Salvatore Magaraci and Estate Protection Planning Corporation v. Eduardo S. Espinosa in His Capacity as Receiver of Retirement Value, LLC ( 2015 )

ACCEPTED
03-14-00515-CV
4682316
THIRD COURT OF APPEALS
AUSTIN, TEXAS
3/27/2015 6:08:15 PM
JEFFREY D. KYLE
CLERK
No. 03-14-00515-CV
FILED IN
3rd COURT OF APPEALS
IN THE COURT OF APPEALS AUSTIN, TEXAS
FOR THE THIRD DISTRICT OF TEXAS 3/30/2015 3:30:00 PM
JEFFREY D. KYLE
Clerk
Salvatore Magaraci and Estate Protection
Planning Corporation, appellants
v.
Eduardo S. Espinosa in his Capacity as
Receiver of Retirement Value, LLC, appellee
On Appeal from the 419th District Court
Travis County, Texas
Tr. Ct. No. D-1-GN-14-001581
APPELLANTS’ BRIEF
Timothy A. Hootman
SBN 09965450
2402 Pease St
Houston, TX 77003
713.247.9548
713.583.9523 (f)
Email: thootman2000@yahoo.com
ATTORNEY FOR APPELLANTS, SALVATORE
MAGARACI AND ESTATE PROTECTION
PLANNING CORPORATION
ORAL ARGUMENT REQUESTED
1
LIST OF PARTIES AND COUNSEL
This list of is broken into four Parts: (I) Summary of Parties and
Abbreviations Used in Brief; (II) Parties and Counsel in Trial Court; (III) Parties
and Counsel in This Appeal; and (IV) Parties and Counsel in Related Appeal.
I. SUMMARY OF PARTIES AND ABBREVIATIONS
USED IN BRIEF
The following is a summary of the parties, their names, and the
abbreviations used in this brief:
Plaintiff: State of Texas (“the State”)
Receiver: Edward S. Espinosa was appointed receiver of
RETIREMENT VALUE LLC (“the Receiver”)
Primary defendants: RETIREMENT VALUE LLC is the subject of the
receivership (“Retirement Value”)
Richard H. “Dick” Gary with Retirement Value (“Mr.
Gary”)
KIESLING, PORTER, KIESLING & FREE, PC (“Kiesling-
Porter”)
Bruce Collins with Kiesling, Porter (“Mr. Collins”)
Licensee defendants: ESTATE PROTECTION PLANNING CORPORATION (“Estate
Protection”)
Salvatore Magaraci with Estate Protection (“Mr.
Magaraci”)
SENIOR RETIREMENT PLANNERS, LLC (“Senior
Retirement”)
James Poe with Senior Retirement (called “Mr. Poe”)
Approximately 88 additional “licensees” were listed as
defendants but their cases have been resolved and are
not pending on appeal (called “other Licensees”).
2
II. PARTIES AND COUNSEL IN TRIAL COURT
Plaintiff: The State of Texas
Counsel for plaintiff in Kara L. Kennedy, SBN 00787454
trial court: Jennifer S. Jackson, SBN 240600004
Assistant Attorneys General
OFFICE OF THE ATTORNEY GENERAL
Financial Litigation Division
300 W. 15th St, 6th Fl, P.O. Box 12548
Austin, TX 78711-2548
512.475.2540; 512.477.2348 (f)
***
Receiver of Retirement Eduardo S. Espinosa
Value, LLC:
Counsel for receiver in Michael D. Napoli, SBN 14803400
trial court: K & L GATES LLP
1717 Main St, Ste 2800
Dallas, TX 75201
214.939.4927; 214.939.5849 (f)
R. James George, Jr., SBN 07810000
John W. Thomas, SBN 19856425
GEORGE & BROTHERS, LLP
114 W. Seventh, Ste 1100
Austin, TX 78701-3015
512.495.1400; 512.499.0094 (f)
***
Primary defendants: RETIREMENT VALUE, LLC
Richard H. “Dick” Gary
KIESLING, PORTER, KIESLING & FREE, PC
Bruce Collins
Counsel for primary Kevin F. Lee, SBN 12128350
defendants in trial court: THOMPSON, COE, COUSINS & IRONS
701 Brazos, Ste 1500
Austin, TX 78701
512.708.8200; 512.708.8777 (f)
(for Richard H. “Dick” Gray)
3
Randy Howry, SBN 10121690
HOWRY BREEN, LLP
1900 Pearl St
Austin, TX 78705
512.474.7300; 512.474.8557 (f)
(for Bruce Collins)
Spencer C. Barasch, SBN 00789075
Matthew G. Nielsen, SBN 24032792
Ted Gilman, SBN 24002140
ANDREWS KURTH, LLP
1717 Main St, Ste 3700
Dallas, TX 75201
214.659.4614; 214.659.4794 (f)
(for KIESLING, PORTER, KIESLING & FREE, PC)
***
“Licensee” defendants: Salvatore Magaraci (“Mr. Magaraci”) and his
company ESTATE PROTECTION PLANNING
CORPORATION (“Retirement Value”)
James Poe (“Mr. Poe”) and his company SENIOR
RETIREMENT PLANNERS, LLC
88 additional “licensees” defendants were sued
but their cases were resolved. (CR 1311-1331).
Counsel for “licensee” R. James George, Jr., SBN 07810000
defendants in trial court: John W. Thomas, SBN 19856425
GEORGE & BROTHERS, LLP
114 W. Seventh, Ste 1100
Austin, TX 78701-3105
512.495.1400; 512.499.0094 (f)
Bogdan Rentea, SBN 16781000
Nathan Leake, SBN 24046277
REATEA & ASSOCIATES
505 West 12th St, Ste 206
Austin, TX 78701
512.472.6291
512.472.6278 (f)
(for Salvatore Magaraci and his company
ESTATE PROTECTION PLANNING CORPORATION)
4
Robert L. Wright, SBN 22054300
4501 Blue Lake Ct.
Fort Worth, TX 76103
817.688.2846
(for James Poe and his company SENIOR
RETIREMENT PLANNERS, LLC)
***
III. PARTIES AND COUNSEL IN THIS APPEAL
Appellants: Salvatore Magaraci (“Mr. Magaraci”) and his
company ESTATE PROTECTION PLANNING
CORPORATION (“Retirement Value”)
Counsel for appellants on Timothy A. Hootman, SBN 09965450
appeal: 2402 Pease St
Houston, TX 77003
713.247.9548; 713.583.9523 (f)
Email: thootman2000@yahoo.com
Appellee: Eduardo S. Espinosa in his Capacity as RECEIVER
OF RETIREMENT VALUE, LLC
Counsel for appellee on R. James George, Jr., SBN 07810000
on appeal: John W. Thomas, SBN 19856425
John R. McConnell, SBN 24053351
GEORGE, BROTHERS, KINCAID & HORTON, L.L.P.
114 W. Seventh, Ste 1100
Austin, TX 78701-3105
512.495.1400; 512.499.0094 (f)
***
IV. PARTIES AND COUNSEL IN RELATED APPEAL
There is currently pending in this Court cause number 03-14-00518-CV
which is related to this appeal and raises one issue that is the same as the sole
issue raised in this appeal. The parties and lawyers in that appeal are as follows:
5
Appellants: James Poe (“Mr. Poe”) and his company SENIOR
RETIREMENT PLANNERS, LLC
Counsel for appellants on Scott Lindsey, SBN 24036969
on appeal in related case: ALDRICH PLLC
1130 Fort Worth Club Tower
777 Taylor St
Fort Worth, TX 76102
817.336.5601; 817.336.5297 (f)
Email: slindsey@aldrichpllc.com
6
RELATED APPEALS
Currently pending in the Third Court of Appeals is cause number 03-14-
00518 which was originally part of this case in the trial court. The cases were
severed after the trial court made the substantive rulings that are challenged in
both appeals. The sole issue raised in this case regarding the propriety of not
allowing settlement credits is also raised in the related appeal. This Court’s
ruling in that regard would be dispositive of both appeals if the Court agrees with
the appellants’ arguments. The related appeal raises two additional fact-bound
issues that are not raised in this case.
7
TABLE OF CONTENTS
LIST OF PARTIES AND COUNSEL ............................................................................ 2
RELATED APPEAL ..................................................................................................... 7
TABLE OF CONTENTS .............................................................................................. 8
INDEX OF AUTHORITIES ......................................................................................... 9
STATEMENT OF CASE ............................................................................................ 10
ISSUE PRESENTED ................................................................................................. 11
STATEMENT OF FACTS .......................................................................................... 12
SUMMARY OF ARGUMENT .................................................................................... 17
ARGUMENT AND AUTHORITIES ........................................................................... 18
PRAYER .................................................................................................................. 25
CERTIFICATE OF WORD COUNT ........................................................................... 26
CERTIFICATE OF SERVICE .................................................................................... 27
APPENDIX 1 ... Order granting partial summary judgment as to Retirement Value
APPENDIX 2 ................ Order granting partial summary judgment as to Appellants
APPENDIX 3 .......................................................................................Final Judgment
APPENDIX 4............................................................................ Settlement Agreement
8
INDEX OF AUTHORITIES
Cases:
AMX Enterprises, Inc. v. Bank One, N.A., 196 S.W.3d 202 (Tex.
App.—Houston [1st Dist.] 2006, pet. denied) ...............................................22
Crown Life Is. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000) ....................................22
Dalworth Restoration, Inc. v. Rife-Marshall, 433 S.W.3d 773 (Tex.
App.—Fort Worth 2014, pet. denied) ............................................... 18, 22, 23
Drilex Systems, Inc. v. Flores, 1 S.W.3d 112 (Tex. 1999) ...................................... 24
Galle, Inc. v. Pool, 262 S.W.3d 564 (Tex. App.—Austin 2008, pet.
denied) ........................................................................................................... 18
JCW Elecs., Inc. v. Garza, 257 S.W.3d 701 (Tex. 2008) ........................................22
LaFreniere v. Fitzgerald, 669 S.W.2d 117 (Tex. 1984) ..........................................25
Mart. v. First Republic Bank, Fort Worth, N.S., 799 S.W.2d 482
(Tex. App.—Fort Worth 1990, writ denied) ................................................. 19
Mobile Oil Corp. v. Ellender, 968 S.W.2d 917 (Tex. 1998) ....................... 23, 24, 25
Osborne v. Jauregui, Inc., 252 S.W.3d 70 (Tex. App.—Austin 2008,
pet. denied) .................................................................................................... 21
Paschall v. Peevey, 813 S.W.2d 710 (Tex. App.—Austin 1991, writ
denied) .......................................................................................................... 24
Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1 (Tex. 1991) ............................. 20
Utts v. Short, 81 S.W.3d 822 (Tex. 2002) ..............................................................23
Statutes:
TEX. CIV. PRAC. & REM. CODE § 33.001 ....................................................................22
TEX. CIV. PRAC. & REM. CODE § 33.002 ...................................................... 23, 24, 25
TEX. CIV. PRAC. & REM. CODE § 33.003 ...................................................................23
TEX. CIV. PRAC. & REM. CODE § 33.012 ....................................................................23
TEX. CIV. PRAC. & REM. CODE § 33.013 ....................................................................23
9
STATEMENT OF THE CASE
The State sued to have Retirement Value placed into receivership
(CR 30-67, 1540). The appointed receiver sued the founders of Retirement
Value for violation of the Texas Securities Act seeking injunctive and
monetary relief (CR 9, 30-67).
The Receiver filed a motion for summary judgment against
Retirement Value and its founders regarding the Securities Act allegations
(CR 319-481, 820-1260), which was granted (CR 1307).
The Receiver sued Retirement Value’s independent sales agents—
including appellants—under the Fraudulent Transfer Act to recover
judgment for the commissions they had received from the sale of securities
made on behalf of Retirement Value (CR 1309-1411).
The Receiver filed a motion for summary judgment arguing
Appellants are liable as a matter of law under the Fraudulent Transfer Act
(CR 1429-1762, 1814-2367). Appellants filed a no-evidence motion for
summary judgment arguing the Receiver’s non-Fraudulent Transfer Act
claims fail as a matter of law (CR 788-819). The trial court granted the
Receiver’s motion and Appellants’ motion (CR 3217-3218).
A bench trial regarding the remaining damages issues was conducted
(RR Vols. 1-4) after which final judgment was entered in favor of the
Receiver (CR 3317-3320).
10
ISSUE PRESENTED
Did the trial court properly determine
settlement credits?
11
STATEMENT OF FACTS
Retirement Value 1 sold millions of dollars in securities to over 900
investors (CR 30-67, 1540). The State believed that those sales violated the
Texas Securities Act and therefore sued Retirement Value and various
other defendants that operated Retirement Value (all of which are referred
to herein jointly as Retirement Value) to place it into receivership, enjoin it
from selling securities, and for a money judgment in the amount of $77
million to reimburse the investors for monies spent purchasing the
securities (CR 31-67).
Mr. Espinosa was appointed receiver 2 (CR 9). In addition to alleging
violations of the Securities Act, the pleadings assert theories of breach of
fiduciary duty, conspiracy to breach fiduciary duty, aiding and abetting
breach of fiduciary duty, and breach of contract (CR 1335-1360). Mr.
Espinoza filed a motion for partial summary judgment against Retirement
1 The complete names of the parties and an index to the abbreviations
used in this brief are contained under the portion of this brief entitled “List
of Parties and Counsel.”
2 More specifically, the order of appointment states: “[Mr. Espinosa]
is authorized to serve as Temporary Receiver for the company, assets,
monies, securities, claims in action, and properties, real and personal,
tangible and intangible, of whatever kind and description … of Retirement
Value … and for assets, monies, securities, claims in action, and properties,
real and personal, tangible and intangible, of whatever kind and
description … of [Mr. Gray or Mr. Collins] as appear to the Receiver to
contain or be derived from proceeds of Defendants’ sale of securities or
used in furtherance thereof.” (CR 9, 48-52).
12
Value (CR 319-481, 820-1260) and responses were filed (CR 1261-1270,
1271-1294). The trial court granted the motion in part, stating:
The court grants the motion in part concluding
that Retirement Value engaged in fraud or
fraudulent practices in the course of selling
unregistered securities, and thereby violated
section 32(A) of the Texas Securities Act (the
“Act”). Further, pursuant to section 32(B) of the
Act, the court orders Retirement Value to make
restitution in the amount of 77.6 million to
persons who purchased the unregistered
securities (CR 1307-1308).
In his “Eighth Amended Cross-Claim and Third-Party Claim,” the
Receiver sued the independent sales agents that had received commissions
from Retirement Value for sales of the securities to various investors 3
alleging joint and several liability along with the other Retirement Value
defendants (CR 1309-1411). The pleadings alleged a common scheme to
commit securities violations and asserted theories as to all defendants of
breach of fiduciary duty, conspiracy to breach fiduciary duty, aiding and
abetting breach of fiduciary duty, and breach of contract (CR 1309-1411).
3 In this regard, the Receiver explained in his affidavit:
“My investigation has revealed that Retirement Value sold
participations in its RSLIP program through a network of agents
called “Licensees.” The Licensees received commissions of up to
18% on each sale they made. Some of the Licensees recruited
“Sub-licensees” who worked under them in a pyramid-type sales
organization. The Licensees received override commissions on
the sales of the Sub-licensees below them. The Licensees played a
vital role in the Retirement Value scheme, as they were the ones
who convinced the victims to invest. There would be no victims,
but for the acts of the Licensees.” (CR 1658).
13
There were 90 or so sales agents made defendants to the secondary case,
including Mr. Magaraci and his company 4 (CR 1335-1360).
The Receiver filed a motion for partial summary judgment against
the licensee sales agents—including Mr. Magaraci—arguing they are liable
as a matter of law under the Fraudulent Transfer Act for damages and
attorney’s fees (CR 1429-1762, 1814-2367). Attached to the Receiver’s
motion for partial summary judgment are requests for admissions which
Mr. Magaraci and his company did not answer (CR 2333-2336). Mr.
Magaraci adopted the response filed by other licensee sales agents (CR
2368-2807, 2816) and filed a separate response (CR 2808-2835). Mr.
Magaraci also filed a no-evidence motion for summary judgment arguing
the Receiver’s theories of breach of fiduciary duty, conspiracy to breach
fiduciary duty, aiding and abetting breach of fiduciary duty, and breach of
contract fail as a matter of law (CR 788-819). The Receiver filed a response
(CR 3197-3209).
On February 21, 2013, the trial court granted the Receiver’s motion
and the motion filed by Mr. Magaraci (CR 3217-3218). The order states:
The Court grants the Receiver’s Motion for Partial
Summary Judgment as to Licensee Defendants on
the Receiver’s claims under the Texas Uniform
Fraudulent Transfer Act (“TUFTA”) as to liability,
damages and attorney’s fees against … Estate
Protection Planning Corp.…
4 When “Mr. Magaraci” is referred to herein the intent is to refer to
both Mr. Magaraci and his company.
14
The Court grants the Receiver’s Motion for Partial
Summary Judgment as to Licensee Defendants on
the Receiver’s claims under the Texas Uniform
Fraudulent Transfer Act as to liability and
attorney’s fees against … Salvatore Magaraci…. At
the hearing, the court asked counsel for the
parties to get together and attempt to reach a
stipulation as to the amount of commissions these
defendants directly or through their companies or
employers relating to Retirement Value with the
understanding that judgment would be entered
against them as damages for the TUFTA claims.
The Court grants the motions for summary
judgment filed by Estate Planning & Protection
Services [and Mr.] Magaraci … as to the
Receiver’s claims of breach of fiduciary duty,
conspiracy to breach fiduciary duty, aiding and
abetting breach of fiduciary duty, and breach of
contract (CR 1973-1974).
Thus the remaining issues to be resolved by trial or settlement were
damages and attorney’s fees. In this regard, the parties stipulated that Mr.
Magaraci received $271,658.55 in commissions (CR 3257). An accountant
retained by the Receiver testified that Estate Planning was paid
$388,589.11 in commissions (CR 1659-1662). Also, the Receiver and the
primary defendants reached a settlement whereby the Receiver would give
a release of all claims in exchange for $5.5 million in unallocated funds.
See Aplt. Appx. 4; (RR 2/11).
Mr. Magaraci, along with the other nonsettling defendants, filed a
motion arguing that under the one-satisfaction rule he should receive
credit for the settlement with the nonsettling defendants, which would
result in a take nothing judgment (CR 1763-1813, 3233, 3240; RR 2/18). In
15
response, the Receiver argued the settlement should not be credited to Mr.
Magaraci or the other nonsettling defendants (CR 3247-3252). The trial
court addressed these arguments at trial, at which time additional
arguments were heard (RR 2/13-38). The trial court refused to give any
credit to the nonsettling defendants for the settlement by the settling
defendants (CR 3317-3320; RR 2/13-38).
The trial court signed a final judgment against Mr. Magaraci stating
(1) Mr. Magaraci and his company are jointly and severally liable to the
Receiver for $271,658.55 in actual damages, and $101,871.96 in attorney’s
fees, with interest and costs; (2) Estate Planning is individually liable to the
Receiver for an additional $116,930.56 in actual damages, and “reasonable
and necessary attorney’s fees of $43,848.96 which is 37.5% of actual
damages awarded,” with interest and costs; and (3) Mr. Magaraci and his
company are jointly and severally liable to the Receiver for appellate
attorney’s fees in the amount of $7,142.86 if an appeal is taken to the court
of appeals, $2,142.86 if a petition for review is filed in the Supreme Court,
and $4,285.71 if the a petition for review is granted by the Supreme Court
(CR 3317-3320).
The trial court also signed an order severing the Receiver’s claims
against Mr. Magaraci from the remaining parties (CR 3321-3324).
16
SUMMARY OF ARGUMENT
Mr. Magaraci (and his company), as nonsettling defendants, are
entitled to credit for the settling defendants $5.5 million settlement. When
Mr. Magaraci established that the settlement occurred, the burden shifted
to the Receiver to show that he will not receive a double recovery by a
judgment against Mr. Magaraci and his company. Because the Receiver
established only the amounts of commissions received by Mr. Magaraci
and his company (which were much lower than the settlement), he did not
to meet his burden of rebuttal.
A plaintiff must establish the amount of damages it suffered to meet
its burden of proving that it will not receive a double recovery from the
settlement with a settling defendant and a judgment against a nonsettling
defendant. Here, the Receiver did not establish its amount of damages and
therefore it is presumed that the settlement with the nonsettling
defendants made the Receiver whole. Thus, reversal and rendition is in
order.
17
ARGUMENT AND AUTHORITIES
The proper standard of review.
Where there are no factual disputes underlying a trial court’s
determinations on settlement credits, the review on appeal is de novo.
Galle, Inc. v. Pool, 262 S.W.3d 564, 570 n. 3 (Tex. App.—Austin 2008, pet.
denied); but see Dalworth Restoration, Inc. v. Rife-Marshall, 433 S.W.3d
773, 780 (Tex. App.—Fort Worth 2014, pet. denied) (stating that an abuse
of discretion standard of review is applied on appeal regarding a trial
court’s settlement credit determination).
***
Issue:
Did the trial court properly
determine settlement credits?
The trial court granted a partial summary judgment against
Retirement Value (CR 1307-1308) and a separate partial summary
judgment against Mr. Magaraci and his company (CR 1973-1974). These
partial summary judgments were incorporated into the final judgment
after trial on the remaining issues of damages and settlement credits (CR
3317-3320). Of course, the partial summary judgment against Retirement
Value is not applicable to Mr. Magaraci because it is directed only at
Retirement Value. More to point, the partial summary judgment against
18
Mr. Magaraci was only on the issue of liability under the Fraudulent
Transfer Act, not as to liability under the Securities Act, and not as to the
amount of damages (CR 1973-1974). After a partial summary judgment is
granted, the issues it decides cannot be litigated further in the trial.
Martin v. First Republic Bank, Fort Worth, N.S., 799 S.W.2d 482, 488-89
(Tex. App.—Fort Worth 1990, writ denied). Thus the Receiver was
required to present evidence at trial proving the remainder of the
allegations contained in his pleadings, including the amount of damages, to
be entitled to the final judgment that the trial court ultimately entered.
The Receiver’s pleadings assert the same legal theories of recovery
against all defendants, assert that all defendant’s engaged in factually the
same illegal scheme, and assert that all defendants are jointly and severally
liable for the same damages caused to the plaintiff in the amount of $77
million (CR 1309-1411). The partial summary judgment orders against
Retirement Value and the sales agents conclude that they are all liable
under the Fraudulent Transfer Act (CR 1307-1308; 1973-1974). After the
summary judgment orders were signed, the remaining issues were the
amount of damages and attorney’s fees. Because the Receiver settled with
Retirement Value for $5.5 million, the question also arose of what, if any,
credits the sales agent defendants receive for the settlement with the
primary defendants.
19
At trial, the Receiver never established what amount of damages
were suffered by the State or the investors—the only damages that were
established by the Receiver were the amounts received as commissions by
the sales agent defendants. In Mr. Magaraci’s case the amount of
commissions established by stipulation was $271,658.55 (CR 3257). The
Receiver’s accountant testified that the total commission by Mr. Magaraci
and his company was $388,589.11 (CR 1659-1662) and from this the trial
court reasoned that the damages caused by Mr. Magaraci were $271,658.55
and the damages caused by his company were $101,871.96 (CR 3317-
3320). The trial court’s reasoning in this regard is obviated by looking at
the final judgment which awards these amounts to the Receiver;
271,658.55 + 101,871.96 = 388,589.11 (CR 3317-3320).
In the end, the trial court gave no settlement credits to the
nonsettling defendants for the $5.5 million paid by the settling defendants
even though the Receiver did not establish the damages beyond the
commissions paid (CR 3317-3320). This was error on the part of the trial
court for the following reasons.
Under the one-satisfaction rule, a trial court may not render a
judgment that would allow a double recovery. See Stewart Title Guar. Co.
v. Sterling, 822 S.W.2d 1, 8 (Tex. 1991) (“There can be but one recovery for
one injury, and the fact that more than one defendant may have caused the
injury or that there may be more than one theory of liability, does not
20
modify this rule.”). Thus, a plaintiff is only entitled to one recovery for a
particular harm, and must elect a single remedy if the trier of fact has
awarded more than one; and any award must be reduced by the amount of
any settlements the plaintiff has received from other entities for the same
injury. This Court has said of the one-satisfaction rule and explained its
application as follows:
[It is] the longstanding proposition that a plaintiff
should not be compensated twice for the same
injury. The rule guards against a plaintiff
receiving a windfall by recovering an amount in
court that covers the plaintiff’s entire damages,
but to which a settling defendant has already
partially contributed. The plaintiff would
otherwise be recovering an amount greater than
the trier of fact has determined would fully
compensate for the injury. The one-satisfaction
rule applies both when several defendants
commit the same act and when multiple
defendants commit technically different acts that
result in the same, single injury. The application
of the rule is not limited to tort claims, and
whether the rule may be applied depends not on
the cause of action asserted but rather the injury
sustained. Thus, if the plaintiff has suffered only
one injury, even if based on overlapping and
varied theories of liability, the plaintiff may only
recover once; this is especially true if the evidence
supporting each cause of action is the same.
Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75 (Tex. App.—Austin 2008, pet.
denied) (op. on reh’g) (en banc) (quotations marks and citations omitted).
The one-satisfaction rule applies when multiple defendants commit
the same act, or when multiple defendants commit “technically different
acts” that result in the same, single injury regardless of the absence of tort
21
liability. AMX Enterprises, Inc. v. Bank One, N.A., 196 S.W.3d 202, 206
(Tex. App.—Houston [1st Dist.] 2006, pet. denied). Moreover, a nonsettling
defendant may only claim credit based on damages for which all tortfeasors
are jointly liable. Crown Life Is. Co. v. Casteel, 22 S.W.3d 378, 391 (Tex.
2000).
The Texas legislature has weighed in on the policy behind the one-
satisfaction rule with the Proportionate Responsibility Act. TEX. CIV. PRAC.
& REM. CODe § 33.001 et. seq. The Proportionate Responsibility Act
“applies to … any cause of action based on tort in which a defendant,
settling person, or responsible third party is found responsible for a
percentage of the harm for which relief is sought.” Id. at § 33.002(a)(1);
see also JCW Elecs., Inc. v. Garza, 257 S.W.3d 701, 704 (Tex. 2008);
Dalworth Restoration, Inc., 433 S.W.3d at 780. Under the Act, the trier of
fact must find causation as to a particular party so that it can then
apportion causation to that party. When a party is found to be responsible
as a matter of law, the Act is still applicable and the trial court should only
enter judgment according to the proportionate responsibility of each party
and according to their degree of causation. Under the Act, the question
begins with determining the exact amount of damage that was suffered by
the plaintiff. Next, a determination of whether the damage suffered by the
plaintiff is the same damage attributable to all defendants must be made.
If it is, proportionate responsibility of each defendant that caused the
22
damage must be determined. TEX. CIV. PRAC. & REM. CODe § 33.003(a).
Next, settlement amounts must be ascertained. Id. at § 33.012(b). And
finally, entry of judgment is possible. Id. at § 33.013. 5
A burden-shifting framework is applied to determine if a nonsettling
defendant is entitled to a settlement credit under chapter 33. Mobile Oil
Corp. v. Ellender, 968 S.W.2d 917, 926-29 (Tex. 1998); see also Utts v.
Short, 81 S.W.3d 822, 829 (Tex. 2002). First, the defendant that seeks the
credit must prove the settlement’s amount by placing some evidence of the
settlement amount in the record. Mobile Oil Corp., 968 S.W.2d at 927.
Once the defendant meets its burden to prove the settlement’s amount, the
burden shifts to the plaintiff to show that it will not receive a double
recovery from the settlement and a judgment against the nonsettling
defendant. Id. at 928. The plaintiff must meet this burden by offering into
evidence a written settlement agreement allocating damages to each cause
of action, and in doing so may not rely on evidence extrinsic to the
settlement agreement. Id. at 928-29; see also Dalworth, 433 S.W.3d at
781. The rationale of this burden shifting procedure is that the plaintiff is
5 See also Utts, 81 S.W.3d at 829 (stating that it is the trial court’s duty
at entry of judgment to determine how the settlement credits should be
applied once the jury determines the damages and the apportionment on
causation among the defendants); Mobile Oil Corp., 968 S.W.2d 917 at 928
(stating that where there is settlement covering some or all damages
awarded in judgment, section 33.012 requires trial court to reduce
judgment accordingly); Dalworth Restoration, 433 S.W.3d at 781 (stating
trial court has mandatory duty to apply settlement credits).
23
in the best position to provide proof of allocation of damages. Mobile Oil
Corp., 968 S.W.2d at 928. Chapter 33 applies to any scenario where a
plaintiff seeks joint and several liability. 6
Here, Mr. Magaraci met his initial burden by showing that a
settlement in the amount of $5.5 million was entered into by the settling
defendants and the Receiver. This shifted the burden to the Receiver to
show that he will not receive a double recovery by a judgment against Mr.
Magaraci and his company. Id. at 226-29. Because the Receiver only
established the amounts of commissions received by Mr. Magaraci and his
company, he has failed to meet his burden. Id. The amount of
commissions is, obviously, less than the amount of the settlement. There
was no evidence put on as to the amount of damages suffered by the
Receiver and therefore no basis upon which the trial court could apply
6 See, e.g., Drilex Systems, Inc. v. Flores, 1 S.W.3d 112, 122-23 (Tex.
1999) (In determining how to allocate settlement money as credit against
claims of family members arising out of injury to one member of family,
court must view entire family as one claimant for section 33.012(b)
purposes. Total of all damages to be recovered by family must be reduced
by total of all settlements received by family. Then, to give effect to jury
verdict, remaining damages should be allocated among parties seeking
recovery based on each party’s percentage of total verdict awarded to
claimant by jury.); Paschall v. Peevey, 813 S.W.2d 710 (Tex. App.—Austin
1991, writ denied) (When plaintiff sues several defendants and alleges
different types of damages, credit against verdict given to nonsettling
defendant must be for those damages common to settling and nonsettling
defendants. Personal injury plaintiff cannot prohibit nonsettling defendant
from taking dollar-for-dollar credit against judgment in amount of joint
tortfeasor’s settlement by designating settlement as for pain and suffering
and then seeking damages at trial for physical impairment. All personal
injury damages are common damages).
24
Chapter 33 of the Proportionate Responsibility Act. Because Chapter 33
applies to this case, establishing the amount of damages suffered by a
plaintiff is a precondition for the plaintiff to be able to meet its burden
under the Mobile Oil Corp. burden-shifting procedure. Therefore, the
Receiver has failed to show that it will not receive a double recovery from
the settlement and a judgment against Mr. Magaraci and his company, and
the trial court was in error concluding otherwise. The trial court should
have entered a take nothing judgment.
Additionally, because the attorney’s fee awards against Mr. Magaraci
and his company are based on the trial court’s erroneous conclusion that a
money judgment was proper, those awards should also be set aside.
LaFreniere v. Fitzgerald, 669 S.W.2d 117, 119 (Tex. 1984).
In short, this Court should reverse and render judgment in favor of
Mr. Magaraci and his company, Estate Protection Planning Corporation.
PRAYER
Accordingly, appellants, Salvatore Magaraci and Estate Protection
Planning Corporation, pray that this Court reverse and render, or
alternatively, reverse and remand for a new trial or for entry of a different
judgment.
25
Respectfully submitted,
/s/Timothy A. Hootman
Timothy A. Hootman
SBN 09965450
2402 Pease St
Houston, TX 77003
713.247.9548
713.583.9523 (fax)
Email: thootman2000@yahoo.com
ATTORNEY FOR APPELLANT, SALVATORE
MAGARACI AND ESTATE PROTECTION
PLANNING CORPORATION
CERTIFICATE OF WORD COUNT
I hereby certify that, in accordance with Rule 9.4 of the Texas Rules
of Appellate Procedure, that the number of words contained in this
document are 4,989 according to the computer program used to prepare
this document.
Dated: March 27, 2015.
/s/Timothy A. Hootman
Timothy A. Hootman
26
CERTIFICATE OF SERVICE
I hereby certify that, in accordance with Rule 9.5 of the Texas Rules
of Appellate Procedure, I have served the forgoing document upon the
following attorneys by personal mail, by commercial delivery service, or by
fax:
John W. Thomas
GEORGE, BROTHERS, KINCAID & HORTON, LLP
114 West 7th St, Ste 1100
Austin, TX 78701
Dated: March 27, 2015.
/s/Timothy A. Hootman
Timothy A. Hootman
27
│
│
│
│
│
│
Appendix 1
(Order granting partial summary judgment as to Retirement Value)
│

DC BK13057 PG878
Filed In The District Court
of Travis County, Texas
FEB 21 2013 LAM
At //· !:12 A M.
CAUSE NO. D-l-GV-10-000454 Amalia Rodrlguu-Mendoii, Clerk
STATE OF TEXAS
§ IN THE DISTRICT COURT OF
§
Plaintiff, §
§
v. §
§
RETIREMENT VALUE, LLC, §
RICHARD H. "DICK" GRAY, lULL §
COUNTRY FUNDING, LLC, HILL §
COUNTRY FUNDING, and §
WENDY ROGERS, § TRAVIS COUNTY, TEXAS
§
Defendants, §
§
and §
§
JAMES SETTLEMENT SERVICES, §
LLC,etal., §
§
Third Party Defendant~. § 126™ JUDICIAL DISTRICT
ORDER ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT
AGAINST DEFENDANT RETIREMENT VALUE. LLC
CAME ON TO BE HEARD on this 7th day of January, 2013, Plaintiff's Motion for
Partial Summary Judgment against Defendant Retirement Value, LLC ("the Motion").
Having heard the arguments of counsel, reviewed the Motion and responses, and
considered the evidence, the Court GRANTS the Motion in part, and DENIES the Motion in
part.
The court GRANTS the motion in part upon concluding that Retirement Value engaged
in fraud or fraudulent practices in the course of selling unregistered securities, and thereby
violated section 32(A) of the Texas Securities Act (the "Act). Further, pursuant to section 32(8)
of the Act, the court orders Retirement Value to make restitution in the amount of $77.6 million
to persons who purchased the unregistered securities.
ORII£11 ONPIAINTI"'·' IiiOrtON roa PAit71At.SUMMAil'f Ju(J(;JIENT
Ar&MNSr Dt::I"EI'IIMNTRET/Il£MI'.Nr VAI.UI>, LLC
1307
DC BK13057 PGI77
Any relief sought by the Motion that is not herein granted is DENIED.
Signed this )..\ day of 1~2013.
THE HONORABLE GISELA D. TRIANA
JUDGE PRESIDING
ORI>U ON I'I.A/NT/f"f"'.Y MOTION F'OR I'AitT/111. SUNIJAilY }Uf)(i!IIENT
AGAINST Dr:nN/JANT RET/Il£/IIENT JIAJ.Ue, LLC Pagel
1308
│
│
│
│
│
│
Appendix 2
(Order granting partial summary judgment as Appellants)
│

....
• DC 8K13346 PG1739
NOTICE SENT: FII'JAL INTE:RLOCUTORY___, __ Filed in The District Court
of Travis County, Texas
DISP PARTIE.S:. _ _ _...,.......=-----
DISP CODE: CVD - `` og~13 M.
REDACT 2 · ·=------;"1----~..,..,.
.,.Ocy None DC BK14155 PG1196
Filed in The District Court
.·J~.··,s.p Parties:
· ..::t .
A`` .
·. ~:Hd•
r - of Travis County, Texas
t DISP code: CVD / CLS -~.:....u.t:...s.-.:.--
MAY 28 !014 'BH
Redact P.gs:......
i:J \,... __...
• f:._-::1
Clerk _-l.:~::;o..--- N · 1:oof M.
Judge.OD~- - A!nalia Rddriguez-Mendoza1 Clerk
CAUSE NO.-----~
EDUARDO S. ESPINOSA, § IN THE DISTRICT COURT
IN HIS CAPACITY AS §
RECEIVER OF RETIREMENT §
VALUE, LLC, §
flaintiff, §
v. § OF'TRA VTS COUNTY, TEXAS
§
SALVA TORE MAGARACI, and §
EST ATE PROTECTION PLANNING §
CORPORATION § . t-h
l)efendants. § Ji lq JUDICIAL DISTRICT
JUDGMENT AS TO DEFENDANTS SALVATORE MAGARACl AND
.E STATE PROTECTION PLANNING CORPORATION
On t:he 30ih day of October, 2013, came on to be htfard Rece iver's Motion for
Partial Summary Judgmentas·to Licensee Defendants, Receiver's Motion for Partlal
Summary Judgment as to Certain Licensee Defendants with Deemed Admissions, and
Receiver's Motion for Patti a! Summary Judgment as to Certain Licensee Defendants with
No Resp()llses Filed. The Court granted the Receiver's Motion for Partial Summary
Judgment in all respects as to Estate Protection Planning Corporation . The Court granted
the Motion for Partial Summary Jt!dgment as .to liahil.ity and attorney's fees on the
Receiver's claims asserted under the Texas Unifo rm Fraudulent Transfer Act (" Tl)FTA")
as to Salvatore Magaraci, and the amount of damages was determined at trial.
On the !81h and 191h of February, 2014 came on to be heai·d trial in Cause No. D-
1-GV I0-000454 Srate of Texas v. Retirement Value, eta/. in the I 26111 Judicial District
Court, Travis County Texas. The Court, having considered the· pleadings, the evidence,
and the arguin.ents of counsel, and noting the Court'K orders granting the motions for
3317
DC BK14155 PG11'97
partial summary judgment as described above, is of the opinion that judgment should be
rendered for Eduardo S, Espinosa, Receiver ofRetirement Value, LLC ("Receiver")
against Third-Party Defendants Estate Protection Planning Corporation and SaLvatore
Maga.raci. lt is, therefore ORDERED AND ADJUDGED as follows ;
The Cout1 hereby RENDERS judgment for Eduardo S. Espinosa, in his capacity
as Receiver of Retirement Value, LLC ("Receiver") against Third-Party Defendants
estate Protection Planning Corporation and Salvatore Magaraci (''Defendants").
The Court finds that the Receiver is entitled to actual damages, pre-and post-
judgment interest and court costs. In addition, the Receiver is entitled to reasonable
and necessary attorney's fees pursuant to Section 24.013 of the Texas Business &
Commerce Code.
Accordingly, the Court orders that the Receiver recover the following :
I. Ftom Estate Protection Planning Corporation and Salvatore Magaraci,
jointly and severally, $271,658.55 in actual damages, prejudgment interest from. August
12, 2011 at a rate 6f 5% until the date of this jt1dgrnent, comt costs, and post judgment
interest on the above from today until paid at a rate of 5% compounded annually. In
addition, the Receiver shall also recover from Estate Protection Planning Corporation and
Salvatore Maga.raci, jointly and severally, reasonable and necessary attorney'·s fees of
$101,871.96, which is 37.5% of act1,1al damages awatded. Post judgment interest shall
also accrue on the award of attorney's
.
fees from
., . : .
to,day u.ntil paid at a rate of 5%
compounded annually.
2. In addition to the foregoing, the Receiver shall recover from Estate
. Protection Planning Corporation individually, an additional $11.6,930.56 in actual
2
3318
DC BKl4155 PG1198
damages, prejudgment interest from August 12, 201J at a rate of5% untifthe dateofthis
judgment, court ,costs, and post judgment interest on the above from today until paid at a
rate of 5% compounded annually; ln addition, the Receiver shall also recover from
Estate Protection Planning Corporation, individually, reasonable and necessary attorney's
fees of$43,848 .96 which is 37.5% of actual damages awarded. Postjudgment interest
shaH also ac.crue on the award of attorney' s fees from today until paid at a rate of 5%
compounded annually.
The Court further orders that ifone or more Defendants herein unsuccessfully
appeal thls judgni:ent to an intermediate court of appeals, the Receiver will additionally
recover tJ·om such Defendants, jointly and severally, the amount of$7,1 42.86,
tepresent'ing the anticipated reasonable and necessary fees and expenses that would be
incurred by the Receiver in defending the appeal .
The Court further orders that ifone or more Defendants here.in unsuccessfully
appeal this judgment to the Texas Supreme Court, the Receiver will additionally
recover from such Defendants, jointly and ~everally , the amount Of$2,142.86 in the
event a petition for discretionary review is filed but the Texas SJ.tpreine Court denies
review; or $4,285.71 in the event a petition for discretionary revieW is.filed and the
Texas Supreme Court grants review. Such amounts tepresent the anticipated
reasonable and necessary fees and expenses that would be incur1·ed. by the Receiver in
defending the appe present and potential controversies between
Plaintiffs, the James Parties and Beste that were brought and/or that could have been brought in
Cause No. D-1-GV-10-000454, and that arise out of all operations and activities ofRV or HCF,
against each other and all of their respective counsel, agents. etc. with prejudice; and
WHEREAS, Plaintiffs, the James Parties and Beste have agreed to resolve all claims that
they have or may have against each other which were or could have been asserted in the Lawsuit,
and that arise out of all operations and activities ofRV or HCF, without admission by any party
of the merits of the claims, demands, charges, and/or contentions of the others; and
.'
WHEREAS, Plaintiffs, the James Parties and Beste covenant and wan1mt that they have
not ~signed, transfe1Ted, or subrogated any portion of any claim which they have against each
other, other than to !heir attorneys of record, and further warrant that the undersigned are
auth01ized to act in the capacities indicated:
NOW, THEREFORE, in consideration of the mutual promises and the covenants set forth
herein, other good and valuable consideration. the receipt and sufficiency of which is hereby
acknowledged, and in full compromise, release, settlement, accord and satisfaction, and
discharge of all claims or causes of action, known or unknown, which were brought and/or that
could have been brought in the Lawsuit, and that arise out of all operations and activities of RV
or HCF, Plaintiffs, the James Parties and Beste covenant and agree as follows:
1. Monetary Consideration. Ronald James, Donald James, James Settlement Services, LLC
(''JSS") and Michael Beste C'Beste") agree to pay Espinosa $3 .4 million on or before
April 25, 2013, and an additional $1.1 million on o1· before July 31, 2013, and an ·
addi:t:ional $1 million on or before October 31, 2013. The James Parties and Beste wUl
receive a $100.000.00 discount off of the October payment if the payment is made by
July 31, 2013, to be applied pro-rata to any amount of early payment less than the full $1
million. The payments shall be made by wire transfer to the IOLTA trust account of
George & Brothers, LLP. Wiring or routing :instructions will be provided to cmmsel for
the James Parties'by counsel for the Receiver reasonably promptly after the execution of
this Ag1-eement. Attorneys for Espinosa, George, Brothers Kincaid & Horton, LLP,
agree to hold any payment in trust until the trial court judge approves this settlement
This settlement is expressly conditioned on and subject to com't approval. In the event it
is not approved, all payments will be returned to the James Parties and Beste. ·
2. Agreed Judgment: The parties will have an agreed judgment in the form· attached hereto
as Exhibjt A signed by the judge, but 11ot flled, in the amount of $8 million against the
James Parties and Beste jointly and severally to secure the payments set out above in
paragraph L The original copy of the judgment signed by the Court will be held by
Espinosa, one copy will be held by counsel for Espinosa, and one copy will be held
by Taylor. Except as provided herein, no copies of the judgment will ever be made,
and no copies of the judgment will ever be disseminated and/or provided to any other
person(s) and/or entities. If any payment is not timely made, counsel for Espinosa shall
provide notice via e~mail to counsel for the James Parties and Beste. The James Parties
and Beste shall have nve (5) business days to cure the payment failure. If the payment
failure is not timely cured, the judgment may be filed and abstracted immediately. The
James Parties and Beste agree not to challenge the flling and enforcement of the
judgment if peyments are not timely :tnade, notice has been. provided, and the payment
failure has not been cured, but reserve their right to challenge the amount due under the
judgment based on offsets or credits allowed by this Agreement The James Parties and·
Beste shall receive a dollar for dollar credit against the $8 million agreed judgment for all
settlement payments made (including the initial $3.4 million payment) if the judgment is
ever filed for nonpayment. If all of the payments called for in Section 1 are made, all
copies of 1he judgment in tbe possession of Taylor, Espinosa or counsel for Espinosa,
including tile original copy signed by the Court, will be delivered to counsel for the
-2-
2024
James Parties and Beste. At such time, the James Parties and/or Beste will be permitted
to destroy any and all copies of the judgment The parties also agree to the agreed order
of severance attached hereto as Exhibit B. That order of severance will be ftled
immediately upon approval of the settlement by the trial court judge so that the agreed
judgment can be filed in that cause, if appropriate 'Wlder the te1ms of this Agreement.
3. Permanent Injunction: The James Parties and Beste agree to the entry of the Permanent
Injunction attached hereto as Exhibit C.
4. Agreement to Cooperate: If the James Parties discover any additional non~privileged
records and/or documen1s that relate to RV and/or HCF that have not already been
produced in this litigation, they agree to provide 'a copy to their counsel who will then
provide a copy to counsel for the Receiver and the James Parties agree to maintain a
copy of those records and/or documents until January 1, 2014. The James Parties agree
to respond to w1itten questions or inquiries from Espinosa or Taylor related to policy
maturity issues and/or problems either of them may have from time to time related to
management or administration of the policies. TI1e written questions or inquires described
above arc to be trdilsmitted to the James Parties through their counsel of record.
Espinosa, Taylor, and counsel for Espmosa and/or Taylor are not to contact the.James
Parties without prior permission from their respective counsel of record. If Espinosa,
Taylor, and counsel for Espinosa and/or Taylor are unable, after a good faith searcl1, to
locate Lany York, Carl Galant, or Nicholas Laurent to submit a written inquiry as
provided herein, they may contact the James Parties directly in writing. In response to a
direct inquiry from Espinosa or Taylor, the James Parties may refer Espinosa and/or
Taylor to counsel for the James Pru:ties in. which case all further communications will be
through counsel.
5. Releases.
A. In return for the Monetary Consideration to be paid as stated hereill, the
Agreement to Cooperate, the James Parties' and Beste's releases, as set forth
below, and other good and valuable consideration, Plaintiffs, for themselves and
their respective legal representatives, successors, and assigns hereby agree to
mutually, irrevocably, unconditionally and completely, RELEASE, ACQUIT
AND FOREVER DISCHARGE the James Parties and Beste and aU of their
agents, employees, servants and attorneys, of and :from any and all claims,
demands, actions, debts, accounts, rights, liabilities, damages, judgments, liens,
losses, costs, expenses, attorneys' fees and f?SUSes of action of any nature, both
past, present and future. known and unknown, accrued and unaccrued, foreseen
and unforeseen, asserted and nat asserted, discovered or not discovered, whether
at law, in equity or otherwise, either direct or consequential, which Plaintiffs
could have or have ever had or may now have against the James Parties and Beste
that were brought and/or that could have been brought in Cause No. D~l~GV-
10-000454, and that arise out of all operations and activities of RV or HCF,
against each other and all of their respective counsel, agents, ·etc. with
prejudice. Plaintiffs' release is expressly conditioned upon the payment of the
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2025
Monetary Consideration as required by Section 1 hereof.
B. In return for Plaintiffs' release, as set forth in Section S.A heteof, and other good
and valuable consideration, the James Parties and Beste, for themselves and their
respective heirs~ executors, administrators, legal representatives, successors and
assigns, hereby agree to mutually, irrevocably, unconditionally and completely,
RELEASE, ACQUIT AND FOREVER DISCHARGE Plaintiffs, the State of
Texas, Eduardo S. Espjnosa, individually, Janet Mortenson, individually, Michael
D. Napoli, John Thomas, John M. McConnell, Jim George, Cox Smith Matthews,
Inco:rporated, K&L Gates, ·LLP. George & Brothern, LLP, George, Brothers,
Kincaid & Ho1ton, LLP, Donald R. Taylor, individually, Isabelle M . Antongiorgi, ·
and Taylor Dunham LLP, and all of their agents, employees, servants and
attorneys of and from any and all claims, demands, actions, debts, accounts,
rights, liabllities, datnages, jud~entq, liens, losses, costs, expenses, attorneys'
fees and causes of action of any nature, both past, present and future, known and
unknown, accrued and unaccrued, foreseen and unforeseen, asserted and not
asserted, discovered or not discovered, whether at law, in equity or otherwise,
either direct or consequential, which the James Parties and Beste could have or
have ever had or may now have against Plaintiffs that were brought and/or that
could have been brought in Cause No. D-1-GV-10-000454, and that arise out of
all operations and activities of RV or HCF, against each other and all of their
respective counsel, agents, etc. with prejudice. The James Parties' and Beste's
release is expressly conditioned upon the Plaintiffs' mutual release contained in
Section 5.A hereof.
C. The parties expressly waive the provisions of any law that might otherwise render
the releases contained herein unenforceable with respect to unknown claims,
including § 1542 of the California Civi1 Code, which provides as follows;
A general release does not extend to claims which the creditor
does not know or- suspect to exist in his or her favor at the time of
executing the release, which if known by him or her must have
materially affected his or her settlement v.rith the debtor.
D. Plaintiffs, the James Parties and Beste completely and unconditionally release and
forever discharge each other, respectively, from any claim that this Agreement
was induced by any fraudulent or negligent act or omission, and/or result from
any actual or constructive fraud, negligent misrepresentation, conspiracy, breach
of fiduciary duty, breach of confidential relationship, or the breach of any other
duty under law or in equity. It is the Plaintiffs' and the James Parties' and Beste's
intent that on and following the execution of this Agreement that tbey shall have
no further relationship with each other, other than 1ights that are expressly created
in 1his Agreement. Plaintiffs, the James Parties and Beste expressly understand
and agree that the exchange of releases does not apply to actions brought by any
of them to enforce the tem1s of this Agreement. The James Parties and Beste
further understand and agree that the foregoing no-further-relationship clause
- 4-
2026
s!Iall not apply to the State of Texas or its agencies, except insofar as the claim,
demand, action> debt, account, right, liability, damage, judgment, lien, loss, cost,
expense, claim for attorneys' fees or cause of action has been released under
Section 5 of this Agreement. Plaintiffs, the James Parties and Beste shall reserve
and each has reserved all of their rights against the other to enforce the terms of
this Agreement.
E. Noiliing in this release language nor any other provision of this Agreement is
intended to release any claims Plaintiffs have against the Licensees, Wells Fargo
or any other party to the Lawsuit. Those claims are expressly and specifically
reserved. Except as expressly provided herein, there are no third party
beneficiaries to this Agreement.
6. Non" Admission .. Plruntiffs, the James Parties and Beste agree tJ1at this Agreement is a
compromise settlement of a disputed claim or claims, and shall not be deemed or
construed 'a t any time or for any purpose ro be an admissimt by any released party of a:ny
violation of any right, contract) statute, or common law or of any wrongdoing. The James
Parties and Beste vigorously dispute aH claims that have been. asserted against them and
maintain that those claims have no basis in fact or law.
7. Defense And Indemnity. Plaintiffs further agree to DEFEND, INDEMNIFY AND
HOLD HARMLESS the James Parties and Beste from any claim or cause of action of
any kind filed or made against any of them whicl1 has been or may subsequently be
.brought by, through, or on behalf of Plaintiffs and arising from any claim released under
this Agreement. The James Parties and Beste, likewise, agree to DEFEND,
INDEMNIFY AND HOLD HARMLESS the Plaintiffs from any claim or cause of action
of any .kind hereafter filed or made against any of them which has been or may
subsequently be brought by, through, or on behalf of the James Parties and Beste and
arising ftom any claim released under this Agreement This right of indemnity is
conditioned upon prompt notice by the party claiming a right to indemnity on any such
claim to the party against whom indemnity is sought and the party against whom
indemnity is sought being given the right to defend the claim on which indemnity is
sought. Plaintiffs, the James Parties and Beste warrant they are not presently aware of
any facts that would give rise to a claim for indemnity under this Section. The right to
indemnity in this Section is limited to the James Parties, Beste and Plaintiffs, as herein
defined, and shall not be construed as granting a right to indemnity jn favor of any other
entities or persons related to or affiliated with the Plaintiffs or the James Parties and
Beste. The pruties' indemnity oblig1ttioo under this provision is limited to the Monetary
Consideration actually paid by the James Parties and Beste pursuant to Section 1 above.
The Defense and Indemnity provisions set out in this Section 7 shall not apply to the
State of Texas or its agencies; provided, however, that the absence of such obligation on
the part of the State shall in no way limit or modify the scope the release given by the
State of Texas in Section 5. Plaintiffs' indemnity obligation does.not encompass claims
brought by any investors, including but not limited to the l:ICF Investors provided no
investor claims have been or will be brought by, through, or on behalf of Plaintiffs.
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2027
8. Attorney's Fees. The James Parties, Beste and Plaintiffs will beat their own attorney's
fees, expenses and costs in tlus Lawsuit.
9. Reasonable Steps. The James Parties, Beste and Plaintiffs further wan'3.Jlt and represent
that they will cooperate fully and execute any and all supplementaty documents and take
such additional actions which reasonably may be necessary or appropriate to give full
force and effect to the terms and intent of this Agreement RV, by and through its
Receiver, and HCF. by through its Receiver, agree to file a non-suit with prejudice of all
claims against the James Parties and Beste within fourteen (14) days from the date the
last settlement payment is made, if all settlement paymenlt;l are made as contemplated in
this Agreement.
10. Severability and Governing Law. If any single section or clause of this Agreement
should be found unenforceable, it shall be severed and the remaining sections and clauses
shall be enforced in accordance with the intent of this Agreement. Texas law shall
govern the validity and interpretation of this Agreement.
11. Waiver or Breach. The James Parties, Beste and Plaintiffs agree that one Ol" more waivers
or breaches of any covenant, tenn, or provision of this Agreement by any party shall not
be construed as a waiver of a subsequent breach of the same covenant, term, or provision,
or as a waiver or breacb. of any other covenant, term, or provision.
12. Entire Agreement. This Agreement, including the exhibits hereto, contains the entire
understanding between the James Parties, Beste and Plaintiffs and supersedes all prior
agreements and understandings, oral or written, relating to the subject matter of this
Agreement. The James Parties, Beste and Plaintiffs expressly acknowledge and agree
that no provisions, representations, or warranties whatsoever were made, express or
implied, other than those contained iu this Agreement and that they are not relyjng on any
statement o1· communication from the other patty other than those expressly contained in
this Agreement in deciding to execute this Agreement. This Agreement shall not be
modified. amended, or terminated \lllless such modification, amendment, or termination is
executed in writing and signed by authorized l-epresentatives of the affected parties. The
Jan1es Parties, Beste arul Plaintiffs hereby waive their right to make future oral
agreements covering the same subject as this Agreement.
13. Construction. The language of all parts of this Agreement shall in all cases be construed
as a whole, accorcling to its fair meaning, and not strictly for or against either the James
Parties, Beste or Plaintiffs. The James Parties, Beste and Plaintiffs agree that the waivers,
releases, relinquishments and disavowals herein granted shall be with respect to claims,
interests, rights, remedies and causes of action known or unknown, matured or
unmatured, contingent or direct, existing or hereafter arisjng. The James Parties, Beste
and Plaintiffs acknowledge (after :full consideration of the consequences and after being
:fu.lly advised in the premises) that the waiver and relinquishment of their respective
claims contained in this Agreement is full and complete, whether or not the factual basis
for their respective clab:ns or defenses are currently known to them.
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2028
14. Other Acknowledgments. Plaintiffs, the Jatnes Parties and Beste, and each of them,
hereby represent and certify that they (1) have bad an oppOliunity to read aU of this
Agreement; (2) have been given a fair opportunity to, and have been advised to, discuss
and negotiate the terms of this Agreement by and through their legal counsel~ (3) have
been given a reasonable time to consider the Agreement; (4) understand the provisions of
this Agreement; (5) have bad ample opportunity to seek and have received advice from an
attorney or other advisors regarwng this Agreement or have otherwise waived their right
to do so; (6) have determined that it is in their best interest to enter h1to this Agreement;
(7) have not been influen.c.ed. to sign this Agreement by a.ny statement or representation
by the other party or its legal counsel or other representative not contained in this
Agreement; (8) have had sufficient time to investigate the existence of the claims and
other rights hereby released and have satisfied themselves with respect to the same based
upon their investigation and the advice of counsel, (9) are fully authorized to execute this
Agreement in the capacities in which it is executed and (I 0) enter jnto this Agreement
knowingly and voluntarily without coercion, duress, or fraud.
15. Valid Consideration. Plajntiffs, the James Parties and Beste agree that this Agreement is
supported by good, valuable, and sufficient consideration.
16. Change of Facts. Plaintiffs, 1hc James Parties and Beste understand and agree tl1at the
facts in respect of which this Agreement is made may hereafter prove to be other lilan, or
of different form than, the facts now known by either of them or believed by either of
them to be true as set forth in this Agreement. Plaint:i.ffi'i, the James Parties and Beste
expressly accept and assume the risk of the facts proving to be so different, and each of
them agrees that all of the terms of this Agreement shall be, in all respects, effective and
binding, and not subject to termination or rescission by either of them due to any such
difference in facts.
17. Multiple Countexparts. Plaintiffs, the James Parties and Beste agree that this Agreement
may be signed in multiple counterparts, each of which shall be deemed an original for all
purposes.
Plaintiffs the James Parties and Beste have executed this Agre~?ment on the following
date
Remainder of this Page Intention:d1y Left Blank
-7-
2029
Eduardo S. Espinosa in s capacity as Receiver of
Retirement Value, LLC and on behalf of Retirement
Value, LLC
TJIESTATE OF TEXAS §
§
COUNTY OF DALLA$ §
BEFORE :tviE, the undersigned authodty, on this day p~onally appew:ed Eduardo S.
Espinosa known to me to be the person whose na.-rne is subscribed to the foregoing "Settlement
Agreement and Release of all Claims" and acknowledged to me that he executed same for the
purposes and consioerations therein expressed and in the capacity or capactties indicated.
11,r ``~R MY HAND AND · SEAL OF
OFFICE this JZ t1;i day of
-3·
2030
THE STATE OF TEXAS §
§
COUNTY OFTRAVIS §
BEFORE ME, the undersigned authority, on this day personally appeared Donald Taylor
known to me to be the person whose name is subscribed to tlle foregoing "Settlement Agreement
and Release of all Claims'' and acknowledged to me that he executed sam~ for the puxposes and
considerations therein expressed and in the capacity or capacities indicated.
. )GIVEN UNDER MY HAND AND SEAL OF OFFICE tbis _d.) 1~ay of
flfr 1 -· 2013.
2031
oate:d.tw; U, £0U ``.~lbL-
of'Retlrement Value, LLC
TflESTATEOFTEXAS §
§
COUNTY OF HARIUS §
BEFORE ME, the uoder.;igoed anthority} on this .those: name Is subscribed to the foregoing "Seitleroent
Agreement apd Rdense of all Claims" and aol'..nowledged to mo that she executed &amc for the
purposes and considerations therein expressed and in the capa.oity or capacities indicf!t.OO.
A ylVEN
< UNDER MY HAND AND SEAL.. OF OFFICE this cJ2nd day of
~2013.
UNDASM1TH
NoL:IJV Public
STATE OF TEXAS
M~ eomm. EXP. 10·28·15
• 10-
2032
Date: 'j- JJ..- J..otJ
Jack Hohengarten
Assistant Attorney General
On behaffofthe State ofTexas
THE STATE OF TEXAS §
§
COUNTY OF TRAVIS §
BEFORE. ME. the undersigned authority, ·on
this day personally .appeared ·Jack
Hohengarten known to me to be the person whose name is subscribed to the foregoing
"Settlement Agreement and Release of all Claims•• and acknowledged to me that she executed
same for the purpos~ and considerations therein expressed and in the capacity or capacities
indicated,
() ,...., • GAVEN UNDER MY HAND AND SEAL OF OFFICE this ~ day of
~-2013.
P.@4/
-ll-
2033
Date:
J arne dement Services. LLC
By: dJames
Its: anagjng Member
TIIE STATE OF CALlFORNIA§
§
COUNTY OF CONTRA COSTA §
BEFORE 'ME. the undersigned authority, on this day personally appeat·ed Ronald James,
the Managing Member of James Settlement Services, LLC, known to me to be the person whose
name is subscnoed to the foregoing ..Settlement Agreement and Release of all Claims" and
acknowledged to me that he executed same for the purposes and considerations therein ex'P.ressed
and in the capacity or capacities indicated.
OJVEN UNDER MY HAND AND SEAL OF OFFICE this } 8" day of
Af``k 2o13.
KAZIE 1<. AFSARI
Comm, #1903
Notary Pub/Jc C .175
Contra C , • i!llfomla ;:;
Com osta Count)' ~
rn.&p/resSep6, 20!4
.. . . . .... . .....
- !2-
2034
Date:~ Ljj_;f- dJ) / J
Rlsames. individually
§
THE STATE OF CALIFORNIA
§
COUNTYOFCONTRACOSTA §
BEFORE ME, the undersigned authority, on this day personally appeared Ronald James,
known to me to be the person whose name is subscribed to the foregoing "Settlement Ag.reen1ent
and Release of alL Claims" and acknowledged to me that he executed same for the purposes and
considerations therein expressed and in the capacity or capacities indicated.
GIVEN UNDER l\fY HAND AND SEAL OF OFFICE this lX_ day of
A'P~i L... 2013.
KAZlE K. AFS~
C.omm. M\903)75 . ~
Notary PubHc. CahfotOla n
contUI Cost<"~ County t
comm.ExplresSep6,20\4 _j"
- l3-
2035
Date:
~> nald Ja
THE STATE OF CALIFORNIA§
§
COUNTY OF CONTRA COSTA §
BEFORE ME, the undersigned authority, on this day personally appeared Donald James
known to me to be the person whose name is subscribed to the foregoing "Settlement Agreement
aod Release of aU Claims" and acknowledged to me that he executed same for the purposes and
considerations therein expressed and in the capacity or capacities indicated.
GIVEN UNDER MY HAND AND SEAL OF. OFFICE this J..x_ day of
A f?R_r L. 2013.
AAZIE 1<. AFSARI
~ ~ K. 4/t.i---.,
cornm. 1:1903175 Notary Public, the State of ('..alifomia
Notary Public. California n
Contra Costa Covnty
comm. Expru~s.Se!!' 6, 20\4
-14 -
2036
··-----·- ... .... .... ....... .... . .. ........ .
~ ··
I
H.
Date: ~
~lBeste
TBESTATEOFNEWMEXlCO §
§
COUNTY OF SANTA FE §
BEFORE ME. the undersigned authority. on this day personally appeared Michael Beste
known ro me to be the person whose name is subscribed to the foregoing "Settlement Agreement
and Release of all Claims'$ and aclmowledged to me that he executed same f~r the purposes and
considerations therein eJ...'Pressed and in the capacity or capacities indicated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 17--rf.l day of
/kvL 2013.
I
I
II
·t
t
I
-15-
2037