Clayton Mountain, LLC Clayton Mountain Resort, LLC Independent Subcontractors, LLC Premium Sandstone Group, LLC Premium Sandstone Supply, LLC Ramrock Holdings, LLC Sundance Tiny Homes, LLC Clayton Mountain Construction, LLC Arenisca Holdings, LLC Clayton Mountain Group, LLC Clayton Mountain Holdings, LLC Clayton Mountain Management, LLC Discount Stone, LLC Pastoraska Holdings LLC 7R Club, LLC Sundance Club Food and Beverage, LLC And Sundance Club Hospitality, LLC v. Suzann Ruff ( 2021 )

Opinion filed August 5, 2021
In The
Eleventh Court of Appeals
__________
No. 11-20-00034-CV
__________
CLAYTON MOUNTAIN, LLC; CLAYTON MOUNTAIN
RESORT, LLC; INDEPENDENT SUBCONTRACTORS, LLC;
PREMIUM SANDSTONE GROUP, LLC; PREMIUM
SANDSTONE SUPPLY, LLC; RAMROCK HOLDINGS, LLC;
SUNDANCE TINY HOMES, LLC; CLAYTON MOUNTAIN
CONSTRUCTION, LLC; ARENISCA HOLDINGS, LLC;
CLAYTON MOUNTAIN GROUP, LLC; CLAYTON MOUNTAIN
HOLDINGS, LLC; CLAYTON MOUNTAIN
MANAGEMENT, LLC; DISCOUNT STONE, LLC;
PASTORASKA HOLDINGS LLC; 7R CLUB, LLC; SUNDANCE
CLUB FOOD AND BEVERAGE, LLC; AND SUNDANCE CLUB
HOSPITALITY, LLC, Appellants
V.
SUZANN RUFF, Appellee
On Appeal from the 29th District Court
Palo Pinto County, Texas
Trial Court Cause Nos. C46164-3 & C46164-4
MEMORANDUM OPINION
After an arbitration panel awarded Appellee Suzann Ruff $49,000,000 in
actual damages on her tort claims against her son, Michael Ruff,1 Suzann sued,
among other defendants, Appellants Clayton Mountain, LLC; Clayton Mountain
Resort, LLC; Independent Subcontractors, LLC; Premium Sandstone Group, LLC;
Premium Sandstone Supply, LLC; Ramrock Holdings, LLC; Sundance Tiny Homes,
LLC; Clayton Mountain Construction, LLC; Arenisca Holdings, LLC; Clayton
Mountain Group, LLC; Clayton Mountain Holdings, LLC; Clayton Mountain
Management, LLC; Discount Stone, LLC; Pastoraska Holdings LLC; 7R Club,
LLC; Sundance Club Food and Beverage, LLC; and Sundance Club Hospitality,
LLC.
As to Appellants, Suzann alleged in her seventh amended petition, (1) that,
based on the arbitration award, a constructive trust in her favor was imposed on any
interest that Michael has, or had and purportedly and/or fraudulently transferred, in
Appellants; (2) that, if any Appellant was found to be Michael’s alter ego, it owed a
fiduciary duty of full and complete disclosure to Suzann and had breached that duty;
(3) that Appellants had knowingly participated in Michael’s breaches of fiduciary
duty; and (4) that, if any Appellant was not found to be Michael’s alter ego, it had
“conspired and [is] continuing to conspire” with Michael “to commit the torts
found[] to have been committed” by Michael in the arbitration award and in
Michael’s “continuing breaches of fiduciary duty.” Suzann also requested that, if
any Appellant was found to be Michael’s alter ego, it be required to provide an
accounting as to its participation in the marketing and sale of Suzann’s property and
the disposition of funds received from the sales.
1
Because several individuals involved in this litigation have the same surname, we will refer to
those individuals by first name for purposes of clarity.
2
Contending that Suzann’s claims were based on, related to, or in response to
their exercise of the right of association, Appellants filed four motions to dismiss
pursuant to the Texas Citizens Participation Act, TEX. CIV. PRAC. & REM. CODE
ANN. §§ 27.001–.011 (West 2015) (the TCPA).2 The trial court denied the motions
to dismiss, determined that the motions to dismiss were frivolous and solely intended
to delay, and awarded Suzann attorney’s fees.
In their first two issues, Appellants assert that the trial court erred when it
denied the motions to dismiss because (1) they established by a preponderance of
the evidence that the TCPA applies to Suzann’s claims and (2) Suzann failed to
present clear and specific evidence to establish a prima facie case for each essential
element of her claims. In their third issue, Appellants argue that the trial court erred
when it awarded attorney’s fees to Suzann. We affirm the trial court’s denial of
Appellants’ motions to dismiss. However, because the motions to dismiss were
neither frivolous nor intended solely to delay, we reverse the trial court’s award of
attorney’s fees to Suzann.
Background
In 2011, Suzann sued Michael in probate court in Dallas County. Michael
filed a demand for arbitration with the American Arbitration Association, and the
litigation in the probate court was stayed. On October 21, 2014, while the arbitration
2
The Texas legislature amended the TCPA effective September 1, 2019. See Act of May 17, 2019,
86th Leg., R.S., ch. 378, §§ 1–9, 12 (H.B. 2730) (codified at TEX. CIV. PRAC. & REM. CODE ANN.
§§ 27.001, .003, .005–.007, .0075, .009–.010). Because the claims against Appellants were filed prior to
September 1, 2019, the law in effect before September 1 applies. See id. §§ 11–12; see also Clayton
Mountain Dev., LLC v. Ruff, No. 11-20-00114-CV, slip op. at 2 n.2 (Tex. App.—Eastland Aug. 5, 2021, no
pet. h.) (mem. op.). For convenience, all citations to the TCPA in this opinion are to the version of the
statute prior to September 1, 2019. See Act of May 21, 2011, 82d Leg., R.S., ch. 341, § 2, 2011 Tex. Gen.
Laws 961–64, amended by Act of May 24, 2013, 83d Leg., R.S., ch. 1042, 2013 Tex. Gen. Laws 2499–
2500.
3
was pending, Suzann filed this case in Palo Pinto County against Michael and five
business entities, none of which are parties to this appeal.
On December 7, 2017, the arbitration panel issued a decision in which it
found that Michael committed numerous torts against Suzann and awarded Suzann
actual damages of $49,000,000 plus interest, attorney’s fees, and expenses. In
Suzann’s favor, the arbitration panel also imposed a constructive trust on any real
property held or owned by Michael that had belonged to Suzann or had originated
from property owned by Suzann and on Michael’s interest in any entity that he
formed or in which he invested using Suzann’s property. The arbitration panel listed
specific entities and properties that were subject to the constructive trust, including
“4,683 acre real property asset located in Palo Pinto County, Texas.” The probate
court confirmed the arbitration award, and Michael appealed the judgment to the
Dallas Court of Appeals. See Ruff v. Ruff, No. 05-18-00326-CV, 2020 WL 4592794,
at *15 (Tex. App.—Dallas Aug. 11, 2020, pet. denied) (mem. op.).
On October 3, 2018, Suzann filed her fifth amended petition in which she first
named Appellants as defendants. Suzann filed her sixth amended petition on
February 14, 2019. In the sixth amended petition, Suzann asserted causes of action
against Appellants for (1) imposition of a constructive trust, (2) breach of fiduciary
duty, (3) knowing participation in breach of fiduciary duty, (4) conspiracy, and
(5) fraud. Suzann also requested that Appellants be required to account for their
participation in the marketing and sale of her property and the disposition of any
funds from those sales. Suzann served Appellants with both the fifth and sixth
amended petitions in August 2019.3
3
The record does not reflect the date on which Ramrock Holdings, Sundance Tiny Homes, Arenisca
Holdings, Clayton Mountain Holdings, or Pastoraska Holdings were served. However, Ramrock Holdings
and Sundance Tiny Homes filed their original answer on September 9, 2019, and Arenisca Holdings,
Clayton Mountain Holdings, and Pastoraska Holdings filed their original answer on September 23, 2019.
4
Clayton Mountain and Clayton Mountain Resort filed a TCPA motion to
dismiss on August 27, 2019, and asserted that Suzann’s claims were based on,
related to, or in response to their exercise of the right of association. Clayton
Mountain and Clayton Mountain Resort specifically argued that the TCPA applied
to Suzann’s claims because (1) communications “necessarily must have occurred”
for Suzann to prove her pleaded causes of action and (2) the communications
occurred in relation to a common interest because “the individual conspirators
allegedly made the complained-of ‘communications’ between themselves to further
the sale, marketing, and operational management of the Palo Pinto property at
Clayton Mountain to [Suzann’s] exclusion.”
Along with their answers, Appellants filed special exceptions to Suzann’s
sixth amended petition. The trial court ruled on the special exceptions filed by
Clayton Mountain, Clayton Mountain Resort, 4 Independent Subcontractors,
Premium Sandstone Group, Premium Sandstone Supply, Ramrock Holdings, and
Sundance Tiny Homes. The trial court denied the special exceptions as to Suzann’s
causes of action for knowing participation in breach of fiduciary duty but granted
the special exceptions as to Suzann’s remaining causes of action and ordered Suzann
to replead. Suzann filed her seventh amended petition on October 17, 2019, in which
she dropped her claim for fraud and made additional allegations in her other causes
of action. 5
4
The record reflects that “Clayton Mountain Resort, Inc.” filed special exceptions, rather than
“Clayton Mountain Resort, LLC.” However, no entity named “Clayton Mountain Resort, Inc.” is a party
to this litigation, and neither party asserts that “Clayton Mountain Resort, LLC” is not the party that filed
special exceptions.
5
On November 5, 2019, Appellants moved to strike the seventh amended petition on the ground
that Suzann had “failed to address or meet the special exceptions” granted by the trial court. On January 7,
2020, the trial court denied Appellants’ motion to strike.
5
Independent Subcontractors, Premium Sandstone Group, Premium Sandstone
Supply, Ramrock Holdings, and Sundance Tiny Homes filed a TCPA motion to
dismiss on October 18, 2019; Clayton Mountain Construction filed a TCPA motion
to dismiss on October 25, 2019; and Arenisca Holdings, Clayton Mountain Group,
Clayton Mountain Holdings, Clayton Mountain Management, Discount Stone,
Pastoraska Holdings, 7R Club, Sundance Club Food and Beverage, and Sundance
Club Hospitality filed a TCPA motion to dismiss on October 28, 2019. These
motions to dismiss were substantively identical to Clayton Mountain and Clayton
Mountain Resort’s motion to dismiss.
Suzann requested limited discovery related to the motions to dismiss. The
trial court allowed both Suzann and Appellants to serve written discovery and to take
depositions. The parties filed this discovery in support of and in opposition to the
motions to dismiss.
In her responses to the motions to dismiss, Suzann contended that her claims
were based on actions, not communications, and that Appellants had failed to
produce evidence of any communications or to identify a communication that was
referenced in the seventh amended petition. Suzann specifically asserted that
Appellants were pieces of paper created by Michael to help hide and move Suzann’s
assets, that Appellants are Michael and Michael is Appellants, and that no
communications were involved because all Michael had to do was “think about”
what he wanted Appellants to do. Suzann contended that Appellants also failed to
show a “common interest” under the statute. Alternatively, Suzann argued that, even
if the TCPA applied to her claims, she had met her burden to show by clear and
specific evidence a prima facie case of each essential element of her claims. Finally,
Suzann asserted that the motions to dismiss were both frivolous and solely intended
to delay and requested an award of attorney’s fees.
6
On January 16, 2020, the trial court denied Clayton Mountain and Clayton
Mountain Resort’s motion to dismiss, severed Suzann’s claims against Clayton
Mountain and Clayton Mountain Resort into cause number C46164-3, and awarded
Suzann attorney’s fees in the amount of $8,178. On February 18, 2020, the trial
court denied the other three motions to dismiss; severed Suzann’s claims against
Independent Subcontractors, Premium Sandstone Group, Premium Sandstone
Supply, Ramrock Holdings, Sundance Tiny Homes, Clayton Mountain
Construction, Arenisca Holdings, Clayton Mountain Holdings, Clayton Mountain
Management, Discount Stone, Pastoraska Holdings, 7R Club, Sundance Food and
Beverage, and Sundance Club Hospitality into cause number C46164-4; and
awarded Suzann attorney’s fees in the amount of $12,789 as well as attorney’s fees
on appeal. 6
At Appellants’ request, the trial court entered findings of fact and conclusions
of law. As relevant to this appeal, the trial court found (1) that Appellants presented
no evidence of a communication; (2) that, as to Appellants, there were no
communications identified or unambiguously implied in the sixth or seventh
amended petitions; (3) that Suzann’s claims against Appellants in the sixth and
seventh amended petitions were not based on, related to, or in response to any
communication; (4) that Appellants failed to present evidence of a common interest;
and (5) that the motions to dismiss were filed solely to delay the proceedings. The
trial court concluded that Appellants had failed to establish that the TCPA applies to
6
We note that the trial court did not expressly condition the award of appellate attorney’s fees on
the success of the appeal. “Because unconditional appellate fees are improper, such a condition is
necessarily implied.” La Ventana Ranch Owners’ Ass’n, Inc. v. Davis, 363 S.W.3d 632, 652 n.17 (Tex.
App.—Austin 2011, pet. denied); see also Ruff v. Ruff, No. 11-20-00122-CV, 2021 WL 388707, at *3 n.4
(Tex. App.—Eastland Feb. 4, 2021, pet. filed) (mem. op.).
7
Suzann’s claims and that the motions to dismiss were both frivolous and filed solely
to delay.
Appellants appealed from the trial court’s denial of the motions to dismiss.
We consolidated the appeals into this proceeding.
Analysis
In their first two issues, Appellants assert that the trial court erred when it
denied the motions to dismiss because (1) they established by a preponderance of
the evidence that the TCPA applies to Suzann’s claims and (2) Suzann failed to
present clear and specific evidence to establish a prima facie case for each essential
element of her claims.
The TCPA protects citizens from retaliatory lawsuits meant to intimidate or
silence them on matters of public concern. Dallas Morning News, Inc. v. Hall, 579
S.W.3d 370, 376 (Tex. 2019); In re Lipsky, 460 S.W.3d 579, 584 (Tex. 2015) (orig.
proceeding). “The TCPA’s purpose is to safeguard ‘the constitutional rights of
persons to petition, speak freely, associate freely, and otherwise participate in
government to the maximum extent permitted by law’” and, at the same time, protect
the rights of a person “to file meritorious lawsuits for demonstrable injury.” Kinder
Morgan SACROC, LP v. Scurry Cty., 622 S.W.3d 835, 847 (Tex. 2021) (quoting
CIV. PRAC. & REM. § 27.002). We construe the TCPA “liberally to effectuate its
purpose and intent fully.” CIV. PRAC. & REM. § 27.011(b); see also State ex rel.
Best v. Harper, 562 S.W.3d 1, 11 (Tex. 2018).
The TCPA “provides a three-step process for the dismissal of a ‘legal action’
to which it applies.” Montelongo v. Abrea, 622 S.W.3d 290, 296 (Tex. 2021). The
movant has the initial burden to demonstrate by a preponderance of the evidence that
the legal action is based on, related to, or in response to the movant’s exercise of the
right of free speech, petition, or association. CIV. PRAC. & REM. § 27.005(b);
8
Montelongo, 622 S.W.3d at 296. If the movant makes this showing, the burden shifts
to the nonmovant to establish by clear and specific evidence a prima facie case for
each essential element of the claim in question. CIV. PRAC. & REM. § 27.005(c);
Montelongo, 622 S.W.3d at 296. If the nonmovant satisfies that burden, the trial
court still must dismiss the legal action if the movant “establishes by a
preponderance of the evidence each essential element of a valid defense to the
nonmovant’s claim.” CIV. PRAC. & REM. § 27.005(d); see also Montelongo, 622
S.W.3d at 296.
We review de novo the question of whether the parties satisfied their
respective burdens. Hall, 579 S.W.3d at 377. When we determine whether the
defendant carried its initial burden to establish that the TCPA applies to the
plaintiff’s claims, we consider the pleadings and affidavits that state the facts on
which liability is based. CIV. PRAC. & REM. § 27.006(a); Montelongo, 622 S.W.3d
at 296. A legal action’s basis is determined by the plaintiff’s allegations rather than
by the defendant’s admissions or denials. Hersh v. Tatum, 526 S.W.3d 462, 467
(Tex. 2017). The plaintiff’s petition is “the ‘best and all-sufficient evidence of the
nature of the action.’” Id. (quoting Stockyards Nat’l Bank v. Maples, 95 S.W.2d
1300, 1302 (Tex. 1936)).
Appellants moved for dismissal on the ground that Suzann’s claims were
based on, related to, or in response to Appellants’ exercise of the right of association.
The TCPA defines the “[e]xercise of the right of association” as “a communication
between individuals who join together to collectively express, promote, pursue, or
defend common interests.” CIV. PRAC. & REM. § 27.001(2). The trial court found
that Appellants failed to establish either a communication or a common interest.
“In order for a movant to invoke the TCPA, there must first be a
communication.” Krasnicki v. Tactical Entm’t, LLC, 583 S.W.3d 279, 283 (Tex.
9
App.—Dallas 2019, pet. denied)). A “communication” includes “the making or
submitting of a statement or document in any form or medium, including oral, visual,
written, audiovisual, or electronic.” CIV. PRAC. & REM. § 27.001(1); see also
Adams v. Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex. 2018)
(recognizing that under the TCPA, “[a]most every imaginable form of
communication, in any medium, is covered”). “When a claim does not allege a
communication, and is instead based on a defendant’s conduct, the TCPA is not
implicated.” Davis v. Gulf Coast Auth., No. 11-19-00309-CV, 2020 WL 5491201,
at *8 (Tex. App.—Eastland Sept. 11, 2020, no pet.) (mem. op.) (quoting Pacheco v.
Rodriguez, 600 S.W.3d 401, 410 (Tex. App.—El Paso 2020, no pet.)); see also
Smith v. Crestview NuV, LLC, 565 S.W.3d 793, 798–99 (Tex. App.—Fort Worth
2018, pet. denied) (holding that the plaintiff’s claims that did not allege a
communication as defined by the TCPA were not subject to dismissal under the
statute).
The vast majority of Suzann’s factual allegations in both the sixth and seventh
amended petitions pertain to Michael’s conduct that was the subject of the arbitration
proceeding. These allegations allude to communications between Michael and
Suzann and between Michael and other individuals. However, Suzann did not
specifically allege any communications between Michael and Appellants. Rather,
as to Appellants (as well as defendants who are not part of this appeal), Suzann
pleaded all of her causes of action collectively and did not allege any specific
conduct by any defendant that purportedly injured her.
Suzann cannot circumvent the application of the TCPA by artful pleading.
See Smith, 565 S.W.3d at 798. However, we also cannot blindly accept attempts by
Appellants to characterize Suzann’s claims as implicating protected expression. See
White Nile Software, Inc. v. Carrington, Coleman, Sloman & Blumenthal, LLP,
10
No 05-19-00780-CV, 2020 WL 5104966, at *5 (Tex. App.—Dallas Aug. 31, 2020,
pet. denied) (mem. op.). Rather, the basis of the legal action must be determined
based on Suzann’s allegations. See Hersh, 526 S.W.3d at 467. We, therefore, look
to the pleadings and the supporting and opposing evidence to determine the true
nature of the dispute and whether any communications are implicated. See CIV.
PRAC. & REM. § 27.006(a); Montelongo, 2021 WL 1705210, at *3.
In her seventh amended petition,7 Suzann first sought to enforce the
constructive trust imposed in the arbitration award. 8 Specifically, Suzann asserted
that a constructive trust was imposed on “all of the interests that [Michael] has, or
had and purportedly and/or fraudulently transferred, in any of the other Defendant
entities.” Suzann also alleged that “if there are other entities related to the
development and marketing of [Suzann’s] Palo Pinto Property, that were acquired
with or investments made with funds obtained in whole or in part from [Suzann],
then [Suzann] is also entitled to constructive [trust] in [Michael’s] interest, in any
capacity, in those entities.” Because Suzann’s request that the trial court enforce the
constructive trust imposed by the arbitration panel is not based on or related to any
communications involving Appellants, it is not subject to the TCPA. See Davis,
2020 WL 5491201 at *8.
7
In her response to the motions to dismiss, Suzann represented that the constructive trust claim was
asserted only against Michael, the claims for breach of fiduciary duty and accounting applied to Appellants
only if they were found to be the alter egos of Michael, and that only the conspiracy and knowing
participation in breach of fiduciary duties were asserted against Appellants. However, Suzann asserted all
her claims collectively against Appellants and other defendants. Therefore, we will address all of Suzann’s
claims.
8
Suzann argued in her responses to the motions to dismiss that she also seeks to impose a
constructive trust under the common law. However, in the seventh amended petition, Suzann referenced
only the constructive trust imposed by the arbitration award and prays only that the trial court enforce the
constructive trust imposed by the arbitration award.
11
Suzann’s claims against Appellants for breach of fiduciary duty are based on
the allegations (1) that Michael owes a continuing duty of full and complete
disclosure to Suzann and (2) that, if Appellants are found to be Michael’s alter egos,
they owe the same duties as Michael. Therefore, Suzann’s claims for breach of
fiduciary duty against Appellants are based on the alleged failure to disclose or
failure to communicate and are not subject to the TCPA. See White Nile, 2020 WL
5104966, at *6; see also SSCP Mgmt. Inc. v. Sutherland/Palumbo, LLC, No. 02-19-
00254-CV, 2020 WL 7640150, at *3 (Tex. App.—Fort Worth Dec. 23, 2020, pet.
filed) (mem. op.).
Suzann also alleged that Appellants knowingly participated in Michael’s
“breaches of fiduciary duty and continue to do so.” “To establish a claim for
knowing participation in a breach of fiduciary duty, a plaintiff must assert: (1) the
existence of a fiduciary relationship; (2) that the third party knew of the fiduciary
relationship; and (3) that the third party was aware that it was participating in the
breach of that fiduciary relationship.” Lara v. Streamline Ins. Servs., LLC, No. 03-
19-00474-CV, 2020 WL 7776080, at *6 (Tex. App.—Austin Dec. 31, 2020, no pet.)
(mem. op.) (quoting Meadows v. Hartford Life Ins., 492 F.3d 634, 639 (5th Cir.
2007)). The only specific fiduciary duty that Suzann alleges that Michael owed, or
continues to owe, is the duty of full disclosure. Therefore, as pleaded, Suzann’s
claims for knowing participation in breach of fiduciary duty are based solely on
Appellants’ participation in Michael’s alleged breach of a duty to disclose. As with
Suzann’s claims for breach of fiduciary duty, Suzann’s claims against Appellants
for knowing participation in a breach of fiduciary duty are based on a failure to
communicate and are not subject to the TCPA. See White Nile, 2020 WL 5104966,
at *6; see also SSCP Mgmt., 2020 WL 7640150, at *3.
12
In the alternative, Suzann alleged that, if any Appellant is not found to be
Michael’s alter ego, it conspired with and is continuing to conspire with Michael “to
commit the torts found[] to have been committed by [Michael] in the [arbitration
award], and with his continuing breaches of fiduciary duty.” “[C]ivil conspiracy is
a theory of vicarious liability and not an independent tort.” Agar Corp., Inc. v.
Electro Circuits Int’l, LLC, 580 S.W.3d 136, 142 (Tex. 2019). Because civil
conspiracy is derivative, it is “connected to the underlying tort and survives or fails
alongside it.” Id. at 141. We, therefore, must analyze whether the TCPA applies to
Suzann’s conspiracy claim in connection with the alleged underlying tort. See
Seibert v. Bauserman-Trammel, No. 03-19-00360-CV, 2020 WL 3887969, at *2
(Tex. App.—Austin July 10, 2020, no pet.) (mem. op.); Cunningham v. Waymire,
612 S.W.3d 47, 68 (Tex. App. —Houston [14th Dist.] 2019, no pet.).
Suzann has asserted two different underlying torts to support the alleged civil
conspiracy. Suzann first contends that Appellants conspired with Michael to commit
“continuing breaches of fiduciary duty.” Again, in her claim for breach of fiduciary
duty, Suzann has alleged only that Michael has a continuing duty to disclose and has
breached that duty. Therefore, to the extent that Suzann’s conspiracy claim is
premised on her breach-of-fiduciary-duty claim, the conspiracy claim is based on a
failure to communicate and does not fall within the scope of the TCPA. See White
Nile, 2020 WL 5104966, at *6 see also SSCP Mgmt., 2020 WL 7640150, at *3.
Suzann also alleged that Appellants conspired with Michael to commit the
torts that Michael was found to have committed in the arbitration award. Those torts
included breach of fiduciary duty, fraud, misapplication of fiduciary property,
conversion, and negligence based on Michael’s misappropriation of Suzann’s
property. In the factual allegations set out in the seventh amended petition, Suzann
alleged that Appellants “conspired” with Michael to “hide” Suzann’s assets and that
13
Michael created “various entities,” presumably including Appellants, to further his
scheme to hide and launder Suzann’s assets.
Suzann alleges that Appellants are the alter egos of Michael and, therefore,
that it was not necessary for Michael to communicate with Appellants. However,
Suzann’s conspiracy claim is expressly based on the condition that Appellants are
not found to be Michael’s alter ego. See Hersh, 526 S.W.3d at 467 (holding that the
basis of a legal action is determined by the plaintiff’s allegations). Therefore, given
the broad statutory definition of “communication,” any conspiracy to transfer
misappropriated property from Michael to an Appellant would necessarily involve a
communication. See Bandin v. Free & Sovereign State of Veracruz de Ignacio de la
Llave, 590 S.W.3d 647, 651 n.9 (Tex. App.—Houston [14th Dist.] 2019, pet. denied)
(holding that, because an alleged conspiracy “inherently requires a meeting of the
minds on the object or course of action,” it necessarily involves communication).
On this record, the trial court erred when it determined that Appellants failed to
establish by a preponderance of the evidence that any conspiracy between
Appellants and Michael to transfer or hide Suzann’s assets was based on or related
to communications between Michael and Appellants. See Hersh, 526 S.W.3d at 467
(“When it is clear from the plaintiff’s pleadings that the action is covered by the
[TCPA], the defendant need show no more.”).
Finally, Suzann’s live pleading at the time that Appellants filed the motions
to dismiss was the sixth amended petition in which Suzann also alleged a claim for
fraud against Appellants. Suzann nonsuited her fraud claims against Appellants
when she filed the seventh amended petition. See Abercrombie v. Angela Hightower
Enters. Inc., No. 07-20-00139-CV, 2021 WL 1538251, at *1 (Tex. App.—Amarillo
Apr. 19, 2021, no pet. h.) (mem. op.) (noting that a nonsuit of three causes of action
occurred when the plaintiff amended its original petition to no longer assert those
14
causes of action against the TCPA movant). However, a nonsuit does not prejudice
the right of the adverse party to be heard on a pending claim for affirmative relief.
Morath v. Lewis, 601 S.W.3d 785, 787 (Tex. 2020) (per curiam); Gaskamp v. WSP
USA, Inc, 596 S.W.3d 457, 468 (Tex. App.—Houston [1st Dist.] 2020, pet. dism’d)
(en banc). “A motion to dismiss that affords more relief than a nonsuit provides
constitutes a claim for affirmative relief, which survives nonsuit.” Gaskamp, 596
S.W.3d at 468–69; see also CTL/Thompson Tex., LLC v. Starwood Homeowner’s
Ass’n, Inc., 390 S.W.3d 299, 300 (Tex. 2013) (per curiam) (“A motion for sanctions
is a claim for affirmative relief that survives nonsuit if the nonsuit would defeat the
purpose of the sanctions.”). A TCPA motion to dismiss survives a nonsuit because,
unlike a nonsuit, the TCPA movant might also be entitled to a dismissal with
prejudice, attorney’s fees, and sanctions. Gaskamp, 596 S.W.3d at 468; see also
CIV. PRAC. & REM. § 27.009(a).
In their motions to dismiss, Appellants requested dismissal of Suzann’s fraud
cause of action as well as the affirmative relief of “costs, reasonable attorney’s fees,
and other expenses incurred in defending against” Suzann’s claims. Therefore,
Appellants’ motions to dismiss Suzann’s fraud cause of action survived Suzann’s
nonsuit of the claim in her seventh amended petition. See Gaskamp, 596 S.W.3d at
468–69; Walker v. Hartman, 516 S.W.3d 71, 80 (Tex. App.—Beaumont 2017, pet.
denied).
In her fraud claim, Suzann specifically alleged that Michael, “in conspiracy
with and through other Defendants,” fraudulently conveyed property in Palo Pinto
County “in an attempt to hide, conceal, and tortiously interfere” with Suzann’s rights
and interests. As explained above, any transfer of property between Michael and
one of Appellants would necessarily involve a communication between Michael and
that Appellant. Therefore, the trial court erred to the extent that it determined that
15
Appellants failed to establish that Suzann’s fraud claim was based on or related to a
communication between Appellants and Michael.
After reviewing de novo Suzann’s pleadings and the evidence attached to the
motions to dismiss and to Suzann’s responses, we hold (1) that the trial court
correctly determined that Suzann’s claims for breach of fiduciary duty, knowing
participation in breach of fiduciary duty, and conspiracy based on the failure to
disclose are not factually predicated on communications but (2) that, as to Suzann’s
conspiracy and fraud claims based on the transfer or misappropriation of property,
the trial court erred when it determined that Appellants presented no evidence of a
communication and that, as to Appellants, there were no communications
unambiguously implied in Suzann’s sixth or seventh amended petitions.9
We next turn to whether Appellants met their burden to prove that the
communications implicated in Suzann’s conspiracy and fraud claims based on the
alleged transfer or misappropriation of property were made in the exercise of
Appellants’ right of association. To meet this burden, Appellants were required to
prove that the communications were between individuals who joined together to
collectively express, promote, pursue, or defend common interests. CIV. PRAC. &
REM. § 27.001(2). This “common interest” “means something more than allegedly
9
Suzann also requested that any Appellant found to be the alter ego of Michael be required to
account for its “participation in the marketing and sale of [Suzann’s] property and the disposition of funds
received therefrom.” A request for an accounting “may be a particular remedy sought in conjunction with
another cause of action or it may be a suit in equity.” Yeske v. Piazza Del Arte, Inc., 513 S.W.3d 652, 675
(Tex. App.—Houston [14th Dist.] 2016, no pet.). If Suzann seeks an accounting in the form of a remedy,
we do not address it separately from the underlying cause of action. See Van Der Linden v. Khan, 535
S.W.3d 179, 203 (Tex. App.—Fort Worth 2017, pet. denied) (holding that a request for relief under the
TCPA “should be directed at the underlying legal action, not at the requested remedy”). However, if
Suzann seeks to allege a suit for an equitable accounting, she must first show the right to an accounting.
Yeske, 513 S.W.3d at 674. The only alleged basis that would support Suzann’s request for an accounting
is her breach-of-fiduciary-duty claim, which we have determined is not subject to the TCPA. See id. at 675
(“To be entitled to an accounting, a plaintiff usually must have a contractual or fiduciary relationship with
the party from which the plaintiff seeks the accounting.”).
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tortious communications between individuals in the pursuit of a private business
endeavor.” Blue Gold Energy Barstow, LLC v. Precision Frac, LLC, No. 11-19-
00238-CV, 2020 WL 1809193, at *6 (Tex. App.—Eastland Apr. 9, 2020, no pet.)
(mem. op.); see also David H. Arrington Oil & Gas Operating, LLC v. Wilshusen,
No. 11-19-00318-CV, 2020 WL 5241131, at *4 (Tex. App.—Eastland Sept. 3, 2020,
pet. denied). Rather, there must be a citizen or public component to the “common
interest” in order to constitute the “right of association” as defined by the TCPA.
Norwich v. Jack N. Mousa, Ltd., No. 11-19-00339-CV, 2020 WL 2836789, at *5
(Tex. App.—Eastland May 29, 2020, pet. denied) (mem. op.); Blue Gold Energy,
2020 WL 1809193, at *6.
Suzann’s claims against Appellants for conspiracy and fraud are factually
predicated on alleged communications by the tortfeasors about the transfer or
misappropriation of property. The only common interest alleged by these
communications was that Michael and Appellants (among other entities and
individuals) joined together to conceal the location of Suzann’s property for their
own pecuniary benefit. These communications do not relate to a matter of public or
community interest. See Blue Gold Energy, 2020 WL 1809193, at *6; see also
Pollard v. Pollard, No. 05-19-00240-CV, 2021 WL 423166, at *4 (Tex. App.—
Dallas Feb. 8, 2021, no pet.) (mem. op.) (holding that nonmovant’s allegations that
movant and others joined together to deprive nonmovant of his property did not
implicate public participation necessary for movant to establish that she was
exercising her right of association under the TCPA); Gaskamp, 596 S.W.3d at 476
(concluding that conduct and communications that “benefitted only the five alleged
tortfeasors” did not constitute the exercise of the right of association under the TCPA
where there were “no allegations that the tortfeasors ‘join[ed] together to collectively
express, promote, pursue, or defend’ any public or community interests”).
17
Accordingly, as to Suzann’s conspiracy and fraud claims based on the transfer or
misappropriation of property, the trial court did not err when it determined that
Appellants failed to establish the common interest necessary to constitute the
exercise of the right of association under the TCPA.
We hold that Appellants failed to establish that the TCPA applies to any of
Suzann’s claims. We, therefore, overrule Appellants’ first issue. Based on our
resolution of that issue, we need not consider Appellants’ second issue in which they
complain that Suzann failed to establish by clear and specific evidence a prima facie
case of each essential element of her claims. See TEX. R. APP. P. 47.1; Blue Gold
Energy, 2020 WL 1809193, at *8.
In their third issue, Appellants contend that the trial court erred when it found
that the motions to dismiss were frivolous and filed solely for purposes of delay and
when it awarded attorney’s fees to Suzann. We review the trial court’s decision to
award attorney’s fees under the TCPA for an abuse of discretion. Caliber Oil &
Gas, LLC v. Midland Visions 2000, 591 S.W.3d 226, 242 (Tex. App.—Eastland
2019, no pet.). A trial court abuses its discretion when it acts arbitrarily or
unreasonably or without regard to guiding principles. Id. at 242–43; see also
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985).
“[T]o secure an award of attorney’s fees from an opponent, the prevailing
party must prove that: (1) recovery of attorney’s fees is legally authorized, and
(2) the requested attorney’s fees are reasonable and necessary for the legal
representation, so that such an award will compensate the prevailing party generally
for its losses resulting from the litigation process.” Rohrmoos Venture v. UTSW
DVA Healthcare, LLP, 578 S.W.3d 469, 487 (Tex. 2019). Pursuant to the TCPA,
the trial court has discretion to award costs and reasonable attorney’s fees to a
nonmovant if it determines that the motion to dismiss was frivolous or solely
18
intended to delay. CIV. PRAC. & REM. § 27.009(b); Caliber, 591 S.W.3d at 243.
Here, the trial court found that Appellants’ motions to dismiss were both frivolous
and solely intended to delay and (1) as to Clayton Mountain and Clayton Mountain
Resort, awarded Suzann $8,178 for attorney’s fees in the trial court and (2) as to the
remaining Appellants, awarded Suzann $12,789 for attorney’s fees in the trial court
and additional attorney’s fees on appeal.
A motion to dismiss under the TCPA is frivolous if it has no basis in law or
fact and lacks a legal basis or legal merit. Caliber, 591 S.W.3d at 243. In their
motions to dismiss, Appellants argued that the TCPA applied because Suzann’s
claims were based on Appellants’ exercise of the right of association. As discussed
above, Appellants established that Suzann’s claims for fraud and for conspiracy
based on the alleged transfer or misappropriation of property were necessarily
premised on communications. The issue, therefore, is whether Appellants’
contention that those communications related to a “common interest” under the
TCPA had a legal basis or legal merit.
When Appellants filed the motions to dismiss, there was a split among the
courts of appeals as to whether the “common interest” necessary for the exercise of
the right of association as defined by the TCPA included a “citizen” or “public”
component. See Stallion Oilfield Servs. Ltd. v. Gravity Oilfield Servs., LLC, 592
S.W.3d 205, 222 (Tex. App.—Eastland 2019, pet. denied). Several courts of appeals
had specifically determined that communications between individuals for the
purpose of engaging in a business enterprise constituted the “exercise of the right of
association,” even if those communications involved confidential information
misappropriated from the nonmovant. See id. We have now held that the “common
interest” necessary to constitute the “exercise of the right of association” under the
TCPA requires a “citizen” or “public” component. See Norwich, 2020 WL 2836789,
19
at *5; Blue Gold Energy, 2020 WL 1809193, at *6. However, at the time that
Appellants filed their motions to dismiss, we had not addressed the unsettled law,
and Appellants had a basis in law to assert that the TCPA applied to Suzann’s claims.
See Stallion Oilfield, 592 S.W.3d at 222; see also Keane Frac, LP v. SP Silica Sales,
LLC, 608 S.W.3d 416, 433 (Tex. App.—Houston [1st Dist.] 2020, no pet.) (holding
that motion to dismiss was not frivolous based on the “unclear state of the law at the
time” that appellant filed the motion). Therefore, the trial court erred when it
determined that Appellants’ motions to dismiss were frivolous. See Grand Parkline,
LLC v. Mama Fu’s Lakeline, LLC, No. 03-19-00683-CV, 2020 WL 7050375, at *6
(Tex. App.—Austin Dec. 2, 2020, no pet.) (mem. op.)
The trial court also found that Appellants filed the motions to dismiss solely
to delay. Although Suzann argues that Appellants are simply attempting to delay
the proceedings against Michael, the disputed issue of whether Appellants are the
alter egos of Michael has not been resolved and we must determine whether the
record reflects that Appellants filed the motion with the sole intent to delay the
proceedings. See CIV. PRAC. & REM. § 27.009(b). Appellants timely filed the
TCPA motions to dismiss.10 See id. § 27.003(b) (Absent an extension on a showing
of good cause, a “motion to dismiss a legal action under this section must be filed
not later than the 60th day after the date of service of the legal action.”). And, as a
10
In Borderline Management, LLC v. Ruff, a prior appeal of the trial court’s denial of a TCPA
motion to dismiss filed in this litigation, we focused on the issue of whether the motion to dismiss was filed
timely. No. 11-19-00152-CV, 2020 WL 1061485, at *8 (Tex. App.—Eastland Mar. 5, 2020, pet. denied)
(mem. op.). Suzann named Borderline as a defendant in her second amended petition. Id. at *1. More than
a year after it was served with the second amended petition, Borderline filed a TCPA motion to dismiss.
Id. In holding that the trial court did not abuse its discretion when it found that Borderline’s motion to
dismiss was solely intended to delay, we noted (1) that Borderline had engaged in extensive discovery and
motion practice before it filed the motion to dismiss; (2) that Borderline ‘s counsel admitted that, despite
Borderline being the manager of certain limited liability companies, Michael remained in charge of
“operations” at the 7R Ranch; and (3) that the trial court found that two entities that had filed for bankruptcy
were managed by Borderline, but controlled by Michael, and noted that other courts had found that Michael
had “engaged in a pattern of delay and obstruction.” Id. at *9.
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discussed above, Appellants had a valid basis in both law and fact to seek the
dismissal of the claims against them. On this record, the trial court erred when it
found that the motions to dismiss were solely intended to delay. See id. (holding
that trial court abused its discretion when it found that TCPA motion to dismiss was
solely intended to delay when TCPA motion was filed timely and the record did not
reflect that the motion was motivated solely by delay).
We sustain Appellants’ third issue.
This Court’s Ruling
We reverse the portions of the trial court’s January 16, 2020 and February 18,
2020 orders in which it awarded attorney’s fees to Suzann and render judgment that
Suzann take nothing on her request for attorney’s fees. We otherwise affirm the trial
court’s January 16, 2020 and February 18, 2020 orders.
JOHN M. BAILEY
CHIEF JUSTICE
August 5, 2021
Panel consists of: Bailey, C.J.,
Trotter, J., and Williams, J.
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