Kenneth W. Scroggins and Dallas Lite & Barricade, Inc. v. Buyers Barricades, Inc. ( 2022 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-22-00186-CV
___________________________
KENNETH W. SCROGGINS AND DALLAS LITE & BARRICADE, INC.,
Appellants
V.
BUYERS BARRICADES, INC., Appellee
On Appeal from the 141st District Court
Tarrant County, Texas
Trial Court No. 141-332979-22
Before Womack, Wallach, and Walker, JJ.
Memorandum Opinion by Justice Walker
MEMORANDUM OPINION
In this interlocutory appeal, Appellant Kenneth W. Scroggins complains that
the trial court erred by entering a temporary injunction enjoining him from violating
certain terms of the “Employee Confidentiality, Non-Competition, and Non-
Solicitation Agreement” (Agreement) he had entered into with his former employer,
Appellee Buyers Barricades, Inc. (Buyers). See Tex. Civ. Prac. & Rem. Code Ann.
§ 51.014(a)(4). Because portions of the injunction order are vague or unspecified, we
will reverse those portions and remand the case to the trial court for further
proceedings. See Tex. R. App. P. 43.2.
I. BACKGROUND
A. PRE-SUIT FACTS
Before joining Buyers, Scroggins worked as a salesperson for Striping Services
and Supply (SSS), a company that provides traffic control products and services in the
Dallas-Fort Worth Metroplex. Scroggins focused his sales efforts on large, public-
sector road projects.
In May 2020, Scroggins went to work as an at-will salesperson for Buyers and
brought with him a book of business from SSS. Buyers provides substantially the
same products and services as SSS, albeit on a larger scale. Upon beginning his job at
Buyers, Scroggins signed the Agreement which included the following
noncompetition, nonsolicitation, and confidentiality provisions:
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[1]. In consideration of my employment rights under this Agreement
and in recognition of the fact that I will have access to the confidential
information of [Buyers] and that [Buyers’s] relationships with its
customers and potential customers constitutes a substantial part of
[Buyer’s] goodwill, I hereby agree that for a period of eighteen (18)
months from and after the termination of my employment, for any
reason, unless acting with [Buyers’s] express prior written consent, I shall
not, directly or indirectly, in any capacity, solicit or accept business from,
provide consulting services of any kind to, or perform any of the
services offered by [Buyers], for any of [Buyers’s] customers or
prospective customers with whom [Buyers] had business dealings in the
year preceding the termination of my employment.
....
[2]. In consideration of my employment rights under this Agreement
and in recognition of the fact that I will have access to confidential
information of [Buyers’s], I hereby agree that I shall not for a period of
eighteen (18) months from and after the termination of my employment
with [Buyers], whether by resignation, termination for cause, or for any
other reason, and within the one hundred (100) mile radii of the greater
Dallas/Fort Worth metroplex area engage in any business or perform
any service, directly or indirectly, in the traffic control sales business . . . .
[3]. I hereby represent to [Buyers] that enforcement of the restrictions
contained in [the above provisions] would not be unduly burdensome to
me . . . .
[4]. Unauthorized Disclosure of Confidential Information. While
employed by [Buyers] and thereafter, I shall not, directly or indirectly,
disclose to anyone outside of [Buyers] any Confidential Information or
use any Confidential Information (as hereinafter defined) other than
pursuant to my employment by and for the benefit of [Buyers]. The
term “Confidential Information” as used throughout this Agreement
means any and all trade secrets and any and all data or information not
generally known outside of [Buyers] whether prepared or developed by
or for [Buyers] or received by [Buyers] from any outside source.
Without limiting the scope of this definition, Confidential Information
includes: any customer files, customer lists, any business, marketing,
financial or sales record, data, electronic data, program, plan, or survey;
and any other record or information relating to the present or future
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business, product, or service of [Buyers]. All Confidential Information
and copies therefor are the sole property of the Company.
Notwithstanding the foregoing, the term Confidential Information shall
not apply to information that [Buyers] has voluntarily disclosed to the
public without restriction, or which has otherwise lawfully entered the
public domain.
In February 2022, Scroggins resigned from Buyers and soon started working as
a salesperson at Dallas Lite & Barricade, Inc. (Dallas Lite), a direct competitor of
Buyers.
B. BUYERS SUES AND APPLIES FOR INJUNCTIVE RELIEF
In April 2022, Buyers sued Scroggins and Dallas Lite under various breach-of-
contract, tortious-interference, and misappropriation-of-trade-secrets causes of action.
Generally, Buyers alleged that Scroggins—in concert with Dallas Lite—was actively
breaching the Agreement by directly competing against Buyers, soliciting its
customers, and using its confidential information. Buyers also sought temporary and
permanent injunctions to enjoin Scroggins and Dallas Lite from continuing to violate
the Agreement.
1. Temporary Injunction Hearing
a. Scroggins’s Testimony
At a hearing on Buyers’s temporary injunction, Scroggins testified that he
signed the Agreement as a condition of his initial employment and that, in doing so,
he had agreed to all of its terms. He explained that he had developed close
relationships with a small number of customers in the heavy-traffic-barricading
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industry while at SSS and that he had brought those relationships with him to Buyers.
Scroggins said that Buyers hired him mainly because of these relationships and that he
had worked exclusively with those few customers during his time at Buyers. In fact,
Scroggins did not have a sales territory like all of the other salespeople at Buyers
because he was tasked with focusing only on this set list of customers.
All of the salespeople at Buyers, including Scroggins, were emailed weekly
customer lead sheets and each other’s top customers. In addition, all salespeople
collectively attended a weekly sales meeting with management at which they discussed
their weekly sales efforts. Scroggins said that the relationships with his customers
were cultivated while he worked at Buyers because he was able to offer them more
services than when he had worked at SSS and because Buyers purchased appreciation
gifts for the customers. However, Scroggins maintained that he was never given any
of Buyers’s confidential information and that he did not take any confidential
information with him to his job at Dallas Lite.
Scroggins stated that his work at Dallas Lite was the same work that he
performed at Buyers. He admitted that, soon after leaving Buyers, he contacted on
behalf of Dallas Lite at least two of his established customers that he had worked with
at Buyers in the preceding year. He also acknowledged that he had contacted other
customers that he knew were Buyers’s customers but with whom he had not
previously worked. Due to the nature of the barricade business, Scroggins explained
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that most customers have relationships with and “purchase from almost every
barricade company” in the industry.
Pointedly, Scroggins was asked if he would solicit Buyers’s customers in the
absence of an injunction against doing so:
Q. Now, if the court does not enter a temporary injunction in this case,
you’ll continue to solicit Buyers’s customers on behalf of Dallas Lite &
Barricade, won’t you?
A. I will be soliciting Dallas Lite & Barricade current customers.
Q. Regardless of whether those customers happen to be customers who
were customers of Buyers during the one-year period before you resigned from
Buyers, correct?
A. Correct.
b. Tony Troxclair’s Testimony
Tony Troxclair, director of sales at Buyers, testified that Buyers does business
primarily in north Texas with smaller branches in San Antonio and Houston. He
stated that Dallas Lite is one of Buyers’s largest competitors and that the two
companies compete for the same customers. Troxclair said that Buyers supplied
Scroggins with confidential information through the weekly sales lead reports and
meetings, which included data about sales volume and customer contacts. The
reports informed the salespeople about current and future projects so that they could
“get in front of the jobs early on, to be the first to a particular site, to try to get in the
door” with their customers. Also, by having knowledge of Buyers’s largest-volume
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customers, its salespeople could focus on those relationships to continue to grow
them.
Troxclair testified that the salespeople had access to a shared computer drive
that contained information about project bids and plans. He characterized this
information as a confidential trade secret that, if divulged, could be used by
competitors to gain an advantage when drafting their future bids. Additionally,
Scroggins had access to Buyers’s password-protected TCR system that was used “to
generate all of [Buyers’s] jobs and tickets for [its] customers” and contained
information such as sales volume, price points, and special pricing related to particular
customers. According to Troxclair, this information could be used by a competitor to
undercut Buyers’s pricing and customer relationships.
c. Steve Lappa’s Testimony
Steve Lappa, a director consultant at Buyers, testified that he provided
Scroggins with information about Buyers’s price points and margins on certain jobs.
He considered this information confidential and stated that it would be valuable to
competitors. According to Lappa, Scroggins became Buyers’s leading salesperson by
volume of sales due in large part to the confidential information and the “bigger
platform” provided to him by Buyers. And while Buyers had already done business
with all of the customers Scroggins had “brought” over from SSS, Lappa was
“absolutely certain” that Scroggins had helped Buyers increase those relationships.
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2. Trial Court Enters Temporary Injunction
The trial court entered a temporary injunction order (Order) which included,
among others, the following findings:
• that Scroggins “has accompanied [Dallas Light] sales employees to solicit
Buyers’[s] customers on behalf of [Dallas Light]”;
• that “during his employment at Buyers, Scroggins had access to
confidential information about Buyers’[s] business operations and
customers, and that Scroggins is now in a position to use Buyers’[s]
confidential information to compete unfairly against Buyers and to assist
[Dallas Lite] in competing unfairly against Buyers”;
• that “Scroggins has violated and continues to violate the [Agreement]”;
• that “such actions are causing immediate and irreparable injury to Buyers
by destroying Buyers’[s] goodwill and reputation, and is continuing, or
may continue, to cause Buyers continued damage and loss to its business
for which monetary damages are not readily calculable”; and
• that “Buyers has demonstrated a probable right to the relief
requested . . . .”
Accordingly, the Order enjoined Scroggins from “soliciting, diverting, taking
away, or attempting to take away from Buyers any customer listed on Exhibit A.”
Both Scroggins and Dallas Lite were enjoined from “possessing, using, or disclosing
Buyers’[s] confidential information or trade secrets that Scroggins acquired or gained
access to because of his employment at Buyers.” There was no Exhibit A attached to
the Order and it did not define confidential information.
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II. DISCUSSION
Scroggins raises five issues on appeal: that (1) the Order lacks specificity
because it does not attach an Exhibit A defining which customers Scroggins is
enjoined from soliciting; (2) the Order lacks adequate specificity because it fails to
adequately define what constitutes confidential information; (3) the trial court abused
its discretion by entering the Order because the evidence did not reasonably support a
determination of the existence of Buyers’s probable right to relief; (4) the Order, if it
enjoins solicitation of all of Buyers’s customers from the preceding one-year period, is
overbroad in that it should not include customers with whom Scroggins had a pre-
existing relationship; and (5) the Order is overbroad to the extent that it enjoins
Scroggins from soliciting customers with whom he had no business contact while
employed by Buyers.
Because we agree that the Order lacks the requisite specificity as to issues one
and two, we will sustain those issues and remand the case for further proceedings on
those issues only. We will overrule issues three, four, and five and leave the
remainder of the Order intact.
A. STANDARD AND SCOPE OF REVIEW
“A temporary injunction is an extraordinary remedy and does not issue as a
matter of right.” Abbott v. Anti-Defamation League Austin, Sw., & Texoma Regions,
610 S.W.3d 911, 916 (Tex. 2020) (quoting Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex.
1993)). Such an injunction functions “to preserve the status quo of the litigation’s
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subject matter pending a trial on the merits.” Butnaru v. Ford Motor Co., 84 S.W.3d 198,
204 (Tex. 2002) (op. on reh’g) (citing Walling, 863 S.W.2d at 57). “To obtain a
temporary injunction, the applicant must plead and prove three specific elements:
(1) a cause of action against the defendant; (2) a probable right to the relief sought;
and (3) a probable, imminent, and irreparable injury in the interim.” Id.
The trial court exercises its sound discretion in deciding whether to issue a
temporary injunction, and we may reverse that decision only if we conclude that the
trial court abused its discretion because its actions were “so arbitrary that [they]
exceeded the bounds of reasonable discretion.” Id. Our abuse-of-discretion review
requires that we “view the evidence in the light most favorable to the trial court’s
order [and that we indulge] every reasonable inference in its favor.” IAC, Ltd. v. Bell
Helicopter Textron, Inc., 160 S.W.3d 191, 196 (Tex. App.—Fort Worth 2005, no pet.).
Thus, if the trial court must resolve a conflict in the evidence, its resolution of a fact
issue is one to which we must defer. Wright v. Sport Supply Grp., Inc., 137 S.W.3d 289,
292 (Tex. App.—Beaumont 2004, no pet.). However, we review the trial court’s
application of the law to established facts and the resolution of pure legal questions de
novo. Jelinis, LLC v. Hiran, 557 S.W.3d 159, 165 (Tex. App.—Houston [14th Dist.]
2018, pet. denied); Tom James of Dall., Inc. v. Cobb, 109 S.W.3d 877, 883 (Tex. App.—
Dallas 2003, no pet.). Also, “[w]hen the trial court embeds findings of fact and
conclusions of law in its order denying a temporary injunction, the findings and
conclusions may be helpful in determining whether the trial court exercised its
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discretion in a principled fashion[;] however, they are not binding on this court.”
Communicon, Ltd. v. Guy Brown Fire & Safety, Inc., No. 02-17-00330-CV, 2018 WL
1414837, at *6 (Tex. App.—Fort Worth Mar. 22, 2018, no pet.) (mem. op.).
Because the temporary injunction only preserves the status quo pending final
trial, the trial court’s determination regarding whether to issue the temporary
injunction does not resolve the ultimate merits of the suit. Brooks v. Expo Chem. Co.,
576 S.W.2d 369, 370 (Tex. 1979). The assumption is that the evidence may well
change between the preliminary temporary-injunction stage of the proceeding and a
final trial on the merits. Burgess v. Denton Cnty., 359 S.W.3d 351, 359 n.35 (Tex.
App.—Fort Worth 2012, no pet.) (citing Davis v. Huey, 571 S.W.2d 859, 862 (Tex.
1978)). Thus, the probability-of-success requirement does not require an applicant to
show that it will prevail at final trial. Kim v. Oh, No. 05-19-00947-CV, 2020 WL
2315854, at *2 (Tex. App.—Dallas May 11, 2020, no pet.) (mem. op.). Instead, the
applicant must only “produce some evidence supporting every element of at least one
valid legal theory.” Id.B. Probable Right to Relief
We will first consider Scroggins’s third issue because, if the evidence did not
support the trial court’s determination that Buyers established a probable right to
relief, the entire basis for the temporary injunction would be undermined. See
Hernandez v. Combined Ins. Co. of Am., No. 02-20-00225-CV, 2021 WL 520456, at *8
(Tex. App.—Fort Worth Feb. 11, 2021, pet. denied) (mem. op.).
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Scroggins attacks only the trial court’s determination as to the second element
required for temporary injunctions, contending that Buyers failed to show a probable
right to relief because the Agreement’s noncompete and nonsolicitation provisions1
were not ancillary to an otherwise enforceable agreement as required by section 15.50
of the Texas Business and Commerce Code (the Act). This is true, says Scroggins,
because Buyers never supplied Scroggins with confidential information as promised in
the Agreement.2 If true, this would render the confidentiality agreement illusory and,
thus, unable to serve as an ancillary agreement capable of supporting the noncompete
and nonsolicitation agreements. And without enforceable noncompete,
nonsolicitation, and confidentiality provisions, Buyers would be unable to show a
probable right to relief on any of its causes of action because each cause relies on the
enforceability of at least one of those provisions.
1
While Scroggins explicitly refers only to the enforceability of the Agreement’s
noncompete provision, we will liberally construe Scroggins’s argument to also include
the nonsolicitation agreement. See Shoreline Gas, Inc. v. McGaughey, No. 13-07-364-CV,
2008 WL 1747624, at *10 (Tex. App.—Corpus Christi–Edinburg Apr. 17, 2008, no
pet.) (mem. op.) (“A non-solicitation agreement is sufficiently analogous to a covenant
not to compete such that provisions of the Act must apply fully to such agreement.”);
see also Hernandez, 2021 WL 520456, at *8 (same).
2
Scroggins does not dispute that Buyers made such a promise in the
Agreement. Regardless, it is well established 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.” Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844, 850 (Tex. 2009).
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1. Ancillary Agreement Required
A noncompete or nonsolicitation agreement is enforceable only 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,
geographic 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.
Tex. Bus. & Com. Code Ann. § 15.50; see Hernandez, 2021 WL 520456, at *8 (applying
the requirements of the Act to nonsolicitation agreements). The promise and ultimate
provision of confidential information sufficiently “satisfies the statutory nexus”
required to establish the existence of an ancillary agreement under the Act. Marsh
USA Inc. v. Cook, 354 S.W.3d 764, 775 (Tex. 2011); see Mann Frankfort, 289 S.W.3d at
850; see also Shoreline Gas, 2008 WL 1747624 at *8 (holding that a unilateral
confidentiality agreement became an enforceable ancillary agreement “as soon as the
employer provided confidential information to the employee”) (citing Alex Sheshunoff
Mgmt. Services, L.P. v. Johnson, 209 S.W.3d 644, 657 (Tex. 2006)).
2. Evidence Existed That Scroggins was Given Confidential Information
Thus, though we are to draw no conclusions as to the ultimate merits of
Buyers’s causes of action, we must determine whether, in the light most favorable to
the Order and indulging every inference in its favor, there was at least some evidence
supporting the trial court’s determination that Buyers supplied Scroggins with
confidential information. We hold that such evidence existed.
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The Agreement defined confidential information to include “any customer
files, customer lists, any business, marketing, financial or sales record, data, electronic
data, program, plan, or survey; and any other record or information relating to the
present or future business, product, or service of [Buyers].” Though Scroggins
contends that he was never supplied with confidential information, Troxclair and
Lappa testified that Buyers supplied Scroggins with the following information via its
weekly sales reports and meetings, its shared drive and TCR system, and other
personal communication:
• Sales leads and sales volume for individual customers and delineating Buyers’s
top customers;
• Information about customers’ current and future projects;
• Project bid and plan information;
• Price points and special pricing for particular customers; and
• Buyers’s margins for certain projects.
Viewed in the light most favorable to the Order and deferring to the trial
court’s discretion in resolving conflicting evidence, we conclude that this constitutes
at least some evidence to support the trial court’s determination that Buyers supplied
Scroggins with confidential information as contemplated by the Agreement. It
follows, then, that the confidentiality agreement was an otherwise enforceable,
ancillary agreement to support both the noncompete and nonsolicitation provisions
pursuant to the Act. See Tex. Bus. & Com. Code Ann. § 15.50. Accordingly, the trial
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court did not err in concluding that Buyers showed a probable right to recovery, and
we overrule Scroggins’s third issue.
C. Vague or Overbroad Provisions
In his remaining issues, Scroggins contends that certain provisions of the Order
are vague or overbroad related to which customers Scroggins was enjoined from
soliciting and what constituted the confidential information that he and Dallas Lite
were enjoined from using.
A trial court abuses its discretion by issuing a temporary-injunction order that
does not comply with the substantive requirements for such an order or that is overly
broad or vague. See Bellefeuille v. Equine Sports Med. & Surgery, Weatherford Div., PLLC,
No. 02-15-00268-CV, 2016 WL 1163364, at *3 (Tex. App.—Fort Worth Mar. 24,
2016, no pet.) (mem. op.); Fuqua v. Oncor Elec. Delivery Co., 315 S.W.3d 552, 557 (Tex.
App.—Eastland 2010, pet. denied); see also Tex. R. Civ. P. 683. An injunction order
must “be specific in terms [and] shall describe in reasonable detail and not by
reference to the complaint or other document, the act or acts sought to be
restrained . . . .” Tex. R. Civ. P. 683; see San Antonio Bar Ass’n v. Guardian Abstract &
Title Co., 291 S.W.2d 697, 702 (Tex. 1956). This is balanced with the practicality that
an injunction “must be in broad enough terms to prevent repetition of the evil sought
to be stopped.” Guardian Abstract & Title Co., 291 S.W.2d at 702.
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1. What customers is Scroggins enjoined from soliciting?
The Order enjoins Scroggins from soliciting any of Buyers’s customers “listed
on Exhibit A” but does not include an Exhibit A. Scroggins argues that this makes
the Order impermissibly vague regarding which customers Scroggins is enjoined from
soliciting.3 Buyers concedes this issue and requests that we remand the Order for
clarification about which customers should be included in Exhibit A.
An injunction order does not violate Rule 683 merely because it references
documents that are attached and incorporated into the order, Layton v. Ball,
396 S.W.3d 747, 753 (Tex. App.—Tyler 2013, no pet.), or by failing to identify a
specific list of customers that a person is enjoined from soliciting, Lockhart v. McCurley,
No. 10-09-00240-CV, 2010 WL 966029, at *4 (Tex. App.—Waco Mar. 10, 2010, no
pet.) (mem. op.). The Order here, however, neither attaches the referenced Exhibit A
nor provides any other direction for Scroggins to know which customers he is
enjoined from soliciting.
For these reasons, we hold that this portion of the Order is impermissibly
vague or unspecified and that the trial court abused its discretion. We reverse this
portion of the Order and remand the case to the trial court for further proceedings on
3
Scroggins filed with the trial court a motion for clarification on what the trial
court intended to be included in Exhibit A, but that motion was never ruled on.
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this issue.4 See Rapid Settlements, Ltd. v. Settlement Funding, LLC, 358 S.W.3d 777, 790
(Tex. App.—Houston [14th Dist.] 2012, no pet.) (reversing portions of an overbroad
temporary injunction and remanding to the trial court because “the trial court [was] in
a better position” to make the relevant factual determinations needed to cure its
error); Webb v. Glenbrook Owners Ass’n, Inc., 298 S.W.3d 374, 392 (Tex. App.—Dallas
2009, no pet.) (reversing portions of a vague injunction order and remanding to the
trial court for correction).
2. What confidential information are Scroggins and
Dallas Lite enjoined from using?
Finally, in his second issue Scroggins argues that the Order is impermissibly
vague because it does not adequately define what constitutes the confidential
information that he and Dallas Lite are enjoined from using. Buyers does not address
this issue in its response brief. We agree with Scroggins.
Orders that prohibit the disclosure and use of confidential information violate
Rule 683 when they do not specifically define what constitutes the information sought
to be protected. Ramirez v. Ignite Holdings, Ltd., No. 05-12-01024-CV, 2013 WL
4568365, at *5 (Tex. App.—Dallas Aug. 26, 2013, no pet.) (mem. op.); Wimbrey v.
WorldVentures Mktg., LLC, No. 05-19-01520-CV, 2020 WL 7396007, at *6 (Tex.
App.—Dallas Dec. 17, 2020, no pet.) (mem. op.)
4
Having reversed and remanded on issue one for the trial court to more
specifically identify which customers are included in the Order, we overrule
Scroggins’s fourth and fifth issues as not ripe for consideration.
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The Order is impermissibly vague because it provides no definition of what
constitutes confidential information. This is an abuse of discretion. Accordingly, we
reverse this portion of the Order and remand the case to the trial court for further
proceedings on this issue. See Rapid Settlements, Ltd., 358 S.W.3d at 790.
III. CONCLUSION
Because we conclude that the Order is impermissibly vague or unspecified as to
issues one and two, we sustain these issues, reverse these portions of the Order, and
remand to the trial court for further proceedings on these issues. We affirm the
Order in all other respects. See Tex. R. App. P. 43.2(a), (d).
/s/ Brian Walker
Brian Walker
Justice
Delivered: October 13, 2022
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