Cheniere Energy, Inc. and Cheniere LNG Terminals, LLC v. Parallax Enterprises LLC, Parallax Energy LLC, Parallax Enterprises (NOLA) LLC, Live Oak LNG LLC, Live Oak LNG Pipeline LLC, Moss Lake LNG LLC, Louisiana LNG Energy, LLC, and Calcasieu LNG LLC ( 2019 )


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  • Motion for Reconsideration En Banc Granted; Opinion and Judgment of
    December 27, 2018, Withdrawn; Affirmed; and Opinion on Reconsideration
    En Banc, Concurring Opinion on Reconsideration En Banc, and Dissenting
    Opinion on Reconsideration En Banc filed August 13, 2019.
    In The
    Fourteenth Court of Appeals
    NO. 14-17-00982-CV
    CHENIERE ENERGY, INC. AND CHENIERE LNG TERMINALS, LLC,
    Appellants
    V.
    PARALLAX ENTERPRISES LLC, PARALLAX ENERGY LLC,
    PARALLAX ENTERPRISES (NOLA) LLC, LIVE OAK LNG LLC, LIVE
    OAK LNG PIPELINE LLC, MOSS LAKE LNG LLC AND CALCASIEU
    LNG LLC, Appellees
    On Appeal from the 61st District Court
    Harris County, Texas
    Trial Court Cause No. 2017-49685
    DISSENTING OPINION ON
    RECONSIDERATION EN BANC
    The trial court abused its discretion in issuing the injunction and in
    determining that appellees Parallax Enterprises LLC and Live Oak LNG LLC
    established two prerequisites for the extraordinary remedy of a temporary
    injunction: (1) a probability of success on the merits of a claim that could support
    the injunctive relief sought and (2) imminent, irreparable injury in the absence of
    immediate injunctive relief.
    I. BACKGROUND
    Appellees Parallax Enterprises LLC and several related entities, Parallax
    Energy LLC, Parallax Enterprises (NOLA) LLC, Live Oak LNG LLC, Live Oak
    LNG Pipeline LLC, Moss Lake LNG LLC and Calcasieu LNG LLC (collectively,
    the “Parallax Parties”) allege that they reached an agreement with appellants
    Cheniere Energy, Inc. and Cheniere LNG Terminals, LLC (collectively, “the
    Cheniere Parties”) on all material terms for an “expanded joint development
    agreement, business association, and venture” to develop jointly two mid-scale
    liquefied natural gas (LNG) facilities in Louisiana. The proposed venture changed
    over time.   According to the Parallax Parties, the two sides agreed Parallax
    Enterprises would take the front-line role in developing the facilities and the
    Cheniere Parties would supply funding of up to $120 million to develop the
    projects. The Parallax Parties allege the parties originally proposed to own the
    projects on a 50/50 basis, but later proposed that the Cheniere Parties would pay
    contractors directly to build the facilities and pay success fees to the Parallax
    Parties upon completion. The Parallax Parties allege that while the parties were
    working on the written terms of a final agreement, the Parallax Parties began
    incurring expenses to develop the project. The Parallax Parties hired Bechtel
    Corporation to begin engineering and constructing the facilities.
    The Note and Guaranties
    Cheniere LNG Terminals, LLC advanced about $46 million in development
    2
    funds. To get the funds, Parallax Enterprises signed a secured promissory note,
    which the parties amended several times (the “Note”). Several of the Parallax
    Parties guaranteed the Note. Among the guarantors was Live Oak, a wholly-
    owned subsidiary of Parallax Enterprises.
    The Parallax Parties contend they signed the Note only to satisfy the
    Cheniere Parties’ internal accounting department, and that the parties intended the
    Cheniere-supplied funds to be considered a capital contribution—or equity—in the
    joint project rather than a loan that had to be repaid. The Note and security
    documents do not reflect any of that. The documents show the transaction to be a
    secured loan. According to the loan documents, the Parallax Parties secured their
    obligations with collateral and promised to pay back the borrowed sums.
    Though the Parallax Parties allege they entered into a partnership agreement
    with Cheniere to pursue the liquefaction projects, the record contains documents in
    which the parties expressly disavowed the existence of any such agreement. The
    Cheniere Parties maintain the parties never reached a final agreement on the joint
    development of the projects and that Cheniere advanced the funds only as a short-
    term loan under the express terms of the Note.          At the time the Note and
    Guaranties were signed, the Parallax Parties were not capitalized and had no assets
    or means to repay a loan.
    Before the parties finalized the written terms of their agreement, the deal fell
    through. Cheniere LNG Terminals, LLC demanded repayment of the $46 million
    due under the Note. The Parallax Parties failed and refused to pay.
    The Parallax Parties’ Allegations Regarding the Note and Guaranties
    The Parallax Parties take the position that the $46 million advanced under
    the Note was not debt but a capital contribution and that the Cheniere Parties were
    3
    due to advance even more under an unwritten agreement.              According to the
    Parallax Parties, although the parties had not finalized a written agreement, the
    Parallax Parties proceeded to develop the project and incurred expenses—
    including the Note—based on the Cheniere Parties’ assurances that the advanced
    funds would be considered equity and not debt. Live Oak alleged that it incurred
    substantial liabilities to third parties, and does not have any assets to pay the debts.
    The Parallax Parties ceased development of the two projects and allege they owe
    $10 million in debt to third parties.
    The Parallax Parties’ Lawsuit
    The Parallax Parties—including Live Oak—sued the Cheniere Parties,
    asserting claims for breach of contract, breach of fiduciary duties, promissory
    estoppel, and quantum meruit. The Parallax Parties also asserted that the Cheniere
    Parties fraudulently induced them to sign the Note, under which Parallax
    Enterprises, LLC got about $46 million. The Parallax Parties sought declaratory
    relief that the Note constitutes equity rather than debt and that the Parallax Parties
    hold no enforceable security interest.
    The Cheniere Parties’ Counterclaim and Third-Party Claims
    The Cheniere Parties filed a counterclaim against Parallex Enterprises,
    asserting the right to repayment of the $46 million advanced under the Note. The
    Cheniere Parties brought third-party claims against four individual defendants and
    four entities affiliated with those defendants.         In addition, Cheniere LNG
    Terminals, LLC served notice that it intended to effect non-judicial foreclosure of
    all of Parallax Enterprises’ equity interest in Live Oak. The Cheniere Parties
    contend that Parallax Enterprises’ interest in Live Oak serves as collateral for the
    Note.
    4
    Injunctive Relief
    The Parallax Parties sought injunctive relief to prevent Cheniere from:
    (1) foreclosing on Parallax Enterprises’ interest in Live Oak; (2) interfering with or
    attempting to control the management, governance and/or operation of any of the
    Parallax Parties; and (3) otherwise disrupting the normal course of business of any
    of the Parallax Parties. The Parallax Parties also asserted that their rights under the
    Note are the subject of the lawsuit and that allowing Cheniere LNG Terminals,
    LLC to foreclose would undermine the trial court’s jurisdiction because it would
    allow the Cheniere Parties a “self-help remedy” without proving any of their
    claims. The Parallax Parties maintained that the Note was not valid or enforceable,
    and that Cheniere LNG Terminals, LLC did not have an enforceable security
    interest in Parallax Enterprises’ equity interest in Live Oak.
    The Parallax Parties argued they would suffer imminent, irreparable injury
    absent injunctive relief.   They claimed monetary relief would not adequately
    remedy the interruption of Live Oak’s operations, the loss of Parallax Enterprises’
    management and control of Live Oak, and loss of the court’s jurisdiction to
    determine the claims brought.
    After an evidentiary hearing, the trial court granted the requested injunctive
    relief, finding that absent injunctive relief, the Parallax Parties would “suffer
    imminent irreparable injury by . . . losing ownership and control over assets,
    including the limited liability company interest of Live Oak LNG LLC, the rights
    to which are the subject of the parties’ claims in this action, and through which
    claims are made by [the Parallax Parties] against [the Cheniere Parties].” The trial
    court also found that without injunctive relief, the Parallax Parties would “be
    forced to defend their right to control claims made against [the Cheniere Parties],
    including defending against attempted dismissal of legal claims that [the Parallax
    5
    Parties] make against [the Cheniere Parties] and with regard to claims that [the
    Cheniere Parties] state they intend to assert through ownership of the limited
    liability company interest in Live Oak LNG, LLC.” Under the terms of the
    injunction order, the Parallax Parties posted a cash deposit in lieu of bond.
    II. REASONS TO REVERSE THE TEMPORARY INJUNCTION
    The law permits a court to grant a temporary injunction to preserve the status
    quo of the litigation’s subject matter pending a trial on the merits.1 Because the
    law views a temporary injunction as an extraordinary remedy, an applicant is not
    entitled to one as a matter of right.2 To get a temporary injunction under equitable
    principles, the applicant must plead and prove (1) a claim against the defendant, (2)
    a probable right to the relief sought, and (3) a probable, imminent, and irreparable
    injury in the interim.3 These equitable elements of injunctive relief likewise apply
    to a request for injunctive relief under section 65.011 of the Texas Civil Practice
    and Remedies Code.4
    The trial court abused its discretion in determining that the Parallax Parties
    met their burden of proving a probable right to relief and imminent, irreparable
    harm. In the absence of these showings — or either of them — the trial court
    abused its discretion in issuing injunctive relief under general principles of equity
    and under section 65.011 of the Texas Civil Practice and Remedies Code.
    1
    Butnaru v. Ford Motor Co., 
    84 S.W.3d 198
    , 204 (Tex. 2002).
    2
    
    Id. 3 Id.;
    Hsin-Chi-Su v. Vantage Drilling Co., 
    474 S.W.3d 284
    , 295 (Tex. App.—Houston [14th
    Dist.] 2015, pet. denied).
    4
    See Tex. Civ. Prac. & Rem. Code § 65.001 (“The principles governing courts of equity govern
    injunction proceedings if not in conflict with this chapter or other law.”); Town of Palm Valley v.
    Johnson, 
    87 S.W.3d 110
    , 111 (Tex. 2001) (per curiam) (applying irreparable harm element to
    application under Section 65.011(1)); City of El Paso v. Caples Land Co., LLC, 
    408 S.W.3d 26
    ,
    37 (Tex. App.—El Paso 2013, pet. denied) (stating applicant must establish both probable right
    to relief and irreparable injury in addition to showing required by section 65.011(2)).
    6
    Therefore, this court can and should reverse on one of these bases without reaching
    the Cheniere Parties’ other issues.5
    No Showing of Probable Right to Relief
    The majority concludes the Note’s collateral description fails to create a
    security interest in Live Oak’s equity. The Uniform Commercial Code (“UCC”)
    reflects a “broad policy of leniency for collateral descriptions.”6 Under the UCC, a
    description of personal or real property suffices, “whether or not it is specific, if it
    reasonably identifies what is described.”7 “[A] description of collateral reasonably
    identifies the collateral if it identifies the collateral by . . . category . . . [or] a type
    of collateral defined in [the UCC].”8
    The UCC identifies “general intangibles” as a collateral category, 9 defined
    as “any personal property, including things in action, other than accounts, chattel
    paper, commercial tort claims, deposit accounts, documents, goods, instruments,
    investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or
    other minerals before extraction.”10           The majority undertakes to draw a legal
    distinction between “general intangibles” and “intangible property.” Though the
    majority acknowledges that Live Oak’s equity is a general intangible under the
    UCC, the majority reasons that “intangible property” is too general a description of
    Live Oak’s equity to satisfy the UCC’s sufficiency standard.
    The description of collateral, though broad, is sufficiently specific. Courts
    5
    See Tex. R. App. P. 47.1
    6
    In re Grogan, 
    2013 WL 5630627
    , at *9 (B.A.P. 9th Cir. Oct. 15, 2013).
    7
    Tex. Bus. & Comm. Code § 9.108(a).
    8
    
    Id. § 9.108(b).
    9
    
    Id. § 9.102(a)(42).
    10
    Tex. Bus. & Com. Code Ann. § 9.102(a)(42).
    7
    uphold broad descriptions of collateral.11 Rather than view the description through
    the UCC’s lens of leniency, as the UCC commands, the majority assesses it with a
    less-forgiving eye and concludes that the description falls short. When read in
    proper context, using the proper standard, the description reasonably identifies
    what it describes. So, it suffices.
    In assessing the adequacy of the collateral description, the court should
    begin with the text of the agreement. Yet, the majority does not cite or discuss the
    Note’s key provision. Section 6.5(a) of the Note expressly creates a security
    interest in Parallax Enterprises’s “general intangibles”:
    Each Loan Party hereby assigns, grants and pledges to Payee a first
    priority security interest in and Lien on all of such Loan Party's right,
    title and interest in, to and under the assets and properties described
    on Exhibit A hereof (the “Property”), including all accessions to,
    substitutions for and replacements, proceeds and products of the
    foregoing, together with all materials and records related thereto and
    any general intangibles at any time evidencing or relating to any of
    the foregoing.12
    Exhibit A of the Note states:
    Description of the Property
    All of Loan Party’s right, title and interest in and to the following,
    whether now owned or hereafter acquired by such Loan Party and
    whether now existing or in the future coming into existence:
    1. All deposit, securities and other accounts and investment
    property
    2. All instruments, documents and chattel paper
    3. All inventory, equipment, fixtures and goods
    4. All contracts and permits
    11
    James J. White & Robert S. Summers, Uniform Commercial Code 910 (2d. 1980) (“The
    overwhelming majority of courts uphold very broad descriptions [of collateral under UCC
    section 9.203]”).
    12
    (emphasis added).
    8
    5. All letter-of-credit rights
    6. All intellectual property
    7. All real property
    8. All other tangible and intangible property and assets of such
    Loan Party
    This collateral description works.13 The Note’s Exhibit A identifies such
    things as contracts, permits, and intellectual property and then refers to “all other . .
    . intangible property,” thus again delineating the collateral as general intangibles.14
    Context drives meaning. In ascertaining the adequacy of the collateral
    description, we must consider it in the context of the larger transaction. Parallax
    Enterprises does not own—and never has owned—any property other than its
    equity interest in Live Oak and other subsidiaries. These are the only general
    intangibles Parallax Enterprises had to pledge. In the context of a secured
    transaction between the debtor and the creditor, that description reasonably
    identifies the collateral securing the Note. Nothing in the record suggests any
    confusion on that point. Simply put, the parties to the transaction knew what the
    collateral was and who was getting a security interest in it. Because (1) the written
    description reasonably can be read to include the equity interest in Live Oak and
    (2) the parties actually intended that result, the description suffices to satisfy the
    objective requirements of UCC sections 9.203 and 9.110.
    Parallax Enterprises pledged the only asset it had to secure the Note. The
    13
    Tex. Bus. & Comm. Code § 9.108(b); Transamerica Annuity Serv. Corp. v. Symetra Life Ins.
    Co., 4:16-CV-1426, 
    2018 WL 4620712
    , at *9 (S.D. Tex. Sept. 19, 2018) (order); In re Barr, 
    180 B.R. 156
    , 159 (Bankr. N.D. Tex. 1995).
    14
    See Orix Credit All., Inc. v. Omnibank, N.A., 
    858 S.W.2d 586
    , 591 (Tex. App.—Houston [14th
    Dist.] 1993, no writ) (restating prior holding that “‘catch all’ description of tangible property was
    . . . sufficient to cover the tangible property in dispute”); see also In re ProvideRx of Grapevine,
    LLC, 
    507 B.R. 132
    , 162 (Bankr. N.D. Tex. 2014) (“The term ‘general intangibles’ in a secured
    transaction acts as a ‘catch-all’ and brings under Article 9 miscellaneous types of contractual
    rights and other personal property that are used or normally may be used as commercial
    security.”).
    9
    only purpose of the collateral description was to create the security interest in the
    equity interest in Live Oak. The words contained in the Note sufficed for that
    purpose because the description made possible the identification of the collateral
    described.
    The majority errs in using the UCC comments to add requirements not
    contained in the statute. The Note uses “general intangibles” in creating the
    security interest and in describing the collateral. But even if the Note did not use
    this term, the Note’s use of “intangible property” accomplishes the same thing. The
    majority’s strained construction turns these key words invisible.
    In deciding the adequacy of the collateral description, the court should focus
    on the essentials: the maker of the Note pledged its only asset — intangibles — as
    security for the debt, identifying the collateral with both the UCC term “general
    intangibles” and the plain-English equivalent “intangible property.” From a
    functional perspective, these words reflect the parties’ intent that the maker’s
    equity interest in Live Oak secure the Note. Read fairly, interpreted reasonably,
    and construed liberally, these words identify the collateral sufficiently to serve that
    purpose. That is all the law requires.
    The majority’s approach of construing the operative UCC term with
    excessive rigidity goes against the UCC’s liberal-construction mandate and
    undercuts the purpose of the collateral-description provision.15 Courts must view
    the UCC as an integrated whole, and give attention to definitions without
    destroying meaning. In this way, courts serve the UCC’s goal of preserving
    parties’ agreements where possible so that the terms parties negotiate control the
    15
    The official comment explains the purpose of collateral description is evidentiary, “to make
    possible the identification of the collateral described,” and relates a more relaxed approach that
    “rejects any requirement that a description is insufficient unless it is exact and detailed (the so-
    called ‘serial number’ test).” Tex. Bus. & Com. Code Ann. § 9.108 cmt. 2.
    10
    contours of their bargain. This approach honors both the intent of the parties and
    freedom-of-contract principles.16           Likewise, this approach recognizes that a
    security interest promotes economic security because it provides the creditor with
    the promise of repayment by means of the collateral. If the debtor defaults, the
    creditor should get the benefit of its bargain. By holding parties to their bargains,
    courts also serve the UCC goal of promoting certainty and predictability in
    commercial transactions. Today’s holding defeats all of these objectives. Worse, it
    creates a sufficiency yardstick at odds with the very commercial purposes the UCC
    seeks to achieve.
    A common-sense reading of the loan documents and the statute can lead to
    only one reasonable conclusion: the collateral description suffices to create a
    security interest in Live Oak’s equity. So, the Parallax Parties cannot and did not
    show a probable right to the relief they sought.
    No Showing of Imminent, Irreparable Injury in the Interim
    Even if appellant Cheniere LNG Terminals, LLC were to wrongfully
    foreclose on Parallax Enterprises’ equity interest in Live Oak, any resulting harm
    or injury could be quantified and remedied through monetary damages. Because
    Parallax and Live Oak did not meet their burden to establish an inadequate remedy
    at law, this court should reverse the trial court’s order granting a temporary
    injunction and remand for further proceedings.
    Texas courts consider an injury irreparable if the party could not be
    compensated adequately in damages or if those damages could not be calculated.17
    16
    James J. White & Robert S. Summers, Uniform Commercial Code 911 (2d. 1980) (noting that
    sweeping clauses that give parties to secured transactions the “ability to monopolize collateral —
    and to have collateral monopolized –comports with freedom of contract.’)
    17
    See 
    Butnaru, 84 S.W.3d at 204
    ; N. Cypress Med. Ctr. Operating Co., Ltd. v. St. Laurent, 
    296 S.W.3d 171
    , 175 (Tex. App.—Houston [14th Dist.] 2009, no pet.). An adequate remedy at law
    is one that is “as complete, practical, and efficient to the prompt administration of justice as is
    11
    Most of the time money damages suffice to compensate an injured party.18 Only
    when the loss at issue is “legally ‘unique’ or irreplaceable” might damages be
    found an inadequate remedy.19              Thus, the law permits trial courts to grant
    injunctive relief in foreclosure actions involving real property because the law
    generally views real estate as unique.20 But, today’s case presents a dispute over
    contract rights, not real property. Courts typically do not enforce contract rights
    through injunction, because an applicant who may recover breach-of-contract
    damages rarely can establish an irreparable injury or inadequate legal remedy.21
    As the applicants in the temporary-injunction hearing, the Paralllax Parties
    had the burden to prove that their damages cannot be calculated.22 As the parties
    opposing the application, the Cheniere Parties did not have to disprove that the
    Parallax Parties’ claimed damages could not be calculated. The Parallax Parties
    fell short in making the requisite showing. The trial court found in its order that the
    Parallax Parties demonstrated an imminent, irreparable injury from the planned
    foreclosure because: (1) Parallax Enterprises would lose ownership and control
    over assets, including Live Oak, the rights to which are the subject of the parties’
    claims in the case; and (2) the Parallax Parties would be forced to defend against
    dismissal of claims that Live Oak has asserted against the Cheniere Parties and
    against claims that the Cheniere Parties state they intend to assert through Live
    equitable relief.” Tex. Black Iron, Inc. v. Arawak Energy Int’l Ltd., 
    527 S.W.3d 579
    , 584 (Tex.
    App.—Houston [14th Dist.] 2017, no pet.).
    18
    See St. 
    Laurent, 296 S.W.3d at 175
    .
    19
    
    Id. 20 See
    Butnaru, 84 S.W.3d at 211 
    (noting a trial court may grant equitable relief when dispute
    involves real property); Pinnacle Premier Props., Inc. v. Breton, 
    447 S.W.3d 558
    , 565 n.10 (Tex.
    App.—Houston [14th Dist.] 2014, no pet.) (noting real estate is generally considered unique).
    21
    St. 
    Laurent, 296 S.W.3d at 175
    .
    22
    
    Id. at 177.
    12
    Oak. The trial court concluded that injunctive relief was necessary to avoid the
    Cheniere Parties’ performing an act relating to the subject of the pending litigation
    that would violate the Parallax Parties’ rights and tend to render any judgment
    ineffectual under section 65.011(2).
    The Parallax Parties failed to establish an imminent, irreparable injury. The
    trial court abused its discretion in finding otherwise because any harm resulting
    from foreclosure on the equity interest in Live Oak can be quantified through
    monetary damages.
    Loss of Claims Live Oak asserted against the Cheniere Parties
    The evidence at the injunction hearing showed that Live Oak has no assets
    other than its claims in this litigation — claims for damages in the amount of the
    debt Live Oak claims to have incurred to vendors based on the Cheniere Parties’
    alleged promises (“Vendor Debt Claim”), rescission or damages for alleged
    fraudulent inducement of the Note (“Fraudulent-Inducement Claim”), and a
    declaratory judgment that the Note is properly characterized as equity or does not
    create an enforceable security interest (“Declaratory Judgment Claims”).
    Vendor Debt Claim
    The Vendor Debt Claim is for a sum certain. Live Oak’s “Accounts Payable
    Aging Detail” report shows outstanding debt to vendors in the amount of nearly
    $4.3 million. Whether Cheniere LNG Terminals, LLC or Parallax Enterprises
    owns Live Oak and thus controls the Vendor Debt Claim does not change the
    quantifiable value of the claim that would be lost if the Cheniere Parties caused
    Live Oak to file a nonsuit.
    The Parallax Parties assert that foreclosure of Parallax Enterprises’ interest
    in Live Oak would deprive it “of the damages awardable on those claims,” which
    13
    Parallax Enterprises would have to spend money to relitigate on Live Oak’s behalf
    after proving that the foreclosure was unlawful. But the value of the claims lost
    could be quantified and awarded as damages in this case if it is shown that
    Cheniere LNG Terminals, LLC wrongfully foreclosed upon the interest.23 In their
    reply brief, the Cheniere Parties describe the damages for the wrongful foreclosure
    as “the amount of vendor charges Live Oak supposedly incurred in reliance on
    Cheniere’s alleged representations for which Parallax Enterprises became liable as
    a result of the foreclosure.”        Some courts have held that attorneys’ fees are
    available for obtaining a declaration of wrongful foreclosure.24                The Parallax
    Parties produced no evidence that the Cheniere Parties could not pay any such
    damages and fees.25
    The Fraudulent-Inducement and Declaratory-Judgment Claims
    The Parallax Parties argued that if Cheniere LNG Terminals, LLC
    forecloses, the Cheniere Parties could cause Live Oak to nonsuit the Fraudulent
    Inducement Claim and the Declaratory Judgment Claims. The Parallax Parties’
    representative testified that foreclosure may complicate the litigation. Like Live
    Oak, the other Parallax Parties are either signatories to or guarantors of the Note,
    23
    See St. 
    Laurent, 296 S.W.3d at 177
    (reversing injunctive relief because applicant failed to
    establish his damages could not be calculated, noting expert witnesses frequently offer opinions
    regarding the value of a partnership interest); Durkay v. Madco Oil Co., Inc., 
    862 S.W.2d 14
    , 21
    (Tex. App.—Corpus Christi 1993, writ denied) (stating measure of damages for wrongful
    foreclosure is difference between value of property at time of foreclosure and any indebtedness
    owed).
    24
    See, e.g., Cadle Co. v. Ortiz, 
    227 S.W.3d 831
    , 837–38 (Tex. App.—Corpus Christi 2007, pet.
    denied).
    25
    Cf. Tex. Black 
    Iron, 527 S.W.3d at 587
    (“Texas cases hold that a plaintiff does not have an
    adequate remedy at law if the defendant faces insolvency or becoming judgment proof before
    trial.”).
    14
    and they maintain all of the same rights and abilities to rescind, recharacterize, or
    obtain damages relating to the Note through their own claims against the Cheniere
    Parties. Thus, whether Live Oak maintains those claims has no effect on the
    Parallax Parties’ right to relief under the Fraudulent Inducement Claims. To the
    extent Live Oak suffers a separate negative impact from not pursuing these claims,
    Parallax Enterprises can obtain damages for Live Oak if it proves wrongful
    foreclosure, as explained above.
    Potential for the Cheniere Parties to Cause Live Oak to Assert Claims
    The Parallax Parties’ argument that foreclosure may allow the Cheniere
    Parties to cause Live Oak to pursue claims against Live Oak’s principals—some of
    whom are also principals of other Parallax Parties—likewise does not support the
    injunction. Live Oak’s principals are not parties to the injunction, and the Parallax
    Parties have no standing to assert a potential threat of litigation against others as
    injury to themselves.26
    The Parallax Parties maintain that the Cheniere Parties could cause Live Oak
    to assert claims against them and that they have no legal remedy available to
    recoup the costs of defending against ostensibly frivolous claims. Contrary to
    these assertions, rules and statutes authorize sanctions against parties for filing
    frivolous claims.27 And, the Parallax Parties’ apprehensions of what the Cheniere
    Parties could or might do in the future do not constitute an imminent, irreparable
    injury necessary for injunctive relief.28
    26
    See Heckman v. Williamson Cty., 
    369 S.W.3d 137
    , 155 (Tex. 2012) (standing requires
    showing that plaintiff—rather than a third party or the public at large—was personally injured).
    27
    Nath v. Tex. Children’s Hosp., 
    446 S.W.3d 355
    , 365 (Tex. 2014).
    28
    See Camp Mystic, Inc. v. Eastland, 
    399 S.W.3d 266
    , 276 (Tex. App.—San Antonio 2012, no
    pet.) (“fear or apprehension of the possibility of injury is not sufficient; injunctive relief requires
    the plaintiff to prove the defendant has attempted or intends to harm the plaintiff in the future”
    15
    The record contains no evidence that the Cheniere Parties intend to cause
    Live Oak to assert claims against the Parallax Parties, and any apprehension that
    they will do so cannot support injunctive relief. 29
    Loss of Control and Ownership of Live Oak
    The Parallax Parties also point to their claimed loss of continued control and
    ownership by Parallax Enterprises over its interest in Live Oak as evidence of
    irreparable injury. In certain scenarios, courts have recognized the existence of an
    irreparable injury where an applicant will suffer the loss of unique management
    rights in a company.          For example, in Sonwalkar v. St. Luke’s Sugar Land
    Partnership, L.L.P., the First Court of Appeals concluded that unique management
    rights related to interests in a limited liability partnership supported injunctive
    relief.30 The management rights included the right to participate in the selection of
    governing members of the partnership that could block major actions, such as
    capital calls.31      Unlike today’s case, Sonwalkar involved a potential loss of
    management rights in an ongoing business that could not “be measured by any
    certain pecuniary standard.”32 Live Oak has no ongoing business. According to
    the Parallax Parties, Live Oak’s only assets are its claims in this case. Unlike the
    rights at issue in Sonwalkar, the management rights the Parallax Parties cite can be
    measured in monetary damages. The only evidence of management rights in Live
    Oak that would be lost concern management of claims in litigation. The value of
    litigation claims can be measured by a certain pecuniary standard regardless of
    (internal quotation marks omitted)); Morris v. Collins, 
    881 S.W.2d 138
    , 140 (Tex. App.—
    Houston [1st Dist.] 1994, writ denied).
    29
    
    Morris, 881 S.W.2d at 140
    .
    30
    
    394 S.W.3d 186
    , 201 (Tex. App.—Houston [1st Dist.] 2012, no pet.).
    31
    
    Id. 32 Id.
    16
    who manages the claims; thus, loss of management does not establish an
    irreparable injury.33
    Though Texas law recognizes the propriety of injunctive relief when the
    enjoined conduct threatens to disrupt an ongoing business,34 the Parallax Parties
    presented no evidence at the hearing — and make no argument on appeal— that
    foreclosing on the equity interest in Live Oak would disrupt any ongoing business.
    In the trial court, the Parallax Parties argued that the Cheniere Parties were
    attempting to gain the ability to manage and control Live Oak by foreclosing on
    the Live Oak equity interest.           The Parallax Parties asserted that even if the
    Cheniere Parties were to obtain this equity interest by foreclosure, they would not
    obtain the ability to manage and control Live Oak because under Delaware law the
    assignment of a limited liability company interest does not entitle the assignee to
    become a member or exercise the rights of a member. This argument, if correct,
    only shows that the Cheniere Parties will not obtain control or management of Live
    Oak upon foreclosure. This argument does not show that the Parallax Parties will
    lose the ability to manage and control Live Oak or will suffer irreparable injury.
    The en banc majority states that, even if the Cheniere Parties would not
    obtain control or management of Live Oak by foreclosing on the Live Oak equity
    interest, the Parallax Parties face irreparable harm from the foreclosure because,
    under title 6, section 18-702(b)(3) of the Delaware Code, foreclosure would cause
    Parallax to cease to be a member of Live Oak and thus to lose the ability to manage
    33
    See St. 
    Laurent, 296 S.W.3d at 176
    (finding no irreparable injury because loss of partnership
    shares could be measured in monetary damages); see also Doerwald v. MBank Fort Worth, N.A.,
    
    740 S.W.2d 86
    , 90 (Tex. App.—Fort Worth 1987, no writ) (finding no irreparable injury because
    party to joint venture agreement with 5% interest in profits could be compensated for lost profits
    measured by pecuniary-loss standard).
    34
    See 
    Sonwalkar, 394 S.W.3d at 199-200
    ; Liberty Mut. Ins. Co. v. Mustang Tractor & Equip.
    Co., 
    812 S.W.2d 663
    , 666 (Tex. App.—Houston [14th Dist.] 1991, no writ).
    17
    and control Live Oak.35 The en banc majority also concludes that if Parallax
    ceases to be the sole member of Live Oak, there would be no members of Live Oak
    after foreclosure, thus triggering irreparable harm by the automatic dissolution of
    Live Oak under title 6, section 18-801(a)(4) of the Delaware Code.36
    First, the Parallax Parties did not assert either of these points in the trial
    court, so this court should not base its decision on this ground. Second, the en
    banc majority does not mention the second sentence of section 18-702(b)(3).37 The
    entire subsection provides that, unless otherwise provided in the limited liability
    company agreement:
    (3) A member ceases to be a member and to have the power to
    exercise any rights or powers of a member upon assignment of all of
    the member’s limited liability company interest. Unless otherwise
    provided in a limited liability company agreement, the pledge of, or
    granting of a security interest, lien or other encumbrance in or
    against, any or all of the limited liability company interest of a
    member shall not cause the member to cease to be a member or to
    have the power to exercise any rights or powers of a member.38
    In its construction of the Delaware statutes, the en banc majority equates the
    assignment of a limited liability company interest with the foreclosure of a security
    interest in a limited liability company interest. But, the plain text of section 18-
    702(b)(3) shows that the Delaware General Assembly does not treat these terms as
    equivalent.39 The General Assembly determined that unless otherwise provided in
    the limited liability company agreement, a member’s rights as a member cease
    35
    Ante at 17.
    36
    Ante at 17-18; Del. Code Ann. tit. 6 § 18-801(a)(4).
    37
    See ante at 17; Del. Code Ann. tit. 6 § 18-702(b)(3).
    38
    Del. Code Ann. tit. 6 § 18-702(b)(3) (emphasis added).
    39
    See 
    id. 18 when
    the member assigns the member’s limited liability company interest to
    another party but that a member’s rights as a member do not cease when the
    member grants a security interest in the member’s limited liability company
    interest.40 The General Assembly did not provide that a member’s rights as a
    member cease upon foreclosure of a security interest in the member’s limited
    liability company interest.41 Thus, the Parallax Parties did not show that Parallax
    would cease to be a member in Live Oak upon foreclosure of the security interest
    in the Live Oak equity. Likewise, the Parallax Parties did not prove that upon
    foreclosure there would be no members in Live Oak, which might trigger the
    automatic dissolution of Live Oak under section 801(a)(4).42 The evidence before
    the trial court did not show that Parallax would cease to be a member upon
    foreclosure of the security interest in the Live Oak equity. So, the Parallax Parties
    did not show irreparable harm on the ground that Parallax would cease to be a
    member or on the ground that Live Oak would dissolve automatically.
    Section 65.011
    The Parallax Parties also argue that section 65.011(2) of the Texas Civil
    Practice and Remedies Code authorizes the temporary injunction.                       Section
    65.011(2) permits a trial court to issue an injunction when a party is about to
    perform an act relating to the subject matter of pending litigation, in violation of
    the rights of the applicant, and the act would tend to render the judgment in the
    case ineffectual.43
    40
    See 
    id. 41 See
    id.
    42
    Del. 
    Code Ann. tit. 6 § 18-801(a)(4).
    43
    See Tex. Civ. Prac. & Rem. Code § 65.011(2); Topletz v. City of Dallas, No. 05-16-00741-
    CV, 
    2017 WL 1281393
    , at *4 (Tex. App.—Dallas Apr. 6, 2017, no pet.) (mem. op.) (affirming
    injunction in part where trial court found conduct of defendants affected core functions of the
    19
    Section 65.011(2) does not support the trial court’s injunction for two
    reasons. First, the Parallax Parties failed to show an irreparable injury under
    section 65.011(2).44 Second, the statute requires the Parallax Parties to establish
    that the act of which they complain would render any judgment by the trial court
    ineffectual. The Parallax Parties argue that allowing Cheniere LNG Terminals,
    LLC to foreclose on the equity interest in Live Oak under the Note would render a
    judgment in this case at least partially ineffectual because the trial court ultimately
    could find that the Cheniere Parties have no rights under the Note, thus allowing
    the Cheniere Parties to exercise disputed rights before they can be adjudicated.
    But the Parallax Parties’ representative testified that even if Cheniere LNG
    Terminals, LLC forecloses on Live Oak, Parallax Enterprises would not dismiss its
    claims against the Cheniere Parties.
    Parallax Enterprises does not contend it will be entitled to more money
    under its claims if it owns Live Oak than if it does not. In other words, Parallax
    Enterprises’ ownership of Live Oak does not affect its ability to pursue its claims
    regarding the validity of the Note in this lawsuit. Because the Parallax Parties have
    not shown that the relief they seek would be affected even if the injunction were
    not issued, they have not shown that the judgment would be rendered ineffectual.45
    As to any injury that Live Oak might suffer from foreclosure, nothing in the record
    or in the Parallax Parties’ argument suggests that monetary damages could not be
    awarded to compensate for wrongful foreclosure or that any judgment awarding
    court).
    44
    See Town of Palm 
    Valley, 87 S.W.3d at 111
    (holding that applicant seeking a temporary
    injunction under subsection 65.001(1) of the general injunction statute was not exempt from
    traditional requirement of irreparable harm); City of El 
    Paso, 408 S.W.3d at 37
    .
    45
    See Guillermo Benavides Garza Inv. Co. v. Benavides, No. 04-13-00453-CV, 
    2014 WL 3339555
    , at *4 (Tex. App.—San Antonio July 9, 2014, no pet.) (mem. op.).
    20
    those damages would be ineffectual.46 The cases the Parallax Parties cite involved
    materially different facts and do not support a temporary injunction under the facts
    of today’s case.47
    Any damages to the Parallax Parties from the loss of Parallax Enterprises’
    equity interest in Live Oak can be measured by a certain pecuniary standard.48 The
    trial court abused its discretion in finding the Parallax Parties would suffer an
    irreparable injury where the evidence established any losses could be compensated
    through monetary damages.49 Therefore, this court should sustain the Cheniere
    Parties’ second issue.
    III. CONCLUSION
    The trial court abused its discretion in granting the temporary injunction
    because the Parallax Parties did not establish either a probable right to relief or an
    irreparable injury. This court should reverse the trial court’s order granting
    temporary injunctive relief and remand for further proceedings. Because it does
    46
    See Hotze v. Hotze, No. 01-18-00039-CV, 
    2018 WL 3431587
    , at *6 (Tex. App.—Houston [1st
    Dist.] July 17, 2018, no pet.) (mem. op.) (applicant presented no evidence that judgment
    rendered against brothers for wrongfully receiving advance payments would be rendered
    ineffectual).
    47
    See Brazos River Conserv. & Reclamation Dist. v. Allen, 
    171 S.W.2d 842
    , 847 (Tex. 1943)
    (permitting injunction because allowing separate suit involving same subject matter to go
    forward would “not afford a remedy as practical and efficient to the ends of justice and its
    prompt administration as that of injunction”); Gen. Fin. Servs., Inc. v. Practice Place, Inc., 
    897 S.W.2d 516
    , 519 (Tex. App.—Fort Worth 1995, no writ) (involving foreclosure on real
    property); Trinity Water Reserve, Inc. v. Evans, 
    829 S.W.2d 851
    , 866 (Tex. App.—Beaumont
    1992, no writ) (restraining action that could put applicants into bankruptcy because applicants
    would have no realistic or fully adequate remedy at law).
    48
    See St. 
    Laurent, 296 S.W.3d at 176
    (finding no irreparable injury because loss of partnership
    shares could be measured in money damages); see also 
    Doerwald, 740 S.W.2d at 90
    (finding no
    irreparable injury because party to joint venture agreement with 5% interest in profits could be
    compensated for lost profits measured by pecuniary loss standard).
    49
    See St. 
    Laurent, 296 S.W.3d at 176
    ; 
    Doerwald, 740 S.W.2d at 90
    .
    21
    not, I respectfully dissent.
    /s/    Kem Thompson Frost
    Chief Justice
    En banc court consists of Chief Justice Frost and Justices Christopher, Wise,
    Jewell, Bourliot, Zimmerer, Hassan, and Poissant. (Spain, J., not participating).
    Justice Christopher authored the Opinion on Reconsideration En Banc, in which
    Justices Wise, Bourliot, Zimmerer, Hassan, and Poissant joined. Justice Zimmerer
    authored the Concurring Opinion on Reconsideration En Banc. Chief Justice Frost
    authored the Dissenting Opinion on Reconsideration En Banc, in which Justice
    Jewell joined.
    22