In
The provision
A lease from
An amendment to the lease replaced the original Paragraph 7 with this less-restrictive clause:
"The rights and obligations of the Lessee hereunder are not assignable or transferable in any respect by it, except upon the written approval of [Mayo], which approval shall not be unreasonably withheld."
Lips donated her interest in the land to Mayo. Alpar farmed out acreage, including Section 157, to Amoco. Amoco and
Mayo sued and requested a preliminary injunction. The district court denied the request.
The "
A federal court should grant a preliminary injunction only when the plaintiff establishes all of the following:
-
It is substantially likely to succeed on the merits of the underlying case;
- It is substantially likely to suffer irreparable harm if the injunction is not granted;
- The threatened injury outweighs any harm that the injunction may occasion for the defendant; and
- The injunction will not undermine the public interest.
- If Mayo may withhold consent, was such a refusal to consent "reasonable"?
- Mayo's refusal to consent was unreasonable.
The court discussed the first factor in great detail, the second factor in less detail, and the final two factors not at all.
Substantial likelihood of success
The court was presented with two questions of first impression:
-
Given
Short answers:
-
The consent-to-assign paragraph was valid.
Validity
The court found the amended consent-to-assign to be a promissory restraint on alienation of property. Promissory restraints are valid if they permit alienation to at least some possible alienees. By prohibiting "unreasonable" refusals to consent, the provision did not veto assignment to all possible assignees.
Reasonableness
The court looked to sources beyond
The court concluded that Mayo's refusal to consent to the assignment to Courson was not reasonable under those factors.
Irreparable harm
The court reasoned that the second Winter factor, irreparable harm, is arguably the most important, and Mayo failed to satisfy the court that it would suffer the required harm absent the drastic relief of a preliminary injunction.
The result
Because Mayo failed to establish two Winter factors, its motion was denied without prejudice.
What does it mean?
Injunctions are decided on limited evidence without full development of the underlying facts, and the irreparable harm hurdle is quite high. This result doesn't mean that Mayo can't prove at trial that its veto was not reasonable.
And a story about love and a motorcycle.
* History buffs: The court speaks of the history of the ranch and describes
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr
TX 75201
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