in Re 8650 Frisco, LLC D/B/A Estilo Gaucho Brazilian Steakhouse, Mandona, LLC, Galovelho, LLC, Bahtche, LLC, Claudio Nunes and David Jeiel Rodrigues ( 2015 )
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ACCEPTED 01-15-00423-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 5/8/2015 10:13:28 AM CHRISTOPHER PRINE CLERK No. 01-15-00423-CV FILED IN 1st COURT OF APPEALS HOUSTON, TEXAS In the Court of Appeals 5/8/2015 10:13:28 AM For the First Judicial District of Texas CHRISTOPHER A. PRINE Houston, Texas Clerk In re 8650 Frisco, LLC; Estilo Gaucho Brazilian Steakhouse; Mandona, LLC; Galovelho, LLC; Bahtche, LLC; Claudio Nunes; and David Jeiel Rodrigues, Relators The Honorable Jaclanel McFarland, 133rd Judicial District Court of Harris County, Texas, Respondent Arising out of Cause No. 2014-10896 Real Parties in Interest’s Response to Motion for Emergency Temporary Relief to Stay Action by the Trial Court Hawash Meade Gaston Stephens & Domnitz, Dykema Cox Smith Neese & Cicack LLP PLLC Andrew K. Meade Kelly D. Stephens David Kinder State Bar No. 24032854 State Bar No. 19158300 State Bar No. 11432550 Samuel B. Haren P.O. Box 79734 112 East Pecan Street, State Bar No. 24059899 Houston, Texas 77279 Suite 1800 2118 Smith Street 281-394-3287 (phone) San Antonio, Texas Houston, Texas 77002 832-476-5460 (fax) 78205 713-658-9001 (phone) kstephens@stephensdom 210-554-5500 (phone) 713-658-9011 (fax) nitz.com 210-226-8395 (fax) ameade@hmgnc.com sharen@hmgnc.com Background Real Parties in Interest (“Los Cucos”) have a pending claim against Relators (“8650 Frisco”) for breach of the parties’ settlement agreement (the “Settlement Agreement”). See Exhibit 1, Fourth Amended Petition at ¶¶ 32–40. Under the Settlement Agreement, 8650 Frisco is required to pay $900,000 to Los Cucos over a period of five years.
Id. at ¶33. Los Cucos’ suit against 8650 Frisco is premised, in part, on 8650 Frisco’s refusal to execute a promissory note and UCC-1 form. See
id. at ¶¶34–36. As a result, Los Cucos has taken-on an unbargained-for credit risk. The magnitude of this risk—and the attendant harm and damages resulting therefrom—hinges on 8650 Frisco’s financial condition. Los Cucos seeks damages and, in the alternative, specific performance of 8650 Frisco’s obligation to execute the relevant documents. See
id. at ¶42; Exhibit 2, Supplement to Fourth Amended Petition at ¶ 3. Over a year ago, Los Cucos requested that 8650 Frisco produce certain financial and accounting documents (the “Financial Documents”). The Court ordered 8650 Frisco to produce the Financial Documents on June 13, 2014; July 28, 2014; April 1, 2015; and April 27, 2015. See Exhibit 3, Hearing Transcript at 23:2–4; Exhibit 4, Order on Third Motion to Compel; Exhibit 5, Order Granting in Part and Denying in Part Motion to Enforce the Court’s Order; Exhibit 6, Order Granting Plaintiffs’ Third Motion to Enforce the Court’s Order (the “April 27 1 Order”). The last of these four orders included (1) a monetary sanction of $1,000 and (2) a finding conclusively establishing the irreparable harm element of Los Cucos’ specific performance claim. See Exhibit 6, April 27 Order. Los Cucos believes that 8650 Frisco still has not complied with the April 27 Order. See Exhibit 7, Fourth Motion to Enforce the Court’s Order and for Sanctions. Los Cucos has filed yet another motion to enforce the trial court’s order; that motion is set for hearing on May 18, 2015. See Exhibit 8, Notice of Hearing. Discussion 8650 Frisco’s Motion for Emergency Temporary Relief to Stay Action by the Trial Court (the “Motion”) is factually incorrect and legally insufficient. As demonstrated below, the Motion should be denied in its entirety and the trial court should be permitted to continue working toward a resolution of this case. I. 8650 Frisco’s Motion misstates the facts. 8650 Frisco’s Motion contains numerous factual misstatements. First, 8650 Frisco flatly asserts that the Financial Documents “have no relevance to the live pleading on file with the trial court.” Motion at ¶ 7. This is incorrect as 8650 Frisco’s financial condition is relevant to assessing the harm/damages caused by 8650 Frisco’s breach of the Settlement Agreement.1 1 In fact, 8650 Frisco has a pending no-evidence motion for summary judgment on this exact issue, and Los Cucos requires the Financial Documents in order to fully respond thereto. See Exhibit 9, No-Evidence Motion for Summary Judgment at ¶ 13; Exhibit 10, Los Cucos’ Supplemental Response at 1–2. 2 8650 Frisco next complains that the trial court “conclusively establish[ed] an unpleaded issue in favor of [Los Cucos].” Motion at ¶ 8. This is a reference to the irreparable harm element of Los Cucos’ request for specific performance. Compare Exhibit 6, April 27 Order and Exhibit 2, Supplement to Fourth Amended Petition at ¶ 3. In both its Motion and its petition for writ of mandamus, 8650 Frisco appears to have simply forgotten that Los Cucos has sought specific performance. 8650 Frisco further complains that it had already produced the Financial Documents “twice previously.” Motion at ¶ 9. If this were true, 8650 Frisco could avoid any harm—let alone irreparable harm—by simply sending the documents to a courier and having the courier hand deliver those documents before the May 18, 2015 hearing. In truth, however, the April 27 Order was issued precisely because 8650 Frisco’s prior attempts at production were incomplete. 8650 Frisco has not produced the requested Financial Documents, and any future complete production would be the first. 8650 Frisco next complains that the trial court signed the April 27 Order “in the presence of Counsel for [Los Cucos] but outside the presence of [8650 Frisco’s] attorney.” Motion at ¶ 10. Because 8650 Frisco’s attorney chose to appear telephonically, the entire hearing occurred outside of his presence. Moreover, despite the nefarious implication 8650 Frisco seeks to make, the Court 3 merely signed the proposed order filed by Los Cucos with its Motion to Enforce. Compare Exhibit 6, April 27 Order and Exhibit 11, Proposed Order. Finally, 8650 Frisco complains that Los Cucos’ Fourth Motion to Enforce the Court’s Order “demanded that the [trial court] strike [8650 Frisco’s] pleadings for failure to comply” with the April 27 Order. Motion at ¶ 12. But Exhibit B to the Motion plainly states that the only sanctions requested are (1) a monetary sanction for the attorneys’ fees incurred in obtaining the Financial Documents, (2) an order to 8650 Frisco and its attorneys to show cause as to why they should not be held in contempt, and (3) an order barring 8650 Frisco from conducting further discovery. See Motion Exhibit B at 6, 50. While such sanctions are admittedly harsh, they are not requests to strike 8650 Frisco’s pleadings. II. 8650 Frisco has not shown irreparable harm. 8650 Frisco has shown that it disagrees with the trial court’s orders. It has not shown that it faces irreparable harm unless the trial court’s proceedings are stayed. Should the May 18, 2015 hearing go forward, 8650 Frisco is not threatened with the loss of any property, the expiration of any deadlines, or the striking of its pleadings. 8650 Frisco merely complains that, absent a stay, it will be required to appear at a hearing on a motion which 8650 Frisco believes it should win. If that were the standard for irreparable harm, every hearing could produce a petition for 4 writ of mandamus, and every petition for writ of mandamus would result in a stay of the trial court’s proceedings. Conclusion 8650 Frisco has not accurately characterized this case, nor has it shown that failure to stay the trial court would cause it any harm. Los Cucos prays that the Court deny the Motion and grant Los Cucos all other relief to which it is entitled. Respectfully submitted, Hawash Meade Gaston Neese & Cicack LLP /s/ Samuel B. Haren Andrew K. Meade State Bar No. 24032854 Samuel B. Haren State Bar No. 24059899 2118 Smith Street Houston, Texas 77002 713-658-9001 (phone) 713-658-9011 (fax) ameade@hmgnc.com sharen@hmgnc.com Stephens & Domnitz, PLLC Kelly D. Stephens State Bar No. 19158300 P.O. Box 79734 Houston, Texas 77279-9734 281-394-3287 (phone) 832-476-5460 (fax) kstephens@stephensdomnitz.com 5 Dykema Cox Smith David Kinder State Bar No. 11432550 112 East Pecan Street, Suite 1800 San Antonio, Texas 78205 210-554-5500 (phone) 210-226-8395 (fax) Attorneys for Real Parties in Interest Certificate of Compliance Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), this document contains 1,062 words, not including portions excluded under Texas Rule of Appellate Procedure 9.4(i)(1). /s/ Samuel B. Haren Samuel B. Haren Certificate of Service I hereby certify that a true and correct copy of the foregoing was served on the following via electronic service on May 8, 2015: James C. Mosser Nicholas D. Mosser Paul J. Downey Mosser Law PLLC 2805 Dallas Parkway, Suite 220 Plano, Texas 75093 /s/ Samuel B. Haren Samuel B. Haren 6 Cause No. 2014-10896 Los Cucos Mexican Cafe VIII, Inc.; In the District Court of Los Cucos Mexican Cafe IV, Inc.; Manuel Cabrera; and Sergio Cabrera, Plaintiffs v. Harris County, Texas 8650 Frisco, LLC d/b/a Estilo Gaucho Brazilian Steakhouse; Mandona, LLC; Galovelho, LLC; Bahtche, LLC; Claudio Nunes; and David Jeiel Rodrigues, Defendant 133rd Judicial District Plaintiffs’ Fourth Amended Petition Plaintiffs Los Cucos Mexican Cafe VIII, Inc.; Los Cucos Mexican Cafe IV, Inc.; Manuel Cabrera; and Sergio Cabrera file this Fourth Amended Petition against defendants 8650 Frisco, LLC d/b/a Estilo Gaucho Brazilian Steakhouse; Mandona, LLC; Galovelho, LLC; Bahtche, LLC; Claudio Nunes a/k/a Alex Nunes; and David Jeiel Rodrigues: Discovery Level 1. The plaintiffs intend to conduct discovery under Level 3 of Rule 190.3 of the Texas Rules of Civil Procedure. 2. The plaintiffs seek damages within the jurisdictional limits of this Court, including monetary relief over $1,000,000. Parties 3. Plaintiff, Los Cucos Mexican Cafe VIII, Inc. (“Los Cucos VIII”), is a Texas Corporation with its principal place of business in Houston, Harris County, Texas. 4. Plaintiff, Los Cucos Mexican Cafe IV, Inc. (“Los Cucos IV”), is a Texas Corporation with its principal place of business in Harris County, Texas. Exhibit 1 A-1 5. Plaintiff, Manuel Cabrera, is an individual who resides in Austin County, Texas. 6. Plaintiff, Sergio Cabrera, is an individual who resides in Harris County, Texas. 7. Defendant, 8650 Frisco, LLC (“8650 Frisco”), is a Texas limited liability company doing business as Estilo Gaucho Brazilian Steakhouse. It has been served and appeared herein. 8. Defendant, Mandona, LLC (“Mandona”), is a Texas limited liability company. It has been served and appeared herein. 9. Defendant, Galovelho, LLC (“Galovelho”), is a Texas limited liability company. It has been served and appeared herein. 10. Defendant, Bahtche, LLC (“Bahtche”), is a Texas limited liability company. It has been served and appeared herein. 11. Defendant, Claudio Nunes a/k/a Alex Nunes (“Nunes”), is an individual citizen of Texas. He has been served and appeared herein. 12. Defendant, David Jeiel Rodrigues (“Rodrigues”), is an individual citizen of Texas. He has been served and appeared herein. Jurisdiction and Venue 13. Venue is proper under TEX. CIV. PRAC. & REM. CODE § 15.002(a)(1) because a substantial part of the events giving rise to this lawsuit occurred within this county. More specifically, Plaintiffs and Defendants negotiated and entered into, on the record, an agreement to settle the underlying complaints of Plaintiffs. The negotiations leading to this settlement took place in the offices of Hawash, Meade Gaston Neese & Cicack, LLP, located at 2118 Smith Street, Houston, Harris County, Texas 77002. 14. Jurisdiction is proper in this Court because the parties are all Texas residents and the amount in controversy is within the jurisdictional limits of the court. 2 A-2 Factual Background 15. Manuel Cabrera and Sergio Cabrera are brothers with significant experience in creating, owning, and operating restaurants. The brothers are the owners and operators of a number of Mexican restaurants branded and known as “Los Cucos Mexican Cafe”. Each restaurant is a separate legal entity registered with the State of Texas. Los Cucos VIII and Los Cucos IV are two of these entities. 16. Manuel Cabrera, Sergio Cabrera, David Jeiel Rodrigues, and Claudio Nunes (collective, the “Partners”) agreed to create and operate a restaurant together. The plan and agreement was to create a Brazilian churrascaria-style restaurant in the Dallas, Texas area. The Underlying Background I. The initial agreement. 17. After a series of negotiations, the Partners agreed that, inter alia: (1) each partner would obtain a 25% interest in the restaurant; (2) Manuel Cabrera and Sergio Cabrera (individually or through entities subject to their control) would contribute $600,000 for start-up capital; (3) David Jeiel Rodrigues and Claudio Nunes would contribute “sweat equity” by contributing personal services to the creation and operation of the restaurant; (4) Manuel Cabrera and Sergio Cabrera (individually or through entities subject to their control) would guarantee a lease for the restaurant; (5) all intellectual property, including trademarks would be held together with the restaurant; and (6) the Partners would share control, profits, and losses equally, but would receive no other salary from the restaurant. II. Excess contributions and attempted renegotiation. 18. As work progressed on the restaurant, additional capital was needed. At David Jeiel Rodrigues’ and Claudio Nunes’ request, Manuel Cabrera and Sergio Cabrera (individually or through entities subject to their control) increased their contributions. The Cabreras’ total 3 A-3 contributions eventually equaled more than $948,000. In addition, Manuel Cabrera and Sergio Cabrera (individually or through entities subject to their control) paid for and/or loaned equipment and furniture (including two large, expensive, and difficult-to-obtain Brazilian grills) worth over $60,000 to the enterprise. 19. To account for the unanticipated and additional contributions, the Partners attempted to negotiate a way for Manuel Cabrera and Sergio Cabrera (individually or through entities subject to their control) to receive preferential distributions until their initial contributions were repaid, subject to a small guaranteed distribution to David Jeiel Rodrigues and Claudio Nunes. III. Creation of the corporate structure and the Restaurant operations. 20. While the Partners negotiated a new distribution structure, the Partners agreed to form 8650 Frisco as the holding company for the Restaurant. Each of the four Partners was to own 25% of 8650 Frisco. David Jeiel Rodrigues and Claudio Nunes created defendant Galovelho to hold their 50% ownership interest in 8650 Frisco and the Restaurant. Sergio Cabrera and Manual Cabrera designated Los Cucos VIII to hold their 50% ownership interest in 8650 Frisco and the Restaurant. 21. 8650 Frisco then entered into a lease agreement for restaurant space, which Sergio Cabrera and Manuel Cabrera personally guaranteed. 22. David Jeiel Rodrigues and Claudio Nunes also desired to create a holding company to manage 8650 Frisco, but the parties did not agree on this structure. Instead, David Jeiel Rodrigues and Claudio Nunes formed Mandona to hold their collective 50% interest in the management of 8650 Frisco. Manuel Cabrera and Sergio Cabrera did not form a holding 4 A-4 company to hold their collective 50% control over 8650 Frisco, but continued to hold control in their individual capacities. 23. The Partners then opened bank accounts for 8650 Frisco and granted all of the Partners access to the accounts. 24. Despite lengthy negotiations, it now appears that the Partners were and are unable to agree on new distribution terms to take into account the Cabreras’ (or entities under their control) substantial excess contributions. Instead, the Partners continued to operate as general partners or joint venturers up and until the defendants removed the plaintiffs from the enterprise and began to deny the plaintiffs’ ownership interest in 8650 Frisco and the restaurant. IV. The defendants’ exclusion of the plaintiffs. 25. Thanks to the contributions from Manuel Cabrera and Sergio Cabrera (individually or through entities subject to their control), 8650 Frisco opened the Estilo Gaucho Brazilian Steakhouse (the “Restaurant”) in February of 2013. 26. 8650 Frisco is currently operated by David Jeiel Rodrigues and Claudio Nunes, individually, and (upon information and belief) through their entities Mandona, Galovelho, and Bahtche. The defendants have collectively refused to recognize the plaintiffs as co-owners of 8650 Frisco and the Restaurant, and have collectively excluded the plaintiffs from the operations, control, distributions, and profits of 8650 Frisco and the Restaurant. 27. On information and belief, the defendants are distributing and/or diverting $40,000 or more per month from 8650 Frisco and the Restaurant to themselves or their designees. This is a violation of the parties’ agreement and the defendants’ duties as partners and/or joint venturers. 5 A-5 28. On further information and belief, the defendants registered the Restaurant’s “Estilo Gaucho” trademark in the name of Bahtche and/or transferred the trademark to Bahtche without the plaintiffs’ consent, in violation of the parties’ agreement, and in breach of the defendants’ duties as partners and/or joint venturers. 29. The plaintiffs have not received any distributions from the Restaurant’s operations. Instead, the defendants have attempted to steal the plaintiffs’ contributions by denying the plaintiffs any distributions or benefits of ownership. For example, the defendants have: transferred and/or laundered 8650 Frisco’s cash from bank accounts to which the plaintiffs had access to new accounts to which the plaintiffs have no access; denied the plaintiffs access to 8650 Frisco’s new bank accounts; failed to hold and/or give notice of meetings for 8650 Frisco; denied the plaintiffs access to the Restaurant’s premises; fired 8650 Frisco’s long-time accountant in favor of an account who, upon information and belief, is controlled by the defendants; denied the plaintiffs access to 8650 Frisco’s books and records; denied the plaintiffs’ interest in 8650 Frisco; distributed 8650 Frisco’s cash to themselves but not to the plaintiffs; used equipment loaned to 8650 Frisco for the defendants’ own benefit and refusing to return such equipment after demand was made; and transferring the assets of 8650 Frisco to entities owned or controlled by the defendants such as Bahtche. 30. The plaintiffs have made written demands for return of their money and property and for an accounting. The defendants have refused. Instead, the defendants continue to use the 6 A-6 plaintiffs’ property and the fruits of the plaintiffs’ contributions while simultaneously pretending that the plaintiffs are owed nothing in the transaction. The Underlying Causes of Action 31. The Plaintiffs sued Defendants alleging as causes of action: Breach of Contract, Coversion, Breach of Fiduciary Duty, Fraud/Fraudulent Inducement, Civil Conspiracy, Aiding, Abetting and Participation in Breach of Fiduciary Duty, Corporate Veil Piercing, Unjust Enrichment, Quantum Meruit, and Money Had and Received and for an Accounting. The Rule 11 Settlement Agreement 32. On or about August 5, 2014, while in the midst of taking the Court Ordered depositions of the Defendants at the offices of Hawash Meade Gaston Neese & Cicack, LLP, located at 2118 Smith Street, Houston, Harris County, Texas 77002, the parties entered into a settlement negotiation and on August 5, 2014, entered into a Rule 11 Settlement Agreement on the record. On August 6, 2014, the Defendants filed the Rule 11 Agreement with the Court. 33. The key elements of the agreement were: A. Defendant 8650 Frisco, LLC d/b/a Estilo Gaucho Brazilian Steakhouse was to pay to Cabrera Brothers II, LP, the amount of $900,000.00. The terms of payment were $60,000.00 was to be paid upon completion of the paperwork formalizing the settlement and the remainder to be paid monthly over 5 years at 6.7% interest. The initial payment under the note was to be due on October 1, 2014; B. The Defendants further agreed to enter into “standard bank-type documentation” for the note to include a “note or promissory note, a deed of trust, 7 A-7 appropriate UC-1s to the extent Plaintiff determine it’s necessary, an assignment of the lease and any assets related to the restaurant; C. Time would be of essence in the agreements, and there would no cure time for any default; D. In the case of default, there was to be a $10.00 paid up license fee for use of the name of the restaurant limited to that location; and, E. The individual Defendants would not be liable under the note. Plaintiffs ask that the Court take judicial notice of the Transcript of the Rule 11 Settlement Statement filed in this cause by the Defendants on August 6, 2014. 34. In August and September of 2014, Plaintiffs prepared and forwarded documents to the Defendants for review and suggestion. These documents included a formal settlement agreement which included the release of the individual Defendants, a promissory note, a UCC-1 listing as collateral for the note the assets of the restaurant; an assignment of interest in the lease, all as required by the Rule 11 Agreement. 35. The Defendants made a number of suggestions to change these documents, most of which were then included in the documents. Not all of Defendants changes were accepted, most notably Plaintiffs refused to accept a venue selection clause in the documents requiring venue of any action based on a breach of the agreement in Collin County, Texas. 36. Defendants have and continue to refuse to execute the settlement agreement or the note and security documents as required by the Rule 11 Agreement. 37. On or about October 1, 2014, the Defendants did make the $60,000.00 down payment and the first monthly payment under the proposed terms of the note. And, have made the monthly payments through the January 1, 2015 payment as of the time of this filing. 8 A-8 38. On or about October 9, 2014, Plaintiffs notified the Defendants that they were in default of the settlement agreement absent the execution of the settlement agreement, the note, the deed of trust and the appropriate security documents. 39. On or about October 10, 2014, Plaintiffs again notified the Defendants of the default, ask for additional complaints about the documents as provided and made an offer to change the documents to address the lone identified bone of contention (venue). 40. To date, Defendants have not responded to this request. Causes of Action I. Breach of Contract 41. The Defendants have breached the Rule 11 Agreement by failing to execute the formal settlement agreement, the promissory note and the appropriate security documents as set forth in the Rule 11 Agreement. By so doing, the Defendants are denying the Plaintiffs the protection agreed to in case of default under payments of the amount agreed to. Relief Requested 42. The plaintiffs seek judgment jointly and severally against all Defendants for actual damages in the amount of $900,000.00 as agreed to under the Rule 11 agreement with credit to be given for the amounts paid. 43. The plaintiffs seek their attorney’s fees and costs incurred in prosecuting these claims. 44. The plaintiffs seek pre and post judgment interest and the maximum rate allowed by law. 45. The plaintiffs seek all other relief, at law or in equity, to which the plaintiffs may be entitled. 9 A-9 Respectfully Submitted, Stephens & Domnitz, PLLC /s/ Kelly D. Stephens Kelly D. Stephens State Bar No. 19158300 P.O. Box 79734 2118 Smith Street Houston, Texas 77279-9734 281-394-3287 (phone) 832-476-5460 (fax) kstephens@stephensdomnitz.com Hawash Meade Gaston Neese & Cicack LLP Andrew K. Meade State Bar No. 24032854 Jeremy M. Masten State Bar No. 24083454 Samuel B. Haren State Bar No. 24059899 2118 Smith Street Houston, Texas 77002 713-658-9001 (phone) 713-658-9011 (fax) ameade@hmgnc.com jmasten@hmgnc.com sharen@hmgnc.com Cox Smith Matthews Incorporated David Kinder State Bar No. 11432550 112 East Pecan Street, Suite 1800 San Antonio, Texas 78205 210-554-5500 (phone) 210-226-8395 (fax) dkinder@coxsmith.com Attorneys for Plaintiffs 10 A-10 Certificate of Service A true and correct copy of the foregoing has been served on all counsel of record via ECF on January 21, 2014. James C. Mosser Nicholas D. Mosser Mosser Law PLLC 17110 Dallas Pky, Suite 290 Dallas, Texas 75248 /s/ Kelly D Stephens Kelly D. Stephens 11 A-11 2/23/2015 8:37:36 PM Chris Daniel - District Clerk Harris County Envelope No. 4254256 By: JIMMY RODRIGUEZ Filed: 2/23/2015 8:37:36 PM Cause No. 2014-10896 Los Cucos Mexican Cafe VIII, Inc.; In the District Court of Los Cucos Mexican Cafe IV, Inc.; Manuel Cabrera; and Sergio Cabrera, Plaintiffs v. Harris County, Texas 8650 Frisco, LLC d/b/a Estilo Gaucho Brazilian Steakhouse; Mandona, LLC; Galovelho, LLC; Bahtche, LLC; Claudio Nunes; and David Jeiel Rodrigues, Defendants 133rd Judicial District Supplement to Plaintiffs’ Fourth Amended Petition 1. Plaintiffs file this Supplement to Plaintiffs’ Fourth Amended Petition (the “Supplement”) to clarify the relief requested in Plaintiffs’ Fourth Amended Petition (the “Petition”). The Supplement does not replace the Petition. 2. Plaintiffs believe that the Petition gives fair notice of Plaintiffs’ need and request for specific performance of the Rule 11 settlement agreement. See Stafford v. S. Vanity Magazine, Inc.,
231 S.W.3d 530, 535 (Tex. App.—Dallas 2007, pet. denied). 3. Out of an abundance of caution, Plaintiffs hereby expressly plead that, in the event damages are not awarded in this action, (1) Defendants’ refusal to execute a promissory note, settlement agreement, and other security agreements would constitute an irreparable harm by exposing Plaintiffs to a credit risk they specifically contracted to avoid and (2) Plaintiffs respectfully request that the Court order specific performance of Defendants’ obligations under the Rule 11 settlement agreement, including, without limitation, the execution of a promissory note, a settlement agreement, and a dismissal of its pending claim for declaratory relief. Exhibit 2 A-12 Respectfully submitted, Stephens & Domnitz, PLLC /s/ Kelly D. Stephens Kelly D. Stephens State Bar No. 19158300 P.O. Box 79734 2118 Smith Street Houston, Texas 77279-9734 281-394-3287 (phone) 832-476-5460 (fax) kstephens@stephensdomnitz.com Hawash Meade Gaston Neese & Cicack LLP Andrew K. Meade State Bar No. 24032854 Jeremy M. Masten State Bar No. 24083454 Samuel B. Haren State Bar No. 24059899 2118 Smith Street Houston, Texas 77002 713-658-9001 (phone) 713-658-9011 (fax) ameade@hmgnc.com jmasten@hmgnc.com sharen@hmgnc.com Cox Smith Matthews Incorporated David Kinder State Bar No. 11432550 112 East Pecan Street, Suite 1800 San Antonio, Texas 78205 210-554-4400 (phone) 210-226-8395 (fax) dkinder@coxsmith.com Attorneys for Plaintiffs 2 A-13 Certificate of Service A true and correct copy of the foregoing has been served on all counsel of record via electronic service on February 23, 2015. James C. Mosser Nicholas D. Mosser Mosser Law PLLC 17110 Dallas Pky, Suite 290 Dallas, Texas 75248 /s/ Samuel B. Haren Samuel B. Haren 3 A-14 MOTION TO COMPEL 1 1 REPORTER'S RECORD VOLUME 1 OF 1 VOLUME 2 TRIAL COURT CAUSE NO. 2014-10896 3 4 LOS CUCOS MEXICAN CAFE VIII( IN THE DISTRICT COURT OF INC.;LOS CUCOS MEXICAN ( 5 CAFE IV,INC.; MANUEL ( CABRERA;AND SERGIO CABRERA ( 6 ( VS. ( HARRIS COUNTY, TEXAS 7 ( 8650 FRISCO,LLC D/B/A ESTILO 8 GAUCHO BRAZILIAN ( STEAKHOUSE; MANDONA,LLC; ( 9 GALOVELHO,LLC;BAHTCHE, ( LLC; CLAUDIO NUNES; AND ( 10 DAVID JEIEL RODRIGUES ( 133rd JUDICIAL DISTRICT 11 _______________________________________________________ 12 MOTION TO TRANSFER 13 _______________________________________________________ 14 15 On the 23rd day of June, 2014, the following 16 proceedings came on to be held in the above-titled and 17 numbered cause before the Honorable JACLANEL McFARLAND, 18 Judge Presiding, held in Houston, Harris County, Texas. 19 Proceedings reported by computerized stenotype 20 machine. 21 22 23 DARLENE STEIN OFFICIAL COURT REPORTER 24 133RD DISTRICT COURT HARRIS COUNTY, TEXAS 25 DARLENE STEIN Exhibit 3 A-15 MOTION TO COMPEL 2 1 APPEARANCES 2 Mr. Andrew K. Meade SBN 24032854 3 Mr. Samuel B. Haren SBN 24059899 4 2118 Smith Street Houston, Texas 77002 5 Telephone: (713)658-9001 Telephone: (713)658-9011 (Fax) 6 Attorney for Plaintiffs 7 Mr. Nicholas D. Mosser 8 SBN 24075405 Mr. James Mosser 9 SBN 00789784 17110 Dallas Parkway, Suite 290 10 Dallas, Texas97 75248 Telephone:) (972)733-3223 11 Telephone: (972)267-5072 Attorney for Defendants 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DARLENE STEIN A-16 MOTION TO COMPEL 3 1 CHRONOLOGICAL INDEX 2 June 23, 2014 3 PAGE 4 Proceedings............................... 4 5 Argument by Mr. Meade..................... 6 6 Argument by Mr. Mosser.................... 11 7 Proceedings concluded..................... 25 8 Reporter's Certificate.................... 26 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DARLENE STEIN A-17 MOTION TO COMPEL 4 1 (P R O C E E D I N G S) 2 June 23, 2014 3 4 THE COURT: This is Cause No. 2014-10896. 5 And if everyone would announce who they are and who they 6 represent, please. 7 MR. MEADE: Andrew Meade and Sam Haran for 8 the Plaintiffs. 9 THE COURT: Mr. Mosser, if you'll announce 10 who you are and who you represent, please. 11 MR. MOSSER: I'm sorry? 12 THE COURT: Announce who you are and who 13 you represent. 14 MR. MOSSER: Yes, ma'am. This is James 15 Mosser, Mosser Law Firm, PLLC, appearing telephonically 16 on behalf of all Defendants. 17 THE COURT: Okay. I will tell you that I 18 don't have the motions in front of me. My law clerks 19 have gone to get them. For some reason, even though you 20 are on the docket, they thought it had been pulled. So, 21 anyway, but I'm going to let y'all go ahead and start. I 22 think it's Plaintiff's motions. So, I'm going to let 23 them go ahead and start while the law clerks are bringing 24 in the actual written motions. 25 MR. MEADE: All right. Your Honor, if DARLENE STEIN A-18 MOTION TO COMPEL 5 1 you'll recall, this is a -- my client supplied about 2 $950,000 in some equipment for a restaurant -- 3 MR. MOSSER: Your Honor, if he could get 4 closer to the microphone or speak up louder, it would be 5 easier to hear. 6 THE COURT: Yeah. Well, I'll put the 7 phone a little closer. But, you know, have you got a 8 storm in Dallas? Is that the problem or what? You know, 9 when you don't show up, it's -- we can only do the best 10 we can do. 11 You know, that's why when I practiced law, 12 I didn't depend on Southwest. Now, going to committee 13 meetings, I depended on Southwest a lot. I was on a lot 14 of Baptist boards that met over on North Washington, the 15 Baptist building. But when I had a case, I usually drove 16 down the night before or drove up or drove west or east or 17 wherever I was going. 18 MR. MEADE: And -- and for convenience, 19 Your Honor, we will try to set hearings in the case on 20 Fridays and Mondays to make that more convenient. 21 THE COURT: Well, we don't have hearings 22 on Fridays. So, they have to be on Mondays. 23 MR. MEADE: Mondays. 24 And so, the situation that we've got 25 here -- Your Honor will recall that we had previously DARLENE STEIN A-19 MOTION TO COMPEL 6 1 noticed depositions for early May of the Defendants, that 2 those depositions had been quashed. So, we set a Motion 3 to Compel. The Court ordered the depositions to occur in 4 June. We agreed on dates that were put into the Court's 5 order, which was June 9th and 10th for six depositions to 6 occur. 7 On the Sunday before -- June 9th was a 8 Monday. 10th was a Tuesday. On the Sunday before, 9 Mr. Mosser left a message on Mr. Stephen's phone, saying 10 that he wouldn't be attending the depositions nor would 11 his clients because -- and they subsequently filed a 12 motion. Mr. Mosser apparently has a nervous system injury 13 of some sort that he came down with the day before the 14 depositions. And there is nobody else within his 15 four-person law firm who's qualified to sit in a chair and 16 defend a deposition. 17 He then went and set his Motion to Transfer 18 Venue, offered us some dates in late July that -- or -- 19 that conflict with a trial that I have in Judge 20 Englehart's court. And then when I rejected those dates, 21 offered dates in August. 22 And we have run into a problem now, which 23 is that I leave the country on Saturday for two and a half 24 weeks. I get back and have five days to prepare for a 25 week-long trial in Judge Englehart's court. And then at DARLENE STEIN A-20 MOTION TO COMPEL 7 1 the end of the week that I'm in trial with Judge Englehart 2 is their Motion to Transfer Venue. We have taken the 3 position, which is correct under the rules, that discovery 4 should not be and cannot be, in fact, abated while a 5 Motion to Transfer Venue is pending. 6 They have taken the position and even set 7 for today and then withdrew a Motion to Stay all 8 proceedings while they have the opportunity to have that 9 Motion to Transfer Venue heard. 10 We're going to have to take these 11 depositions before the Motion to Transfer Venue hearing. 12 We need them ordered and compelled, and we need the Motion 13 to Transfer Venue hearing pushed back till that can 14 happen. 15 But we also need Mr. Mosser or his clients 16 to pay the costs of the depositions that were ordered -- I 17 took Certificates of Nonappearance on all six 18 depositions -- and that they ought to have to bear the 19 cost on each of those. 20 The next issue that we have is as you'll 21 recall, we have an accountant that worked for the company 22 in New Braunfels and then a new accountant in Dallas. We 23 had the -- the letter and correspondence where they said, 24 you know, turn over all records and destroy all in your 25 possession. And -- and we had to move to compel the DARLENE STEIN A-21 MOTION TO COMPEL 8 1 accountant to produce the records from New Braunfels, and 2 he did produce the records to us. 3 But we have also asked for certain 4 financial records, including tax records and other 5 financial documents from the Defendants themselves; and 6 soon we will -- and, also, their new accountant, who will 7 soon have to come down on a Motion to Compel, as well, 8 although that's not part of today. 9 The -- the other issue that is part of 10 today is their responses and objections to our requests 11 for production, which deal with the financial and tax 12 records. 13 Starting with the tax records, there are 14 numerous reasons why as members of the company and -- 15 that -- that we're entitled to the tax records of an LLC. 16 First of all, the statute allows it. 17 Second, we need to prepare our own tax 18 returns. 19 Third, how they chose to characterize our 20 capital contributions, the proportion of what is 21 characterized as a loan and capital contribution and all 22 of that is going to be relevant to the parties' agreement 23 or disagreement about our membership status and -- and how 24 much money is owed in terms of -- our position is that 25 part of the money was loaned and part of it was a capital DARLENE STEIN A-22 MOTION TO COMPEL 9 1 contribution, and -- and they may or may not disagree, 2 although they haven't disclosed their theory of the case 3 to us at all in any way. That will be relevant, those tax 4 records. 5 The other financial records, which include 6 bank account statements, we're -- we're entitled to the 7 books and records, again, of the company; but, also, these 8 bank account statements are going to be relevant to 9 whether distributions -- because under the -- under the 10 limited liability company act, under the partners' oral 11 agreement, and under the written agreements that were 12 exchanged, we would be entitled to distributions of 13 distributable cash. 14 None have been made to us. We believe some 15 have been made to the Defendants, substantial 16 distributions, and that there is distributable cash. We 17 believe that, but we don't have the records to show it, 18 and the bank statements will go a long ways towards that. 19 What we've met with to date is an objection 20 every step of the way and resistance even to Court-ordered 21 depositions. And -- and the objection that was made, for 22 example, to the accountant's records was that objection of 23 privilege that the Texas courts don't recognize. Well, it 24 was made again in response to requests for production 25 after the Court had already ruled on the objection in DARLENE STEIN A-23 MOTION TO COMPEL 10 1 relation to the accountant. 2 They made other objections; for example, 3 objecting that the Texas Finance Code provides the 4 exclusive means to get bank account statements, even bank 5 account statements of a party. I -- I assure you that I 6 will go to the bank, under the Texas Finance Code, and get 7 the bank statements separately. But that doesn't 8 alleviate the obligation of a party to produce those bank 9 statements. 10 So, a recommendation in -- in one of my 11 motions is really -- it's really -- we're asking for the 12 relief but sort of recommending a path for the Court, 13 would be to appoint a discovery master in the case. I 14 don't mind coming down here once a week, and I suspect we 15 will be back here again in a week. And I'll tell you why. 16 You know, we had these grills. I -- I 17 don't know if you remember the -- the unique grills. 18 Well, we have reason to believe that the grills have been 19 destroyed. And I've asked for an inspection of the 20 collateral, of -- of the property. They haven't responded 21 to it. I'm going to be asking the Court for it and 22 probably having to move it to compel. 23 When these depositions do occur, I suspect 24 I'm going to meet with a series of objections and probably 25 instructions to the witness not to answer and that sort of DARLENE STEIN A-24 MOTION TO COMPEL 11 1 thing. And I -- and we can have the depositions in your 2 chambers. I leave it to the Court's discretion of how we 3 deal with these issues; but I would rather, if we can 4 avoid it -- and I -- I know that judges, including 5 yourself, don't like us coming down here all the time on 6 Motions to Compel. I would like to avoid them, if 7 possible. And so, the appointment of a discovery master 8 is one suggestion to do that. 9 And I'll let Mr. Mosser respond. 10 THE COURT: Mr. Mosser? 11 MR. MOSSER: Yes, ma'am. 12 THE COURT: You may respond. 13 Hello? 14 MR. MOSSER: Yes, ma'am. I'm right here. 15 THE COURT: Where -- you want to respond? 16 MR. MOSSER: Oh, yes, ma'am. I surely 17 will. Thank you. 18 May it please the Court? Let me go 19 backwards a little bit here. Let's start with the grills 20 are being destroyed, which is a false statement made by 21 counsel. It has become custom in this case. The problem 22 is we sent notice to counsel that he should come and pick 23 up the grills, and counsel told us they weren't going to 24 pick up the grills. 25 So, we told them if they leave the grills DARLENE STEIN A-25 MOTION TO COMPEL 12 1 that they claim they loaned to my clients, we told them, 2 If you don't pick them up, we'll just put them in storage; 3 and you can pay the storage bill when you get here. 4 Nobody said they were going to destroy them, and it's just 5 outrageous that he would say those kinds of things. 6 As for bank accounts, the Finance Code does 7 provide the method by which he can obtain the bank 8 accounts. But let's assume he doesn't want to do that and 9 I'm required to deliver bank accounts. If the Court will 10 recall, he mentioned that he held a deposition on written 11 questions for Mr. -- I can't remember the accountant's 12 name -- Hal Holtman, I think -- to produce all the records 13 he had related to anything with my clients. 14 Now, if you will recall from the -- the 15 Temporary Injunction hearing, Mr. Holtman went and 16 testified on everything we told him he shouldn't be 17 testifying on; and then he subsequently, based on comment 18 from counsel this morning, delivered all the documents he 19 had to the Plaintiff's lawyers in this case. That 20 includes the tax returns, all bank statements, all the 21 income statements, all the financial statements, 22 everything related to the business until Mr. Holtman was 23 fired. 24 Now, the Court ordered that. Mr. Holtman 25 turned them over, over our objection. So, I don't think DARLENE STEIN A-26 MOTION TO COMPEL 13 1 that we're required to produce records in a duplicitous 2 manner that have already been produced by the accountant 3 in this case. 4 And, secondly, those documents were 5 produced to opposing counsel who has yet to this day 6 served them on us. When he gets discovery from whatever 7 source it's from, he's required to serve everybody in the 8 lawsuit, all parties, a copy of that discovery. He has 9 not done so. So, I don't have any. 10 Going back to the top of the complaint from 11 opposing counsel, I'm 69 years old; and I can't help it if 12 my sacral iliac joint gets sprained, inflamed, bruised, 13 and strained. I can't do anything about that. We 14 immediately notified, upon determination that I was 15 immobile, that this deposition had to be reset or 16 postponed. 17 I think it's outrageous that I can't even 18 pick up the phone and call a counsel for a medical problem 19 that he won't reset depositions for or even respond to the 20 telephone calls. I think it's outrageous that they file 21 motions claiming that they've had a conference with 22 opposing counsel, which is plainly false. They didn't 23 have any conference with us. In fact, they filed these 24 motions and then claimed that they had a conference after 25 they filed the motion. DARLENE STEIN A-27 MOTION TO COMPEL 14 1 As for offering dates, we offer to set a 2 date in July; and understanding trial schedules, as I do, 3 I was required to file a Motion to Continuance on -- let's 4 see -- that date that he wanted to do these, the 16th, 5 17th, somewhere in there because I had a special setting. 6 I had to go into that court and request the Court reset 7 the special setting in that case because of my sacral 8 iliac sprain. 9 I don't under -- I suppose five years ago 10 when I had my quadruple bypass surgery, opposing counsel 11 would complain because that was just an excuse. These are 12 not excuses. These are real-live things. We've offered a 13 second set of dates. Counsel didn't even respond to them. 14 Now, counsel also says that we don't -- we 15 should take depositions to get proof for the Motion to 16 Transfer Venue. I don't think the Motion to Transfer 17 Venue is set for today, but he puts it in his -- in his 18 response or his Third Amended Motion to Compel, and I 19 don't understand. He believes that the testimony given in 20 open court on the record and sworn to by his clients can't 21 be used in Motion to Transfer Venue. At some point in 22 time, the Court will have to rule on that motion; and I 23 will be happy to defend that issue. 24 As for costs, counsel fails to properly 25 prepare any cost statements, hasn't made any cost DARLENE STEIN A-28 MOTION TO COMPEL 15 1 statements, hasn't suffered from any problems other than 2 my sacral iliac joint sprain; and I don't think he would 3 like me sitting in his conference room, taking the 4 narcotics that I was taking and the side effects that go 5 with it. 6 So, he has all of the financial records we 7 believe that exist, delivered by Holtman over our 8 objection. He did not properly serve the accountant -- 9 the new accountant in Texas, which is more than 150 miles 10 and -- away, and he doesn't have a right to get anything 11 from him. 12 And as for tax records from the LLC, 13 they're not members. They never have been members. 14 They're not members. They rejected the opportunity to 15 become a member, and that's clear testimony in the 16 Temporary Injunction hearing. 17 So, I think I've covered the waterfront. 18 But as far as tax returns, the State of Texas has made 19 very clear by the Supreme Court and the Court of Appeals 20 in Houston -- I think every Court of Appeals has said it 21 is an abuse of discretion requiring the disclosure of 22 Federal income tax returns if other documents can provide 23 the information necessary. 24 But in order to even search out and get 25 that information, opposing counsel is required to provide DARLENE STEIN A-29 MOTION TO COMPEL 16 1 the relevancy and materiality that's necessary as to his 2 claims. He has none. He hasn't presented any. He hasn't 3 asked for any. He hasn't said a single word that shows 4 that a tax return, a financial statement, or any of these 5 other intrusive and burdensome matters are necessary for 6 his claims. And the Court should deny his motions in 7 total. 8 Thank you. 9 THE COURT: When do you want to take the 10 depositions? 11 MR. MEADE: Well -- 12 MR. MOSSER: I'm sorry, Judge? 13 THE COURT: I'm -- I'm asking your 14 opposing counsel when he wants to take the depositions. 15 MR. MEADE: I knew you were going to ask 16 that, and I think the simplest answer to that is before 17 the Motion to Transfer Venue is heard. 18 THE COURT: Okay. 19 MR. MEADE: The more complex answer is 20 after the week of the 21st of July because I have a trial 21 that entire week. But we are set number one. So, we 22 will go; and I will be done that week because it's a 23 breach of contract case. 24 So, following that week, I only have one 25 day that I have a -- I have a deposition currently set DARLENE STEIN A-30 MOTION TO COMPEL 17 1 that I'm defending on the 28th of July. Otherwise, I am 2 wide open to -- to take these depositions. 3 THE COURT: Okay. Counsel, you heard 4 that, I assume. So, pick a date after his trial in Judge 5 Englehart's court and not on July -- what? 6 MR. MEADE: 28th. 7 THE COURT: -- 28th that you can produce 8 your people for depositions. 9 MR. MOSSER: I'm looking at the calendar 10 now, Judge. 11 THE COURT: Okay. 12 MR. MOSSER: I would recommend August 4th 13 and 5th, and I -- I would like to also add, Judge, that 14 four of the depositions that were set, two of them -- on 15 two separate days, two of them were set at exactly the 16 same time. And then the next day, two more were set at 17 exactly the same time, which I would discourage that 18 concept as appropriate. 19 MR. MEADE: And -- and here would be my 20 response. If Mr. Mosser would cooperate with me -- 21 MR. MOSSER: But the 4th and the 5th are 22 good with me, Judge. 23 MR. MEADE: If Mr. Mosser would cooperate 24 with me a little bit and let me know -- these are an 25 individual -- two individuals and four corporate DARLENE STEIN A-31 MOTION TO COMPEL 18 1 representatives who may be, and I suspect will be, those 2 same individuals -- could all be taken possibly at the 3 same time or concurrently with each other. But 4 Mr. Mosser hasn't identified who are -- who's going to be 5 the corporate representative. So, I don't know how else 6 to do it. 7 If he will identify who will be the 8 corporate representatives for those entities, I will 9 notice the -- the depositions so that they don't conflict 10 timewise with one other another. 11 MR. MOSSER: As you previously noticed, 12 the doc -- the areas of inquiry, Mr. Rodriguez will be 13 the deponent. 14 MR. MEADE: On all, Mr. Mosser? 15 MR. MOSSER: Yes. 16 MR. MEADE: Okay. Then I will -- I will 17 set it up so that they don't conflict with one another. 18 MR. MOSSER: Thank you. 19 THE COURT: Okay. So, pick, the 4th of 20 the 5th of August? 21 MR. MEADE: It will be both, Your Honor. 22 THE COURT: Oh, both. 23 MR. MEADE: Yeah. 24 THE COURT: Okay. All right. The 25 depositions are set for the 4th and the 5th. And DARLENE STEIN A-32 MOTION TO COMPEL 19 1 Plaintiff's counsel will send notice, but they are now 2 set. He'll send notice as to time and place, I assume, 3 which I assume you've already -- where -- where are they 4 going to be? 5 MR. MEADE: Well, as Mr. Mosser doesn't 6 have an office here in Houston -- 7 THE COURT: Okay. 8 MR. MEADE: -- I'm just going to do them 9 at my offices here in Houston, Your Honor. 10 THE COURT: Right. And I presume that's 11 okay with you, Mr. Mosser? 12 MR. MOSSER: Oh, yes, ma'am, that's fine 13 with me. 14 THE COURT: Okay. Now, as to fees of the 15 nonappearance, I'm not going to order anything at this 16 time. I will consider it later as the case progresses, 17 depending on how discovery goes. So, I will just hold 18 that under advisement. 19 What else was there? 20 MR. MEADE: The objections, which I think 21 lie in the Third Motion to Compel, which are Motions to 22 Compel the responses to discovery that ask for a 23 variety -- it's -- it's a variety of financial 24 information, including bank statements and -- and tax 25 returns. DARLENE STEIN A-33 MOTION TO COMPEL 20 1 THE COURT: Mr. Mosser, have -- does your 2 client have the bank statements? 3 MR. MOSSER: I'm sorry, Judge? 4 THE COURT: Does your client have the bank 5 statements? 6 MR. MOSSER: I think Mr. Holtman has them, 7 and opposing counsel has collected everything Holtman 8 has. And I would like the Court to order opposing 9 counsel to deliver those documents that he got from the 10 third-party witness Holtman to us. 11 THE COURT: Well, let me ask -- that -- 12 that wasn't my question. 13 MR. MOSSER: I understand. 14 THE COURT: My question is: Does your 15 client have them? 16 MR. MOSSER: No. I think -- I think 17 Holtman has them all. 18 THE COURT: So, your client didn't keep a 19 copy? 20 MR. MOSSER: Nobody sends out copies of 21 bank statements any more, Judge. 22 THE COURT: Sure they do. I get them 23 every month. 24 MR. MOSSER: I appreciate that, Your 25 Honor. Let me put it a different way. Many businesses DARLENE STEIN A-34 MOTION TO COMPEL 21 1 do not get bank statement in paper form. 2 THE COURT: Well, do they get them 3 electronically where they can print them out? 4 MR. MOSSER: My understanding, Your Honor, 5 is that Holtman has all the bank statements. 6 THE COURT: So, your client doesn't get 7 the e-mail saying, Your bank statement is ready to be 8 printed out; or they can't go in and print it out? 9 MR. MOSSER: I haven't made that 10 particular inquiry. 11 THE COURT: Yeah. 12 MR. MOSSER: Because they're with the bank 13 and the accountant. 14 THE COURT: Well, my guess is your client 15 has access to them by -- if they -- if they're not like 16 me and they don't pay to get a paper statement or get a 17 paper statement, they get an e-mail saying, Your bank 18 statement is online. And you just log in, and you can 19 print it out. 20 MR. MOSSER: I understand what the Court 21 is saying, but my suggestion is that they already have 22 all of that stuff. They got it from Holtman. 23 MR. MEADE: Your Honor, if I -- if I could 24 add one -- as Your Honor may recall, they -- the 25 Defendants fired Mr. Holtman, who is the CPA, from the DARLENE STEIN A-35 MOTION TO COMPEL 22 1 company in March, terminated my client's access and his 2 access to all of the bank accounts. Then -- then hired a 3 new accountant located up in Dallas and identified him as 4 the new CPA, to which Holtman was supposed to and did 5 send all of the information. 6 As far as account statements, the -- it's 7 an ongoing duty, in fact, and they -- they have the 8 duty -- even if, in fact, we had gotten all of the 9 information and -- and Mr. Mosser has just said he doesn't 10 actually know what we've gotten. Even if had gotten all 11 of the information, it wouldn't alleviate their 12 responsibility to produce it, too, because, for example, 13 we might be missing a page of a bank statement. We might 14 want to use a 173, you know, authentication means for the 15 documents. 16 But there are certainly post termination of 17 Mr. Holtman, zero financial records that we have access to 18 but that the Defendants have access, custody, and control 19 over those documents exclusively; and that's what we're 20 asking for. 21 THE COURT: Okay. So -- 22 MR. MEADE: Their current accountant has 23 all of it, and they have all of it. 24 THE COURT: All right. 25 MR. MOSSER: Well, we don't really know DARLENE STEIN A-36 MOTION TO COMPEL 23 1 that. 2 THE COURT: Well, I'm going to overrule 3 your objections and tell you to produce it if it's 4 available to you. 5 MR. MOSSER: From the time that Holtman 6 was terminated? Because they already have everything 7 else. 8 THE COURT: No. Just from what they've 9 requested. 10 MR. MOSSER: And will you order them to 11 deliver us what Holtman has? 12 MR. MEADE: I don't need to be ordered to, 13 Your Honor. I will -- I haven't had him even ask me. If 14 you send me a letter asking for it -- 15 THE COURT: Well, he's asking now. Send 16 it to him. 17 MR. MEADE: I'll send it to him, Your 18 Honor. 19 THE COURT: Yeah. I'm not going to order 20 him, but he -- he said on the record now he's going to 21 send you copies of it. 22 MR. MEADE: Well, in fact, if it's 23 easiest, I will upload it onto FPT link; and you can 24 download it from your computer today. 25 THE COURT: You want to do that, Counsel? DARLENE STEIN A-37 MOTION TO COMPEL 24 1 MR. MOSSER: Which kind of link? 2 THE COURT: I don't know. It's over my 3 head. 4 MR. MEADE: I will suggest a couple of 5 means by which I can deliver the documents to you, 6 Mr. Mosser. 7 THE COURT: He will -- he will get them to 8 you. 9 MR. MEADE: You can choose the most 10 convenient means to you. 11 THE COURT: Okay. On the -- I've looked 12 at the interrogatories, your objections are overruled. 13 What else have we got? 14 MR. MEADE: The requests for production 15 objections that were -- 16 THE COURT: Yeah, and they're overruled, 17 also. 18 Anything else? 19 MR. MEADE: And -- nothing else unless 20 Your Honor -- and I -- and from what Your Honor said 21 earlier, I think you're not inclined to appoint a master 22 at this -- 23 THE COURT: I'm not. 24 MR. MEADE: -- point in the discovery. 25 So, I won't -- DARLENE STEIN A-38 Motion to Compel 25 1 THE COURT: And we will reset -- 2 MR. MEADE: -- belabor the point. 3 THE COURT: -- the motion for change of 4 venue until after the deposition. 5 MR. MEADE: Thank you, Your Honor. 6 Nothing else today. 7 THE COURT: Anything else? 8 MR. MOSSER: No, Your Honor. 9 THE COURT: Counsel, I hope you feel 10 better. I know -- 11 MR. MOSSER: Thank you very much, Judge. 12 THE COURT: I know how it feels to get 13 older, but... 14 MR. MOSSER: I appreciate it, Judge. 15 THE COURT: Okay. Thank you. 16 MR. MOSSER: Yes, ma'am. 17 MR. MEADE: Thank you. Have a good week, 18 Your Honor. 19 THE COURT: Thank you. 20 (Proceedings concluded.) 21 22 23 24 25 DARLENE STEIN A-39 Motion to Compel 26 1 STATE OF TEXAS 2 COUNTY OF HARRIS 3 I, DARLENE STEIN, Official Court Reporter in and 4 for the 133rd District Court of Harris, State of 5 Texas, do hereby certify that the above and foregoing 6 contains a true and correct transcription of all 7 portions of evidence and other proceedings requested 8 in writing by counsel for the parties to be included 9 in this volume of the Reporter's Record in the 10 above-styled and numbered cause, all of which 11 occurred in open court or in chambers and were 12 reported by me. 13 I further certify that this Reporter's Record of 14 the proceedings truly and correctly reflects the 15 exhibits, if any, offered by the respective parties. 16 I further certify that the total cost for the 17 preparation of this Reporter's Record is $312.00 and 18 was paid by Mr. Andrew Meade. 19 /s/Darlene Stein_________ 20 DARLENE STEIN, CSR Texas CSR 2557 21 Official Court Reporter 133rd District Court 22 Harris County, Texas 201 Caroline, 11th Floor 23 Houston, Texas 77002 Telephone: (713) 368-6402 24 Expiration: 12/31/2014 25 DARLENE STEIN A-40 Exhibit 4 A-41 A-42 Exhibit 5 A-43 Exhibit 6 A-44 A-45 5/4/2015 2:00:20 PM Chris Daniel - District Clerk Harris County Envelope No. 5138641 By: JIMMY RODRIGUEZ Filed: 5/4/2015 2:00:20 PM Cause No. 2014-10896 Los Cucos Mexican Cafe VIII, Inc.; In the District Court of Los Cucos Mexican Cafe IV, Inc.; Manuel Cabrera; and Sergio Cabrera, Plaintiffs v. Harris County, Texas 8650 Frisco, LLC d/b/a Estilo Gaucho Brazilian Steakhouse; Mandona, LLC; Galovelho, LLC; Bahtche, LLC; Claudio Nunes; and David Jeiel Rodrigues, Defendant 133rd Judicial District Plaintiffs’ Fourth Motion to Enforce the Court’s Order and for Sanctions The Court has ordered Plaintiffs to produce certain financial documents on four separate occasions. Defendants have refused to do so. Plaintiffs request that the Court obviate the need for further document production by striking Defendants’ pleadings. Background At a June 23, 2014 hearing, the Court orally ordered Defendants to produce certain financial documents. Exhibit 1, Transcript of Motion to Compel Hearing at 23:2–9. Defendants pretended that, they “ha[d] never been served with an order from the court to produce documents,” they were not required to do so. Exhibit 2 Letter from Mosser to Stephens. On July 28, 2014, the Court again ordered Defendants to produce all responsive documents “by August 1, 2014.” Exhibit 3, Order on Plaintiffs’ Third Motion to Compel. Defendants improperly served an inadequate production. On March 30, 2015, the Court ordered Defendants a third time to produce all responsive documents “by 5:00 p.m. on Wednesday, April 1, 2015.” Exhibit 4, Order on Plaintiffs’ Second Motion to Enforce the Court’s Order. Defendants again violated the Court’s order by making a woefully incomplete production. Exhibit 7 A-46 On the morning of Monday, April 27, the Court ordered Defendants to (1) produce all responsive documents and (2) pay a $1,000 sanction. Exhibit 5, Order Granting Plaintiffs’ Third Motion to Enforce the Court’s Order. The Court further ordered that, “[s]hould Defendants fail to comply with this order within forty-eight hours of the signature hereof, Defendants and their attorneys of record will be asked to personally appear and show cause as to why they should be held in contempt of this Court.”
Id. Once again,Defendants ignored this order. On Thursday, April 30, Plaintiffs informed Defendants of their failure to comply with the Court’s order and demanded production of the documents and payment of the sanction before noon on Monday, May 4. Exhibit 6, Letter from Haren to Mosser. At 4:50 p.m. on Friday, May 1, Defendants sent the following response: Exhibit 7, Letter from Mosser to Stephens. Even though the order was available from the Court’s office and through the District Clerk’s website, Plaintiffs forwarded a copy of the order to Defendants on Sunday, May 3. Exhibit 8, Letter from Haren to Mosser. Background The Court has ordered Defendants to produce certain documents on four separate occasions. Defendants have refused or failed to comply all four times. Defendants’ most recent is excuse is that they were not “served” a copy of the Court’s order. See Exhibit 7, Letter from Mosser to Stephens As the Court may recall, this was the same explanation Defendants offered 2 A-47 for their failure to comply with the original order compelling production. See Exhibit 2, Letter from Mosser to Stephens. This excuse was invalid both times it was made. Regardless of whether Defendants “served” a copy of the Court’s order, “[t]he law charges all parties and their lawyers with notice of all orders and judgments that the court renders in the case.” Welborn Mortg. Corp. v. Knowles,
854 S.W.2d 328, 331 (Tex. App.—Dallas 1993, writ denied). For this reason alone, Defendants are deemed to have known the contents of the Court’s order. Moreover, “[t]he law charges one who has knowledge of facts that would cause a prudent man to inquire further with notice of the facts that, by use of ordinary intelligence, he would have learned.”
Id. Defendants appearedat the April 27 hearing telephonically, so they were aware that the Court ordered them to produce documents and pay a sanction. Defendants were further aware that copies of the order could have been easily obtained by calling the Court’s clerk or by visiting the District Clerk’s website. A reasonably prudent attorney who was ordered to pay a sanction and produce documents would make an effort to obtain such orders rather than remaining deliberately ignorant. Further, Defendants received actual notice at 1:57 p.m. on April 30 that the Court had signed an order requiring Defendants produce documents and pay a sanction within 48 hours. See Exhibit 6, Letter from Haren to Mosser. Thus, Defendants had at least 94 hours between receipt of actual notice of the terms of the Court’s order and the filing of this motion. As a sanction for Defendants’ fourth failure to comply with the Court’s order, Plaintiffs ask the Court to order that: Defendants’ attorneys pay Plaintiffs a sanction for all attorneys’ fees incurred in attempting to obtain the requested documents; Defendants and their attorneys appear and show cause as to why they should not be held in contempt; and Defendants be disallowed from conducting any discovery in this case. 3 A-48 Plaintiffs are hopeful that such a sanction will be sufficient to ensure future compliance with the Court’s orders and Defendants’ obligations under the Texas Rules of Civil Procedure. Conclusion Defendants continue to ignore the Court’s orders. Plaintiffs pray that the Court further sanction Defendants and order Defendants and their attorneys to show cause as to why they should not be held in contempt. Plaintiffs further pray for all other relief to which they are entitled. Respectfully submitted, Hawash Meade Gaston Neese & Cicack LLP /s/ Samuel B. Haren Andrew K. Meade State Bar No. 24032854 Jeremy M. Masten State Bar No. 24083454 Samuel B. Haren State Bar No. 24059899 2118 Smith Street Houston, Texas 77002 713-658-9001 (phone) 713-658-9011 (fax) ameade@hmgnc.com jmasten@hmgnc.com sharen@hmgnc.com Stephens & Domnitz, PLLC Kelly D. Stephens State Bar No. 19158300 P.O. Box 79734 Houston, Texas 77279-9734 281-394-3287 (phone) 832-476-5460 (fax) kstephens@stephensdomnitz.com 4 A-49 Cox Smith Matthews Incorporated David Kinder State Bar No. 11432550 112 East Pecan Street, Suite 1800 San Antonio, Texas 78205 210-554-5500 (phone) 210-226-8395 (fax) Attorneys for Plaintiffs Certificate of Conference I sent two letters to opposing counsel in an effort to obtain the documents and payment without further judicial intervention. I further tripled the time for compliance from the two days allowed by the Court to six. Despite this, Defendants still have not complied with the Court’s order. /s/ Samuel B. Haren Samuel B. Haren Certificate of Service A true and correct copy of the foregoing has been served on all counsel of record via electronic service on May 4, 2015. James C. Mosser Nicholas D. Mosser Mosser Law PLLC 17110 Dallas Pky, Suite 290 Dallas, Texas 75248 /s/ Samuel B. Haren Samuel B. Haren 5 A-50 MOTION TO COMPEL 1 1 REPORTER'S RECORD VOLUME 1 OF 1 VOLUME 2 TRIAL COURT CAUSE NO. 2014-10896 3 4 LOS CUCOS MEXICAN CAFE VIII( IN THE DISTRICT COURT OF INC.;LOS CUCOS MEXICAN ( 5 CAFE IV,INC.; MANUEL ( CABRERA;AND SERGIO CABRERA ( 6 ( VS. ( HARRIS COUNTY, TEXAS 7 ( 8650 FRISCO,LLC D/B/A ESTILO 8 GAUCHO BRAZILIAN ( STEAKHOUSE; MANDONA,LLC; ( 9 GALOVELHO,LLC;BAHTCHE, ( LLC; CLAUDIO NUNES; AND ( 10 DAVID JEIEL RODRIGUES ( 133rd JUDICIAL DISTRICT 11 _______________________________________________________ 12 MOTION TO TRANSFER 13 _______________________________________________________ 14 15 On the 23rd day of June, 2014, the following 16 proceedings came on to be held in the above-titled and 17 numbered cause before the Honorable JACLANEL McFARLAND, 18 Judge Presiding, held in Houston, Harris County, Texas. 19 Proceedings reported by computerized stenotype 20 machine. 21 22 23 DARLENE STEIN OFFICIAL COURT REPORTER 24 133RD DISTRICT COURT HARRIS COUNTY, TEXAS 25 DARLENE STEIN Exhibit 1 A-51 MOTION TO COMPEL 2 1 APPEARANCES 2 Mr. Andrew K. Meade SBN 24032854 3 Mr. Samuel B. Haren SBN 24059899 4 2118 Smith Street Houston, Texas 77002 5 Telephone: (713)658-9001 Telephone: (713)658-9011 (Fax) 6 Attorney for Plaintiffs 7 Mr. Nicholas D. Mosser 8 SBN 24075405 Mr. James Mosser 9 SBN 00789784 17110 Dallas Parkway, Suite 290 10 Dallas, Texas97 75248 Telephone:) (972)733-3223 11 Telephone: (972)267-5072 Attorney for Defendants 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DARLENE STEIN A-52 MOTION TO COMPEL 3 1 CHRONOLOGICAL INDEX 2 June 23, 2014 3 PAGE 4 Proceedings............................... 4 5 Argument by Mr. Meade..................... 6 6 Argument by Mr. Mosser.................... 11 7 Proceedings concluded..................... 25 8 Reporter's Certificate.................... 26 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DARLENE STEIN A-53 MOTION TO COMPEL 4 1 (P R O C E E D I N G S) 2 June 23, 2014 3 4 THE COURT: This is Cause No. 2014-10896. 5 And if everyone would announce who they are and who they 6 represent, please. 7 MR. MEADE: Andrew Meade and Sam Haran for 8 the Plaintiffs. 9 THE COURT: Mr. Mosser, if you'll announce 10 who you are and who you represent, please. 11 MR. MOSSER: I'm sorry? 12 THE COURT: Announce who you are and who 13 you represent. 14 MR. MOSSER: Yes, ma'am. This is James 15 Mosser, Mosser Law Firm, PLLC, appearing telephonically 16 on behalf of all Defendants. 17 THE COURT: Okay. I will tell you that I 18 don't have the motions in front of me. My law clerks 19 have gone to get them. For some reason, even though you 20 are on the docket, they thought it had been pulled. So, 21 anyway, but I'm going to let y'all go ahead and start. I 22 think it's Plaintiff's motions. So, I'm going to let 23 them go ahead and start while the law clerks are bringing 24 in the actual written motions. 25 MR. MEADE: All right. Your Honor, if DARLENE STEIN A-54 MOTION TO COMPEL 5 1 you'll recall, this is a -- my client supplied about 2 $950,000 in some equipment for a restaurant -- 3 MR. MOSSER: Your Honor, if he could get 4 closer to the microphone or speak up louder, it would be 5 easier to hear. 6 THE COURT: Yeah. Well, I'll put the 7 phone a little closer. But, you know, have you got a 8 storm in Dallas? Is that the problem or what? You know, 9 when you don't show up, it's -- we can only do the best 10 we can do. 11 You know, that's why when I practiced law, 12 I didn't depend on Southwest. Now, going to committee 13 meetings, I depended on Southwest a lot. I was on a lot 14 of Baptist boards that met over on North Washington, the 15 Baptist building. But when I had a case, I usually drove 16 down the night before or drove up or drove west or east or 17 wherever I was going. 18 MR. MEADE: And -- and for convenience, 19 Your Honor, we will try to set hearings in the case on 20 Fridays and Mondays to make that more convenient. 21 THE COURT: Well, we don't have hearings 22 on Fridays. So, they have to be on Mondays. 23 MR. MEADE: Mondays. 24 And so, the situation that we've got 25 here -- Your Honor will recall that we had previously DARLENE STEIN A-55 MOTION TO COMPEL 6 1 noticed depositions for early May of the Defendants, that 2 those depositions had been quashed. So, we set a Motion 3 to Compel. The Court ordered the depositions to occur in 4 June. We agreed on dates that were put into the Court's 5 order, which was June 9th and 10th for six depositions to 6 occur. 7 On the Sunday before -- June 9th was a 8 Monday. 10th was a Tuesday. On the Sunday before, 9 Mr. Mosser left a message on Mr. Stephen's phone, saying 10 that he wouldn't be attending the depositions nor would 11 his clients because -- and they subsequently filed a 12 motion. Mr. Mosser apparently has a nervous system injury 13 of some sort that he came down with the day before the 14 depositions. And there is nobody else within his 15 four-person law firm who's qualified to sit in a chair and 16 defend a deposition. 17 He then went and set his Motion to Transfer 18 Venue, offered us some dates in late July that -- or -- 19 that conflict with a trial that I have in Judge 20 Englehart's court. And then when I rejected those dates, 21 offered dates in August. 22 And we have run into a problem now, which 23 is that I leave the country on Saturday for two and a half 24 weeks. I get back and have five days to prepare for a 25 week-long trial in Judge Englehart's court. And then at DARLENE STEIN A-56 MOTION TO COMPEL 7 1 the end of the week that I'm in trial with Judge Englehart 2 is their Motion to Transfer Venue. We have taken the 3 position, which is correct under the rules, that discovery 4 should not be and cannot be, in fact, abated while a 5 Motion to Transfer Venue is pending. 6 They have taken the position and even set 7 for today and then withdrew a Motion to Stay all 8 proceedings while they have the opportunity to have that 9 Motion to Transfer Venue heard. 10 We're going to have to take these 11 depositions before the Motion to Transfer Venue hearing. 12 We need them ordered and compelled, and we need the Motion 13 to Transfer Venue hearing pushed back till that can 14 happen. 15 But we also need Mr. Mosser or his clients 16 to pay the costs of the depositions that were ordered -- I 17 took Certificates of Nonappearance on all six 18 depositions -- and that they ought to have to bear the 19 cost on each of those. 20 The next issue that we have is as you'll 21 recall, we have an accountant that worked for the company 22 in New Braunfels and then a new accountant in Dallas. We 23 had the -- the letter and correspondence where they said, 24 you know, turn over all records and destroy all in your 25 possession. And -- and we had to move to compel the DARLENE STEIN A-57 MOTION TO COMPEL 8 1 accountant to produce the records from New Braunfels, and 2 he did produce the records to us. 3 But we have also asked for certain 4 financial records, including tax records and other 5 financial documents from the Defendants themselves; and 6 soon we will -- and, also, their new accountant, who will 7 soon have to come down on a Motion to Compel, as well, 8 although that's not part of today. 9 The -- the other issue that is part of 10 today is their responses and objections to our requests 11 for production, which deal with the financial and tax 12 records. 13 Starting with the tax records, there are 14 numerous reasons why as members of the company and -- 15 that -- that we're entitled to the tax records of an LLC. 16 First of all, the statute allows it. 17 Second, we need to prepare our own tax 18 returns. 19 Third, how they chose to characterize our 20 capital contributions, the proportion of what is 21 characterized as a loan and capital contribution and all 22 of that is going to be relevant to the parties' agreement 23 or disagreement about our membership status and -- and how 24 much money is owed in terms of -- our position is that 25 part of the money was loaned and part of it was a capital DARLENE STEIN A-58 MOTION TO COMPEL 9 1 contribution, and -- and they may or may not disagree, 2 although they haven't disclosed their theory of the case 3 to us at all in any way. That will be relevant, those tax 4 records. 5 The other financial records, which include 6 bank account statements, we're -- we're entitled to the 7 books and records, again, of the company; but, also, these 8 bank account statements are going to be relevant to 9 whether distributions -- because under the -- under the 10 limited liability company act, under the partners' oral 11 agreement, and under the written agreements that were 12 exchanged, we would be entitled to distributions of 13 distributable cash. 14 None have been made to us. We believe some 15 have been made to the Defendants, substantial 16 distributions, and that there is distributable cash. We 17 believe that, but we don't have the records to show it, 18 and the bank statements will go a long ways towards that. 19 What we've met with to date is an objection 20 every step of the way and resistance even to Court-ordered 21 depositions. And -- and the objection that was made, for 22 example, to the accountant's records was that objection of 23 privilege that the Texas courts don't recognize. Well, it 24 was made again in response to requests for production 25 after the Court had already ruled on the objection in DARLENE STEIN A-59 MOTION TO COMPEL 10 1 relation to the accountant. 2 They made other objections; for example, 3 objecting that the Texas Finance Code provides the 4 exclusive means to get bank account statements, even bank 5 account statements of a party. I -- I assure you that I 6 will go to the bank, under the Texas Finance Code, and get 7 the bank statements separately. But that doesn't 8 alleviate the obligation of a party to produce those bank 9 statements. 10 So, a recommendation in -- in one of my 11 motions is really -- it's really -- we're asking for the 12 relief but sort of recommending a path for the Court, 13 would be to appoint a discovery master in the case. I 14 don't mind coming down here once a week, and I suspect we 15 will be back here again in a week. And I'll tell you why. 16 You know, we had these grills. I -- I 17 don't know if you remember the -- the unique grills. 18 Well, we have reason to believe that the grills have been 19 destroyed. And I've asked for an inspection of the 20 collateral, of -- of the property. They haven't responded 21 to it. I'm going to be asking the Court for it and 22 probably having to move it to compel. 23 When these depositions do occur, I suspect 24 I'm going to meet with a series of objections and probably 25 instructions to the witness not to answer and that sort of DARLENE STEIN A-60 MOTION TO COMPEL 11 1 thing. And I -- and we can have the depositions in your 2 chambers. I leave it to the Court's discretion of how we 3 deal with these issues; but I would rather, if we can 4 avoid it -- and I -- I know that judges, including 5 yourself, don't like us coming down here all the time on 6 Motions to Compel. I would like to avoid them, if 7 possible. And so, the appointment of a discovery master 8 is one suggestion to do that. 9 And I'll let Mr. Mosser respond. 10 THE COURT: Mr. Mosser? 11 MR. MOSSER: Yes, ma'am. 12 THE COURT: You may respond. 13 Hello? 14 MR. MOSSER: Yes, ma'am. I'm right here. 15 THE COURT: Where -- you want to respond? 16 MR. MOSSER: Oh, yes, ma'am. I surely 17 will. Thank you. 18 May it please the Court? Let me go 19 backwards a little bit here. Let's start with the grills 20 are being destroyed, which is a false statement made by 21 counsel. It has become custom in this case. The problem 22 is we sent notice to counsel that he should come and pick 23 up the grills, and counsel told us they weren't going to 24 pick up the grills. 25 So, we told them if they leave the grills DARLENE STEIN A-61 MOTION TO COMPEL 12 1 that they claim they loaned to my clients, we told them, 2 If you don't pick them up, we'll just put them in storage; 3 and you can pay the storage bill when you get here. 4 Nobody said they were going to destroy them, and it's just 5 outrageous that he would say those kinds of things. 6 As for bank accounts, the Finance Code does 7 provide the method by which he can obtain the bank 8 accounts. But let's assume he doesn't want to do that and 9 I'm required to deliver bank accounts. If the Court will 10 recall, he mentioned that he held a deposition on written 11 questions for Mr. -- I can't remember the accountant's 12 name -- Hal Holtman, I think -- to produce all the records 13 he had related to anything with my clients. 14 Now, if you will recall from the -- the 15 Temporary Injunction hearing, Mr. Holtman went and 16 testified on everything we told him he shouldn't be 17 testifying on; and then he subsequently, based on comment 18 from counsel this morning, delivered all the documents he 19 had to the Plaintiff's lawyers in this case. That 20 includes the tax returns, all bank statements, all the 21 income statements, all the financial statements, 22 everything related to the business until Mr. Holtman was 23 fired. 24 Now, the Court ordered that. Mr. Holtman 25 turned them over, over our objection. So, I don't think DARLENE STEIN A-62 MOTION TO COMPEL 13 1 that we're required to produce records in a duplicitous 2 manner that have already been produced by the accountant 3 in this case. 4 And, secondly, those documents were 5 produced to opposing counsel who has yet to this day 6 served them on us. When he gets discovery from whatever 7 source it's from, he's required to serve everybody in the 8 lawsuit, all parties, a copy of that discovery. He has 9 not done so. So, I don't have any. 10 Going back to the top of the complaint from 11 opposing counsel, I'm 69 years old; and I can't help it if 12 my sacral iliac joint gets sprained, inflamed, bruised, 13 and strained. I can't do anything about that. We 14 immediately notified, upon determination that I was 15 immobile, that this deposition had to be reset or 16 postponed. 17 I think it's outrageous that I can't even 18 pick up the phone and call a counsel for a medical problem 19 that he won't reset depositions for or even respond to the 20 telephone calls. I think it's outrageous that they file 21 motions claiming that they've had a conference with 22 opposing counsel, which is plainly false. They didn't 23 have any conference with us. In fact, they filed these 24 motions and then claimed that they had a conference after 25 they filed the motion. DARLENE STEIN A-63 MOTION TO COMPEL 14 1 As for offering dates, we offer to set a 2 date in July; and understanding trial schedules, as I do, 3 I was required to file a Motion to Continuance on -- let's 4 see -- that date that he wanted to do these, the 16th, 5 17th, somewhere in there because I had a special setting. 6 I had to go into that court and request the Court reset 7 the special setting in that case because of my sacral 8 iliac sprain. 9 I don't under -- I suppose five years ago 10 when I had my quadruple bypass surgery, opposing counsel 11 would complain because that was just an excuse. These are 12 not excuses. These are real-live things. We've offered a 13 second set of dates. Counsel didn't even respond to them. 14 Now, counsel also says that we don't -- we 15 should take depositions to get proof for the Motion to 16 Transfer Venue. I don't think the Motion to Transfer 17 Venue is set for today, but he puts it in his -- in his 18 response or his Third Amended Motion to Compel, and I 19 don't understand. He believes that the testimony given in 20 open court on the record and sworn to by his clients can't 21 be used in Motion to Transfer Venue. At some point in 22 time, the Court will have to rule on that motion; and I 23 will be happy to defend that issue. 24 As for costs, counsel fails to properly 25 prepare any cost statements, hasn't made any cost DARLENE STEIN A-64 MOTION TO COMPEL 15 1 statements, hasn't suffered from any problems other than 2 my sacral iliac joint sprain; and I don't think he would 3 like me sitting in his conference room, taking the 4 narcotics that I was taking and the side effects that go 5 with it. 6 So, he has all of the financial records we 7 believe that exist, delivered by Holtman over our 8 objection. He did not properly serve the accountant -- 9 the new accountant in Texas, which is more than 150 miles 10 and -- away, and he doesn't have a right to get anything 11 from him. 12 And as for tax records from the LLC, 13 they're not members. They never have been members. 14 They're not members. They rejected the opportunity to 15 become a member, and that's clear testimony in the 16 Temporary Injunction hearing. 17 So, I think I've covered the waterfront. 18 But as far as tax returns, the State of Texas has made 19 very clear by the Supreme Court and the Court of Appeals 20 in Houston -- I think every Court of Appeals has said it 21 is an abuse of discretion requiring the disclosure of 22 Federal income tax returns if other documents can provide 23 the information necessary. 24 But in order to even search out and get 25 that information, opposing counsel is required to provide DARLENE STEIN A-65 MOTION TO COMPEL 16 1 the relevancy and materiality that's necessary as to his 2 claims. He has none. He hasn't presented any. He hasn't 3 asked for any. He hasn't said a single word that shows 4 that a tax return, a financial statement, or any of these 5 other intrusive and burdensome matters are necessary for 6 his claims. And the Court should deny his motions in 7 total. 8 Thank you. 9 THE COURT: When do you want to take the 10 depositions? 11 MR. MEADE: Well -- 12 MR. MOSSER: I'm sorry, Judge? 13 THE COURT: I'm -- I'm asking your 14 opposing counsel when he wants to take the depositions. 15 MR. MEADE: I knew you were going to ask 16 that, and I think the simplest answer to that is before 17 the Motion to Transfer Venue is heard. 18 THE COURT: Okay. 19 MR. MEADE: The more complex answer is 20 after the week of the 21st of July because I have a trial 21 that entire week. But we are set number one. So, we 22 will go; and I will be done that week because it's a 23 breach of contract case. 24 So, following that week, I only have one 25 day that I have a -- I have a deposition currently set DARLENE STEIN A-66 MOTION TO COMPEL 17 1 that I'm defending on the 28th of July. Otherwise, I am 2 wide open to -- to take these depositions. 3 THE COURT: Okay. Counsel, you heard 4 that, I assume. So, pick a date after his trial in Judge 5 Englehart's court and not on July -- what? 6 MR. MEADE: 28th. 7 THE COURT: -- 28th that you can produce 8 your people for depositions. 9 MR. MOSSER: I'm looking at the calendar 10 now, Judge. 11 THE COURT: Okay. 12 MR. MOSSER: I would recommend August 4th 13 and 5th, and I -- I would like to also add, Judge, that 14 four of the depositions that were set, two of them -- on 15 two separate days, two of them were set at exactly the 16 same time. And then the next day, two more were set at 17 exactly the same time, which I would discourage that 18 concept as appropriate. 19 MR. MEADE: And -- and here would be my 20 response. If Mr. Mosser would cooperate with me -- 21 MR. MOSSER: But the 4th and the 5th are 22 good with me, Judge. 23 MR. MEADE: If Mr. Mosser would cooperate 24 with me a little bit and let me know -- these are an 25 individual -- two individuals and four corporate DARLENE STEIN A-67 MOTION TO COMPEL 18 1 representatives who may be, and I suspect will be, those 2 same individuals -- could all be taken possibly at the 3 same time or concurrently with each other. But 4 Mr. Mosser hasn't identified who are -- who's going to be 5 the corporate representative. So, I don't know how else 6 to do it. 7 If he will identify who will be the 8 corporate representatives for those entities, I will 9 notice the -- the depositions so that they don't conflict 10 timewise with one other another. 11 MR. MOSSER: As you previously noticed, 12 the doc -- the areas of inquiry, Mr. Rodriguez will be 13 the deponent. 14 MR. MEADE: On all, Mr. Mosser? 15 MR. MOSSER: Yes. 16 MR. MEADE: Okay. Then I will -- I will 17 set it up so that they don't conflict with one another. 18 MR. MOSSER: Thank you. 19 THE COURT: Okay. So, pick, the 4th of 20 the 5th of August? 21 MR. MEADE: It will be both, Your Honor. 22 THE COURT: Oh, both. 23 MR. MEADE: Yeah. 24 THE COURT: Okay. All right. The 25 depositions are set for the 4th and the 5th. And DARLENE STEIN A-68 MOTION TO COMPEL 19 1 Plaintiff's counsel will send notice, but they are now 2 set. He'll send notice as to time and place, I assume, 3 which I assume you've already -- where -- where are they 4 going to be? 5 MR. MEADE: Well, as Mr. Mosser doesn't 6 have an office here in Houston -- 7 THE COURT: Okay. 8 MR. MEADE: -- I'm just going to do them 9 at my offices here in Houston, Your Honor. 10 THE COURT: Right. And I presume that's 11 okay with you, Mr. Mosser? 12 MR. MOSSER: Oh, yes, ma'am, that's fine 13 with me. 14 THE COURT: Okay. Now, as to fees of the 15 nonappearance, I'm not going to order anything at this 16 time. I will consider it later as the case progresses, 17 depending on how discovery goes. So, I will just hold 18 that under advisement. 19 What else was there? 20 MR. MEADE: The objections, which I think 21 lie in the Third Motion to Compel, which are Motions to 22 Compel the responses to discovery that ask for a 23 variety -- it's -- it's a variety of financial 24 information, including bank statements and -- and tax 25 returns. DARLENE STEIN A-69 MOTION TO COMPEL 20 1 THE COURT: Mr. Mosser, have -- does your 2 client have the bank statements? 3 MR. MOSSER: I'm sorry, Judge? 4 THE COURT: Does your client have the bank 5 statements? 6 MR. MOSSER: I think Mr. Holtman has them, 7 and opposing counsel has collected everything Holtman 8 has. And I would like the Court to order opposing 9 counsel to deliver those documents that he got from the 10 third-party witness Holtman to us. 11 THE COURT: Well, let me ask -- that -- 12 that wasn't my question. 13 MR. MOSSER: I understand. 14 THE COURT: My question is: Does your 15 client have them? 16 MR. MOSSER: No. I think -- I think 17 Holtman has them all. 18 THE COURT: So, your client didn't keep a 19 copy? 20 MR. MOSSER: Nobody sends out copies of 21 bank statements any more, Judge. 22 THE COURT: Sure they do. I get them 23 every month. 24 MR. MOSSER: I appreciate that, Your 25 Honor. Let me put it a different way. Many businesses DARLENE STEIN A-70 MOTION TO COMPEL 21 1 do not get bank statement in paper form. 2 THE COURT: Well, do they get them 3 electronically where they can print them out? 4 MR. MOSSER: My understanding, Your Honor, 5 is that Holtman has all the bank statements. 6 THE COURT: So, your client doesn't get 7 the e-mail saying, Your bank statement is ready to be 8 printed out; or they can't go in and print it out? 9 MR. MOSSER: I haven't made that 10 particular inquiry. 11 THE COURT: Yeah. 12 MR. MOSSER: Because they're with the bank 13 and the accountant. 14 THE COURT: Well, my guess is your client 15 has access to them by -- if they -- if they're not like 16 me and they don't pay to get a paper statement or get a 17 paper statement, they get an e-mail saying, Your bank 18 statement is online. And you just log in, and you can 19 print it out. 20 MR. MOSSER: I understand what the Court 21 is saying, but my suggestion is that they already have 22 all of that stuff. They got it from Holtman. 23 MR. MEADE: Your Honor, if I -- if I could 24 add one -- as Your Honor may recall, they -- the 25 Defendants fired Mr. Holtman, who is the CPA, from the DARLENE STEIN A-71 MOTION TO COMPEL 22 1 company in March, terminated my client's access and his 2 access to all of the bank accounts. Then -- then hired a 3 new accountant located up in Dallas and identified him as 4 the new CPA, to which Holtman was supposed to and did 5 send all of the information. 6 As far as account statements, the -- it's 7 an ongoing duty, in fact, and they -- they have the 8 duty -- even if, in fact, we had gotten all of the 9 information and -- and Mr. Mosser has just said he doesn't 10 actually know what we've gotten. Even if had gotten all 11 of the information, it wouldn't alleviate their 12 responsibility to produce it, too, because, for example, 13 we might be missing a page of a bank statement. We might 14 want to use a 173, you know, authentication means for the 15 documents. 16 But there are certainly post termination of 17 Mr. Holtman, zero financial records that we have access to 18 but that the Defendants have access, custody, and control 19 over those documents exclusively; and that's what we're 20 asking for. 21 THE COURT: Okay. So -- 22 MR. MEADE: Their current accountant has 23 all of it, and they have all of it. 24 THE COURT: All right. 25 MR. MOSSER: Well, we don't really know DARLENE STEIN A-72 MOTION TO COMPEL 23 1 that. 2 THE COURT: Well, I'm going to overrule 3 your objections and tell you to produce it if it's 4 available to you. 5 MR. MOSSER: From the time that Holtman 6 was terminated? Because they already have everything 7 else. 8 THE COURT: No. Just from what they've 9 requested. 10 MR. MOSSER: And will you order them to 11 deliver us what Holtman has? 12 MR. MEADE: I don't need to be ordered to, 13 Your Honor. I will -- I haven't had him even ask me. If 14 you send me a letter asking for it -- 15 THE COURT: Well, he's asking now. Send 16 it to him. 17 MR. MEADE: I'll send it to him, Your 18 Honor. 19 THE COURT: Yeah. I'm not going to order 20 him, but he -- he said on the record now he's going to 21 send you copies of it. 22 MR. MEADE: Well, in fact, if it's 23 easiest, I will upload it onto FPT link; and you can 24 download it from your computer today. 25 THE COURT: You want to do that, Counsel? DARLENE STEIN A-73 MOTION TO COMPEL 24 1 MR. MOSSER: Which kind of link? 2 THE COURT: I don't know. It's over my 3 head. 4 MR. MEADE: I will suggest a couple of 5 means by which I can deliver the documents to you, 6 Mr. Mosser. 7 THE COURT: He will -- he will get them to 8 you. 9 MR. MEADE: You can choose the most 10 convenient means to you. 11 THE COURT: Okay. On the -- I've looked 12 at the interrogatories, your objections are overruled. 13 What else have we got? 14 MR. MEADE: The requests for production 15 objections that were -- 16 THE COURT: Yeah, and they're overruled, 17 also. 18 Anything else? 19 MR. MEADE: And -- nothing else unless 20 Your Honor -- and I -- and from what Your Honor said 21 earlier, I think you're not inclined to appoint a master 22 at this -- 23 THE COURT: I'm not. 24 MR. MEADE: -- point in the discovery. 25 So, I won't -- DARLENE STEIN A-74 Motion to Compel 25 1 THE COURT: And we will reset -- 2 MR. MEADE: -- belabor the point. 3 THE COURT: -- the motion for change of 4 venue until after the deposition. 5 MR. MEADE: Thank you, Your Honor. 6 Nothing else today. 7 THE COURT: Anything else? 8 MR. MOSSER: No, Your Honor. 9 THE COURT: Counsel, I hope you feel 10 better. I know -- 11 MR. MOSSER: Thank you very much, Judge. 12 THE COURT: I know how it feels to get 13 older, but... 14 MR. MOSSER: I appreciate it, Judge. 15 THE COURT: Okay. Thank you. 16 MR. MOSSER: Yes, ma'am. 17 MR. MEADE: Thank you. Have a good week, 18 Your Honor. 19 THE COURT: Thank you. 20 (Proceedings concluded.) 21 22 23 24 25 DARLENE STEIN A-75 Motion to Compel 26 1 STATE OF TEXAS 2 COUNTY OF HARRIS 3 I, DARLENE STEIN, Official Court Reporter in and 4 for the 133rd District Court of Harris, State of 5 Texas, do hereby certify that the above and foregoing 6 contains a true and correct transcription of all 7 portions of evidence and other proceedings requested 8 in writing by counsel for the parties to be included 9 in this volume of the Reporter's Record in the 10 above-styled and numbered cause, all of which 11 occurred in open court or in chambers and were 12 reported by me. 13 I further certify that this Reporter's Record of 14 the proceedings truly and correctly reflects the 15 exhibits, if any, offered by the respective parties. 16 I further certify that the total cost for the 17 preparation of this Reporter's Record is $312.00 and 18 was paid by Mr. Andrew Meade. 19 /s/Darlene Stein_________ 20 DARLENE STEIN, CSR Texas CSR 2557 21 Official Court Reporter 133rd District Court 22 Harris County, Texas 201 Caroline, 11th Floor 23 Houston, Texas 77002 Telephone: (713) 368-6402 24 Expiration: 12/31/2014 25 DARLENE STEIN A-76 From:},|OSSEB HILL PlLl-C st72287 5072 g7/ 1?/2914l0: 33 S235P.001,,'001 MorisERL,qw PLLC l?llCD.qI-L.{sPeRxrv,,\'t',sitrrrnllit).D-rlr-.r,s.TRx+sr5:41i.!)ll-:33-3:l3.F 9 r1i2x - 2 6 , - - 5 l l r 2 NIo55PPf,;11t.q1.111 J u l y1 2 , 2 O 1 4 Via Facsirmile:832-476-5450 KellyStephens P O Box'79734 -f Houston, €X?S77279 R E : L o s C u c o sV l l l , I n c .[ ] t i a l . ,v . 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Document Info
Docket Number： 01-15-00423-CV
Filed Date： 5/8/2015
Precedential Status： Precedential
Modified Date： 9/29/2016