Avco Corp. v. Interstate Southwest, Ltd.

145 S.W.3d 257, 2004 WL 944528
CourtCourt of Appeals of Texas
DecidedOctober 7, 2004
Docket14-03-01099-CV
StatusPublished
Cited by14 cases

This text of 145 S.W.3d 257 (Avco Corp. v. Interstate Southwest, Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Avco Corp. v. Interstate Southwest, Ltd., 145 S.W.3d 257, 2004 WL 944528 (Tex. Ct. App. 2004).

Opinion

OPINION

ADELE HEDGES, Chief Justice.

This is an accelerated appeal from a temporary anti-suit injunction obtained by the plaintiff below, Interstate Southwest Ltd. (“ISW”), enjoining two of the defendants below, AVCO Corporation and Tex-tron Lycoming Reciprocating Engine Division of AVCO Corporation (collectively “Lycoming”), from prosecuting two suits that they filed in Pennsylvania — one at law and one at equity — against three corporate affiliates of ISW: Interstate Forging Industries (“IFI”), Citation Wisconsin, LLC, and Citation Corporation. Finding that the trial court abused its discretion in granting the injunction, we reverse the court’s order and dissolve the injunction.

Background

Lycoming manufactures piston-driven aircraft engines. Under a Master Supply Agreement (“the MSA”), signed in 1995, IFI agreed to supply all of the rough forgings Lycoming required for making crankshafts for the engines. It is undisputed that the forgings have always been produced in Navasota, Texas. Originally, the forging facility was operated as IFI’s Southwest Division. ISW contends that in October 1996, it was formed as a Texas limited partnership. 1 IFI then sold its Southwest Division to ISW under a “Bill of Sale and Assignment Assumption Agreement.” Thus, according to ISW, it has been the sole producer of Lycoming’s rough forgings since 1996. IFI allegedly ceased to produce forgings as of that time and, in 2002, was converted into Citation Wisconsin, a holding company, which is also a defendant in the Pennsylvania cases. Lycoming maintains that it did not learn of the assignment until some point in 2002.

Beginning in 1999, crankshafts in Ly-coming engines began to fail. In 2002, the Federal Aviation Administration mandated a recall of Lycoming engines to replace the defective crankshafts. Lycoming blames IFI’s forging process for the defects, and IFI and ISW blame Lycoming’s design specifications. On October 14, 2002, Ly-coming and ISW entered into a Replacement Crankshaft Production Agreement for the production of crankshafts to fulfill the recall requirements.

On May 2, 2003, ISW filed suit in Grimes County, Texas, alleging claims against Lycoming for business disparage *261 ment and breach of contract and seeking declaratory relief regarding the rights and obligations of the parties under the MSA. Specifically, ISW claimed that Lycoming’s public statements regarding the cause of the crankshaft failures injured ISW’s reputation and that Lycoming breached the MSA by failing to pay for certain crankshafts. ISW further requested declaratory judgment that ISW was entitled to indemnity from Lycoming and that ISW was not obligated to indemnify Lycoming.

On May 22, 2003, Lycoming initiated suit in Pennsylvania against IFI, Citation Wisconsin, and Citation Corporation. 2 Ultimately, Lycoming brought two actions against these entities: an action at law seeking over $75 million in damages allegedly incurred as a result of the recall, and an action in equity requesting injunctive relief to force IFI to continue producing crankshafts under the MSA. In the damages action, Lycoming also alleged that Citation breached the MSA by causing its subsidiary, ISW, to file the Texas action in violation of a mediation clause. 3 Lycoming initially requested that the Pennsylvania court direct Citation to have ISW dismiss the Texas action pending mediation, but this request was subsequently withdrawn.

On May 23, 2003, a day after filing the Pennsylvania praecipe, Lycoming answered in the Texas litigation, asserting that ISW lacked standing to bring suit under the MSA because IFI, not ISW, was the signatory. On June 24, ISW filed an amended petition in the Texas lawsuit, claiming that IFI had assigned all of its rights and obligations under the MSA to ISW and that ISW was attorney-in-fact for

IFI on all matters pertaining to the MSA. The amended petition further requested a declaratory judgment that the assignment was valid.

On June 12, 2003, the parties to the Pennsylvania litigation entered into, and the judge signed, an Agreed Order for Preliminary Injunction, requiring IFI, Citation Wisconsin, and Citation Corporation to continue to produce all crankshaft forgings ordered by Lycoming. When forgings were not timely produced, Lycoming filed a motion for contempt in the Pennsylvania court on August 13, 2003. 4

On September 5, 2003, the Texas district judge signed a temporary restraining order requiring Lycoming to immediately cease prosecution of the Pennsylvania lawsuits. Lycoming then wrote two letters to the Pennsylvania court, essentially informing the court of the Texas TRO and stating that Lycoming did not intend to violate the TRO; the letter suggested that the Texas TRO did not restrain the Pennsylvania court from enforcing its own orders sua sponte. The Pennsylvania court then ordered the contempt proceeding to go forward as scheduled. All parties to the Pennsylvania lawsuits appeared at the hearing and announced ready, and no party objected to the proceedings based on the Texas TRO. Before any evidence was received, however, the parties agreed to a production schedule, and an agreement to that effect was memorialized on the record.

On September 25, 2003, after an eviden-tiary hearing, the Texas trial court entered a temporary injunction expressly prohibit *262 ing Lycoming from prosecuting the Pennsylvania lawsuits and requiring it to file any pleadings necessary to obtain a stay, abatement, or dismissal of the Pennsylvania lawsuits pending final judgment of the Texas court. In its order, the court specifically found, inter alia: (1) that IFI had assigned to ISW all of its rights and obligations under the MSA; (2) that Lycoming knew or should have known of the assignment no later than October 14, 2002, and either consented to the terms, waived the right to complain, or was otherwise es-topped from asserting lack of consent as a defense to the assignment; (3) that Ly-coming subsequently filed the Pennsylvania lawsuits with full knowledge of the assignment; (4) that the legal and factual issues in the Pennsylvania lawsuits were substantially similar to those raised in the Texas lawsuit; (5) that Lycoming sought to stay the Texas lawsuit by its actions in the Pennsylvania lawsuits; (6) that Lycom-ing prosecuted a motion for contempt in Pennsylvania despite issuance of the Texas TRO; (7) that unless the prosecution of the Pennsylvania lawsuits was immediately enjoined, ISW’s rights would be adjudicated by a foreign court in multiple lawsuits in which it was not a party; and (8) that prosecution of the Pennsylvania lawsuits threatened the jurisdiction of the Texas court, violated important public policies of Texas, and was vexatious and harassing to ISW.

Anti-suit Injunctions

In reviewing the issuance of a temporary anti-suit injunction, we utilize an abuse of discretion standard. Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex.1986).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Mitchell v. Turbine Resources Unlimited, Inc.
523 S.W.3d 189 (Court of Appeals of Texas, 2017)
Google, Inc. v. Expunction Order
441 S.W.3d 644 (Court of Appeals of Texas, 2014)
Rouse v. Texas Capital Bank, N.A.
394 S.W.3d 1 (Court of Appeals of Texas, 2011)
Ortiz v. Legal Concierge, Inc.
263 S.W.3d 385 (Court of Appeals of Texas, 2008)
Marketshare Telecom, L.L.C. v. Ericsson, Inc.
198 S.W.3d 908 (Court of Appeals of Texas, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
145 S.W.3d 257, 2004 WL 944528, Counsel Stack Legal Research, https://law.counselstack.com/opinion/avco-corp-v-interstate-southwest-ltd-texapp-2004.