Matrix Network, Inc. v. Ginn

211 S.W.3d 944, 25 I.E.R. Cas. (BNA) 1623, 2007 Tex. App. LEXIS 247, 2007 WL 80582
CourtCourt of Appeals of Texas
DecidedJanuary 12, 2007
Docket05-06-00604-CV
StatusPublished
Cited by11 cases

This text of 211 S.W.3d 944 (Matrix Network, Inc. v. Ginn) 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
Matrix Network, Inc. v. Ginn, 211 S.W.3d 944, 25 I.E.R. Cas. (BNA) 1623, 2007 Tex. App. LEXIS 247, 2007 WL 80582 (Tex. Ct. App. 2007).

Opinion

OPINION

Opinion by

Justice MORRIS.

This is an accelerated appeal from the trial court’s interlocutory order denying Matrix Network, Inc.’s request for a temporary injunction in its lawsuit against Larry M. Ginn, Lonnie J. Ginn, GenOmega Software Systems, Inc., and DVR Connections, L.L.P. Matrix contends the trial court abused its discretion in denying in-junctive relief. Because Matrix did not establish it would suffer a probable imminent and irreparable injury in the absence of a temporary injunction, we affirm the trial court’s order.

Matrix sells digital video recorders (DVRs) and other closed circuit television components to companies that provide security services. Matrix hired Larry Ginn as an employee in 2004 to provide engineering and technical support services. Ginn had previously worked for Matrix as an independent contractor through Ginn’s company, GenOmega Software Systems, Inc.

In January 2005, Matrix learned that its DVR manufacturer, Intelligent Digital Integrated Security (IDIS), had embedded software in its DVRs to provide remote viewing capability using dynamic domain name service (DDNS). 1 IDIS named the new feature DVRNS. Matrix discussed this new feature with ADT, one of its largest customers. As result, Matrix planned to develop a service that would enable ADT to charge its customers for remote viewing of security cameras using DDNS and IDIS’s DVRNS.

Larry Ginn was involved in the development of this new product. After testing IDIS’s DVRNS software, Ginn prepared a report that was forwarded to IDIS suggesting, among other things, the inclusion of an authentification feature. ADT ultimately chose not to pursue the remote viewing service and Matrix decided to develop and offer the service on its own. Matrix sought to combine the DVRNS software with an account management software that Ginn would write to control account access and management of the remote viewing. Ginn had indicated to Matrix, however, that IDIS had to supply the modifications he had previously requested before he could write the account management software.

IDIS informed Ginn it would supply the modifications by October. In August, *946 Ginn resigned from Matrix to take a contract job with another company. He continued, however, to host Matrix’s websites, email, and perform other work for Matrix through his company GenOmega. Ginn and Matrix also had discussions about Ginn continuing to develop Matrix’s DDNS, although there was conflicting testimony at the hearing as to the parties’ understanding of these discussions. By mid-September, Ginn realized his new contract job was not going to be available. He therefore turned his attention to the DDNS remote viewing project. After seeking assistance from his brother Lonnie, Ginn obtained a DVR and other items. He also spoke to another software engineer who suggested an approach that did not use IDIS’s DVRNS embedded software. Ultimately, Ginn developed account management software that used DDNS to provide DVR remote viewing without IDIS’s DVRNS or the DVRNS modifications he had requested from IDIS. His product also contained additional features that Matrix’s product did not contemplate. Ginn formed a company with Lonnie called DVR Connections, L.L.P., to own, operate, and host the software on its server.

Matrix informed Ginn in mid-October that the IDIS modifications would be ready at the end of the month. Ginn responded that he had already completed account management software for a DDNS remote viewing service that did not require IDIS’s embedded software. Ginn and Lonnie met with Matrix representatives to demonstrate his system. Later, Ginn received a letter from Matrix asserting he had violated the non-disclosure agreement he had signed while an employee at Matrix by developing his remote viewing system.

Matrix sued Ginn, Lonnie, GenOmega, and DVR Connections for breach of the non-disclosure agreement, breach of fiduciary duty, and unfair competition. Matrix then sought a temporary injunction, which the trial court denied. In its order, the trial court accepted appellees’ representation that they would comply with the first paragraph of the non-disclosure agreement which restricted the solicitation of Matrix customers and employees for one year after termination of Ginn’s employment. The trial court’s order further concluded that Matrix did not establish a probable right of recovery or that a probable imminent and irreparable injury would occur between now and the trial on the merits. Matrix filed this appeal.

Before analyzing the merits of this appeal, we must first address appellees’ motions to dismiss the appeal and for damages. In their motions, appellees assert that events occurring while this matter was pending have rendered this appeal moot. They further assert that because appellant filed this appeal solely for the purposes of delay, we should impose damages for a frivolous appeal. We disagree with appellees on both assertions.

In support of their motion to dismiss, appellees contend (1) the expiration of the non-solicitation provision in the non-disclosure agreement and (2) appellant’s public disclosure of its secret business plan that forms the basis of its misappropriation complaints against appellees necessarily means a controversy no longer exists. Appellant responds that it is not the non-solicitation provision that is the subject of this appeal. Instead, it is the non-use and non-disclosure obligations that form the basis of appellant’s claims. We agree with appellant. We perceive the gravamen of appellant’s complaints on appeal and in the trial court below to be that appellees are trying to compete unfairly by using and disclosing appellant’s business plan, which it alleges is a trade secret or confidential information. In such circumstances, we *947 cannot conclude the expiration of the non-compete clause or appellant’s public disclosure renders this matter moot. We therefore deny appellees’ motion to dismiss this appeal. Likewise, because we are unpersuaded by appellees’ contention that this is a frivolous appeal, we deny appellees’ motion for damages. We proceed to address the merits of the appeal.

In its sole issue, Matrix contends the trial court abused its discretion when it denied its application for injunctive relief. A temporary injunction serves to preserve the status quo of the litigation’s subject matter pending a trial on the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex.2002). It is an extraordinary remedy and will not issue as a matter of right. Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex.1993) (per curiam). For a temporary injunction to issue, the movant must plead and prove: (1) a cause of action against the defendant; (2) a probable right to the relief sought; (3) a probable, imminent, and irreparable injury in the interim; and (4) no adequate remedy at law. Butnaru, 84 S.W.3d at 204.

We review a trial court’s decision to grant or deny an application for temporary injunction for an abuse of discretion. Id. The trial court does not abuse its discretion if some evidence reasonably supports its decision. Id. at 211.

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211 S.W.3d 944, 25 I.E.R. Cas. (BNA) 1623, 2007 Tex. App. LEXIS 247, 2007 WL 80582, Counsel Stack Legal Research, https://law.counselstack.com/opinion/matrix-network-inc-v-ginn-texapp-2007.