IN THE COURT OF APPEALS FIFTH JUDICIAL DISTRICT OF TEXAS DALLAS, TEXAS. No CV. HAMILTON GUARANTY CAPITAL, LLC, Appellant,

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1 IN THE COURT OF APPEALS FIFTH JUDICIAL DISTRICT OF TEXAS DALLAS, TEXAS No CV 5th Court of Appeals FILED: 02/08/ :00 Lisa Matz, Clerk HAMILTON GUARANTY CAPITAL, LLC, Appellant, v. ORPHAN HOUSE PRODUCTIONS, LLC, Appellee, On appeal from the 380 th Judicial District Court of Collin County, Texas, Trial Court Cause No Honorable Suzanne Wooten, Judge Presiding Honorable Webb Biard, Visiting Judge, Hearing on Application for Temporary Injunction Honorable Richard Davis, Visiting Judge, Hearing on Motion to Reconsider Honorable Quay Parker, Visiting Judge, Hearing on Motion for Entry of Orders REPLY BRIEF OF APPELLANT WT SKIP LEAKE, P.C. W. T. Skip Leake TBN: Donald R. Miller TBN: WT SKIP LEAKE PC Landmark Building 2201 North Collins Street, Suite 110 (76011) P O Box Arlington, Texas Phone: (817) Fax: (817) Attorneys for Appellant Oral Argument Requested

2 IDENTITY OF PARTIES AND COUNSEL So that the Justices of this Court may evaluate any possible disqualifications or necessary recusals, the following is a complete list of the names and addresses of the parties: Appellant: Attorneys: Appellee: Attorneys: Hamilton Guaranty Capital, LLC W T Skip Leake TBN: Donald R. Miller TBN: W. T. Skip Leake PC Attorneys & Counselors at Law Landmark Building 2201 North Collins Street, Suite 110 (76011) P.O. Box Arlington, Texas Phone: (817) Fax: (817) Orphan House Productions, LLC Andrew Bayley TBN: Law office of Andrew Bayley 3730 Kirby Dr., Suite 1200 Houston, Texas Phone: (713) Fax: (832) Wade Kricken TBN: Law Office of Wade Kricken P.O. Box Dallas, Texas Phone: (214) Fax: (214) ii

3 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL... ii INDEX OF AUTHORITIES... iv RECORD REFERENCES...v STATEMENT OF THE CASE... vi ISSUE PRESENTED... vii Whether the trial court erred in issuing the Temporary Injunction when mandatory arbitration had been compelled, or in the alternative, when there was no evidence or factually insufficient evidence of any probable harm, or, further in the alternative, when the Temporary Injunction Order itself was legally insufficient on its face... vii REPLY BRIEF OF APPELLANT...1 SUMMARY OF ARGUMENT...1 STANDARD OF REVIEW...1 ARGUMENT...2 I. The Parties did not contemplate any court intervention in the FSA and, as such, OHP s argument that the trial court was vested with authority is improper...2 II. In the alternative, OHP has failed to establish that their injury is irreparable...4 III. Further in the alternative, OHP has conceded that the Temporary Injunction is invalid on its face and, as a result of its own actions, should not be granted leave to amend the Temporary Injunction Order...4 CONCLUSION AND PRAYER...5 iii

4 INDEX OF AUTHORITIES Texas Supreme Court Cases Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002)... 1, 4 Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238 (Tex. 1985)...1 McDaniel v. Yarbrough, 898 S.W.2d 251 (Tex. 1995)...1 Walker v. Packer, 827 S.W.2d 833 (Tex. 1992)...2 Texas Court of Appeals Cases Feldman/Matz Interests, LLP v. Settlement Capital Corp., 140 S.W.3d 879 (Tex. App. Houston [14th Dist.] 2004, orig. proceeding);...2 Structured Capital Resources Corp. v. Arctic Cold Storage, 237 S.W.3d 890 (Tex. App. Tyler 2007, no pet.)... 2, 3 United States Court of Appeals, 5th Circuit Cases RGI, Inc. v. Tucker & Associates, Inc., 858 F.2d 227 (5th Cir. 1988)...2 Texas Statues Tex. Civ. Prac. & Rem. Code (a)(4)... vi Tex. Civ. Prac. & Rem. Code (5)...4 Texas Rules of Appellate Procedure Tex. R. App. P vi Texas Rules of Civil Procedure Tex. R. Civ. P Tex. R. Civ. P iv

5 RECORD REFERENCES Appellant, Hamilton Guaranty Capital, LLC will be called HGC. Appellee, Orphan House Productions, LLC will be called OHP. Ferguson Law Group, PC, Defendant at the trial court level, will be called FLG. The Temporary Restraining Order issued in this case on July 15, 2011 will be called TRO. The Temporary Injunction issued in this case on September 29, 2011 will be called TI. The Financial Services Agreement signed by the parties, which serves as the basis of this suit will be called FSA. Citations in this brief to the record are as follows: For the Clerk's Record: CR [page]. For the Reporter s Record: RR [page:line]. For Appellant s Brief: Appellant s Brief [page]. For Appellee s Brief: Appellee s Brief [page]. v

6 STATEMENT OF THE CASE Nature of the Case: Course of Proceedings and Disposition: Trial Court: Orphan House Productions, LLC ( OHP ) entered into a Financial Services Agreement (the FSA ) with Hamilton Guaranty Capital, LLC ( HGC ) for HGC to assist OHP in obtaining a Standby Letter of Credit. OHP escrowed certain fees with the escrow agent, Ferguson Law Group, PC ( FLG ), which were to be delivered to HGC on an incremental basis. The fees were earned by HGC when OHP failed to comply with the FSA by not issuing the required fee guarantee. OHP filed suit to prevent HGC from receiving its earned fees out of escrow by asserting HGC breached the FSA and committed fraud. OHP also sought a Temporary Restraining Order ( TRO ) and Temporary Injunction ( TI ) against FLG. Per the FSA, HGC moved to compel arbitration, which was granted by the trial court, notwithstanding the granting of OHP s Application for TI by the trial court. This is an accelerated interlocutory appeal from an order granting a temporary injunction in favor of OHP. Tex. Civ. Prac. & Rem. Code (a)(4); Tex. R. APP. P Honorable Suzanne Wooten, Judge Presiding 380th Judicial District Court, Collin County, Texas Application for Temporary Injunction Hearing Honorable Webb Biard, Visiting Judge 380th Judicial District Court, Collin County, Texas Motion to Reconsider Hearing Honorable Richard Davis, Visiting Judge 380th District Court, Tarrant County, Texas Motion for Entry of Orders Hearing Honorable Quay Parker, Visiting Judge 380th Judicial District Court, Collin County, Texas vi

7 ISSUE PRESENTED Whether the trial court erred in issuing the Temporary Injunction when mandatory arbitration had been compelled, or in the alternative, when there was no evidence or factually insufficient evidence of any probable harm, or, further in the alternative, when the Temporary Injunction Order itself was legally insufficient on its face. vii

8 REPLY BRIEF OF APPELLANT To the Honorable Court of Appeals: Hamilton Guaranty Capital, LLC, Appellant, respectfully submits Appellant s Reply Brief. SUMMARY OF ARGUMENT OHP has failed to establish that it was entitled to the injunctive relief sought because the FSA in this matter does not demonstrate that the parties contemplated injunctive relief, but, rather, requires the parties to arbitrate all disputes. In the alternative, OHP has failed to establish all the elements required for injunctive relief including irreparable injury. In this case, a sum certain can be calculated for OHP s damages, which by definition means the injury is not irreparable. Further in the alternative, OHP has conceded that the TI order is invalid on its face. After submitting the order that was signed unchanged by the trial court, OHP s untimely request to amend the TI should be denied. This Court should issue an Order dissolving the TI and order the funds returned to FLG or, in the alternative, this Court should issue its Writ of Mandamus ordering the trial court to dissolve the TI and return the funds to FLG. STANDARD OF REVIEW A trial court s ruling on a temporary injunction is subject to review for abuse of discretion. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). A trial court abuses its discretion when it acts without reference to any guiding rules and principles or when its action is arbitrary and unreasonable. McDaniel v. Yarbrough, 898 S.W.2d 251, 253 (Tex. 1995); Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, (Tex. 1985). Further, a clear failure by 1

9 the trial court to analyze or apply the law correctly constitutes an abuse of discretion. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). ARGUMENT I. The Parties did not contemplate any court intervention in the FSA and, as such, OHP s argument that the trial court was vested with authority is improper. Relying heavily on the Structured Capital case out of the Twelfth Court of Appeals in Tyler, OHP first argues that this case stands for the proposition that injunctive relief is permitted when arbitration has been ordered. Structured Capital Resources Corp. v. Arctic Cold Storage, LLC, 237 S.W.3d 890 (Tex. App. Tyler 2007, no pet.). In its argument, OHP wholly ignores the fact that it is relying on the exception to the general rule that a trial court cannot grant injunctive relief when a party has established its right to arbitrate as has happened here. Feldman/Matz Interests, LLP v. Settlement Capital Corp., 140 S.W.3d 879, 886 (Tex. App. Houston [14th Dist.] 2004, orig. proceeding). Specifically, OHP quotes the exception from Structured Capital that the FAA does not preclude a court from issuing injunctive relief...where the contract at issue reflects a consensus of the parties that such relief was contemplated. Structured Capital, 237 S.W.3d at 894. (citing RGI, Inc. v. Tucker & Assocs., Inc., 858 F.2d 227, 230 (5th Cir.1988) (emphasis added). As previously discussed at length in HGC s initial brief, the exception to the general rule does not apply here. 1 (emphasis added) In this case, the FSA contains no language, express or implied, demonstrating that either OHP or HGC contemplated court intervention to maintain the status quo. See CR 20. Indeed, OHP has not and cannot point to any language that demonstrates this. OHP further spends time in its brief demonstrating how Structured Capital should guide 1 Please see Appellant s Brief 6-8 for a thorough discussion of this issue. 2

10 this Court because of its analogous characteristics; however, beginning with the issue presented in Structured Capital, the case is factually and legally different. The issue presented in Structured Capital was if by seeking the issuance of a TI, a party invoked the legal process sufficiently to constitute a waiver of the right to arbitrate, not whether the TI was properly issued by the trial court. Structured Capital, 237 S.W.3d at 894. Further, the fact situation in Structured Capital dealt with the issuance of a TI only after a defendant directly disobeyed a TRO by having funds transferred out of escrow to itself. Id. at 893. No such situation occurred here the trial court ordered funds into the court s registry with the issuance of the ex parte TRO, not after HGC or FLG disobeyed any court order. Finally, OHP spends much of its time discussing how the trial court was convinced of OHP s justified fear that the $200, tendered to FLG would disappear into the hands of HGC before a resolution. Appellee s Brief 4. Interestingly, without the required findings in the temporary injunction, HGC is unable to ascertain what the trial court was convinced of or what the trial court found to support the issuance of the TI. See Tex. R. Civ P. 683 & 684; CR 110. In sum, OHP has attempted to thread itself into an exception that does not apply to this situation because the FSA does not contemplate, in any way, injunctive relief or any court interference. OHP s reliance on Structured Capital is misplaced because not only is this situation factually different, but it also legally different in that this situation does not deal with the waiver of the right to arbitrate. Finally, OHP s statements concerning the trial court s opinion on this matter are mere speculation because no findings in support of the TI were made. As a result, this Court should issue an order dissolving the TI and order the trial court to release all funds held in the trial court registry returned to FLG or issue its writ of mandamus ordering the trial court to do the same. 3

11 II. In the alternative, OHP has failed to establish that their injury is irreparable. OHP next argues that it is entitled to relief under (5) of the Texas Civil Practice and Remedies Code because of the irreparable threat of losing its investment of $200, Appellee s Brief 5. Tex. Civ. Prac. & Rem. Code (5) provides the trial court the right to issue injunctive relief where irreparable injury to real or personal property is threatened irrespective of any remedy at law. As previously established, an injury is irreparable if the injured party cannot be adequately compensated in damages or if the damages cannot be measured by any certain pecuniary standard. 2 Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). In this matter, OHP establishes in its own pleadings/ and brief that the damages are a sum certain $200, See, e.g., CR 7-13; Appellee s Brief 5. In conclusion, even if this court determines OHP does not need to address whether there is an adequate remedy at law, OHP has failed to establish that its injury is irreparable because OHP has clearly identified its own damages as $200, As a result of this failure, this Court should issue an order dissolving the TI and order the trial court to return all funds held in the trial court registry back to FLG or issue its writ of mandamus ordering the trial court to do the same. III. Further in the alternative, OHP has conceded that the Temporary Injunction is invalid on its face and, as a result of its own actions, should not be granted leave to amend the TI order. OHP has conceded that the TI issued by the trial court in this matter is invalid on its face. At the trial court, OHP had two full months to prepare a proposed temporary injunction order for the Court to sign. See CR 5-6 (demonstrating Temporary Injunction (improperly titled Temporary Restraining Order Hearing on the docket sheet) heard and granted on July 29, Please see page 10 of Appellant s Brief for a thorough discussion of this issue. 4

12 and, ultimately, signed on September 29, 2011 at Motion for Entry of Orders hearing). In fact, HGC filed a Motion for Entry of Orders to get the TI signed because, without the TI signed, HGC could not file its appeal. Id. Ultimately, OHP submitted the proposed invalid order that was signed by the Court without change on the day of the hearing for the Motion for Entry of Orders. CR 110 (emphasis added). In light of these facts, OHP s request for leave to amend the Temporary Injunction order issued by the trial court should be denied. 3 CONCLUSION AND PRAYER In conclusion, OHP has failed to establish that it was entitled to the TI because (1) the FSA in this matter did not contemplate injunctive relief, but rather provided for mandatory arbitration to settle all disputes; (2) OHP cannot establish all the elements required for injunctive relief including irreparable injury because a sum certain can be calculated for OHP s damages; and (3) OHP has conceded that the TI order is invalid on its face. OHP s request to amend the TI should be denied because OHP created its own error and previously had two months to submit a valid TI order to the trial court. WHEREFORE, PREMISES CONSIDERED, Appellant requests that that this Court issue an Order dissolving the TI and order the return the funds to the escrow agent, FLG, or, in the alternative, issue its Writ of Mandamus ordering the trial court to dissolve the TI and return the funds to FLG. Appellants further request this Appellate Court to make any other determination or grant Appellant such other and further relief at law or in equity, specific and general, to which Appellant may be justly entitled to receive. 3 OHP has not cited any authority to support its request for leave to amend the TI. 5

13 Respectfully Submitted, W.T. SKIP LEAKE PC By: /s/ Donald R. Miller W.T. Skip Leake TBN: Donald R. Miller TBN: Landmark Building 2201 North Collins Street, Suite 110 (76011) P.O. Box Arlington, Texas Phone: (817) Fax: (817)

14 CERTIFICATE OF SERVICE A true and correct copy of Appellant s Reply Brief was served on Appellee s attorney of record, Andrew Bayley, by and by certified mail, return receipt requested, at 3730 Kirby Dr., Suite 1200, Houston, Texas and to Appellee s co-counsel, Wade Kricken, by or by certified mail, return receipt requested, at P.O. Box 59331, Dallas, Texas on February _8, 2012 /s/ Donald R. Miller Donald R. Miller 7