Great Northern Energy, Inc. v. Circle Ridge Production, Inc. ( 2016 )

ACCEPTED
06-16-00015-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
9/8/2016 10:57:21 PM
DEBBIE AUTREY
CLERK
IN THE SIXTH COURT OF
APPEALS TEXARKANA, TEXAS FILED IN
6th COURT OF APPEALS
TEXARKANA, TEXAS
GREAT NORTHERN ENERGY, INCORPORATED
9/9/2016 8:52:00 AM
DEBBIE AUTREY
APPELLANT Clerk
No. 06-16-00015-CV
v.
CIRCLE RIDGE PRODUCTION, INC.
APPELLEE
APPLELLANT GREAT NORTHERN
ENERGY, INC.
ORAL ARGUMENTS REQUESTED
APPELLANT’S BRIEF
WILLIA M J. GARDNER
Texas Bar No. 07661000
422 N. Green St., P.O. Box l 746
Longview, Texas 75606-1 746
Tel. 903-236-7900
Fax 903-236-3367
wjg@wjg-law.com
ATTORNEY FOR APPELLANT
GREAT NORTHERN ENERGY, INC.
Page 1 of 93
TABLE OF CONTENTS
IDENTITY OF PARTIES & COUNSEL .......................................... pg 3-6
INDEX OF AUTHORITIES ..............................................................pg 6-10
STATEMENT OF THE CASE ........................................................pg 11-15
REQUEST FOR ORAL ARGUMENT ........................................... pg 16
ISSUES PRESENTED ........................................................................ pg 17-28
STATEMENT OF FACTS ..................................................................pg 29-33
SUMMARY OF THE ARGUMENT .................................................pg 34-36.
ARGUMENT & AUTHORITIES........................................................pg 37-88
I, Standards of Review………………………………………………………………………pg 37
II. September 11, 2012 Note and Deed of Trust……………………………..pg 37-41
III. Improper Voir Dire……………………………………………………………………pg 41-43
IV. Exclusion of Practically All of Appellants Evidence………………….pg 43-58
V. Error in Either Granting Instructed Verdicts Against GNE
and/or Refusing to Submit Issues to Jury for Decision ………………pg 58-67
VI. Error in Refusig to Grant Great Northern’s Motion for
Mistrial ……………………………………………………………………………………pg 67-68
VII. Errors Related to Jury Submission & Argument …………………. pg 68-74
VIII. Cumulative Error………………………………………………………………. pg 74-76
IX. Error in Awarding Attorneys’’ Fees to Circle Ridges’
Attorneys…………………………………………………………………………………,pg 76-82
X. Error in Overruling Great Northern’s Motion for Judgment……….
Page 2 of 93
NOV that Circle Ridge taken nothing with regard to
any liability of Great Northern on the $700K note…………………… pg 82-83
XI. Error Overruling Great Northen’s Motion for Judgment
NOV on Circle Ridge’s Trespass to Try Title Claims………………pg 83-88
PRAYER ............................................................................................pg 89-90.
CERTIFICATE OF SERVICE ...........................................................pg 91-92.
CERTIFICATE OF COMPLIANCE………………………………………………….pg 93.
APPENDIX .........................................................................................pg 94-95.
Page 3 of 93
IN THE SIXTH COURT OF
APPEALS TEXARKANA, TEXAS
GREAT NORTHERN ENERGY, INCORPORATED
APPELLANT
No. 06-16-00015-CV
v.
CIRCLE RIDGE PRODUCTION, INC.
APPELLEE
DOCKETING STATEMENT
IDENTITY OF PARTIES &
COUNSEL
The following is a complete list of the parties, the attorneys, and any
other person who has an interest in the outcome of this lawsuit:
CIRCLE RIDGE PRODUCTION, INC., Plaintiff, by serving its
attorney: Dean Searle
Ronan Searle
SEARLE & SEARLE PC
305 W. Rusk Street, Suite 101
Marshall, Texas 75670
Tel. #:903-935-9772
Fax # 903-935-9790
Page 4 of 93
Michael T. Runyan
305 W. Rusk Street
Marshall, Texas
75670
Tel.#:903-935- 7700
Fax #:903-935-9790
KEVIN STEPHENS, Third Party Defendant, Pro se:
Kevin Stephens
Hallsville, Texas
kstephens@signal
wellservice.com
Great Northern Energy, Incorporated, by serving its attorney:
William J. Gardner
William J. Gardner, PC PO
Box 1746
422 B N Green Street
Longview, Texas 75606-1746
Tel. No. 903-236-7900
Fax No. 903-236-3367
Page 5 of 93
TABLE OF AUTHORIITES
CASES
A. J. Miller Trucking v. Wood, 474 S.W.2d 763 (Tex. App. Tyler 1971, writ ref’d
n.r.e.)……………………………………………………………..pg. 43
Allen v. Reidel, 425 S.W.2d, 665 (Tex.Civ.App.-Eastland, 1969, no writ)pg 74
Anderson Bartlett & East’s Texas Uniform Commercial Code Annotated
(2007 Addition-West Publishing)………………………………………… pg 39
Anderson v Gilbert, 897 S.W.2d 783, 784-785, (Tex. 1995)………………pg 47
Amoco Production v. First Baptist Church, 611 S.W. 2d , 610(Tex. 80)..pg.67
Archer v. Griffin, 390 S.W. 2d, 735, 740, (Tex. App. 1964)……………….pg.
Bank One v. Stewart, 967 S.W. 2d, 419, 434, (Tex. App.-Houston [14th Dist.]
1998, pet. denied.)……………………………………………………………pg.66
Campbell v. Mortgage Electric Registrations System Inc., 2012 Tex. App. Pg.41
Case Corp. v. High Class Business Systems, 184 S.W.3d 760, 770(Tex.App.-
Dallas 2005 pet. denied.)……………………………………………………pg 67.
Chapman v. Moser, 532 F2d, 1358 (5th Cir. 1976)……………………………pg71
Cire v. Cummings, 134 S.W. 3d, 835, 838-39(Tex. 2004…………………….pg
Cortez v. HCCI-SAN ANTONIO INC. 159 S.W. 3d, 87 (Tex. 2005)……….pg.42
Crill v. Houston Ind., 124 S.W. 3d, 742m 753(Tex.App.-Houston [1st Dist.],
2003 no pet.)……………………………………………………………….pg.64
D.T. Carroll Corp. v Carroll, 256 S.W.2d 429, 432 (Civ. App.—San Antonio 1953
ref. n.r.e.)……………………………………………………………………………….pg85
Dames v Strong, 659 S.W.2d 127, 129 (Tex. App.—Houston[14th Dist.] 1983, no
writ)……………………………………………………………………………………pg 85
Page 6 of 93
Daves v. Lawyers Surety Corp. 459 S.W. 2d, 655, 657(Tex. Civ. App.-Amarillo
1970 writ ref’d n.r.e.)……………………………………………………… pg.
Dewitt County Elec. Coop v. Parks, 1 S.W. 3d, 96105, (Tex 1999)………pg 65
Dillon v. Hodges, 804 F2d, 1384, (5th Cir. 1984)…………………… ... pg 71
Doria v Suchowolski, 531, S.W. 2d 360, 362 (Civ. App.—San Antonio 1975 ref.
n.r.e.)…………………………………………………………………… pg 85
El Applel, LTD, v. Olivas, 370 S.W.3d, 757 Texas (2012)……………. Pg 77
Estate of Boren, 268 S.W. 3d 841,846(Tex.App.-Texarkana, 2008, pet
denied……………………………………………………………….....pg.70
Everbank v. Seedergy Ventures, Inc., 2016, Tex.App. LEXIS 7319 (Tex.App.-
Houston [14th Dist.] 2016, authority cite)………………………………..pg 38
Exxon Mobil Corp. v. Kinder Morgan Operating, LP, 192 S.W. 3d, 120,126-
127(Tex.App.-Houston [14th Dist.] 2006, no pet.)…………………………….pg.65
Exxon Corp. v. Gill, 221 S.W.3d, 841, 848(Tex.App.-Corpus Christi 2007) reversed
on other grounds…... ………………………………………………………..…pg.65
Farah v. Mafrige & Cornmanik, PC, 927 S.W.2d, 663, 675(Tex.App.-
Houston[1st Dist.] 1996 no writ……………………………………………pg.66
Federal Financial Co. v. Delgado, 1 S.W.3d 181, 185….………….pg.40
Foley v. Daniel, 346, S.W.3d 687,690(Tex. App. –El Paso 2009,
no pet.)………………………………………………………………………pg. 63
Foremost Plastics Corp, USA v. Presidio Engineering Contractors, Inc., 960
S.W. 2d, 41, 45(Tex. 1998)……………………………………………… .pg.65
Fritsche v Niechoy, 197 S.W. 1017, 1018-1019 (Civ. App.—Galveston 1917,
dis…………………………………………………………………………..pg.85
Gray v Joyce, 485 S.W.2d 311, 313 (Civ. App. –Tyler 1972, ref. n.r.e.)……pg 86
Hart v. Easton, 321 S.W.2d 574,159,Tex 375, (Texas 1959)……………….pg 72
Heil v Wirth, 161 Tex. 609, 343 S.W.2d 226, 226-230 (1961)…………………pg 85
Page 7 of 93
Hicks v Southwestern Settlement & Devlop. Corp., 188 S.W.2d 915, 929 (Tex.
App. –Beaumont 1945, ref, w.o.m.)…………………………………………………pg 85
Jamail v. Anchor Mort. Services, Inc., 809 S.W.2d 221, 223(Tex.1991)……pg. 56
Johnson v. Cox, 630 S.W.2d 492 (Tex. App.-Corpus Christi, 1982, writ ref’d
n.r.e.)…………………………………………………… ……………...pg.39
Landon v. Jean Paul Budinger, Inc., 724 S.W. 2d, 931,939 (Tex.App.-Austin
1987, no writ)…………………………………………………………….pg.
Lawson v. Finance America Private Brands, 537 S.W.2d 483, 485(Tex. Civ.
App.-El Paso, 1976, no writ)…………………………………………………..pg.62
Leavings v. Mills, 175 S.W.3d 301, 310 (Tex. App-Houston[1st Dist.] 2004, no
Pet.)……………………………………………………………………..pg. 41
Lexis 4030, 2012 Westlaw 1839357*4 (Tex. App.-Austin May 18, 2012, Pet.
denied)………………………………………………………………………..pg
McCraw v. Maris, 828, S.W. 2d, 756, 758(Tex.1992)………………………pg 57
Mancorp, Inc. v. Culpepper, 802 S.W. 2d, 226, 230 (Tex. 1990)…………..pg 56
Mangess v. Guerra, 673 S.W. 180, 183 (Tex. 1984)……………………pg.67-68
Mapco Inc. v. Holt, 476, S.W.2d , 70 (Tex.Civ. App.-Amarillo, 1971, writ ref’d
n.r.e…………………………………………………………………………….pg
Marquis Acquisitions, Inc, v Steadfast Ins., 409 S.W. 3d, 808, 813-14(Tex. App.-
Dallas 2013, no pet.)(elements 1, 3-5)………………………………………pg.63
Marshall v Garcia, 514 S.W.2d 513, 518-519 (Civ. App.—Corpus Christi 1974,
ref. n.r.e.)……………………………………………………………………………..pg 84
Modine Mfg.Co. the North E. Ind. School District, 503 S.W. 2d,
833(Tex.Civ.App-Beaumont 1973, writ ref’d n.r.e.)………………..……...….pg.57
Montgomery Ward & Co. v. Scharrenbeck, 204 S.W.2, 508, 510 (Tex.1947)pg 66
Ojeda v. Walmart Stores, 956 S.W.2d 704, 706-707 (Tex. App.-San Antonio
1997, pet. denied)…………………………………………………………….pg.58
Page 8 of 93
Page Airways, Inc., v. the Associated Radio Service Co., 545 184, 189-
190(Tex.Civ. App.-San Antonio, 1976, writ ref’d n.r.e.)…………………….pg. 61
Peco Contruction Co. v.Quahardo, 919 S.W.2d, 736, 738 n.3.Tex. App. –San
Antonio 1996, writ denied)………………………………………………... pg 65
Perry v. Breland, 16 S. W. 3d, 182, 187, (Tex. App. –Eastland, 2002 pet.
denied)(element 2)………………………………………………………….....pg. 63
Ragsdale v. Griffin, 380 S.W.2d, 164 (Tex.Civ.App. 1964…………………pg 71
Reinhardt v North 507 S.W. 2d 589,591, (Civ. App.–Waco 1974, ref. n.r.e)pg 86
Southwestern Bell Telephone Co. v. DeLanney, 809 S.W. 2d , 493,494-95)Tex.
1991)…………………………………………………………………………pg.65
Standard Oil Co. of Tex. V Marshall, 265 F.2d 46,50 (5th Cir. 1959) cert denied
361 U.S. 915, 80 S. Ct. 259, 4 L. Ed. 2d 185…………………………………….pg 84
Standolind Oil & Gas Co. v State, 136 Tex. 5, 133 S.W.2d 767, 770 (1939) pg 84
Stewart Title Guaranty, Co. v. Sterling, 822 S.W.2d, 1 (Texas 2006)……...pg 82
..
Southern Pacific Co., v. Hubbard, 297 S.W.2d, 120, 156, Tex. 525, (Tex.
1956)……………………………………………………………………….pg 75
T.F.W. Management v. Westwood Shores Property Owners Assoc., 79 S.W.3d
712, 719(Tex.App.-Houston[14th Dist.] 2002 pet. denied)………………….pg. 66
Texas Co. v Lee, 157 S.W. 2d, 628, 183 Tex. 167 (Texas 1942)……………pg 70
Tony Gullo Motors, v. Chapa, 212 S.W.3d, 299 (Texas 2006)……………. Pg 79
Traveler’s Ins. Co., v. Deleon, 456 S.W.2d 544, 545,(Tex. Civ. App.-
Amarillo 1970, writ ref’d n.r.e.)…………………………………………….pg.43
Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992(, Orig Proceeding).pg.
Zuniga v. Wooster Ladder Co., 119 S.W.3d, 856, 862(Tex. App.- San Antonio
2003, no pet.) (element 2)……………………………………………………pg. 63
Page 9 of 93
STATUTES
26 USCS §7425(b)(1),(c)(1)………………………….................................... pg 86
Tex. Bus. & Com. Code Ann Section §3.3110 (West 2015)………………..pg 38
Tex. Bus. & Com. Code Ann. §3.3110 (d) (West 2015)……………………pg.38
Tex. Bus & Com. Code Ann. §3.201. (West 2015)…………………………pg.39
Tex. Bus. & Com. Code Ann §3.201(a)……………………………………...pg 62
Tex. Bus & Com. Code Ann. §3.201(c) Comment C………………………..pg
Tex. Bus. & Com. Code Ann §3.203(2013)…………………………………pg 40
Tex. Bus. & Com. Code Ann §3.203(b) (West 2015)………………………..pg
Tex. Bus. & Com. Code Subsection §3.203(d)………………………… pg.39,60
Tex. Bus. & Com. Code Ann Section §3.201, (LEXIS NEXIS 2016)……….pg.44
Tx. Prop. Code, 22.001-22.022………………………………………………pg 84
Tex Rules of Evidence 701-706………………………………………………pg 42
RULES
Texas Rules of Civil Procedure. 783-809…………………………………… pg 84
TREATISES
Anderson Bartlett & East’s Texas Uniform Commercial Code Annotated
(2007 Addition-West Publishing)………………………………………. Pg.39
Page 10 of 93
STATEMENT OF THE CASE
The Parties to this Appeal, and their respective designations are as follows, to wit:
1. Great Northern Energy, Inc.: Appellant, Defendant and Counter-
Plaintiff in the trial court (hereinafter sometimes either “Appellant” or
“Great Northern”) or: (“GNE”).
2. Circle Ridge Production, Inc.: Appellee herein, Plaintiff and Counter
Defendant in the trial court action (hereinafter sometimes either
“Appellee” or “Circle Ridge” or “C.R.P.”).
3. Kevin Stephens: Appellee herein, and Third Party Defendant in the
court below (hereinafter “Appellee Stephens” or “Stephens”: or
“K.S.”).
Collectively, hereinafter Circle Ridge and Stephens are referred to as “Appellee’s”.
“Other parties to the court below, who are not parties to this appeal are as follows:
1. Joseph B. Loftis, Defendant below (hereinafter sometimes either
“Loftis” or “Joe Loftis”).
2. Ronald J. Abercrombie, Defendant in the trial court (hereinafter
sometimes either “Abercrombie” or “R.J.A.”).
Further, for reference, the reporter’s record of the proceedings is hereinafter
referred to as “R.R.” and the clerk’s record or transcript is “C.R.”.
This central beginning point of this case is a sale occurring on
September 11, 2012 in which Great Northern Energy, Inc., (“Appellant”)
purchased oil gas and mineral and lease hold interest from two parties, Circle
Ridge Production, Inc., and Kevin Stephens, (“Appellees”). The consideration
given was $200,000 cash and a $700,000 installment note (“$700K note”), and
Page 11 of 93
Deed of Trust in which Circle Ridge Production, Inc. and Kevin Stephens were
named the beneficiaries. The interests which were the subject of the sale are called
the “OBENCO” leases, which cover approximately 1100 to 1200 acres in the
Waskom, Texas area in Harrison County, Texas. Shortly after Great Northern
Energy acquired these properties, it purposed to include them in a package to be
resold to a company called Rangeford Resources. Shortly after September 11,
2012, one of the payees, Kevin Stephens, determined to participate with his interest
in the transaction in the Rangeford Resources transfer. To that end, he transferred
and assigned his interest in the note and Deed of Trust to Great Northern Energy.
around December 1, 2012 and before the first installment on the purchase note was
due and payable. Subsequently, Circle Ridge Production, the remaining party of
“Circle Ridge Production and Kevin Stephens” attempted to collect on only the
“Circle Ridge” portion of the note, and determined to foreclose. It conducted a
foreclosure sale on November 5, 2013. On December 26, 2013, simultaneously
with recording the Trustees Deed from the November 5, 2013 sale, it claimed it
“acquired” the remaining interest in the $700K note through a purported
assignment from “Kevin Stephens”.
Following this muddled state of affairs, Great Northern filed suit in Dallas
County, Texas, in Cause No.14-04993, against Circle Ridge Production, Kevin
Stephens and Bill Briscoe, Circle Ridge Production’s President, and principal
Page 12 of 93
shareholder. It alleged, causes of action for slander of title, breach of contract,
unjust enrichment, and breach of implied covenant of good faith in fair dealing,
negligent misrepresentation, fraud, and torturous interference with contact with
claims for attorney’s fees. Circle Ridge Production and Bill Briscoe responded by
filing a Motion to Transfer Venue to Harrison County, and separately, filed suit in
Cause No. 2014-0460, alleging, that Great Northern had filed a notice of its
assignment from Kevin Stephens of his rights with respect to his interest in the
$700K note, and his liens and property rights with respect to the OBENCO leases.
(which it alleged to be a forgery). Circle Ridge claimed that that “forged”
assignment from Stephens to Great Northern clouded Circle Ridge’s title. The
venue in these actions was subsequently transferred to Harrison County, Texas,
and the causes consolidated into Cause No.14-0460.
By the time of trial in October, 2015, Circle Ridge had filed its Fifth
Amended Petition and Second Amended Answer, in which it asserted causes of
action against Defendant Great Northern for possession of property (under a
Trespass to Try Title) theory, removal of a cloud on title, (attributable to the note
assignment, (from Stephens), breach of contract, for non-payment of the $700K
note). The Fifth Amended Petition also included claims against Joe Loftis and
Ronald J. Abercrombie for alleged violations of the Texas Civil Conspiracy and
Violation of the Texas Theft Liability Act, and negligence. Great Northern had
Page 13 of 93
expanded the claims of which it presented in its trial petition as follows: against
Kevin Stephens for Breach of Contract, Unjust Enrichment, and failure to deliver
purchased equipment, Breach of the Implied Covenant of Good Faith and Fair
Dealing, negligent misrepresentation, fraud, and tortuous interference with
contract, to remove cloud on Great Northern’s title, and for wrongful foreclosure
against all Defendants including Briscoe, Circle Ridge and Kevin Stephens, for
attorney’s fees and costs.
After midnight on October 20th and on October 21, 2015, Circle Ridge
Production filed its Notice of Non-Suit in which non-suited all claims Joe Loftis
and Ronald J. Abercrombie individually, including its claims of civil conspiracy
and violation of the Texas Theft Liability Act.
Trial in this matter was conducted before a jury commencing October 19,
2015 after 3 ½ days of proceedings, the Court refused to allow Great Northern
Energy to submit any of its issues except wrongful foreclosure to the jury, granting
directed verdicts to Circle Ridge Production on all of Great Northern’s other
claims. The Court also ruled in favor of Circle Ridge with respect to removal of
claims as cloud of title, liability of Defendant Great Northern for Breach of
Contract, and for claims by third party Kevin Stephens for Breach of Contract by
Great Northern Energy. The Court further found that Great Northern owed Circle
Ridge Production the sum of $637,611.93 under terms of the $700K note. The only
Page 14 of 93
issue submitted to the jury was with regard to Great Northern Energy’s claims that
Circle Ridge had wrongfully foreclosed the lien and the Deed of Trust sale on
November 5, 2013. The jury found adversely to Great Northern Energy with
respect to those issues submitted.
Based upon its directed verdict rulings, the Court entered Judgment for
Circle Ridge Production against Great Northern Energy on Circle Ridge
Productions claims against Great Northern Energy, and denied either liability or
recovery against Bill Briscoe, Kevin Stephens or Circle Ridge Production with
respect to all of Great Northern Energy’s claims. The Court entered its Judgment
on December 7, 2015. Further, on February 22, 2016, the Court overruled Great
Northern’s Motion for Judgment NOV and Motion for New Trial, presenting
many, if not all, of the issues presented by Appellants in this appeal.
From these preceding circumstances, Great Northern Energy brings this
appeal.
Page 15 of 93
REQUEST FOR ORAL ARGUMENT
Appellant Great Northern Energy, Inc., has previously filed its Notice of
Appeal in the Court from the "Orders" of the said 71" District Court, Harrison
County, Texas, dated March 30 & 31, 2016, which is pending herein as Cause
#06-2016-15-CA, styled, Great Northern Energy, Incorporated, Appellant vs.
Circle Ridge Production, Inc., Appellee.
The Court should grant oral argument for the following reasons:
a. Oral argument would give the Court a more complete
understanding of the facts presented in this appeal. See Tex. R.
App. P. 39.l (c).
b. Oral argument would significantly aid the Court in deciding this
case. See Tex. R.
App. P. 38.l (e), 39.i (d).
Page 16 of 93
ISSUES PRESENTED
From Voir Dire, through ruling on Defendants’ Motions for New Trial and
Motion for Directed Verdict, the record is filled with errors committed by the trial
court. Certain rulings by the trial court arise from and relate to its refusal to allow
Defendants to present factual evidence establishing the bases for their defenses,
counter-claims, and third party claims. All these erroneous rulings underlie, are
common to, and result in various reversible rulings by the trial court. These
evidentiary errors are presented as initial issues. Further they are incorporated into
the subsequent erroneous rulings of the Court in withdrawing Defendants’ rights to
obtain proper jury findings and rulings in this case. Specifically, subsequent
erroneous filings with respect to withdrawal of issues from the jury are specified,
many of which incorporate the evidentiary exclusions. From Appellants
perspective, the errors are so numerous and glaring that it is impossible to submit
them in conformance with the ideal Rule of Presentation of only (3) areas. For
purposes of clarity, and hopefully simplicity, the errors are organized within seven
eleven (11) groups or areas of wrongful conduct by the trial court; however, each
issue is specified separately within the various groups. These areas are organized
chronologically within the progress of the trial proceeding.
1. Errors in Voir Dire:
1-1. The Court erred in permitting counsel for 3d party Defendant
Page 17 of 93
Kevin Stephens to improperly attempt to bolster his evidentiary
contentions and prejudice Defendants through using his questions to
venire persons to support his contentions, over Defendants’
objections and to grant Defendants’ Motion for Mistrial following its
overruling of them.
2. Errors in Excluding Practically All of the Testimony and Evidence
offered by Defendants to support their defenses, counterclaims and
third party claims;
Errors in excluding Kevin Stephen’s testimony & exhibits:
2-1. The Court erred in excluding testimony of Kevin Stephens that he
“assigned and transferred” his interest in the September 11, 2012,
$700,000.00 note (“$700K note) to Great Northern Energy, Incorporated
in December, 2012;
2-2. The Court erred in refusing to allow Defendants’ to introduce
exhibit P-12, “the note assignment”, or to allow questioning of Kevin
Stephens regarding same, evidencing Kevin Stephens assignment of his
interest in the $700K note to GNE in December, 2012;
2-3. The Court erred in refusing to permit the cross-examination of
Kevin Stephens regarding the significance of the “Rojo Burro” contract,
Page 18 of 93
evidencing his participation with GNE in the Rangeford Resources
transaction;
2-4. The Court erred in refusing to admit the Rojo Burro contract
signed by Kevin Stephens into evidence (Exhibit GN #16);
2-5. The Court erred in refusing to admit the $700K note and lien
assignment dated December 1, 2012, from Kevin Stephens to Great
Northern Energy, Incorporated (Exhibit GN #18);
2-6. The Court erred in excluding the testimony of Kevin Stephens
regarding GNE’s payments of $10,000 to Mike Stephens and $50,000 to
Bobby Stephens in satisfaction of its consideration obligations
established in the December 1, 1012, note assignment (Exhibit GN #18);
2-7. The Court erred in excluding the admission of GNE’s exhibits
GN 20 and 21), evidencing payment of $60,000.00 in December, 2012, in
satisfaction of its consideration obligations in the December 1, 2012
assignment (Exhibit GN18);
2-8. The Court erred in excluding from the jury Kevin Stephens
testimony that he has sold his interest in the $700K note to Bill Briscoe
before February 1, 2013;
Page 19 of 93
2-9. The Court erred in excluding testimony that Kevin Stephens had
authorized Michael Stephens to act as his agent regarding collection and
assignment of note matters after December 1, 2012;
2-10. The Court erred in excluding testimony that the $135K paid by
Great Northern Energy to 15 Bar LLC was paid as consideration for the
$700K note assignment to the Stephens family;
2-11. The Court erred in excluding GNE exhibits #16, #17 and #18
from introduction into evidence; Exhibit #16 is Rojo Burro agreement,
Exhibit #17 is Rojo Burro agreement and Exhibit #18 is (Searle note
transfer) Kevin Stephens Affidavit of Forgery;
2-12. The Court erred in excluding the testimony of Kevin Stephens,
acknowledging execution of assignment interest to Great Northern as
offered in Kevin Stephens Bill of Exceptions;
2-13. The Court erred in excluding the testimony Kevin Stephens
acknowledging payments of $62,500 by Great Northern in consideration
of his assignment of his interest in the note; Exhibit #19 in excluding the
testimony of Kevin Stephens offered in the Bill of Exceptions
acknowledging assignment document assigning his interest in the note to
Great Northern;
Page 20 of 93
Errors in excluding Joe Loftis’ testimony & related exhibits:
2-14. The Court erred in excluding the testimony of Joe Loftis relating
to payments to Kevin Stephens in consideration of his transfer of his
interest into the September 11, 2012 note;
2-15. The Court erred in excluding the testimony of Joe Loftis
concerning the terms of assignment of Kevin Stephens interest in the
$700K note to Great Northern Energy, and GN#17, setting forth the
terms, and GN#18 concerning the terms of the transaction between Kevin
Stephens and Great Northern Energy relating to his transfer of his interest
in the $700K note;
2-16. The Court erred in excluding the evidence regarding the
payments by Great Northern to Michael Stephens and Bobby Stephens in
satisfaction of its obligations under the note;
2-17. The Court erred in excluding the testimony of Joe Loftis
regarding Great Northerns performance of its obligations under the notes.
Exhibits #20 and #21;
Errors in excluding Kayla Marrs’ testimony & related exhibits:
2-18. The Court erred in excluding the testimony of Kayla Marrs
regarding the execution of Kevin Stephens’ Exhibit GN#17 before her;
Page 21 of 93
Errors in excluding Nate Morans’ testimony & related exhibits:
2-19. The Court erred in excluding the testimony and exhibit offered
through Nate Moran, Exhibit #D12, and Exhibit #D15 regarding payment
by Great Northern Energy on the $700K note;
2-20. The Court erred in excluding Exhibits #GN16,#GN17, GN#18,
#2, #2A, and #12 from admission as offered by Nate Moran on Plaintiffs
Bill of Exceptions through Nate Moran, together with his explanation
thereof;
2-21. The Court erred in prohibiting the witness Michael Stephens
from testifying regarding the Rangeford Resources project and the role of
the assignment of the note therein;
Error in Michael Stephens’s testimony exclusions: The
Court erred in excluding from the jury the following items
from the Bill of Exceptions of Michael Stephens:
2-22. the Court erred in excluding Mr. Stephens’ explanation
of the transaction between Kevin Stephens and Great Northern Energy
regarding his assignment of the note;
2-23. the Court erred in excluding the testimony of Michael
Stephens in explanation with respect to their participation with Great
Northern in the Rangeford Resouces transactions;
Page 22 of 93
2-24. the Court erred in excluding the testimony of Michael
Stephens regarding Michael Stephens and Kevin Stephens appearance
before Kayla Marrs acknowledging Exhibit #GN17;
2-25. the Court erred in excluding the testimony of Michael Stephens
in explanation of the terms and performance of Great Northern with
respect to Exhibit #GN17;
2-26. the Court in excluding the testimony of Michael Stephens of the
specific notification he gave to Bill Briscoe, President of Circle Ridge
Productions, concerning the Stephens family’s participation with
Great Northern in the Rangeford Resources transaction and the
assignment of Michael Stephens interest in the $700K note all in
October, 2012;
2-27. the Court erred in excluding the testimony of Michael Stephens
regarding the terms of the Rojo Burro transaction outlined in Exhibits
#GN16 and #GN18, together with the exclusion of Exhibits #GN16,
#GN17, #GN18 and #GN20 as identified by Michael Stephens as
identified and authenticated by Michael Stephens;
2-28. the Court erred in excluding the testimony of Michael Stephens’
acknowledging Great Northerns payments of $10,000 and $50,000 to
Bobby Stephens in December 2012;
Page 23 of 93
2-29. the Court erred in excluding the testimony of Michael Stephens
regarding the financial and business relationship between Kevin Stephens
and Chad Hamilton;
2-30. the Court erred in excluding the testimony offered in the Bill of
Exceptions by Michael Stephens of Kevin Stephens role in the
disappearance of equipment sold to Great Northern for use on the leases;
2-31. the Court erred in refusing to admit Great Northern Exhibit #16,
letter of agreement between Kevin and Michael Stephens and OBENCO
and Rojo Burro; the Court erred in refusing to admit Great Northern
Exhibit #17, letter of agreement between Kevin and Michael Stephens
and Great Northern; the Court erred in refusing to admit Great
Northern Exhibit #18, purchase (or) note and financial interest Kevin
Stephens unto Great Northern Energy, OBENCO; the Court erred in
refusing to admit Great Northern Exhibit #20($10,000 check to
Michael Stephens) & #21, ($50,000 check to Bobby Stephens);
2-32. the Court erred in refusing to admit Exhibit #21A, demand
letter, Defendants Exhibit #12, (letter dated August 2, 2013), and
Exhibit #12, a schedule of payments to Circle Ridge.
3. The Court erred in granting instructed verdicts and or refusing to
submit the following matters to the jury:
Page 24 of 93
3-1. the Court order granting Circle Ridge’s Motion against Great
Northern for a Breach of Contract, liability on $700K note;
3-2. the Court erred in granting Kevin Stephens Breach of Contract
claims with regard to its dismissal of Great Northerns Breach of Contract
claims against Kevin Stephens;
3-3. the Court erred with regard to granting Kevin Stephens’ motion
for directed verdict against Great Northern with respect to Great
Northerns cause of action of fraud against Kevin Stephens;
3-4. the Court erred in granting Kevin Stephens’ and Bill Briscoe’s
instructed and directed verdict against Great Northern claims in
dismissing Great Northerns claims against them for unjust enrichment;
3-5. the Court erred in granting Briscoe and Stephens’ Motion for
Instructed Verdict against Great Northern with respect to Great
Northerns’ claims for breach of the implied covenant of good faith and
fair dealings;
3-6. the Court erred in so far as it granted Kevin Stephens and Bill
Briscoe’s for instructed or directed verdict that Great Northern take
nothing from Briscoe and Stephens with respect to its claims for
negligent misrepresentation;
Page 25 of 93
3-7. the Court erred in entering a directed verdict in favor of Briscoe,
Circle Ridge and Kevin Stephens with regard to Great Northerns claims
for interference with contract;
3-8. the Court erred in directing a verdict for Circle Ridge Production
with regards to its Trepass to Try Title claims;
3-9. the Court erred in awarding Circle Ridge Production attorney’s
fees against Great Northern for trial attorney’s fees in the amount of
$150, 873.37;
3-10. the Court erred in entering a directed verdict for Circle Ridge
against Great Northern for liability in the sum of $637,114.15 which
Circle Ridge asserted Great Northern owed it on the notes.
4. the Court erred in failing to grant Great Northern Energy, Inc.,
Abercrombie and Loftis’ Motion for Mistrial prior to submission of
any issues to the jury.
5. Errors with respect to Jury Questions and Answers:
5-1. the Court erred in improperly submitting the jury issues to the
jury as submitted because it improperly allocated the burden of proof.
5-2. the Court erred in awarding bases based upon the findings of the
jury that the Courts answers to questions 1 and 2 were immaterial
Page 26 of 93
because the evidence proves conclusively as a matter of law, that the
foreclosure sale on November 5, 2013 was improperly conducted.
6. the Court erred in awarding damages in the amount of
$637.114.15 to Circle Ridge, because there is no proper evidence
upon which to award such basis.
7. the Court erred in allowing counsel for Circle Ridge to make the
following improper jury arguments;
7-1. With respect to question number 1, insofar as counsel for Circle
Ridge asserts the burden of proof was on Defendant to disprove the that
the foreclosure sale of November 5, 2013, was properly conducted, the
burden was not upon Great Northern Energy, but rather upon Circle
Ridge.
7-2. the Court erred in allowing counsel for Circle Ridge Production
to make an improper and prejudicial argument, insofar as it allowed such
counsel to read a stipulation to the jury that Great Northern owed Circle
Ridge $637,114.15 under terms of the note when such representation was
in fact a misrepresentation known to all parties and submitted over Great
Northerns objections.
8. the Court erred in awarding attorney’s fees of $150, 873.37.
Page 27 of 93
9. the Court erred in all respects in this trial and its denial that a new
trial should be granted herein and all matters re-tried. This case
should be reversed and remanded for an entire new trial, because the
cumulative error of the Court was so great that that is the sole
remedy can effectively address the errors in the prior trial.
10. the Court erred in failing to grant Great Northern Energy an
instructed verdict with regard to its contentions that is has no
liability with regard to the Circle Ridge Production note, as asserted
by Circle Ridge Production in the trial, because there is neither now
or has there ever been any proper presentation of Circle Ridge’s
demands insofar as there is no proper assertion of Great Northerns
liability under the $700K note because Circle Ridge does not have
the authority, acting alone, to enforce, or even attempt enforcement
of liability on such note, nor has it ever attempted to enforce the note
in accordance with the law.
11. Great Northern is entitled to judgment that Circle Ridge take
nothing, with respect to its claims for Trespass to Try Title, because
there is no sufficient legal evidence which supports such
determination.
Page 28 of 93
STATEMENT OF FACTS
One of America’s great trial lawyers, Abraham Lincoln learned to read
in front of the fireplace in his log cabin. Among his early reading text was
AESOP’S Fables. Lincoln loved recounting the stories he first read there.
Among his favorites was that of the “Wolf in Sheep’s Clothing”, a story in
which a lamb, seeking the wisdom and protection of its mother bounded up a
hill to a figure apparently clad in a sheep’s skin. However, upon arrival, sadly
the lamb realized it encountered the wolf covered in its mother’s wool. Sadly
it was devoured. Unfortunately, Appellants would liken the lamb’s experience
to theirs in seeking justice and protection of the law in this case. Sadly, from
the commencement of voir dire through the Court’s ruling on Appellant’s Post
Judgment Motions, they felt deceived at every turn and ultimately devoured
by their trial court experience.
From the viewpoint of Appellant, Great Northern Energy, this lawsuit is the
effort of Appellees Circle Ridge Production and Kevin Stephens to avoid the
consequences of the unauthorized foreclosure of a Deed of Trust lien and its
attempt to enforce the liability of Appellant Great Northern Energy as first
established in a promissory note in the principal sum of $700,000.00 (“$700K
note”) on September 11, 2012 and a deed of trust given as security therefore on
that date. The payees in the note and beneficiaries in the deed of trust were “Circle
Page 29 of 93
Ridge Production and Kevin Stephens”. (CR: 3:134:9-136:15) Indeed, the Deed
of Trust, designating both as “Beneficiary” (Cr: 1085, RR: 3:99:1-100:25) (Ex. 8)
expressly provides the “Beneficiary” “… may request the Trustee to proceed with
foreclosure and other remedies.” Article 3, 3.1(c) CR: 1092. [page 8 of D.T.] As
specified the Uniform Commercial Code and in Texas case law ( as described in
Argument and Authorities section III below) the proper enforcement of rights
granted in both the $700K note and deed of trust must be enforced in the name of
both, ”Circle Ridge Production and Kevin Stephens” and neither of those parties
can act alone in enforcement. However, in this case joint action never existed in
connection with enforcement or foreclosure, and legally it never could have
existed. Nevertheless, Circle Ridge Production attempted to and did conduct a
purported foreclosure sale on November 5, 2013, (CR: 1085-1106), (RR: 3:134:9-
1316:15) and asserts it right to enforce the $700K note in this lawsuit. Circle
Ridge’s efforts began in its Original Petition filed on June 18, 2014, (CR: 10) with
its claim to own oil and gas interests in Harrison County, Texas. It further alleged
that the defendant Great Northern Energy had alleged it owned rights and titles
with respect to the liens, leases, and promissory note of September 11, 2012
through an “assignment and bill of sale of oil and gas leases OBENCO purportedly
signed by Kevin Stephens as grantor purporting to convey all of Kevin Stephens’
right title and interest to Great Northern.” (CR: 11) It further claimed that such
Page 30 of 93
assignment was a forgery, “thereby rendering said Assignment and Bill of Sale
invalid and in no force and affect.” (CR: 11, 12) Its requested relief was that the
Court declare the Assignment and Bill of Sale from Stephens to Great Northern
invalid and unenforceable and ordering it removed from the title of property of
subject litigation and quieting title. (CR:13) Simply stated, Circle Ridge centered
its claims upon the proposition that Great Northern had forged and assignment of
Kevin Stephens’ interest in and to $700K note from Kevin Stephens to Great
Northern Energy. Throughout the discovery and pretrial process Circle Ridge
Production maintained these positions, refining and expanding them through four
amendments to its Original Petition, including but not limited to its 5th Amended
Petition upon which it based its prosecution in this trial. (CR: 1066-1125)
Commencing in its First Amended Original Petition filed January 5, 2014, (CR:97)
Circle Ridge expanded its claims of forgery of the Assignment from Kevin
Stephens to Great Northern and claims the principals of Great Northern Energy,
Joe Loftis and R.J. Abercrombie has conspired to violate the Texas Civil
Conspiracy and Texas Theft Liability Acts in securing and recording the forged
Assignment and Bill of Sale from Kevin Stephens to great Northern Energy. (Cr:
101-102) These allegations continued throughout the pretrial period in successive
pleadings, Plaintiff 2nd Amended Petition filed on October 10, 2014 (CR: 680, 683-
685), Plaintiff’s 3rd Amended Petition filed August 28, 2015 (Cr: 839, 845-847),
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and in Plaintiff’s 5th Amended Petition, filed October 13, 2015 (CR: 1066, 1069-
1074). However, apparently realizing its inability to establish the “forgery”
allegations through competent evidence in trial, (see Statement of Facts, pages 29-
30 herein). Circle Ridge surreptitiously abandoned its claims of allegations of
forgery shortly after midnight, on the 2nd day of testimony, to-wit: around midnight
on October 20, 2015 at 12:32 a.m., (CR: 1237), in which it Non-suited all claims
regarding, Non-suiting all claims against Loftis and Abercrombie, individually for
violation of civil conspiracy or of the Texas Theft Liability Act, (CR: 1238) and
also any other claims against Loftis or Abercrombie individually. Thus, when it
came time to put up or shut up, concerning Circle Ridges allegations that the
Assignment of Kevin Stephens was a forged document, Circle Ridge tucked its tail
and ran from any effort to prove the veracity of those allegations through
competent evidence. Further, being unable to establish that the assignment of
Kevin Stephens’ interest in the $700K note and deed of trust to Great Northern in
December 2012 was not legitimate, (CR:1238), Circle Ridge proceeded to attempt
to cover its tracks for its unauthorized acts in conducting the foreclosure sale of
November 5, 2013 (Cr:1238), RR: 3:230:14-237:20) or attempting to enforce
collection on the $700K note (CR: 1066,1075-1077, 1078-1079) (RR: 3:99:1-
100:25), by enlisting the assistance of the trial Court. It’s assistance was in
excluding virtually all evidence tending to establish that neither it, nor its
Page 32 of 93
designated Trustee Dean Searle, failed to act with proper authority in foreclosing
on November 5, 2013 ( RR:3:145:17-146:9, 3:146:15-149:10), or filing suit to
enforce collection of the note.
Page 33 of 93
SUMMARY OF THE ARGUMENT
As stated in the statement of facts, the overarching and underlying legal
relationships in this cause arise through a note of September 11, 2012 and Deed of
Trust contemporaneously executed to secure its payment. The designated payee
and beneficiaries in both instruments are “Circle Ridge Production, Inc., and
Kevin Stephens”. Because of this designation, under law, the consent of both
parties, acting together, is necessary in any enforcement or collection efforts. All
arguments and authorities supporting those propositions are set forth in Section II
Argument and Authorities.
Because Circle Ridge had conducted a wrongful foreclosure sale, acting
without the proper authority of its remaining joint tenant Kevin Stephens, or his
successor in interest Great Northern Energy, Inc., Appellees initially attempted to
cover their omission by claiming that as assignment of Stephens’ interest in the
note and Deed of Trust to Great Northern Energy was “forged”. All evidence, both
documentary and testimony, that Kevin Stephens had assigned his interest to Great
Northern Energy before any foreclosure attempts or enforcement action by Circle
Ridge Production occurred. Notwithstanding that mountain of evidence, the court
improper allowed Kevin Stephens to testify that he gave permission to Circle
Ridge Production to foreclose on Great Northern, almost 10 to 11 months after he
Page 34 of 93
had assigned his interest away to Great Northern. That testimony was admitted and
presented to the jury although Great Northern Energy was not allowed to present
its rebuttal evidence. (See Section IV, Argument and Authorities). The testimony
excluded was not of a single witness, but rather that of 5 witnesses, including
admissions by Kevin Stephens to the effect that Great Northern had purchased
Kevin Stephens’ interest in the note long before any foreclosure was attempted.
(See Section IV, Argument and Authorities).
The court further compounded these errors by improperly overruling
Appellants counsels attempts to have the court declare a mistrial, both at the outset
during voir dire, when counsel for Kevin Stephens attempted to illegally inject
evidence into the minds of the jury pool, and at the conclusion because of the
massive evidentiary exclusions.
(See Sections 6 and 7 below Argument and Authorities )
The court further compounded its errors in excluding testimony, by ruling
against Great Northern Energy in numerous instances because it ruled that no
evidence appeared of record to support submission of issues to the jury. However,
the court had excluded that evidence which was offered on a bill. Both those
procedures are improper as outlined in Section_4__ below, Argument and
Authorities. The court further compounded it errors by improperly shifting the
burden of proof from Circle Ridge to Great Northern regarding the wrongful
Page 35 of 93
foreclosure issues insofar as they affected Appellees claims that Great Northern
was trespassing against its title. And avoiding the burden of proof on Great
Northern with respect to which party had responsibility to establish that the
foreclosure sale of November 5, 2013 was properly authorized. The court further
allow improper argument by counsel for Appellees in support of the answers to
jury issues. (All is more particularly specified in Section 7, Argument and
Authorities).
Finally, the court committed error in overruling Great Northern Energys
Motion for New Trial and Motion for Judgment NOV, insofar as it granted Circle
Ridges Trespass to Try Title judgment on the basis of a wholly insufficient legal
basis because evidence of title and third parties was introduced into the record and
negated and because Circle Ridge impleaded the parties into the cause who later
filed answers, to wit: the United States Government with an Internal Revenue
Service lien, without establishing a proper evidentiary basis to exclude that lien.
Finally, it improperly ruled that Circle Ridge had the right to collect the $700K
note proceeds from Great Northern Energy, when in fact, in law, there has never
been any proper enforcement of the note.
Page 36 of 93
ARGUMENT AND AUTHORITIES
I.
STANDARDS OF REVIEW
Because different standards of review apply to the various issues presented as
errors in this brief, each standard is separately stated within the specific areas to
which it applies.
II.
September 11, 2012 Note and Deed of Trust
As previously described in the Statement of Facts, central events in this
dispute arise from the enforcement attempts and foreclosure by Circle Ridge
Production of a Promissory note in the original principal sum of $700,000.00,
together with a Deed of Trust securing same, and both made to “Circle Ridge
Production, Inc. and Kevin Stephens”, as payees in the note, (CR1107-1111)
and_(RR3:98:1-98:24) and beneficiaries in the Deed of Trust. (CR1084:1106) (RR
Ex.9). These designations, created a joint tenancy, and, in this case, requires that
both Circle Ridge Production, Inc., and Kevin Stephens must act to enforce the
note, §3.3110 (d), Tex. Bus. & Com. Code Ann. (2016), or authorize the trustee to
foreclose the deed of trust lien indeed, the Deed of Trust itself designates “Circle
Ridge Inc., and Kevin Stephens” as “Beneficiary”.(CR 1085)(RR Ex 9, page 1.)
Further, in article 3, “Defaults & Remedies”, the Deed of Trust provides at
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paragraph 3.2 “remedies”…”Beneficiary may…do any one or more of the
following to the extent permitted by applicable law: (c)…Foreclosure…request the
trustee to proceed with foreclosure. (CR 1092, Ex 9, (Everbank v. Seedergy
Ventures, Inc., 2016 Tex.App. LEXIS 7319 (Tex. App.—Houston [14th Dist.]
2016), But, in this case, no such joint action occurred, nor was it ever possible at
any time after January 1, 2013, because in December, 2012, Kevin Stephens
assigned all of his right, title and interest in the note and liens to Great Northern
Energy, (RR3:98:1-98:24); and Great Northern Energy paid the consideration of
approximately $60,000.000, to Kevin Stephens’ family members, (RR3:227:8-
230:13), as directed by Kevin Stephens, (RR3:227:8-230:13). There is enormous
significance in the impact of the word “and” in this designation.
Article 3 of the Uniform Commercial Code, Texas Business and Commerce
Code adaption of the UCC, controls enforcement of rights arising pursuant to
promissory notes and negotiable instruments. The relevant statutory provision is
§3.110, “Identification of the Person to Who Instrument is Payable” Tex. Bus. &
Com. Code Ann.§3.3110 (West 2015). Specifically, subsection (d) of §3.3110
provides in relevant part, “…(i)f an instrument is payable to two or more persons
not alternatively, it is payable to all of them and may be negotiated, discharged,
or enforced only by all of them.” Id. at §3.3110(d). The Comment 4 attached to
(and part of) this Code section discusses subsection (d) with this explanation:
Page 38 of 93
“…If an instrument is payable to X and Y, neither X nor Y acting
alone can be the holder of the instrument. The instrument is ‘payable to
an identified person.’ The ‘identified person’ is X and Y acting jointly.
Section 3-109(b) and 1-102(5)(a). Thus,…X or Y acting alone, cannot be
the holder or person entitled to enforce or negotiate the instrument because
either, acting alone, cannot be the holder or the person entitled to enforce,
or negotiate the instrument because neither, acting alone, is the identified
person stated in the instrument.”
Thus, Circle Ridge, acting alone does not have the power to enforce or
foreclose on the liens securing payment thereof. See Johnson v. Cox, 630 S.W.2d
492 (Tex.App.-Corpus Christi, 1982, writ ref’d n.r.e.).
Section 3.201 of the Texas UCC (Tex. Bus. & Com. Code Ann. §3.201
(West 2015), governs “Negotiation”. Although the specific statutory language of
that section does not squarely address the issue presented here, a statement in the
“Commentary” following that section does, see Comment 5 to §3.203, and
Commentary, “No Partial Negotiation or Transfer” and “Distinction between
right to enforce instrument and ownership of instrument, “Anderson, Bartlett &
East’s Texas Uniform Commercial Code Annotated(2007 Edition-West
Publishing)i.d. A paragraph of the Commentary section is entitled, “Effect of
attempted partial negotiation” states:
“Negotiation is all or nothing. Subsection 3.203(d) and Comment 5
make it clear that the cause of action on an instrument cannot be split.
An indorsement and delivery purporting to transfer less than the entire
Instrument cannot be a negotiation. It may, however, be a partial
Assignment as recognized in the last sentence of §3.203(d). …”
Page 39 of 93
Further, Section 3.203. “Transfer of Instrument” (Tex. Bus. & Com. Code
Ann.§3.203 (West 2015), specifies in its subsection (b), “transfer of an instrument,
whether or not the transfer is a negotiation, vests in the transferee any right of the
transferor to enforce the instrument, including any right as a holder in due course.
“… Comment 5 to §3.203, provides in relevant part, “…(t)he cause of action to
enforce an instrument cannot be split. Any indorsement which purports to convey
to any party less than the entire amount of the instrument is not effective for
negotiation. …An indorsement purporting to convey less than the entire
instrument does, however, operate as a partial assignment of the cause of action…..
A partial assignee of an instrument has rights only to the extent the applicable law
give rights, either at law or in equity, to a partial assignee.”
Among the most recent declaration of those rights which may be assigned was set
forth in Federal Financial Co. v. Delgado, 1 S.W.3d 181, 185, where the Court
stated, “a transferee of an instrument receives whatever rights his transferor has.”
In this case, the relevant language in the transfer instrument from Stephens to GNE
states:
“IT IS HEREBY AGREED AND UNDERSTOOD, FOR AND IN
CONSIDERATION OF ONE DOLLAR AND OTHER GOOD AND
VALUABLE CONSIDERATION, IN HAND PAID BY THE PARTIES HERETO
AND ACKNOWLEDGE BY THEM AS SUFFICIENT, that Kevin Stephens,
Individually and as any or no portion of ownership in Circle Ridge Production,
Inc., (hereinafter called KS) does hereby sell, transfer, bargain, let, provide
possession and domain over and otherwise gives unto Great Northern Energy, Inc.
(hereinafter GNE) all of KS right, title and interest in and to that certain debt
instrument wherein KS is lender unto GNE under and note, and according to the
herein state terms and conditions: to wit: KS does hereby, effective December 1st,
2013, sell and grant his undivided portion, whatever such portion may be, but not
less than 50% of, that certain note due from GNE unto KS and Circle Ridge
Page 40 of 93
Production, Inc., jointly, and that certain Deed of Trust attached thereto, and
subject in and to the OBENCO leases and wells, as shown ….”
…Kevin Stephens is assigning this debt in whole and as part of the original
contract and debt instrument and …Kevin Stephen transfers (sic) his rights, in any
form or manner, under those agreement…”(RR Ex GN 18,4:310-11-
311:22,4:325:20-25,3:210:3-213:25)
Further, the identified beneficiaries or beneficiary of the Deed of Trust as
stated on its face is Circle Production and Kevin Stephens. Texas is jurisdiction
in which the lien follows the note. In other words, enforcement of the lien must
comply with the terms of the note. There can be no greater or separate right for
enforcement of the lien beyond the authority of the note it secures. (Case
citation). Campbell v. Mortgage Electric Registrations System, Inc., 2012 Tex.
App. Lexis 4030, 2012 Westlaw 1839357 *4 (Tex. App.-Austin May 18, 2012,
Petition denied), Leavings v. Mills, 175 S.W.3d 301, 310 (Tex. App.-Houston
[1st District] 2004, no Petition).
III.
IMPROPER VOIR DIRE
During the voir dire, examination by Josh Manass, Kevin Stephens’
attorney, over Defendants objections, (RR 2:127:1-128:1), and in overruling
Defendants request for mistrial to: (RR 2:128: 2-9), the Court allowed Manass to
inject wholly improper evidentiary matters into the trial, attempting to use
venireman as “experts”, to bolster his contentions by using voir dire with jurors
Page 41 of 93
having specialties such as being an attorney, or having oil field experience or
having psychological experience, to inject their opinions regarding the specialty
matters related to their occupations, into consideration before the whole panel, all
being in complete violation of the requirement for the proper presentation of expert
testimony pursuant to Texas Rules of Evidence (“T.R.E.”), Rules 701-706 T.R.E.
Specifically, Manass attempted to use the venire person Berry to bolster his case
concerning the requirements for notarization, and (RR 2:120: 12-124:12), and the
venire person Williams, over Defendants objections, (RR 2:121: 22-122:14) and
venire person Williams, concerning his knowledge of wells in the Waskom area
and the quality of wells concerning their productive capability of wells. (RR 2:124:
13-2:126-24, and specifically: asking about the quality of wells as being “only
stripper wells” (RR 2:128 17-129:24), again, over Defendants attorneys objection,
Manass also conducted improper voir dire with venire person Williams concerning
psychological tendencies of persons, aimed at discrediting Joe Loftis (RR 2:128
10-129-23). As stated, these questions were submitted with an idea to planting
preconceived opinions of the Defendants as can be further seen below.
It, impacted one of the jurors who was selected and deliberated. The test for the
Courts rulings on Defendants objections to voir dire is an abuse of discretion.
Cortez v. HCCI-SAN ANTONIO INC., 159 S.W. 3d, 87(Tex. 2005). An abuse of
discretion occurs when a trial court allows questioning in violation of law.
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(Travler’s Ins. Co. v Deaton, 456 S.W.2d 544, 545 of Tex. Civ. App. Amarillo
1970, writ ref’d n.r.e.); A.J. Miller Trucking Co. v. Wood, 474 S.W. 2d, (Tex. App.
Tyler 1971, writ ref’d n.r.e).
IV.
EXCLUSION OF PRACTICALLY ALL OF
APPELLANTS EVIDENCE, BOTH TESTIMONY
AND DOCUMENTARY
As previously presented in (Section II), “September 11, 2012 Note and
Deed of Trust”, the proper resolution of issues in this case revolves around the
determination of whether Plaintiff Circle Ridge can properly prosecute an action
for enforcement of its right under the promissory $700K note of September 11,
2012 and foreclose the Deed of Trust lien given as security therefore when the
note is made payable to “Circle Ridge Production, Inc. and Kevin Stephens”
and the same parties are identically specified as “Beneficiary”
in the Deed of Trust.. (CR1085-1111)(RR3:99:1-100:25), (Ex.8)) In trial, Circle
Ridge attempted to convince the jury that is could proceed in its collection and
enforcement efforts, acting alone because it had been authorized to do so by
Kevin Stephens in behalf of Kevin Stephens and Circle Ridge Production, Inc.
Bill Briscoe testified Kevin Stephens gave him oral permission to foreclose in
November, 2013, (RR 3:104: 17-109:24). Kevin Stephens testified that he gave
Page 43 of 93
Bill Briscoe permission to foreclose on his interest in the $700K note and Deed
of Trust, (RR3:200:19-202:19), Circle Ridge Production argued that fact to the
Court (RR 5:14”23-18:3) (RR 3:200:19-202:19). However, the Court wholly and
completely to refused to allow Defendants to offer testimony through either the
cross examination of Kevin Stephens (RR3:210:3-213:25), the direct testimony
of Joe Loftis (RR4:38:6-4:39:11), the direct testimony of Michael Stephens
(RR4:292:17-305:11), that Kevin Stephens had assigned his interest in the
promissory note, as permitted by Section 3:201, (TEX. BUS. & COM. CODE
ANN.) (LEXIS NEXIS 2016 ).
However, specific testimony as set forth below was offered by Joe Loftis,
of the negotiation, and execution and delivery of the note and Deed of Trust lien
assignment by Kevin Stephens (RR4:38:6-4:39:11,4:141:127-151:4), as well as
the payment of the sum of $10,000 to Michael Stephens (RR4:141:17-151:4) and
$50,000 Kevin Stephens father Bobby Stephens (RR4:141:17-151:4) at Kevin
Stephens direction, (Michael Stephens testimony)(RR4:303:13-305:11). That
testimony was supported by both Joe Loftis and Kevin Stephens, and the
admission of Kevin Stephens under oath in cross examination under Defendants
bill of exceptions, that he had executed contracts assigning such note and its
attached liens to Circle Ridge in December 2012, (RR3:210:3-213:25). Further,
Michael Stephens testified that he had personally informed Bill Briscoe,
Page 44 of 93
President of Circle Ridge Production, Inc., all of the Stephens family’s
assignments to Great Northern,(RR4:298:20-299:1), relevant and material to the
jury determination of the issues presented to it, namely: whether the foreclosure
of November 5, 2013 was properly conducted. It would not be properly
conducted if the trustee conducting that sale did not have proper authority to do
so. As set forth in Sec. II, page 35-39, above, it is axiomatic that Circle Ridge
acting alone, did not have the authority to enforce the note. (Subsection D),
(Section 3.3110, Tex. Bus. & Com. Code.) (West 2015).
The court erred in its refusal to allow the testimony of Lofts, that Kevin
Stephens sold and assigned his interest in the underlying note and liens to Circle
Ridge as (RR4:38:6-39:11-Bill of Exceptions) (and through Exhibits 16, 17, 18,
20, and 21) the testimony of Kevin Stephens acknowledging that he signed such
documents (and sold his interest) (RR3:210:3-213:25, and Exhibits 16,17,and 18)
the testimony of his brother Michael Stephens that such transaction occurred, and
the testimony of Kayla Marrs, impeaching Kevin Stephens insofar as he denied
executing one of the contracts (Kayla Marrs being the notary before whom he
appeared to acknowledge his execution) (RR3:216:9-219:5). Four separate
witnesses testified that Kevin Stephens assigned his rights in and to the $700K
note and its underlying liens to Great Northern Energy, yet the Court wholly
excluded, blocked and prevented the jury from having any knowledge
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whatsoever of such occurrence. The reason initially given by the Court for
excluding such evidence was that the assignment instrument offered by
Appellants, was excluded by the statute of frauds objections of Circle Ridge;
however, when Defendants counsel pointed out on the morning of the 2nd day of
trial, that statute of frauds did not apply because it did not apply to an assignment
of mortgage, and the contract was a performed contract, nevertheless, the Court
persisted in excluding Defendants attempts to offer defensive testimony as just
outlined, saying that “I just don’t think you can block a foreclosure by buying
1% of a note.” (RR4:311:24-322:17) That comment by the Court indicates three
areas of bias or prejudice and prejudgment of this case. First, it is not reflective
of any of the testimony of the case, because there is no evidence that anyone
bought or attempted to buy only 1% of a note to block a foreclosure. Rather, the
evidence in this case (albeit offered through the Bill of Exception) conclusively
establishes that the transaction to purchase Kevin Stephens interest occurred
December 2012, almost a year before the foreclosure.(RR3:210:3-213:25). There
was no discussion of foreclosure at the time the Defendant Great Northern
Energy purchased the note. Second, the Courts application of that ruling is
completely contrary to the applicable standards of both the uniform commercial
code, of the express language of the Deed of Trust, and of joint tenancy rules
which require the action of both parties who then own the note at the time of the
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foreclosure to proceed with enforcement. Through its exclusion of evidence, the
Court left the jury with the impression that Kevin Stephens owned an interest in
the note and had the right to grant his consent in November 2013, when he had
parted with his ownership interest in and to the note in December 2012. Finally,
the Court substitutes its preference for outcome i.e. that Appellants cannot
contest foreclosure actions without giving the jury the opportunity to fully weigh
all relevant evidence.
Insofar as the Court refused to admit Appellants Exhibits #16 (the Rojo
Burro contract wherein Kevin Stephens agrees to assign interest in and to the
note and liens to Great Northern), #17 (additional Rojo Burro contract
acknowledging before Kayla Marrs), #18 (note and lien assignment from Kevin
Stephens to Great Northern (#GN12, exhibit Defendant #12) as offered,
RR3:196:2-199:1, 3:200-19-209:18,3:220:1-223:1, GN Ex. 16 & 18, it prevented
Appellants from proving their defenses, rebutting Appellees testimony regarding
its authority to foreclose, and from proving their affirmative claims.
(RR:4:239:5-241:8). Clearly all of this testimony is relevant and material, as the
Texas Supreme Court indicated in its ruling in Anderson v. Gilbert, 897 S.W.2d,
783, 784-785, per curiam, overruling the 5th Court of Appeals in Dallas for its
failure to properly evaluate claims as to whether only one of the joint tenants in a
note in which …”Gilbert and Gideon” were joint payees of the note and joint
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beneficiaries of the Deed of Trust id. at 784 had properly acted through only one
of the joint tenants in causing a foreclosure sale to be executed and sue for a
deficiency. id.at 785. The Texas Supreme Court reversed the Dallas Court of
Appeals for failing to evaluate whether only one joint tenant (in an “and” note
and Deed of Trust situation) had received a proper assignment of the interest
from the remaining joint tenant of their rights under the note before conducting
the foreclosure or engaging in enforcement. id at 785. It ordered the Appellate
Court to consider and evaluate the claims of a note payee that no proper
assignment of the interest of Gideon or his widow had occurred before Gilbert
acted alone to…cause a foreclosure sale to be executed and sue Anderson for
deficiency. i.d. at 785. This analysis is precisely in point in this case. If a Court
of Appeals must evaluate whether one joint tenant has properly assignment
interest to a second joint tenant, before the second commences foreclosure or
note enforcement actions, clearly the trial court must allow the admission of such
evidence. Further, these facts were identified in the testimony of Nate Moran
(RR:220:9-222:1), documentary evidence of the contract by Kevin Stephens to
assign his interest in the note and liens, the actual assignment,(Exhibits GN 16,
17, 18, & RR 4:310:11-311:22, 4:325:225), and the testimony of Nate Moran,
that he had calculated payments to Circle Ridge Productions only, in calculating
the amounts due on the note (RR: 4:239:5-241:8). Thus, the only party with
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whom Mr. Moran dealt in representing Great Northern, was Dean Searle, who
acted in behalf of Circle Ridge Production, solely.
Similarly, the Court erred in excluding the testimony of Michael Stephens,
that the Rojo Burro transaction was a part of the sale and assignment of the
Kevin Stephens interest in the $700K note to Great Northern (RR:4:248:13-
250:251).
The Court systematically excluded either oral testimony and/or documentary
evidence offered through oral testimony, relating to any attempt by Great Northern
to establish before the jury that Kevin Stephens had assigned his interest in the
note and Deed of Trust of September 11, 2012, to Great Northern Energy before
the foreclosure on November 5, 2013. Further, it excluded evidence that the
President of Circle Ridge Production, Bill Briscoe, had notice of that assignment
before he attempted any foreclosure as did his attorney, Dean Searle, who was the
trustee conducting the foreclosure sale on November 5, 2013.(RR3:145:17-146:9)
The Court excluded the testimony of 5 separate witnesses regarding events
connected to the assignment, or collection or enforcement of the $700K note, as set
forth below. No testimony or exhibits relating to the assignment from Kevin
Stephens to Great Northern were admitted before the jury. The Court wholly
excluded and prohibited the jury from knowledge of any such relevant and material
evidence. However, all of such testimony was introduced in Bills of Exception by
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Appellants. Simply stated, the Court refused to allow Appellants to introduce
material and relevant evidence supporting their claims and defenses before the
jury, on a systematic and intentional basis. The following specific testimony which
Defendants attempted to offer through the individuals identified, was excluded and
appears on a Bill as hereafter indicated:
a. Errors in excluding Kevin Stephens’ testimony and exhibits:
b. Errors in excluding testimony and exhibits offered through Bill of
Exceptions testimony of Kevin Stephens:
The Court allowed Bill Briscoe to testify that he obtained “oral” permission to
foreclose his lien from Kevin Stephens, (RR 3:105: 17-109:24). He further claimed
that after the foreclosure sale he purchased Kevin Stephens’ interest in the note,
(CRP Ex 11, assignment from Kevin Stephens to Circle Ridge Production dated
December 11, 2013) (RR 3:112:10-113:24, CRP Ex 11). Bill Briscoe did
acknowledge that all documents including the promissory note and Deed of Trust
were made jointly payable to Circle Production and Kevin Stephens and that both
Circle Ridge Production and Kevin Stephens were the designated beneficiaries of
the Deed of Trust.(RR3:134:9-136:15). He further acknowledged that the
foreclosure demand (CRP Ex 15)(RR3:136:15-138:22), states it is only in behalf of
Circle Ridge Production interest in the note, (RR 3:138:20-140:10). Briscoe further
acknowledged that the demand letter of July 2013 and the October demand letter of
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foreclosure (CRP Ex 14), were in behalf of Circle Ridge Production (RR 3:143:10-
145:14). Briscoe further acknowledged that Kevin Stephens had told him he had
participated with Great Northern in the Rangeford Resources transaction, (RR
3:145:17-146:9). However, the Court refused to allow Great Northerns attorney to
cross examine Mr. Briscoe when he attempted to specifically obtain Mr. Briscoe’s
admission that it had prior notice before the foreclosure, (RR 3:146:15-149:10). It
further excluded evidence which Appellants counsel attempted to offer that Circle
Ridge Production did not own Kevin Stephens interest on November 5, 2013,
when it foreclosed, (RR 3:151:22-153:6). It further refused to allow the
introduction of correspondence with Nate Moran, (CRP Ex 20), establishing the
amount of $171, 000 as a payoff amount on Circle Ridges portion of the note in
correspondence between Dean Searle and Great Northern, a payoff sheet from
Dean Searle, acting as attorney for Circle Ridge (RR 3:158:4-162:9).
Notwithstanding these refusals to permit cross-examination by Great Northerns’
counsel, it allowed Kevin Stephens’ attorney to examine and introduce into
evidence through Bill Briscoe, Bill Briscoe’s claim that he had no notice that
Kevin Stephens had assigned his interest in the $700K note before he received his
assignment of Kevin Stephens’ interest on December 13, 2013.(RR 3:146:15-
149:10).
The Court allowed testimony from Kevin Stephens that he gave Bill Briscoe
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permission to foreclose his interest on the $700K note and Deed of Trust (RR
3:201:8-13, 200:19-202:19). Inexplicably, it refused to allow Great Northerns
attorney to cross-examine Kevin Stephens to dispute the fact that he had any
ownership interest in either the note or the Deed of Trust lien at the time he sold
his interest to Briscoe in December 2013.(RR3:210:3-213:25, 3:220:1-223:13)or
(RR 3:200:19-201:13, 3:203 25-209:18). Instead, the Court only allowed Great
Northern Energy’s attorney to present its cross-examination of Kevin Stephens in a
Bill of Exceptions: (RR 3:210:3-252:17 and 4:31:22). During the course of Kevin
Stephens’s testimony, taken during the Bill of Exceptions by Appellants attorney,
Kevin Stephens testified among other facts as follows:
1. That he admitted he signed the document introduced as GN Ex 16,
around December 1, 2012 (RR 3:210:3-213-:25), in which he assigned his interest
in the note and Deed of Trust and Lien (GN Ex 18)(RR3:210:3-213:25, 4:310:11-
311:22,325:20-25) accompanying the note to Great Northern in order to participate
proposed transaction wherein the “OBENCO” package would be included in the
Rangeford Resources transaction. He denied that he had signed a similar contract
(GN Ex 17) Rojo Burro to Great Northern Energy contract before an independent
notary, Kayla Marrs, around October 24, 2012, (RR3:215:4-216:25), and
equivocating as to whether his signature appeared on the document (RR 3:216:9-
219:25). Although he denied the validity or genuineness of his signature on GN 17
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before Kayla Marrs, an independent notary, he did acknowledge signing the
agreements which were (GN Ex 16 & 18), the original Rojo Burro contract he
admitted signing and the actual assignment of all of his right title and interest,
including (GN Ex 18), which is a purchase of note and financial instrument Kevin
Stephens into Great Northern Energy, Inc., “OBENCO” properties. Kevin
Stephens acknowledged executing that document on that date. Kevin Stephens
further acknowledged that Great Northern tendered the sum of $10,000 to his
brother Michael Stephens and $50,000 to his dad Bobby Stephens in satisfaction of
its obligations under Ex 16 and 18 in December, 2012 (RR 3:227:8-230-13).
B. The Court erred in refusing to allow Joe Loftis, President of Great Northern
Energy, Inc., to testify concerning Kevin Stephens assignments of his interests.
The Court erred in excluding the testimony of Joe Loftis, President of Great
Northern Energy, Inc., (offered on a Bill of Exceptions) (RR:4:141:17-151:4), that
Great Northern entered into a contract with Kevin Stephens and Michael Stephens
for the acquisition of Kevin Stephens interests in the $700K promissory note and
Deed of Trust, through (GN Ex 16, 17,) (RR4:141:17:144:11). It excluded
testimony explaining Kevin Stephens’ election to take $62,500 initially and
$62,500 on one year after December 1, 2012, to wit: December 1, 2013 (RR
4:144:2-17.) Further, Loftis testified on the Bill of Exceptions that Kevin Stephens
assigned the document to Great Northern in GN Ex 18(RR: 144:18-145:24). He
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further testified that the $62,500 was paid in the form of $10,000 to Michael
Stephens, $50,000 to Kevin Stephens’ father, Bobby Stephens, (RR 150:15). Loftis
further testified on the Bill of Exception that Bill Briscoe knew of the transactions
between Great Northern and Kevin Stephens by virtue of having come to Great
Northerns office to discuss those transactions (RR 4:150:19-151:5).
C. The Court erred in exclusion of Kayla Marrs testimonies as offered on the
Bill of Exceptions. Kayla Marrs, is a notary public who acknowledged GN Ex17
(RR 4:206 :22-207-15). She verified that her acknowledgement on GN Ex 17 was
valid and impeached Kevin Stephens testimony that he had executed and
acknowledged the same, as he did that before her and in her presence (RR
4:207:16-209:5).
D. The Court erred in excluding the testimony of Nathaniel Moran, as offered on
his Bill of Exceptions, (RR 4:239:5-241:8) to the effect that the only party against
whom Dean Searle represented he was attempting to enforce the $700K note was
in behalf Circle Ridge Production, and not Circle Ridge Productions and Kevin
Stephens, in the summer and fall of 2013. The Court further erred in failing to
admit GN Ex 12, tendered with that testimony and Ex D12(RR:4:220:9-221:1) and
Ex D15(RR:4:218:14-220:8) regarding payment by Great Northern on the $700K
note. (GN Ex 15, letter of October 11 from Dean Searle, Demand, (RR4:218:14-
220:8).
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Errors excluding Michael Stephens’ testimony:
E. The Court erred in refusing to admit GN Ex 15 offered with the testimony of
Michael Stephens explaining the substance of the Great Northern transaction
which included assignment of all interests in the $700K note formally owned by
Kevin Stephens (RR4: 296:1-298:4). The Court erred in excluding Michael
Stephens testimony that he personally delivered notice to Mr. Briscoe of the
Stephens families decision to participate with Great Northern in the Rangeford
Resources transaction and to assign its interest in the $700K note to Great Northern
together with all liens, in the fall of 2012 (RR 4: 298:5-299:1): The court erred in
excluding Michael Stephens identification of GN Ex 16 & 18 (the assignment) and
explaining the terms of payment and the payment of same: for $62,500 (RR4:299
9-302:3) and expressing (RR: 4:300:14-302:12). The Court erred in excluding the
testimony Michael Stephens acknowledging the receipt of the checks for $10,000
and $50,000 in December of 2012 in satisfaction of the obligations established in
the Rojo Burro contracts GN Ex16, 17 & 18 (RR 4:303:13-305:11). Further, the
Court erred in excluding the testimony of Michael Stephens, as offered in the Bill
of Exceptions regarding the financial and business relationships between Kevin
Stephens and Chad Hamilton (RR4:305:12-307:13). The Court erred in excluding
the testimony offered in the Bill of Exceptions of Michael Stephens regarding
Kevin Stephens role in the disappearance of equipment sold to Great Northern for
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use on the leases and that is(RR:4:307:25-309:2)
Standard of Review – Evidence Exclusion
Each and all of the evidentiary exclusions, standards for review and
restrictions on Appellants counsel’s ability to conduct cross-examination or present
their case, constitutes the greatest restrictions on the ability of parties to present
Appellants’ case. Approximately 80% of the evidentiary offers by Appellants were
excluded. While certain evidentiary exclusions or rulings may not be reversible
error, clearly these were. The improper exclusion of competent and relevant
evidence to material injury of the complaining party should result in reversal. See:
Anderson v. Gilbert, supra, Modine Mfg.Co. the North E. Ind. School District, 503
S.W. 2d, 833(Tex.Civ.App-Beaumont 1973, writ ref’d n.r.e.). Appellants recognize
that the standard of valuation of whether or not the trial court committed reversible
error is an abuse of discretion, by the trial Court. However, the Texas Supreme
Court has said that the harmfulness of evidentiary rulings is determined by
examining the entire record to see whether a judgment was controlled by the
testimony in question. Mancorp, Inc. v. Culpepper, 802 S.W. 2d, 226, 230 (Tex.
1990). Jamail v. Anchor Mort. Services, Inc., 809 S.W.2d 221, 223(Tex.1991),
reh’g of writ of error overruled, June 19, 1991). However, no specific test for
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determining whether an improper exclusion of evidence was reasonably calculated
to cause and probably did cause the rendition of an improper judgment: McCraw v.
Maris, 828, S.W. 2d, 756, 758(Tex.1992). In fact, in response to Appellants
attorney’s objections regarding the exclusion of Appellants evidence, the Court
acknowledged understanding Appellants attorney’s objections, but responded, that
he did not believe that the Appellant could “block” a foreclosure by buying 1% of
the note. (RR4:316:25-317:8). Clearly, this comment indicates the Judge’s bias,
prejudice or pre-judgment of this case. Further, in the issues submitted to the jury
the specific inquiry into question number one was “requesting whether “Great
Northern Energy established a defect in the foreclosure sale of November 5, 2013.”
A defect would be a foreclosure sale (CR 1254) would be one that was conducted
without proper authorization. However, in all of the evidence recited above in
items the Court blocked Great Northerns attempts to introduce any evidence
substantiating its claims that there was never any proper authority to conduct such
sale in behalf of only Circle Ridge Production by Dean Searle. Instead, the
evidence before the jury was that “Kevin Stephens had authorized Bill Briscoe to
act for Kevin Stephens’ interest in the foreclosure sale in November 2013.”
(RR:3:200:19-202:19). Clearly the absence of this evidence affected the jury’s
decisions, and the Courts entry of judgment that Great Northern had not “proved”
its wrongful foreclosure allegations. This testimony was should be controlling on a
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material issue dispositive in this case.
V.
COURT ERROR IN EITHER GRANTING INSTRUCTED VERDICTS
AGAINST GNE AND/OR REFUSING TO SUBMIT THE FOLLOWING
ISSUES TO THE JURY FOR DECISION.
1. Standard of review: insofar as Appellants present issues relating to the
trial courts granting Plaintiffs Motions for Directed Verdict or refusing to submit
Appellants issues, to the jury and granting an instructed verdict in favor of
Plaintiffs, the exclusion of the evidence as argued in Section IV, pages 43-58
above, becomes relevant and important. The evaluation standard for this Court in
determining the propriety of the trial court’s action in granting Motions for
Directed Verdict or removing matters from consideration from the jury to grant a
Directed Verdict, is whether the party opposing the granting of the Directed
Verdict or removal of issues from the jury has presented any evidence of probative
worth, raising a material fact issue and establishing a claim or defense, while
viewing such evidence in the light most favorable to, in the case Appellants. Ojeda
v. Walmart Stores, 956 S.W.2d 704, 706-707 (Tex. App.-San Antonio 1997, pet.
denied). Further, insofar as the Appellant present issues regarding the trial Courts
exclusion of oral and documentary evidence, which would establish Appellants
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defenses and claims against Plaintiff Circle Ridge Production and Third Party
Defendant Kevin Stephens, Appellants submit that the standard is whether the
evidence excluded was calculated to and probably did cause the rendition of an
improper judgment as the Supreme Court has announced is prohibited in McCraw
v. Maris, 828, S.W. 2d, 756, 758(Tex.1992), supra, 758, and Anderson v. Gilbert,
supra, at 784-85
In evaluating whether Appellants submitted sufficient evidence of probative
worth, raising a material fact issue and establishing a claim or defense, the
evidence described in Section IV. 43-58 above, must be viewed in the light most
favorable to Appellants; however, the Court excluded that evidence, but it was
before the Court through the Bills of Exception recited previously and offered by
Appellants.
The prejudicial and apparently intentional nature and extent of the Courts
actions in excluding the evidence recited in Section IV 43-58 above, is apparent.
Simply stated, the Court refused to allow evidence in support of Appellees claims
and defenses as indicated below and then rendered its judgment because contrary
evidence did not appear on the record. Since these issues were never presented to
the jury, it is essentially immaterial whether the unsupporting evidentiary matters
were formally admitted into evidence.
The following issues are those which the Court erred in connection with the
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entry of a Directed Verdict or overruling Appellants claims, to wit:
5-1. The Court erred in granting Circle Ridges’ motion that Great Northern
breached the $700K promissory note and owed the sum of $637,114.15 to Circle
Ridge Production as liability on such note.
Many of the statutes and case authorities relating to this issue have been set
forth above in Section II of this Argument of Authorities portion. Those arguments
are incorporated into this section by reference as though set forth verbatim herein.
The central issue is determining liability on the note, is whether any liability
on the note at this point can be properly enforced. Extensive testimony was
offered to the effect that Bill Briscoe attempted to act alone. All demands (RR
4:222:18-223:6) were made by Searle in behalf of only the Circle Ridge portion of
the note. Nate Moran testified in the Bill of Exceptions that all his negotiations
with Dean Searle were conducted with Searle acting only in behalf of Circle Ridge
Production (RR4:213:9-218:13). Joe Loftis, Michael Stephens testified, and even
Kevin Stephens acknowledged through testimony offered in Bills of Exception that
in December, 2012, Kevin Stephens interest in the note was assigned to Great
Northern Energy. This lawsuit, including any actions to enforce liability on the
note by Circle Ridge Production was not filed until June 18, 2014 (CR:10-45).
Clearly, the assignment of Kevin Stephens’s interest in and to the 700K note to
Great Northern, occurred prior to June 18, 2014. As stated above, this evidence
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must be viewed in the light most favorable to Appellants. As specified in Leavings
v. Mills, supra, (310). Texas is a state were “enforcement follows the note”. It is
elementary that Kevin Stephens had the right to assign his interest in the note and
liens to Great Northern. (§3.203(d), comment 5, Tex. Bus. And Comm. Code
recognizing the effectiveness of partial assignments in note ownership. The Court
completely refused to recognize or honor Great Northern’s ownership interest in
the note, following Kevin Stephen’s assignment, or its failure to authorize Bill
Briscoe, President of Circle Ridge, to proceed with enforcement of the note. Those
admissions are errors by the Court. As the Texas Supreme Court stated the
considerations which were necessary in evaluating whether proper authority to
proceed in an, “x and y” foreclosure of deed of trust, and note enforcement,
existed, it should include factual evaluation of whether only one joint tenant acting
alone had received a proper assignment of rights from a successor interest owner.
Here there is no evidence of a proper assignment. Anderson v Gilbert, supra, 784-
785. If an instrument is payable to two or more persons and does not provide that it
is payable to them in alternative, it can only be enforced by all payees, and all co-
payees should be joined in the action. Page Airways, Inc., v. the Associated Radio
Service Co., 545 184, 189-190(Tex. Civ. App.-San Antonio, 1976, writ ref’d.
n.r.e.) Further, the fact that the interest of Kevin Stephens was assigned, to GNE
maybe be established by proving the transaction through which it acquired the
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interest of Stephens, Sections 3.201(c), comment C, Tex. Bus. & Com. Code. See
also Lawson v. Finance America Private Brands, 537 S.W.2d 483, 485(Tex. Civ.
App.-El Paso, 1976, no writ). Once the transactions established however, the
transferee acquires the same rights as the transferor had under the instrument (Tex.
Bus. & Com .Code Section 3.201(a)). Clearly, evidence exists that Great Northern
owned Kevin Stephens’ interest. The Court’s refusal to acknowledge this evidence
much less admit it, is construed, and constitutes a reversible error, because the
Court failed to consider the ocean of evidence supporting Appellants position. In
fact, there is not one scintilla of evidence in the trial that indicates or evidences the
fact that Briscoe acted with permission of the proper parties. Evidence of the fact
that he had no evidence or basis to establish that Kevin Stephens owned any
interest in the note or that he acted in his behalf. Clearly he did not act in behalf of
Great Northern Energy with respect to the subsequently acquire interest in the
September 11, 2012 note from Kevin Stephens. In short, the proper parties
Plaintiff, have never prosecuted this note, and no liability can exist,
notwithstanding the Court’s attempts to enter its Directed Judgment at the
conclusion of the trial, in the Final Judgment submitted.
Further, insofar as Appellees may argue that Appellants had stipulated to
any amount owed under terms of the note, any and all of such stipulations are
conditional, and apply only in the event that “Circle Ridge Production owns 100%
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of the note and GNE does not own undivided ½ interest as assignee of Kevin
Stephens. There is abundance evidence in the record to suggest the assignment of
interest from Kevin Stephens to GNE, it has been excluded by the Court, and is
contrary to the presumption that it should have been presented to the jury. Clearly
the granting of these Directed Verdicts was an error by the Court.
V-2. The Court erred in granting Kevin Stephens take nothing Judgment with
respect to Great Northern’s Breach of Contract claims against him.
The elements of a Breach of Contract claim are as follows:
1. there is a valid, enforceable contract;
2. Plaintiff is the proper party to sue for Breach of Contract;
3. Plaintiff tendered performance of its contractual obligations;
4. the Defendant breach the contract;
5. the Defendant breach caused Plaintiff injury.
The elements of a contract are specified in the following cases:
Foley v. Daniel, 346, S.W.3d, 687,690(Tex. App. –El Paso 2009,
no pet.)(elements 1, 3-5), Marquis Acquisitions, Inc, v Steadfast
Ins., 409 S.W. 3d, 808, 813-14(Tex. App. –Dallas 2013, no pet.)(elements 1, 3-5),
Zuniga v. Wooster Ladder Co., 119 S.W.3d, 856, 862(Tex. App.-San Antonio
2003, no pet.) (element 2), Perry v. Breland, 16 S. W. 3d, 182, 187, (Tex. App. –
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Eastland, 2002 pet. denied)(element 2).
The testimony of Joe Loftis offered on his Bill of Exceptions9/8/2016 5:29
PM:75:4-76:22,4:39:13-46:4, and Michael Stephens, (RR4:305:12-309:2,
establishes that there was a contract or agreement between Kevin Stephens and
Great Northern to furnish pipe and equipment, and that some of that equipment
was either neither furnished or removed, after Great Northern paid for it.
(RR:4:305:12-309:2). Further, Kevin Stephens acknowledged that he had a
contractual agreement to furnish pipe and supplies to Great Northern
(RR:4:305:12-309:2). This evidence establishes the existence of an agreement.
Further, the testimony of Joe Loftis that the equipment was removed, and
(RR:4:29:6-31:22), and that of Michael Stephens that he felt entitled to remove the
equipment (RR:4:39:13-46:4, establishes the basis for submission of a Breach of
Contract issued. Further, the testimony as to the amount of money paid establishes
the loss (RR:4:39:13-46:4). Thus, Great Northern has satisfied its requirements to
present testimony sufficient to meet his burden of proof for submission of the
Breach of Contract issued to the jury; however, the Court refused to present this
matter to the jury, ruling that no evidence existed. Of course no evidence existed,
the Court prevented the evidence from being introduced. The presumption exist
that this testimony, viewed most favorably in Great Northern Energy’s perspective,
should have been presented. The Court erred in failing to do so and Great Northern
is entitled to submit these issues to a proper trier of facts.
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V.3 Great Northern submits the Court erred in granting the motions of Bill Briscoe
and Kevin Stephens for Directed Verdict against Great Northern with respect to
Great Northerns claims for Breach of the Implied Covenant of Good Faith and Fair
Dealing.
In determining whether a cause of action can be characterized as a Breach of
Contract, a Tort or both, the Courts consider (1) the source of Defendants duty to
act and (2) the nature of the remedy or damages sought by the Plaintiff. See:
Foremost Plastics Corp, USA v. Presidio Engineering Contractors, Inc., 960 S.W.
2d, 41, 45(Tex. 1998); Southwestern Bell Telephone Co. v. DeLanney, 809 S.W. 2d
, 493,494-95)Tex. 1991); Exxon Corp. v. Gill, 221 S.W.3d, 841, 848(Tex.App.-
Corpus Christi 2007) reversed on other grounds, 299 S.W.3d 124,(Tex. 2009);
Crill v. Houston Ind., 124 S.W. 3d, 742m 753(Tex.App.-Houston [1st Dist.], 2003
no pet.) In order to determine whether any individual action, constitutes a breach of
contract or a breach of legal duty imposed by law, the Court must determine
whether the remedy lies in an action for breach of contract, or where general
damages are incurred and create an “independent injury”. DeWitt County Elec. Co-
op v. Parks, 1 S.W.3d, 96105(Tex. 1999), Exxon Mobil Corp. v. Kinder Morgan
Operating, LP, 192 S.W. 3d, 120,126-127(Tex.App.-Houston [14th Dist.] 2006, no
pet.). In ascertaining the distinction whether the remedy should lie in Tort or in
contract, (1) obligations imposed by law or Tort obligations. Delaney, supra at 495
note 2; Peco Contruction Co. v.Quahardo, 919 S.W.2d, 736, 738 n.3.Tex. App. –
San Antonio 1996, writ denied). Further, malfeasance are negligent affirmative
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contract in the performance of a promise generally subjects an actor to tort liability
as well as contract liability for physical harm and persons and tangible. Delaney,
809 S.W. 2d, 495, note 2; Peco Contruction, 19 S.W. 2d, 738, note 3.
Accompanying every contract is a duty to perform with care, skill and reasonable
expedience the things agreed to be done. The negligent failure to observe any of
these conditions is a tort as well as a breach of contract. Montgomery Ward & Co.
v. Scharrenbeck, 204 S.W.2, 508, 510 (Tex.1947). Further, although there is no
general duty of good faith and fair dealing in all contractual relationships, the duty
may arise when the contract creates or governs a special relationship between the
parties. See T.F.W. Management v. Westwood Shores Property Owners Assoc., 79
S.W.3d 712, 719(Tex.App.-Houston[14th Dist.] 2002 pet. denied). To impose a
Tort duty on the parties to a contract, the Court must find a special relationship
between them. Farah v. Mafrige & Cornmanik, PC, 927 S.W.2d, 663,
675(Tex.App.-Houston[1st Dist.] 1996 no writ. A special relationship will
generally arise from the element of trust necessary to accomplish the goals of the
contract. Bank One v. Stewart, 967 S.W.2d, 419, 441(Tex.App.-[Houston 14th
Dist.]1998 pet denied). Certain relationships have been recognized as sufficient to
create a duty of good faith and fair dealing: within the oil and gas context, the
relationship of the executive-rights holder with the non-participating royality
interest owner. Mangess v. Guerra, 673 S.W. 180, 183 (Tex. 1984), working
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interest owner and royalty owner, Amoco Production v. First Baptist Church, 611
S.W. 2d, 610(Tex. 1980), further, Texas Courts have recognized a duty to
cooperate with every contract in which cooperation is necessary for performance,
and there is an implied duty in such instance. Case Corp. v. High Class Business
Systems, 184 S.W.3d 760, 770(Tex.App.-Dallas 2005, pet. denied.) ,Bank One v.
Stewart, 967 S.W. 2d, 419, 434, (Tex. App.-Houston [14th Dist.] 1998, pet.
denied.) This duty requires a party to a contract not to interfere with the other
parties performance under the contract. Case Corp, supra. Specifically, the actions
of Stephens and Briscoe, interfered with Great Northerns ability to prosecute its
efforts in developing the subject property as testified by Loftis, (RR:4:53:13-87:5.
Briscoes’ claims to purchase the interest, which he already knew were sold, are
also an interference as further outlined below. Thus, and independent duty in Tort
arises, and violates the Covenant of Good Faith and Fair Dealing.
VI. Refusal to Grant Mistrial
The Court erred in failing to grant Great Northern Energy,
Incorporated, Ronald J. Abercrombie, and Joseph B. Loftis’ Motion for
Mistrial prior to the submission of this cause to the Jury.
Before this cause was submitted to the jury, counsel for appellants moved
the Court to grant and order a mistrial in this cause. (RR 5:11:14-21) It was the
second time such a motion had been presented. At the outset of the trial, during
the voir dire presentation of Kevin Stephens’ counsel, a similar Motion had also
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been presented. (RR2:128:2-9), see, “Improper Voir Dire” Section III, pages 41-
43 above, and now incorporated herein by reference). This subsequent Motion for
Mistrial was presented after the Court’s evidentiary rulings had excluded over 75%
of the evidence Appellants offered for their defenses and counter-claims, and over
80% of the documents they attempted to offer in support of their claims and
defenses. From appellants’ view, simply stated, they had been denied the
opportunity to fairly present their evidence of their well plead claims and defenses
because of wholly erroneous evidentiary rulings by the Court excluding that
evidence, and because of the prejudicial and improper conduct of voir dire, and
because, cumulatively, the error was so enormous it was impossible for any jury to
fairly evaluate the truth and credibility of their claims and defenses. The legal
authority supporting Appellants Motion for Mistrial are set forth in Section III,
pages 41-43 above, and in the authorities and arguments presented in Section III__,
pages 41-43 below, applicable to cumulative error, are applicable to the evaluation
of whether the trial court erred in failing to grant Appellants Motion for Mistrial
presented prior to jury submission.. All of such arguments and authorities are
incorporated into this Section 4, and re-urged here:
VII.- Errors Related to Jury Submission & Argument
A. Errors with respect to Jury Questions and Answers:
VII-1. the Court erred in improperly submitting the jury issues to the
jury as submitted because it improperly shifted the burden of proof to
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Great Northern.
VII-2. the Court erred in awarding judgment based upon the findings
of the jury that the Courts answers to questions 1 and 2 were immaterial
because the evidence proves conclusively as a matter of law, that the
foreclosure sale on November 5, 2013 was improperly conducted.
B. the Court erred in allowing counsel for Circle Ridge to make the
following improper jury arguments;
VII-3. With respect to question number 1, insofar as counsel for
Circle Ridge asserts the burden of proof was on Defendant to disprove
the that the foreclosure sale of November 5, 2013, was properly
conducted, the burden was not upon Great Northern Energy, but rather
upon Circle Ridge.
VII-4. the Court erred in allowing counsel for Circle Ridge
Production to make an improper and prejudicial argument, insofar as it
allowed such counsel to read a stipulation to the jury that Great Northern
owed Circle Ridge $637,114.15 under terms of the note when such
representation was in fact a misrepresentation known to all parties and
submitted over Great Northerns objections.
Because the trial court’s errors relating to the submission of issues and
instructions to the jury, relating to arguments improperly allowed to be
presented to the jury by Circle Ridge’s and Third Party Defendant’s
counsel, and relating to the trial court’s entry of judgment for Appellees
based on the jury’s answers to the questions submitted, are related and
exemplify the “intertwined” totality of the trial court’s “errors” in this
cause, Appellant’s argument and authorities with respect to points of error
#VII-1-VIII-A above, are combined in this response. The standard for
review of the trial court’s rulings complained of is abuse of discretion; In re
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Estate of Boren, 268 S.W.3d 841, 846 (Tex.App.---Texarkana, 2008, pet. denied)
(citing Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004), Landon v. Jean-
Paul Budinger, Inc., 724 S.W.2d 931, 939 (Tex.App.—Austin 1987, no writ)
however, if a court’s ruling is contrary to clearly established law, it is an abuse of
discretion. In re Estate of Boren, 268 S.W.3d 841, 846 (Tex.App.---Texarkana,
2008, pet. denied) (citing Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004),
Landon v. Jean-Paul Budinger, Inc., 724 S.W.2d 931, 939 (Tex.App.—Austin
1987, no writ)
Further, even if there exists a contention that some factual evidence exists to
support the trial court’s ruling under attack, if such evidence is otherwise legally
insufficient, a “no evidence” resolution is required. Walker v. Packer, 827 S.W.2d
833, 839 (Tex. 1992) (orig. proceeding)..
In evaluating the trial court’s approach and submission of its charge
and questions to the jury, the only issues submitted to the jury were two
questions, (CR1254 and 1255), which inquired whether 1) that Great
Northern had “established” there was a defect in the foreclosure sale of
November 5, 2013, proceedings, as conducted by Dean Searle, Trustee.
(CR 1254); and the second was whether Great Northern had established
that there was a grossly inadequate sales price…in the foreclosure
sale…on November 5, 2013,(CR 1255). No issues were submitted
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placing the burden of proof upon Circle Ridge Production, Inc. to
establish the validity of the disputed foreclosure sale of November 5,
2013, through which it claimed to have derived its title.
This submission process completely miscasts the burden of proof. In a
trespass to try title case, the burden is always on the Plaintiff to establish
good title, is the Plaintiff’s responsibility, and a plaintiff cannot prevail
based on the failure of opposing parties to establish good title in the
opposing party. In this case, however, although the Trial Court did not
grant Circle Ridges Production’s request for Directed Verdict,
(RR5:14:23-18:04,5:19:19-25), implying that there were fact issues for
jury evaluation, it shifted the Proof of Burden to Great Northern. Dillon
v. Hodges, 804 F.2d 1384 (5thCir. 1984), Texas Co. v. Lee, 157 S.W.2d
628, 183 Tex. 167 (Tex. 1942), Chapman v. Moser, 532 F.2d 1358 (5th
Cir. 1976) (***-better pg. ref.), Ragsdale v. Griffin, 380 S.W.2d 164
(Tex. Civ. App ****-1964). Here, however, over the objections of
Appellants’ counsel, (CR 1240-1246, RR 5:137:3-24), the Court,
submitted the issues, miscasting the burden of proof upon Great Northern
Energy to prove that Circle Ridge had not conducted a proper
foreclosure. The burden of proof in a trespass to try title action does not
shift to the defendant, it remains with the Plaintiff, in this case Circle
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Ridge to establish the valid conduct of the foreclosure sale. Hart v.
Eason, 321 S.W.2d 574, 159 Tex.375 (Tex. 1959), get more specific
info) Appellants submitted a proper issue, (CR 1243), but the Court
refused to submit it, relying, instead on Circle Ridge’s insistence that the
burden rested on Defendants. That is an improper shifting of the burden
of proof, and an improper jury submission, contrary to established law;
and thus, an abuse of discretion.
Additionally, the Court permitted the counsel for Circle Ridge to
argue before the jury that Great Northern had stipulated that it owed
$637,114.15 (RR 5:22:4-30:4 ). In fact, Appellants attorney only
stipulated that such sum would be a proper calculation in the event Great
Northern had not purchased Kevin Stephen’s one half interest in the note
(RR 5:25:4-26:22, and in the event the note was properly enforced in the
name of “Circle Ridge Production, Inc. and Great Northern Energy,
Incorporated, successor in interest to Kevin Stephens”. (RR 5:22:3-
30:4). Of course, the court would not permit that stipulation, as stated, to
be used in jury argument, because it had excluded all evidence of such
assignment of interest (see, Section II & IV above). Appellant’s attorney
stipulated that Defendant’s counsel might argue same, subject however,
to Appellants objection, which the Court overruled. (RR 5:22:13-30:14).
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Thus, Circle Ridge’s counsel improperly argued to the jury that Great
Northern had stipulated it owed the sum of $637,114.15. That erroneous
statement of evidence was prejudicial and likely caused error in the jury’s
deliberations. (Add cite-prejudicial argument). Further, counsel for
both Circle Ridge and Kevin Stephens argued that the burden of proof
was on Great Northern to establish that Dean Searle had not properly
conducted the November 5, 2012, foreclosure sale. (CT 125_; RR
5:14:23-18:3, 5:28:10-29:16). Among other arguments, both counsel
recited that Kevin Stephens had given Circle Ridge the authorization to
foreclose, insofar as the Kevin Stephens ownership interest in the note
made payable to “Circle Ridge Production, Inc., and Kevin Stephens”
was concerned (RR5:14:23-18:3).
At no time, were Appellants allowed to argue before the jury that Kevin
Stephens had sold, assigned, and transferred his interest in the note
previous to the foreclosure sale to Great Northern, that Bill Briscoe had
prior notice of that assignment, or that Dean Searle acted without the
authority of anyone but Circle Ridge Production, Inc., in conducting the
foreclosure sale on November 5, 2012, because he did not have authority
from any other legal interest owner in the note on November 5, 2012.
(see Section II, above).
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Finally, counsel for Kevin Stephens argued that the value of the
leasehold interest was much less than experts (whose testimony was also
excluded) regarding the value of the interest foreclosed on versus the
purchase consideration established at the foreclosure sale of $150,000.00
(RR 5:098:15-105:13, 108:23-1218). Here, the adverse effect of Josh
Maness’s improper injection of evidence into voir dire, through his
questioning of venireman Williams becomes important because Mr.
Williams was selected as a juror, and Maness had represented that he
could use his prior experience as “common sense.” (RR 2:124:13-126:24
and 2:128:10-129:24). Thus Maness injected an improper basis for the
jury to use in evaluating the testimony in this case in deliberations. The
harm is manifest.
VIII.- Cumulative Error
The Court erred in all respects in this trial and its denial that a new
trial should be granted herein and all matters re-tried. This case
should be reversed and remanded for an entire new trial, because the
cumulative error of the Court was so great that that is the sole
remedy can effectively address the errors in the prior trial.
Few cases present a sufficient number and quality of errors to justify the
reversal of the trial court’s judgment because of cumulative errors.
However, Texas courts recognize that when all the errors are considered
together, in light of the whole record, an appellate court may find that the
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accumulation of those errors was reasonably calculated to and probably
did cause the rendition of an improper judgment, requiring a reversal of
the trial court’s judgment. See, Southern Pacific Co. v. Hubbbard, 297
S.W.2d 120, 156 Tex. 525 (Tex. 1956), Mapco, Inc. v. Holt, 476 S.W.2d
70 (Tex.Civ.App.—Amarillo 1971, writ ref’d. n.r.e.),, Allen v. Reidel,
425 S.W.2d 665 (tex.Civ.App.—Eastland 1969, no writ);
Appellants submit that the number and quality of errors committed by
the trial court in this case more than satisfy the standard required for
reversal for cumulative error. As recited above, by itemization, there are
a minimum of 54 erroneous rulings all against appellants in allowing
improper voir dire, in excluding virtually all of Appellants’ otherwise
admissible evidence in support of Appellants defenses and counterclaims,
in erroneously granting Appellees requests for directed verdicts on 3 of
Appellants claims, after excluding the supporting evidence offered by
Appellants, in overruling Appellants motion for mistrial at the conclusion
of evidence presentation, in erroneously submitting questions and a
charge to the jury which wrongly shifted the burden of proof on Circle
Ridge’s issue of proper foreclosure sale authorization, in failing to
require proper documentation and proof for awarding attorneys fees to
Appellees, in overruling Appellants Motion for New Trial 54 points of
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error), and in failing to grant Appellants Motion for Judgment NOV (3
issues). In the introduction to these arguments and authorities, Appellants
likened their experience to the Wolf in Sheep’s Clothing experience
described in the Aesop’s Fable story often recited by Abraham Lincoln.
Appellants submit that the foregoing argument and authorities more than
substantiates that analogy to this trial.
IX.
The Court erred in awarding Circle Ridge’s attorney’s fees against
Great Northern in the amount of $150,873.37
Following the conclusion of the jury portion of the trial, Appellee’s
attorneys submitted their claims for attorneys fees to the Court. In its “Judgment”
entered on December 7, 2015, the Court awarded $150,873.37 to Plaintiff’s
attorneys. However, as Appellants’ attorney asserted in his reply and opposition
(CT 1330-1337), the Court was incorrect in awarding any attorneys fees, or,
alternatively, awarding the sum of $150,873.37 for the following reasons:
IX-1. Appellant completely failed to sustain its burden of proof on any basis
authorizing the award of attorneys fees.
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All of the arguments by Circle Ridge in support of its Motion for Attorneys’
Fees are founded and based upon the legal position that it is authorized and
empowered to attempt collection and enforcement efforts because of its
attempts to collect, foreclose, etc. in behalf of the interest of Circle Ridge
production under the note of September 11, 2012, in the principal amount of
$700,000.00.(the “$700K note”); however, as was extensively argued during
the trial, any such collection attempts were, and are, wholly unauthorized
and illegal. Under §§3.201, 3.203, et seq., Tex. Bus. & Com. Code (2013),
any attempt to enforce or collect the note without the joinder of both parties,
i.e.¸ both Circle Ridge and Great Northern (the then legal owner and holder
of the rights formerly owned by Kevin Stephens) were wholly improper.
See, Comment 5 to §3.203, and Commentary, “No Partial Negotiation or
Transfer” and “Distinction between right to enforce instrument and
ownership of instrument,” Anderson, Bartlett & East’s Texas Uniform
Commercial Code Annotated (2007 Edition-West Publishing). At the time
the demands attached to Plaintiffs’ MfAF were prepared and served, the
record owners and holders of the note were Circle Ridge Production, Inc.
and Great Northern Energy, Inc., and Dean Searle, acting as agent for Circle
Ridge Production, was not authorized to so act for the holders thereof. Thus
his actions were completely improper, not properly submitted, nor properly
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conducted, and thus cannot form the basis for the award of any attorneys’
fees herein, nor can any award be made to any attorney representing only
Circle Ridge herein because such action seeks to enforce only the interest of
Circle Ridge in the note.
IX-2. Similarly, any efforts to collect attorneys fees for violations of
any of the provisions of, or pursuant to the terms of the Deed of Trust dated
September 11, 2012, are improper, and must fail because Appellee has
never properly conducted or attempted any proper enforcement of the Deed
of Trust, because it has always acted alone and never jointly with the
remaining interest owner “Great Northern Energy, Incorporated, as
successor to Kevin Stephens, in the Deed of Trust in which the originally
designated Beneficiaries or “Beneficiary” were “Circle Ridge Production,
Inc. and Kevin Stephens”. Again, the arguments set forth in Section II,
pages 37-40 are incorporated into this point of error as though set forth
verbatim.
IX-3: Texas Civil Remedies and Procedures, Code 18.001, requires that
applications for attorney’s fees must be submitted, at a minimum and based
upon a proper evidentiary affidavit, El Apple1, Ltd. V. Olivas, 370 S.W.3d
757 (Texas 2012). He should properly identify and segregate claims which
allowed recovery for such fees. Stewart Title Guaranty Company v Sterling,
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822 S.W. 2d 1(Texas 1992), notwithstanding the ruling of Tony Gullo
Motors v Chapa, 212 S.W.3d 299 (Texas 2006), the Texas Supreme Court
has still directed that applications for legal fees must focus on analysis of the
factors (facts) underlying multiple claims. Block billing may not support the
recovery of attorney’s fees. As the Plaintiff argues, this case involved not
only trespass to try title, breach of contract, wrongful foreclosure, forgery,
lack of sufficient acknowledgement in suit to quiet title.
1. The Affidavit of Ronan Searle in behalf of Searle and Searle is legally
insufficient to support the award of attorneys’ fees. Specifically, the
affidavit of Ronan Searle incorporates the “contemporaneous billing
records of the firm Searle and Searle. There is no independent Affidavit
of Dean Searle, who apparently performed many of the services for
which billing is attributable by virtue of the initials “DS” on many of the
billing records in Appendix “A”, stating that such services were
reasonable and necessary. Further, Ronan Searle, also a member of the
firm performed services; however, no segregation of services performed
by either Ronan or Dean Searle is specified, either in the Affidavit of
Ronan Searle, or in any portion of Appendix A.(CR1330-1337).
Among insufficiencies frowned upon in establishing the basis for
attorneys’ fees recovery are unnecessary duplication of billing for
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services by partners or associates. Here, Plaintiff specifies in its MFAF
that “(a) as shown on Appendix, two separate law firms had to be hired
by Plaintiff in order to take this case through trial.” (CR1330-1337). The
billing submitted in both Appendices “A” and “B” (CR1268, 1278-1301),
is so insufficient that it is impossible to determine what duplication
occurred. Courts do not and should not award attorneys” fees for hours
spent in duplicative activity or spent in a passive role of an observer
while other attorneys perform, and are generally not recoverable.
Chaves, Douglas E., “Attorney’s Fees Update, 36th State Bar of Tex.
Prof. Dev. Program, 36th Annual Advanced Civil Trial Course Chap. 26,
p 9 (2013 ). Neither can any such segregation be made based on the
Affidavit of Michael Runyan submitted. Neither is there any evidence
that any “billing judgment” has been exercised in this case, which
omission is also a serious flaw in applications for payment of attorneys’
fees.
2. The time records submitted in Appendices A & B (CR1278-1301) are
further insufficient insofar as they fail to specify which issues or claims
apply to any distinct issues. Issues relating to Plaintiffs “forgery” claims
were never submitted, and further, Plaintiff nonsuited its claims relating
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to recovery for alleged violations by the individual Defendants Loftis and
Abercrombie for Plaintiff’s originally plead claims of “negligence,”
“civil conspiracy” and violation of the “Texas Civil Theft Liability Act”-
thus legally abandoning such claims against all Defendants.
Nevertheless, Plaintiff’s claims for recovery of attorneys’ fees and costs
clearly include claims for service time and costs attributable to “forgery”
issues-specifically, as marked on Exhibit “4” to this Response (see page
4, “telephone conference with handwriting expert”, (CR1281),p.5,
“preparing documentation to expert”(CR1282), p,.7, $900 paid to
handwriting expert,(CR1299). Clearly there is no recovery for such
claims, and in fact, no proper basis for any recovery exists because of the
violations of the requirements of §§3.201 and 3.203, Tex.Bus.& Com.
Code (2013), as specified above in Response #1. Again, any claims of
admission of liability with respect to any performance, either payment of
sums due or any other obligation contained in the Deed of Trust, are
expressly denied by all Defendants, as any admission of any liability
whatsoever, is specifically conditioned on the language contained in the
stipulation “in the event Defendant Great Northern Energy in did not own
the interests of Kevin Stephens in the $700K note.” Any such stipulation
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is conditional only. In this connection, see, Steward Title Guaranty Co.
V. Sterling, 822 S.W.2d 1 (Texas 1992), Chaves, supra, at p.7.
X.
The Court erred in failing to grant Great Northern Energy’s Motion
for Judgment NOV with regard to its contentions that is has no
liability with regard to the Circle Ridge Production note, as asserted
by Circle Ridge Production in the trial, because there is neither now
or has there ever been any proper presentation of Circle Ridge’s
demands insofar as there is no proper assertion of Great Northerns
liability under the $700K note because Circle Ridge does not have
the authority, acting alone, to enforce, or even attempt enforcement
of liability on such note, nor has it ever attempted to enforce the note
in accordance with the law, or in awarding any claim that Great
Northern Energy pay any attorneys fees for the collection activities
related to Circle Ridge Production’s collection efforts in such
connection.
Appellants re-urge the argument and authorities set forth in pages 37-41
Section II above relating to the improper efforts to foreclose the Deed of Trust
lien, or to enforce collection of the September 11, 2012, $700K note, without
proper participation by both parties, and in the name of both parties jointly. In
this case, the Court should disregard all the jury findings and sign a judgment in
favor of Great Northern Energy, Inc. because no evidence was introduced by
Circle Ridge to establish that the proper party authorized, noticed, or conducted
the foreclosure sale in controversy on November 5, 2013. In fact, the only
evidence that both “X and Y” participated in or noticed or conducted the
foreclosure was the testimony of Bill Briscoe, President of Circle Ridge
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Production, that he got Kevin Stephen’s permission to foreclose before he
initiated the foreclosure proceedings in Circle Ridge’s name. However, that
testimony, even as taken to be wholly true and accurate in inadequate to meet the
burden of proof demanded of Circle Ridge. Specifically that testimony is
contradicted by Stephen’s admission against interest (offered in the Bill of
Exceptions) that he had sold his interest in the $700K note to Great Northern
Energy before January 1, 2013, and this foreclosure did not occur until
November 5, 2013. Further, the relevant foreclosure or note collection procedures
were not commenced by Circle Ridge until after February 1, 2013. Thus, Kevin
Stephens did not have any authority to “authorize” any foreclosure proceedings
or to transfer any interest in and to the $700K note or Deed of Trust lien after
December, 2012. Clearly, no proper entity ever authorized Circle Ridge to
proceed with any foreclosure or collection procedures of any kind or character.
Because there is no evidence that any foreclosure was properly conducted, Great
Northern is entitled to judgment as a matter of law
XI.
Great Northern is entitled to judgment that Circle Ridge take
nothing, with respect to its claims for Trespass to Try Title, because
there is no sufficient legal evidence which supports such
determination.
An action in trespass to try title is a suit to recover the possession of land
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unlawfully withheld from an owner who has a right to immediate possession
Standard Oil Co. of Tex. V Marshall, 265 F.2d 46,50 (5th Cir. 1959) cert denied
361 U.S. 915, 80 S. Ct. 259, 4 L. Ed. 2d 185. It embraces all character of litigation
affecting title to real estate. Standolind Oil & Gas Co. v State, 136 Tex. 5, 133
S.W.2d 767, 770 (1939). The action is purely statutory Tx. Prop. Code, 22.001-
22.022 and is governed by the Texas Rules of Civil Procedure [T.R.C.P. 783-809].
To bring an action in trespass to try title, Circle Ridge Production is
required to file a formal petition in accordance with the Texas Rules of Civil
Procedure [T.R.C.P. 783-809]. The petition must state: the real names of the
parties and their residences, if known; (2) a legally sufficient description of the
premises; (3) the interest which the plaintiff claims in the premises; (4) that the
plaintiff was in possession of the premises or entitled to such possession; (5) that
the defendant unlawfully entered upon and dispossessed the plaintiff of the
premises and withholds possession; (6) facts showing rents, profits, or damages if
claimed; and (7) a prayer for the relief sought T.R.C.P. 783; see Marshall v
Garcia, 514 S.W.2d 513, 518-519 (Civ. App.—Corpus Christi 1974, ref. n.r.e.)
The petition must state the nature and extent of the interest which the
plaintiff claims in the premises, such as fee simple or other estate. If an undivided
interest is claimed, the petition must state the nature and amount of that interest
T.R.C.P. 783. The purpose of this rule is to put the defendant on notice of how
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much of the land or of the title to the land was in issue Hicks v Southwestern
Settlement & Devlop. Corp., 188 S.W.2d 915, 929 (Tex. App. –Beaumont 1945,
ref, w.o.m.)
Since the plaintiff must recover out of the strength of his or her own title and
not on the weakness of the title of the adversary party, the burden of proof remains
on the plaintiff throughout the action Fritsche v Niechoy, 197 S.W. 1017, 1018-
1019 (Civ. App.—Galveston 1917, dis.); see Dames v Strong, 659 S.W.2d 127, 129
(Tex. App.—Houston[14th Dist.] 1983, no writ) – burden on plaintiff to prove
prima facie right of title and possession]. When the plaintiff’s title is controverted,
the burden of proof is on the plaintiff to establish a superior title by an affirmative
showing, regardless of whether the claim of title rests in law or in equity see Doria
v Suchowolski, 531, S.W. 2d 360, 362 (Civ. App.—San Antonio 1975 ref. n.r.e.).
The plaintiff’s case must be proven by a preponderance of the evidence see D.T.
Carroll Corp. v Carroll, 256 S.W.2d 429, 432 (Civ. App.—San Antonio 1953 ref.
n.r.e.), and if the plaintiff fails to satisfy the burden of proof of superior title, the
defendant is entitled to judgment without proving any right of title or possession
see Heil v Wirth, 161 Tex. 609, 343 S.W.2d 226, 226-230 (1961).
Circle Ridge Production wholly failed to satisfy its burden of proof in this
connection. First, in its petition, it has cited additional parties owning interests (an
admission against interest. (CR1066-1126). Further, it introduced into evidence
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itself, Circle Ridge claimed and attempts to claim through the judgment entered
herein ownership of 100% of the working interest in and to the OBENCO Leases
(CT:1068,1069,1497-1508). However, Circle Ridge itself introduced evidence of
outstanding ownership in third parties, to-wit: Wayne Johnson, WJ South Waskom
(RR:4:104:4-105:7), (Plaintiffs’ Exhibit 13). Further, it is clear that this
assignment, effective from its date of assignment by Great Northern, pre-dates the
date of the granting of the Deed of Trust and it is not foreclosed by any apparent
foreclosure of the Deed of Trust and is contrary to Circle Ridges claims of 100%
ownership. And therefore is not foreclosed under the Deed of Trust. (RR:3:210:3-
213:25). Thus, the lien interest of the United States, as evidenced by pleading of
the United States, (CR:1649) and the identification of these lien hold interests by
Circle Ridge in its Fifth Amended Petition prevent Circle Ridge from owning title.
Further, there was no evidence introduced by Circle Ridge in trial to evidence the
fact that it had properly excluded any Internal Revenue Service tax liens upon the
property as required by 26 U.S.C.§7425(b)(1)(c)(1)(Internal Revenue Code).
Simply stated, the record is filled with claims of title besides that of Circle Ridge,
pursuant to Circle Ridge’s own proof. As stated, the Plaintiff in an action in
trespass to try title must recover, if at all, on strength of his or her own title and
may not rely on the weakness of the defendant’s title see Reinhardt v North, 507
S.W. 2d 589,591, (Civ. App. –Waco 1974, ref. n.r.e). Gray v Joyce, 485 S.W. 2d
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311, 313 (Civ. App. –Tyler 1972, ref. n.r.e.).
In its Trespass to Try Title action, Circle Ridge Production sought confirmation
of its ownership, and rights to possession of an undivided 100% leasehold or
working interest in and to the OBENCO leases. Insofar as Circle Ridge claims
entitlement to a judgment of ownership of one hundred percent of the working
interest in and to the OBENCO leases, (described in Exhibit “A: attached thereto)
it failed to establish its claims “against all of the world” in the lawsuit. In fact, it
plead there were outstanding liens in favor of Topcat Well Service and the
Internal Revenue Service,(CR 1068, 1069-1072). Further, it itemized outstanding
working interest ownership of forty-two percent (42%) in WJ South
Waskom,(CR 1070-71, and RR:4:104:4-105:7, CRP Ex. 13), and introduced
evidence of that outstanding interest; however, it never introduced any evidence
of resolution of that claim lien as required by 26 USC, Section 7425(b)(1) and
(c)(1). In the event Circle Ridge attempts to claim that it can rely on the so-called
Abstract of Title which it filed only one week before trial, that document is not
timely filed. Additionally, Defendants did not demand that Plaintiff Circle Ridge
file any abstract pursuant to Rule 791, et seq., Texas Rules of Civil Procedure.
Clearly, as a matter of law, Plaintiff has failed to meet the required burden of
proof to establish its title against all other claims. Therefore, Circle Ridge
Production failed to establish its claims to the extent that it is entitled to a
Page 87 of 93
judgement granting it an undivided one hundred percent title to the working
interest in and to the OBENCO leases, even assuming arguendo¸ that it
established that its foreclosure sale on November 5, 2013 was legal. Of course,
as set forth in paragraphs 2-19, that sale was not legal. Further, neither the
Abstract, nor any instrument designated within it were introduced into evidence.
Page 88 of 93
PRAYER
Appellants pray that the court reverse the trial court and render judgment in
favor of Appellants that Appellant Great Northern Energy take nothing by virtue
of its claims with respect to any liability on the part of Appellees with respect to
any sums allegedly owed under the September 11, 2012 note, that its claims of
title under its Trespass to Try Title action be set aside and denied in all things, and
that it reverse the trial court’s rulings insofar as it denied Great Northern Energy
the opportunity for a new trial with regard to Great Northern Energy’s claims of
wrongful foreclosure, interference with contractual relations and breach of the
Covenant of Good Faith and Fair Dealing and Breach of Contractual obligations
with respect to the equipment sales from Kevin Stephens to Great Northern
Energy, and that it reverse the Courts award of attorney’s fees in favor of Circle
Ridge Production as against Great Northern Energy.
Alternatively, Great Northern Energy request that all matters tried before the
trial court be reversed and set aside, and that a new trial be ordered on all matters
pled in Circle Ridge Productions 5th Amended Original Petition and Great
Northern Energy’s 3rd Amended Original Answer and Counter-Claims.
Respectfully submitted,
/s/William J. Gardner
William J. Gardner
Page 89 of 93
William J. Gardner, PC
PO Box 1746
422 B N Green Street
Longview, Texas 75606-1 746
Tel. No. 903-236-7900
Fax No. 903-236-3367
Email: wjg@w jg-law.com
Page 90 of 93
CERTIFICATE OF SERVICE
I certify that on September 8, 2016, I served a copy of Appellants Brief of
Great Northern Energy, Incorporated on the parties listed below by electronic
service and that the electronic transmission was reported as complete. My e-
mail address is wjg@wjg-law.com.
/s/ William J. Gardner
William J. Gardner,
PC PO Box 1746
422 B N Green Street
Longview,Texas 75606
Tel. No. 903-236- 7900
Fax No. 903-236-3367
wjg@wjg-law.com
Honorable J. Brad Morin, Respondent
Judge of the 7pt District Court of Harrison County, Texas
Harrison County Courthouse, 200 W. Houston Street, Room
219 Marshall, Texas 75670
Tel # 903-935-8407
Fax # 903-935-9963
leslie(a)co .harrison.tx. us
CIRCLE RIDGE PRODUCTION, INC., Plaintiff, by serving its
attorney: Dean Searle
Ronan Searle
SEARLE & SEARLE PC
305 W. Rusk Street, Suite I
01 Marshall, Texas 75670
Tel. #:903-935-9772
Fax # 903-935-9790
Dean.searle@gmail.com
Page 91 of 93
Michael T. Runyan
305 W. Rusk Street
Marshall, Texas
75670
Tel.#:903-935- 7700
Fax #:903-935-9790
Michael(a)runyanlaw .com
KEVIN STEPHENS, Third Party Defendant
Hallsville, Texas
kstephens@.si gnal wellservice.com
Brendan Roth
400 S. Alamo, Site I
Marshall, Tx 75670
Tel.#903-472-4278
Fax# 888-482-9512
br@brendancroth.com
/s/William J. Gardner
William J. Gardner
Page 92 of 93
CERTIFICATE OF COMPLIANCE
I certify that this document was produced on a computer using Microsoft Word
2013 and contains Fourteen thousand, eight hundred seventy-nine words, (14,879)
as determined by the computer software's word-count function, excluding the
sections of the document listed in Texas Rule of Appellate Procedure 9.4(i)(1).
/s/ William J. Gardner
WILLIAM J.GARDNER
Texas Bar No. 07661000
422 N. Green St.; P.O. Box 1746
Longview, Texas 75606-1746
Page 93 of 93