No. 05-12-00331-CV
ACCEPTED
225EFJ016929629
FIFTH COURT OF APPEALS
DALLAS, TEXAS
12 June 14 P11:59
Lisa Matz
CLERK
IN THE FIFTH DISTRICT COURT OF APPEALS—DALLAS, TEXAS
KHANH DAO
Individually & Derivatively on Behalf of
PHO PARTNERS, LLC
&
PHO COLONIAL 1623 MAIN STREET, LLC
Appellant Plaintiffs,
v.
PHILLIP SILVA
Appellee Defendant.
-andPHO PARTNERS, LLC
&
PHO COLONIAL 1623 MAIN STREET, LLC
Appellee Intervenors & Nominal Defendants
_________________________
ON APPEAL FROM 192st STATE DISTRICT COURT—DALLAS, TEXAS
__________________________
REPLY BRIEF FOR APPELLANT
Khanh Dao, Individually & Derivatively on behalf of Pho Colonial 1623 Main, LLC & Pho
Partners, LLC
__________________________
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Identity of Parties and Counsel
Appellants/
Khanh Dao
PHO Colonial 1623 Main, LLC
PHO Partners, LLC
(Appellants -Derivative Plaintiffs)
Counsel:
Tim Whalen
Whalen Law Firm, PLLC
6028 Thursby Ave.
Dallas, Texas 75252
214-909-4879
877-278-5968 (fax)
Appellee/
Phil Silva
Counsel
Mark How
Mark Frels
How Frels Rohde Woods & Duke, P.C.
2027 Young Street
Dallas, TX 75201
(214) 720-2220
(214) 720-2240 (fax)
Intervenors/
PHO Colonial 1623 Main, LLC
PHO Partners, LLC
Mark How
Mark Frels
How Frels Rohde Woods & Duke,
P.C.
2027 Young Street
Dallas, TX 75201
(214) 720-2220
(214) 720-2240 (fax)
Nominal Defendant/
PHO Colonial 1623 Main, LLC
PHO Partners, LLC
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TABLE OF CONTENTS
Table of Contents
3
Index of Authorities
5
Statement of Facts
9
Standard of Review and Evidentiary Sufficiency
14
I.
Appellants’ Issues are Exclusively and Sufficiently Sustained by
Reference to the Law and the Application of Law to Undisputed Facts.
15
II.
TRAP 34.6(c)(1) is Generally Inapplicable To The Issues On Appeal
15
TRCP Rule 683 Requires Strict Compliance On The
Face of The Order and Does Not Permit Recourse
To The Record For Remediation
16
Evidentiary Burden To Show Justiciability Shifted
To Appellees
16
Issues of Standing Are Reviewed de novo
16
Appellees TRAP 34.6 Presumptory Challenge to Appellants’
Showing of a Probably Right to Relief and Ireparable Harm
Is Inapplicable Because The Trial Court Awarded
Appellants Some Equitable Relief and Accordingly,
This Court Must Presume The Record Supports
Appellants Equitable Standing
17
Appellees TRAP 34.6 Analytical Method Renders it Meaningless
17
III.
The Trial Court’s Failure to Comply With TRCP Rule 60 is an Abuse
of Discretion As A Matter of Law.
17
IV.
Appellees Motion To Strike Shifted The Evidentiary Burden to Appellees
19
V.
In Balancing The Equities, The Partial Record, The Findings, & Appellees’ 21
Reply Brief All Agree TheTrial Court Gave Significant Weight To
Silva’s Threat To Pull Loans
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VI.
Silva’s Threats Undisputable, This Court Discretionary Authority
Controls In Striking Equitable Relief Under Unclean Hands Challenge
25
VII.
Status quo: Appellees Strategy To Simplify & Obscurify Is Unavailing
26
VIII. Because The Trial Court Awarded Appellants Some Equitable Relief,
This Court Must Presume The Record Supports Appellants Equitable
Standing
29
IX.
32
The Order is Vague Under TRCP 683 and Requires Reformation
Prayer
34
Certificate of Service
34
Appendix
35
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INDEX OF AUTHORITIES
Cases
Basic Capital Mgmt. Inc. v. Dynex Commercial Inc., 348 S.W.3d 894 (Tex. 2011)(pet
den’d)
Benavides Indep. Sch. Dist. v. Guerra, 681 S.W.2d 246, 249 (Tex. App. - San Antonio
1984, writ ref’d n.r.e.)
Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002)
City of San Antonio v. Vakey, 123 S.W.3d 497, 501 (Tex. App.—San Antonio 2003, no
pet.)
Coastal liquids Transp. V. Harris Cty. Appr. Dist., 46 S.W.3d 880, 884 (Tex.2001)
Collum v. Neuhoff, 507 S.W.2d 920, 924 (Tex. Civ. App.—Dallas 1974, no writ)
Computek Computer & Office Sups. v. Walton, 156 S.W.3d 217, 221 (Tex. App.—Dallas
2005, no pet.)
Cowling v. Colligan, 158 Tex. 458, 312 S.W.2d 943, 946 (1958)
Dunnagan v. Watson, 204 S.W.3d 30, 41 (Tex. App.—Fort Worth 2006, pet. denied)
E & B Carpet Mills v. State, 776 S.W.2d 286, 290 (Tex. App.—Austin 1989, writ
dism’d)
EPG, Inc. v. RDM, Inc., No. 14-07-00415 CV (Tex. App. 2/7/2008)
Ex parte Slavin, 412 S.W.2d 43, 44 (Tex. 1967)
Faour v. Faour, 789 S.W.2d 620, 622 (Tex.App.-Texarkana 1990, writ denied))
Flores v. Flores, 116 S.W.3d 870, 876 (Tex. App.—Corpus Christi 2003, no pet.)
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Forbes, Inc. v. Granada Biosciences Inc., 124 S.W.3d 167, 170 (Tex. 2003)
Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987)
Gadin v. Societe Captrade, 2009 WL 1704049 (S.D.Tex. June 17, 2009);
Gearhart Indus., Inc. v. Smith Int'l, Inc., 741 F.2d 707, 721 (5th Cir. 1984)
Grinnell v. Munson, 137 S.W.3d 706, 718 (Tex.App.-San Antonio 2004, no pet.)
Guar. Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 657 (Tex. 1990)
Gunnels v. North Woodland Hills Cmty. Ass'n, 563 S.W.2d 334, 338 (Tex. Civ. App.—
Houston [1st Dist.] 1978, no writ)
Holliday v. IIenry 1. Siegel Co., 643 S.W.2d 519, 520 (Tex. App.-Houston [14th Dist.]
1982),aff'd. 663 S.W.2d 824 (Tex. 1984)
Hot Rod Hill Motor Park v. Triolo, 276 S.W.3d 565, 568 (Tex.App.—Waco 2008, no
pet.)
Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987)
In re Crown Castle Int'l Corp., 247 S.W.3d 349, 355 (Tex.App.-Houston [14th Dist]
2008, orig. proceeding)
In re Newton, 146 S.W.3d 648, 651 (Tex. 2004) (orig. proceeding))
In re Union Carbide Corp., 273 S.W.3d 152, 156 (Tex. 2008)
Kenedy Mem’l Found. v. Dewhurst, 994 S.W.2d 285, 308 (Tex.App.—Austin 1999),
rev’d on other grounds, 90 S.W.3d 268 (Tex. 2002)
Lazy M Ranch v. TXI Operation, LP, 978 S.W.2d 678, 683 (Tex. App.--Austin 1998, pet.
denied)
McLean v. Employers Cas. Co., 381 S.W.2d 582, 584 (Tex. Civ. App.-Dallas 1964, no
writ)
Mendez v. Brewer, 626 S.W.2d 498, 499 (Tex. 1982)
NMTC Corp. v. Conarroe, 99 S.W.3d 865, 868 (Tex. App—Beaumont 2003, no pet.)
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Nootsie, Ltd. V. Williamson County Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996)
Paciwest, Inc. v. Warner Alan Props., LLC, 266 S.W.3d 559, 571 (Tex. App.--Fort Worth
2008, pet. denied)
Perry v. Cohen, 285 S.W.3d 137, 144 (Tex.App.-Austin 2009, pet. denied)
Pierce v. State, 184 S.W.3d 303, 308 (Tex. App.—Dallas 2005, no pet. h.)
Pledger v. Schoelkopf, 762 S.W.2d 145, 146 (Tex. 1988)
Redmon v. Griffith, 202 S.W.3d 225, 233 (Tex.App.Tyler 2006, pet. denied)
R.S. v. B.J.J., 883 S.W.2d 711, 715 n.5 (Tex. App.-Dallas 1994, no writ)
Sixth Rma Parters v. Sibley, 11 S.W.3d 46, (Tex. 2003)
Storey v. Cent. Hide & Rendering Co., 148 Tex. 509, 226 S.W.2d 615, 618–19 (1950)
Suntech Processing Sys., L.L.C. v. Sun Comm., Inc., 2000 WL 1780236 (Tex.App.-Dallas
2000, pet. denied)
Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex.1990)
Weingartens, Inc. v. Price, 461 S.W.2d 260, 264 (Tex. Civ. App.—Houston [14th Dist.]
1970, writ ref’d n.r.e.)
Statutes & Rules
Texas Business Organization Code 101.052(b)
Texas Business Organization Code Sec. 101.354
Tex. R. Civ. P. 93
Tex. R. Civ. P. 60
Tex. R. Civ. P. 296-299a
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STATEMENT OF FACTS
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The Appellant-Plaintiff Khanh Dao is an experienced restaurateur with over a decade of
proven success creating and executing award winning restaurant concepts including Voltaire
Restaurant & Bar, Steel Restaurant and Lounge, the Draelion Restaurant and the Drae Lounge. 1
CR 6 In 2010, Ms. Dao finalized plans to execute her long incubating vision to bring to market a
restaurant concept and brand featuring casual Vietnamese dinning with authentic cuisine—PHO
Colonial. 1 CR 7, 1 CR 35
Ms. Dao meticulously and exhaustively planned the endeavor
recruiting skilled chefs and staff, evaluating interior designs, and creating the menu and many of
the recipes. 1 CR 7
In late 2009, Ms. Dao negotiated a lease and secured a letter of intent from the landlords
for the current location for Pho Colonial in downtown Dallas.
In the late summer of 2010, Ms. Dao reached an agreement in principle to form a
business with the Appellee-Defendant Phillip Silva, the owner and proprietor of the now defunct
Bene Bene Restaurant in far North Dallas. 1 CR 142-43
Silva introduced Ms. Dao to his attorney (Mark How) who currently represents both Silva
and the Intervenors in this case. 1 CR 153
At that time, however, and unknown to Ms. Dao, Mr. How was also representing Silva
in a lawsuit against the Bene Bene landlords seeking a declaratory judgment that Silva had not
defaulted on his Bene Bene lease and that the escape clause in his personal guarantee on the
lease had not been nullified. 1 CR 193 (App. #3, pg.2) The landlords challenged both assertions
in a responsive pleading. 1 CR 193 (App. 4, pg. 2)
Mr. How immediately took charge of re-negotiating the lease for the downtown location,
formed PHO Colonial 1623 Main, LLC as the governing business entity, took on the
responsibility as the agent for this LLC, and drafted the Company Agreement. Mr. How also
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drafted an assumed name licensing agreement between Ms. Dao’s PHO Colonial Corporation
and the newly formed LLC. 1 CR 24
The Company Agreement for PHO Colonial 1623 Main, LLC was signed by Ms. Dao on
December 14, 2010 at the law offices of Mr. How’s firm. (1 CR 98) The downtown lease was
also executed on the same day. The Certificated of Formation (COF) for this LLC was approved
on December 15, 2010. The COF lists Ms. Dao and Silva as Managing Members.
Contemporaneously with this execution of the Pho downtown lease and Company
Agreement, Silva disclosed to Ms. Dao his plans to convert his Bene Bene restaurant into
another Pho Colonial restaurant to be held under a new LLC entity—Pho Partners, LLC. 1 CR 7
Another partner at Mr. How’s law firm filed a COF for this new entity on December 29, 2010 1 1
CR 16 and drafted a Company Agreement. However, Ms. Dao was not listed as a Managing
Member on this initial COF filed by Mr. How’s firm.2 1 CR 27-38
In the interim, Silva had assigned the Bene Bene lease to PHO Partners and nonsuited
without prejudice his lawsuit against the landlords.
Escalating Tensions The North Dallas restaurant opened for business in February of
2011. (1 CR 16) Due to the significant remodeling requirements for the downtown location, the
downtown restaurant did not open for business until August 3, 2011. (1 CR 123) By all
accounts, the downtown PHO Colonial was an instant success, quickly doubling the daily
patronage of the North Dallas location. 1 CR 17 The North Dallas restaurant suffered from the
same burdens that sunk Silva’s Bene Bene restaurant—poor location and an oppressive lease. 1
CR 15
1
2
Subsequently, after repeated requests from Ms. Dao, she was added as a Managing Member by Amendment to the
COF filed on March 31, 2011.
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Shortly after the downtown location ramped up in sales, Silva instructed the companies’
comptroller to transfer all the bank accounts receiving the restaurants’ credit transactions to a
certain branch of the Capital One Bank where Silva did his personal banking. 1 CR 18, 1 CR
123 The manager at the bank is Teena Le. Her close friend is Justin Camper. Silva would later
hire Justin Camper Silva also instructed the comptroller that henceforth only Silva could sign
checks from the accounts. 1 CR 18, 123, 134
This exacerbated an already existing problem with liquidity and cash flow at the
restaurants. (1 CR 134) Since the business began, Silva had refused to open a line of credit to
fund daily operations. Instead, Silva would make small loans to the business at random or only
after considerable efforts had been expended chasing him down.
(1 CR 134-35) The
management staff had to spend considerable time and effort stalling, delaying, kiting or
otherwise avoiding even small transactions.
Legal Action: In late December 2011, Silva noticed Ms. Dao of his intention to remove
her as a Managing Member of the PHO Companies in hastily scheduled meeting. Ms. Dao
retained counsel and sought a temporary restraining order to prohibit Silva from unilaterally
removing her as a Managing Member. Such a removal would effectively strip her of any
authority or control over the restaurants. See infra Ms. Dao challenged, among other things, the
legal authority of Silva to take such unilateral action under the governing documents of the
companies. Ms. Dao brought claims of breach of contract and breaches of fiduciary duty against
Silva individually.
Ms. Dao also sought recovery for $96,000 in unpaid compensation that is expressly
provided for in the Company Agreements. A visiting judge declined to grant the TRO.
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Ms. Dao retained new counsel and amended her original complaint which was filed on
Jan. 19, 2012 at 8:29 am, to properly allege breaches of fiduciary duties as a derivative claim and
requested a new TRO and temporary injunction to seek protection on behalf of the PHO
companies’ interests.
On Jan. 19, 2012, at 8:34 am, Appellees filed their Plea in Intervention bringing counterclaims unrelated to the issues in the case. On the same date, Appellants filed their Motion to
Strike Intervention.
Also on Jan. 19, 2012, the present trial court heard arguments and awarded both parties
partial relief in a TRO, though the relief granted Appellants was extremely limited and so vague
as to be unenforceable. This Order was subsequently submitted and signed on Jan. 24, 2012.
The Court only required bond from Appellees. None was ever posted.
Both parties’ Application for Temporary Injunction was heard on Feb. 2 and 3, 2012.
On the following Tuesday, Feb. 7, the Defendant/Intervenors filed a Motion for
Receivorship, presumably to facilitate the trial court’s frequent threat to put the
restaurants into receivorship.3 The motion was quickly withdrawn (nonsuited) at the
outset of the follow-on hearing. Appellees complained to the court that the landlords had
been tipped off by Appellant’s counsel regarding the receivorship motion and requested
the counsel to take the stand. (Almost all commerical leases give landlords right of
recourse to default on receivorship actions). The court declined.
The court then
summarily ordered the TRO be converted into a temporary injunction. The Order, freely
edited by the Appellees, was not submitted or signed until Feb. 17, 2012.
3
See Texas Civil Practices & Remedies Code § 64.002(a) (“PERSONS NOT ENTITLED TO APPOINTMENT. (a)
A court may not appoint a receiver for a corporation, partnership, or individual on the petition of the same
corporation, partnership, or individual.”)
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Appellants objected to the Order under local rule 2.08. Appellants appealed.
ARGUMENT
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Standard of Review and Evidentiary Sufficiency
Appellate courts review the award of a temporary injunction under an abuse of discretion
standard. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). A trial court abuses its
discretion when it acts arbitrarily, unreasonably, and without reference to guiding rules or
principles, or misapplies the law to the established facts of the case. See Walker v. Gutierrez, 111
S.W.3d 56, 63 (Tex. 2003). An appellate court does not weigh conflicting evidence or consider
the merits of the lawsuit. Universal Health Servs., Inc. v. Thompson, 24 S.W.3d 570, 576 (Tex.
App.-Austin 2000, no pet). All evidence in the record is considered in the light most favorable
to the Order, indulging all reasonable inferences in its favor, and determining whether the order
was "so arbitrary as to exceed the bounds of reasonable discretion." Id. An appellate court
"cannot reverse a trial court's order if the trial court was presented with conflicting evidence and
the record includes evidence that reasonably supports the trial court's decision." Id. When, as in
this case, the trial court makes findings of fact or conclusions of law in conjunction with an order
on interlocutory appeal, this Court may consider the findings in determining if the trial court
exercised its discretion in a reasonable and principled fashion. Tom James of Dallas, Inc. v.
Cobb, 109 S.W.3d 877, 884 (Tex. App.-Dallas 2003, no pet.) (citing Chrysler Corp. v.
Blackmon, 841 S.W.2d 844, 852 (Tex. 1992)).
I.
Appellants’ Issues are Exclusively and Sufficiently Sustained by Reference to
the Law and the Application of Law to Undisputed Facts and Do Not
Challenge The Sufficiency of the Evidence.
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Appellants have taken great care to challenge the trial court’s temporary injunction order
exclusively on issues of law and the application of law to undisputed facts. Appellants' issues
are not predicated on challenges to the sufficiency of evidence. This Court need not consider
any disputed facts to sustain any Appellate issue.
See generally, Southwestern Bell Telephone
Co. v. Garza, 164 S.W.3d 607 (Tex. 2005).
Generally, the Appellants have asserted basic foundation facts that are undisputed and
necessary to define the scope of the challenged issues such as the very existence of a Motion to
Strike Intervention, the claims in petitions, or legal arguments heard before the trial court. To
that end, this Court has before it the Clerk’s Record, a partial Reporter’s Record (encompassing
only the legal arguments at the conclusion of the evidentiary hearing), and the briefs of the
Appellants and Appellees.
The Appellants requested the partial record because it strongly showed the trial courts
conclusions of law and application of law to facts. Given the portion of the Record submitted,
the Appellants could not have been seeking a presumption on any issue of evidentiary
sufficiency. Appellants purpose was to aid this Court’s inquiry into whether the trial court
“exercised its discretion in a reasonable and principled fashion”— a reviewing posture identical
to this Court’s treatment of the Order’s findings. Tom James of Dallas at 884.
II.
TRAP 34.6(c)(1) is Generally Inapplicable To The Issues On Appeal
Appellants certainly acknowledge that it is necessary and appropriate for appellate courts
to demand from the parties a heightened level of procedural and substantive sophistication.
Failure to strictly comply with the various provisions of TRAP 34.6 (hereafter Rule) is but one of
the many procedural tools available to appellate courts to dispose of unmeritorious appeals.
Appellees in this case have asked this Court to summarily dismiss Appellants’ appeal in its
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entirety based on strict compliance with Rule, and the Appellants have objected. Appellees
enthusiastic “toss the baby with the bathwater” approach should give this Court pause to test the
credibility of Appellees’ arguments and methods.
TRCP Rule 683 Requires Strict Compliance On The Face of The Order and
Does Not Permit Recourse To The Record For Remediation
First, Appellants TRCP 683 challenge requires the Order to be strictly compliant on its
face without reference to record. Second, Appellants’ strict compliance challenge to TRAP Rule
60 requires only reference to the Clerk’s Record for validation of the sequence of filings. Failure
to strictly comply with TRAP Rule 60 is an abuse of discretion as a matter of law and is not
susceptible to challenges of evidentiary sufficiency.
Evidentiary Burden Shifted To Appellees To Show Justiciability
Third, Appellees fail to understand that Appellants’ challenge to the Intervenors’
justiciable interest shifted the evidentiary burden to them. It is the Appellees that are required to
produce a record if they want to argue justiciability based on the sufficiency of the evidence. In
any case, it is undisputed that the issue of justiciability was not before the trial court prior to the
award of equitable relief. After a motion to strike, justiciability cannot be presumed by the trial
court.
Issues of Standing Are Reviewed de novo
Fourth, Appellants have also challenged the standing of the Appellee Silva to bring
claims which properly belong to the Appellee Intervenors. Standing can be first challenged on
appeal and does not implicate a trial court’s abuse of discretion, but rather implicates the court’s
subject matter jurisdiction.
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Appellees TRAP 34.6 Presumptory Challenge to Appellants’ Showing of a
Probably Right to Relief and Irreparable Harm Is Inapplicable Because The
Trial Court Awarded Appellants Some Equitable Relief and Accordingly,
This Court Must Presume The Record Supports Appellants Equitable
Standing
See infra
Appellees TRAP 34.6 Analytical Method Renders it Meaningless
Appellees also fail to make any attempt to distinguish which challenges of the Appellants
are issues of law, or issues of the application of law to undisputed facts (or which facts are
disputed), or issues that challenge the sufficiency of evidence, if any. Appellees’ misguided and
mechanical recital that this Court cannot consider any facts under the Rule is not a proper
challenge to undisputed facts and should not be remediated.
Accordingly, Appellees’ core argument that every issue proposed by the Appellants that
remotely implicates a fact question must be summarily dismissed by this Court because it
implicates the trial court’s judgment is grossly oversimplified to the point of meaninglessness.
Appellees’ analysis amounts to nothing more than an exorcism of some factual content from any
proposed issue of the Appellants, regardless of its evidentiary significance. Appellees then
announce that this Court must presume the omitted record supports the trial court’s judgment and
dismiss the issue.
The Appellees do not consider the significance of undisputed facts, or
questions of law, or questions of the application of law to undisputed facts.
III.
The Trial Court’s Failure to Comply With TRCP Rule 60 is an Abuse of
Discretion As A Matter of Law.
In general, “a trial court is required to consider and rule upon a motion within a
reasonable time.” Nelson v. Pnc Mortgage Corp., 139 S.W.3d 442, 445 (Tex. App.—Dallas,
2004 no pet.) (citing In re Ramirez, 994 S.W.2d 682, 683 (Tex.App.-San Antonio 1998, orig.
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proceeding). Where the motion is a motion to strike intervention, the Texas Supreme Court
has unequivocally held that “trial courts should rule on motions to strike interventions before
considering other matters such as severance.” In re Union Carbide Corp., 273 S.W.3d 152,
156 (Tex. 2008).
Appellants cite to the clerk’s record for verification that the Appellees filed a Plea in
Intervention on Jan. 19, 2012 and that the Appellants filed a Motion to Strike on the same
date.
The clerk’s record shows the temporary injunction order issued on Feb. 17, 2012.
Appellees state in their Reply Brief that “Appellant correctly states that the hearing on the
Motion to Strike occurred after the Temporary Injunction hearing.” Appellees' Reply Brief,
pg. 14, note 4. Appellants do not dispute that factual assertion.
Appellants’ Brief only rhetorically offers as a fait accompli the question of whether an
injunction order should be considered an “other matter” such as severance. This Court
should regard the sweeping holding In re Union Carbide Corp as the controlling authority.
The Appellant’s Brief contrasts the award of a temporary injunction with a severance
action in light of the posture and policy rationales underpinning the In Re Union Carbide
holding.4 Appellants highlight some of “disruptive” consequences in the context of our case:
§
§
§
§
§
Flanks the rules of joinder.
Flanks prohibitions of corporations defending derivative lawsuits on the
merits and the well-established policy rationales thereof;
Flanks fatal conflicts of interest by opposing counsel(s)
Flanks opposing counsel(s) liabilities for breaches of fiduciary duty and
violations of Rules for Disciplinary Procedure
Flanks the discovery rules by improper and illusory claims of privilege
4
“Because interventions have the potential for disrupting pending suits, trial courts should rule on motions to strike
intervention before considering other matters such as severence. “ In re Union Carbide Corp., 273 S.W.3d 152, 156
(Tex. 2008).
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Appellees confusingly assert that there is no evidence to show intervention is a
disruptive force in this case. The In Re Union Carbide Court does not offer up “disruption”
as a qualifying factor subject to an evidentiary burden. The Court found strict compliance
was mandatory because disruption is inherent in any intervention.
IV.
Appellants Motion To Strike Shifted The Evidentiary Burden to Show
Justiciability To The Appellees
Appellants’ argued in their brief that it was an abuse of discretion for the trial court to
award injunctive relief to Intervenors who had not properly upheld their burden to show a
justiciable interest in the case. This may be a jurisdictional question.
But unquestionably, the
failure to establish justiciability prior to being awarded injunctive relief voids the order. This is a
qualitatively different argument than our strict compliance challenge to Rule 60.5
Appellants challenge to the Intervenors’ justiciable interest is both procedural and
substantive.
Procedurally, once the Appellants filed the Motion to Strike, the Intervenors
became obligated with the burden of proof to demonstrate a justiciable interest in the case. See
Mendez v. Brewer, 626 S.W.2d 498, 499 (Tex. 1982) (“If any party to the pending suit moves to
strike the intervention, the intervenors have the burden to show a justiciable interest in the
pending suit.”) The trial court cannot presume a justiciable interest once a motion to strike has
been filed. Awarding injunctive relief to the Intervenors without any reasoned inquiry into their
justiciable interest is the very definition of acting without any reference to guiding rules or
principles—the abuse of discretion standard.
5
The Texas Supreme Court in In re Union Carbide Corp., could have found, but did not do so, that once the burden
shifts to the Intervenors to show a justiciable interest in the case, the Intervenors have no standing ( before the court
(other than to show a justiciable interest) until they obtain such a ruling. The Court may have been concerned about
post hoc determinations of justiciability “relating back” to validate rulings on “other matters” which would
effectively eviscerate the strong policy rationales found by the Court to be decisive in timely ruling on the motion to
strike. Appellees do not argue any theory of “relating back.”
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The Appellees never address the procedural significance of this burden shifting issue.
Instead, they merely reassert the tired argument that if it contains any factual content then this
Court must presume the omitted record supports the trial court’s judgment. Of course, the trial
court did not consider the issue of justiciability in rendering its injunction order. Rule 34.6
cannot apply because the trial court’s judgment did not consider this issue. In any case, the
burden was on the Appellees to show that they properly possessed a justiciable interest and
obtain a timely ruling on the matter. It is undisputed that they did not.
Additionally, Appellants have also argued in our brief that the Intervenors did not in fact
hold a justiciable interest in the case. (Appellants’ position is that our procedural argument is
sufficient to show the Order void.) Appellees entire answer is predicated on their mistaken belief
that the Appellants bear the evidentiary burden to disprove a justiciable interest. Appellees also
fail to understand that justiciability in the intervention context is not limited to Art. III injury.
Appellees never address why the Intervenors would be able “to defeat [the] recovery, or some
part thereof.”
Guaranty Fed. v. Horseshoe Operating, 793 S.W.2d 652, 657 (Tex.1990).
Additionally, these counter-claims do not arise out of the same transaction(s) or occurrence(s)
that is the subject matter of the Plaintiff’s claims. (The requirement for joinder).
The Appellees intervened on the Defendant’s side of the ball. How could the PHO
companies have defeated any “recovery or some part thereof” when the claims were against
Silva for breaching the contract and his fiduciary duties? Could these claims be brought against
the Intervenors? Moreover, the Appellants derivative claim is by law a claim on behalf of the
interests of the Intervenors.
In a transparent attempt to flank the sound policy rationales for the rules of joinder,
derivative actions, and the clear breaches of fiduciary duty and the disciplinary rules by his
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Khanh Dao ETAL v. Phil Silva ETAL - 20
attorney, the Defendant Silva has hijacked the PHO companies to run point as Intervenors,
ordering them to assert frivolous and baseless counterclaims against the Appellant. Appellees
apparently believe that funding Silva’s “multi-party” defense with company money and
otherwise conflicted company lawyers is what is meant by “defeat the recovery.”
This opens the floodgates for wayward corporate managers challenged in derivative
lawsuits to shield accountability for their wrongdoings by merely joining their alter ego
corporate personas as Intervenors, enabling them to bankroll their “multi-party” defense with
company assets.
Appellees assertion that legal capacity is not a consideration in intervention is simply not
true.
V.
In Balancing The Equities, The Partial Record, Findings, & Appellees’ Reply
Brief All Agree The Trial Court Gave Significant Weight To Silva’s Threat
To Pull Loans
Appellants argue in their Brief that it was an abuse of discretion for a trial court to
balance the equities by weighing as an injury favoring the Appellees, the threats of the Appellee
Silva to discontinue making loans to the companies in response to an unfavorable ruling on the
injunction.
In determining whether to grant injunctive relief, a trial court must balance the equities of
the parties and the resulting conveniences and hardships. See City of San Antonio v. Vakey, 123
S.W.3d 497, 501 (Tex. App.—San Antonio 2003, no pet.). The trial court must balance the
equities by considering the injury to (1) the defendant and the public if the injunction is granted
and (2) the complainant if the injunction is denied. See Hot Rod Hill Motor Park v. Triolo, 276
S.W.3d 565, 568 (Tex.App.—Waco 2008, no pet.) (citing Storey v. Cent. Hide & Rendering Co.,
148 Tex. 509, 226 S.W.2d 615, 618–19 (1950)).
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However, the fact that enforcing the restriction may cause the nonmovant greater injury
than the movant does not compel denial of injunctive relief. See Collum v. Neuhoff, 507 S.W.2d
920, 924 (Tex. Civ. App.—Dallas 1974, no writ). The disproportion between the harm the
injunctive relief causes and the benefit it produces must be of considerable magnitude to justify a
refusal to enforce the restrictions. Cowling v. Colligan, 158 Tex. 458, 312 S.W.2d 943, 946
(1958); Gunnels v. North Woodland Hills Cmty. Ass'n, 563 S.W.2d 334, 338 (Tex. Civ. App.—
Houston [1st Dist.] 1978, no writ).
Appellants contend that this kind of self-imposed injury is not a proper injury
contemplated under that equitable rule, and that, in any case, the threats of a party to do injury
for the purpose of influencing the outcome of a judicial action in equity should, at a minimum,
effectively foreclose that injury from equitable consideration under the doctrine of unclean
hands. The Appellants have been seriously harmed. (The North Dallas restaurant has been
closed, key employees fired, menus and recipes changed, and the continued erosion of the PHO
brand.)
Appellees first contend that the cases cited to support the governing law are all restrictive
covenant cases and of “no particular significance to the issues in this case.” It is unclear whether
the Appellee is disputing the applicability of the governing law or something else. It is simply
not true the cases only deal with restrictive covenants.
The Appellees subsequently conclude that contrary to “Appellant’s unfounded
accusations, the trial court did balance the equities in the instant case.” We Agree. The point is
that the trial court impermissibly weighed Silva’s threats to harm the business as a proper injury
contemplated under the equitable rule.
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Appellees also correctly assert that the trial court was “very much concerned about the
continued viability of the Pho Restaurants . . .” They cite no evidence to support this
conclusion, but the Appellants can help them out. The partial record clearly supports Appellees
contention that the trial court was very preoccupied with the financial viability of the companies.
Additionally, the trial court frames this question only in the context of Silva’s threat to refuse to
extend any more loans:
CR 17-18
25
THE COURT: I've seen nothing that shows me that
1
this -- that this can be a continuing enterprise without the
2
influx of more money.
Cr 19-20
THE COURT: You still haven't answered my
11
question.
12
MR. WHALEN: What's that?
13
14
15
THE COURT: How does this company, these
restaurants, how do they continue without continuing funding by
Mr. Silva?
16
17
MR. WHALEN: Okay. Well, that issue is not
before us.
18
THE COURT: That's wrong.
19
MR. WHALEN: No.
20
21
THE COURT: It is before me on the tempoary
injunction matter. I believe it is.
………………………………..
6
THE COURT: Let's say I put her back in
7
control. What's going to happen? He is going to say, I'm not
8
put anymore money in this. I'm done. He doesn't have any
9
contractual duty to put anymore money in the deal.
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The Appellees’ findings also explicitly support this conclusion by stating as either a fact
or conclusion of law the hypothetical injury that “if Silva does not continue to loan money to the
Restaurants, they will fail.”
Moreover, the partial record clearly supports Appellees’ contention that the trial court
found this issue weighing heavily in favor of the Appellees:
4
5
6
7
THE COURT: Let's say one person, one vote.
Let's say I think the meeting was proper. Okay. Let's just
say I think that 51, 49, percent isn't really applicable in
that clause. Then what?
8
9
10
MR. HOW: Well, then I think the Court has to
look at who bears the burden of proof, number one. And number
two, whether or not –
11
THE COURT: Bears the burden on what?
………………………………………………………
15
MR. HOW: On their application, basically the
16
Court to put her back into management. They do. The plaintiff
17
bears that burden. And the plaintiff's got to show you that
18
there is, in fact, an irreparable injury.
19
At this point the time I think the evidence
20
before this Court makes it pretty clear that there is not an
21
irreparable injury. There will be an irreparable injury if, in
22
fact, she is put back into the manager. That's the evidence
23
before the Court because at that point Mr. Silva will stop
24
funding the operations. At this point, her 49 percent is the
25
beneficiary of the things that he's doing.
And it just seems to me that it's kind of -2
it's a reversal that the irreparable injury is going to occur
3
if Mr. Silva is basically foisted with a partner he doesn't
4
want. He is going to stop funding.
25
2
3
4
5
THE COURT: What are we going to do about it?
MR. HOW: Well, I think what I meant was that by
putting her back into management, she is being thrust back upon
him and at that point in time, I think he's made it clear that
he is not to going to be continuing funding the restaurants.
And there, now you're going to have the irreparable injury.
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6
7
THE COURT: I mean, he's in complete control of
that.
8
9
10
11
12
13
14
MR. HOW: It may be irreparable for both sides
if he doesn't continue to fund. And that's what I don't
understand, why we're even going through this exercise.
The long and short of it is that him continuing
to operate these restaurants and continuing to pour money into
these restaurants, is to the best interest of both of them. It
is the cessation of that by her being putting back into
15 management that causes the problem.
VI.
Silva’s Threats Are Undisputable, This Court Has Discretionary Authority
To Strike Equitable Relief Under The Doctrine of Unclean Hands
Appellees state that “Appellant has failed to bring forth an evidentiary record to allow the
Court to determine whether there is any legitimate evidence to support Appellant’s unclean
hands allegation.” (Appellees’ Reply Brief 22-23) Appellees also assert that this Court must
review an unclean hands challenge under an abuse of discretion standard.
Appellees again
misunderstand the challenge. The Appellants have asked this Court to strike equitable relief.
This Court has the authority to strike equitable relief under the doctrine of unclean hands
upon its own discretion. See Dunnagan v. Watson, 204 S.W.3d 30, 41 (Tex. App.—Fort Worth
2006, pet. denied).
The record cited infra and the Appellees findings clearly speak for
themselves. The effectiveness of such threats and the subsequent damage to the Appellants is
undisputable.
Silva’s attorney succinctly summarizes our contention: “There will be an irreparable
injury if, in fact, she [Ms. Dao] is put back into the manager. That’s the evidence before the
Court because at that point Mr. Silva will stop funding the operations.” (RR 34-5) This is not
an isolated claim as highlighted in excerpts below.
Furthermore, the Appellees’ findings
(authorized by the court) directly imply this conclusion by stating as a fact or conclusion of law
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the contingency that “if Silva does not continue to loan money to the Restaurants, they will fail.”
(CR 185) These are undisputed facts that cannot be remediated by any presumption.
Appellees offer no legal argument or cite any authority to challenge our contention that
such a threat is actionable under the doctrine of unclean hands.
VII.
Status quo: Appellees Strategy To Simplify & Obscurify Is Unavailing
The central purpose of a temporary injunction is 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).
The Appellants argued in their Brief and in the trial court that proper
consideration of the status quo should consider the risks inherent in the power of the parties to
irreversibly alter or destroy the subject matter of the suit.
This consideration is also directly
implicated in the mandatory determination of irreparable harm and in the trial court’s balancing
of the equities. It is no revelation to this Court that more often than not, it is the award of
injunctive relief that irreversible alters the status quo by interfering with the traditional nonjudicial forces that naturally promote the checks and balances governing the relationships
between parties.
This case is not about an employment contract.
This case is about the governing
authority and future direction of two separate companies operating related restaurant brands.
The two human parties in this dispute entered into a partnership to build a restaurant business.
One party (Appellant Ms. Dao) brought to the table successful experience as a restaurateur, a
widely lauded new brand concept, inexhaustible sweat equity, and a lucrative deal for a
downtown lease, requiring a co-signer.
The other party (Appellee Silva) brought to the table the experience and liquidity
necessary to finance the significant start up costs associated with new restaurants, and a marginal
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North Dallas location saddled with an oppressive and commercially unreasonable lease (which
he has now closed). It is important to remember that Silva did not invest in the business. He
loaned the business money with interest and secured the loans with the assets of the companies.
Since then, it is undisputed that the Appellee Silva has fired key employees, including
cooks and administrative staff, and replaced them with cronies, including installing his daughter
as a manager, changed the menu, prices, and recipes, and just last week, Silva closed the North
Dallas business in violation of the injunction order. Silva has engaged in all these unilateral
actions without consulting or seeking the approval of the Appellant. That’s the controversy.
Does the Appellant Ms. Dao have any right to participate in the control and direction of her
business and restaurant brand?
The Appellee Silva claims the status quo is that state of affairs where he can do whatever
he wants, unchecked and unfettered by any authority, apparently even the courts. It does not
matter what he does, nor should this be the proper inquiry regarding the status quo. The status
quo is merely the perpetuation of his alleged right to do whatever he wants.
Appellees apparently challenge as distinguishable on the facts the case cited for the well
established proposition that “if an act of one party alters the relationship between that party and
another, and the latter contests the action, the status quo cannot be the relationship as it exists
after the action.6 Appellants' primary case7 cited in our brief because of the similarity of facts
also states the same holding and it applies with equal force.
Appellees incorrectly assert that the status quo issue in this case concerned the issue of
whether the employment status of a school principal was “interrupted” prior to his filing suit.
More properly stated, the issue was whether or not the principal had become unemployed by the
6
Benavides Indp. Sch. Dist. v. Guerra, 681 S.W.2d 246, 249 (Tex. App.-San Antonio 1984, writ
ref’d n.r.e.).
7
EPG, Inc. v. RDM, Inc., No. 14-07-00415 CV (Tex. App. 2/7/2008),
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natural expiration of his contract and had “accepted” this new state of affairs resulting in a new,
peaceable, uncontested status. The Benavides Court found this argument unavailing both in the
fact of the unemployment and in regards to any assertion that this was an accepted uncontested
state of affairs.
In our case, Appellees make no allegations that the Appellant “accepted” the state affairs
after her illegal ouster as a Manager of the companies, as ridiculous as that assertion would be.
Accordingly, Appellants do not have to challenge the sufficiency of any evidence supporting
such an assertion. The Appellees only claim it was within their authority to do so, and
accordingly, any changes to the status quo subsequent to the Appellant’s dismissal are properly
considered . . .the status quo . . . because . . . they were within their authority. This kind of
circular argument is unavailing.
Appellees offer up the Tri-Star case as an example for this Court to apply the controlling
law to the facts of our case. Tri-Star is a case involving a joint venture agreement (JOA) where
one party (Tri-Star) had contractual rights to develop a natural gas field in Australia. The other
party (Tipperary Corp.) became disenchanted with Tri-Star’s performance and sued them for
non-performance in 1998. Subsequently, Tipperary Corp. won supporting votes in not one, but
two separate meetings of the JV’s governing body, held almost two years apart, to remove TriStar from control of the gas field operations. Tipperary filed an amended complaint seeking
injunctive relief to force Tri-Star to comply with the vote.
It is clear from the start that the Tri-Star court understands that the traditional status
quo analysis would put Tri-Star in the field as the operator given that status when Tipperary first
filed the lawsuit. Tipperary apparently did not ask for injunctive relief, but did ask for a
declaratory judgment that sufficient cause exists to remove Tri-Star as operator. However, the
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Court did not like that solution, given the facts of the case, and the protracted litigation that had
already left Tri-Star in charge for several years after the initial challenge by Tipperary.
The Tri-Star Court’s solution was to default to the lukewarm affirmation that “given the
standard of review we must employ, we find that the trial court could have rationally determined
that the last peaceable, non-contested status between the parties during this lengthy litigation was
the status of the parties prior to Tipperary’s filing of the amended original petition, i.e., prior to
the new controversy as to whether tri-star must comply with the affirmative vote for its removal
as operator.” 588
The Tri-Star Court found the length of the litigation, and the inability of the Appellant to
assert his rights, the fact that Tri-Star did not challenge the initial vote, and the fact that the vote
was technically an act of third parties to the litigation, weighed in favor of the trial court’s
determination of status quo. It’s also clear that this case does not change the controlling law, or
the application of law to facts. The Court could have said, given the claims, the subject matter of
the litigation was in danger of being severely diminished, rendering the litigation moot. They
chose not to do so.
In our case, the Appellants immediately challenged the legal authority for such a vote,
and made allegations of improper purpose. The vote cannot be considered the impartial act of
third parties, but central to the dispute.
VIII. Because The Trial Court Awarded Appellants Some Equitable Relief, This
Court Must Presume The Record Supports Appellants Equitable Standing
Appellants acknowledge that challenges to a trial court’s findings regarding the required
elements of a probable right to relief and irreparable injury are, in most cases, issues of
evidentiary sufficiency.
Accordingly, to the extent that this Court finds the pernicious
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consequences of TRAP 34.6(c)(1) apply to these specific challenges, the Appellants concede the
standard of review requires this Court to presume that the omitted portions of the record support
the trial court’s findings on these issues, since they are necessarily required to support the trial
court award of a temporary injunction. (Appellants have only argued that this is a presumption,
and that this presumption does not fatally preclude this Court from reviewing these challenges
based on any undisputed facts, or based on any conclusions of law or the application of this law
to undisputed facts to the extent they are dispositive of these issues.) This Court does not need to
decide this issue here.
Appellants do not need to plead and prove the three elements necessary to obtain
injunctive relief because the trial court has presumptively affirmed the Appellants right to
equitable relief by awarding such relief in the injunction Order.
by Appellants in their Reply Brief.
This is not a new issue raised
Appellants had argued in their Brief that they had
sufficiently shown these elements in the trial court. And based on the partial record, the trial
court agreed. However, the standard of review and the pernicious consequences of Appellees’
Rule 34.6 challenge have required Appellants to argue the applicability of the Rule to our issues.
The Order grants Appellants the following relief: (CR 186)
This provision is semantically identical to the parallel provision in the temporary
restraining order where both parties were awarded equitable relief, however imbalanced. See
Temporary Restraining Order, (SCR 2) Additionally, the trial court did order that this TRO
order become effective as the injunction Order in the Feb. 9, 2012 hearing where the court
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decided the issue. However, the Appellees took the initiative to slip in a few items such as the
findings and that pronouncement above that “Silva shall manage the Restaurants.” It does not
say that Silva shall be the sole Managing Member of the Pho Companies. The Appellants had
requested such relief at a minimum and it was challenged by the Appellees who claim to have
the legal right to dispose of company assets as they will. “At the Special Meeting which
thereafter occurred on December 30, 2011, Silva voted for the removal of Appellant as a
manager of each company and Appellant voted against the motion. (CR 144). However, owning
a majority membership interest, Silva prevailed and Appellant was removed as a manager and
was forced to relinquish control of the day-to-day operations of each restaurant. (CR 145).”
Appelllees’ Reply Brief, pg 6-7, (citing to the record).
As noted earlier, the removal as a Manager was not the removal of the Appellant Ms.
Dao’s from management of the restaurants. It was the removal of Ms. Dao as a Managing
Member of the PHO Companies. Ms. Dao’s status as a Member only grants her no rights in the
management of the companies:
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Clerk’s Record, pg. 106-7 Regulations and Company Agreement of Pho Colonial 1623 Main,
LLC
Appellees have not challenged this equitable relief. They have also not substantively
challenged the Appellees claims on the required elements necessary for injunctive relief. They
have only challenged the sufficiency of the evidence under the Rule 34.6(c)(1) presumption, and
they have offered no controverting facts, nor do they even claim such controverting facts exist.
It would be an abuse of discretion for the trial court to award such relief absent a determination
of the required elements. Given the standard of review, and absent a record on the issue, this
Court must presume the omitted portions of the record support the trial court’s judgment.
Certainly, the partial record supports the Appellants position that the Appellee Silva did
not have the required authority to act unilaterally:
The Order is Vague Under TRCP 683 and Requires Reformation
Appellants may properly challenge the scope of their awarded injunctive relief on appeal.
This Court acquires jurisdiction. The Appellants had properly objected to the vagueness of this
Order under Local Rule 2.08. The clerk’s record supports Appellants’ pre-existing challenge to
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the specificity of this part of the Order and its non-conformance with the trial court’s direction
(Clerk’s Record, pg. 198, Objection to Injunction Order pursuant to local rule 2.08):
The Appellants’ concerns were well founded given the Appellee Silva’s reckless
disregard of any authority both prior and subsequent to this Order.
Silva’s actions are
undisputed. “After Appellants was removed as manager, new staff was hired and many changes
were implemented in the Pho Restaurants.” (Appellees’ Reply Brief 24)
Silva has recently
closed the North Dallas restaurant without seeking any approval from the trial court or the
Appellants.
This Court has the authority to reform Orders in conformance with TRCP 683.
Appellants prayer for the reformation found in the Appendix.
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CONCLUSION AND PRAYER
The trial courts award of injunction relief for the Appellee-Defendant-Intervenors should
be reversed and this Court should render injunctive relief for Ms. Dao by reinstating her to her
duties as Managing Member of the PHO Companies, and additionally reforming the Order with
the language found in Appendix. The Appellees should forfeit the posted bond in favor of the
Appellants.. The Intervention should be struck for the reasons explained in this brief.
CERTIFICATE OF COMPLIANCE
I hereby certify that the foregoing brief meets the technical rules promulgated by the Fifth
District Court of Appeals—Dallas. The foregoing brief is in 12 point Times New Roman font
with 1 inch margins on every side.
________________________
Attorney
__________05/04/2012
Date
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the above and foregoing pleading has been
served upon the primary counsel of record on this the 14 day of June , 2012, via:
______
certified mail, return receipt requested
___X___
facsimile
______
hand delivery
______
express mail
______
counsel has accepted electronic service
Fax # 214-720-2240
Mark How
2027 Young Street
Dallas, Texas 75
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Appendix
Language to Reform Injunction Order
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1. IT IS THEREFORE, ORDERED, ADJUDGED, AND DECREED that the Defendant
Silva, his officers, employees, agents, representatives, attorneys and persons in active in
concert or participation with him who receive legally cognizable notice of this Order are
hereby enjoined and restrained from making and expenditures, or otherwise distributing,
assigning or committing as collateral any of Pho Partners, LLC or Pho Colonial 1623
Main Street, LLC assets, (hereafter “assets”) to include cash from operations, existing
bank accounts, whether or not comingled with the Defendants accounts, or any other debt
or obligation or interest thereof, for purposes that not in the “ordinary course of
business.” The Court further defines the “ordinary course of business” as expenditures or
disbursements or decisions necessary for managing the daily operations of the restaurants
in a commercially reasonable manner and in accordance with established practices at the
restaurants.
2. IT IS THEREFORE, ORDERED, ADJUDGED, AND DECREED that the Court
specifically finds the following to NOT be in the “ordinary course of business”: (a)
expenditures from PHO’s assets in regards to any legal or other administrative action; (b)
hiring or firing of key employees defined as head cooks, consultants, managers, or other
administrative personal with agency authority to access, audit, or distribute from Pho’s
assets, including bank accounts, inventory stocks, and the like, absent a clear showing of
fraud, criminal activity, or immediate and irreparable harm to the Restaurants; (c)
changing suppliers, vendors, partners, or any other relations, including insurance
providers, tax providers and the like that are currently supporting the Restaurant’s
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operations; (d) changing, modify, or otherwise diluting the Pho brand including
advertising themes and strategies, marketing materials, websites or other internet
marketing strategies, logos, promotional events or promotions, or any discounting of
Pho’s offerings deviating more than 10% from the established pricing; (e) changes to the
Restaurant’s TRADE DRESS including but not limited to furniture, dishware, uniforms,
layout, layouts, methods and procedures, (f) modifying, removing or transferring any of
Pho’s assets, including any intellectual property assets; and (g) announcing, publishing,
or marketing or otherwise communicating any changes or pending changes in PHO’s
“Brand” which includes, but is not limited to such actions, decisions, or expenditures
NOT in the ordinary course of business, and (h) announcing, publishing, or marketing
any statements on behalf of PHO or in PHO’s name that Khanh Dao is not a Manager of
PHO (this does not preclude Silva from making such claims or any other claims in his
own name; and (h) harassing, rewarding, or otherwise influencing employees, vendors,
suppliers and the like for the improper purpose of witness tampering, as legally defined.
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