NO. 13-15-00452-CV 

IN THE THIRTEENTH COURT OF APPEALS

CORPUS CHRISTI—EDINBURG, TEXAS

 

SANDEEP PATEL, 

Appellant, 

v. 

HARBOR HOSPICE OF BEAUMONT, L.P., HARBOR HOSPICE MANAGER, L.L.C.,

QAMAR ARFEEN, AND ARFEEN PROPERTIES, L.P., 

 Appellees.

 

ON APPEAL FROM THE 172nd DISTRICT COURT, 

JEFFERSON COUNTY, TEXAS, NO. E-192,576 

 

APPELLEES’ BRIEF 

Glen W. Morgan 

State Bar No. 14438900 

gmorgan@rmqlawfirm.com

John Werner 

State Bar No. 00789720 

jwerner@rmqlawfirm.com

Reaud, Morgan & Quinn 

801 Laurel St. 

Post Office Box 26005 

Beaumont, Texas 77720 

(409) 838-1000. 

(409) 833-8236 Fax 

David Gaultney 

State Bar No. 07765300 

davidgaultney@mehaffyweber.com

Elana Einhorn 

State Bar No. 06502455 

elanaeinhorn@mehaffyweber.com

MehaffyWeber, P.C. 

823 Congress Avenue, Suite 200 

Austin, Texas 78701 

(512) 394-3840 

(512) 394-3860 Fax 

Brandy Wingate Voss 

State Bar No. 24037046 

brandy@appealsplus.com

Smith Law Group LLLP 

820 E. Hackberry Ave. 

McAllen, Texas 78503 

(956) 683-6330 

(956) 225-0406 Fax 

ATTORNEYS FOR APPELLEES 

ORAL ARGUMENT REQUESTED 

ACCEPTED

13-15-00452-CV

THIRTEENTH COURT OF APPEALS

CORPUS CHRISTI, TEXAS

12/10/2015 2:49:53 PM

Dorian E. Ramirez

CLERK

 FILED IN 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, TEXAS 12/10/2015 2:49:53 PM DORIAN E. RAMIREZ Clerk
ii

IDENTITY OF PARTIES AND COUNSEL

Appellant: Sandeep Patel 

Represented by: 

Chris Portner 

State Bar No. 24007858 

cportner@portnerbond.com 

J. Trenton Bond 

State Bar No. 00785707 

tbond@portnerbond.com 

Portner Bond, PLLC 

1905 Calder Avenue 

Beaumont, Texas 77701 

Phone: (409) 838-4444 

Fax: (409) 554-0240 

Anthony Malley, III 

State Bar No. 24041382 

tony@mallaw.com 

Malley Law Firm, PLLC 

905 Orleans, Suite 110 

Beaumont, Texas 77701 

Phone: (409) 212-8888 

Fax: (409) 212-8002 

Jamie D. Matuska 

State BarNo. 24051062 

jamie@matuskalaw.com 

Matuska Law Firm 

2809 Highway 69 North 

Nederland, Texas 77627 

Phone: (409) 722-5600 

Fax: (409) 727-1290 
iii

Appellees: Harbor Hospice of Beaumont, L.P., Harbor Hospice Manager, L.L.C., 

Qamar Arfeen, and Arfeen Properties, L.P. 

Represented by: 

David Gaultney 

State Bar No. 07765300 

davidgaultney@mehaffyweber.com 

Elana Einhorn 

State Bar No. 06502455 

elanaeinhorn@mehaffyweber.com

MehaffyWeber, P.C. 

823 Congress Avenue, Suite 200 

Austin, Texas 78701 

Phone: (512) 394-3840 

Fax: (512) 394-3860 

Jeremy Stone 

State Bar No. 24013577 

jeremystone@mehaffyweber.com 

MehaffyWeber, P.C. 

500 Dallas, Suite 1200 

Houston, Texas 77002 

Phone: (713) 655-1200 

Fax: (713) 655-0222 

Glen W. Morgan 

State Bar No. 14438900 

gmorgan@rmqlawfirm.com 

John Werner 

State Bar No. 00789720 

jwerner@rmqlawfirm.com

Reaud, Morgan & Quinn 

801 Laurel St. 

Post Office Box 26005 

Beaumont, Texas 77720-6005 

Phone: (409) 838-1000 

Fax: (409)833-8236 

David E. Bernsen 

State Bar No. 02217500 

dbernsen@bernsenlaw.com 

Christine L. Stetson 

State Bar No. 00785047 

cstetson@bernsenlaw.com 

420 North MLK, Jr. Pkwy 

Beaumont, Texas 77701 

Phone: (409) 212-9994 

Fax: (409)212-9411 

Brandy Wingate Voss 

State Bar No. 24037046 

brandy@appealsplus.com

Smith Law Group LLLP 

820 E. Hackberry Ave. 

McAllen, Texas 78503 

Phone: (956) 683-6330 

Fax: (956) 225-0406 
iv

TABLE OF CONTENTS 

Identity of Parties and Counsel ................................................................................. ii

Table of Contents ..................................................................................................... iv

Index of Authorities ................................................................................................. vi

Statement of the Case ................................................................................................. x

Request for Oral Argument ...................................................................................... xi

Issues Presented ...................................................................................................... xii

Statement of Facts ...................................................................................................... 1

Summary of the Argument ......................................................................................... 5

Argument.................................................................................................................... 6

I. All of Patel’s claims are barred by limitations. ..................................... 6

A. Patel’s claims accrued by March 10, 2008. ................................ 6

B. Neither the discovery rule nor fraudulent 

concealment delays accrual or tolls 

limitations here. ........................................................................... 9

1. The discovery rule does not apply 

because the alleged injury was not of 

the limited type that is inherently 

undiscoverable. ................................................................. 9

2. The fraudulent concealment doctrine 

does not apply because the 

Partnership did not try to conceal 

termination of Patel’s interests and 

Patel had notice of facts giving rise to 

his claims by March 2008. .............................................. 13

3. The presence of fiduciary duties does 

not relieve Patel of his own obligation 

of diligent inquiry. .......................................................... 14
v

4. The same statute of limitations applies 

to Patel’s declaratory-judgment claim 

as to his substantive claims. ............................................ 15

II. Defendants conclusively negated at least one element of 

each of Patel’s claims. ......................................................................... 17

A. Patel has no breach-of-fiduciary-duty claim. ............................ 17

B. There is no genuine issue of material fact as 

to breach of contract. ................................................................. 21

C. There is no genuine issue of material fact as 

to conversion and theft. ............................................................. 23

III. There is no fact question as to damages. ............................................. 24

IV. The summary judgment evidence was properly 

considered by the trial court. ............................................................... 26

Prayer ....................................................................................................................... 28

Certificate of Compliance ........................................................................................ 30

Certificate of Service ............................................................................................... 31

Index to Appendix .................................................................................................... 32
vi

INDEX OF AUTHORITIES 

Cases

Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 

287 S.W.3d 877 (Tex. App.—Dallas 2009, no pet.) ..................................... 23 

B&W Supply, Inc. v. Beckman, 

305 S.W.3d 10 (Tex. App.—Houston [1st Dist.] 2008, pet. 

denied) ........................................................................................................... 21 

Bandy v. First State Bank, 

835 S.W.2d 609 (Tex. 1992) ......................................................................... 24 

Bohatch v. Butler & Binion, 

977 S.W.2d 543 (Tex. 1996) ................................................ 14, 17, 18, 19, 20 

Bokor v. State, 

114 S.W.3d 558 (Tex. App.—Fort Worth 2002, no pet.) ............................. 24 

Brosseau v. Ranzau, 

81 S.W.3d 384 (Tex. App.—Beaumont 2002, pet. denied) .......................... 19 

City of Houston v. Clear Creek Basin Auth., 

589 S.W.2d 671 (Tex. 1979) ......................................................................... 28 

Computer Assocs. Int’l., Inc., v. Altai, Inc., 

918 S.W.2d 453 (Tex. 1994) ........................................................................... 9 

Cosgrove v. Cade, 

468 S.W.3d 32 (Tex. 2015) ........................................................................... 14 

Cotton v Cotton, 

169 S.W.3d 824 (Tex. App.—Dallas 2005, pet. denied) .............................. 27 

Douglas v. Aztec Petroleum Corp., 

695 S.W.2d 312 (Tex. App.—Tyler 1985, no writ) ...................................... 17 

Exxon Corp. v. Emerald Oil & Gas Co. L.C., 

348 S.W.3d 194 (Tex. 2011) ........................................................................... 7 

Graham Mortg. Corp. v. Hall, 

307 S.W.3d 472 (Tex. App.—Dallas 2010, no pet.) ..................................... 17 
vii

Green Int’l v. Solis, 

951 S.W.2d 384 (Tex. 1997) ......................................................................... 23 

Guidry v. Wells, No. 

09-05-00182-CV, 2006 WL 246493 (Tex. App.—Beaumont 

2006, no pet.) (mem. op.) .............................................................................. 27 

Hooks v. Samson Lone Star, Ltd. P’Ship, 

457 S.W.3d 52 (Tex. 2015) .................................................................... 13, 14 

In re Estate of Denman, 

362 S.W.3d 134 (Tex. App.—San Antonio 2011, pet. denied) .................... 16 

J.M. Davidson, Inc. v. Webster, 

128 S.W.3d 223 (Tex. 2003) ......................................................................... 12 

LG Ins. Mgmt. Servs., LP v. Leick, 

378 S.W.3d 632 (Tex. App.—Dallas 2012, pet. denied) .............................. 18 

Luna v. Runyon, 

No. 03-06-00615-CV, 2008 WL 2609171 (Tex. App.—Austin 

2008, pet. denied) (mem. op.) .......................................................................... 9 

McConathy v. McConathy, 

869 S.W.2d 341 (Tex. 1994) ......................................................................... 26 

Merriman v. XTO Energy, Inc., 

407 S.W.3d 244 (Tex. 2013) ........................................................................... 6 

Mowbray v. Avery, 

76 S.W. 3d 663 (Tex. App.—Corpus Christi 2002, pet. denied) .................. 27 

Nalle Plastics Family L.P. v. Porter, Rogers, Dahlman & Gordon, 

P.C., 

406 S.W.3d 186 (Tex. App.—Corpus Christi 2013, pet. denied) ................... 6 

Neely v. Comm’n for Lawyer Discipline, 

302 S.W.3d 331 (Tex. App.—Houston [14th Dist.] 2009, pet. 

denied) .................................................................................................... 26, 28 

Pink v. Goodyear Tire & Rubber Co., 

324 S.W.3d 290 (Tex. App.—Beaumont 2010, writ dism’d) ....................... 28 
viii

Provident Life & Accident Ins. Co. v. Knott, 

128 S.W.3d 211 (Tex. 2003) ........................................................................... 7 

Royston, Rayzor, Vickery & Williams, LLP v. Lopez, 

467 S.W.3d 494 (Tex. 2015) ......................................................................... 12 

S.V. v. R.V., 

933 S.W.2d 1 (Tex. 1996) ...................................................................... 14, 15 

Schneider Nat’l Carriers, Inc. v. Bates, 

147 S.W.3d 264 (Tex. 2004) ........................................................................... 7 

Schrock v. City of Baytown, 

No. 01-13-00618, 2015 WL 1882190 (Tex. App.—Houston [1st 

Dist.] April 23, 2015, no pet.) (mem. op.) ..................................................... 15 

Sci. Spectrum, Inc. v. Martinez, 

941 S.W.2d 910 (Tex. 1997) .................................................................... 6, 17 

Shell Oil Co. v. Ross, 

356 S.W.3d 924 (Tex. 2011) .................................................................. 10, 12 

Strebel v. Wimberly, 

371 S.W.3d 267 (Tex. App.—Houston [1st Dist.] 2012, pet. 

denied) ........................................................................................................... 18 

Thomas v. Ray, 

889 S.W.2d 237 (Tex. 1994) .......................................................................8, 9 

Valdez v. Hollenbeck, 

465 S.W.3d 217 (Tex. 2015) ............................................................ 6, 7, 9, 13 

Via Net v. TIG Ins. Co., 

211 S.W.3d 310 (Tex. 2006) (per curiam) .................................................... 10 

Wagner & Brown, Ltd., 

58 S.W.3d 732 (Tex. 2001) ........................................................................... 10 

Weaver v. Witt, 

561 S.W.2d 792 (Tex. 1977) ......................................................................... 13 
ix

Statutes

TEX. BUS. ORG. CODE ANN. § 152.002 ........................................................ 18, 21, 22 

TEX. BUS. ORG. CODE ANN. § 152.206 .................................................................... 20 

TEX. BUS. ORG. CODE ANN. § 153.003 .................................................................... 22 

TEX. BUS. ORG. CODE ANN. § 153.105 .................................................................... 21 

TEX. CIV. PRAC. & REM. CODE ANN. § 16.003 ........................................................ 16 

TEX. CIV. PRAC. & REM. CODE ANN. § 16.004 ........................................................ 16 

TEX. CIV. PRAC. & REM. CODE ANN. § 134.002 ...................................................... 24 

TEX. CIV. PRAC. & REM. CODE ANN. § 134.003 ...................................................... 24 

Rules

TEX. R. APP. P. 33.1 .................................................................................................. 28 

TEX. R. CIV. P. 166a ................................................................................ 6, 26, 27, 28 
x

STATEMENT OF THE CASE 

Nature of the Case: Claims for breach of contract, breach of fiduciary duty, 

conversion, theft, and fraud arising out of partnership 

dispute. 

Trial Court: The Honorable Donald J. Floyd, 172nd District Court, 

Jefferson County. 

Trial Court’s 

Disposition: 

Summary judgment granted in favor of Defendants on all 

claims. CR255. 
xi

REQUEST FOR ORAL ARGUMENT 

Appellees respectfully request the opportunity to present oral argument. 

Appellees believe oral argument will assist the Court in resolving the issues 

presented. 

 
xii

ISSUES PRESENTED 

The trial court properly granted summary judgment because: 

I. All of Patel’s claims are barred by a statute of limitations. 

II. Defendants negated at least one element of each of Patel’s claims. 

III. Patel did not sustain any damages. 

IV. The summary judgment evidence was properly before the court. 
STATEMENT OF FACTS 

Defendant Harbor Hospice of Beaumont, L.P. (the “Partnership”) is a 

limited partnership formed in 2005 to build and operate a hospice in Beaumont, 

Texas. CR42-43. Defendant Harbor Hospice Managers, L.L.C., was the general 

partner. CR73. The limited partners included Defendant Arfeen Properties, L.P. 

(Defendant Dr. Qamar Arfeen was its general partner), and Plaintiff Sandeep Patel. 

CR74,79. 

Patel, an engineer, did not contribute any money to the Partnership; instead 

he was granted a 3% ownership interest in exchange for overseeing construction of 

the hospice. CR92-93,110-11.1

 Midway through construction, however, Patel 

demanded that his interest in the Partnership be doubled, and he threatened to walk 

off the job if his demand was not met. CR 107,116. Given the circumstances, the 

Partnership reluctantly agreed to his demand. Id. 

Because of faulty construction and use of subcontractors who were not 

specialized in building medical facilities, the hospice did not pass state inspection. 

CR 110-12,114-15. Patel then promptly disappeared. CR105-07. This forced the 

Partnership to obtain substitute contractors at additional expense. CR107,118-19. 

Patel never responded to the Defendants’ numerous attempts to contact him. 

 

1 The parties attached color-highlighted deposition testimony as exhibits to the motion for 

summary judgment and response. As it appears in the clerk’s record, however, that highlighted 

testimony may be difficult to read. The parties therefore provided accurate color copies of that 

highlighted deposition testimony in their stipulation filed with this Court on November 24, 2015. 
2

CR105,107. Dr. Arfeen testified that “before the facility was finished or could pass 

the Life Safety Code, he would not answer my calls.” CR105. “He just totally 

disappeared from the scene.” CR107. 

Patel also failed to respond to requests for updated financial information 

from the bank financing the construction. Patel was a guarantor on the construction 

loan for the hospice, CR101-03, and the bank requested updated financial 

information as the loan approached maturity. App’x Tab A (CR121; Supp.CR102-

06).2

Because Patel ignored the bank’s requests, on March 4, 2008, the 

Partnership’s general counsel sent a letter to Patel informing him that the bank was 

once again requesting updated financial information from him as the loan was 

about to mature. Id. The letter, sent by certified and regular mail, stated that the 

bank had tried several times to get the information from him, yet he had refused to 

provide the information or return phone calls. Id. The letter further told Patel that if 

he failed to provide the information to the bank by March 10, 2008, he would “be 

in material breach of [his] obligations under the partnership agreement . . . .” Id. 

The letter then spelled out that the effect of this material breach would be 

termination of his partnership interest: 

 

2

 As Patel notes, the second page of the letter can be found in the supplemental clerk’s record. 

Supp.CR103. Patel testified about the second page of the letter at his deposition. CR95. The text 

is not in dispute. See the stipulation filed in this appeal on November 24, 2015. 
3

Please allow this letter to serve as notice that unless you 

remedy this breach and provide updated financials to the 

bank on or before March 10, 2008, the general partner 

shall terminate your interest in Harbor Hospice of 

Beaumont, L.P. and expel you for your continued breach 

of this written obligation. Please further note that if the 

general partner is forced to take action pursuant to 

Section 10.2 of the partnership agreement, you will 

forfeit to the partnership the entire value of your 

partnership interest upon your termination and expulsion. 

Id. Patel’s wife signed for the certified letter. CR94. The return receipt is dated 

March 29, 2008. CR134. Patel did not submit the required financials, CR106, and 

the Partnership was forced to refinance with another bank. CR117. 

Because Patel failed to meet his commitments to the Partnership, his 

partnership interest was forfeited under section 10.2 of the Partnership Agreement. 

App’x Tab C (CR62); App’x Tab A (Supp.CR103). An amendment to the 

Partnership Agreement was executed to document the fact Patel was no longer a 

member of the Partnership effective January 1, 2008. CR126-29.3

 

Patel’s 2008 IRS schedule K-1 accordingly showed his capital account and 

ownership interest as zero. App’x Tab B; CR96,141. Patel admitted that his 2008 

tax return included the K-1 showing a zero equity interest in the Partnership. 

CR98.

 

3

 The amendment incorrectly states that Patel's limited partnership interests were redeemed rather 

than forfeited, but this mistake is immaterial because Patel had a negative balance in his capital 

account at the end of 2007, CR130-33, and under the Partnership Agreement, any redeemed 

interest would be equal to the redeemed partner’s capital account. CR57-58. In other words, 

there was no value to the partnership interest in a redemption situation. 

 
4

More than four years after the deadline set in the letter, Patel sued the 

Partnership, its general partner (Harbor Hospice Manager, L.L.C.), and two of its 

limited partners (Dr. Arfeen and Arfeen Properties, L.P.). His original petition, 

filed June 15, 2012, claimed breach of fiduciary duty, conversion, and fraud. 

CR5,7. He filed an amended petition on May 20, 2013, dropping the fraud claim 

but adding a breach-of-partnership-agreement claim. CR15,16. The Defendants 

moved for summary judgment on January 22, 2015. Supp.CR5. On February 26, 

2015, Patel amended his petition again to reassert the fraud claim, add a claim 

under the Theft Liability Act, and add a request for declaratory judgment and 

specific performance. CR19,21,23. 

A little less than a month later, the Defendants filed an amended motion for 

summary judgment demonstrating that: (1) statutes of limitations barred all claims; 

(2) there was no genuine issue of material fact as to at least one element of each of 

the substantive claims; and (3) Patel suffered no damages, a necessary element for 

each of his claims. CR26. The trial court granted summary judgment on all claims. 

CR255. 
5

SUMMARY OF THE ARGUMENT 

The Partnership Agreement Patel signed authorized his involuntary 

termination, and allowed the general partner to reallocate his interest. Under the 

terms of the Agreement, Patel ratified and confirmed the general partner’s actions. 

Patel admitted when he filed his tax return for 2008 that his partnership interest 

had terminated—he reported a zero ownership interest to the IRS. 

Patel was notified that his interest would be terminated if he did not provide 

updated financial information to the bank by March 10, 2008. He did not do so, 

and his interest was terminated and reallocated. Those actions were not a breach of 

contract, fraud, breach of fiduciary duty, conversion, or theft. They were in fact 

what Patel agreed could happen. 

Any claim that the contract was breached, or that the general partner should 

not have terminated his interest, should have been brought within four years after 

March 10, 2008—the deadline in the letter for him to avoid termination. Any claim 

for conversion or theft should have been brought within two years of that date. All 

of Patel’s claims are barred by limitations. Neither the discovery rule nor 

fraudulent concealment delays accrual or tolls limitations in this case. 

Furthermore, Patel suffered no damages. The Partnership Agreement 

provides that a limited partner who leaves the partnership leaves with nothing more 

than his capital account. The value of Patel’s capital account was never a positive 
6

amount while he was a partner, and so he was not entitled to any amount when he 

walked away from the partnership. 

There are no genuine issues of material fact, and the Defendants were 

entitled to judgment as a matter of law. The trial court’s summary judgment should 

be affirmed.

ARGUMENT

Summary judgments are reviewed de novo. Merriman v. XTO Energy, Inc., 

407 S.W.3d 244, 248 (Tex. 2013); Nalle Plastics Family L.P. v. Porter, Rogers, 

Dahlman & Gordon, P.C., 406 S.W.3d 186, 199 (Tex. App.—Corpus Christi 2013, 

pet. denied). To be entitled to summary judgment, the movant must establish that 

there is no genuine issue as to any material fact, and that the movant is entitled to 

judgment as a matter of law. TEX. R. CIV. P. 166a; Nalle Plastics Family L.P., 406 

S.W.3d at 199-200. A defendant can meet its summary-judgment burden by 

conclusively negating at least one element of each cause of action or conclusively 

establishing each element of an affirmative defense. See Sci. Spectrum, Inc. v. 

Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Defendants did both here. 

I. All of Patel’s claims are barred by limitations. 

A. Patel’s claims accrued by March 10, 2008. 

Patel’s claims all arise out of the termination of his partnership interest. The 

determination of when those claims accrued, and when the statute of limitations 

began to run, is a question of law. See Valdez v. Hollenbeck, 465 S.W.3d 217, 229 
7

(Tex. 2015) (“When a cause of action accrues is typically a question of law.”); 

Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264, 274-75 (Tex. 2004) 

(“Accrual of limitations is a question of law for the court.”). To answer that 

question, the Court must decide when facts came into existence that authorized 

Patel to seek a judicial remedy. See Exxon Corp. v. Emerald Oil & Gas Co. L.C., 

348 S.W.3d 194, 202 (Tex. 2011); Provident Life & Accident Ins. Co. v. Knott, 128 

S.W.3d 211, 221 (Tex. 2003). “In most cases, a cause of action accrues when a 

wrongful act causes a legal injury, regardless of when the plaintiff learns of that 

injury or if all resulting damages have yet to occur.” Knott, 128 S.W.3d at 221. 

Patel’s claims accrued on the March 10, 2008 deadline. In failing to supply 

updated financial information by that deadline, he forfeited his partnership interest. 

Patel was notified by letter of the deadline and that he would be expelled and his 

interest terminated. He was notified that he would “forfeit to the partnership the 

entire value of your partnership interest upon your termination and expulsion.” 

App’x Tab A (Supp.CR103). On receipt of the letter, Patel was on actual notice of 

facts in existence that authorized him “to seek a judicial remedy.” See Knott, 128 

S.W.3d at 221. 

Patel claims the letter was only a threat, but the letter was more than that. He 

received notice of the reason for the termination of his partnership interest and the 

deadline for his compliance. He knew from the letter that he had only until March 
8

10, 2008, to act to avoid termination of his partnership interest. App’x Tab A 

(Supp.CR103). The Partnership plainly informed him that if he ignored the 

deadline his interest would be terminated. His interest was in fact terminated, and 

the termination was made effective as of January 1, 2008. But for purpose of the 

accrual of his causes of action, by March 10, 2008, facts had come into existence 

that permitted him to seek a judicial remedy. 

The March 4, 2008 notice was mailed by regular mail and certified mail. 

CR121. When notice is sent to a proper address by regular mail there is a 

presumption of receipt that may only be overcome by sworn proof of non-receipt. 

See Thomas v. Ray, 889 S.W.2d 237, 238-39 (Tex. 1994). In Thomas, the Court 

explained: 

When a letter, properly addressed and postage prepaid, is 

mailed, there exists a presumption that the notice was 

duly received by the addressee. This presumption may be 

rebutted by an offer of proof of nonreceipt. In the 

absence of any proof to the contrary, the presumption has 

the force of a rule of law. 

Id. at 238. (internal citations omitted). Moreover, section 13.2 of the Partnership 

Agreement provides that notice shall be deemed completed two days after it is 

deposited in the United States mail, first class, postage prepaid. CR67. 

Patel testified that the letter was properly addressed to his residence and he 

confirmed his wife’s signature on the certified letter. CR94. The fact that Patel did 

not personally sign the green card does not rebut the presumption or constitute 
9

evidence of non-receipt. See Luna v. Runyon, No. 03-06-00615-CV, 2008 WL 

2609171, at * 2 (Tex. App.—Austin 2008, pet. denied) (mem. op.). Patel neither 

denied receipt of the copy sent by regular mail nor offered proof of non-receipt. 

CR95-96. When he was asked if his wife brought the certified letter to his 

attention, he simply stated, “[s]he may have. I just don’t recall." CR95. And he 

testified, “Well, I’m not telling you I didn’t read it. I just don’t recall.” Id. Under 

the circumstances, the presumption that he received the notice “has the force of a 

rule of law.” See Thomas, 889 S.W.2d at 238. His claims accrued and the statute of 

limitations began to run when he learned of facts giving rise to his right to seek a 

judicial remedy—by March 10, 2008. 

B. Neither the discovery rule nor fraudulent concealment delays 

accrual or tolls limitations here. 

The Texas Supreme Court has recognized two limited doctrines that in 

appropriate circumstances may delay accrual or toll limitations: (1) the discovery 

rule, and (2) fraudulent concealment. See Valdez v. Hollenbeck, 465 S.W.3d 217, 

229 (Tex. 2015). Contrary to Patel’s argument, neither doctrine applies here. 

1. The discovery rule does not apply because the alleged injury 

was not of the limited type that is inherently 

undiscoverable. 

The discovery rule is a “very limited exception” to statutes of limitations 

that applies “in certain limited circumstances.” Computer Assocs. Int’l., Inc., v. 

Altai, Inc., 918 S.W.2d 453, 456-57 (Tex. 1994). When it applies, the doctrine 
10

“defers the accrual of the cause of action until the injury was or could have 

reasonably been discovered.” Shell Oil Co. v. Ross, 356 S.W.3d 924, 929-30 (Tex. 

2011). The Supreme Court has limited the discovery rule to “exceptional cases to 

avoid defeating the purposes behind the limitations statutes.” Via Net v. TIG Ins. 

Co., 211 S.W.3d 310, 313 (Tex. 2006) (per curiam). 

The discovery rule applies “only when the nature of the plaintiff’s injury is 

both inherently undiscoverable and objectively verifiable.” Wagner & Brown, Ltd., 

58 S.W.3d 732, 734 (Tex. 2001). The legal question of whether an injury is 

inherently undiscoverable “is decided on a categorical rather than a case-specific 

basis; the focus is on whether a type of injury rather that a particular injury was 

discoverable.” Via Net, 211 S.W.3d at 314. A type of injury is inherently 

undiscoverable only if it is by its nature unlikely to be discovered within the statute 

of limitations despite due diligence. Id. at 313. 

The loss of an interest in a partnership is not the type or category of injury 

that can be described as inherently undiscoverable. The Texas Supreme Court has 

explained that breach-of-contract cases to which the discovery rule would apply 

“should be rare, as diligent contracting parties should generally discover any 

breach during the relatively long four-year limitations period provided for such 

claims.” Id. at 315. The exercise of due diligence in this case in responding to the 

letter would have provided Patel any information he did not already know. The 
11

loss of a partnership interest is not the type or category of injury that is unlikely to 

be discovered despite due diligence. Indeed, Patel’s 2008 IRS schedule K-1 and his 

non-receipt of K-1 schedules in the subsequent years made the injury not merely 

discoverable, but obvious. 

Patel cites section 13.4 of the Partnership Agreement as requiring his 

signature on the termination to make it effective. App’x Tab C (CR68).4

 And he 

cites section 3.4 to the same effect. Id. (CR45).5

 But his termination was 

involuntary, not voluntary. Section 13.4 begins with the words “Except as 

otherwise expressly provided in this Agreement....” Id. (CR68). Section 10.2 

expressly provides for the expulsion of a limited partner and the involuntary 

termination of his interest by the general partner. Id. (CR62). And Section 3.4 

applies only to “agreed” changes, not involuntary termination. Id. (CR45). 

Section 12.1 expressly provides that each limited partner “authorizes” and 

“ratifies and confirms” the actions of the general partner in, among other things, 

executing “[a]ll instruments and documents necessary to effectuate or act upon any 

reallocation of a defaulting partner’s partnership interest.” Id. (CR66). The contract 

does not require Patel’s consent in writing to an involuntary termination. He knew 

 

4

 Section 13.4 provides in part: “Except as otherwise expressly provided in this Agreement, no 

modification, waiver or termination of this Agreement, or any part hereof, shall be effective 

unless made in writing signed by the party or parties sought to be bound thereby....” 

5

 Section 3.4 provides that “Any changes, additions or deletions to the list of GPs or LPs or their 

partnership interests made and agreed upon hereafter from that listed on Exhibit ‘A’ shall be 

recorded on Exhibit ‘C’ and initialed by all GPs and any LPs whose PI has so changed.” 
12

that when he signed the Partnership Agreement. Royston, Rayzor, Vickery & 

Williams, LLP v. Lopez, 467 S.W.3d 494, 500 (Tex. 2015) (“[A]bsent fraud, 

misrepresentation, or deceit, one who signs a contract is deemed to know and 

understand its contents and is bound by its terms.”). He also knew that when he 

received the termination letter. Requiring a partner’s consent in writing for an 

involuntary termination to be effective would render the section authorizing 

involuntary termination meaningless. In construing a written contract, a court 

“must examine and consider the entire writing in an effort to harmonize and give 

effect to all the provisions of the contract so that none will be rendered 

meaningless.” J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). 

Furthermore, even when applicable, the discovery rule only tolls accrual 

“until the injury was or could have reasonably been discovered.” Shell Oil Co., 356 

S.W.3d at 929-30. The “injury was or could have reasonably been discovered” by 

the March 10, 2008 deadline. Patel discovered or could have reasonably discovered 

then that he failed to meet the deadline, and knew or could have reasonably 

discovered the forfeiture of his partnership interest. 

Patel also claims that somehow his interest may not yet have been 

terminated. This argument ignores not only the terms of the Agreement but his 

own 2008 tax return showing he no longer owned an interest in the Partnership. 

App’x Tab B (CR141). The contract authorized the general partner to reallocate his 
13

interest, and the Partnership Agreement was amended as permitted by the 

Agreement. Nothing about this type of alleged injury brings it within the narrow 

orbit of the discovery rule. 

2. The fraudulent concealment doctrine does not apply 

because the Partnership did not try to conceal termination 

of Patel’s interests and Patel had notice of facts giving rise 

to his claims by March 2008. 

The fraudulent concealment doctrine also does not apply. Fraudulent 

concealment tolls limitations until fraud is discovered or should have been 

discovered with reasonable diligence. Valdez, 465 S.W.3d at 229. It is an 

affirmative defense to the statute of limitations under which the plaintiff has the 

burden of proof. See Weaver v. Witt, 561 S.W.2d 792, 793 (Tex. 1977). 

Defendants did not try to conceal the termination of Patel’s interest in the 

Partnership. To the contrary, they actually advised him of the occurrence of 

forfeiture in the March 4th letter. App’x Tab A (Supp.CR102-06). Patel testified 

that he had no reason to believe that the Partnership did not terminate his interest 

as provided in the letter. CR96. He filed a K-1 with his tax return showing zero 

interest in the Partnership for 2008, and he did not receive any additional K-1 

schedules in the following years. CR96-97. 

The Texas Supreme Court has explained that, even in cases of alleged fraud, 

in some circumstances a court “can determine as a matter of law that reasonable 

diligence would have uncovered the wrong.” Hooks v. Samson Lone Star, Ltd. 
14

P’Ship, 457 S.W.3d 52, 58-59 (Tex. 2015); see also Cosgrove v. Cade, 468 S.W.3d 

32, 38-39 (Tex. 2015). When there is actual or constructive notice, the accrual of a 

fraud claim is not delayed. Cosgrove, 468 S.W.3d at 38-39 (citing Hooks). By 

March 2008, Patel was aware that he was being expelled, yet he did not exercise 

any right to judicial relief until he filed suit more than four years later on June 15, 

2012. 

Nor can Patel create an issue based on the fact that Partnership Amendment 

4 was executed twice. Both documents give the effective date of the termination as 

January 1, 2008. CR126, CR135. And in filing his 2008 tax return, he reported a 

zero interest in the Partnership for 2008. App’x Tab B (CR141). 

3. The presence of fiduciary duties does not relieve Patel of his 

own obligation of diligent inquiry. 

Patel is not entitled to special consideration due to any fiduciary duty owed 

to him as a limited partner. First, the Texas Supreme Court has explained that 

“partners have no obligation to remain partners.” Bohatch v. Butler & Binion, 977 

S.W.2d 543, 545 (Tex. 1996). “The fiduciary duty that partners owe one another 

does not encompass a duty to remain partners or else answer in tort damages.” Id.

at 546. And second, a fiduciary’s misconduct is only inherently undiscoverable in 

situations when the person to whom a fiduciary duty is owed is either unable to 

inquire into the fiduciary’s actions or unaware of the need to do so. See S.V. v. 

R.V., 933 S.W.2d 1, 8 (Tex. 1996). As the Supreme Court has explained, 
15

[w]hile a person to whom a fiduciary duty is owed is 

relieved of the responsibility of diligent inquiry into the 

fiduciary’s conduct, so long as that relationship exists, 

when the fact of misconduct becomes apparent it can no 

longer be ignored, regardless of the nature of the 

relationship. 

Id. Defendants took affirmative steps to put Patel on notice of the impending 

expulsion from the Partnership. App’x Tab A (CR121;Supp.CR102-06). Patel 

simply chose to ignore his obligations. CR97. Patel was neither unable to inquire 

nor unaware of the need to do so. Neither the discovery rule nor the doctrine of 

fraudulent concealment applies. 

4. The same statute of limitations applies to Patel’s 

declaratory-judgment claim as to his substantive claims. 

Finally, Patel argues that the trial court improperly disposed of his 

declaratory-judgment claim. But Defendants moved for summary judgment on all 

of his substantive claims, and it was properly granted on all of them. As the First 

Court of Appeals has stated, “because claims for declaratory relief necessarily 

derive from claims for substantive relief, the statute of limitations for the 

underlying action at law is applied to an accompanying action for declaratory 

relief.” Schrock v. City of Baytown, No. 01-13-00618, 2015 WL 1882190, at *7 

(Tex. App.—Houston [1st Dist.] April 23, 2015, no pet.) (mem. op.). Because all 

of Patel’s underlying substantive claims were barred by limitations, the procedural 

device and remedy of a declaratory judgment was also properly dismissed. See id.;
16

In re Estate of Denman, 362 S.W.3d 134, 144 (Tex. App.—San Antonio 2011, pet. 

denied) (“Because a declaratory judgment action is a procedural device used to 

determine substantive rights, to determine the applicable limitations period, we 

must look to the legal remedy underlying the cause of action.”). 

Any alleged misconduct was not inherently undiscoverable. Patel was 

required to act. Since the termination occurred more than four years before he filed 

his original petition, Patel’s claims for breach of partnership agreement, breach of 

fiduciary duty, and fraud are barred. See TEX. CIV. PRAC. & REM. CODE ANN. § 

16.004(a)(5). 

Patel had two years from accrual to file his claims for conversion and 

violation of the Texas Theft Liability Act. See TEX. CIV. PRAC. & REM. CODE ANN. 

§ 16.003. He was on notice in March 2008 of his expulsion from the Partnership, 

and admits that he received, sometime in 2009, the 2008 K-1 showing a zero 

interest in the partnership. CR96. He also admits that he included this K-1 in his 

2008 tax return. CR96. Having waited to file suit until June 15, 2012, Patel’s 

claims are time-barred, as any claim for an alleged conversion or theft accrued 

before June 15, 2010. 

The trial court properly granted summary judgment on all claims based on 

the statute of limitations. The judgment should be affirmed. 
17

II. Defendants conclusively negated at least one element of each of Patel’s 

claims. 

A defendant can meet its summary-judgment burden by conclusively negating 

at least one element of each of a plaintiff’s claims. See Sci. Spectrum, 941 S.W.2d 

at 911. Defendants did that here with respect to each of Patel’s claims, as to 

damages on the fraud claim and as to both damages and another element on all 

other claims. 

A. Patel has no breach-of-fiduciary-duty claim.

Breach of fiduciary duty is a tort. Douglas v. Aztec Petroleum Corp., 695 

S.W.2d 312, 318 (Tex. App.—Tyler 1985, no writ). The elements for a breach-offiduciary-duty claim are: (1) plaintiff and defendant had a fiduciary relationship; 

(2) defendant breached this duty; (3) this breach resulted in harm to plaintiff or 

benefit to defendant. See Graham Mortg. Corp. v. Hall, 307 S.W.3d 472, 479 (Tex. 

App.—Dallas 2010, no pet.). 

Harbor Hospice Managers, L.L.C., the general partner of Harbor Hospice of 

Beaumont, L.P., terminated Patel’s limited partnership interest in the Partnership. 

Patel alleges this termination of his partnership interest was a breach of fiduciary 

duty. But the Supreme Court has already determined that, as a matter of law, 

“partners have no obligation to remain partners.” Bohatch, 977 S.W.2d at 545. The 

fiduciary duty that partners owe each other “does not encompass a duty to remain 
18

partners or else answer in tort damages.” Id. at 546.6 Defendants had no fiduciary 

duty to remain partners with Patel. See LG Ins. Mgmt. Servs., LP v. Leick, 378 

S.W.3d 632, 643 (Tex. App.—Dallas 2012, pet. denied). As a matter of law, Patel 

has no breach-of-fiduciary-duty claim based on the termination of his partnership 

interest. 

Furthermore, any action taken after termination of Patel’s partnership 

interest, for example in transferring his former interest, cannot be a breach of 

fiduciary duty either. No fiduciary duty is owed to a former partner after the 

partnership interest is terminated. See id. 

Even if a duty were owed, Defendants’ actions were proper as a matter of 

law. Defendants’ actions complied with the Partnership Agreement and the statutes 

governing partnership fiduciary obligations. See TEX. BUS. ORG. CODE ANN. §

152.002(a) (partnership statutes govern to the extent a partnership agreement does 

not otherwise provide). 

A partner’s fiduciary duty includes: (1) duty of loyalty to the joint concern; 

(2) duty of good faith, fairness, and honesty in dealings with each other on matters 

pertaining to the partnership; (3) duty of full disclosure of all matters; (4) 

accounting for partnership profits and property; and (5) refraining from competing 

 

6

 Moreover, there is no claim that the limited partners terminated Patel’s interest; limited partners 

generally do not owe any fiduciary duty to each other in this context. See Strebel v. Wimberly, 

371 S.W.3d 267, 281 (Tex. App.—Houston [1st Dist.] 2012, pet. denied). But see LG Ins. Mgmt. 

Servs., LP v. Leick, 378 S.W.3d 632, 643 n.8 (Tex. App.—Dallas 2012, pet. denied) (“Texas law 

is not clear whether limited partners owe each other fiduciary duties.”). 
19

or dealing with the partnership in a manner adverse to the partnership. See 

Bohatch, 977 S.W.2d at 545; Brosseau v. Ranzau, 81 S.W.3d 384, 394-95 (Tex. 

App.—Beaumont 2002, pet. denied). The claimed actions of Defendants in 

terminating Patel’s interest do not constitute a breach of any of these duties. 

Patel cites various provisions of the Agreement that he claims required his 

consent to the termination and reallocation of his interest. But his termination was 

involuntary. Section 10.2 expressly provides for the expulsion of a limited partner 

and the involuntary termination of his interest by the general partner. App’x Tab C 

(CR62). Section 12.1 expressly provides that Patel “authorizes” and “ratifies and 

confirms” the actions of the general partner in, among other things, executing “[a]ll 

instruments and documents necessary to effectuate or act upon any reallocation of 

a defaulting partner’s partnership interest.” Id. (CR66). The Agreement does not 

require Patel’s consent to an involuntary termination or to the reallocation of his 

interest as a defaulting partner. Id. (CR62,66). The Agreement he signed 

authorized his involuntary termination and in that Agreement he ratified and 

confirmed the reallocation of his interest. Id. (CR62,66). He knew that when he 

signed the Agreement and when he received the March 4th letter from the 

Partnership. App’x Tab B (CR121;Supp.CR102-06). He acknowledged that when 

he filed his tax return showing a zero partnership interest. CR96; App’x Tab B 

(CR141). 
20

As the Supreme Court stated in Bohatch, partners may choose with whom 

they associate. See Bohatch, 977 S.W.2d at 545. Patel can point to no requirement 

in the Agreement or the law that barred Defendants from rejecting him as their 

partner. Once the decision was made to reject him, he was notified, and under the 

terms of the Agreement, he was not owed any money. Regardless of the language 

used in the resolution terminating his interest, the termination was not a breach of 

fiduciary duty. See id. at 546. 

A partner is presumed to satisfy the duty of care if the partner acts on an 

informed basis and in good faith with a reasonable belief that it is acting in the 

partnership’s interest. TEX. BUS. ORG. CODE ANN. § 152.206. Removing Patel from 

the Partnership was objectively in the best interest of the Partnership. Patel had 

shown himself to be unreliable by not finishing the construction properly and by 

failing to pay subcontractors on-time, if at all. CR105,110-11. He held the halfcompleted major construction project hostage for an increase in ownership. 

CR107,116. He proved to be detrimental to the Partnership yet again when he 

failed to respond to the bank’s request for financial information. This forced the 

Partnership to have to refinance the loan with another bank. CR117. Considering 

that Patel put up no money for his interest, but was supposed to successfully 

complete the construction project (CR92-93,110), his failure to act and his cavalier 
21

attitude towards his partnership commitments and responsibilities were not in the 

best interest of the Partnership. 

A partnership has the right to rid itself of partners who do not live up to their 

obligations. To exercise that right cannot be a violation of a fiduciary duty. The 

trial court properly granted summary judgment on the fiduciary-duty claim. 

B. There is no genuine issue of material fact as to breach of contract.

To prevail on a breach-of-contract claim, a plaintiff must prove: (1) there is 

a valid, enforceable contract; (2) the plaintiff is a proper party to sue for breach of 

contract; (3) the plaintiff performed, tendered performance of, or was excused from 

performing its contractual obligations; (4) the defendant breached the contract; and 

(5) defendant’s breach caused plaintiff injury. See B&W Supply, Inc. v. Beckman,

305 S.W.3d 10, 16 (Tex. App.—Houston [1st Dist.] 2008, pet. denied). The trial 

court properly granted summary judgment on Patel’s breach-of-contract claim 

because there is no question of fact with respect to any breach. 

Under Texas Business Organizations Code section 153.105, rights of limited 

partners may only be created by: (1) the certificate of formation; (2) the partnership 

agreement; (3) other sections of that chapter; or (4) other limited partnership 

provisions. TEX. BUS. ORG. CODE ANN. § 153.105. Section 152.002(a) of the Code 

provides: 

Except as provided by Subsection (b)[not relevant here], 

a partnership agreement governs the relations of the 
22

partners and between the partners and the partnership. To 

the extent that the partnership agreement does not 

otherwise provide, this chapter and the other partnership 

provisions govern the relationship of the partners and 

between the partners and the partnership. 

Id. § 152.002(a); see also id. § 153.003. Therefore, unless the Partnership 

Agreement conflicts with a non-waivable provision of the law, the Agreement 

governs the permissible actions by members of the Partnership with relation to it 

and one another. 

Section 10.2 of the Partnership Agreement allowed the general partner to 

terminate Patel’s partnership interest and expel him from the Partnership: 

Expulsion. All of the general partners may unanimously 

terminate the interest of a limited partner and expel 

him... (c) for failing to meet any commitment to the 

partnership or manager in accordance with any written 

undertaking signed by such limited partner... [T]he 

expulsion and termination may, in the sole discretion of 

the general partners in order to compensate for any 

damages caused to the partnership, result in a forfeiture 

to the partnership of all or a portion of the value of the 

partnership interest of the expelled partner at the time of 

such expulsion or termination. 

App’x Tab C (CR62). 

No provision of the Texas Business Organizations Code prohibits partners 

from agreeing to expulsion provisions in a partnership agreement. Because Patel 

failed to meet his commitments to the Partnership, his interest was terminated and 

his partnership interest was forfeited under section 10.2 of the Partnership 
23

Agreement. App’x Tab C (CR62); App’x Tab A (Supp.CR102-06). An amendment 

to the Partnership Agreement was executed to document the fact Patel was no 

longer a member of the Partnership effective January 1, 2008. CR126-29. Patel’s 

2008 K-1, which he admitted filing with the IRS, accordingly showed his capital 

account and ownership interest as zero. CR96,98, App’x Tab B (CR141). 

The forfeiture of the value of Patel’s partnership interest was “in the sole 

discretion” of the general partner. App’x Tab A (CR62). The Partnership had the 

right to expel him under section 10.2, and Patel cannot identify any provision of 

the Agreement that was breached. There is no genuine issue of material fact 

regarding Patel’s claim of breach of the Partnership Agreement. The trial court 

properly granted summary judgment on the breach of contract claim. 

C. There is no genuine issue of material fact as to conversion and 

theft.

The trial court also properly granted a summary judgment on Patel’s 

conversion and theft liability claims. The elements of conversion are: (1) the 

plaintiff owned, possessed, or had the right to immediate possession of property; 

(2) the property was personal property; (3) the defendant wrongfully exercised 

dominion or control over the property; and (4) the plaintiff suffered injury. See 

Green Int’l v. Solis, 951 S.W.2d 384, 391 (Tex. 1997); Alan Reuber Chevrolet, Inc. 

v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 888-89 (Tex. App.—Dallas 2009, no 

pet.). The elements are similar under the Theft Liability Act. TEX. CIV. PRAC. &
24

REM. CODE ANN. §§ 134.002(2) (“‘Theft’ means unlawfully appropriating property 

or unlawfully obtaining services....”), 134.003. 

Patel violated the Partnership Agreement and triggered the expulsion clause. 

Defendants had the right to take control of his partnership interest under section 

10.2 of the Agreement. App’x Tab C (CR62). Furthermore, when ownership of 

property is subject to a legitimate claim under a contract, there is no theft. See

Bokor v. State, 114 S.W.3d 558, 560 (Tex. App.—Fort Worth 2002, no pet.). 

Patel’s expulsion and the reallocation of his partnership interest were authorized by 

the contract. See, e.g., Bandy v. First State Bank, 835 S.W.2d 609, 622 (Tex. 1992) 

(no conversion when bank had right to offset deposits against customer’s debts). 

There is no genuine issue of material fact as to whether expulsion was justified or 

authorized by the contract; therefore the termination of Patel’s interest cannot 

constitute conversion or theft. The trial court properly granted summary judgment 

on these claims. 

III. There is no fact question as to damages.

Furthermore, there is no fact question as to whether Patel suffered any injury 

from any of Defendants’ alleged actions. The Partnership Agreement governs the 

relationship of the parties. Once Patel signed the Agreement, he agreed to each of 

the following provisions: 
25

 Section 4.2 Return of Capital. 

Except as otherwise expressly provided for elsewhere herein, no 

partners shall be entitled to a refund or return of any capital 

contributions nor to withdraw any part of his capital account nor to 

receive any distributions of any kind, including of profits, from the 

partnership, except upon termination of the partnership which shall 

mean a complete winding up of the partnership and following the 

filing of a certificate of cancellation. App’x Tab C (CR45-46). 

 Section 8.1 General Limitations. 

No limited partner may sell, pledge, transfer, exchange, hypothecate, 

encumber, give, devise, assign or otherwise dispose of or allow to be 

attached (“transfer” or “assign”) any portion of his partnership interest 

nor may he withdraw from the partnership without the prior written 

consent of all of the general partners, which decision shall be made at 

their sole discretion. Id. (CR53). 

 Section 8.5 Redemption of Partnership Interest 

a. The partnership interest of all limited partners are subject to 

redemption by the partnership at the election of the general 

partners. In the event the general partners make such an 

election, the general partners shall provide the limited partner 

whose partnership interest is to be redeemed (the “Redeemed 

Partner”) with at least sixty (60) days’ prior written notice of 

the redemption. 

b. The purchase price of the Redeemed Partner’s LPI shall equal 

the balance of the Redeemed Partner’s capital account 

established under Section 5.1 hereof, determined as of the end 

of the calendar month immediately preceding the month in 

which the closing of the redemption transaction takes place. Id.

(CR57-58). 

 Section 10.2 Expulsion 

All of the general partners may unanimously terminate the interest of 

a limited partner and expel him (a) for interfering in the management 

of the partnership affairs or otherwise engaging in conduct which 
26

could result in the partnership losing its tax status as a partnership, (b) 

if the conduct of a limited partner brings the partnership into 

disrepute, or (c) for failing to meet any commitment to the partnership 

or manger in accordance with any written undertaking signed by such 

limited partner, but the general partners shall be not be required to so 

terminate. In each of the foregoing events, the expulsion and 

termination may, in the sole discretion of the general partners in order 

to compensate for any damages caused to the partnership, result in a 

forfeiture to the partnership of all of a portion of the value of the 

partnership interest of the expelled partner at the time of such 

expulsion or termination. Id. (CR62). 

Under these provisions, any partner who leaves the partnership, either 

voluntarily or through expulsion, leaves with nothing more than his capital 

account. Patel had a negative balance in his capital account. CR130-33. The value 

of Patel’s capital account was never a positive amount during any time in which he 

was a partner. As a matter of law he suffered no injury. 

IV. The summary judgment evidence was properly considered by the trial 

court.

Patel claims for the first time on appeal that the summary judgment proof 

was not properly authenticated. The objection has no merit. See TEX. R. CIV. P.

166a(d). The summary judgment evidence in this case consists exclusively of 

deposition testimony and deposition exhibits. It was not necessary to authenticate 

them. McConathy v. McConathy, 869 S.W.2d 341, 341 (Tex. 1994); Neely v. 

Comm’n for Lawyer Discipline, 302 S.W.3d 331, 344 n.14 (Tex. App.—Houston 

[14th Dist.] 2009, pet. denied) (“Deposition transcripts and the exhibits discussed 
27

in the deposition need no authentication and constitute proper summary judgment 

evidence.”). 

This Court and the Ninth Court of Appeals have applied Rule 166a(d) to 

discovery documents and concluded authentication was unnecessary. The Ninth 

Court ruled “[a]uthentication of discovery documents is unnecessary if the 

proponent complies with Rule 166a(d).” Guidry v. Wells, No. 09-05-00182-CV, 

2006 WL 246493, at *1 (Tex. App.—Beaumont 2006, no pet.) (mem. op.) (holding 

that referring to requests for admission and attaching an unauthenticated copy 

satisfied Rule 166a(d)). Likewise, in Mowbray v. Avery, this Court explained that 

two exhibits “were discovery documents in the same case and so do not need to be 

authenticated to serve as summary judgment proof.” 76 S.W. 3d 663, 689 n.44 

(Tex. App.—Corpus Christi 2002, pet. denied). 

Patel did not object in the trial court and does not argue in this Court that 

any of the summary judgment evidence is not subject to Rule 166a(d). See Cotton v 

Cotton, 169 S.W.3d 824, 829 (Tex. App.—Dallas 2005, pet. denied) (“To the 

extent the ‘exhibits’ are discovery products, Neel’s argument is not well taken, and 

Neel makes no argument that the exhibits are not subject to rule 166a(d).”). He 

does not point to any one exhibit as objectionable; he globally objects to them all 

without mentioning Rule 166a(d). Yet he did not object to the summary judgment 

evidence in the trial court. He did not ask the trial court for a ruling on any 
28

objection to the evidence. He has waived the objection. See TEX. R. APP. P. 33.1; 

City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex. 1979); 

Pink v. Goodyear Tire & Rubber Co., 324 S.W.3d 290, 301 (Tex. App.—

Beaumont 2010, writ dism’d) (“Generally a party is required to obtain an express 

ruling on its objection to summary judgment evidence.”); Neely, 302 S.W.3d at 

344-45. 

Patel’s objection has no basis. The deposition excerpts and exhibits were 

properly considered by the trial court under Rule 166a(d), and any objection cannot 

be made for the first time on appeal. 

PRAYER

Appellees respectfully request that the summary judgment be affirmed. 

Respectfully submitted, 

MEHAFFYWEBER, P.C. 

By: /s/ David Gaultney 

David Gaultney 

State Bar No. 07765300 

davidgaultney@mehaffyweber.com 

Elana Einhorn 

State Bar No. 06502455 

elanaeinhorn@mehaffyweber.com

MehaffyWeber, P.C. 

823 Congress Avenue, Suite 200 

Austin, Texas 78701 

Phone: (512) 394-3840 

Fax: (512) 394-3860 
29

Jeremy Stone 

State Bar No. 24013577 

jeremystone@mehaffyweber.com 

MehaffyWeber, P.C. 

500 Dallas, Suite 1200 

Houston, Texas 77002 

Phone: (713) 655-1200 

Fax: (713) 655-0222 

David E. Bernsen 

State Bar No. 02217500 

dbernsen@bernsenlaw.com 

Christine L. Stetson 

State Bar No. 00785047 

cstetson@bernsenlaw.com 

420 North MLK, Jr. Pkwy 

Beaumont, Texas 77701 

Phone: (409) 212-9994 

Fax: (409) 212-9411 

Glen W. Morgan 

State Bar No. 14438900 

gmorgan@rmqlawfirm.com 

John Werner 

State Bar No. 00789720 

jwerner@rmqlawfirm.com

Reaud, Morgan & Quinn 

801 Laurel St. 

Post Office Box 26005 

Beaumont, Texas 77720-6005 

Phone: (409) 838-1000 

Fax: (409) 833-8236 

 Brandy Wingate Voss 

 State Bar No. 24037046 

brandy@appealsplus.com

Smith Law Group L.L.L.P. 

820 E. Hackberry Ave. 

McAllen, Texas 78503 

Phone: (956) 683-6330 
30

Fax: (956) 225-0406 

Attorneys for Harbor Hospice of Beaumont, 

LP, Harbor Hospice Manager, L.L.C, Qamar 

Arfeen, and Arfeen Properties, L.P. 

CERTIFICATE OF COMPLIANCE 

I certify that this Appellees’ Brief complies with the length limits of Tex. R. 

App. P. 9.4(i). The Brief contains 6,837 words, not counting the contents excluded 

by Rule 9.4(i)(1). 

/s/ David Gaultney 
31

CERTIFICATE OF SERVICE 

 I certify that a true and correct copy of this document has been forwarded to 

the following counsel of record via electronic filing manager and e-mail on 

December 10, 2015. 

Chris Portner 

cportner@portnerbond.com 

J. Trenton Bond 

tbond@portnerbond.com 

Portner Bond, P.L.L.C. 

1905 Calder A venue 

Beaumont, Texas 77701 

(409) 838-4444 Telephone 

(409) 554-0240 Facsimile 

Anthony Malley, III 

tony@mallaw.com 

Malley Law Firm, P.L.L.C. 

905 Orleans, Suite 110 

Beaumont, Texas 77701 

(409) 212-8888 Telephone 

(409) 212-8002 Facsimile 

Jamie D. Matuska 

jamie@matuskalaw.com 

Matuska Law Firm 

2809 Highway 69 North 

Nederland, Texas 77627 

(409) 722-5600 Telephone 

(409) 727-1290 Facsimile 

ATTORNEYS FOR APPELLANT, 

SANDEEP PATEL 

/s/ David Gaultney 
32

No. 13-15-00452-CV 

IN THE THIRTEENTH COURT OF APPEALS

CORPUS CHRISTI—EDINBURG, TEXAS

 

SANDEEP PATEL, 

Appellant, 

v. 

HARBOR HOSPICE OF BEAUMONT, LP, HARBOR HOSPICE MANAGER, LLC, QAMAR 

ARFEEN, AND ARFEEN PROPERTIES, L.P., 

 Appellees.

 

ON APPEAL FROM THE 172nd DISTRICT COURT, 

JEFFERSON COUNTY, TEXAS, NO. E-192,576 

 

INDEX TO APPENDIX 

Tab: Description: 

A. Letter from the Partnership to Patel 

B. Patel’s 2008 IRS Schedule K-1 

C. Partnership Agreement 

 
Tab A 

(Letter from the Partnership to Patel) 

 
102

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March 4, 2008 

FILED 

DISTRICT CLERK OF 

JEFFERSON CO TEXAS 

1/22/2015 5:19:08 PM 

JAMIE SMITH 

DISTRICT CLERK 

E-192576 

Maggie Parker 

GeMral Cot,lllsel and 

Director of Risk Management 

Harbor Healt.hcara System, LP 

8515 Fannin, Suite lG7 

Beaumont, TX 7770i 

409.813.2332. office 

409.838.7598 fu 

mparkru:@harborhcs.com 

VIA CERTIFIED 1.\'IAIL, RETUR.t~ RECEIPT REQUESTED AND REGULAR U.S. MAIL 

Sandeep Patel 

12802 Aspen Terrace 

Cypress~ TX 7743j 

Re: Harbor Hospice of Beaumont, L.P.; 

Loan fl330001985366 with Capital One1 N.A. 

Dear Mr. Patel, 

I am writing as General Counsel for Hat:bor Healthcare System~ L.P. and the Harbor Hospice 

affiliates, including but not limited to Harbot· Hospice of Beaumont, L.P. As you know, the above 

referenced loan on which you are a Guarantor matures March 12~ 2008. A copy of a letter from 

Capital One dated February 25, 2008 was received this morning and is enclosed for your review. A 

copy of the Cotntl:tercial Guaranty signed by you on th!s loan is also enclosed for your reference, as 

well as the Notice of Final Agreement. 

The bank has attempted on several occasions to obtain updated financials from you and yQu have 

refused to provide same. Further, you have failed to return several phone messages regarding this 

matter. If you do not provide updated financials to 1he bank on or before March 10, 2008, you will 

be in material breach of your obligations . under the partnership agreement and the enclosed loah 

documents. 

Pursuant to Section 10.2 of the Agreement of Limited Partnership for Harbor Hospice of Beaumont, 

.L.P~, '.'[~]~ <;>f .th~ g~~r~ p~~~r~ m~y .u~~O.l;l~ly terminat~. the inte!est of a !~t~d partnex:_ and 

expel him .•. for failing to meet any commitment to the partnership or manager in accordance with 

any written undertaking signed by such limited partner .... fTJhe expulsion and 1ermina~ion may, 

in the sole discretion of the general partners in order to compensate for any damages caused to the 

partnership~ result in a forfeiture to the partnership of all or a portion of the· value of th.e partnership 

interest of the expelled partner at the time of such expulsion or termination., 

EXHIBIT NO.~ 

S. B~;·w! 4/l /J 4 

EXHIBIT "F": 

DEF000578 
103

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,..-\ 

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() 

Please allow this letter to serve as notice that unless you remedy this breach and provide updated 

financials to the bank on or before March 10, 2008, the general partner shall terminate your interest 

in Harbor Hospice of Beaumont~ L.P. and expel you for your continued breach of this written 

obligation. Please further note that if the general partner is forced to take action pursuant to Section 

10.2 of the partnership agreement, you will forfeit to the partnership the entire value of your 

partnershipinterest upon your term:ination and expulsion. 

Please give this matter your immediate attention. It is our hope that you will honor· your obligations 

and resolve this situation accordingly. Please give me a call to discuss your intentions on or before 

the March 10, 200& deadline. 

ve.ry nuty y~u:1} . 

L-1!1;/!fp.e IM!h. ~~f:}Parker MMP/nunp 

En c. 

DEF000579 
104

~· h 

("'\ 

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(_) 

~ ) "'~ ,. 

-Capital One® 

February 25 1 2008 

<:ap.ual one, N.A. 

F. 0. Box3597 

Bato.n Rouge, 1A 70821 

(225) 381·2000 

Harbor Hospice of Beaumont, L.P. 

ATTN: Sandeep Patel 1 Member 

2450 N. Major Drive 

Beaumont/ TX. 77713 

RE: Loan i3300019S5366 

Dear Mr. Patel: 

,. 

Roc:c:o v. Kuhn 

VIce President 

The above referenced loan with Capital One, N.A. (~c.o.N.A.") 

matures March 12" :woe and will become due and payable in full, 

Due to this loan"s pending maturity, CONA hereby makes formal 

demand for the outstanding debt as follows: 

Principal 

Interest {through March 12, 2008) 

Total Amount Due 

$493,708.32 

$3,373,67 

$4971081.99 

Formal qemand is hereby made for $497,081.99 to be paid on or 

before March 12, 2008. Should you fail to comply with CONA's 

formal demand for $.497, 081.99, it is CONA' s intention to proceed 

with any legal action necessary to collect all sums due under 

your Promissory Note, including all alla"lflable attorney's fees and 

court costs which CONA incurs in collecting the amounts owed 

under the said Note. Your remi.ttance must be paid by cashier's 

check and mailed to the undersigned. 

Should any payments less than the total outstanding balance plus all accrued 

;interest and :.fees be received £_rom you, C!ONA will apply those payments t:o 

reduce your debt. However,. CON.A does not waive any or i.t::s rights and 

_spea.iri.cally reserves its rights to enforC$ the terms of yo~r loan documents 

even 1.£ those payment~ are reoe.:Lved and applied to your debt. 

CAPI~AL ONB, N.A, • P. 0. BOX 3697_ • BATON ~QUGE, LA 108~1 • PttONBt (225) 381-~214 

DEF000580 

I 
105

.. •, ... .. 

,.. \ 

\ l 

( ) 

February 25, 2008 

Harbor Hospice of Beaumont, L.P. 

ATTN: Sandeep Patel, Member 

Page: 2 

Should you have any questions concerning this matter, l can be 

reached at (225) 381-2214. 

Rocco 

1;Z.~ v. Kuhn 

Vice !?resident 

rvk/kwb. 

cc: File 

DEF000581 
106

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, , . 

Capital One, N.A. P.o. Box 3597 

aaton Rouge, lA 70821 

·'-": 

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f 

02 1A 

0004554243 

ADDRESS SERVICE REQUESTED M.41iEO.FR01

--·-...........-..-.-....... ---... -" ...... --·------

Harbor Hospice. of 'Beaumont, LP. 

A TIN: Sandeep Rate!, 

2450 N. ....... _... .. ···---·· .. BeaUfT!Ont, T)i __ _, ......... ·- ·· - ...

709 N7E; .:1.· 'aO"?::t 

. • . . . · · · . . . . 

. :·HAREilbR .HGSF:tOE· 

·:Po eo.x. 23£'/'l'r . · . 

SEAIJMONT TX 

· .. 

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.... •••••"""--··

·•_,• ,,.:,.,..i I 

... _ .... ,..._., .. ..,.,w. 

'?7'720@307(. 
Tab B 

(Patel’s 2008 IRS Schedule K) 

 
141

Selledule K·1 

(Fmm 1065) 

7 

ForcalMdoryoor 2003, or !lo>: 

651108 

2008 

Oa11artment of til& Troasury yoor beglcmll!ll ----------- !----...Al~lli!:ili!lru!:...Q!~:ru!Ll!lrul2!!!1§!!:J!!i!.IDL~ 

lntemal R~Mmoo.SefllklD endll!ll ------------

Partner's Share of Income, ue.~:~uc..:aon:s, 

Credits, etc. 

m;t rental income (loss) 

min tax (AMT) Items 

D D Chook If tills Is a !}UbUc.'y lraded partnership {PTP) sllort·lerm capitaroatn (toss) 

Information About the Partner long·tarm capl!al gain (loss} 

E Partn&r'llldDntlf)llng number 

limttEtd partner or other lLC 

rnember·mana\}or member 

H 00 Dornesllc partner D Fnralgn partner 

I What type of entity Is this palinar? --=-I..;;;.N.;..;;D_I.;;;..V"'-'-'I"'-D~U..:c-AL-=------- 1----------+--1---------l 

J f>ltrtners share of profit, loss, and capital: 

-Beginning 

Profit 6. 6 0 3529 h. ~- 6.6035294% 

ca · 1 6. 603529h. 

K Partners share of liabllilies at year end: 

Eni!lng 

0.0000000% 

0.0000000% 

0.0000000% 

Nonrecourse ................................................ $ -------- !-2S~!!!!Qllil!!§@!~lf!!.11~!l!i!!~J!lli!l!l!!!iQ!l,_ ____ ~ 

Qualified nonrecourse tlnancl.ng ........................ $ ------~ 

RecQurse ................... ;;~ ......... .:. ..................... $ ______ __;;,_, 

t P~rtners capital t~coounl analysis: 

Beginning capltafaecount .............................. $ ~-----'-<-::4:-::1:-''-:6:-:6~4i2-. <» 

C~pital eont!lbutlld during toe year .~............... $ 7 0 r 2 3 9 • ~ 

Curran! year Increase (decrease) ..................... $ -----::-::,..--::,...,.,0:':-. ~ 

Withdrawals & dlstrlbuHons ........... ,.................. $( 2 8 , 5 7 5 ~ 

Eadlno caf)itala~nt .................................... $ 0 • u. 

00 Tax basis 0GAAP D Sectlon 704(b) book 

LHA For Paperwtlfk R!!iluctlon At! Notlue, see lnstru~tlons lor Form 1ll55. 

EXHIBIT No.ac:L 

S. Bearcl4 /<f /I fi 

Sclledula K·1 (f11rm 11165) 2t!Ofl 

30 7 

2008.03040 HARBOR HOSPICE OF BEAUMONT1 31200 __ 1 

DEF002164 

EXHIBIT "K" 
Tab C 

(Partnership Agreement) 
42

.• 

AGREEMENT OF LIMITED PARTNERSHIP 

FOR HARBOR HdSPICS OF BEAUMONT, L.P., 

A TEXAS LIMITED PARTNERSHIP 

----~This Agreement is made by and among each of the parties (all 

referred to as '~partners-11)-Taent:.Tfied on E~~f-as·-ngenera±--------­

partners" and as 11 1imited partners 11 , effective on the n day of 

0"\ .. ,...J~ , 2005 ( 11 effective date"). In consideration of the 

covenants of each other, these 11partners 11 agree to the formation of 

this limited partnership ( 11 partnership11 ) and to be bound by all of 

the following~ 

ARTICLE l 

FORMATION; NAME AND OFFICE; PURPOSE 

Section 1.1 Formation, 

The partners hereby form this limited partnership pursuant to 

the provisions of the Texas Revised Limited Partnership Act 

("Act 11 ), 

Section 1.2 Name and Office. 

The name, register~¢ office 1 registered agent and principal 

office of the partnership are desi$;Jnat:ed on the Certificate of 

Limited Partnership {11Certificate 11 } 1 a copy of which is attached -M 

Exhibit ·u8 11 1 or shall become such other name, agent or address c1S 

the general partner(s} shall hereafter agree upon and designat~ by not·~£~ to the 1 imited partners and, where required1 the Certiiicatt;: 

filed with the Secretary of State of Texas ( 1'S0S"} shall be 

am(:mded. 

Section 1.3 Purpose and Activities. 

The general purposes for which this partnership is organized 

are-: 

{a) For the tranpaction of any or all lawful business; 

(b) To enter into any lawful arrangements for sharing profits 

and_losses in any transaction or transactions 1 and to promote· and 

organ:i ze other entitie~;, 

{c) To invest 1 buy, sell 1 lease or deal in any property 

(pe~'sonal, intangible, real or mixed) or t6 render services 1 

(d) 'l'o have and exercise all rights and powers that are now 

or may hereafter be granted to a limited partnership by law. 

1 

EXHIBIT NO. j_ 

S. Beard 'f/fJiq 

Defendants p. ·3. 

DEF000315 

EXHIBIT "A" 
43

The foregoing shall be construed as objecta 1 purpose$, and 

powers and enumeration thereof shall not be held to l.ilni t or 

restrict in any martner the powers hereafter conferred on this 

partnership by the laws of the State of Texas. 

The objects~ purposes I and-powers--speci-fied-in-t-hi-s-eect :ian __ . _____ _ 

shall not be limited or restricted by reference to or inference 

from the term of any other clause or paragraph Pin this Agreement« 

{ 11 herein11 ). The objects, purposes, and. powers specified in each of 

the clauses or paragraphs herein shall be regarded as independent 

and cumulative objects, purposes <;>r powers·. 

. . The specific activity in which the partnership intends to 

engage upon formation is to provide inpatient hospice cart?. and 

services related or incidental thereto to individuals·in need of 

such services. · 

Notwithstandirtg any provision in this Agreement to the 

contrary, if a physician owns 1 directly or indirectly, an LP or GP 

interest in the partnership, there shall be·an absolute prohibition 

a9ainst the referral by that physician of that physician's patients 

to the partnership for the receipt of hospice services covered by 

Medicare, unless the hospice services are reimbursed under· the 

hospice composite rate. 

Section 1.4 Partnership Property. 

The property· owned by the partnership may be held in the name 

of the partnership or in the name of any general partner. 

AR.TICLE II 

TERM 

The term of the partnership shall commence on the effective 

date of this agreement and shall continue for ninety-nine (99) 

years, after which date the partnership shall dissolve, unless 

sooner dissolved in accordance with the Act or upon the occurrence 

of any of tpe following events of dissolution: 

(a) the voluntary bankruptcy of the partnership; 

(b) the termination and winding up of the partnership 

pursuant to other provisions contained elsewhere herein; or 

(c) the written agreement of all partners to dissolve the 

Pa:rt.nershiPi 

provided, however, that the sale or other disposition of all or 

2 

Defend(lnts p. 4 -

DEF000316 
44

substantially all of the assets of the partnership or any time 

perioq of inactivity by the partnership shall not in and of itself 

dissolve or be grounds to dissolve the partnership. 

ARTICLE III 

INTEREST OF GENERAL AND LIMITED 

Section 3:1 General Partner(s) 

The initial General Partner (the 11 GP11) is identified and its 

address is listed on Exhibit 11A11 under the caption "General 

Partner 11 • The initial General Partner and each succeeding general 

partner, whether one or more, is referred to individually and 

collectively as general partner, general partners 1 GP, or GPs. 

Each GP 13hall have a upartnership interest" {IIPJU) (which term is 

defined in the Act) and shall be allocated profits and losse~ in 

the percentage set forth opposite its name under the column labeled 11 Pl"1 .subject to it being changed over time in accordance with the 

other provisions herein. The aggregate or s~m of all partnership 

intere.sts of all GPs ia referred to as the 11AGIU (aggregate general 

partnership interest}. The general partnership interest of a GP ·is 

referred to as IIGPI 11 • 

Section 3.2 Limited Partners. 

There shall be three (3) classes of "limited partners" 

(collect:tvely ~ the "LPs 11 and each1 an \\LP11 ) • as fo1.1ows! Class 'A, 

Class B, and Class c. The initial Class A LPs and Class S LPa are 

identified on Exhibit "A" under the caption "Limited PartnerS11 • 

The Class C limited partnership inte:rests shown on Exhibit 111\/1 are 

initially reserved for future investors and shall be issued to such 

investors in the discretion of the GP_ · ' 

Except as otherwise provided in this Agreement, each LP have a 

partnership interest and shall be allocated profits and losses in 

the percentage set forth opposite his, her or its respective name 

under the column labeled 11 PP 1 subject to it being changed over 

time in accoroance with the other.provisions herein. The aggregate 

or sum of al~ partnershi.p interests of all Lf's is referred to as 

the 11111..! '

1 (aggregate limited partnership interest) . ·A LP Pl is 

referred to as a "LPI". 

Defendants p. 5 

DEF000317 
45

Section 3.3 Voting. 

Each partner shall have , the number o-r--votes--equ.a.l---to_tbe ___ _ 

percentage of their respective Pl (partnerahip interest{e)), The 

agg:regate or sum of all AGI and ALI shall be I'API 11 (aggregate 

partnership interest) .There shall be no difference in votirig rights 

among the different classes of LP!. 

Section 3.4 Changes. 

Any changes,,aclditions or deletions to the list of GPs o:r LPs 

or their partnership interests made and agreed upon hereafter from 

that listed on Exhibit 11A11 shall be .recorded on Exhibit ncu ·and 

initialed by all GPs and any LPs whose PI nas so changed. 

ARTICLE IV 

CAPITAL CONTRIBUTIONS 

,.., Section 4.1 Capital Contributions. 

Each partner shall make (if he has· not already made the 

contribution of capital to the partnership} contributions of cash1 

services, property or obligations set forth opposite his or her 

name and initials on Exhibit nJ.\. 11 or ncu (if any shall be noted on 

ucu} • 

Sectio~ 4.2 Return of Capital. 

Except as otherwise expressly provided for elsewhere herein, 

no partner shall be entitled to a r~fund or return of any capital 

contributions nor to withdraw any part of his capital account nor 

to receive any distributions of any kind, including of profits 1 

frQm the partnership, except upon termination of the partnership 

which shall mean a complete winding up of , the partnership anC! 

following· the filing of a certificate of cancellation. Such a 

termination or winding up does not include a dissolution which 

involves only a change in the relationship of the partners where 

the partnership continues (referred to in the Act and he~e aa a 11 reconstitution 11 ). Mo):"eover, except as provided to the contrary 

herein or by the law, the general -partner shall not be personally 

liable for the return of contributions of oi additions to the 

capital of any limited partner 1 or any portion thereof, it being 

expressly understood that any such return shall be made solely from 

partnership assets. The GP~ shall decide for each partner whether 

he may receive property or oash in exchange of all or part .of his 

Defendants p. e · 

DEF000318 
46

partnership interest if and when auch e:x.chang_e may be permitted by 

the other provisions herein. 

Section 4. 3 Loans .. 

---··H······-··· The ~artnership shall be authorized to loan to and borrow 

money from any partner or oEner intlivi'dua1·-or-ent-i-ty~e~on.11 .)- •. 

The amount of any loan made by or to a partner shall not: be 

considered an increase or decrease in such partner 1 a capital 

contribution or account or otherwise a contribution to the 

partnership,nor shall the making of any such loan affect the profit 

and loss ratios. The general partner may, but shall not be 

obligated toj make loans to the partnership so that the partnership 

may pay its obligations timely. obligations incluoe debts for 

which the partnership has no personal liability but to which its 

property m~y be subject. 

ARTICLE V 

CA-PITAL ACCOUNTS; INTEREST; WITBDRAt>1AL 

Section 5.l Capital Accounts. 

A capital account shall be estimated for each partner and 

shall. be maintained according to the Act and income tax accounting 

principles, including 1 for exampleJ (a) increasing or crediting a 

partner 1 s capital account _with the amount of his capital 

contribution when made {b) crediting or reducing {debiting), as the 

case may be 1 a partner 1 s ca);:dtal account \<lith such partner 1 s 

allocated share of partnership profit or loss and (c) charging or 

debiting permitted distributions of capital to partners, other than 

any salary or guaranteed payments, against their respective capital 

accounts. · 

Section 5 .. 2 Interest. 

No interest shall be paid to any partner on the amount of his 

capital contribution or the amount in his capital account. 

Section 5.3 Negative Balance. 

If, after the net profit or the net loss of the partnership 

for the fiscal year has been determined and allocated, a general 

partner's capital account shows a deficit or negative balance, 

whether occasioned by permitted withdrawals or by charging him for 

his share of partne:rahip loss, the deficit shall constitute an 

obligation of that partner t.o the partnership to be paid to the . partnership upon its final termination and winding up. No limited 

partner shall be personally liable for any deficit amount in his 

capital account. 

5 

Defendants p. 1 

DEF000319 
47

Section 5.4 Additional Capital, 

Additional capital may 1 from time to time 1 be contributed to 

the partnership by the partners in such amounts and proportions as ····~-~shati--b~imousl~eed upon by the partners, A deeo:dption of 

such additional contrib\ltions shall be set forth on Ex-l:ti-hit_J'·C--l'----

at tac,hed hereto and made a part hereof for all purposes 1 along with 

any change in partnership i:nt.erests of the partners; which changes 

must be agreed upon unanimously. 

Section 5.5 Distribution of Capital and Profits. 

Distribution of any 11 amount in the capital account of a 

pa:rtner 11 , including his share of profits ( 11 capitalU) 1 may only be 

made as provided herein or as agreed upon from time to time by the 

GPs. The GPs may consider special circumstances of the partnership 

and of individual partners and may allow disproportionate or no 

distributions of capital among partners. Since one of the 

partnership goals is to earn profit by investing its assets, the' 

GPs shall decide when, how much and to or by whom withdrawals or . distribution of capital shall be made. 

Notwithstanding any provision in this Agreement to the 

contrary1 the following provisions shall be applicable: 

(i) prior to the issuance of all of the Class c LPl 1 the 

portion of the profit or loss recognized by the partnership that is 

allocable to the unissued Class C LPI shall be reallocated to the 

Class A and Class B LPs and the GP on a pro-rata basis; and 

(ii) when distributions of cash are made to partners, fifty 

percent (SO%) of such distributions shall be allocated 15,625% to 

Class B and 84.375% to Class C LPs until $275 1 000.00 of the 

initial capital contributions made by Class a LPs and $1,485 1 000.00 

of the initial capital contr~butions made by Class C LPs have been 

:ceturned to such partne~s. Once the amounts of the initial capital 

contributions have been returned to the Class B and Class C LPs as 

described herein, distributions of cash shall be allocated to all 

partners according to their respective GPI or LPI. 

Section 5.6 Adjustments of Capital Accounts. 

In the event it is subsequently determined that the fair 

market value of an asset contributed by any partner was not, on the 

date of such contribution, set' forth on any Exhibit or Schedule 

attached hereto, tbe capital account of the contributing partner 

shall be adjusted to reflect such determined fair market value. 

6 

Defendants p. 8 

DEF000320 
48

The provisions of this Agreement relating to the maintenance 

of capital accounts are intended to comply with Treasury 

Regulations Section 1. 704-l (b), and shall ·be interpreted a:nd 

applied in a manner consistent. with such Regulations. In, the event 

the GPs shall determine that it is prudent to modify the manner in --------c_w~m.on-t:he...-:_'ccipi-~al-· accounts,. <¢r any debits or credits thereto 

(including/ without limitation~ debits or credJ:t:$ ···'rt::d:at:±ng----t.o·,- ----~ 

liabilities which are secured by contributions or distributed 

property or which are assumed by the Partnership or GP) 1 are 

compute~ in order to comply with such Regulations, the GPs may make 

such modification, provided that it is not likely to have a 

material effect·on the amounts dist~ibuted to any partner upon the 

dissolution of the Partnership. The GPs also shall (i) make any 

adjustments that are necessary or appropriate to maintain equality 

between the capital accot,mt:s of the partners and the amount of 

partnership capital reflected on the partnership 1 s balance sheetr 

as computed for book purposes 1 in accordance \'lith Regulations 

section 1.704-l(h) (2) (iv) (g) 1 and (ii) make any appropriate 

modifications in the event unanticipated events {for example~ the 

acquisition by the partnership of oil or gas properties) might 

otherwise cause this Agreement not to comply with Regulations 

section 1.?04-l(b}. 

ARTICLE VI 

LIMITED PARTNERS 

Section 6.1 Powers; Actions. 

Except as otherwise expressly provided elsewhere herein, any 

actions taken1 or to be taken {incl.uding but not limited to 

objections, approvals and consents) by the lim~ted partners shall 

be duly and validly taken if app~oved, in writing, by LPs owning 

more than fifty pe~cent {SO%} of all ALl, unless another percentage 

is required by applicable law. The general partners shall notify. 

the limited partners .in \'Jriting whenever any auch objection, 

consent or approval is required, and within ten {~0} days after 

sending of such notice, each limited partner shall notify the 

general partners of .his consent, approval or objection. Failure of 

any limited partner to so notify the general partners of an 

objections, disapproval or refusal of consent within such period 

shall be deemed to be conaent 1 apprqval or waiver of objection by 

such limited partner, unless a specific response is :required 

hereunder. All such actions by the limited partners shall be 

within their sole and absolute di&cretion except as otherwise 

expressly provided for elsewhere herein. The limited partners ~hall not participate in the management or control of the 

partnership's business nor shall they 1 as limited partners/ 

transact any business for the partnership or have the power to sign 

7 

Defendants p. 9 

DEF000321 
49

for or bind the partnership, said powers being vested solely and_ 

exclusively in the general partners. All ,of the partners shall be 

entitled at all times to devote themselves to any other business, 

whether or not similar in nature to the business of the 

partnership, without offering any interest or participation therein - ·----to-any---e artners. All decisions to be made regarding 

"this partnership shall be made by the genera1-partners-e:x-oept--whe:~:e_~·-----· 

specifically required elsewhere herein or in the Act (as either may 

be amended from time to time) . 

section 6.2 Li~itat~on of Liability. 

Subject only to the provisions of the Act and notw~thstanding 

anything elsewhere provided herein to the contrary: 

(a) No limited partner shall be Hable for any debts, 

liabilities or obligations of the partnership; and 

{b) No limited partner shall have to make any contributions 

of c<;~.sh o:l:' other property, unless otherwise agreed to by such 

limited partner and evidenced in a writing signed by such limited 

partner, Any amounts loaned by any partner to the partnership and 

not repaid upon termination; winding up and liquidation of the 

partnership, shall be deemed to be in restoration of any ~eficit in 

such partner's capital account. 

Section 6,3 Incapacity. 

ln the event that a limited partner cannot vote on partnership 

matters or otherwise becomes incapacitated, such limited partner's 

attorney in fact, if any, or legal guardian 1 if any, shall be 

entitled to cast his vote on any, matter requiring a decision by 

limited partners. lf no guardian or attorney in fact is appointed 

at a time when a vote of LPs is taken, the incapacitated .limited 

partner •.s interest shall be disregarded for purposes of such a vote 

or decis;l.on. 

ARTICLE VIl 

GENERAL PARTNER 

Section 7.1 PQwe:rsi Action. 

(a) The general partners shall have the responsibility for 

the management ( operation and control of the .business and affairs 

of the partnel:"ship and each GP s.hall act as a 11manage:r 11 of the 

partnership unless it is agreed by general partners owning at least 

90% of the AGI that one or more general partners shall not act as a 

manager, in which case the partnership may employ one or more non~ 

8 

Defendants p. 10 

DEF000322 
50

general partner managers to carry out or assist in carrying out 

such day-to-day management, operation and control (the 11manager 11 ), 

The. general partners shall remain responsible to the partnership 

for the acts or omissions of the manager and for performance of --~----____ their GPs 1 duties prov~ded fqr herein or otherwise undertaken. The mana-g-er-may-be-any.-p~r_ent i ty. ~---

(b) Without limiting the generality of subsection {a} above 1 

the general partners shall have full power to (i) borrow-money for 

any partnership purposes and to secure the repayment of s\lch 

loan{s) by pledging partnership assets; (ii) cause the partnership 

to acquire assets; {iii} manage partnership assets (which term 

would include any investments and/or property)i (iv) execute such . other documents as it may deem advisable :for partnership purposes; 

(y) operate, sell, maintain, insure and lease partnership assets; 

(vi) transfer, assign, convey, sublet, operate assets or construct 

additional assets or improvements thereon; (vii) pay all 

partnership expenses, (ix) perform o~ cause to be performed the 

partnership 1 s.obligationst and exercise or cause to be exercised 

all of the partnership's rights, under any agreement to which the 

partnership or any nomin~e of the partnership is a party; {x) loan 

funds to. any partne~, and {xi) admit additional limited partners 

into the partnership, The use hereafter of the term 11manager" 

includes 11 Gl? managersn and other 11managers 11 to the extent that such 

other managers are appointed. The manager mayJ on behalf of the 

partnershipJ employ, engage, retain or deal with any person to ~ct 

in such other capacities as he may determine in his sole and. 

complete discretion, including, without limitation1 the hiring of 

any person to perform services in connection with the investment, 

operation, service, repair, leasing1 advertising and/or sale of 

partnership assets, provided that in all such cases such services 

are deemed by the manager to be advisable and the compensation 

therefor is reasonable, and provided further that the general 

partners shall continue to be primarily responsible for the 

fulfillment of all of tbe~r obligations pursuant to this Agreement. 

The fact that .a partner. or manager is directly or indirectly 

connected with any person shall not prohibit them from employing or 

otherwise dealing with such person. Any such employment or dealing 

shall be done at reasonable rates for similar services, supplies or 

materials. The partnership shall reimburse the manager for all 

direct out:..of-pocket· expenses incurred on behalf of the partnership 

in.accordance herewith. · 

(c) ·subject to the provisions of Section 7.2(a) herein 1 the 

manager shall have the power to execute and/or accept any 

instrument or agreement incident to the partnership 1 s business and 

in furtherance of its purposes and any such instrument or agreement 

so e:xecuted or accepted as s1,1ch shall be deemed executed and 

accepted on behalf of the partnership by the general partners. 

9 

Defendants p. 11 

DEF000323 
51
52

(. 

substitute general partner if one is to be elected. A substitute 

general partner may be elected upon vote of partners owning more 

than fifty percent (50%) ·of the API. 

Seet:-ien--'7.-.-3--.Duties_and ... Oblig~tions of the General Partner. 

{a) During the continuance of the partnersh:ip1 the general 

partners shall diligently and faithfully devote such time to the 

management of the business of the partnership as·may be necessary 

to serve the interests of th~ partnership and shall perform all of 

the duties of a general partner which are provided f9r herein. 

{b} . In the event that at any time there are more than one 

general partner~ all obligations of the general partners under this 

Agreement shall.be joint and several. 

{c) The general partners shall have the authority to draw 

checks and drafts on the partnership bank accounts. The general 

partners shall be under no obligation to spend any of the assets of 

the limited partnership, but they 1nay use or invest such portions 

thereof as they deem best for the interests of the partnership. 

Section 7.4 Compensation. 

Annuallyt the general partners may receive a reasonable fee 

for services rendered which is agreed upon py the GP majority, 

which payment {i) shall not exceed 20% of the net profits of the pa~~nership for the year in question 1 and (ii) shall be in addition 

to any respective share of partnership profits paid to general 

partners. This compensation shall he reviewed periodically and 

adjusted by the general partners and shall be a guaranteed payment. 

If the cash flow of the partnership is insufficient to pay such 

salary, the unpaid portion of such salary may be deferred and bear 

interest. 

Section 7.5 Liability; Jndemnification. 

The general partners shall be entitled to all indemnification authori~ed in the Act even it such indemnification is not 

specifically described else\'lhere herein. The general partners 

shall have no obligation to loant advance or contribute any amounts 

to the partnership {whether any deficit exists or otherwise} other 

than their obligation to pay their capital contribution provided 

for herein, Each general partner shall indemnify1 save and hold 

harml-ess the partnership and e_ach of the limited partners from any 

lossr damage, claim or liability incurred by them, including but 

not limited to reasonable attorneys 1 fees and expenses, due to or 

arising. out of any breach of such general partner 1 s obligations 

under this Agreement, negligence, fraud or bad faith. The 

ll 

Defendants p. 13 

DEF000325 
53

partnership shall indenmity, save and hold harmless the manager 

frorn any loss, damage, claim o:r liability, including but: not 

limited to direct and indirect costs and reasonable attorneys' fees 

and expenses, incurred by them by reason of any act performed by th~ manager on behalf of the partnership or in furtherance of the -----=p-;;;a~r=t=n=e~;'!:""stri-p-'-s--inter-est .. other .. than .. c;tn act which is a breach of any 

obligation under this Agreement, negligence 1 frau~-fa~th·r·--------­

p:rovided, ho\vever 1 that this indem:nity from the partnership shall 

be satisfied out of partnership assets only. The partnership may 

purchase insurance to provide all or part of this indemnification. 

Section 7.6 Banking, 

All funds in the partnership shall be deposited in ita name in 

such checking account or accounts as shall be designated by the 

general partners. All withdrawals therefrom shall be made upon 

checks signed by at least one (l) of the general partners or the 

manager, if he is authorized to so sign by the general partners. 

Section 7.7 Relation. 

Except whel:'e provided else\IJhere herein or in the Act 1 a 

general partner shall have the rights and po"111ers 1 and shall be 

subject to the restrictions and liabilities, of a partner in a 

partnership wi.thout limited partners. 

Section 7.8 Personal Services. 

By acting aa a general partner or by signing this Agreement as 

a general partner, each general partner has made a personal 

services contract to perform each of the duties and obligations of 

a general partner that are specified herein and in the Act. 

ARTICLE VHI 

DISPOSITION OF L!MITSD PARTNERS' INTERESTS 

Section S.l General Limitation. 

No limited partner may sell, pledge( transfer, exchange, 

hypothecate, encumber, give, devise, assign or otherwise dispose of 

or allow to be attached ( 11 tranafer 11 or 11 ass:i.gn") any portion of his 

parenership interest nor may he withdraw from the partnership 

without ,the prior written consent of all of. the general partners~ 

which decision shall be made at their sole discretion. such 

consent may not be given unless the general partners are satisfied 

that: 

{i) the transfer will not generate any unfavorable tax 

consequences, including impairing the ability of the 

12 

Defendants p. 14 

DEF000326 
54

partnership to be taxed as a partnership or to take advantage 

of accelerated depreciation or any similar concept enacted in 

the future under the federal income tax. laws or 1 taken 

together with other transferred intere~ts within the period of 

twelve (12) consecutive months prior to the proposed date of ------------------t~ransfe~,-~~~uLt._in the termination of the partnership under 

Section 708 of the Internal Revenue Code of -1-s-s-s-;-cr:ramended----

(the 11 Code 11 }; 

and 1 in addition, that the transferee! 

(ii} represents that he is acquiring the transferred 

interest for his own account for investment and not with a 

view to the resale o~other distribution thereof; and 

(iii) agrees in writing to comply with and be bound by 

all of the provisions of this Agreement (as it may have 

been amended) and to execute any and all documents and furnish 

such other information or documents that the general 

partner (s} may deem necessary in connection with the 

transactioni 

and, unless the transfer is to anot.her existing partner, in 

addition to all of the foregoing 1 either (a) the transferee 

furnishes an opinion of counsel, which counsel and the form and 

substance of which opinion shall be satisfactory to the general 

partners, to the effect that registration of such transactio11 is 

not required under the Securities Act 19~3, as amended; or any 

state securities act, or (b) such transfer is made pursuant to an 

effective registratJ.on statement under. such laws, Any. attempted 

assignment or withdrawal of or part of any partnership interest 

which is not permitted {11 unperl(litted 1') by the provisions in this 

Section 8.1 shall be automatically void and ineffective, except to 

the extent otherwise required by law. 

Section 8.2 Right of First Refusal. 

(a) A limited partner may sell his partnership interest only 

after he has {1) first offered it -to the partnership pursuant to 

the provisions of this paragraph 8.2, and {2) obtained the prior 

written consent of the general partners as specified above. 

(b} The selling limited partner shall give written notice to 

the partrterehip that he desires to sell his interest. He shall 

attach to that notice the written offer of a prospective purchaser 

to buy the interest. This offer shall be complete in all details 

of purchase price and terms of payment. The limited partner shall 

certify tl:lat the offer is genuine. 

(c} For sixty (60} days from.receipt of the written notice 

13 

Defendants p. 15 

. DEF000327 
55

from the limited partner 1 the partnership shall have the option to 

redeem the interest of the limited partner at the price and on the 

terms contained in the offer submitted by the limited partner; 

----------J-cl-}--Fo:t"~another sixty_{_~_Q.L_ days thereafter 1 the existing 

partners shall have the option to purchase the remaining int-erest--·---~ 

of the limited partner at the price and on the terms contained in 

the offer submitted by the limited partner, If more than one 

partner wishes to make this purchase, then their rights shall be 

prorated between them based upon their respective partnership 

interests, 

{e) If the partnership does not 1 and none of the partners 

exercise the option to acquire this interest, the selling limited 

partner shall be free to sell his partnership interest to the said 

prospective purchaser for the price 1 and on the· terms contained in 

the certified off~r s~bmitted b~ the ~imited Partner, if such sale 

has been approved in advance in writing by all of the general 

partners, and all other applicable conditions and provisions herein 

have been satisfied. 

Section $.3 Substituted Limited Partner. 

No assignee or transferee of the whole or any portion of a 

partner 1 s interest in this partnership shall have the right to 

become a substituted partner in place of his assignor unless all of 

the following conditions are satisfied: 

(a) All of the other conditions and provisions herein 

regarding a transfer or ass~gnment are satisfiedi 

{b) All. of the general partners have consented in writing to 

the admission o~ the assignee as a substituted limited partner; 

{c) A fully executed and acknowledged written instrument of 

assignment has been filed with the partnership which sets for the 

i11tention of the asstgnor that the assignee become a substitute 

limited partner. 

{d) Unless waived in a writing signed by all general 

partners/ the partnership interest being acquired by the assignee 

consists of one hundred percent {100%) of the ass~gning partner's 

interest. 

(e) The assignor and assignee execute and acknowledge such 

other instruments as the general partners may deem necessary or 

desirable to effect such admission, including the written 

acceptance and adoption by the assignee of the provisions of the 

Agreement and the a~signee s execution, acknowledgment and delivery 

14 

Defendants p. 16 

DEF000328 
56

( 

to the general partners of a J?ower of Attorney 1 the to:t:"m and 

content of which shall be provided by the general partner; 

(f)· A reasonable transfer fee, not exc"eeding Two Thousand 

Dollars ($2, ooo. 00), has been paid by assignee to the limited 

·--·--pan-n-

~( g~} ~~T~h_e_g_e_n_e_r_a~l-p_a_r_t_n_e_r_s_·_w_i_l_l_b_e_r_e_q_u_i_r_e_d::---t-o_a_m_e_n-:d-:---:th:-e---~-·~-

Agreernent of Limited Partnership no more frequently than quarterly 

to reflect the permitted substitution of partners, and until such 

Agreement is so amended, an assignee shall not hecome a substituted 

partner; 

(h) In the event any note or consent of any partners shall be 

taken or sought pursuant to this Agreement for any reason, an 

assignqr or prospective assignor partner shall, solely tor the 

purpose of determining the number of partnership interests beld by 

him in weighting his vote, be deemed the holder of any partnership 

interests assigned by him in respect of which the assignee has not 

yet become a substituted partner; 

{i} Subject to the other prov:tsl.ons herein, any limited 

partner may transfer at death or by way of gift any part of his 

interest in the Partnership; and 

(j) Upon the withdrawal 1 death, bankruptcy or legal 

incompetency of a limited partner {and 1 in the case of a limited 

partner that is a corporation, association, partnership, joint 

venture or trust, the dissolution of such limited partner) 1 the 

paxtnership shall not be dissolved but shall continue in existence 

without interruption 1 and in case of the death or legal 

incompetency of a limited partner 1 the executor, administrate~, 

personal representative or guardian of such limited partner, if 

any, shall have the rights provided for in the Act·. 

Section S .4 Other Assignees or Transferees; Transferor. 

(a} Anything in this Agreement to the contrary 

notwithstanding, no person, including but not limited to any 

attempted or actual assignee of all or any part of any partnership 

.interest, may become a substitute partner nor may such right to 

substitute be granted by a partner to any assignee, by operation of 

law ox- otherwise, without the prior written consent of all of the 

general partners, the granting of \vhich shall be in their sole and 

uncontrolled discretion, and otherwise complying with the other 

provisions herein, Nor may any attempted assignee, except to the 

extent required by law, become an assignee or transferee of any 

portion of any partnership interest or partnership rights without 

the prior written unanimm.ls consent of all general partners, 

15 

Dafendantsp. 17 

DEF000329 
57

(b) Except as otherwise expressly provided elsewhere herein, 

an attempted transferee who does not become a full substitute 

limited partner shall have no rights of a partner and shall have no 

right to vote or otherwise act as a partner under any of the 

provisions of this Agreement, including but not limited to the -'-------__;pr<ti,.,gr+hrrt--tt...,.o"r-'1t~-eql:li!'e any ::i nfonnation or accotmt of the partnership 1 s 

transactions or to inspect the partnership'S ___ booX:s, but at most-------

shall only be allocated the share of the assigned interest of the 

partnership to the income, gain, loss, deduction, credit and 

distributions to which his ~.ssignor would otherwise be entitled. 

Except to the ·extent otherwise required by la111 1 any such assignee 

(including but not limited to an intestate successor, a receiver, a 

trustee, legal representative 1 guardian or other successor in 

interest) 1 who desires to make a further transfer of all or any 

part of his interest in the partnership shall be subject to all of 

the restrictive provisions herein to the same extent and in the 

same manner as any partner desiring to make an assignment of all or 

part of his interest in the partnership, 

(c) Any limited partner who properly assigns as permitted 

herein all of his int~rest in the partnership shall cease to be a 

limited partner of the partnership and shall no longer have any 

rights or privileges of a limited partner e~cept that, unless and 

until the assignee of such limited partner is admitted as a 

substitute limited partner, said transferring limit.ed partner shall 

retain the statutory rights and obligations of an assignor limited 

l_:>artner. 

{d} No partner (GP or LP) may withdraw and receive the fair 

value of his partnership interests as of the date of his withdrawal 

until the earlier of (a} the date that the partnership liquidates 

and winds up its affairs pursuant to Section 8.04 of the Act or (b) 

the date agreed upon by all general partners in the partnership 

{excluding/ if applicable, the withdrawing partner)r which 

agreement is memorialized in writing, signed by all such general 

partners and made at their sole discretion. 

(e} Except where otherwise required by applicable law, an 

assignee or attempted assignee of a partn~r shall not be entitled 

to receive distributions of the assignor or would-be assignor 

partner unless and until all general partners in the partnership 

(excluding the assignor if he were a general partner) have agreed 

to such assignment and to permit such di.stributions or withdrawals 

and evidence such agreement in writing, signed by all of them, made 

at their ~ole discretion. 

Section 8.5 Redemption of ?artnership Interest. 

(a) The partnership interests of all limited partners are 

subject to redemption by the partnership at the election of the 

16 

Defendants p. 18 

DEF000330 
58

general partne~s. In the event the general partners make such an, election~ the general partners shall provide the limited partner whose partnership interest is to be redeemed (the '\Redeemed 

Partner"} with at least sixty {60) days' prior written notice of 

the redemption. 

tr)-The--purehase .... p-~i-ce of the Redeemed Partner's LPI shall 

equal the Ralance of the Redeemed Partner1 s capi~account 

established under Section 5.l hereof, determined as of the end of 

the calendar month immediately preceding the month in which the 

closing of the redemption transaction takes place, 

ARTlCLE IX 

DXSPOSITION OF GENERAL PARTNER'S INTEREST 

Section 9,1 Voluntary Disposition or Encumbrance; Removal, 

(a} No general partner may assign or transfer (i.e. sellt 

transfers assign1 exchange 1 dispose of, pledge, hypothecate, 

encumber or allow to be att.ached) all or any part of his interest 

in the partnership, or withdraw or resign as general partner, no~ 

shall a new or substitute general partner be admitted to the 

partnership, without the prior written consent of all of the other 

partners (general partners and limited partners), Providedr 

however 1 a sole remaining general partner shall have the right to 

withdraw as a general partner only if he notifies the limited 

partners of his desire to admit a substitute general partner and 

the unanimous written consent of the limited partners to such 

admission is granted and the new general partner is admitted to the 

partnership prior to the time of the withdrawal of the prior 

general partner. AnY attempted unpermitted assignment or transfer 

of all or part of any partnership interest shall be automatically 

void and ineffective, except to the extent otherwise required by 

law. Upon the granting of unanimous written consent of all of the 

partners, additional or substitute general partners may be 

designated with such share of the then existing transferring 

general partners' aggregate interest as the general partner(s) and 

designated additional or substitute general partners may agree 

upon. Without limitation to the generality of the.foregoing, any 

general partner may 1 at any time without obtaining any prior 

written consent 1 convert all but one percent (1%) of his general 

partnership interest to a limited partnership interest. Any 

permittect assignee or transferee· of a GP pursuant to all of.the 

provisions herein shall become a general partner under this 

Agreement with all of the rights and subj.ect to all of the 

obligations of a general partner under this Agreement. No 

substitution or change of general partners shall- eve-r cause a 

termination/ liquidation or winding up of this partnership/ but 

instead the partnership shall continue uninterrupted and shall be -

17 

Defendants p. 1 g 

DEF000331 
59

.... ~~--

reconstituted pursuant to the Act. 

(b) Notwithstanding the other prov:tsJ.ons herein and without 

limiting any other rights and remedies of any of the parties hereto 

arising from any breach by a general partner of the provisions of 

thi.s Agreemen\: 1 Lthe ___ p~ovisions of Section 

9. l (a} above by the general partner { 11 breaching general partner 11·)-;,-----

or upon any attempted -unpermitted assignment, transfer or 

attachment of any part of a general partner partnership interest 

without the prior wr~tten consent signed by all other partners, the 

partner status and partnership interest of such breaching general 

partner or such status and interest of his assignee or creditor {if 

such assignment~ transfer or attachment is ever permitted or is not 

void) shall automatically become a limited partner and limited 

partnership interest~ ~less a vote to accomplish this is required 

by law~ in which case the percentage in inte:rest of the limited 

partners required by law ~~lect to deem such genexal partner as 

having retired and ceased to be a general partner and his 

partnership interest shall thereupon become a limited partnership 

interest and the partnership shall continue uninterrupted and shall 

be reconstituted pursuant to the Act·. 

(c) Upon the written consent or affi:rmative vote of all 

limited partners, a general partner may be removed if, immediately 

prior to such removal{ a successor general partner is elected by 

the limited partners owning ninety percent (90%) of the (then 

outstanding) AL! and becomes a substitute general partner or more 

than fifty percent (50%) of the ALl agree that no successor general 

partner shall be elected, 

(d.) Notwithstanding the prov~slons of Section 9.1\a), then 

the existing general partners may, at any time, upon their 

unanimous written consent, appoint a new general partner from the . ranks of the then existing limited partners, if such appointee 

shall <Jonsent .in writing to act as a general partner. 'l'he 

appointee may convert as ·;.much of his prior limited partnership 

interest to a general partnership interest as all of the partners 

shall agree, otherwise at least one percent {1%) of bis prior partner~hip interest shall be so converted. The general partners 

may also, at any t.ime 1 by their unanimous written consent, 

designate one or more persons who are limited partners to act as a 

general partner {subject to the provisions in the preceding 

sentence} on a standby basis and specify any order or conditions of 

such appointmentsl such de$ignation to occur in a writing signed by 

all existing general partners and a copy mailed or delivered to 

each limited partner and one kept with the partnership's copy of 

this Agreement (which shall be considered an amendment for this 

conditional appointment purpose), but requiring no other formality 

or approval other than the written consent of the appointees to so 

act. For example, the general partners may decide to appoint one 

18 

Defendants p . .20 

, DEF000332 
60

or more standby eligible partner{s) to serve in the event of.the 

withdrawal of one or more existing general partner(s) or to appoint 

additional general. partner{a) from those who are eligible 1 such 

appointment to occur at some specified future time or upon the 

happening. of some condition. These examples are given by way of · --i-1-l-ust-:t:=a.t-ion---Only:._and .... .DQ!; to limit the types of such· eligible 

appointments. 

{e) Unless they are (a) specifically contradicted by the 

provisions of Axticle IX, or {b) expressly applicable only to ·a 

limited partner, the provisions of Article VII! shall also apply to 

general partners, 

Section 9.2 Death 1 Bankruptcy, Incompetence, Attachment and 

Incapacity. 

(a) Upon the death, attempted unpermitted assignment or 

transfer or attachment of all or any part of his partnership 

interest 1 attempted attachment of. all or any part of the 

outstanding stock of a co~poration acting as a general partner, 

retirement, removal1 resignation 1 withdrawal t dissolution, 

termination, bankruptcy or adjudication of incompetency of a 

general partner or his permanent incapacitation so that he is 

unable to perform his' duties or vpon his attempted withdrawal or 

resignation as general partner 1 he shall thereupon be deemed 

(except as provided differently elsewhere herein) to have retired 

as and ceased to be a general partner and his partnership interest 

shall thereupon be converted into an interest of a.limited partner. 

For' exaruple 1 a ten percent {10%} PI as a GP shall become a ten 

percent (10%) PI as an I.1P.· 

(b) lf 1 -upon the occurrence of any event referred to in 

Section 9-.2 (a) or Section 14.1 1 there remains one or more other 

general partners I all such remaining . general partners acting 

together shall have the right and duty to continue the business of 

the partnership. 

1f there e~ist such remaining general partners, or if none 1 

·any standby GPs exist, the partnership shall not liquidate, 

terminate and/or wind llP. but shall continue its busines!S and 

existence without interruption or other change in its reconstituted 

form with the remaining or nev1 standby Gl?s who agree to act as a GP 

pursuant to the provisions of the Act. 

(c) lf, upon the occurrence of any event, including those 

referred to in Section 9. 2 (a) or Section 14.1 1 there is not a 

general partner, the partnership shall not be terminated, 

liquidated or wound up if, within a period of ninety (90) days 

after the occurrence of such event, the majority in interest of the 

limited partners elect to continue the business of the partne~ship 

19 

Defendants p. 21 

DEF000333 
61

. I 

--

in a reconstituted form and designate if necessary and for such 

purpose at least one new general partner who consents to and 

accepts such designation as of. the date of such event and agrees to 

be bound by all of the obligations of a general partner und~r this 

Agreement. If the limited partners elect to continue the business 

·ot·-t·he--pa.rtnershi.P and designate one or more general partners 

pursuant to this Section, such ereccion-and-des~~B~io~ 

be deemed a termination of the partnership and the business of the __________ _ 

partnership shall be continued uninterrupted using the partnership 

assets and name/ in a reconstituted form1 upon the same terms ~nd 

conditions as are set forth in this Agreement, except for any 

agreed upon changes in percentage partnership interests of the 

parties and eaoh partner hereby agrees to such continuation and/or 

reconstitution. 

Section 9.3 Continuing· Obligation. 

Nothing in Section 9. 2 (b)· or in this Article IX shall be 

construed to relieve any general partner 1 or its successors, 

assigns, heirs or legal representatives from liability, if any, for 

any breaches or defaults incurred as a result of or in connection 

with, the termination, attempted assignment and/or conv~raion, as 

the case may bet of its partnership interest, or from any liability 

with respect to any claims arising from acts or omissions while he 

was a general partner, or from any of ita obligations, whether or 

not theretofore incurred or accrued. 

Section.9.4 Removal. 

Except as provided elsewhere herei)j, removal of the sole 

general partner 1 which may occur only upon the written consent of 

all of the limited partners {exc~pt in cases of certain breaches by 

the general partners where the percentage vote of the limited 

partners to remove him may be ninety pe~cent {90%} of the ALI), 

shall be effective only upon the selection of a successor general 

partner and such successor is admitted immedi.qtely prior to the 

time the removal is effective and the partnership shall continue 

its business and existence in its reconstituted form as provided 

for in the Act and such removal shall not be grounds to tex-minate, 

liquidate or wind up the partnership. 

ARTICLE! X 

DURATION OF BUSINESSi DISSOLUTION; TERMINATION 

Section 10.1 Duration. 

The Limited Partnership shall continue for its full term as 

provided for in Article II here.in unless i. t is terminated and wound 

up earlier as provided for below. 

Defendants p. 22 

DEF000334 
62

Section 10.2 Expulsion. 

All of the general partners may unanimously terminate the ____ ·-·- interest of a limited partner and expel him (a) for interfering in ------·-tn~ent-of-t·he-pa-rt.nel?ship -a.ffairs or: otherwise engaging in 

conduct which could result in the partnership losing its tax at~a~t~u~s~------­

as· a partnership, {b} if the conduct of a limited partner brings 

the partnership into disrepute, or (c) for failing to meet any 

commitment to the partnership or manager in accordance with any 

written undertaking signed by such limited partner, but the general 

partners shall not he required to so terminate. In each of the 

foregoing events, the expulsion and termination may1 in the sole 

discretion of the general partners in ot"der to compensate for any 

damages caused to the partnership, result in a forfeiture to the 

partnership of all or a portion of the value of the partnership 

interest of the expelled partner at the time of such expulsion·or 

termination. 

section 10.3 Dissolution. 

The partnership shall be dissolved only when required by the 

.Act. 

Section 10.4 Reconstitution. 

Upon any dissolution, the partners and partnership shall have 

all rights provided for in the .Act or elsewhere in this Agreement 

to reconstitute the partnership and continue its business and 

existence without terminating1 liquidating or winding up. The 

partners are authorized to do any and all acts contemplated or 

referred to in the Act relative to reconstitution. A single simple 

majority of API in interest of all partners may authorize such a 

reconstitution. 

Section 10.5 Winding up the Partnership. 

Only if the partnership is dissolved and is not reconstituted 

as provided for in the Act 1 shall the pa~tnership commence to wind 

up its affairs, terminate Qr liquidate. In such case 1 the GPs 

shall sell all the partnership assets as promptly as is consistent 

with obtaining, insofar as possible 1 the fair value thereof, and 

after paying all liabilities, including all costs of dissolution/ 

and subject to the right of the general partners to set up cash 

:reserves to meet short-term partnership 1 iabilities, other liabilit~es or obligations of the partnership1 shall distribute the 

remainder to th~ partners pursuant to the relevant provisions of 

this Agreement and the Act. Except where otherwise required 1 such 

remaining distribution shall be first to pay off capital accounts 

ratably and the excess, ~f any, divided according to the 

21 

Defendants p. 23 

DEF000335 
63

percentages by which the partners shat'e profit;s. The partners. 

shall continue to share profits and losses during the period of 

liquidation in the same proportions a_s. before dissolution. 

Section 10.6 Gains or Losses in Process of Winding up and 

-------------- --~------------ L:iqui9a~_~on, 

------------------- Any gain or loss on disposition of partnership properties in 

winding up and liquidation shall be credit.ed or charged to the 

partners in the proportion of their partnership interests (which 

are their interests in profits or losses as specified in Article 

III). Any property distributed in kind in liquidation shall be 

valued and treated as though the property \'lere sold and the cash 

proceeds were distributed. The difference between the value of the 

property distributed in kind and its book value shall be treated as 

a gain or loss on sale of the property and shall be credited or charg~d to tbe partners in the proportions of their interests in 

profits and losses. 

AR.TJC:WE XI 

ACCOUNTING FOR THE PARTNERSHIP 

.section 11.1 Method of Accounting. 

The Partnership shall keep its accounting records and shall 

report for income tax purposes on the cash basis. The records 

shall otherwise be maintained in accordance with generally accepted 

accounting principles. 

Section 11.2 Annual Statement. 

Financial statements shall be prepared not less than annually 

and copies of the statement shall be mailed to each partner. 

Copies of all income tax returns filed by the partnership shall be 

furnished to ali partners and shall suffice as annual financial 

statements. 

Section 11.3 Gain or Loss from Contributed Property. 

Pursuant to Section 704(c) of the Code 1 income, gain, losa1 

and deduction ''lith respect to property contributed to the 

partnership by a partner may be shared among the partners so as to 

take account of the variation bet\'leen the basis of the property to 

the partnership and its fair market value at the time of 

contribution. 

2·2 

Defendants p. 24 

DEF000336 
64

Section 11.4 Tax Matters Partner. 

The general partner with the largest interest in the 

partnership ( 11 largest general partneru) (after combining his 

general partne~ and limited partner interest 1 if any) or if there 

-----i$_nn_single largest general partner, the largest general partner 

whose last name would appear first in an alphabet-i-ca-1-}y--a~g.ed ____ _ 

li~t of last names of all general partners at the beginning of 

each year, shall be during such year and is hereby designated as 

the tax matters partner of the partnership pursuant to Section 

6231 (a) {7) of the Code {!'Tax Partner 11 or '~'!'ax pn} for all returns 

filed for such year unless a replacement is designated and approved 

by more than fifty percent {SO%) of the aggregate partnership 

interests owned by all partners or the Tax P gives notice of his 

intent to no longer be treated as Tax t>artner. If, however, he 

gives notice of his intent to no long~r be treated as Tax Partner 

aa provided a~ove, a Tax Partner shall be designated as provided by 

Section 623l(a} {7) of the Code. The Tax Partner shall keep all 

other partners informed of all administrative and judicial 

proceedings and any other matters which may come to the attention 

of the Tax Partner in its capacity as Tax Partner and which may, in 

the sole discretion of the ~ax Parttler, affect a partner 1 s tax 

liability \'Jith respect to. partnership tax items·, by giving the 

other partners notice thereof within a reasonable time after the 

Tax Partner becomes informed of any such matter and in a reasonable 

manner consistent with the regulations promulgated under Section 

6223 (g) of the Code. The Tax Partner may take any action 

contemplated by Sections 6224 through 6232 of the Code if it has fi~st giyen the other partners notice of the contemplated action 

and has not received within twenty (20) days after such notice is 

sent, notice of the disapproval of such contemplated action by 

partners owning in the aggregate at least fifty-one percent (51%) 

of the partnership aggregate interests owned by all partners. This 

provision is not intended to authori~e the Tax Partner to take any 

action which is left to the determination of an inoividual partner 

under Sections 6222 through 6232 of the Code. The general partners 

shall insure that there is always a Tax Partner who is aware that 

he has such status and the GPs may 1 if a Tax Partner resigns such 

position, by majority vote of GPX, appoint a Tax Partner 

replacement. 

section 11.5 Annual Meeting to Review Financial Statements. 

Not less than once a year 1 and as soon as possible after 

completion of the financial statements; a meeting shall be held for 

all general and limited partners to attend, The GPs shall review 

and discuss the financial statement at that meeting and report to 

the limited partners the financial condition of the partnership. 

All annual meetings shall be held at a place agreed upon by the 

general partners 1 or if not 1 then at the principal place of 

23 

. Defendants p. 25 

DEF000337 
65

business of the partnership on or before the third Tuesday in April 

of each year and all partners shall receive prior notice of such 

meeting dates and places. 

Section 11,6 Interim Financial Statements. 

----··----···- ~----- On written request, any limited partner shill be ent·ttred-t-o---_____,____ 

copies of any interim financial statements prepared for· the 

partnership which exiat, 

.ARTICLE XII 

:POWER OF ATTORNEY 

Section 12.1 Power of Attorney. 

The GPs shall from time to time elect one GP to act as 

attorney-in-fact {AIF). Without limiting the generality and effect 

of any other provisions herein appointing a general partner as 

attorney in fact for all the limited partners under this Agreement 

in connection \'lith the doing of certain acts and the filing of 

certain papers 1 each limited partner hereunder hereby makes, 

constitutes and appoints~ reserving full power of substitution and 

revocation, the general partner \'lho is the .AIF (or if none/ the 

general partner v1ith the largest partnership interest. in this 

partnership or if more than one of them, the oldest), his true and 

lawful attorney in fact, empowered to act alone, and in the name1 

place and stead of each such limited partner, to make, execute, 

sign, acknowledge and swear to all instruments and file and record 

all documents requisite to carrying out the intention and purpose 

of this Agreement, including but not limited to the following: 

{a) All business certificates and necessary Certificates of 

Limited Partnership (if any) and amendments thereto from time to 

time as required by the Act or this Agreement; 

(b) All documents which may be required to effect the 

dissolution of the partnership which is permitted herein and any 

permitted cancellation of its Certificate of Limited Partnership, 

as amended from time to time; 

(c} All fictitious or assumed name certificates required or 

permitted to be file on behalf -of the ~artnership; 

(d) All such other instruments, documents and certificates 

which may from time to time be required by the laws of the State of 

Texas, the United States of America, or any other jurisdiction in 

which the .partnexship shall determine to do business, or any 

political subdivision or agency thereof, to effectuate, implement 1 

continue and defend the valid and subsisting existence of the 

Defendants p. 26 

DEF000338 
66

Partnership as a limited partnership; 

{e) All instruments and.documents necessary to effectuate or 

act upon any reallocation of a defaulting partner 1 s partnership 

interest; 

(:f} . 'l'o reflect any amendments._duly made to the--Ag:reeme!'!t; an.,...d--. ----

{g/ To reflect the admission to the partnership of any 

substituted partner or the withdrawal of any partner, i~ the manner 

prescribed in this ~greement. 

All such powers of attorney shall survive the incompetency, 

incapacity, bankruptcy, retirement or withdrawal of any limited 

partner granting the same and the assignment by any such granting partne~ of the whole or any part of his interest hereunder. 

Each limited partner authorizes the API to take any further 

action which such AFI shall consider necessary or advisable to be 

done regarding the foregoing as fully as such limited partner might 

or could do if personally present and hereby ~atifies and confirms 

all that such AF! shall lawfully do or cause to be done by virtue 

hereof. 

Section 12.2 Amendments. 

(a} Each limited partner hereby authorizes and empowers the 

general partners to amend this Agreement from time to time by 

agreement of GPs owning at least ninety {90%) percent of the AGI, 

provided that without the prior written consent of all of the 

limited partners 1 no such amendment by the ,general partners shal~~ 

{i) enlarge the rights or reduce the obligations or 

duties of the general partners; 

(ii) affect the rights or restrictions regarding the 

assignability of partnership interests; 

{iii} modify the term of the partnership or amend this 

Section 12.2; 

. (iv) reduce the rights or interests, or ·enlarge the 

obligations, of the limited partners; or 

(v) add or delete any GP unless permitted by the other 

provisions herein. 

(b) The general partner shall promptly notify the limited 

partners of any such amendments. 

25 

Defendants p. 27 

DEF000339 
67

(c) Except where specifically provided elsewhere herein or by 

applicable law and except with respect to vested rights 

of the partners, this Partnership Agreement may be 

amended at any time by a vote of partners owning more 

than fifty percent (50%} of each of the ~GI and ALI. A -------------------+~~ny_a~dment s~gped by all partners voting in 

favor of such amendment shall be prompt.:Ly·- mailed or--~---·­

. delivered to each partner at his or her last known 

address. 

ARTICLE XIII 

GENERAL PROVISIONS 

Section 13.1 Recipient of Distributions and Payments, 

All distributions and payments of cash or property to be made 

pursuant to the provisions of this Agreement shall be made directly 

to the part;ies l'lho are entitled hereto at their respective 

addresses indicated on Exhibits uAn and ncu or at such other 

address as $hall have been set forth in a notice sent·pursuanc to 

the provisions of Section 13,2. 

Section 13 • 2 Communicat-ions and Notice. 

E~cept as otherwise expressly provided in this Agreement/ any 

offer, acceptance, election, approval, consent, objection, 

certification, reguest, waiver, notice or other document required 

or permitted to be made or given pursuant to any provisions of this 

Agreement, shall be deemed duly made or given1 as the case may be, 

if in writing1 signed by or one behalf of the person making or 

giving . the same 1 and shall be deemed completed when eithe;c 

personally delivered (with receipt acknowledged by the recipient) 

or two {2) days after deposited in the United States mail, first 

class, postage prepaid/ addressed to .the person or persons to whom 

such offer, acceptance 1 election, approval, consent, certification, 

required, waiver or notice is to be made or given at their 

respective addreg:ses as indicated on Exhibit 11 .A 11 and, in the case 

of the Partnership, at the office of the partnership specified in 

Exhibit 11 Bu of this Agreement, or 1 in any case 1 at such other 

address as shall have been set forth in a notice sent pursuant to 

the provisions of this Section 13.2. 

Section 13.3 Entil:e Agreement; Applicable Law; Effect. 

This document contains the entire agreement by and among the 

parties and supereedes any prior understandings and agreements 

among them respecting the matters provided for herein. This 

agreement shall be construed, enforced. and governed in conformity 

with the la~tlS of the State of Texas 1 without giving effect to 

Defendants p. 28 

DEF00034Q 
68

{ 

principles of conflicts of 1aw1 and shall be binding upon the 

parties hereto/ their sucoessors 1 heirs, devisees~ permitted 

assigns, legal representatives, executors and administrators but 

shall not be deemed for the benefit of creditoxs or any other 

person. 

Section 13 .. 4 Modificationi v7aiver or Termination. 

Except as otherwise expressly provided in this Agreement, no 

modification, waiver or tet'mination of thia·Agr~ement, or any P?rt 

hereof, shall be effective unless made in writing signed by l:he 

party or parties sought to be bound thereby, and no failure to 

pursue or elect any remedy shall constitute a waiver of any default 

under or breach of any provision of this Agreement 1 nor shall any 

waiver of any default under or breach of any provision of this 

Agreement b.e deemed to be a waiver of any other s·ubsequent similar 

or different default under or breach of such or any other provision 

of or any election or remedies available in connection therewith, 

Receipt by any party of any money or other consideration due under 

this Agreement 1 with or without knowledge of any breach or default, 

shall not constitute a waiver of such breach or default or of any 

provision of this Agreement. 

Section 13,5 Counterparts. 

This Agreement may he executed in one or more counterparts 

and, notwithstanding that all of the parties did not execute the 

same counterpart, each of the counterparts shall, for all purposes, 

be deemed to be an origina·l so long as they all sign at lea.st. one 

copy or a signature page, and all of such counterparts shall 

constitute one and the same instrument binding on all of the 

parties het'eto, Limited· partners may become parties to this 

Agreement by executing and delivering to the general partner a 

uaignature page 11 hereto in form approved and signed by the general 

partner. 

Section 13.6 Separability. 

Each provision of this Agreement shall be considered separable 

and (a) if for any reason any provision (clause·, 'lrlord1 sentence or 

portion of a sentence) or provisions herein are determined to be 

invalid and contra:ty to any existing or future 1aw1 such inval;i..dity 

shall not impair the operation of or affect those portion of this 

Agreement which are valid, and (b) if for any reason any provision 

or pxovisions of this Agreement would subject the limited partners 

to any personal liability for the obligations of the partnership 

under the laws of the State of Texas or any other 1aws 1 as the same 

may no'll or hereafter exist 1 such provision or provisions shall be 

deemed void and of no effect. 

27 

Defendants p .. 29 

DEF000341 
69

Section 13.7 Article and Section Headings. 

Article and section titles or capt;.ions contained in this 

Agreement are inserted only as a matter of convenienc·e and for ------~r~e~f;_,;e;_:r;,.e~nci;r;·-'--and~shal-1--not-be-... constxp.li:l<Lin any way to define, limit, 

extend or' describe the scope of any of the prov1s1ons }'ftgreof. ---··----..._,_____, 

Section 13,8 Word Meanings, 

The words such as 11 herein,H '

1hereina:fter 1 11 11 hereof 1

'. and 11 hereunder 11 refer to this Agreement as a whole and not merely to a 

subdivision in which such words appear unless the context otherwise 

requires, The singular shall include the plural and vice versa. 

The masculine gender shall include the feminine and vice versa; 

unless the context otherwise requires. 11And11 or 11 or 11 means 11 and/or 11 • Unless otherwise specified herein, words used herein 

which are defined in the Act shall have the same meaning as they 

have in the Act. 

Section 13.9 ~Xhibits. 

Exhibits 11A 11 1 11Bll and 11C11 are attached hereto, incorporated by 

this reference and their contents are made a part bereof. 

Section 13.10 survival of Covenants. 

All covenants, representations, warranties and other written 

statements set forth in this Agreement shall survive execution and 

delivery hereof and making of the capital contributions provided 

for elsewhere herein. All of the covenants 1 :t"epresentations 1 

\'larranties and statements shall be deemed to be independently 

material and to have been relied upon by the party or parties to 

whom made. 

Section 13.11 Further Actions. 

Each of the partners shall hereafter execute and deliver such 

further instruments and do such further acts and things as may be 

required or useful to carry out the intent and purpose of this 

Agreement and as are not inconsistent with the provisions hereof. 

Section 13.12 Meetings. 

Special Meetings of the partnership may be called ny any 

general partners or limited partners holding more than ten percent 

{lOt) of the limited partners 1 aggregate interests, for any matters 

for which the 1 imi ted partners may vote, as set forth in this 

Agreement. Upon receipt of a written request, either in person or 

by registered mail, stating the purpose of the meeting, the general 

28 

Defendants p. 30 

DEF000342 
70

partner shall provide all limited partners, within fifteen (15) 

days after receipt of said request 1 notice of a meeting and the 

purpose of such meeting to be held on a date not less than thirty 

{30) nor more than sixty (60) days after receipt of said request, 

at a time and place selected by the general partne~. 

The notice of meeting shall state the nature of the business 

to be transacted/ and no other business flhall be considered at the 

meeting. Lim~ted partners may vote in person or by proxy at any 

meeting thereof, and the presence in person or by pro~y of limited 

partners holding at least a majority of the limited partners' 

aggregate interests shall be necessary to constitute a quorum at 

such meeting. The general partner _shall maintain a list of the 

names and addresses of, and the partnership interests owned by, the 

limited partners at the pa~tnership s principal office, Such list 

shall be made available for the review of any limited partner or 

hie representative at reasonable times, and upon request received 

by the general partner, the general partner shall furnish a copy of 

such list to any limited partner or his representative for the cost 

of reproduction and mailing. 

Section 13.13 Confidentiality. 

Ey execution hereof, each partner agrees to keep all 

information concerning the partnership confidential, including but 

not limited to the na~es and ownership interests of the partners. 

This restriction shall not apply to information which is already 

available to the general public. 

ARTICLE XXV 

INVESTMENT AND NOTXCE PROVIS10NS 

Section 14.1 Notice to Limited Partners. 

THE LlMITED PAR'!'NERSH:tP I»'.l'ERES'l'S (THE ''UNITS11 ) OF HARBOR 

HOSPICE OF Blil.A'O'MON'.l' 1 r., P, ('l'HE "PARi;rNERSHIP11 } H,AVll1 NO"l' 'BEEN 

REGIST~RED 1 APPROVED OR DISAPPROVED BY ~HE SECURITIES ~ EXCaANGE 

CO~llcrSSION OR BY THE S~CORITXES ADMINIST~'!'OR OF ANY STATE. ANY 

REPRESENTATION TO THE CO~RARY IS A CRIMINAL OFFENSE. 

'f'HERE !S NO PUBLIC MARKET FOR Tll:B WITS. IN MAKING . AN 

INVESTMENT DECISION, YOU ~WST RELY ON YOUR OWN E~INATION OF THE 

PARTNERSHIP AND THE T:E!R.MS OF THE: OFFERING, INCLUDilif!J THJU 'MERITS AND 

RISKS lNVOLVED, 

29 

Defendants p. 31 

DEF000343 
71

~HE UNITS ARE RESTRICTED SECURITIES, AND YOU MAY NOT TRANSFER 

OR RESELL THEM EXCEPT AS PER!UTTED tiNPER TKE SECURITIES ACT OF 

193~ 1 AS A:MENDEDt AND APPLICABLE STATE SECO'RITIES LAWS, PURSUANT TO 

REGISTRATION OR EXEMPTION THEREFROM. THE SALE OR OTHER TRAI'iSFER OF 

THE UNITS !S ALSO RES~RICTED BY ARTICLE VIII OF THE AGREEMENT OF 

LIMITED PARTNElr.SlllP OF ~'IIE-P.AR'l'NERSH-r·P-~~BE-REQUIRE~.o_--­

BEAR THE FIN.ANCIAL RISKS OF THIS IWESTHENT FOR AN :tNDEFIN1TE 

PERIOD OF TIME. 

Section 14.2 Risk Factors. 

(a) Business Risks. The partnership will he a new business 

venture with no.prior operating experience 1 subject to all of the 

risks that are attendant to any such venture. The partnership does 

not anticipate epgaging in any business except the activities 

described herein. While the discussion herein seeks to summari~e 

the foreseeable risks affecting the operations of the partnership, 

investors in the·partnerehip should recognize the partnership, like 

any new business venture, ia subject to a number of unforeseeable 

risks. 

(b) Failure of Assumptions Regarding_Performance. The actual 

revenues and expenses of the partnership will vary from those 

presented in financial forecasts and the variation may be material. 

Therefore, a prospective investor should evaluate carefully the 

reasonableness of the assumptions which underlie the financial 

forecasts. 

(c) Regulatory Ri~ks. Investors should be aware that there 

is increasing scrutiny by law enforcement authorities, the Office 

of Inspector General, Centers for Medicare and Medicaid, the 

courts, and Congress of arrangements between health care providers 

and potential referral sources .to ensure that these arrangements 

are not designed as a mechanism to exchange remuneration for 

patient care referrals aud opportunities. These agencies have also 

demonstrated a willingness to look behind the formalities of a 

contractual relationship (such as a partnership or limi~ed 

liability company) to determine the underlying purpose of payments 

between health care providers and potential referral sources. 

The partnership believes that the partnership has been st~uctured to comply with federal and state law because the Limited 

Partners Vlill receive financial benefits solely on the basis of 

their equity interests in the partnership and the r~ceipt of such 

benefits is not conditioned upon the wimited Partners 1 referral of 

patients to the lnstitute. No documents or agreements have been 

submitted to the OIG, CMS 1 or the United States Department of 

Justice for a determination of whether conditions for investor 

suitability1 capital contributions to the partnership 1 or 

30 

Defendants p. 32 

DEF000344 
72

distributions to the Limited l?artners, or any of the partnership's 

contractual arrangements constitute remuneration in consideration 

of referral or fee-spl:i.tting a_:rrangements, kick-backs 1 commissions! 

bonuses 1 or rebates, 

Section l4. 3 I.imited Partners 1 Representations aha 

Warranties. 

By execution hereof 1 each Limited Partner represents and 

warrants to the Partnership that; 

(1} The Limited Partner is either an "accredited investor11 or 

is a \\sophisticated and well~inforrned investor'1 {as 

defined in the Securities Act of 1933 ·or the Texas 

Securities Act 1 and the Limited Partner has the required 

financial sophistication 1 net worth 1 knowledge and 

experience in financial matters. 

(2} The information contained in the EXecution Page of this 

Subscription Agreement is complete, accurate, and may be 

relied upon by the partnership and the General Pa~tner. 

(3) The Limited Partner will notify the partnerphlp and the 

General ·Partner immediately of any material adverse 

change in any of the information contained in the 

Execution Page occurring before acceptance of the Limited 

Partner's subscription. 

(4} The Limited Partner will provide any further necessary 

information as.may be required by the partnership, the 

General Partner, or their counsel to verify the 

information contained in'the Execution Page, 

(5) The Limited Partner is subscribing for inv~stment 

purposes only and not for resale or distribution. 

(6) The Limited Partner has adequate means of providing for 

his, her or its current needs and personal contingencies, 

and does not anticipate that he, she or it will have a 

need to liquidate or transfer the Units. 

{7} The Limited Partner recognizes and acknowledges h~s 1 her 

or its understanding of the speculative nature and.risk 

of loss associated. with this type of investment and 

confirm that the Units subscribed for constitute an 

investment that is suitable and consistent with the 

Limited Partner 1 s overall investment prog:ram and that the 

Limited Partner's financial situation enables the Limi~ed 

31 

Defendants p. 33 

DEF000345 
73

Partner to bear the risks of this investment which may 

include the total loss of the subscription. 

{B) In making the decision to purchase the Units 1 the Limited 

Partner pas. ~elied on independent investigations, 

including the Limited Partner's own professional tax and ---------~b;u;s;~:;n;e;s::;;s~a;;:;-cdV;;;;!;:,s~o;..r::,;s;::._::arrd-·ttre-~-tfle:t;·-has.....:Seen-gi.ven--.----·-··-

the opportunity to examine all relevant documents and to 

ask questior.ta of 1 and to receive answers froll\ 1 the 

General Partner concerning the terms and conditions of 

the offering. 

(9} The Limited Partner shall not, directly or indirectly( 

own an interest in an entity or facility located within a lO~mile radius of any facility owned or operated by the 

Partnership that competes with or is substantially 

similar to the business of the Partnership. 

Section 14.4 Spousal Joinder. 

By execution hereof, each Limited Partner 1 s spouse, if 

applicable 1 acknowledges that he or she has received and reviewed. 

this Agreement of. Limited Partnership and that he or she agrees to 

be bound by all of the terms and conditions hereof to the extent of 

such spouse 1 s con~unity property interest 1 if any, in the Units. 

E:XECUTED THIS J...l of Tv.x-..lL 1 2005. 

GENERAL PARTNER: 

HARBOR HOSP!CE MANAGERS 1 L.L.C. 

(EXECUTlON PAGES 

32 

Defendants p. 34 

DEF000346 
74

LIMITED PARTNER EXBCUTlON PAGE 

NAME OF LIMITED PARTNER: Arfeen Properties 1 L.P. 

Signature of Spouse {if applicable): 

nate ot Execution: lf{!Jfl/0) 

33 

Defendants p. 35 

DEF000347 
75

LIMITED PARTNER RXBCOTION PAGE 

NAME OF L!MITED PARTNER: Texas Realms, Ltd, 

of Limited Paxt.ne:r: 

By: Texas Teal 1 Partner 

Signature of Spouse (if applicable) 1 

Not applicable, 

Date of Execution: ----------------~ 

34 

Defendants -p. 36 

DEF000348 
76

L!l>HTED PAR.TNER EXECUTION PAGE 

NAME OF LIMITED PARTNER: Aman Jafar 

Aman Jafar 

Signature of Spouse {if applicable): 

Date of Execution: __ ~/~1_-~0~?_~~~-----

35 

Defendants p. 37 

DEF000349 
77

LIMITED PARTNER EXECUTION PAGE 

NAME OF LIMITED P~TNER: Janet Montagne 

of Limited Partner: 

Janet 

Signature of Spouse {if applicable} : 

Date of Execution: /(:?Jc; ·--'1)5 

36 

, Defendants p. 38 

DEF000350 
78

LIMITEP PJ4~TNER EXECUTION PAGE 

NAME OF LIMITED PARTNER: Joe Royall Chapman 

Signature of Limited Partner: 

Joe ~&<---"~~ ~all Chapman'-.:: 

. Signature of Spouse (if applicable}: 

~c~ = 

Date of Execution: __ ~1~~~--~-r~;j-~-~------

37 

Defendants p. 39 

DEF000351 
79

LIMITED PARTNER .EXECUTION PAGE 

NAME OF LIMITED PARTNER: Sandeep Patel 

Signature of Spouse (if applicable}: 

Date of Execution: 

38 

Defendants p. 40 

DEFOOQ352 
80

LIM!TEO PARTNER EXECUTION PAGE 

NAME OF LIMITED PARTNER: Allen David Ayres 

Signature o.f· Spouse (if applicable) : 

Date of Execution! ll- c:l( • D\ 

---=------------

39 

Defendants p. 41 

DEF000353 
81

LlMlTED PARTNER EXECUTION PAGE 

NAME OF LIMITED PARTNER: Triptesh Chaudhury 

Signature of Limited Partner~ 

.Tripg~ 

Signature of Spouse (if applicable) ~ 

40 

Defendants p. 42 

DEF000354 
82

LIMITED PARTNER EXECUTION PAGE 

NAME OF L!MlTED PARTNER: Anwar Family Partners, Ltd. 

General Partner 

Signature o~ Spouse (if applicable}: 

Not applicable. 

Date of Execution:~_/l+~~~+r~-6~--~----

41 

Defendants p. 43 

DEF000355 
83

BXHIBIT "A.11 CONTINtrED 

INITIALS LIMITED PARTNERS 

Name Contribution 

Class A Limited Partners {cont 1 d}: 

sandeep Patel 

12802 Aspen Terrace 

Cypress 1 TX 77433 

Allen David Ayre~ 

2501 North Street 

Beaumont 1 TX 77702 

~nwa:r Family Partners. Ltd. 

3850 Champions Dr. 

Beaumont/ TX 7770? $ 7 1 832.84 

~ B Limited .Partners: 

Arfeen Properties~ L.P. 

7683 Cobblestone Terrace ~umberton 1 TX 77657 

Te~as Realms! Ltd. 

3840 Champions Dr. 

Beaumont, TX 77107 

Aman Jafar 

1323 Meadowlark Lane 

Sugarland1 TX 7?4?8 

Triptesh chaudhury 

P.O. Box 2652 

Port Arthur, TX 77643 

$ 49,992,00 

$ 49,992.00 

$ 50,004.00 

to total PI 

3.0000% 

3.0000% 

7.8330% 

4.1670% 

4.1660% 

4.1660% 

4.1670% 

Defendants p. 44 

DEF000356 
84

INITIALS GENERAL PARTNER 

Name contribution Percentage 

Harbor Hospice Managers 1 L.L.C. 

4010 College Street 

Suite 100 

Beaumont, Texas ?7707 

INITlA~S LIMITED PARtNERS 

Name 

&·Address 

Class A Limited Partners: 

~ Arfeen Properties, L.P. 

~ 

7683 Cobblestone Terrace 

~umberton, TX 77657 

Texas Realms 1 Ltd. 

3840 Champions Dr. 

Beaumont, TX 77707 

Aman Jafar 

1323 Meadowlark ~ane 

Sugar1and1 TX 77478 

Janet Montagne 

2230 Chasse Bend 

orange 1 T:X. 77632 

Joe Royall Chapman 

7880 Lantana 

Beaumont, TX 77713 

$1~000.00 

Contribu'tion 

pf Capital 

$ 7,833.43 

$ 7,833.43 

$ 3,000.15 

to total PI 

1.00% 

Percentage 

& Interest 

LPI % 

to total PI 

23,5000% 

7.8335% 

7.8335% 

3,0000% 

3.0000% 

Defendants p. 45 

DEF000357 
85

LIM!TED PARTNER EXECUTlON PAG$ 

NAMB OF LIMITED PARTNER: Suleman Lalani 

Signature of Limited Partner: 

Suleman Lalan~ Signature of SpQUSe (if applicable) = 

Pate of Execution: _ ____.['-'-lq~1+1lf-"o-'-L_.__ 

42 

Defendan~ p. 46 

DEFOOQ358 
86

EXHIBIT "An CONTINUED 

INITIALS LIMITED PARTNERS 

Class B Limited Partners (cont 1 d); 

A.n\<lar Family Partners 1 Ltd, 

3850 Champions Dr. 

Beaumont, TX 7?701 $ 50,004.00 

Suleman Lalani 

442 Williams Landing Dr. 

Sugarl.and 1 TX 77479 $ 50r004.00 

Class C Limited Partners: 

4.1670% 

4 .167<H 

Rese~ed in accordance 

with Section 3.2 of 

this Agreement. 

$1,500,000,00 15.0000% 

Defendants p. 47 

DEF000359 
87

EXHIBIT IIB11 

CERTIFICATE OF LIMITED PARTNERSHIP FOR 

HARBOR HOSPICE OF BBAUMONT1 - L.P. 

A TEXAS LIMITED PARTNERSHIP 

2. The address of the registered office of the partnership is 4010 

College Street, Suite 100, :Beaumont 1 Texas 77707 and the name and 

address of registered agent for the partnership is Triptesh 

Chaudhury, 4010 College street, Suite 100, Beaumont 1 Texas 77707. 

3. The address of the principal office of the ·partnership where 

the records are to be kept or made available under Section l.07 of 

the Texas Revised Limited Partnership Act is Triptesh Chaudhury, 

4010_ College Street, Suite 100 1 Beaumont, Texas 77707, 

1. The name 1 mailing and street address of the general partner 

are as follows! 

Harbor Hospice Managers 1 L.L.C. 

4010 College Street, ·suite 100 

Beaumont, Texas 7770? 

5, Other matte~s that the general partne~ has determined to ~nclude 

are: None. 

The Manager of the general partner has signed this document 

under penalty of perjury and certifies that to the best of his 

knowledge and belief 1 the facts stated in this Certificate of 

Limited Partnership are true. 

GENERAL PARTNER: 

aARBOR HOSPICE MANAGERS 1 L.L.C. 

By; Tr~d~, Manager 

Defendanls p. 48 

DEF000360 
88

'I 

( .. 

INITIALS GENERAL PARTNER 

INlTIALS LIMITED PARTNER$ 

Name 

& Address 

EXHXBlT 11Cif 

Changes to 

& Date & Interest 

GPI -% 

to total PI 

Chang,es to 

Capital 

& Date 

Percentage 

& Interest 

LPI % 

to total PI 

Defendants p. 49 

DEF000361