FILED IN 4th COURT OF APPEALS SAN ANTONIO, TEXAS 3/26/2015 9:16:02 PM KEITH E. HOTTLE Clerk
EXHIBIT A
12427086v.1 NO. 04-14-00606-CV
IN THE COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS SAN ANTONIO, TEXAS
ARGO GROUP US, INC., COLONY MANAGEMENT SERVICES, INC., COLONY INSURANCE COMPANY, COLONY NATIONAL INSURANCE COMPANY, COLONY SPECIALTY INSURANCE COMPANY, COLONY AGENCY SERVICES, INC., AND ARGO GROUP INTERNATIONAL HOLDINGS, LTD.,
Appellants,
v.
LOUIS D. LEVINSON, INTERNATIONAL FINANCIAL GROUP, INC., GUILFORD SPECIALTY GROUP, INC., GUILFORD INSURANCE COMPANY, AND THE BURLINGTON INSURANCE COMPANY,
Appellees.
Appeal from the 221st Judicial District Court, Bexar County, Texas Trial Court Cause No. 2014-CI-09550 Hon. Antonia Arteaga, Presiding
SURREPLY TO APPELLANTS’ REPLY TO APPELLEES’ RESPONSE TO APPELLANTS’ MOTION FOR REHEARING
Appellees Louis D. Levinson (“Levinson”), International Financial
Group, Inc. (together with its affiliates, “IFG”), Guilford Specialty Group, Inc.,
2 12427086v.1 Guilford Insurance Company, and The Burlington Insurance Company
(collectively “Appellees”) hereby submit this surreply in opposition to Appellants’
Reply to Appellees’ Response to the Motion for Rehearing and state as follows:
Appellants ask this Court to rehear their appeal, insisting that they are
entitled to an order firing Levinson from his employment with IFG, a job he has
held for over seven months. Appellants do not and cannot dispute that, following
the trial court’s denial of their request for temporary injunction, Levinson’s non-
compete obligations expired by their own terms on August 25, 2014. Appellants
also cannot dispute that they did not seek a stay pending appeal nor did they ask
this Court for an emergency injunction pending appeal before Levinson lawfully
began work for IFG one day after the non-compete expired, on August 26, 2014.
Today, more than seven months later, Appellants still have not pointed to any
court, in any jurisdiction, that has ever issued an order removing an employee from
his position in order to retroactively effect an “equitable extension” of an expired
non-compete.
In a last ditch effort to resurrect their appeal, Appellants dredge up an
unpublished case from the appeals court in Dallas, Nationsbuilders Insurance
Services, Inc. v. Houston International Insurance Group, Ltd., No. 05-2-01103-
CV, 2013 WL 3423755 (Tex. App.—Dallas 2013) (not designated for publication).
But that case does not help them. After citing Weatherford Oil Tool Co. v. A.G.
3 12427086v.1 Campbell, 340 S.W. 2d 950, 952 (Tex. 1960), the court there decides that the
appeal is not moot under Delaware law. See Nationsbuilders at *1 (“The parties
also agreed that Delaware law would apply to any disputes between the
parties . . . .” (emphasis added)). But this case, unlike Nationsbuilders, is
controlled by Texas law. And Weatherford Oil instructs that, as a matter of Texas
law, this appeal is moot. Weatherford Oil, 349 S.W.2d at 953.1
Appellants’ assertions regarding the preservation of the status quo are
similarly strained. The status quo in this case—the “last, actual, peaceable,
noncontested status which preceded the pending controversy,” Transp. Co. of
Texas v. Robertson Transports, Inc., 261 S.W.2d 549, 553-54 (Tex. 1953)
(emphasis added)—was that Levinson was bound by a non-compete clause only
until August 25, 2014. Levinson and IFG have never contested that. But they
1 It is noteworthy that the court in Nationsbuilders was reviewing an arbitrator’s award under the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and properly afforded the arbitrator’s award great deference. See SSP Holdings Ltd. P’ship v. Lopez, 432 S.W.3d 487, 492 (Tex. App.—San Antonio 2014) (“An arbitration award is presumed valid and entitled to great deference and our review of the arbitration award is extraordinarily narrow.” (internal quotations omitted)); see also Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677, 683 (Tex. App.—Dallas 2010, pet. denied) (even a mistake of law or fact by the arbitrator does not justify vacating the award). Here, in sharp contrast, this Court must pay great deference to the trial court’s decision not to grant a temporary injunction. See Morgan Stern Realty Holdings, LLC v. Horizon El Portal, LLC, No. 04-14- 00208-CV, 2014 WL 2531980, at *3 (appellate court may reverse trial court’s decision to deny a temporary injunction only for a “clear abuse of [] discretion”).
4 12427086v.1 have strenuously contested Argo’s suggestion that Levinson may be precluded
from beginning work after the non-compete by its terms expired, or removed from
his job for some period of time under the guise of “equitable extension” of an
expired non-compete. Thus, the last “actual, peaceable, noncontested status”
preceding this suit is not, as Argo insists, that Levinson was prohibited indefinitely
from returning to work. The last noncontested status quo was that Levinson was
subject to a non-compete provision until August 25, 2014.
Even as to Appellants’ proffered status quo, their lack of diligence in
seeking to maintain their proffered status weighs heavily against this Court making
an exception to its mootness doctrine and holding that Levinson can be removed
from his job and prevented from working for some additional period of time.
Appellants had ample opportunity to preserve the proffered status quo before the
expiration of Levinson’s non-compete obligations, but delayed in seeking relief.
Argo’s attorneys first sent a letter to Levinson in September 2013, expressing
“serious concerns” that he had breached his contractual obligations. See Merits
Brief of Appellees at 49 n.19. But then they waited another nine months to file
suit. And even after filing suit two months before Levinson’s non-compete was set
to expire, Appellants delayed again, setting a temporary injunction hearing a mere
11 days before the covenant’s expiration. And after their motion for a temporary
injunction was denied, Appellants did not ask the trial court for a stay pending
5 12427086v.1 appeal, and did not seek an emergency order from this Court enjoining Levinson
from working until this Court could address the issues. This Court should reject
Appellants’ attempt to take advantage of their own delay and their effort to
persuade this Court to exercise its extraordinary equitable power to remove
Levinson from his employment. Equity “aids the diligent and not those who
slumber on their rights. ” In re Laibe Corp., 307 S.W.3d 314, 318 (Tex. 2010); see
also RenewData Corp. v. Strickler, No. 03-05-00273-CV, 2006 WL 504998, at *5
(Tex. App.—Austin 2006) (not designated for publication) (“Thus, if [appellant]
was itself responsible for the delayed enforcement of the covenant not to compete,
the district court may properly deny the equitable relief requested.”).
Appellants, moreover, try to draw too fine a line in their attempts to
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FILED IN 4th COURT OF APPEALS SAN ANTONIO, TEXAS 3/26/2015 9:16:02 PM KEITH E. HOTTLE Clerk
EXHIBIT A
12427086v.1 NO. 04-14-00606-CV
IN THE COURT OF APPEALS FOR THE FOURTH DISTRICT OF TEXAS SAN ANTONIO, TEXAS
ARGO GROUP US, INC., COLONY MANAGEMENT SERVICES, INC., COLONY INSURANCE COMPANY, COLONY NATIONAL INSURANCE COMPANY, COLONY SPECIALTY INSURANCE COMPANY, COLONY AGENCY SERVICES, INC., AND ARGO GROUP INTERNATIONAL HOLDINGS, LTD.,
Appellants,
v.
LOUIS D. LEVINSON, INTERNATIONAL FINANCIAL GROUP, INC., GUILFORD SPECIALTY GROUP, INC., GUILFORD INSURANCE COMPANY, AND THE BURLINGTON INSURANCE COMPANY,
Appellees.
Appeal from the 221st Judicial District Court, Bexar County, Texas Trial Court Cause No. 2014-CI-09550 Hon. Antonia Arteaga, Presiding
SURREPLY TO APPELLANTS’ REPLY TO APPELLEES’ RESPONSE TO APPELLANTS’ MOTION FOR REHEARING
Appellees Louis D. Levinson (“Levinson”), International Financial
Group, Inc. (together with its affiliates, “IFG”), Guilford Specialty Group, Inc.,
2 12427086v.1 Guilford Insurance Company, and The Burlington Insurance Company
(collectively “Appellees”) hereby submit this surreply in opposition to Appellants’
Reply to Appellees’ Response to the Motion for Rehearing and state as follows:
Appellants ask this Court to rehear their appeal, insisting that they are
entitled to an order firing Levinson from his employment with IFG, a job he has
held for over seven months. Appellants do not and cannot dispute that, following
the trial court’s denial of their request for temporary injunction, Levinson’s non-
compete obligations expired by their own terms on August 25, 2014. Appellants
also cannot dispute that they did not seek a stay pending appeal nor did they ask
this Court for an emergency injunction pending appeal before Levinson lawfully
began work for IFG one day after the non-compete expired, on August 26, 2014.
Today, more than seven months later, Appellants still have not pointed to any
court, in any jurisdiction, that has ever issued an order removing an employee from
his position in order to retroactively effect an “equitable extension” of an expired
non-compete.
In a last ditch effort to resurrect their appeal, Appellants dredge up an
unpublished case from the appeals court in Dallas, Nationsbuilders Insurance
Services, Inc. v. Houston International Insurance Group, Ltd., No. 05-2-01103-
CV, 2013 WL 3423755 (Tex. App.—Dallas 2013) (not designated for publication).
But that case does not help them. After citing Weatherford Oil Tool Co. v. A.G.
3 12427086v.1 Campbell, 340 S.W. 2d 950, 952 (Tex. 1960), the court there decides that the
appeal is not moot under Delaware law. See Nationsbuilders at *1 (“The parties
also agreed that Delaware law would apply to any disputes between the
parties . . . .” (emphasis added)). But this case, unlike Nationsbuilders, is
controlled by Texas law. And Weatherford Oil instructs that, as a matter of Texas
law, this appeal is moot. Weatherford Oil, 349 S.W.2d at 953.1
Appellants’ assertions regarding the preservation of the status quo are
similarly strained. The status quo in this case—the “last, actual, peaceable,
noncontested status which preceded the pending controversy,” Transp. Co. of
Texas v. Robertson Transports, Inc., 261 S.W.2d 549, 553-54 (Tex. 1953)
(emphasis added)—was that Levinson was bound by a non-compete clause only
until August 25, 2014. Levinson and IFG have never contested that. But they
1 It is noteworthy that the court in Nationsbuilders was reviewing an arbitrator’s award under the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and properly afforded the arbitrator’s award great deference. See SSP Holdings Ltd. P’ship v. Lopez, 432 S.W.3d 487, 492 (Tex. App.—San Antonio 2014) (“An arbitration award is presumed valid and entitled to great deference and our review of the arbitration award is extraordinarily narrow.” (internal quotations omitted)); see also Centex/Vestal v. Friendship W. Baptist Church, 314 S.W.3d 677, 683 (Tex. App.—Dallas 2010, pet. denied) (even a mistake of law or fact by the arbitrator does not justify vacating the award). Here, in sharp contrast, this Court must pay great deference to the trial court’s decision not to grant a temporary injunction. See Morgan Stern Realty Holdings, LLC v. Horizon El Portal, LLC, No. 04-14- 00208-CV, 2014 WL 2531980, at *3 (appellate court may reverse trial court’s decision to deny a temporary injunction only for a “clear abuse of [] discretion”).
4 12427086v.1 have strenuously contested Argo’s suggestion that Levinson may be precluded
from beginning work after the non-compete by its terms expired, or removed from
his job for some period of time under the guise of “equitable extension” of an
expired non-compete. Thus, the last “actual, peaceable, noncontested status”
preceding this suit is not, as Argo insists, that Levinson was prohibited indefinitely
from returning to work. The last noncontested status quo was that Levinson was
subject to a non-compete provision until August 25, 2014.
Even as to Appellants’ proffered status quo, their lack of diligence in
seeking to maintain their proffered status weighs heavily against this Court making
an exception to its mootness doctrine and holding that Levinson can be removed
from his job and prevented from working for some additional period of time.
Appellants had ample opportunity to preserve the proffered status quo before the
expiration of Levinson’s non-compete obligations, but delayed in seeking relief.
Argo’s attorneys first sent a letter to Levinson in September 2013, expressing
“serious concerns” that he had breached his contractual obligations. See Merits
Brief of Appellees at 49 n.19. But then they waited another nine months to file
suit. And even after filing suit two months before Levinson’s non-compete was set
to expire, Appellants delayed again, setting a temporary injunction hearing a mere
11 days before the covenant’s expiration. And after their motion for a temporary
injunction was denied, Appellants did not ask the trial court for a stay pending
5 12427086v.1 appeal, and did not seek an emergency order from this Court enjoining Levinson
from working until this Court could address the issues. This Court should reject
Appellants’ attempt to take advantage of their own delay and their effort to
persuade this Court to exercise its extraordinary equitable power to remove
Levinson from his employment. Equity “aids the diligent and not those who
slumber on their rights. ” In re Laibe Corp., 307 S.W.3d 314, 318 (Tex. 2010); see
also RenewData Corp. v. Strickler, No. 03-05-00273-CV, 2006 WL 504998, at *5
(Tex. App.—Austin 2006) (not designated for publication) (“Thus, if [appellant]
was itself responsible for the delayed enforcement of the covenant not to compete,
the district court may properly deny the equitable relief requested.”).
Appellants, moreover, try to draw too fine a line in their attempts to
distinguish cases in other contexts in which courts have held appeals moot once the
disputed action has occurred. Appellants are correct, of course, that, in a case like
Toudouze v. Urban Renewal Agency of San Antonio, 404 S.W.2d 821 (Tex. Civ.
App.—San Antonio 1966, writ ref’d n.r.e.), a court could not order a party to
undemolish buildings. But similarly here, IFG cannot unhire Levinson, and the
work he has done over the past seven months following the expiration of his non-
compete cannot be undone. As this Court recognized, Argo’s proper remedy for
any alleged past violation of the non-compete, if any such violation resulting in
economic harm can be proved, is damages. Argo Grp. US, Inc. v. Levinson, No.
6 12427086v.1 04-14-00606-CV, 2015 WL 196174, at *2 n.1 (Tex. App.—San Antonio 2015)
(not designated for publication); see also Tex. Bus. & Com. Code Ann. § 15.51(a).
Indeed, a full trial on the merits is scheduled for October 12, 2015.2 But as to
injunctive relief, because “the thing [Appellants] were trying to prevent from
happening has already happened,” Argo’s request for a temporary injunction is
now moot. Toudouze, 404 S.W.2d at 821; see also Weatherford Oil, 340 S.W. 2d
at 952.
Finally, Appellants’ argument that IFG has taken a “we got away with
it” approach is way off base. First, Levinson did not begin working for IFG until
after his non-compete expired and after the trial court ruled following a three-day
evidentiary hearing that Argo was not entitled to a temporary injunction that would
bar him from working for IFG after its expiration. And second, if Levinson
violated the terms of his non-compete and Argo suffered monetary harm, it can
seek damages, as this Court has recognized.
CONCLUSION
Appellants’ appeal is moot, and is not somehow revived because
Appellants requested an equitable extension below. But, even if the appeal were
not moot, the lower court did not abuse its discretion and the denial of the
2 Argo has even delayed the trial. IFG sought a trial date of May 18; Argo persuaded the district court that the trial should be delayed for five months, until October 12.
7 12427086v.1 temporary injunction should be affirmed. Appellants’ Motion for Rehearing
should therefore be denied.
Respectfully submitted,
/s/ Julia W. Mann________________ Lawrence Morales, II Julia W. Mann State Bar No. 24051077 State Bar No. 00791171 The Morales Law Firm, P.C. Jackson Walker L.L.P. 115 E. Travis, Suite 1530 112 E. Pecan Street, Suite 2400 San Antonio, TX 78205 San Antonio, TX 78205 Tel: (210) 225-0811 Tel: (210) 978-7700 lawrence@themoralesfirm.com jmann@jw.com
ATTORNEY FOR LOUIS D. Anthony Herman LEVINSON Pro Hac Vice Covington & Burling LLP One CityCenter 850 Tenth Street NW Washington, DC 20001 Tel: (202) 662-5280 aherman@cov.com
ATTORNEYS FOR APPELLEES INTERNATIONAL FINANCIAL GROUP, INC., GUILFORD SPECIALTY GROUP, INC., GUILFORD INSURANCE COMPANY, AND THE BURLINGTON INSURANCE COMPANY
8 12427086v.1