The Kute Bar, LLC, C&G All Solutions, Inc., Trang T. Dang, Le Giang T. Tran Individually and Derivatively on Behalf of the Kute Bar, LLC, and Becky Binh Nguyen v. Fugo Tran F/K/A Anh Tran ( 2024 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-24-00119-CV
___________________________
THE KUTE BAR, LLC; C&G ALL SOLUTIONS, INC.; TRANG T. DANG; LE
GIANG T. TRAN, INDIVIDUALLY AND DERIVATIVELY ON BEHALF OF THE
KUTE BAR, LLC; AND BECKY BINH NGUYEN, Appellants
V.
FUGO TRAN F/K/A ANH TRAN, Appellee
On Appeal from the 17th District Court
Tarrant County, Texas
Trial Court No. 017-339756-23
Before Sudderth, C.J.; Kerr and Walker, JJ.
Memorandum Opinion by Justice Walker
MEMORANDUM OPINION
This is an accelerated interlocutory appeal pursuant to the Texas Citizens
Participation Act (TCPA). See Tex. Civ. Prac. & Rem. Code Ann. §§ 27.001–.011,
51.014(a)(12) (authorizing interlocutory appeal of order denying motion to dismiss
filed under TCPA Section 27.003). Appellants The Kute Bar, LLC; C&G All
Solutions, Inc.; Trang T. Dang; Le Giang T. Tran, individually and derivatively on
behalf of The Kute Bar, LLC; and Becky Binh Nguyen contend that the trial court
erred by denying their TCPA motion to dismiss Appellee Fugo Tran’s counterclaims
for breaches of contract and fiduciary duty, tortious interference, and abuse of
process. Applying the TCPA’s standards, we affirm, in part, the trial court’s order as
it concerns Fugo’s breach-of-contract, breach-of-fiduciary-duty, and tortious-
interference claims; reverse, in part, and render judgment dismissing Fugo’s abuse-of-
process claim; and remand this matter for further proceedings consistent with this
opinion.
I. BACKGROUND
In 2021, Fugo had the idea to establish what would ultimately become The
Kute Bar, a restaurant and karaoke bar. Appellants Becky, Dang, and Tran expressed
interest in being Fugo’s business partners. According to Fugo, the four of them orally
2
agreed to create a partnership to pursue the new venture, and each partner was
assigned a specific role in the partnership.1
Becky, who was responsible for filing the necessary forms with the State of
Texas to document the business’s existence, proposed forming a limited liability
company.2 The other partners agreed, and Becky formed The Kute Bar, LLC in
November 2021. Despite the formation of the limited liability company, Fugo
maintained that he and the other partners intended to operate the business as a
partnership.
In 2022, Fugo—who, as the operations manager, was working to get the
restaurant up and running—entered into a construction contract and a commercial
lease on The Kute Bar’s behalf. Fugo personally guaranteed The Kute Bar’s
obligations under these agreements.
Less than one month after the restaurant began operating, disputes began to
break out among the partners. In December 2022, Becky, Dang, and Tran informed
Fugo that they all wanted out of the venture and proposed that Fugo buy them out.
Fugo invited a new investor to purchase Becky’s, Dang’s, and Tran’s interests, and
1
The partners agreed to fund the start-up costs by contributing $150,000 each,
and all did so except Tran, who contributed only $71,406.
2
Fugo’s understanding was that Becky wanted to form the limited liability
company so that she could invest in the venture through her tax-preparation
company, C&G Solutions, Inc., as this would allow her to shield her investment from
her then-husband whom she planned to divorce.
3
Becky prepared a buyout proposal. But the parties were unable to reach an agreement
regarding the terms of the buyout.
In January 2023, after the new investor lost interest in the proposed buyout,
Appellants commenced this lawsuit, asserting claims against Fugo for breach of
contract and breach of fiduciary duty. Then in March 2023, Becky, Dang, and Tran
held a special members’ meeting and voted to close The Kute Bar, LLC, sell the
entity’s assets to satisfy its outstanding debts, and distribute any remaining proceeds to
the members. After Fugo attempted to open the restaurant for dinner service in
contravention of the vote to cease operations, Appellants filed an application for
temporary restraining order (TRO) and temporary injunction.3 Following a hearing,
the trial court signed a TRO preventing Fugo from, among other things, continuing to
operate the restaurant or removing any of the restaurant’s assets.
In January 2024, Fugo filed a counterpetition asserting seven causes of action
against Appellants. In his counterpetition, he alleged, among other things, that The
Kute Bar was actually a partnership, not a limited liability company, and that
Appellants had misrepresented the nature of the business in their TRO application
3
In their TRO application, Appellants alleged that Fugo acted in concert with
his boyfriend and his boyfriend’s mother to “forcibly break into the [r]estaurant” and
open it for operation.
4
because their acknowledgement of the partnership’s existence would have
undermined their claims for injunctive relief. 4
In February 2024, Appellants filed a partial motion to dismiss under the TCPA
seeking the dismissal of Fugo’s breach-of-contract, breach-of-fiduciary-duty, tortious-
interference, and abuse-of-process claims. Following a hearing, the trial court signed
an order denying Appellants’ TCPA motion. This interlocutory appeal followed.
II. DISCUSSION
In what amounts to a single issue, 5 Appellants contend that the trial court erred
by denying their partial motion to dismiss because (1) the TCPA applies to Fugo’s
4
Fugo contends that Appellants attempted to mischaracterize The Kute Bar as
a limited liability company because under the Texas Business Organizations Code, a
limited liability company can be closed by a simple majority vote of the members,
whereas the decision to close a partnership requires the partners’ unanimous consent.
Compare Tex. Bus. Orgs. Code Ann. §§ 101.356(c) (allowing a majority vote of
members to approve “an action that would make it impossible for a limited liability
company to carry out the ordinary business of the company”), 101.552(a) (providing
that a voluntary winding up of a limited liability company may be approved by “a
majority vote of all of the members”), with id. § 152.209(b) (requiring “the consent of
all partners” to approve any “act outside the ordinary course of business of a
partnership”). But we note that unless otherwise provided by a partnership
agreement, a voluntary decision to wind up a domestic general partnership of
unlimited duration requires only “the express will of a majority-in-interest of the
partners.” Id. § 11.057(a).
5
Appellants’ brief enumerates three issues, but they are all subparts of one
overarching argument: that the trial court erred by denying their TCPA motion to
dismiss. Because all of Appellants’ issues pertain to the larger question of whether the
trial court erred by denying their TCPA motion to dismiss, we will treat them as a
single complaint. See Grant v. Finecy, No. 02-23-00310-CV, 2023 WL 8940395, at *2
n.3 (Tex. App.—Fort Worth Dec. 28, 2023, no pet.) (mem. op.).
5
breach-of-contract, breach-of-fiduciary-duty, tortious-interference, and abuse-of-
process claims; (2) Fugo failed to establish each essential element of these claims by
clear and specific evidence; and (3) Appellants established that they are entitled to
judgment as a matter of law on each of these claims. Appellants are partially correct.
A. STANDARD OF REVIEW AND GOVERNING LAW
The TCPA—commonly referred to as Texas’s anti-SLAPP6 statute—is
intended to “protect[] citizens who petition or speak on matters of public concern
from retaliatory lawsuits that seek to intimidate or silence them.” In re Lipsky,
460 S.W.3d 579, 584 (Tex. 2015) (orig. proceeding); see Tex. Civ. Prac. & Rem. Code
Ann. § 27.002 (summarizing TCPA’s purpose as “encourag[ing] and safeguard[ing] the
constitutional rights of persons . . . and, at the same time, protect[ing] the rights of a
person to file meritorious lawsuits for demonstrable injury”).
A party who moves for dismissal under the TCPA invokes a three-step,
burden-shifting process: (1) first, the movant seeking dismissal must demonstrate that
a “legal action” has been brought against him and that the action is “based on or is in
response to” an exercise of a protected constitutional right; (2) then, the burden shifts
to the party bringing the legal action to avoid dismissal by establishing, by clear and
specific evidence, a prima facie case for each essential element of the claim in
question; and (3) finally, the burden shifts back to the movant to justify dismissal by
6
SLAPP stands for Strategic Lawsuit Against Public Participation. See Windsor
v. Round, 591 S.W.3d 654, 658 (Tex. App.—Waco 2019, pet. denied).
6
establishing an affirmative defense or other ground on which he is entitled to
judgment as a matter of law. See Tex. Civ. Prac. & Rem. Code Ann. § 27.005(b)–(d);
Miller v. Schupp, No. 02-21-00107-CV, 2022 WL 60606, at *1 (Tex. App.—Fort Worth
Jan. 6, 2022, no pet.) (mem. op.).
We review a trial court’s ruling on a TCPA motion to dismiss—including its
determination of the parties’ satisfaction of their respective burdens—de novo.
Landry’s, Inc. v. Animal Legal Def. Fund, 631 S.W.3d 40, 45–46 (Tex. 2021); Miller,
2022 WL 60606, at *1–2. Our review encompasses “the pleadings, evidence a court
could consider under Rule 166a, Texas Rules of Civil Procedure, and supporting and
opposing affidavits stating the facts on which the liability or defense is based,” and we
view all of these in a light most favorable to the nonmovant. Tex. Civ. Prac. & Rem.
Code Ann. § 27.006(a); see Maggret v. Ramsey’s Rods & Restoration, No. 02-20-00395-CV,
2021 WL 2253244, at *2 (Tex. App.—Fort Worth June 3, 2021, no pet.) (mem. op.).
B. TCPA ANALYSIS
To determine whether the trial court erred by denying Appellants’ TCPA
motion, we must analyze each of Fugo’s individual challenged causes of action under
the framework outlined above.
1. Breach of Contract
Appellants contend that because Fugo’s breach-of-contract claim is grounded
upon statements contained in their TRO application, it is based on or in response to
their exercise of the right to petition. See Tex. Civ. Prac. & Rem. Code Ann.
7
§ 27.001(4)(A)(i) (defining “[e]xercise of the right to petition” as, among other things,
“a communication in or pertaining to . . . a judicial proceeding”); see also id. § 27.001(1)
(“‘Communication’ includes the making or submitting of a statement or document in
any form or medium, including oral, visual, written, audiovisual, or electronic.”). To
support this contention, they point to Fugo’s allegation in his counterpetition that
“[Appellants] breached the oral partnership agreement when they intentionally
omitted the existence of the partnership and misrepresented to the Court that [The]
Kute Bar is [a limited liability company] in their application[] for injunctive relief.”
According to Appellants, this allegation shows that Fugo’s breach-of-contract claim
“is entirely based on [Appellants’ TRO] [a]pplication and the statements contained
therein.”
But viewing—as we must—Fugo’s counterpetition in the light most favorable
to him and in favor of the conclusion that his claims are not based on or in response
to a protected constitutional right, we conclude that his breach-of-contract claim does
not fall within the TCPA’s scope. See Cweren v. Eureka Multifamily Grp., L.P., No. 01-
21-00470-CV, 2023 WL 2977755, at *16 (Tex. App.—Houston [1st Dist.] Apr. 18,
2023, pet. denied) (mem. op.) (citing Abundant Life Therapeutic Servs., Tex., LLC v.
Headen, No. 05-20-00145-CV, 2020 WL 7296801, at *3 (Tex. App.—Dallas Dec. 11,
2020, pet. denied) (mem. op.)). When Fugo’s counterpetition is viewed as a whole
and his above-quoted allegation is taken in context, it is evident that his breach-of-
contract claim is based on Appellants’ efforts to force Fugo to buy out their shares in
8
The Kute Bar and to purportedly shut down the restaurant through a majority vote,
not any statements in Appellants’ TRO application. See Tex. Right to Life v. Van Stean,
No. 03-21-00650-CV, 2023 WL 3687408, at *5 (Tex. App.—Austin May 26, 2023,
pet. filed) (mem. op.) (holding that trial court correctly concluded that TCPA did not
apply to appellees’ claims because “[t]aken in context and viewed as a whole” they
were not based on appellant’s speech or actions to publicize a bill but were actually in
response to the legislature’s enactment of the bill itself).
The first paragraph of the breach-of-contract section of Fugo’s counterpetition
“incorporates the [counterpetition’s] foregoing paragraphs” detailing Becky, Dang,
and Tran’s efforts to shut down the restaurant to pressure Fugo—who, unlike the
other partners, had personally guaranteed The Kute Bar’s obligations under the
commercial lease and the construction contract—into buying out their shares on
terms favorable to them. And the next two sentences allege, “The acts and omissions
complained [of] herein constitute breach of contract. Spec[ifically], Becky, Dang, and
Tran have breached the oral agreement to form and operate [The] Kute Bar as a
partnership.” This context makes it clear that Fugo’s inartful statement in the
counterpetition’s following paragraph that Appellants had “breached the oral
partnership agreement” when they misrepresented the nature of The Kute Bar’s
business structure in their TRO application is best understood to mean that these
misrepresentations to the court are evidence of Appellants’ breach of the oral
partnership agreement or, at most, are part of a broader array of conduct constituting
9
the breach. But even if we were to assume that the alleged misrepresentations in
Appellants’ TRO application were part of the panoply of conduct constituting the
alleged breach, it is evident that at least some of the allegations relied upon by Fugo to
support his breach-of-contract claim clearly fall outside the TCPA’s scope, and in
such circumstances, a trial court does not err by denying a TCPA motion to dismiss.
See Graves v. Evangelista-Ysasaga, No. 14-22-00137-CV, 2023 WL 370589, at *4 (Tex.
App.—Houston [14th Dist.] Jan. 24, 2023, pet denied) (mem. op.).
Thus, Appellants failed to carry their step-one burden, and the trial court did
not err by denying Appellants’ TCPA motion as to Fugo’s breach-of-contract claim.
2. Breach of Fiduciary Duty
Relying on Fugo’s statement in his counterpetition that Appellants had
breached their fiduciary duties as partners by “improperly obtain[ing] a temporary
restraining order that resulted in the closing of [The] Kute Bar,” Appellants contend
that Fugo’s breach-of-fiduciary-duty claim is based on or in response to their TRO
application—and, thus, their right to petition. But when this excerpt is viewed in
context, it becomes evident that Fugo’s breach-of-fiduciary-duty claim falls outside
the TCPA’s purview.
The full paragraph from which the above-quoted excerpt was taken reads as
follows:
Partners owe each other a fiduciary duty. M.R. Champion, Inc. v. Mizell,
904 S.W.2d 617, 618 (Tex. 1995). By concealing the partnership from
the Court and treating [The] Kute Bar as solely a limited liability
10
company, Becky, Dang, and Tran improperly obtained a temporary
restraining order that resulted in the closing of [The] Kute Bar that led to
its lease termination and forfeiture of all assets without regard for the
applicable laws governing fiduciary obligations and the termination and
orderly winding down of a partnership. Becky, Dang, and Tran had the
ulterior motive of forcing Fugo to buy them out or forcing Fugo out of
the business without regard for his rights as a partner and without regard
for their fiduciary duties owned to him and the KB Partnership.
Viewed as a whole, in the context of the entire counterpetition, and in the light most
favorable to Fugo, see Van Stean, 2023 WL 3687408, at *5; Cweren, 2023 WL 2977755,
at *16, this paragraph—though inartfully drafted—reflects that Fugo’s breach-of-
fiduciary-duty claim, like his breach-of-contract claim, is based on Becky, Dang, and
Tran’s efforts to shut down the restaurant by a majority vote to pressure Fugo into
buying them out on favorable terms. Thus, while Appellants’ filing the TRO
application is evidence of the breach, it was not the triggering event for Fugo’s
breach-of-fiduciary-duty claim. Further, as previously noted, even if we were to
assume that Appellants’ obtaining the TRO was part of the broader array of conduct
constituting the alleged breach, at least some of the alleged conduct comprising the
breach falls outside the TCPA’s scope, and that alone provides a sufficient basis for
denying Appellants’ TCPA motion as to Fugo’s breach-of-fiduciary-duty claim. See
Graves, 2023 WL 370589, at *4.
Thus, Appellants failed to carry their step-one burden, and the trial court did
not err by denying Appellants’ TCPA motion as to Fugo’s breach-of-fiduciary-duty
claim.
11
3. Tortious Interference
Appellants contend that the TCPA applies to Fugo’s tortious-interference claim
because it is based on “the shutdown,” which purportedly includes Appellants’ TRO
application and the statements therein. But as we have explained, even if “the
shutdown,” as that term is used in connection with Fugo’s tortious-interference claim,
includes Appellants’ TRO application, it also refers to other alleged conduct that is
clearly outside the TCPA’s scope. Thus, Appellants failed to carry their step-one
burden. See Graves, 2023 WL 370589, at *4. Accordingly, the trial court did not err by
denying Appellants’ TCPA motion as to Fugo’s tortious-interference claim.
4. Abuse of Process
Appellants argue that the TCPA applies to Fugo’s abuse-of-process claim
because it “is expressly based on [their] exercise of the right to petition.” As they
point out, Fugo conceded in his response to their TCPA motion that his abuse-of-
process claim is based on the way in which Appellants “used the court to further their
unlawful scheme.” Indeed, in his briefing in this court, Fugo acknowledges that his
abuse-of-process claim is based on his allegation that Appellants “improperly
obtained a restraining order closing [The Kute Bar].” And when the counterpetition
is viewed as a whole, it is evident that this allegation is, in turn, based on Fugo’s
assertions that Appellants made misrepresentations to the court and “intentionally
12
omit[ed] the partnership commitment” in their TRO application. 7 Given Fugo’s
acknowledgement that his abuse-of-process claim is based on Appellants’ TRO
application, the allegations in Fugo’s counterpetition, and the nature of abuse-of-
process claims in general, we conclude that Appellants have satisfied their burden to
show that Fugo’s abuse-of-process claim is based on or in response to Appellants’
exercise of the right to petition. See LaCore Enterprises, LLC v. Angles, No. 05-21-
00798-CV, 2023 WL 2607562, at *10 (Tex. App.—Dallas Mar. 23, 2023, no pet.)
(mem. op.).
Having concluded that Appellants satisfied their initial burden to show that the
TCPA applies to Fugo’s abuse-of-process claim, we must determine whether Fugo
carried his burden under the TCPA’s second step to establish each essential element
of this claim by clear and specific evidence. See Tex. Civ. Prac. & Rem. Code Ann.
§ 27.005(c); Lyden v. Aldridge, No. 02-23-00227-CV, 2023 WL 6631528, at *3 (Tex.
App.—Fort Worth Oct. 12, 2023, no pet.) (mem. op.).
The essential elements of an abuse-of-process claim are: (1) the plaintiff was
served with valid process; (2) the defendant made an illegal, improper, or perverted
use of the process after it was issued; (3) the defendant had an ulterior motive or
purpose in using the process; and (4) the plaintiff sustained damage from the
7
We note that the counterpetition states that Fugo’s abuse-of-process claim is
based on “the same set of facts” as his previously discussed claims for breach of
contract and breach of fiduciary duty.
13
improper use. See Warner Bros. Ent., Inc. v. Jones, 538 S.W.3d 781, 815 (Tex. App.—
Austin 2017), aff’d, 611 S.W.3d 1 (Tex. 2020); Hunt v. Baldwin, 68 S.W.3d 117, 129–30
(Tex. App.—Houston [14th Dist.] 2001, no pet.); see also O’Connor’s Texas Causes of
Action ch. 2, § 1.1 (2022). “The focus is on the use of the process once it is properly
obtained, not on the motive for originally obtaining the process.” Davis v. West,
433 S.W.3d 101, 110 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). “When the
process is used for the purpose for which it is intended, even though accompanied by
an ulterior motive, no abuse of process occurs.” Whitehead v. Mackenzie,
No. 02-09-00383-CV, 2011 WL 2755349, at *5 (Tex. App.—Fort Worth July 14,
2011, pet. denied) (mem. op.). “A claim based on the filing and maintaining of a
lawsuit and the obtaining of a temporary restraining order cannot constitute abuse of
process, because abuse of process refers to the improper use of the process after it
has been issued.” Spencer v. Overpeck, No. 04-16-00565-CV, 2017 WL 993093, at *6
(Tex. App.—San Antonio Mar. 15, 2017, pet. denied) (mem. op.) (first citing Alsheikh
v. Dyab, No. 07-08-00162-CV, 2010 WL 1380978, at *2 (Tex. App.—Amarillo Apr. 7,
2010, no pet.) (mem. op.); and then citing Michels v. Zeifman, No. 03-08-00287-CV,
2009 WL 349167, at *6 (Tex. App.—Austin Feb. 12, 2009, pet. denied) (mem. op.)).
Here, Fugo’s abuse-of-process claim is based on his allegation that
Appellants—in order to pressure Fugo to buy out their interests on favorable terms—
improperly obtained a TRO by filing an application that misrepresented that The
Kute Bar is a limited liability company and omitted any reference to the partnership’s
14
existence. But because this tort is concerned with the use of the process after it has
been properly obtained, not on the defendant’s motive for originally obtaining the
process, see Davis, 433 S.W.3d at 110, Fugo’s allegation—even if true—that Appellants
obtained a TRO based on false facts is insufficient to satisfy the second element. See
Spencer, 2017 WL 993093, at *6 (“Even if the [appellants’] lawsuit was based on false
statements and allegations, however, [appellee] has not shown how the temporary
restraining order, once it was obtained, was improperly used.”). Fugo has not shown
how Appellants improperly used the TRO once it was obtained; rather, the record
reflects that it was used for its intended purpose—to protect Appellants’ rights and
maintain the status quo pending the outcome of the underlying lawsuit. See Whitehead,
2011 WL 2755349, at *5; Preston Gate, LP v. Bukaty, 248 S.W.3d 892, 897 (Tex. App.—
Dallas 2008, no pet.) (“To constitute an abuse of process, the process must have been
used to accomplish an end which is beyond the purview of the process and which
compels a party to do a collateral thing which he could not be compelled to do.”); see
also Tex. Civ. Prac. & Rem. Code Ann. § 65.011(2); In re Spiritas Ranch Enters., L.L.P.,
218 S.W.3d 887, 895 (Tex. App.—Fort Worth 2007, orig. proceeding) (“The purpose
of a TRO is to preserve the status quo . . . .”). Therefore, Fugo did not establish a
prima facie case for his abuse-of-process claim, and the trial court erred by denying
Appellants’ motion to dismiss with regard to that claim.
15
III. CONCLUSION
Having determined (1) that the TCPA applies to Fugo’s abuse-of-process claim
but not to his breach-of-contract, breach-of-fiduciary-duty, and tortious-interference
claims and (2) that Fugo failed to present clear and specific evidence of each element
of his abuse-of-process claim, we reverse, in part, and render judgment dismissing
Fugo’s abuse-of-process claim; affirm the trial court’s order denying Appellants’
TCPA motion in all other respects; and remand this matter for further proceedings
consistent with this opinion and TCPA Section 27.009.8 Tex. Civ. Prac. & Rem. Code
Ann. § 27.009.
/s/ Brian Walker
Brian Walker
Justice
Delivered: October 24, 2024
8
In their TCPA motion, Appellants requested attorney’s fees under TCPA
Section 27.009(a), but we note that to the extent Fugo’s abuse-of-process claim is a
compulsory counterclaim, Appellants’ request for attorney’s fees would be governed
by TCPA Section 27.009(c). See Tex. Civ. Prac. & Rem. Code Ann. § 27.009(a), (c).
16