss’s employment because of

concerns regarding Liss’s agreement with Tranter, and PMC and Tranter entered

into discussions regarding Liss’s employment.        After weeks of discussions,

Tranter declined to give its consent because it believed that Liss’s position with

PMC (as a sales representative trainer) would use Tranter’s confidential

information. PMC told Tranter that it would not employ Liss without Tranter’s

consent.

       In January 2013, Tranter discovered that PMC had re-hired Liss in October

2012 in the same position and in direct competition with Tranter. Tranter sued

Liss for breach of contract and PMC for tortious interference with an existing

contract, fraud, and negligent misrepresentation.     Tranter also sued Liss and

PMC for conspiracy, and it sought a temporary restraining order, temporary and

permanent injunctions, and attorney’s fees. The trial court granted Tranter a

temporary restraining order prohibiting Liss from working at PMC “in a same or

similar position of that held while employed at Tranter,” from disclosing or using

Tranter’s confidential or proprietary information, and from soliciting any of

Tranter’s customers that were not previously also PMC’s customers.

       The trial court then held a hearing on Tranter’s application for a temporary

injunction. After the hearing, the trial court found that the Employee Technology

Agreement was unenforceable because of a lack of consideration and because it

                                         3
did not contain geographic limitations. The trial court therefore denied Tranter’s

application, and Tranter filed this appeal.

                                Standard of Review

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

litigation’s subject matter pending a trial on the merits. Butnaru v. Ford Motor

Co., 84 S.W.3d 198, 204 (Tex. 2002) (citing Walling v. Metcalfe, 863 S.W.2d 56,

57 (Tex. 1993)). Whether to grant or deny a temporary injunction is within the

trial court’s sound discretion. Id.

      A temporary injunction is an extraordinary remedy and will not issue as a

matter of right. Id. To obtain a temporary injunction, an applicant must plead

and prove (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. A probable right of recovery is shown by alleging a cause of action and

presenting evidence tending to sustain it. Frequent Flyer Depot, Inc. v. Am.

Airlines, Inc., 281 S.W.3d 215, 220 (Tex. App.––Fort Worth 2009, pet. denied),

cert. denied, 559 U.S. 1036 (2010). An injury is irreparable if damages would not

adequately compensate the injured party or if they cannot be measured by any

certain pecuniary standard. Butnaru, 84 S.W.3d at 204; Frequent Flyer Depot,

281 S.W.3d at 220.

      On appeal, we do not review the merits of the underlying case. Davis v.

Huey, 571 S.W.2d 859, 861 (Tex. 1978), rev’d on other grounds, Davis v. Huey,

620 S.W.2d 561 (Tex. 1981). Instead, we determine only whether there has

                                          4
been an abuse of discretion by the trial court in granting or denying the relief. Id.

at 862.      Given the abuse of discretion standard, we review the evidence

submitted to the trial court in the light most favorable to the court’s ruling, draw all

legitimate inferences from the evidence, and defer to the trial court’s resolution of

conflicting evidence. See IAC, Ltd. v. Bell Helicopter Textron, Inc., 160 S.W.3d

191, 196 (Tex. App.—Fort Worth 2005, no pet.).            A reviewing court will not

reverse an order on a temporary injunction unless the trial court’s action was so

arbitrary that it exceeded the bounds of reasonable discretion. EMSL Analytical,

Inc. v. Younker, 154 S.W.3d 693, 696 (Tex. App.—Houston [14th Dist.] 2004, no

pet.).    The trial court does not abuse its discretion when basing its decision

concerning a temporary injunction on conflicting evidence, nor does it abuse its

discretion when some evidence of substantive and probative character exists to

support its decision. Wright v. Sport Supply Grp., Inc., 137 S.W.3d 289, 292

(Tex. App.—Beaumont 2004, no pet.).

                                     Discussion

I. Probable right to recovery

         To have obtained a temporary injunction, Tranter was required to show

that it had a probable right to recovery on its causes of action against Liss and

PMC. Frequent Flyer Depot, 281 S.W.3d at 220. Tranter may have proven its

probable right to recovery by alleging the existence of a right and presenting

evidence tending to show that right is being denied.           Dallas Anesthesiology

Assocs., P.A. v. Tex. Anesthesia Grp., P.A., 190 S.W.3d 891, 897 (Tex. App.—

                                           5
Dallas 2006, no pet.). Tranter sued for breach of contract, tortious interference

with an existing contract, fraud, negligent misrepresentation, conspiracy, and a

permanent injunction.     The parties agree that the conspiracy, fraud, and

negligent misrepresentation causes of action are irrelevant to the injunction that

Tranter seeks. The causes of action relevant to Tranter’s temporary injunction

are all based upon the noncompete clause in the Employment Technology

Agreement.

      Tranter was required to establish a “substantial likelihood of prevailing on

the merits of its claims regarding the enforceability” of the covenant not to

compete. Loye v. Travelhost, Inc., 156 S.W.3d 615, 620 (Tex. App.—Dallas

2004, no pet.). However, an appeal of an order denying a temporary injunction

based on noncompete clauses does not present for appellate review the ultimate

question of whether the agreement is enforceable. See Tom James of Dallas,

Inc. v. Cobb, 109 S.W.3d 877, 882-83 (Tex. App.—Dallas 2003, no pet.). We

therefore look at the enforceability of the noncompete, but only to the extent

necessary to determine whether the requirements for a temporary injunction

have been met.

      The Covenants Not to Compete Act states,

      [A] covenant not to compete is enforceable if it is ancillary to or part
      of an otherwise enforceable agreement at the time the agreement is
      made to the extent that it contains limitations as to time,
      geographical area, and scope of activity to be restrained that are
      reasonable and do not impose a greater restraint than is necessary
      to protect the goodwill or other business interest of the promisee.


                                         6
Tex. Bus. & Com. Code Ann. § 15.50(a) (West 2011). Therefore, to determine

whether Tranter established a probable right to recovery, we must determine

whether the noncompetition clause at issue (1) is ancillary to or part of an

otherwise enforceable agreement and (2) contains reasonable limitations as to

time, geographic area, and scope of activity that do not impose a greater restraint

than is necessary.

      A. Ancillary to or part of an otherwise enforceable agreement

      In an employment-at-will context, a noncompetition covenant is part of an

otherwise enforceable agreement if the employer gives independent, nonillusory

consideration in exchange for the employee’s promise not to compete. See Light

v. Centel Cellular Co., 883 S.W.2d 642, 645 (Tex. 1994), overruled on other

grounds by Marsh USA Inc. v. Cook, 354 S.W.3d 764, 772 (Tex. 2011).

Confidential or proprietary information may suffice as consideration. See Alex

Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 649 (Tex. 2006).

      The Employee Technology Agreement states that the consideration that

Liss received was “[his] continuing employment in any capacity with Tranter . . . ,

and . . . the salary or wages paid for [his] services during [his] employment.” Liss

and PMC argue that a promise for continued employment is insufficient

consideration as a matter of law. See Light, 883 S.W.2d at 644 (“Consideration

for a promise, by either the employee or the employer in an at-will employment,

cannot be dependent on a period of continued employment.”). The reasoning of

Light, upon which Liss and PMC rely, has been repeatedly addressed and

                                         7
modified by later supreme court decisions. See Marsh USA, 354 S.W.3d at 774–

75 (discussing the supreme court’s opinions addressing Light).              In Mann

Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844 (Tex. 2009), the

supreme court moved away from Light’s restrictiveness and held that “[w]hen the

nature of the work the employee is hired to perform requires confidential

information to be provided for the work to be performed by the employee, the

employer impliedly promises confidential information will be provided,” id. at 850.

Liss and PMC argue first that the express language of the agreement forecloses

the possibility of any implied promises. Second, they argue that Mann Frankfort

is inapplicable to the present case because Mann Frankfort carved out an

exception only for cases in which an employee’s work requires confidential

information.

      We find nothing in the language of the contract nor in the relevant caselaw

that prohibits the coexistence of an express, illusory promise and an implied,

nonillusory promise. See id. at 858 (Hecht, J., concurring) (noting the purpose of

the Act “is to facilitate, not impede, enforcement of covenants not to compete”).

Mann Frankfort states, “[W]hen it is clear that performance expressly promised

by one party is such that it cannot be accomplished until a second party has first

performed, the law will deem the second party to have impliedly promised to

perform the necessary action.” Id. at 851. In the agreement at issue here, Liss

expressly promised not to disclose Tranter’s confidential information. Liss could

not perform that promise until Tranter first disclosed its confidential information to

                                          8
him.   Tranter’s promise to give Liss the confidential information is therefore

deemed to be implied. See id. at 858 (Hecht, J., concurring) (“The parties to an

employment agreement are presumed to have intended it to be effectual, and the

agreement should not be denied enforceability on technical grounds of want of

mutuality if that result can be avoided.”). This is so regardless of what other

promises Tranter may have made.

       Liss and PMC argue that Mann Frankfort is distinguishable because the

employee’s position in Mann Frankfort required confidential information whereas

Liss’s job at Tranter did not. 3 See id. at 850. The relevant inquiry is not whether

Liss’s job could have been performed without Tranter’s confidential information

but whether it was performed without the confidential information.             Liss’s

testimony was that he “was exposed to information without a doubt.” He was

also questioned directly, “Did you have and receive Tranter confidential

information that you believe is confidential during your employment with

Tranter?” Liss answered, “Yes.” He testified that he used Tranter’s proprietary

software and that he was given sales representative training material and sales

reports. See id. at 851 (stating that access to client database with client financial

information was confidential) (citing DeSantis v. Wackenhut Corp., 793 S.W.2d

670, 684 (Tex. 1990) (stating that client lists are confidential information that may

       3
       Liss testified that his job at Tranter did not depend on confidential
information from Tranter. But he later acknowledged that some of the things that
Tranter claimed as confidential information “were, of course, part of the day to
day doing the job.”

                                         9
be protected by a noncompete)). At the point that Tranter provided the impliedly

promised confidential information, the parties made an enforceable agreement.

See id. at 852 (“[T]he parties still formed an ‘otherwise enforceable agreement’

as contemplated by section 15.50 when Mann Frankfort performed its illusory

promise by actually providing confidential information.”) (citing Alex Sheshunoff,

209 S.W.3d at 651 (“[A] unilateral contract formed when the employer performs a

promise that was illusory when made can satisfy the requirements of the Act.”));

see also York v. Hair Club For Men, L.L.C., No. 01-09-00024-CV, 2009 WL

1840813, at *4–5 (Tex. App.—Houston [1st Dist.] June 25, 2009, no pet.) (mem.

op.) (following Mann Frankfort and holding that nondisclosure agreement was

enforceable because employer provided confidential client information to

employees).

      The consideration requirement was satisfied by Tranter’s performance in

disclosing its confidential information to Liss in exchange for Liss’s promise to

keep that information confidential. See Alex Sheshunoff, 209 S.W.3d at 651

(“[I]f, as in the pending case, the employer’s consideration is provided by

performance and becomes non-illusory at that point, . . . we see no reason to

hold that the covenant fails.”). The noncompete clause was therefore ancillary to

an otherwise enforceable agreement. See Light, 883 S.W.2d at 645.

      B. Reasonable limitations

      The second criterion under the Covenants Not to Compete Act requires the

noncompete to contain “limitations as to time, geographical area, and scope of

                                       10
activity to be restrained that are reasonable and do not impose a greater restraint

than is necessary to protect the goodwill or other business interest of the

promisee.” Tex. Bus. & Com. Code Ann. § 15.50(a).

      The noncompetition covenant in this case states,

            I agree, for 3 years following the end of my employment with
      [Tranter,] not to engage in or contribute my knowledge to any work
      which is competitive with or similar to a product, process,
      apparatus[,] or service on which I worked while at [Tranter] at any
      time during the period of 5 years immediately before my employment
      ended.

This clause does not contain a reasonable geographic restriction; it in fact

contains no restriction at all. 4 It is therefore unreasonable and unenforceable as

written. See Juliette Fowler Homes, Inc. v. Welch Associates, Inc., 793 S.W.2d

660, 663 (Tex. 1990) (holding noncompete was an unreasonable restraint of

trade when it contained no geographic restriction at all). 5


      4
       Tranter presents a vague argument on appeal that the agreement does in
fact contain some sort of geographic restriction, but fails to explain precisely what
the restriction is, noting at one point that Liss “was responsible for the entire
western half of the United States,” and at another point, that PMC competes with
Tranter “on a global level.” See Butts Retail, Inc. v. Diversifoods, Inc., 840
S.W.2d 770, 774 (Tex. App.—Beaumont 1992, writ denied) (holding that
noncompete restricting trade within the “metropolitan area” around a shopping
mall was unenforceable when “metropolitan area” was undefined). To the extent
that Tranter argues that the lack of geographic restriction equates to a global or
other territory restriction, we overrule that argument. See Zep Mfg. Co. v.
Harthcock, 824 S.W.2d 654, 661 (Tex. App.—Dallas 1992, no writ)
(“Noncompete covenants with broad geographical scopes have been held
unenforceable, particularly when no evidence establishes that the employee
actually worked in all areas covered by the covenant.”).
      5
         Although courts have upheld noncompetes without geographic
restrictions, they have done so when other limiting clauses, such as restricting
                                         11
      When a court holds that a noncompete is unreasonable for lack of a

geographic restriction, it is required to reform it. See Tex. Bus. & Com. Code

Ann. § 15.51(c). However, because the noncompete is unenforceable as written,

the Covenant Not to Compete precludes Tranter from recovering damages on its

contract claims. See id. (stating that the court must reform an unreasonable

covenant and enforce it as reformed “except that the court may not award the

promisee damages for a breach of the covenant before its reformation and the

relief granted to the promisee shall be limited to injunctive relief”); see also Travel

Masters, Inc. v. Star Tours, Inc., 827 S.W.2d 830, 833 (Tex. 1991) (holding that

employer could not recover damages on its tortious interference of the covenant

not to compete claim when the covenant was an unreasonable restraint of trade),

superseded by statute on other grounds as stated in Alex Sheshunoff, 209

S.W.3d at 653 n.5; Peat Marwick Main & Co. v. Haass, 818 S.W.2d 381, 388

(Tex. 1991) (“Since MH obtained no reformation of the covenant before Haass’

actions for which it sought damages, the act would prohibit MH from obtaining




contact with former clients, served the same purpose of creating reasonable
limits to the noncompetes’ reach. See, e.g., Lockhart v. McCurley, No. 10-09-
00240-CV, 2010 WL 966029, at *2 (Tex. App.—Waco Mar. 10, 2010, no pet.)
(mem. op.) (holding that limitation to specific clients was “sufficient alternative for
a geographic limitation”); Gallagher Healthcare Ins. Servs. v. Vogelsang, 312
S.W.3d 640, 654 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (“A number
of courts have held that a non-compete covenant that is limited to the employee’s
clients is a reasonable alternative to a geographical limit.”). Those types of
limiting clauses are absent from the covenant at issue.

                                          12
damages.”). Tranter has therefore not shown a probable right to recovery on its

breach of contract and tortious interference claims.

      C. Permanent injunctive relief

      Because the noncompetition clause may be reformed, the lack of

geographic restriction is not necessarily fatal to Tranter’s ability to demonstrate a

probable right to permanent injunctive relief. 6 See Butnaru, 84 S.W.3d at 204.

Similarly, if the limitations as to time and scope of activity were likewise

unreasonable, the trial court could reform the limitations and enforce the

reformed covenant through injunctive relief. See Tex. Bus. & Com. Code Ann.

§ 15.51(c) (“[T]he court shall reform the covenant to the extent necessary . . . and

enforce the covenant as reformed.”).

      Under the common law, a party seeking an injunction must show that

without injunctive relief he will suffer irreparable injury for which he has no

adequate legal remedy. Tom James Co. v. Mendrop, 819 S.W.2d 251, 252 (Tex.

      6
         Liss argues that we are not required to reform the noncompete because
section 15.51 of the Covenants Not to Compete Act applies only to inadequate
restrictions, and here there is no restriction at all. Although Liss’s argument has
some basis in the statutory language, see Tex. Bus. & Com. Code Ann.
§ 15.51(c) (requiring courts to reform a covenant only if it “contains limitations as
to time, geographical area, or scope of activity to be restrained that are not
reasonable”), Texas courts, including this one, have reformed those covenants
that have no geographic restriction as well. See Cobb v. Caye Publ’g Grp., Inc.,
322 S.W.3d 780, 785–86 (Tex. App.—Fort Worth 2010, no pet.) (noting that
noncompete contained no geographic restriction and reforming it in temporary
injunction); Poole v. U.S. Money Reserve, Inc., No. 09-08-00137-CV, 2008 WL
4735602, at *9 (Tex. App.—Beaumont Oct. 30, 2008, no pet.) (mem. op.). Cf.
Zep Mfg., 824 S.W.2d at 661 (refusing to reform covenant lacking geographical
restriction when employer did not seek injunctive relief).

                                         13
App.—Fort Worth 1991, no writ). However, if a party relies on a statute that

defines the requirements for injunctive relief, then the express statutory language

supersedes common law requirements. Butler v. Arrow Mirror & Glass, Inc., 51

S.W.3d 787, 795 (Tex. App.—Houston [1st Dist.] 2001, no pet.).          Our sister

courts have held that the Covenants Not to Compete Act preempt the common

law requirements for permanent injunctive relief. See Primary Health Physicians,

P.A. v. Sarver, 390 S.W.3d 662, 665 (Tex. App.—Dallas 2012, no pet.); EMSL

Analytical, 154 S.W.3d at 695; Cardinal Health Staffing Network, Inc. v. Bowen,

106 S.W.3d 230, 239 (Tex. App.—Houston [1st Dist.] 2003, no pet.); Butler, 51

S.W.3d at 795.    We agree.     The Act has no requirement for a showing of

irreparable injury; thus, irreparable injury for which there is no adequate legal

remedy is not a prerequisite to permanent injunctive relief. Tex. Bus. & Com.

Code Ann. § 15.51(a) (providing for “damages, injunctive relief, or both” for a

breach of a noncompete by the promisor); see also id. § 15.52 (stating that “the

procedures and remedies . . . provided by Section 15.51 . . . are exclusive and

preempt any other criteria for enforceability of a covenant not to compete or

procedures and remedies in an action to enforce a covenant not to compete

under common law or otherwise”).

      PMC and Liss argue that Tranter failed to show that it had a probable right

to recovery because it breached the contract by failing to grant Liss permission to

work for PMC despite Liss’s and PMC’s assurances that Liss would not use

Tranter’s confidential information.     PMC and Liss essentially sought a

                                        14
determination from the trial court on who breached the contract first, or in other

words, whether Liss was justified in breaching the contract. At the hearing for a

temporary injunction, the applicant is not required to establish that it will prevail

on final trial. Walling, 863 S.W.2d at 58. The purpose of a temporary injunction

is to preserve the status quo, not to determine the respective rights of the parties

under the cause of action asserted or defenses or counterclaims urged. McCan

v. Missouri Pac. R.R. Co., 526 S.W.2d 754, 758 (Tex. Civ. App.—Corpus Christi

1975, no writ).

      Therefore, because Tranter provided evidence that the noncompete at

issue is ancillary to or part of an otherwise enforceable agreement and because

the noncompete can be reformed to contain reasonable limitations as to time,

geographic area, and scope of activity that do not impose a greater restraint than

is necessary, Tranter established a probable right to recovery on its permanent

injunction claim. 7 See Tex. Bus. & Com. Code Ann. § 15.50(a); Shoreline Gas,

Inc. v. McGaughey, No. 13-07-00364-CV, 2008 WL 1747624, at *9 (Tex. App.—

Corpus Christi April 17, 2008, no pet.) (mem. op.) (holding that employer

established its probable right to relief regarding the noncompete by showing that

the noncompete was ancillary to an otherwise enforceable agreement).

II. A probable, imminent, and irreparable injury


      7
       PMC argues that reformation is only proper as part of a final judgment.
As explained further in section IV of this opinion, we disagree that reformation is
inappropriate as part of a grant of temporary injunctive relief.

                                         15
      As stated above, common law requires a showing of a probable, imminent,

and irreparable injury as a prerequisite for injunctive relief. Mendrop, 819 S.W.2d

at 252.   The Covenants Not to Compete Act preempts that requirement for

permanent injunctive relief, but it does not preempt the requirements for

temporary injunctive relief. See Cardinal Health, 106 S.W.3d at 239 (“Because

section 15.51(a) does not govern preliminary relief, it does not preempt the law

that generally applies to preliminary relief, including the equitable rules that apply

to temporary injunctions.”).      Tranter was therefore required to show an

irreparable injury to be entitled to a temporary injunction.

      A highly trained employee’s continued breach of a noncompete agreement

creates a rebuttable presumption that the employer is suffering an irreparable

injury. See Wright, 137 S.W.3d at 294; Cardinal Health, 106 S.W.3d at 236;

Unitel Corp. v. Decker, 731 S.W.2d 636, 641 (Tex. App.—Houston [14th Dist.]

1987, no writ); Martin v. Linen Sys. for Hosps., Inc., 671 S.W.2d 706, 709 (Tex.

App.—Houston [1st Dist.] 1984, no writ); Hartwell’s Office World, Inc. v. Systex

Corp., 598 S.W.2d 636, 639 (Tex. Civ. App.—Houston [14th Dist.] 1980, writ ref’d

n.r.e.). The evidence at the hearing was that PMC makes and markets products

in direct competition with Tranter. Liss acknowledged that he is working in the

same position at PMC that he had at Tranter, with the same general duties, in the

same territory, and in direct competition with Tranter.

      Scott Poenitzsch, Vice President and General Manager of Tranter, testified

that at Tranter Liss learned

                                         16
      intimate manufacturing knowledge of the processes, the costs, what
      products are manufactured in what locations. He would also know
      what our minimum thresholds are for profitability, gross margin[]
      target as well as actual. He would also know our gross margin
      targets actual to the product line as well as how the manufacturer’s
      reps were doing and as well as what the markets were doing.

He testified that Liss was also told the technical advantages of Tranter products

over their competitors and “intimate applications of where these heat exchangers

are being installed.” Poenitzsch said that Liss had access to costing and pricing

of Tranter products as well as gross margin minimums that he would use to know

“exactly where our pricing needs to be in order to win that order.” Poenitzsch

testified that Liss had knowledge of Tranter’s business goals and evaluations of

Tranter’s sales representatives.

      Poenitzsch explained that Tranter refused to give consent for Liss to work

for PMC because

      [f]rom all the evidence that was provided to us by their counsel as
      well as representatives of [PMC], it was very clear to us that he was
      gonna be doing the same job, the same title, in the same region, and
      promoting and selling identical product to Tranter, and that caused
      us concern.

He said, “[W]e believe that he could cause us irreparable harm going forward by

moving some of our customers over to Paul Mueller, reduce our revenue, reduce

our profitability, and harm our stakeholders,” and, “We believe he has enough

intimate confidential information to know what Tranter would be bidding on a

particular project that [PMC] would be bidding on and possibly bid underneath us

and win the order based on that.”


                                       17
      When asked whether he had believed Liss when Liss had promised that he

would not use Tranter’s confidential information, Poenitzsch said, “I had a

difficulty with that statement simply because even though he may not say it, he

could make inferences or possibly say things inadvertently that would position

[PMC] in a better light than Tranter at a particular customer or particular sales

rep.” He testified, “[Tranter] couldn’t understand how he could be successful at

his job, in the same job, the same region, same products, same markets, without

having to use confidential information, either inadvertently or directly.”

      Poenitzsch explained that the sales cycle “can be upwards of twelve to

twenty-four months. So if Mr. Liss has engaged with one of our customers or

one of our reps say last month, I may not feel that impact for another year to

eighteen months.” He estimated that “threat is probably . . . somewhere around

the one to two-year frame because of the sales cycle.” Poenitzsch testified that

he did not know of any reps being poached by Liss to move to PMC. He also

said that “if that conversation is going on, I probably wouldn’t know it was going

on until they actually terminate the relationship with us.”

      At the time of trial, Liss had gone on four sales calls with PMC.        He

testified that he could not use Tranter’s pricing information and discount

schedules at PMC, that he does not use the training material at PMC, and that he

does not use his knowledge of Tranter’s customers or sales reps at PMC. Terry

Snell, general manager for the heat transfer group at PMC testified that Liss had



                                         18
not disclosed Tranter’s confidential information and that Snell did not think that

he could use any information that Liss disclosed.

      In their briefs on appeal, PMC and Liss argue that Tranter did not establish

any injury because the evidence was that Tranter did not know “if, how, or to

what extent Liss was harming Tranter through his wrongful use of [its]

confidential information” and that it would be “some substantial period of time

before Liss [would be] in a position to negatively affect Tranter’s business.”

Rather than rebutting the presumption, this evidence demonstrates precisely why

the presumption exists. See Williams v. Compressor Eng’g Corp., 704 S.W.2d

469, 472 (Tex. App.—Houston [14th Dist.] 1986, writ ref’d n.r.e.) (“Even when he

operates in the best of good faith, the former employee working in a similar

capacity can hardly prevent his knowledge of his former employer’s confidential

methods from showing up in his work.”); see also Daily Instruments Corp. v.

Heidt, No. H-13-2189, 2014 WL 710683, at *14 (S.D. Tex. Feb. 21, 2014) (“An

employee who possesses trade secrets belonging to a former employer and

accepts employment with one of its competitors, even if acting in good faith, will

have difficulty preventing his knowledge from infiltrating his work.”).

      Liss and PMC did not rebut Tranter’s evidence that Liss is directly

competing with Tranter in the same territory and for the same customers that Liss

worked with at Tranter. Cf. Travelhost, Inc. v. Figg, No. 3:11-CV-0455-D, 2011

WL 6009096, at *4 (N.D. Tex. Nov. 22, 2011) (mem. op.) (holding that if the

presumption of irreparable harm applied, the employee rebutted it by evidence

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that she no longer works in the restricted geographic area); Cardinal Health, 106

S.W.3d at 235–36 (holding that employee rebutted employer’s presumption when

the evidence was that employer’s sales increased, that there was only a small

percentage of shared clients, and that employee did not solicit those clients).

While there was evidence that Liss was not actively trying to use Tranter’s

confidential information, there was no evidence rebutting the presumption that

Liss would have extreme difficulty in not indirectly applying some of that

confidential knowledge in his position at PMC. See Rugen v. Interactive Bus.

Sys., Inc., 864 S.W.2d 548, 552 (Tex. App.—Dallas 1993, no writ) (“Rugen is in

possession of IBS’s confidential information and is in a position to use it. Under

these circumstances, it is probable that Rugen will use the information for her

benefit and to the detriment of IBS. At times, an injunction is the only effective

relief an employer has when a former employee possesses confidential

information.”); Hartwell’s Office World, 598 S.W.2d at 639 (holding that evidence

of earnings from products in direct competition with former employer was not

evidence that former employer did not suffer an irreparable injury).      Tranter

therefore established a probable, imminent, and irreparable injury. See Daily

Instruments, 2014 WL 710683, at *14 (“In Texas, injury resulting from the breach

of non-compete covenants is the epitome of irreparable injury.”) (quoting A & A

Global Indus., Inc. v. Wolfe, No. 3:01-CV-1515–D, 2001 WL 1388020, at *5 (N.D.

Tex. Nov. 6, 2001)).



                                       20
III. Whether the trial court abused its discretion

      While the general rule is that a trial court has broad discretion in

determining whether to issue an injunction, its discretion “does not extend to the

erroneous application of the law to the undisputed facts.” Alert Synteks, Inc. v.

Jerry Spencer, L.P., 151 S.W.3d 246, 253 (Tex. App.—Tyler 2004, no pet.)

(citing Bank of the Southwest N.A. v. Harlingen Nat’l Bank, 662 S.W.2d 113,

115–16 (Tex. App.—Corpus Christi 1983, no writ)).            The trial court’s order

denying Tranter’s petition for a temporary injunction includes the statement that

      the Court finds that:

           1. Tranter, Inc.’s Employee Technology Agreement is
      unenforceable due to a lack of consideration; and

            2. Tranter, Inc.’s Employee Technology Agreement does not
      contain any limitations to geographic area as required by Texas
      Business & Commerce Code § 15.50(a).

These “findings” do not meet the requirements of rule 299a of the rules of civil

procedure and do not control the outcome of this case. See Tex. R. Civ. P. 299a

(“Findings of fact shall not be recited in a judgment. . . . Findings of fact shall be

filed . . . separate and apart from the judgment.”); Tom James of Dallas, 109

S.W.3d at 884; see also Samuelson v. United Healthcare of Tex., Inc., 79 S.W.3d

706, 710 (Tex. App.—Fort Worth 2002, no pet.) (“Where an abuse of discretion

standard of review applies to a trial court’s ruling, findings of fact and conclusions

of law, while helpful, are not required.”) (citing Crouch v. Tenneco, Inc., 853

S.W.2d 643, 649 & n.3 (Tex. App.—Waco 1993, writ denied) (op. on reh’g)).


                                         21
However, such “findings” can be helpful in determining whether the trial court

properly exercised its discretion.   Tom James of Dallas, 109 S.W.3d at 884

(citing IKB Indus., Ltd. v. Pro–Line Corp., 938 S.W.2d 440, 442 (Tex. 1997));

Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 852 (Tex. 1992) (orig.

proceeding)). A trial court abuses its discretion when it misapplies the law to

established facts or when the evidence does not reasonably support its

determination regarding the existence of a probable right of recovery or a

probable injury. See Tom James of Dallas, 109 S.W.3d at 883.

      Tranter established a probable right to recovery and a probable,

irreparable injury.   The evidence, viewed in a light most favorable to the

judgment, does not support the trial court’s denial of Tranter’s application for a

temporary injunction. Further, the trial court’s statements that the noncompete

agreement was unenforceable indicate a misapplication of the law to the

established facts in this case. The trial court therefore abused its discretion by

denying the temporary injunction. We sustain Tranter’s issues.

IV. Remand is appropriate

      As previously noted, PMC argues that reformation is only proper as part of

a final judgment. PMC cites Gray Wireline Serv., Inc. v. Cavanna, 374 S.W.3d

464, 470–71 (Tex. App.—Waco 2011, no pet.), and Cardinal Health, 106 S.W.3d

at 238–39, in support of its argument. These cases analyzed section 15.52 of

the Covenants Not to Compete Act and determined, based on the language of

the Act, that the statutory remedies preempt only final remedies. See Cardinal

                                       22
Health, 106 S.W.3d at 238–39. The Cardinal Health court based its decision in

part on the Act’s inclusion of reformation as a remedy and noted that reformation

is “generally a final remedy.” Id.

      But reformation is not only a final remedy. See Justin Belt Co., Inc. v.

Yost, 502 S.W.2d 681, 685 (Tex. 1973) (affirming trial court’s reformation of

noncompete in its order granting temporary injunction); Weatherford Oil Tool Co.

v. Campbell, 161 Tex. 310, 340 S.W.2d 950, 952–953 (1960) (explaining that a

court may be able to reform a noncompete covenant “as an incident to the

granting of injunctive relief”); Cobb, 322 S.W.3d at 785–86 (modifying reformation

and affirming temporary injunction based on reformed noncompete agreement);

Posey v. Monier Res., Inc., 768 S.W.2d 915, 918–19 (Tex. App.—San Antonio

1989, writ denied) (holding that noncompete was unreasonable as to scope and

time and modifying the temporary injunction based on the noncompete to be

reasonable); Bertotti v. C.E. Shepherd Co., Inc., 752 S.W.2d 648, 654 (Tex.

App.—Houston [14th Dist.] 1988, no writ) (upholding temporary injunction which

reformed noncompete clause to include geographic restriction); Martin, 671

S.W.2d at 709–10 (affirming trial court’s reformation of geographic limitation in its

order granting temporary injunction). Therefore, we remand this case to the trial

court to determine reasonable limitations. See Poole, 2008 WL 4735602, at *9

(holding that temporary injunction was overly broad and remanding to the trial

court to determine reasonable reformations); Wright, 137 S.W.3d at 299 (same);

Voorhees v. Johnson, 538 S.W.2d 271, 273 (Tex. Civ. App.—Beaumont 1976, no

                                         23
writ) (holding that noncompete’s geographic restriction was unreasonable,

“recogniz[ing] that [court] could reform this contract,” and remanding for

determination of reasonable restriction); see also TransPerfect Translations, Inc.

v. Leslie, 594 F. Supp. 2d 742, 756 (S.D. Tex. 2009) (stating that the law is

unsettled regarding reformation at the temporary injunction stage but entering a

limited injunction on the reformed contract, “noting that any reformation or

permanent injunction to be entered may differ from this temporary reformation

based on arguments presented in the parties’ dispositive motions or at trial”).

                                    Conclusion

      Having sustained Tranter’s issues, we reverse the trial court’s order

denying Tranter’s application for a temporary injunction. We remand this case to

the trial court for further proceedings consistent with this opinion.



                                                     /s/ Lee Gabriel
                                                     LEE GABRIEL
                                                     JUSTICE

PANEL: LIVINGSTON, C.J.; GARDNER and GABRIEL, JJ.

DELIVERED: March 27, 2014




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