Dan Simmons Simmons & Associates of North Texas, P.L.L.C DS Family, LP Financial Worx, Ltd. And Secure Connekt, Ltd. v. Richard Wylie, Individually KSW CPA, P.C. Fka Simmons & Wylie, P.C. And HMSW CPA, P.L.L.C.

• Court: Court of Appeals of Texas
• Decided: May 25, 2018
• Docket: 02-18-00166-CV
• Status: Published

Opinion

ACCEPTED 02-18-00166-CV SECOND COURT OF APPEALS FORT WORTH, TEXAS 5/25/2018 10:11 AM DEBRA SPISAK CLERK

No. 02-18-00166-CV

Dan Simmons, § In the Court of Appeals FILED IN Simmons & Associates of North § 2nd COURT OF APPEALS Texas, P.L.L.C.; DS Family, LP; § FORT WORTH, TEXAS Financial Worx, Ltd; and Sekure § 5/25/2018 10:11:40 AM Connekt, Ltd., § DEBRA SPISAK § Clerk Appellants, § § v. § Second District § Richard Wylie, individually, § KSW CPA, P.C., fka § Simmons & Wylie, P.C.; § HMSW CPA, P.L.L.C., § § Appellees. § Tarrant County, Texas

APPELLEES’ RESPONSE TO APPELLANTS’ MOTION FOR EMERGENCY STAY OF TEMPORARY INJUNCTION PENDING ACCELERATED APPEAL

Appellees Richard Wylie, Jr., KSW CPA, P.C., and HMSW CPA, P.L.L.C. (collectively,

“Defendants”) hereby submit their Response to Appellants’ Motion for Emergency Stay of

Temporary Injunction Pending Accelerated Appeal (the “Motion”).

As an initial matter, Appellants strangely cite Ruiz v. Estelle, 650 F.2d 555, 565 (5th Cir.

1981), as somehow governing the disposition of the Motion. However, this case does not

proceed pursuant to the Federal Rules of Civil Procedure. Under Tex. R. App. P. 29.3, this Court

must not stay the order of the trial court “if the appellant’s rights would be adequately protected

by supersedeas or another order made under Rule 24.” Appellants have neither availed

themselves of the relief permitted under Rule 24 nor made any showing that such relief would

not adequately protect their rights. They have ignored the relevant rules altogether.

Furthermore, Appellants base much of their Motion on claimed flaws in the trial court’s

order. Despite having had the proposed order that served as a model for the trial court’s order

RESPONSE TO MOTION FOR EMERGENCY STAY 1 for over six weeks between the time of Defendants’ filing of their Motion for Temporary

Injunction on March 28, 2018, and the hearing on that motion on May 11, 2018, Appellants

never made any of the objections to the trial court that they now make to this Court. Neither did

Appellants meaningfully confer with Defendants for purposes of Tex. R. App. P. 10.1(a)(5) by

articulating those objections.

Defendants have no objection to a modification of the trial court’s order to address many

of the objections posed by Appellants to this Court.1 Specifically, although the reason for the

trial court’s grant of a temporary injunction was clear because the parties had agreed injunctive

relief was an appropriate and necessary remedy in case of any violation of the non-competition

provisions of the July 24, 2008, Purchase Agreement (the “Purchase Agreement”) between the

parties, Defendants do not have any objection to the trial court adding language to that effect in

its order. Likewise, although it was clear that the above-referenced contractual violations would

cause Defendants irreparable harm without injunctive relief because the parties had expressly

agreed as much in the Purchase Agreement, Defendants have no objection to the trial court

adding relevant language to its order. Finally, although the trial court had already set a trial date

for the resolution of all issues in the litigation, Defendants have no objection to the trial court

referencing that trial date in its order. Defendants have moved the trial court to make such

modifications, as evidenced by the filing included as Exhibit A to this Response.

Appellants argue that the trial court’s order improperly references other documents.

Motion, at 6-7. However, in this case, the trial court’s order must necessarily reference Exhibit

1 Defendants do not include a Factual Background section to their Response to Appellants’ Motion because Appellants include Defendants’ entire Motion for Temporary Injunction to the trial court as Exhibit 2 to their Motion to this Court. Defendants invite this Court to review their Motion for Temporary Injunction, along with the attached exhibits, for a full understanding of the factual background and the evidentiary showing offered in support. RESPONSE TO MOTION FOR EMERGENCY STAY 2 A to the Purchase Agreement because Exhibit A contains the list of clients transferred under the

Purchase Agreement. Because the trial court’s order enjoins Appellants from providing public

accounting services to clients on that list, it must necessarily reference the list.

Appellants further contend that the trial court had no jurisdiction to enter a temporary

injunction ostensibly because the relevant non-competition provisions of the Purchase

Agreement had expired before the entry of the order. Motion, at 8-10. However, Defendants’

Motion for Temporary Injunction addresses precisely that issue, explaining that the Purchase

Agreement contained another provision which extended the periods covered by the non-

competition provisions to include any periods of violation. Motion, Exhibit 2, at 7-10. Because

of this extension provision, the non-competition agreements never expired. Appellants now

contend that this extension provision is unenforceable. Motion, at 10 n.4. However, they cite

only cases from Wisconsin and Georgia for this proposition. In any event, these cases are

inapposite.

The first case cited, H&R Block Eastern Enterprises, Inc. v. Swenson, 745 N.W.2d 421,

427 (Wis. Ct. App. 2007),2 addresses a situation in which a company sought to restrain former

employees. The court noted the strong public policy embedded in an applicable Wisconsin

statute in protecting former employees from ambiguous restraints on trade. Id. For example, an

employee might not know precisely what conduct would trigger the tolling provision and for

how long. Id. Here, the Purchase Agreement was negotiated between two equal parties for the

purchase of an accounting firm, almost the entire value of which lay in its clients. Furthermore,

no party has contended that the relevant contractual provisions contain any ambiguity. On the

contrary, the language of the Purchase Agreement itself, in Sections 8.7 through 8.10, made clear

2 Appellants miscite this case as 745 N.S.2d 421. RESPONSE TO MOTION FOR EMERGENCY STAY 3 how critical these non-competition provisions were to the transfer of assets under the Agreement.

If either party had perceived any ambiguity in such critical provisions, it was incumbent on them

to ensure the elimination of any such ambiguity before executing the Agreement.

In the second case cited, ALW Marketing Corp. v. Hill, 422 S.E.2d 9 (Ga. Ct. App. 1992),

the court pointed to difficulties similar to those which rendered the covenants unenforceable in

Swenson. In Hill, the court explained that the covenants contained language which made it

impossible for the employees to determine what “termination of the agreement” meant in

connection with these covenants, such that they could not understand with reasonable certainty

what actions might constitute violations of the covenant. Id., at 12-13. Consequently, the

covenants were unenforceable. As discussed above, no such ambiguities or other concerns exist

in connection with the Purchase Agreement at issue here.

Texas courts have no qualms about enforcing extension provisions of the sort at issue in

this matter. In fact, as demonstrated by Sadler Clinic Ass’n, P.A. v. Hart, 403 S.W.3d 891, 898

(Tex. App.—Beaumont 2013, pet. denied), Texas courts will enforce such provisions, so long as

the extension provisions have not themselves expired by their own terms. Here, they have not

expired.

Appellants finally argue that they will suffer irreparable injury based on the trial court’s

order. Motion, at 11-12. However, they provide no evidence whatsoever to support this

contention, offering nothing but conclusory statements that Appellants would lose clients they

had served for years. Even these conclusory statements do not suggest irreparable harm,

particularly in that the trial court predicated its order on a finding that Appellants violated the

non-competition provisions of the Purchase Agreement precisely by serving these very clients

which they had transferred to Defendants by means of the Purchase Agreement. Ironically, in

RESPONSE TO MOTION FOR EMERGENCY STAY 4 offering such a contention as baseless support for their own claims of irreparable harm,

Appellants only reinforce the basis for the trial court’s order in favor of Defendants.

In light of the foregoing, Defendants respectfully request that this Court deny Appellants’

Motion in its entirety.

DATED: May 25, 2018 Respectfully submitted,

___/s/ Mark Whitburn_________ Mark Whitburn State Bar No. 24042144 Whitburn & Pevsner, PLLC 2000 E. Lamar Blvd., Suite 600 Arlington, Texas 76006 Tel: (682) 706-3750 Fax: (682) 706-3789 mwhitburn@whitburnpevsner.com

Ronald W. Roberts State Bar No. 17018600 Craig D. Davis State Bar No. 00793588 Jeffrey W. Ermis State Bar No. 24032159 1010 N. Center St., Suite 100 Arlington, Texas 76011 Tel: (817) 265-8832 Fax: (817) 262-3264

RESPONSE TO MOTION FOR EMERGENCY STAY 5 CERTIFICATE OF SERVICE

I hereby certify that the foregoing document was served on counsel of record for

Appellants by electronic filing service on May 25, 2018, as follows:

Peter C. Smythe Smythe PC 777 Main Street, Suite 600 Fort Worth, Texas 76102 Fax: (817) 460-9777

____/s/ Mark Whitburn____ Mark Whitburn

RESPONSE TO MOTION FOR EMERGENCY STAY 6