KITCHENS, Justice, for the Court:
¶ 1. Expro Americas, LLC ("Expro") filed a complaint in the Chancery Court of the First Judicial District of Jones County, seeking, inter alia, a temporary restraining
¶ 2. Expro Americas, LLC ("Expro") is a company based in Houston, Texas, which does business in Laurel, Mississippi. It is a "company that offers oil and gas well and pipeline services." A major portion of Expro's pipeline services business involves "helping customers with the safe handling of high pressure hydrocarbons by separating, filtering, and flaring of the gases that result from, among other things, the cleaning, testing, flushing and commissioning and decommissioning of pipelines. Expro specializes in state-of-the-art, portable trailer mounted flare systems...." Flare stacks are equipment used in oil fields and pipelines which burn and dispose of excess, unusable waste gas. Expro "provides the specially designed flaring products and services to pipeline transmission companies and refineries along the Gulf Coast." Flare stacks, in particular Expro's six-inch, trailer-mounted flare stacks, were at issue in the underlying litigation.
¶ 3. H & H Welding, LLC, ("H & H") is a welding company located in Ellisville, Mississippi, which was hired by Expro for various flare-stack-related work. Eddie Walters was an Expro employee until August 5, 2013. Thereafter, Walters was employed by Clean Combustion, a competitor of Expro's that was created in 2013 by former Expro employees.
¶ 4. On August 20, 2013, Expro filed a "Verified Complaint for Emergency Temporary Restraining Order And/Or Application for Preliminary Injunction and Permanent Injunction and Other Relief" in the Chancery Court of the First Judicial District of Jones County against H & H and Walters, alleging that both defendants stole the design for its six-inch, trailer-mounted flare stack. Expro specifically alleged that "[t]he information used to design and create the trailer-mounted flaring system is a `trade secret' of Expro's within the meaning of Miss.Code Ann. § 75-26-1, et seq." Furthermore, it alleged breach of contract against H & H, claiming that the terms of Expro's purchase orders with H & H contained a "Proprietary Rights" section "in which H & H `warrants to keep all design, information, blueprints and engineering data with respect to the Goods confidential and to not make use of but to assign to Expro each invention, improvement and discovery relating thereto (whether or not patentable) conceived or reduced to practice in the performance of the Purchase Order by any person employed by or working under the directions of the Supplier Group.'" Expro attached a purchase order to its Verified Complaint as "Exhibit A." The purchase order attached to the complaint was not signed by H & H. It also alleged that Walters had signed an "Employee Confidentiality and Conflict of Interest Acknowledgement
¶ 5. Expro argued that it was entitled to injunctive relief because Walters and H & H were copying Expro's proprietary designs. It argued that "Walters has signed a confidentiality and non-compete agreement to not take Expro's proprietary information and use it to compete with Expro. H & H similarly has signed a proprietary agreement with Expro not to use Expro's designs to manufacture components that are not for Expro's use."
¶ 6. Expro argued that both H & H and Walters had breached their respective agreements, alleging that Walters had breached his agreement not to use Expro's confidential and proprietary information and that H & H had breached its agreement not to manufacture or use Expro's designs except for Expro's orders. Specifically to H & H, Expro claimed that H & H "signed an agreement with Expro not to manufacture or use Expro's designs except for Expro's orders. See Exhibit `A.'"
¶ 7. Expro alleged that Walters and H & H had misappropriated "the confidential and proprietary information of Expro."
¶ 8. Expro claimed that Walters and Expro had violated the Mississippi Uniform Trade Secrets Act, Mississippi Code Section 75-26-1.
¶ 9. That same day, Expro filed a motion requesting an emergency temporary restraining order (TRO) and an application for a preliminary injunction. Expro requested that the court enjoin H & H and Walters "from taking, using, manufacturing, selling or otherwise distributing the confidential and proprietary information of Expro as set forth and described in Expro's Verified Complaint." The chancellor granted Expro a TRO. In the order, the chancellor set a security bond of $5,000 pursuant to Mississippi Rule of Civil Procedure 65(c).
¶ 10. The chancellor scheduled a hearing to address the merits of Expro's application for a preliminary injunction for August 27, 2013. On August 21, 2013, Expro served a documents subpoena on H & H pursuant to Mississippi Rule of Civil Procedure 45,
¶ 11. The preliminary injunction hearing commenced on September 3, 2013. First, Expro's employee, Chris L. Holifield,
¶ 12. Holifield testified that Expro had a patent related to the design of the six-inch, trailer-mounted flare stack. He further testified that the "construction and the processes" for the six-inch, trailer-mounted flare stack being discussed all were within the description of the patent and that the flare stacks at issue and the flare stacks covered by the patent were the "same concept."
¶ 13. Moreover, aside from the patent on the flare stack, Holifield testified that Expro did little to nothing to keep its flare stack a secret. When Expro needed to transport its flare stacks, they were placed on the back of an open truck, uncovered, and driven to a job site. If the flare stack was being transported far away and the employee transporting it had to stop and spend the night at a hotel, the employee usually parked the flare stack, uncovered, in the parking lot of the hotel. Furthermore, Holifield testified that when Expro sent the flare stack to other companies, Expro did not tell its employees or the employees of other companies to cover the flare stacks, not to allow people to photograph them, or to keep them secure; indeed, Expro does not inform companies in writing that the design of the flare stack is confidential. Holifield also testified that the four-inch flare stack is substantially similar to the six-inch flare stack. He added that Expro has not required any of its vendors, including H & H, to sign confidentiality agreements.
¶ 14. The hearing continued on September 5, 2013. Also on September 5, 2013, Walters filed a "Motion to Dismiss and Dissolve the Temporary Restraining Order and Deny the Request for [a] Preliminary Injunction" and a "Motion for Attorney's Fees and Expenses," both of which H & H joined. Walters also filed a motion to transfer the case to circuit court, arguing that, except for the injunction, all of the remaining causes of action were remedies at law and not remedies in equity.
¶ 16. Holifield then testified that he had never signed a confidentiality agreement with Expro. He testified that the first time he had seen the document that Expro had attached to its complaint, representing that H & H had signed such a document, was when he was served with the complaint. At a break in testimony, the attorneys for Expro admitted that H & H had not signed a contract similar to the one that Expro had attached to its verified complaint with the representation that H & H was bound by the document. The following discussion occurred:
Shortly after Expro's admission about the purchase order, H & H moved ore tenus for "the temporary retaining [sic] order be dissolved, and move[d] to dismiss [the] complaint for an injunction because of those misrepresentations that have been made." Walters joined this motion. The chancellor then confirmed with counsel for Expro that it had concluded its proof regarding H & H. The chancellor held:
¶ 17. On September 16, 2013, the chancellor issued an order dissolving the TRO and denying Expro's application for a preliminary injunction. The chancellor found that Expro "took no steps to ensure the confidentiality of any of the information H & H may have gained while working on Plaintiff's equipment" and that Expro gave "H & H unrestricted access to the equipment Plaintiff is claiming to be a trade secret." It thus dismissed H & H from the case with prejudice based on the merits of Expro's claims against the company. The court also dissolved the TRO against Walters, finding that the remaining claims against him were for money damages because Walters did not sign a noncompete agreement while he was employed by Expro. The chancellor then transferred Expro's remaining claims against Walters to the Circuit Court of the First Judicial District of Jones County. The chancellor retained limited jurisdiction over the case to determine appropriate attorneys' fees and expenses.
¶ 18. Expro filed a motion to reconsider. Expro objected to H & H's being dismissed with prejudice. It argued that the motions to dismiss by Walters and H & H were only to dismiss and dissolve the TRO and deny the preliminary injunction, not to dismiss all claims against the defendants. Expro argued that the hearings were not a final adjudication and also argued that it should be allowed leave to amend its complaint. Both Walters and H & H filed supplemental motions for attorneys' fees. Expro responded, arguing that Walters and H & H were not entitled to attorneys' fees. It alternatively argued that any attorneys' fee award should be limited to the amount of the $5,000 security bond it posted when it applied for the injunction. It also asserted that "there has been no showing of bad faith in the
¶ 19. A hearing on the motion for attorneys' fees and expenses commenced on October 22, 2013. The chancellor held:
¶ 20. Expro continued to argue that it had a viable basis for an injunction. The chancellor found that:
¶ 21. On March 5, 2014, the chancellor granted both H & H's and Walters's motions for attorneys' fees. The chancellor awarded Walters $31,565.47, and H & H $48,337.89 in attorneys' fees and expenses. On the same day, the chancellor denied Expro's motion for reconsideration. Expro timely filed its notice of appeal.
¶ 22. On appeal, Expro asserts two issues: (1) Whether the trial court erred in awarding the defendants attorneys' fees and expenses in an amount exceeding the injunction security bond and (2) whether the trial court erred by dismissing H & H with prejudice.
¶ 23. Expro argues that the trial court erred in awarding attorneys' fees and expenses in excess of the injunction security bond, violating well-established Mississippi law. Notably, Expro does not argue that the chancellor erred in calculating the amount of attorneys' fees and expenses.
¶ 25. The injunction bond rule, which this Court adopted in Broome v. Hattiesburg Building & Trades Council, 206 So.2d 184 (Miss.1967), provides that, in the event an injunction is wrongfully issued, the damages for a wrongfully issued injunction are limited to the amount of the injunction bond. In Broome, a business owner received an injunction restraining certain employees and local unions and the Trades Council from picketing. Id. at 185. This Court affirmed the injunction, but the United States Supreme Court reversed. Id. After the injunction was dissolved, the trial court awarded the defendants $6,572.72 in attorneys' fees and costs and expenses. Id. at 186. The injunction bond was $1,500. Id. at 187. The terms of the injunction bond were that it was "conditioned to pay `all damages and costs which may be awarded against the complainant.'" Id. This Court held that "it has become well settled in this state that in suits upon injunction bonds no recovery may be had against principal or sureties in excess of the penalty of the bond." Id. at 188 (quoting Anderson v. Falconer, 34 Miss. 257, 260 (1857)). This Court held that if the bond is insufficient security for the damages sustained by the enjoined party, that party must request of the court a sufficient bond. Id. at 189. In Broome, the defendants argued that the applicable code section, which was nearly identical to the current Section 11-13-37 of the Mississippi Code,
¶ 26. In the case sub judice, the chancellor set a security bond of $5,000, which Expro posted. After conducting a hearing, the chancellor awarded Walters $31,565.47 and H & H $48,337.89 in attorneys' fees and expenses. Obviously, the attorneys' fees and expenses awarded in this case greatly exceeded the amount of the posted security bond. However, what effect, if any, the promulgation of the Mississippi Rules of Civil Procedure
¶ 27. Rule 11 of the Mississippi Rules of Civil Procedure provides:
M.R.C.P. 11(b). Similarly, the Mississippi Litigation Accountability Act (LAA) provides:
Miss.Code Ann. § 11-55-5(1) (Rev.2012); see Hooker v. Greer, 81 So.3d 1103 (Miss. 2012) ("The provisions of the [Litigation Accountability Act] are in harmony with those of Mississippi Rule of Civil Procedure 11, which allows the awarding of attorney's fees as a sanction. The LAA merely augments Rule 11 by `stating that the court shall specifically set forth the reasons for awarding attorney fees and costs and enumerates factors which shall be considered by the court.'") (internal citations omitted). The Act defines a claim brought "without substantial justification" to be one that is "frivolous, groundless in fact or in law, or vexatious, as determined by the court." Miss.Code Ann. § 11-55-3(a) (Rev.2012). This Court applies the same test to determine whether a filing is frivolous under both Rule 11 and the Act. In re Spencer, 985 So.2d 330, 338 (Miss.2008). A claim is frivolous when, "objectively speaking, the pleader or movant has no hope of success." Leaf River Forest Prods., Inc. v. Deakle, 661 So.2d 188, 195 (Miss.1995) (internal citation omitted).
¶ 28. In this case, even though the chancellor did not rely upon these facts or Rule 11 in his order awarding attorneys' fees, the chancellor made many explicit findings that Expro's application for a preliminary injunction was made frivolously and in bad faith. See Love v. Barnett, 611 So.2d 205, 207 (Miss.1992) ("[W]here the chancellor reaches a correct result in accordance with the law and facts, this Court will affirm the result even though a wrong reason be assigned."); accord Hogan v. Buckingham ex rel. Buckingham, 730 So.2d 15, 18 (Miss.1998).
The chancellor further found:
The chancellor did not abuse his discretion in finding that Expro had acted in bad faith by attaching an irrelevant purchase order, which had not been signed by H & H, to its complaint as the basis for a preliminary injunction.
¶ 30. Moreover, the chancellor found that, based on the complaint as pled by Expro, it was apparent that Expro was not entitled to the relief it requested, an injunction. See Germain v. Harwell, 108 Miss. 396, 66 So. 396, 398 (1914) (defining a complaint as "frivolous" if it is "so clearly untenable, or the insufficiency of which is so manifest upon a bare inspection of the pleadings, that the court or judge is able to determine its character without argument or research."). In its complaint, Expro asserted that it was entitled to an injunction because the construction of its six-inch, trailer-mounted flare stack was a "trade secret." The definition of a trade secret is information that "(i) Derives independent economic value ... from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." Miss.Code Ann. § 75-26-3(d) (Rev.2009) (emphasis added). However, in addition to asserting that the construction of the six-inch flare stack was a "trade secret," Expro asserted that it had proprietary rights to its relevant patents and that Walters and H & H had violated these rights. Indeed, the chancellor found that, in Exhibit A attached to Expro's complaint, "Paragraph 16 talked about proprietary rights. Paragraph 17 talked about patents. Paragraph 20 talked about confidentiality." Moreover, during the hearing, Expro adduced evidence that it had a patent on the design for its six-inch, trailer-mounted flare stack. Stated differently, as pled and argued by Expro in its complaint, because Expro had obtained a patent on its design for the six-inch, trailer-mounted flare stack, the flare stack's design was "readily ascertainable by proper means" and therefore, by definition, was not a trade secret. Miss.Code Ann. § 75-26-3(d). In fact, we have held, "[t]rade secret processes are not passed upon officially as are patented processes." Rice Researchers, Inc. v. Hiter, 512 So.2d 1259,
¶ 31. In sum, we leave the question of whether the bond injunction rule is still in effect for another day, because it is clear that the chancellor determined that Expro's injunction claim was frivolous and made in bad faith. Thus, regardless of the amount of the injunction bond, attorneys' fees were appropriate under Rule 11 and the Litigation Accountability Act.
¶ 32. Next, Expro argues that the chancellor erred by dismissing H & H from this case with prejudice.
¶ 33. This Court applies the substantial evidence/manifest error standard to an appeal of a grant or denial of a motion to dismiss pursuant to Rule 41(b). Stewart v. Merchants Nat'l Bank, 700 So.2d 255, 258 (Miss.1997) (citing Century 21 Deep South Props., Ltd. v. Corson, 612 So.2d 359, 369 (Miss.1992)). "[I]f the trial court applies the `correct legal standard,' we must affirm the decision, regardless of what any one of us individually might have ruled had we been the judge, unless there is a `definite and firm conviction that the court below committed clear error.'" Ashmore v. Miss. Auth. on Educ. Television, 148 So.3d 977, 981 (Miss.2014) (quoting City of Jackson v. Rhaly, 95 So.3d 602, 607 (Miss.2012)).
¶ 34. In this case, after determining that Expro's suit against H & H was meritless, the Chancery Court of the First Judicial District of Jones County sua sponte dismissed the suit against H & H with prejudice pursuant to Rule 41(b) of the Mississippi Rules of Civil Procedure. The relevant part of Rule 41(b) provides:
M.R.C.P. 41(b).
¶ 35. Notwithstanding the merits of Expro's claims against H & H, according to the plain language of Rule 41(b), the trial court's dismissal with prejudice was erroneous for two reasons. First, the trial court did not dismiss the case after a trial, a clear prerequisite to dismissal with prejudice pursuant to Rule 41(b). M.R.C.P. 41(b) ("in an action tried by the court without a jury"). Instead, the trial court dismissed this case after a hearing about whether Expro was entitled to a preliminary injunction. Second, Rule 41(b) states that "the defendant ... may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief." M.R.C.P. 41(b). Under the plain language of the rule, Rule 41(b) relief may be awarded only on the motion of the defendant, regardless of the merits of the case. The defendant in this case, H & H, did not file a Rule 41(b) motion. Instead, H & H moved ore tenus that "the temporary retaining [sic] order be dissolved, and move[d] to dismiss [the] complaint for an injunction because of those misrepresentations that have been made." At best, this can be interpreted as a request for dismissal of Expro's application for a preliminary injunction as a sanction and not as a request for dismissal of the entire case on the merits.
¶ 37. In sum, we leave for another day the question of whether the bond injunction rule remained in effect after the adoption of the Mississippi Rules of Civil Procedure. We instead affirm the trial court's award of attorneys' fees to H & H and Walters because Expro filed its application for a preliminary injunction frivolously and in bad faith, in violation of Rule 11 and the Litigation Accountability Act. However, the trial court applied the wrong legal standard and therefore erred in sua sponte dismissing H & H from Expro's suit with prejudice. We therefore reverse the Court's order dismissing the case against H & H with prejudice and remand the case to Chancery Court of the First Judicial District of Jones County for proceedings consistent with this opinion.
¶ 38.
WALLER, C.J., DICKINSON, P.J., LAMAR, PIERCE AND COLEMAN, JJ., CONCUR. KING, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION JOINED BY RANDOLPH, P.J., AND CHANDLER, J.
KING, Justice, concurring in part and dissenting in part:
¶ 39. The majority finds that the chancery court's decision to dismiss H & H with prejudice was error. Because I find no error in the chancellor's decision, I respectfully dissent from that portion of the majority.
¶ 40. "A dismissal with prejudice indicates a dismissal on the merits." Jackson v. Bell, 123 So.3d 436, 439 (Miss.2013). A Rule 41(b) dismissal "operates as an adjudication upon the merits." Miss. R. Civ. P. 41(b). It is appropriate for failure to prosecute or to comply with the rules of civil procedure or any order of court, or after the plaintiff has completed the presentation of his evidence "in an action tried by the court without a jury" when the plaintiff has shown no right to relief upon the facts and the law. Id. The chancellor did hear the preliminary injunction case in full, and the evidence makes it abundantly clear that Expro had no chance whatsoever of success on its only claims in the complaint against H & H — for breach of contract, when no contract existed, and misappropriation of trade secrets, when no trade secret existed.
¶ 41. I concede that this case does not fit as neatly as one might prefer into Rule 41, because Rule 41 states that when an action is "tried," dismissal is appropriate, and whether this case fits the definition of "tried" under Rule 41 is unclear. On one hand, the majority argues that the case was not finally tried on the merits. On the other hand, the complaint requested a preliminary injunction, the court heard the matter on the preliminary injunction for two days, and the issue of the preliminary injunction was adjudicated on its merits. Moreover, Expro filed clearly frivolous claims against H & H, thus it does not seem inappropriate that the result of doing so should be dismissal.
¶ 42. I believe that dismissal was appropriate, especially in light of considerations of judicial economy. Based on Expro's complaint and its assertions on appeal, it had no cognizable claim against H & H. Its first claim was for injunctive relief. The chancery court clearly found that Expro was not entitled to injunctive relief. Expro's second claim against H & H was for breach of contract based specifically on a contract that Expro admitted did not exist as represented. Thus, its breach of contract claim against H & H as pled in its complaint was a nullity. Expro's third and fourth claims against H & H were for misappropriation of trade secrets and violations of the trade secrets act, and the evidence that Expro transported its flares in the open, took no steps to maintain confidentiality surrounding the flares, and indeed had a patent on the flares, made abundantly clear and obvious that it is likely impossible to prove that Expro's flares were a trade secret. Expro has no remaining viable claims from its complaint against H & H. Turning to the remedies that Expro asks of this Court, it first asks this Court to reinstate the complaint and transfer the claims against H & H with the ones against Walters to the circuit court. But no viable claims against H & H are left to transfer, as opposed to Expro's claims for breach of duty of loyalty and honest services against Walters. Second, it asks this Court to allow Expro to amend its complaint to assert additional claims against H & H. It offers no "additional claims" it would bring besides aiding and abetting a breach of the duty of loyalty, and it offers no caselaw to show that such a "claim" actually exists. Third, it asks this Court to dismiss H & H without prejudice, ostensibly so it can file again against H & H with the dubious "claims" with which it desires to amend its complaint. The evidence show that Expro clearly had no viable claims against H & H as pled in its complaint, and with no claims left, dismissal is certainly practical, and it makes little sense to reinstate a complaint of nothing against H & H.
¶ 43. While the trial court's disposition could and should have been done with more clarity, nothing remained against H & H that was actionable, based on the trial court's rulings made after a fulling hearing
RANDOLPH, P.J., AND CHANDLER, J., JOIN THIS OPINION.
Miss.Code Ann. § 11-13-37 (Rev.2004).
M.R.C.P. 65(c). The Advisory Committee Note to the rule provides that the purpose is "so that proper payment for costs, damages and reasonable attorneys' fees may be made to the restrained party in the event it is determined that such party was wrongfully enjoined or restrained." M.R.C.P. 65, Advisory Committee Note.
Id. at 565. Similarly, another case found that collateral estoppel applies only to questions actually previously litigated, and that damages claims were not brought or litigated in prior suits for injunctions, thus collateral estoppel did not preclude a suit for damages. Southern Land and Res. Co., Inc. v. Dobbs, 467 So.2d 652, 656-57 (Miss.1985). Although more modern res judicata jurisprudence appears to be a bit more sweeping, Expro certainly has a colorable argument that potential claims for money damages, which were not raised or litigated in the underlying injunction action, are not barred by res judicata.