Trial court improperly issued injunction requiring customer to continue paying for City water under contract at higher rate

G-M Water Supply Corporation v. City of Hemphill, Texas,12-16-00129-CV (Tex.App— Tyler, November 22,2016)

This is an injunction case where the Tyler Court of Appeals reversed an injunction requiring a purchaser of City water to make payments at a specific rate until otherwise ordered by the court.

G-M is a nonprofit water supply company which had a contract to purchase a minimum level of City water each month. The less they purchased, the more per gallon they paid. G-M later built a treatment plant and started purchasing less water. The City adjusted the rate and demanded payment, which G-M refused. In 2014-15, the City charged G-M $2.8333 per 1,000 gallons of water, but raised the rate in 2015-16 to $5.2137 per 1,000 gallons of water. The City filed an application for temporary injunction requesting that G-M pay the accrued arrearages into the trial court’s registry, along with the full amount of future monthly invoices all calculated at the higher rate. The trial court granted the injunction and G-M appealed.

To establish an irreparable injury, the applicant must make “a clear and compelling presentation that without the injunction, it would suffer an actual irreparable injury resulting in extreme hardship, or that the injunction is extremely necessary to prevent an actual irreparable injury.” The record shows G-M had sufficient funds in its accounts, so the City did not establish it would not be able to satisfy a monetary judgment if obtained. Additionally, the last, actual, peaceable, non-contested status between the parties that preceded the controversy was when the parties operated under the contract rate for 2014-2015. However, the trial courts order used the 2015-2016 rates, which altered the status quo.  And while this dispute has no doubt affected the City’s short term ability to make all the budgeted capital purchases at the preferred time, the evidence shows that the City maintains capital reserves of over $1,000,000.00, it can negate the effects of its postponed capital expenses, and that it is still able to provide all services until this matter can be resolved at trial.  Finally, the City did not establish it would be required to sue for each month of non-payment and the court believes any breach of contract suit could encompass everything in a single action. Therefore, it was error to issue the injunctive relief.

If you would like to read this opinion click here. The Panel includes Justice Hoyle, Justice Worthen, and Justice Neeley. Justice Hoyle delivered the opinion of the court. To see the Representatives for the Appellant and the City click here for the docket page.