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FILED
TARRANT COUNTY
067-325982-21 7/16/2021 12:45 PM
THOMAS A. WILDER
DISTRICT CLERK
Antonio U. Allen
817-632-6350
aallen@phamharrison.com
July 16, 2021
Via Electronic Filing
Honorable Don Cosby
67th District Court
Tarrant County, Texas
Re: Cause No. 067-325982-21; Trinity Foot and Ankle Specialists, PLLC vs. Michael
W. Downey, DPM; In the 67th Judicial District Court; Tarrant County, Texas
Dear Judge Cosby:
On July 12, 2021, the Court conducted a hearing on Trinity Foot and Ankle Specialists,
PLLC’s (“Trinity”) First Amended Application for Temporary Injunctive Relief (“Application”).
During closing arguments Defendant’s counsel argued that Trinity was required to either end its
contract with Defendant and seek monetary damages for Defendant’s breach of the contract’s non-
compete provision or enforce the non-compete. Defendant’s counsel further argued that if Trinity
chose to enforce the non-compete provision, Trinity was precluded from refusing to accept
Defendant’s alleged tender to buy out of the non-compete. In support of these arguments,
Defendant’s counsel cited Gupta v. Eastern Idaho Tumor Inst., Inc., 140 S.W.3d 747, 756 (Tex.
App.—Houston [14th Dist.] 2004, pet. denied) and Classic Century, Inc. v. Deer Creek Estates,
Inc., No. 2-06-104-CV, 2008 Tex. App. LEXIS 6248, at *11 (Tex. App. Aug. 14, 2008) 1. At the
end of the hearing, you asked the parties to provide the Court with a brief addressing the argument
that Defendant’s counsel made. Please allow this letter to serve as Plaintiffs’ supplemental
briefing.
First of all, despite Defendant’s counsel’s arguments to this Court otherwise, Trinity is not
prohibited from seeking injunctive relief and suing on its underlying breach of contract claims for
damages. Courts in Texas recognize that:
The equitable remedy by injunctions to stop a wrong and
remedy it, when it can be done, is not an inconsistent
remedy to the injured party’s right to have redress during
the time the wrong existed. In this state legal and equitable
1
Because Defendant’s argument is really an assertion of a defense to Trinity’s underlying claim, the Court is not
required to consider the argument for purposes of ruling on the Application. Currie v. Int'l Telecharge, Inc., 722
S.W.2d 471, 475 (Tex. App.—Dallas 1986, no writ) (“It is within the trial court's discretion to reserve matters of a
purely defensive nature to the plenary hearing.”).
Honorable Don Cosby
Letter Brief
Page 2
rights are blended and a choice of remedies for either
equitable or legal relief is not required in a case like this.
Marin Real Estate Partners, L.P. v. Vogt, 373 S.W.3d 57, 76–77 (Tex. App.—San Antonio 2011,
no pet.) (quoting City of Wichita Falls v. Bruner, 191 S.W.2d 912, 920 (Tex. Civ. App.—Fort
Worth 1945, writ ref'd w.o.m.).
The general rule under contract law is that when one party to a contract materially breaches
the contract, the other party is discharged or excused from itsobligation to perform. Corso v.
Carr, 634 S.W.2d 804, 808 (Tex. App.—Fort Worth 1982, writ ref’d n.r.e.). Defendant’s counsel
is correct in that if Trinity (the non-breaching party) elects to treat Defendant’s employment
agreement (the “Agreement”) as continuing and insists that Defendant abide by the confidentiality
and non-compete provisions of the Agreement, the effective provisions of the contract continue in
force for the benefit of both parties. Gupta v. E. Idaho Tumor Inst., Inc., 140 S.W.3d 747, 756
(Tex. App.—Houston [14th Dist.] 2004, pet. denied). However, Defendant’s material breach of
the non-compete covenant (i.e., violation of section 7.1(ii) of the Agreement by handing out
business cards during appointments with Trinity patients while still employed by Trinity, mailing
out over 2,200 solicitation letters to Trinity patients, and mailing out 100 solicitation letters to
Trinity referral doctors) resulted in the forfeiture of Defendant’s right to buy out of the non-
compete provision. See Lazy M Ranch, Ltd. v. TXI Operations, LP, 978 S.W.2d 678, 681 (Tex.
App.—Austin 1998, pet. denied) (“Forfeitures will be avoided unless contract language admits of
no other construction or results in a construction that is unreasonable, inequitable, or oppressive.”)
(emphasis added). Therefore, Trinity was not obligated to accept Defendant’s attempted buy out
tender.
In Lazy M Ranch, Ltd., the plaintiff paid the defendant $2,000.00 for the right to conduct
subsurface tests for gravel on part of the plaintiff’s land. Id. at 680. The contract also gave the
plaintiff an option to lease 300 acres of defendant’s land to mine subsurface materials. Id. To
exercise the option, the contract required the plaintiff to tender $98,000.00 to the defendant. Id.
The plaintiff attempted to exercise the option by delivering the defendant written notice of tender
accompanied by a $98,000.00 bank check. Id. The defendant returned the check with a letter
explaining that it would not lease the plaintiff the land because the plaintiff had breached the
contract by entering on and testing the defendant’s land outside of the designated area specified in
the contract. Id. The plaintiff sued for specific performance of the option provision which was
awarded by the trial court. Id. In reversing the trial court, the Austin Court of Appeals relied on
two separate rationales: (1) the defendant was excused from honoring the lease option because the
plaintiff materially breached a dependent covenant of the agreement and alternatively, (2) the
plaintiff was not entitled to specific performance of the option provision – an equitable remedy –
because it had unclean hands. Id. at 682-83.
Here, both rationales apply to Defendant’s assertions that he was entitled to exercise the
buyout option of the Agreement. First, the plain language of section 7.1 of the Agreement makes
505 Pecan Street, Suite 200 Fort Worth, TX 76102 817-632-6300 www.phamharrison.com
Honorable Don Cosby
Letter Brief
Page 3
it clear that Defendant’s right to buy out of the non-compete was contingent upon him tendering
payment before breaching the non-compete provision:
[I]f Employee acts in violation of any provision contained
in this section 7.1 without first having paid such amount to
Company, Company shall be entitled to preliminary and
permanent injunctions restraining Employee from such
violations . . . as well as obtain remedies available at law
or in equity.
Pl. Ex. 1, at ¶7.1. This language certainly infers that the Agreement’s buyout option is dependent
on Defendant not breaching section 7.1. See Chambers v. Hunt Petroleum Corp., 320 S.W.3d 578,
585 (Tex. App.—Tyler 2010, no pet.) (holding that lessee’s option to extend lease in one section
of lease was not dependent on unrelated obligations located in other areas of the lease). Here, the
solicitation and geographic restrictions and the buyout option of those restrictions and located in
the same provision of the contract – section 7.1. Therefore, Defendant’s rights under the buyout
option were dependent on Defendant complying with the solicitation and geographic restrictions.
Because Trinity presented sufficient evidence that Defendant materially breached section 7.1, the
buyout provision is unenforceable. See Research Inst. v. Keraplast Techs., Ltd., 103 S.W.3d 478,
481 (Tex. App.—San Antonio 2003, no pet.) (“[A]pplicant [seeking temporary injunction] is not
required to prove that he will prevail at trial but must establish the right to preserve the status quo
pending trial.”).
Second, like the plaintiff in Lazy M Ranch, Ltd., Defendant essentially seeks a finding by
this Court that he was entitled to specific performance of the buyout option despite having already
breached the confidentiality and non-compete provisions of the contract. 2 Also, as in Lazy M
Ranch, Ltd., the issue in this case is whether Defendant is entitled to enforce rights embodied in
the very contract that he violated. Lazy M Ranch, Ltd., 978 S.W.2d at 683 (“Under the doctrine of
unclean hands, a court may refuse to grant equitable relief to a plaintiff who has been guilty of
unlawful or inequitable conduct regarding the issue in dispute.”). The undisputed evidence
presented during the Temporary Injunction Hearing (including Defendant’s own admissions)
shows that Defendant is not entitled to prevent Trinity from seeking equitable relief based upon an
attempt to enforce a contract provision that he intentionally violated. See Dunnagan v. Watson,
204 S.W.3d 30, 41 (Tex. App.—Fort Worth 2006, pet. denied) (“Equitable relief is not warranted
when the plaintiff has engaged in unconscionable, unjust, or inequitable conduct with regard to the
issue in dispute.”); Flores v. Flores, 116 S.W.3d 870, 876 (Tex. App.—Corpus Christi 2003, no
pet.) (“The doctrine applies against a litigant whose own conduct in connection with the same
2
Defendant’s material breach of section 6.1 and 7.1 are inextricably related to Defendant’s assertion of his alleged
right to buyout of the non-compete. See Pl. Ex. 1, at ¶7.1 (“Employee recognizes that the Company’s decision to enter
into this Agreement is induced primarily because of the covenants and assurances made by Employee in this
Agreement, that Employee’s covenant not to compete is necessary to ensure the continuation of the business of the
Company and reputation of the Company, as well as to protect the Company from unfair business competition,
including, but not limited to, the improper use of Confidential Information, that irrevocable harm and damage will be
done to the Company if Employee competes with the Company.”).
505 Pecan Street, Suite 200 Fort Worth, TX 76102 817-632-6300 www.phamharrison.com
Honorable Don Cosby
Letter Brief
Page 4
matter or transaction has been unconscientious, unjust, marked by a want of good faith, or violates
the principles of equity and righteous dealing.”). Therefore, Trinity is entitled to injunctive relief
that preserves the status quo until the time of trial. In re Newton, 146 S.W.3d 648, 651 (Tex. 2004)
(“The status quo is the last, actual, peaceable, non-contested status which preceded the pending
controversy.”).
Very truly yours,
Antonio U. Allen
505 Pecan Street, Suite 200 Fort Worth, TX 76102 817-632-6300 www.phamharrison.com
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FILED TARRANT COUNTY 067-325982-21 7/16/2021 12:45 PM THOMAS A. WILDER DISTRICT CLERK Antonio U. Allen 817-632-6350 aallen@phamharrison.com July 16, 2021 Via Electronic Filing Honorable Don Cosby 67th District Court Tarrant County, Texas Re: Cause No. 067-325982-21; Trinity Foot and Ankle Specialists, PLLC vs. Michael W. Downey, DPM; In the 67th Judicial District Court; Tarrant County, Texas Dear Judge Cosby: On July 12, 2021, the Court conducted a hearing on Trinity Foot and Ankle Specialists, PLLC’s (“Trinity”) First Amended Application for Temporary Injunctive Relief (“Application”). During closing arguments Defendant’s counsel argued that Trinity was required to either end its contract with Defendant and seek monetary damages for Defendant’s breach of the contract’s non- compete provision or enforce the non-compete. Defendant’s counsel further argued that if Trinity chose to enforce the non-compete provision, Trinity was precluded from refusing to accept Defendant’s alleged tender to buy out of the non-compete. In support of these arguments, Defendant’s counsel cited Gupta v. Eastern Idaho Tumor Inst., Inc., 140 S.W.3d 747, 756 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) and Classic Century, Inc. v. Deer Creek Estates, Inc., No. 2-06-104-CV, 2008 Tex. App. LEXIS 6248, at *11 (Tex. App. Aug. 14, 2008) 1. At the end of the hearing, you asked the parties to provide the Court with a brief addressing the argument that Defendant’s counsel made. Please allow this letter to serve as Plaintiffs’ supplemental briefing. First of all, despite Defendant’s counsel’s arguments to this Court otherwise, Trinity is not prohibited from seeking injunctive relief and suing on its underlying breach of contract claims for damages. Courts in Texas recognize that: The equitable remedy by injunctions to stop a wrong and remedy it, when it can be done, is not an inconsistent remedy to the injured party’s right to have redress during the time the wrong existed. In this state legal and equitable 1 Because Defendant’s argument is really an assertion of a defense to Trinity’s underlying claim, the Court is not required to consider the argument for purposes of ruling on the Application. Currie v. Int'l Telecharge, Inc., 722 S.W.2d 471, 475 (Tex. App.—Dallas 1986, no writ) (“It is within the trial court's discretion to reserve matters of a purely defensive nature to the plenary hearing.”). Honorable Don Cosby Letter Brief Page 2 rights are blended and a choice of remedies for either equitable or legal relief is not required in a case like this. Marin Real Estate Partners, L.P. v. Vogt, 373 S.W.3d 57, 76–77 (Tex. App.—San Antonio 2011, no pet.) (quoting City of Wichita Falls v. Bruner, 191 S.W.2d 912, 920 (Tex. Civ. App.—Fort Worth 1945, writ ref'd w.o.m.). The general rule under contract law is that when one party to a contract materially breaches the contract, the other party is discharged or excused from itsobligation to perform. Corso v. Carr, 634 S.W.2d 804, 808 (Tex. App.—Fort Worth 1982, writ ref’d n.r.e.). Defendant’s counsel is correct in that if Trinity (the non-breaching party) elects to treat Defendant’s employment agreement (the “Agreement”) as continuing and insists that Defendant abide by the confidentiality and non-compete provisions of the Agreement, the effective provisions of the contract continue in force for the benefit of both parties. Gupta v. E. Idaho Tumor Inst., Inc., 140 S.W.3d 747, 756 (Tex. App.—Houston [14th Dist.] 2004, pet. denied). However, Defendant’s material breach of the non-compete covenant (i.e., violation of section 7.1(ii) of the Agreement by handing out business cards during appointments with Trinity patients while still employed by Trinity, mailing out over 2,200 solicitation letters to Trinity patients, and mailing out 100 solicitation letters to Trinity referral doctors) resulted in the forfeiture of Defendant’s right to buy out of the non- compete provision. See Lazy M Ranch, Ltd. v. TXI Operations, LP, 978 S.W.2d 678, 681 (Tex. App.—Austin 1998, pet. denied) (“Forfeitures will be avoided unless contract language admits of no other construction or results in a construction that is unreasonable, inequitable, or oppressive.”) (emphasis added). Therefore, Trinity was not obligated to accept Defendant’s attempted buy out tender. In Lazy M Ranch, Ltd., the plaintiff paid the defendant $2,000.00 for the right to conduct subsurface tests for gravel on part of the plaintiff’s land. Id. at 680. The contract also gave the plaintiff an option to lease 300 acres of defendant’s land to mine subsurface materials. Id. To exercise the option, the contract required the plaintiff to tender $98,000.00 to the defendant. Id. The plaintiff attempted to exercise the option by delivering the defendant written notice of tender accompanied by a $98,000.00 bank check. Id. The defendant returned the check with a letter explaining that it would not lease the plaintiff the land because the plaintiff had breached the contract by entering on and testing the defendant’s land outside of the designated area specified in the contract. Id. The plaintiff sued for specific performance of the option provision which was awarded by the trial court. Id. In reversing the trial court, the Austin Court of Appeals relied on two separate rationales: (1) the defendant was excused from honoring the lease option because the plaintiff materially breached a dependent covenant of the agreement and alternatively, (2) the plaintiff was not entitled to specific performance of the option provision – an equitable remedy – because it had unclean hands. Id. at 682-83. Here, both rationales apply to Defendant’s assertions that he was entitled to exercise the buyout option of the Agreement. First, the plain language of section 7.1 of the Agreement makes 505 Pecan Street, Suite 200 Fort Worth, TX 76102 817-632-6300 www.phamharrison.com Honorable Don Cosby Letter Brief Page 3 it clear that Defendant’s right to buy out of the non-compete was contingent upon him tendering payment before breaching the non-compete provision: [I]f Employee acts in violation of any provision contained in this section 7.1 without first having paid such amount to Company, Company shall be entitled to preliminary and permanent injunctions restraining Employee from such violations . . . as well as obtain remedies available at law or in equity. Pl. Ex. 1, at ¶7.1. This language certainly infers that the Agreement’s buyout option is dependent on Defendant not breaching section 7.1. See Chambers v. Hunt Petroleum Corp., 320 S.W.3d 578, 585 (Tex. App.—Tyler 2010, no pet.) (holding that lessee’s option to extend lease in one section of lease was not dependent on unrelated obligations located in other areas of the lease). Here, the solicitation and geographic restrictions and the buyout option of those restrictions and located in the same provision of the contract – section 7.1. Therefore, Defendant’s rights under the buyout option were dependent on Defendant complying with the solicitation and geographic restrictions. Because Trinity presented sufficient evidence that Defendant materially breached section 7.1, the buyout provision is unenforceable. See Research Inst. v. Keraplast Techs., Ltd., 103 S.W.3d 478, 481 (Tex. App.—San Antonio 2003, no pet.) (“[A]pplicant [seeking temporary injunction] is not required to prove that he will prevail at trial but must establish the right to preserve the status quo pending trial.”). Second, like the plaintiff in Lazy M Ranch, Ltd., Defendant essentially seeks a finding by this Court that he was entitled to specific performance of the buyout option despite having already breached the confidentiality and non-compete provisions of the contract. 2 Also, as in Lazy M Ranch, Ltd., the issue in this case is whether Defendant is entitled to enforce rights embodied in the very contract that he violated. Lazy M Ranch, Ltd., 978 S.W.2d at 683 (“Under the doctrine of unclean hands, a court may refuse to grant equitable relief to a plaintiff who has been guilty of unlawful or inequitable conduct regarding the issue in dispute.”). The undisputed evidence presented during the Temporary Injunction Hearing (including Defendant’s own admissions) shows that Defendant is not entitled to prevent Trinity from seeking equitable relief based upon an attempt to enforce a contract provision that he intentionally violated. See Dunnagan v. Watson, 204 S.W.3d 30, 41 (Tex. App.—Fort Worth 2006, pet. denied) (“Equitable relief is not warranted when the plaintiff has engaged in unconscionable, unjust, or inequitable conduct with regard to the issue in dispute.”); Flores v. Flores, 116 S.W.3d 870, 876 (Tex. App.—Corpus Christi 2003, no pet.) (“The doctrine applies against a litigant whose own conduct in connection with the same 2 Defendant’s material breach of section 6.1 and 7.1 are inextricably related to Defendant’s assertion of his alleged right to buyout of the non-compete. See Pl. Ex. 1, at ¶7.1 (“Employee recognizes that the Company’s decision to enter into this Agreement is induced primarily because of the covenants and assurances made by Employee in this Agreement, that Employee’s covenant not to compete is necessary to ensure the continuation of the business of the Company and reputation of the Company, as well as to protect the Company from unfair business competition, including, but not limited to, the improper use of Confidential Information, that irrevocable harm and damage will be done to the Company if Employee competes with the Company.”). 505 Pecan Street, Suite 200 Fort Worth, TX 76102 817-632-6300 www.phamharrison.com Honorable Don Cosby Letter Brief Page 4 matter or transaction has been unconscientious, unjust, marked by a want of good faith, or violates the principles of equity and righteous dealing.”). Therefore, Trinity is entitled to injunctive relief that preserves the status quo until the time of trial. In re Newton, 146 S.W.3d 648, 651 (Tex. 2004) (“The status quo is the last, actual, peaceable, non-contested status which preceded the pending controversy.”). Very truly yours, Antonio U. Allen 505 Pecan Street, Suite 200 Fort Worth, TX 76102 817-632-6300 www.phamharrison.com