Kennedy v. Gulf Coast Cancer & Diagnostic Center at Southeast, Inc.

326 S.W.3d 352, 2010 Tex. App. LEXIS 7805, 2010 WL 3718627
CourtCourt of Appeals of Texas
DecidedSeptember 23, 2010
Docket01-09-01056-CV, 01-10-00677-CV
StatusPublished
Cited by27 cases

This text of 326 S.W.3d 352 (Kennedy v. Gulf Coast Cancer & Diagnostic Center at Southeast, Inc.) 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
Kennedy v. Gulf Coast Cancer & Diagnostic Center at Southeast, Inc., 326 S.W.3d 352, 2010 Tex. App. LEXIS 7805, 2010 WL 3718627 (Tex. Ct. App. 2010).

Opinion

OPINION

JANE BLAND, Justice.

This interlocutory appeal from a temporary injunction concerns whether Kirk Kennedy, a former in-house counsel and corporate secretary for Gulf Coast Cancer & Diagnostic Center at Southeast, Inc. (Gulf Coast), is entitled to retain, for his own use, a copy of a legal opinion memorandum concerning Gulf Coast’s potential liability for its former executive’s alleged misconduct. Kennedy solicited the memo while still working for Gulf Coast but obtained a copy of it after Gulf Coast had terminated his employment.

After learning that Kennedy was distributing the sensitive memorandum to his own lawyers and that he had threatened to disclose its contents in the public record, Gulf Coast applied for a temporary injunction requiring Kennedy to turn over all copies of the memo and prohibiting Kennedy from using or disclosing the information it contained. The trial court granted temporary injunctive relief, and Kennedy appeals. He contends that the trial court abused its discretion in granting the injunction because (1) Gulf Coast failed to establish the prerequisites for injunctive relief; (2) as a former counsel and corporate officer, he is entitled to retain and use the memo; and (3) the injunction is an impermissible prior restraint on his free speech rights under the Texas Constitution. Kennedy also requests mandamus relief from the temporary injunction order. Finding no error, we affirm the trial *356 court’s order and deny the petition for writ of mandamus.

Background

While Kirk A. Kennedy was still in-house counsel for Gulf Coast, he engaged the law firm of Epstein, Becker, Green, Wickliff and Hall, P.C. to render an opinion concerning Gulf Coast’s potential liability resulting from certain instances of a former executive’s alleged misconduct. Kennedy had a longstanding relationship with EBGWH based on a personal friendship with one of its attorneys. That attorney had represented Kennedy in a personal bankruptcy-related matter, and, in return, Kennedy had assisted him with personal legal matters.

EBGWH prepared the memo with Kennedy’s assistance, and Kennedy provided the facts EBGWH used for its analysis. The memo is addressed to John Karas, Gulf Coast’s President, and copied to “Kirk Kennedy, General Counsel.” The opening paragraph recites that EBGWH “was retained by Gulf Coast ... and its affiliates (collectively referred to as ... ‘Gulf Coast’).” A footnote identifies the corporate affiliates. The memo outlines the scope of retention as follows: “EBGWH was asked, by the Company’s General Counsel, to review information and apprise the current President and Board of Directors of the Company as to Gulf Coast’s potential ... exposure and that of its current officers and directors arising from [a former executive’s] ... alleged misconduct. EBGWH was also requested to evaluate the Company’s obligations, responsibilities, and duty of disclosure, including that of its officers and directors.” The footnote following that sentence reads:

EBGWH has been retained only to provide advice to the Company and is not providing advice or counsel to the Company’s owners, officers, or directors, who should obtain independent counsel regarding any potential risk to them in their individual capacities.

The memo explains potential liability issues that could arise for Gulf Coast’s officers and directors, but nowhere discusses the possible presence or absence of individual liability for the officers and directors.

Gulf Coast contends that, in late July 2009, Kennedy, without authorization, had diverted approximately $405,000 of Gulf Coast’s funds into a bank account, named himself as the sole signatory for the account, and used $170,000 of the funds to pay a retainer to a firm that he claimed to have selected to “represent and defend corporate officers and agents of Gulf Coast, specifically Kennedy.”

Gulf Coast learned that Kennedy had taken its funds approximately one week later. On or about the same day as that revelation, Kennedy contacted EBGWH, asked the firm to prepare the memo, and assisted with its preparation. EBGWH relied on the facts as stated by Kennedy in rendering its opinion and did not conduct an independent investigation. Gulf Coast terminated Kennedy’s employment as of August 8, 2009. EBGWH finalized the memo after that date and, apparently unaware of Kennedy’s employment status, inadvertently gave him a copy, which Kennedy kept.

Meanwhile, the lawyer who had received the $170,000 retainer from Kennedy inter-pleaded the funds. After Kennedy and Gulf Coast were joined in the interpleader action, Kennedy cross-claimed against Gulf Coast for a declaration that he is entitled to indemnification and advancement of attorney’s fees in potential lawsuits arising out of the misconduct charges. As the suit progressed, Gulf Coast learned that Kennedy had distributed copies of the memo to his personal lawyers, disclosed its contents *357 in unsealed court filings, and discussed it with third parties whose interests were adverse to Gulf Coast. Kennedy also threatened Gulf Coast that he would make the entire memo open to the public by filing it with the court.

Gulf Coast sought and obtained a temporary injunction prohibiting Kennedy from using or disclosing the memo. The trial court signed an order granting the temporary injunctive relief on December 3, 2009, which it amended on July 22, 2010. The amendment provides that the prohibition against Kennedy’s retention or use of the memo “will not be violated” if Kennedy obtains a copy of the memo directly from EBGWH or the memo’s author and Kennedy uses the memo and its information solely in defense of the grievances filed against him by Gulf Coast with the State Bar of Texas. The temporary injunction rests on the following findings:

• The description of EBGWH’s clients in the memo does not include Kennedy as one of the clients in connection with the matters the memo addresses.
• Kennedy has provided the memo to persons having no right to the memo and has threatened and continues to threaten not only to reveal the memo’s contents to others but to make it public.
• Kennedy has already violated Gulf Coast’s right to privileged and private advice from its counsel by distributing it to others.
• Absent a temporary injunction, the Gulf Coast’s right to the attorney-client privilege would continue to be violated and would result in irreparable injury.

Discussion

I. Standard of review

Kennedy challenges the propriety of the trial court’s temporary injunction prohibiting him from using the memo or its contents except as provided for his defense within the State Bar grievance proceedings. The purpose of a temporary injunction is to preserve the status quo pending trial, but it is an extraordinary remedy and does not issue as a matter of right. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex.2002). Trial courts have broad discretion in deciding whether to grant or deny a temporary injunction, and an appellate court should reverse only if it finds a clear abuse of that discretion. Tel. Equip.

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Cite This Page — Counsel Stack

Bluebook (online)
326 S.W.3d 352, 2010 Tex. App. LEXIS 7805, 2010 WL 3718627, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kennedy-v-gulf-coast-cancer-diagnostic-center-at-southeast-inc-texapp-2010.