AFFIRM; and Opinion Filed August 21, 2019.

In The

Court of Appeals

Fifth District of Texas at Dallas

No. 05-18-00752-CV

J. KYLE BASS, ET AL., Appellants

V.

UNITED DEVELOPMENT FUNDING, L.P., ET AL., Appellees

On Appeal from the County Court at Law No. 3

Dallas County, Texas

Trial Court Cause No. CC-17-06253-C

MEMORANDUM OPINION

Before Justices Whitehill, Molberg, and Reichek

Opinion by Justice Molberg

This interlocutory appeal arises out of a lawsuit filed by appellees United Development 

Funding, L.P., et al. (collectively, UDF) against J. Kyle Bass and Hayman Capital Management, 

L.P., et al. (collectively, Hayman), asserting claims for business disparagement, tortious 

interference with contract, tortious interference with business relationships, and civil conspiracy 

to commit these torts, based on statements Hayman wrote and published on the internet about 

UDF’s business. Hayman filed a motion to dismiss UDF’s claims pursuant to the Texas Citizens 

Participation Act, TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.001–.011 (TCPA). The trial court 

denied Hayman’s motion to dismiss.

Hayman raises six issues on appeal. In its first five issues, Hayman argues UDF failed to 

establish by clear and specific evidence a prima facie case for certain of the essential elements of 
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its claims. In its sixth issue, Hayman contends the trial court erred by striking evidence attached 

to Hayman’s post-hearing brief. For the reasons that follow, we conclude UDF carried its burden 

under the TCPA to establish a prima facie case for the challenged essential elements of its claims 

preserved for our review.1 We further conclude the trial court did not err by striking evidence 

attached to Hayman’s post-hearing brief. Accordingly, we affirm the trial court’s order.

BACKGROUND

Procedural Background

UDF filed suit against Hayman on November 28, 2017, asserting claims for business 

disparagement, tortious interference with contract, tortious interference with business 

relationships, civil conspiracy to disparage UDF’s business, civil conspiracy to tortiously interfere 

with UDF’s contracts, and civil conspiracy to tortiously interfere with UDF’s prospective contracts 

and business relationships. UDF requested actual and exemplary damages, as well as an award of 

its attorney’s fees.

On January 26, 2018, Hayman filed a motion to dismiss UDF’s lawsuit under the TCPA. 

As relevant to the issues before us, Hayman argued that UDF did not meet its burden under section 

27.005(c) of the TCPA to establish by clear and specific evidence a prima facie case for the actual 

malice element of its claims. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c). In its reply 

brief on its motion to dismiss, Hayman additionally argued that UDF did not establish a prima 

facie case that Hayman’s statements were false or that Hayman’s statements caused UDF’s 

damages.

 

1 For the first time on appeal, Hayman argues: the only contracts identified by UDF are “those between UDF and 

certain of UDF’s lenders”; UDF “point[ed] to no evidence” that Hayman’s actions caused their lender to breach a 

contract—rather, UDF only identified modifications of loan agreements between UDF and its lenders; and evidence 

that certain lenders did not extend new loans to UDF after their existing credit lines expired “is not evidence of 

interference with any existing contracts.” In its motion to dismiss, Hayman challenged only the essential elements of 

actual malice, causation, and damages; therefore, Hayman’s complaints on appeal are so limited.
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In its brief in opposition to Hayman’s motion to dismiss, UDF asserted that its petition as 

well as numerous affidavits—from its business counterparts, employees, investors, and a forensic 

accounting expert specializing in “areas that are the subject of [Hayman’s] false statements”—

provided detailed allegations and evidence far exceeding the minimum quantum of evidence 

necessary to state a prima facie case under the TCPA.

Following a May 21, 2018 hearing on Hayman’s motion, Hayman filed an amended posthearing brief on May 30, 2018, attaching additional evidence, including a supplemental affidavit 

of Bass. UDF moved to strike Hayman’s amended post-hearing brief and Bass’ supplemental 

affidavit on the grounds (1) they were filed outside of the deadlines and briefing schedule provided 

in the parties’ Rule 11 agreement; (2) they were not served and filed at least three days prior to the 

scheduled hearing as required by Dallas Local Rule 2.09; (3) Bass’ supplemental affidavit 

constituted new evidence filed after the hearing on Hayman’s motion to dismiss; and (4) Hayman’s 

submission of new evidence and arguments after the hearing was prejudicial to UDF.

On June 11, 2018, the trial court signed an order denying Hayman’s motion to dismiss. In 

its order, the trial court concluded Hayman’s amended post-hearing brief and the “evidence in the 

[brief]” were improperly submitted by Hayman “without authorization after the hearing.” 

Accordingly, the trial court granted UDF’s motion to strike the evidence in Hayman’s amended 

post-hearing brief, but the trial court did not strike the amended post-hearing brief itself from the 

record.

UDF’s Prima Facie Evidence

This is not a case in which the plaintiff merely provided the “minimum quantum of 

evidence” necessary to satisfy its burden to state a prima facie case for its claims. See In re Lipsky, 

460 S.W.3d 579, 590 (Tex. 2015). Rather, the prodigious quantity of details and specific fact 

allegations in UDF’s pleadings and affidavits that support a rational inference establishing the 
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challenged elements is much like a restaurant menu with too many offerings—the difficulty lies 

in choosing which examples, and what level of detail, to include in our opinion. In concluding 

UDF satisfied its burden under the TCPA, we reviewed over 2,000 pages of pleadings, affidavits, 

and evidence, such as copies of Hayman’s internet posts and statements, news and social media 

articles, correspondence, contracts and agreements, contract modification agreements, and SEC 

filings. As we must, we considered these pleadings, affidavits, and evidence in a light most 

favorable to UDF, the nonmovant. Dyer v. Medoc Health Servs., LLC, 573 S.W.3d 418, 424 (Tex. 

App.—Dallas 2019, pet. denied).

UDF’s sixty-one page petition, and affidavits attached to its response to Hayman’s motion 

to dismiss, quote extensively from Hayman’s internet posts and they provide numerous detailed 

descriptions of Hayman’s alleged false statements, including dates, titles, and headlines of the 

posts, and the manner in which Hayman circulated its statements on the internet and among various 

specifically identified news and social media outlets, further publicly proliferating Hayman’s 

indictments of UDF’s business. UDF’s pleadings and affidavits explain how and why Hayman’s 

statements were false; illustrate and describe how and why Hayman made the false statements 

knowingly or recklessly; and chronicle the economic and business damages and losses UDF 

sustained as a direct result of Hayman’s false statements. Evidentiary documentation supporting 

UDF’s fact allegations and affidavit testimony was attached to UDF’s response to Hayman’s 

motion to dismiss, and included, among other things, copies of: Hayman’s posts and statements 

subject of this lawsuit; social media posts by other organizations, as well as news articles reporting 

on Hayman’s statements; UDF’s SEC filings; invoices; billing statements; contracts and 

agreements between UDF and various of its business partners and associates, customers, and 

lenders; modifications to and terminations of such contracts and agreements resulting from 
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Hayman’s allegedly false and misleading statements; and correspondence reflecting the same. In 

this opinion, we describe only some of those supernumerary fact allegations and evidence.

The Allegations Underlying UDF’s Claims

We draw the following facts from the pleadings and from evidence adduced in connection 

with Hayman’s motion to dismiss and UDF’s response thereto. See Deuell v. Tex. Right to Life 

Comm., Inc., 508 S.W.3d 679, 685 (Tex. App.—Houston [1st Dist.] 2016, pet. denied). For 

purposes of this appeal, we accept UDF’s pleading allegations and evidence as true.

This lawsuit derives from a series of internet posts written and published by Hayman, a 

hedge fund registered with the United States Securities and Exchange Commission (SEC), about 

the viability and legitimacy of the business of UDF, a residential real estate lender. Hayman 

purchases and sells securities and other financial instruments for institutional investors and high 

net worth individuals. Bass is Hayman’s founder and chief investment officer. Bass and Hayman 

utilize short selling as an investment strategy.2 The gravamen of UDF’s claims is that Hayman 

published and disseminated defamatory, false, and misleading statements about UDF’s business 

in order to drive down UDF’s stock price and profit from several large short positions it had taken 

in UDF stock.

UDF is a family of funds that lends money to residential real estate developers and 

homebuilders in Texas and other states. Several UDF entities are or were registered with the SEC 

or were listed on the NASDAQ stock exchange. According to UDF’s petition:

The UDF family was founded in 2003 to provide investors an opportunity to 

diversify their portfolios with unique and sound investments in affordable 

residential real estate. The UDF Family enjoyed steady growth and provided 

 

2 Short selling is a highly speculative investment strategy which allows investors to profit from a decrease in the 

value of a stock or security. In a short sale, an investor “borrows” shares of a stock that the investor believes will 

decrease in value by a set future date. The investor sells the borrowed shares to buyers willing to pay the market price 

and retains the cash proceeds from the sale, hoping that the stock price will decline and provide an opportunity for the 

investor to purchase the stock at a lower price than the original sales price. The difference between the higher original 

sales price and the subsequent lower purchase price is profit to the short-seller.
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consistent returns to investors for over a decade while financing hundreds of 

millions of dollars in successful housing, construction and development 

projects for leading developers in the State of Texas and elsewhere.

UDF alleges, “Bass made a name for himself as an investor in 2008 when the large short 

positions he had taken against the housing market proved to be hugely profitable for his investors.” 

In subsequent years, however, Bass’ investments incurred losses. According to UDF, “[b]y 2015, 

a steady stream of investors were withdrawing money from Bass’ funds due to poor returns.” To 

stem the exodus of Hayman investors, UDF claims Hayman took “voluminous” short positions in 

UDF stock, and then engaged in a campaign to spread false and damaging information about UDF 

to the public marketplace, to UDF’s business associates, and to governmental authorities with the 

objective of driving down the price of UDF stock:

[Hayman and Bass] chose to engage in what is known as a “short-and-distort” 

scheme. In this illegal scheme, the short seller spreads false and damaging 

information about the target company it is betting against in order to harm 

the business and its stock price. [Hayman and Bass] chose UDF as their target 

for their scheme.

[In] 2015, [Hayman and Bass] opened an enormous short position in UDF. 

[Hayman and Bass] then attacked UDF in a series of false internet posts that 

were made anonymously . . . . The heart of [their] attack was that UDF was 

not a legitimate real estate lending and development business, but rather a 

billion-dollar house of cards that had been built up through a massive Ponzi 

scheme. [They] purported to have done extensive research to back their false 

claims that UDF had no genuine financial ability to carry on its business and 

that it was just a matter of time before creditors and investors were stuck with 

the fallout of UDF’s insolvency.

UDF alleges that Hayman and Bass posted this false information on the internet, 

disseminated the false information to the media, and provided the false information “directly to 

UDF’s business partners—lenders, borrowers, accountants, title companies, etc.—that [they] knew 

were necessary to UDF’s continued success.” UDF contends that as a result of Hayman’s false 

statements:

 UDF sustained hundreds of millions of dollars in damages;
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 UDF suffered a sudden and severe loss of access to credit and capital 

markets necessary for operation of its business;

 UDF was forced to pay off loans and liquidate assets;

 UDF lost builder and developer customers and future investors; and

 agreements and plans for real estate development projects between UDF 

and its customers and business associates fell through.

When UDF’s stock price dropped as a result of Hayman’s false statements,3 Hayman and Bass 

sold their short positions in UDF stock at a profit of $60 million or more.

Hayman’s Short Positions in UDF

Hayman contends that Parker Lewis, a Hayman analyst, began conducting research into 

real estate investment trusts (REITs)4in 2014, to identify potential investment opportunities. 

Lewis’ research led him to probe the business and financial circumstances of various UDF entities. 

According to Hayman, Lewis uncovered “a number of what appeared to be financial irregularities” 

and “certain facts or patterns that raised reasonable questions regarding general solvency concerns 

(and specifically concerning the ability to timely pay debts) regarding certain significant groups 

of related borrowers of certain UDF Entities [or] certain UDF Entities themselves.”

In 2015, Hayman opened an “enormous” short position against UDF. Outstanding short 

positions against UDF IV—an entity in the UDF family of funds—generally averaged around 

80,000 shares. Prior to launching its public campaign attacking UDF’s business on December 10, 

 

3 A December 2018 Dallas Morning News article corroborated UDF’s allegations, reporting, “Over the last 13 

years, United Development has raised more than $1 billion from almost 27,000 investors. Despite those big numbers, 

the company pretty much flew below the radar until earlier this month. That’s when a campaign of anonymous Internet 

posts and unsigned letters to the media began accusing United Development of improper dealing and defrauding 

investors–something the company denies. . . . The Internet chatter has been enough to plunge the stock price on one 

of United Development’s publicly traded real estate investment trusts–UDF IV–by about 50 percent. . . . United 

Development claims that slamming its stock price was the intention of its accusers. The value of the company’s 

securities suffered more than a $350 million decline in value.”

4 A real estate investment trust finances or owns and operates income-producing real estate. REITs allow 

investors to earn a portion of the income produced by income-producing real estate. Many REITs are registered with 

the SEC and traded on a public stock exchange. 
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2015, however, Hayman took an astonishing short position in excess of 4,000,000 shares against 

UDF IV.

Hayman’s Anonymous Internet Posts

On December 9, 2015, Hayman—using the pseudonym “Ernest Poole”—created an 

anonymous blogger profile, “Investors for Truth” (IFT), on the investment website www.hvst.com. 

On IFT’s web page the following day (after assuming a large short position against UDF IV), 

Hayman anonymously published the first of a number of posts falsely declaring or creating a false 

impression that UDF was an illegitimate, “Ponzi-like real estate scheme” on the verge of collapse, 

and that “investors [would be] left holding the bag.” Titled, “A Texas-Sized Scheme Exposing 

the Darkest Corner of the REIT Business, United Development Funding (UDF),” Hayman’s post 

began, “Only when the tide goes out do you discover who’s been swimming naked.” According 

to UDF, the article falsely asserted, among other things, that:

 UDF had characteristics emblematic of a “Ponzi scheme.”

 New investor capital was being used to provide returns to old UDF 

investors.

 UDF’s so-called “developments loans” were collateralized by real estate 

with no actual development “as much as” ten years after the loans were 

issued.

 There were “sinister” explanations for UDF’s business practices: 

“Where did all the money go if not to developments?”

 UDF was generating non-legitimate, fictitious, purported returns to 

“maintain the scheme.”

 The “cracks in UDF’s façade [were] starting to appear.”

 UDF was “underwater” because there was no development for numerous 

UDF loans.

 UDF’s investors, including “retail investors and retirees,” were 

“gullible” “victims” of “one of the most egregious cases” of a business model 

in which “poor investments are masked by additional capital raises.”
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Hayman’s December 10 post included an anonymous letter it sent to Whitley Penn, UDF’s 

former auditor, on December 4, 2015 (the Penn letter). The Penn letter “essentially falsely 

accuse[d] Whitley Penn of being a conspirator with UDF and disseminating false information to 

investors and the public.” The letter included a laundry list of “Red Flags” that implied Whitley 

Penn either was intentionally deceived by UDF and failed to catch the accounting irregularities, or 

Whitley Penn was actively conspiring with UDF to deceive investors.5

Additional anonymous internet posts published by Hayman on December 11 and December 

15, 2015 were titled:

 “United Development Funding (UDF) One Example of Many: How 

The Scheme Works, from One UDF Fund to the Next,” and

 “Reaching Across the Aisle of Your Private Jet Does Not Equal an 

Arms’ Length Transaction United Development Funding (UDF).”

Claiming that “UDF’s management began deceiving its fund investors essentially from the 

beginning,” Hayman’s December 11 and 15 posts echoed the narrative that UDF was running a 

Ponzi scheme, UDF loan proceeds were being misappropriated, and UDF was issuing loans for 

real estate development projects that never occurred.

A considerable portion of Hayman’s posts targeted Centurion—Hayman’s largest group of 

borrower entities—charging that Centurion was not creditworthy, Centurion and UDF had an illicit 

relationship, and Centurion was not engaged in bona fide real estate development. According to 

UDF, Hayman prevaricated that Centurion was part of UDF’s scheme to misappropriate money 

from shareholders by issuing loans for sham real estate development projects that never 

materialized. Declaring that these loans were “collateralized by land that has never been developed 

(for years, not quarters),” Hayman predicated that Centurion did not have the ability to pay its 

 

5 Unless otherwise indicated, italicized, bolded, and underlined text in this opinion is in the original.
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UDF loans, stating, “100% of UDF IV loans are classified as fully collectable, which is likely a 

material misrepresentation if the largest borrower is insolvent.”

For example, Hayman claimed, “Centurion has owned [Shahan Prairie] for over 10 years 

and there is no sign of development activity.” Posting two photographs of undeveloped land 

designated as “Shahan Prairie Estates,” Hayman dissembled, “This is the land that has served as 

collateral for multiple UDF loans issued by various UDF entities; these pictures of the land 

acquired by Centurion in 2004 were taken in November 2015.” Underneath the photographs, 

Hayman posed the rhetorical question, “If you were a developer borrowing at interest rates of 13%, 

wouldn’t you be developing real estate as fast as possible?”

In its fourteen-page post, “Reaching Across the Aisle of Your Private Jet Does Not 

Equal an Arm’s Length Transaction United Development Funding (UDF),” Hayman claimed:

Loans to Centurion regularly (i) do not generate any cash (principal or 

interest), (ii) are extended without any extension fees (try that one with a 

bank), and (iii) accrue larger and larger balances (year after year). . . . Are 

investors (and the authorities) really going to believe that loans that behave 

in this manner are arm’s length?

Raising “further questions about management credibility,” Hayman described UDF’s Form 8-K, 

filed with the SEC on December 14, 2015, as:

[M]anagement’s rambling response attempting to further lull investors with 

the old saw, “they just don’t understand our business.” Management has been 

misleading investors for years, and its response continues further down the 

path of deception. Not only were management’s responses deceptive; in 

some cases, the responses were comical.

In a January 2016 article titled, “ANATOMY OF A BILLION DOLLAR HOUSE OF 

CARDS THE CASE AGAINST UDF IV,” Hayman continued its drumbeat of accusations that 

UDF was running a Ponzi scheme; UDF was issuing loans that did not generate any cash income; 

UDF was funneling new capital to repay existing investors; UDF’s loans were “dangerously 

concentrated” with two borrowers which were “in financial distress”; UDF had an “undisclosed 
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business relationship” with the principal executive of Centurion in which “the economics [do] not 

add up”; and UDF was funding so-called real estate developments when no developing activities 

actually were occurring. Large bolded headlines within the article included:

 “THE UDF STRUCTURE IS A BILLION DOLLAR PROBLEM”

 “Shareholders in UDF IV and UDF’s other real estate investment trusts 

(REITs) are being victimized by UDF management’s Ponzi-like real estate scheme”

 “PARTICIPANTS IN UDF’S PONZI-LIKE REAL ESTATE SCHEME”

 “HOW CAPITAL IS FUNNELED TO REPAY EXISTING INVESTORS”

 “DANGEROUSLY CONCENTRATED LOAN PORTFOLIO”

 “RELATIONSHIPS (sic) GOES FAR BEYOND THAT OF LENDER (UDF) 

AND BORROWER (MOAYEDI)”

 “DEVELOPMENT ACTIVITIES ARE NOT TAKING PLACE AT MANY 

UDF-FUNDED SITES”

 “CRACKS IN UDF’S FAÇADE ARE STARTING TO SHOW”

 “UDF’S SCHEME HAS NEGATIVE IMPLICATIONS FOR ITS 

SHAREHOLDERS”

Hayman Launches www.UDFEXPOSED.com

On February 4, 2016, Hayman launched a newly created website, UDFEXPOSED.com. 

Unlike its previous anonymous posts, Hayman’s UDFEXPOSED.com posts were openly 

published by Hayman Capital Management, L.P. The website included a “Letter from Kyle Bass,” 

addressed to “Dear Reader.” Bass’ letter stated:

 “Our research showed that UDF exhibited characteristics consistent with a Ponzi 

scheme, the size and scope of which exceeded a billion dollars.”

 “UDF is using new investor money to pay existing investors” and “perpetuating 

a Ponzi-like real estate scheme across multiple funds.”

 “UDF management is misleading investors.”
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 “UDF management is preying on ‘Mom and Pop’ retail investors” and “is using 

new investors’ money to make payments to existing investors, and thereby perpetuating 

the scheme.”

 “After years of mismanagement, the UDF structure has begun to implode.”

 “Today, as a consequence of mismanagement and concealed losses, UDF faces 

significant bankruptcy risk, which would leave its shares virtually worthless.”

 “The research on this website exposes how a Texas real estate developer built a 

billion dollar house of cards and why it is now on the verge of collapse.”

Sandbagging UDF with additional accusations concerning its business and business 

partners, Hayman’s UDFEXPOSED.com posts recycled the same themes:

 UDF’s shareholders were “victim[s]” of its “Ponzi-like real estate scheme.”

 UDF had been “misleading investors for years.”

 UDF business model, including “[u]sing cash from new investors to repay existing 

investors,” was “not sound.”

 Transactions with Centurion, UDF’s largest borrower, were not at arms’ length and 

were an integral component of UDF’s fraudulent business scheme.

 Loans to Centurion were “almost always not repaid.”

 Loans to Centurion “typically d[id] not generate any actual cash income.”

 Hayman’s conclusions were “[b]ased on a thorough examination of SEC filings, 

county records and various court documents.”

UDF’s Petition and Affidavits Point to Clear and Specific Facts Showing

Hayman’s Statements and Implications Were False

Pointing to specific fact allegations in its petition and in affidavits and evidence attached 

to its response to Hayman’s motion to dismiss, UDF asserts the statements and the implications in 

Hayman’s internet posts were false.6 Contrary to Hayman’s prevarications, UDF maintains that 

“[n]one of UDF’s returns were fictitious, UDF was not involved in any unlawful fraudulent scheme 

 

6 UDF’s pleadings, affidavits, and SEC filings provide voluminous detailed fact allegations and evidence 

describing and explaining how and why Hayman’s statements were false. In this opinion, we describe only some of 

those copious fact allegations and evidence.
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to generate fictitious returns, and investor money was not misappropriated but rather used in 

furtherance of legitimate business opportunities typically secured by bona fide real estate.” 

In a ninety-two page affidavit accompanying UDF’s response to Hayman’s motion to 

dismiss, Hollis M. Greenlaw, Chief Executive Officer (CEO) of UDF IV and a director of various 

UDF entities, averred that UDF’s SEC filings and other public records unequivocally demonstrated 

UDF loans generated actual cash over the life of the loan. Greenlaw attested:

. . . UDF’s public filings show cash receipts which were applied to principal 

and interest repayments. For example, UDF IV’s SEC filings showed that 

it was generating significant amounts of cash, and, in fact, its generation 

of cash had been steadily increasing. [UDF’s] 2014 10-K contain[s] a table 

listing each outstanding loan and the cash receipts that were applied to 

principal (which includes compounded interest). UDF IV disclosed that its 

2012 cash receipts for its outstanding loan portfolio were approximately $26 

million, which increased to approximately $100 million in 2013 and then to 

approximately $152 million in 2014. However, this table only shows a subset 

of UDF IV’s total cash receipts since it does not include cash receipts on 

loans that were repaid in full during 2012, 2013 and 2014. Total cash 

receipts applied to principal of approximately $45 million in 2012, $135 

million in 2013 and $173 million in 2014 are shown in the Consolidated 

Statement of Cash Flows on page F-7 of UDF IV’s 2014 10-K. . . . Public 

records (which Bass swears he researched) also show recorded UDF lien 

releases from pod, lot and home sales that generally resulted in cash 

payments to UDF. [Hayman] also ignored the parts of UDF’s business, 

finished lot loans and homebuilding loans, that generate current cash. 

[Hayman] only focused on the part of UDF’s business that naturally 

consumes cash – acquisition and development loans.7

In a twenty-four page affidavit attached to UDF’s response to Hayman’s motion to dismiss, 

Dale Kitchens, a forensic accounting expert, averred:

[Hayman’s] assertion that UDF’s business was operating as a Ponzi scheme, 

or in a comparable Ponzi-like manner, was false. UDF’s business was not

masking or engaging in financial irregularities typical of a Ponzi scheme. 

[Hayman] did not show the existence of “purported returns” (i.e., fictitious 

returns), nor was UDF’s business generating fictitious returns typical of a 

Ponzi scheme. . . . It was not true that, as stated in the “Letter from Kyle 

Bass,” UDF’s business was a billion dollar house of cards, and UDF’s 

 

7 Emphasis added.
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business was not on the verge of collapse such that it faced significant 

bankruptcy risk that would leave the shares of investors virtually worthless.

Kitchens provided extensive detail in support of his testimony, including statements in UDF’s SEC 

filings. For example, Kitchens repudiated Hayman’s assertion that UDF was not generating cash 

receipts and instead accrued a fictional form of interest that the “authorities” would reject. To the 

contrary, Kitchens averred, “UDF IV’s SEC filings showed that it was in fact generating cash, 

and, moreover, its generation of cash had been steadily increasing.” Kitchens continued:

[O]n pages 56–59 of UDF IV’s 10-K, UDF IV disclosed that its 2012 cash

receipts for its loan portfolio were approximately $25 million, then increased 

to approximately $100 million in 2013, then increased to approximately $152 

million in 2014. (Annex 9, at 56-59.) As for distributions to the investors in 

UDF IV, page F-18 of the same 10-K disclosed that UDF IV made 

approximately $51 million in distributions to investors in 2014, the source of 

which was approximately $42 million in cash from operations and 

approximately $9 million in borrowings under credit facilities. (Id. at F-18.) 

None of the funding of distributions came from offering proceeds from new 

investors (though there would be nothing indicative of a Ponzi scheme if 

funding did come in part from offering proceeds, as that is an ordinary feature 

of blind pool offerings for real estate investment trusts). [Footnote omitted]

Also contrary to the insinuations and statements in Hayman’s posts, specific fact 

allegations in UDF’s petition, affidavits, and SEC filings show Whitley Penn did not resign as 

UDF’s auditor due to financial irregularities and misconduct by UDF. UDF IV’s November 24, 

2015 form 8-K filed with the SEC disclosed that Whitley Penn resigned as UDF’s auditor on 

November 19, 2015. Whitley Penn submitted a letter to the SEC confirming “there were no 

disagreements between [UDF] and Whitley Penn on any matters of accounting principles or 

practice, financial statement disclosure or auditing scope or procedure.”

According to Mehrdad Moayedi, Centurion’s CEO, UDF, and Kitchens, Centurion was not 

insolvent and was able to service its debt and interest expenses to UDF.

In his affidavit attached to UDF’s response to Hayman’s motion to dismiss, Moayedi 

averred:
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 “Since 1990, Centurion has developed well over 25,000 single-family 

lots in dozens of premier communities in North Texas.”

 “Delivering award-winning communities with impeccable amenities 

such as parks, golf courses, water park themes, and hiking and biking trails, 

Centurion has successfully designed master-planned communities that have 

been recognized across the real estate industry.”

 “Centurion has completed or is in the process of completing several highprofile developments including: (i) the River Walk at Central Park in the 

Town of Flower Mound, which is a 158 acre mixed-use development 

comprising single-family and multi-family homes . . . ., (ii) the remodel of 

the historic Statler Hotel in downtown Dallas and the restoration of the Dallas 

Public Library . . . ., (iii) The Residences At The Stoneleigh, . . . featuring 

customized condominiums. Centurion’s current projects include Mercer 

Crossing in Farmers Branch, which is planned to feature 2 hotels, 3500 multifamily units, and retail shopping. That project will also include over 800 

single-family home sites for townhomes and residential villas, 180,000 

square feet of commercial services, and a reserved 48-acres for a future office 

campus.”

 “Over many years, Centurion has worked with dozens of lenders to 

secure capital necessary for development. Those lenders include traditional 

bank lenders as well as alternative sources of capital from non-bank lenders, 

such as UDF. UDF is not the only non-bank lender from which Centurion 

has borrowed.”

 “The loans [from UDF] were at market rate. Centurion was not, and is 

not insolvent. No loan proceeds were misappropriated. Centurion has had 

no involvement in any Ponzi scheme.”

 “On its website, Hayman Capital asserted that UDF’s loans to Centurion 

were ‘irregular’ because the loans ‘do not generate any cash (principal or 

interest).’ [footnote omitted] . . . This assertion was and continues to be 

incorrect. In truth, loans from UDF to Centurion generated cash.”

UDF’s petition alleges that Hayman “knew that Centurion was not insolvent. Bass himself 

wanted to do business with Centurion and knew that Centurion was one of the most successful 

developers in Texas.” Kitchens’ testimony corroborates UDF’s fact allegations and Moayedi’s 

testimony: “UDF’s loans, including to its largest borrower, Centurion, did generate cash receipts. 

Money did go to development. The collateral was genuine and in the process of development.”
–16–

Likewise, clear and specific fact allegations in UDF’s petition refute Hayman’s 

incriminations about the non-existence of development on UDF-funded real estate projects. UDF 

asseverates that Hayman intented to delude investors about the purported lack of Centurion’s 

development activity when publicly available information showed that development, in fact, was 

taking place:

[In its December 11, 2015 post, Hayman] attached a photo of Shahan Prairie 

purporting to prove the lack of development activity, but the photo only 

showed a tiny fraction of the 102 acre site. In truth, publicly available aerial 

photos showed road cuts and grading that would cause knowledgeable 

persons like [Hayman] to understand that development work had been 

done. [Hayman] obviously meant to create a false appearance by posting 

a single photo of a 102 acre development from the road rather than the 

aerial photo of the entire site.

[Other] public records also showed entitlement activity was underway 

for the development, including the creation of Shahan Prairie’s Water 

Control Improvement District. The very same documents [Hayman] cite[s] 

in their presentation show the recording of documents forming the water 

district, which created municipal reimbursement entitlements for Centurion 

of over $16 million. Those same documents also show an assignment of these 

entitlements to UDF as collateral for its loan.8

The Fallout

UDF’s petition and affidavits and documents attached to its response to Hayman’s motion 

to dismiss provide detailed fact allegations and evidence supporting a rational inference that 

Hayman’s false and disparaging statements proximately caused actual damages to UDF in the form 

of loss of current and future lines of credit, loss of investors, loss of its stock value, loss of business 

partners and customers, loss of present and future business agreements and transactions, and outof-pocket costs incurred to stem and contain the damage caused by Hayman’s statements, 

including UDF’s ability to continue as an ongoing business enterprise.

Hayman’s Statements Caused UDF to Lose Existing and Future Lines of

Credit and Loans Necessary for Operation of Its Business,

As Well As Profit Participation Interests In Some Loans

 

8 Emphasis added.
–17–

Alice Anne Brown was UDF’s lead banker at Legacy Texas Bank (the Bank), and she had 

the “closest relationship with UDF” at the Bank. Brown’s affidavit, attached to UDF’s response 

to Hayman’s motion to dismiss, provides clear and specific evidence not only that Hayman’s 

statements were false, but also that UDF sustained damages as a direct result of the false 

statements. Brown averred that prior to Hayman’s post, “[t]he Bank (including [Brown]) 

considered UDF to be a good credit risk and provided UDF funds on good terms.” Brown attested, 

“As of December 10, 2015, UDF III and UDF IV each had a Ten Million Dollar Term Loan and a 

Five Million Dollar revolving line of credit with the Bank.”

The “strong negative” statements about UDF’s business in Hayman’s December 10, 2015 

post, however, caused “widespread concern” at the Bank. Although the “allegations in 

[Hayman’s] post were not consistent with [Brown’s] experience with and knowledge of UDF’s 

business” and Brown “was aware of no information that would support the assertions made by 

Bass”:

[Hayman’s] post caused the Bank’s entire relationship with UDF to come 

crashing down virtually overnight. The post also caused a panic at the 

Bank, as the allegations in the post implied the Bank’s loan collateral was 

worthless and UDF would not pay its debt to the Bank.

9

Brown continued:

In direct response to the negative statements in the post[, the] Bank 

decided not to lend any additional amounts to UDF, and further decided 

to wind down and terminate any outstanding loans and credit lines with 

UDF.

10

Brown averred, “It was my belief that Bass had taken facts about UDF’s business that were not 

unusual or improper, and had distorted and misrepresented them to create the impression UDF’s 

business was operating in a fraudulent manner based on phony real estate developments that did 

 

9 Emphasis added.

10 Emphasis added.
–18–

not generate legitimate returns.” Brown attested that after investigating and re-appraising the 

collateral for UDF’s loans, the Bank concluded the loans were not at risk for default, and UDF 

paid off significant portions of the loans before April 2017.

Greenlaw, UDF IV’s CEO, averred:11

 “Right after [Hayman’s] attack began, the banks changed their dealings 

with UDF significantly as part of an overall effort to terminate their 

relationship with UDF. Unused lines of credit were cancelled. Banks 

demanded 100% of proceeds from sale of collateral to pay down their debt 

instead of allowing UDF to keep 40–50% to reinvest and operate its business. 

Banks refused extensions and/or drastically changed the terms of such 

extensions (only granting a few months, charging higher fees and requiring 

additional appraisals and other due diligence and reporting by UDF).”

 “[I]n late 2014 or early 2015, a researcher who worked for [Hayman] 

contacted Waterfall Finance 4, LLC [one of UDF’s lenders] and asked 

whether they had any issues with the collateral for the Waterfall $35 million 

loan to UDF IV, and that Waterfall told them they had no issues whatsoever 

with UDF IV or the loan collateral.”

“As of 9/30/15, the UDF Funds had outstanding bank loan balances and notes 

payable to Waterfall of $217,366,164. The interest rates charged to UDF by 

banks ranged from 4.125% to 7.25%, and the Waterfall notes charged 

approximately10%. The $35 million loan from Waterfall was used to finance 

a tender for UDF IV shares in conjunction with its listing on Nasdaq, so it 

was not used to re-lend. The $15 million loan from Waterfall was used to relend. UDF IV’s average rate paid on its bank loans was 4.40% excluding 

Waterfall. These numbers were substantially the same as of December 10, 

2015.”

“As a result of Defendants’ attacks, by December 31, 2017, UDF’s 

outstanding bank loans and [notes payable to] Waterfall [had] been reduced 

from $217,366,164 at September 30, 2015 to $5,941,116. Unused lines of 

credit totaling over $80 million were cancelled. Just the simple interest lost 

from the previously deployed capital is at least $18 million per year (UDF’s 

average spread of approximately 8.6% on this capital that disappeared due to 

Defendants’ attack). This loss of interest injured Plaintiffs UMT [United 

Mortgage Trust] and UDF I, UDF III, UDF IV and UDF V. Waterfall 

accelerated repayments of its loans and increased its interest rate from 10% 

to 12.5%, causing UDF IV to incur additional interest costs to carry these 

loans until they were repaid.”

 

11 Copies of loan agreements, loan documents, loan modification agreements, correspondence, SEC filings, 

balance sheets, news articles, photographs, public documents, and reports referenced by Greenlaw, as well as copies 

of Hayman’s posts and statements, were attached to his affidavit.
–19–

 “Additionally, the loss of the banks’ willingness to do business with 

UDF prevented UDF from taking out new loans with the banks to fund the 

new borrower funding needs UDF had in the pipeline as of December 2015. 

Several banks had expressed an interest in expanding their credit to UDF 

prior to the attack.”

“For example, as to Legacy Bank, prior to the attacks, UDF III had a $10 

million revolving term loan and a $5 million revolving line of credit. These 

had been in place since March, 2014, and had been renewed on September 

21, 2015 through January 1 and March 21, 2016. . . . Prior to [Hayman’s] 

initial posts, the parties had been discussing renewal terms to again continue 

the loans in the ordinary course of business[.]”

“All that changed immediately after [Hayman’s] first posts. Legacy 

contacted UDF about [Hayman’s] postings on December 11, 2015, and bank 

executives came to UDF’s offices for a meeting on December 15, 2015 . . . . 

They were specifically concerned about the Ponzi allegations and the attacks 

on UDF’s collateral.”

“On December 18, 2015, Legacy informed UDF that ‘recent news articles 

regarding the family of UDF entities have raised issues of concern within our 

organization.’ Legacy did not offer renewals of the loans. Instead, on 

December 29, 2015, Legacy sent documents changing the terms so that UDF 

III could not make any more draws on the loan or line of credit and instead 

required repayment.”

 “Origin Bank was UDF IV’s largest lender at the time of Defendants’ 

attacks. UDF IV had three revolving loans with Origin with note amounts 

totaling $70 million and outstanding balances totaling approximately $52 

million as of September 30, 2015. The loans had been in place since 2010 

and 2013, and had been renewed in mid-2015.”

“The week after Defendants’ first postings, Origin expressed its concern 

about the postings, specifically the Ponzi allegations and the attacks on

UDF’s collateral. In an email sent on December 18, 2015, Origin listed its 

new terms. Origin reduced its loan commitment from $70 million to $47.6 

million and required 100% of cash from sales of collateral to go to the bank. 

The bank also required additional appraisals of collateral at UDF’s expense. 

These changes are reflected in fully-executed loan modification 

agreements[.]”

 “Independent Bank was another UDF IV lender at the time of the attack. 

UDF IV had a $15 million revolving loan with an outstanding balance of 

approximately $13.8 million at September 30, 2015 that was due for renewal 

on December 5, 2015. . . . Jonathan Sparling was the bank officer 

communicating with UDF. The bank offered UDF IV renewal terms and 

discussed increasing the amount. On December 11, 2015[,] UDF IV told the 

bank that its lawyers were working on renewal documents and that it wanted 

to move forward on the offered terms.”
–20–

“However, on December 11, 2015, the bank suddenly changed the terms: the 

loan would no longer be revolving – the balance of $12.8 million would need 

to be paid down and 100% of the proceeds of a pending $5 million borrower 

repayment would be applied to the loan balance. UDF asked for better terms, 

but the bank rejected. The bank told us they could no longer do business with 

UDF due to ‘pressure from investors’ regarding [Hayman’s] allegations. Mr. 

Sparling told UDF that the bank was getting questions from analysts about 

its UDF loans. A loan modification agreement was executed on December 

31, 2015, which provided for no further advances, a $6.3 million pay down 

of principal, and 100% net proceeds of all future borrower repayments going 

to the bank.”

 “UDF also had profit participation interests included in some of its 

loans. UDF lost its profit participation in at least two loans due to 

Defendants’ attacks. An entity called UDF IV Woodcreek, Inc. (a UDF IV 

subsidiary) was a party to a Profits Interest Agreement with Southstar 

Woodcreek Developer, LLC (a Florida developer operating in Texas). The 

liquidity crunch Bass created caused a refinancing of this debt, and as a result, 

UDF had to give up its profit participation interest. UDF IV released its 

interest in this profits agreement on March 30, 2016 and to the best of my 

knowledge, lost millions of dollars from the release of the profits agreement.”

Hayman’s Statements Cause UDF to Incur Out-of-Pocket Costs

In his affidavit, Greenlaw averred that after Hayman published its December 10 article, 

“investors, financial advisors, banks, other lenders and journalists immediately started calling and 

emailing UDF, demanding responses to the allegations.” Each new post by Hayman caused an 

avalanche of phone calls and emails to UDF about Hayman’s statements “that UDF was a 

fraudulent ‘Ponzi’ scheme, its collateral worthless, and that UDF was at risk from having too many 

loans concentrated with Centurion, an insolvent borrower.”

Greenlaw attested that UDF was compelled to hire a public relations firm and various 

attorneys, law firms, and accounting firms to handle different specified aspects of the fallout 

resulting from Hayman’s false and disparaging descriptions of UDF’s business. In addition to 

these out-of-pocket costs, UDF “incurred increased insurance and accounting expenses.” UDF 

also was “forced to pay legal bills submitted by banks for the research done to confirm their 

collateral in response to Bass’ allegations,” as well as reimburse attorney’s fees incurred by one of 
–21–

its lenders in connection with loan modification agreements it “required as a direct result of 

[Hayman’s] attack.”12

Hayman’s Statements Caused UDF to Lose “Current and Future Investors”

Greenlaw attested that UDF raised over $1 billion in investor capital between 2003 and 

December 2015. Hayman’s actions upended another capital raise, which “would have provided 

$1 billion in new capital to UDF.” Specifically, “UDF V sought to sell 37,500,000 shares of 

beneficial interest for $20.00 per share and 13,157,895 shares of beneficial interest through DRIP 

for $19 per share for total offering proceeds of $1,000,000,000.”

Hayman’s Statements Caused UDF to Lose Business

Greenlaw averred, “[Hayman’s] actions also caused its existing borrowers, including but 

not limited to Centurion, Harris & Straub Development Partners, David Weekley Homes and 

affiliates of True Homes, to reduce their existing and future business with [UDF].” One example 

described by Greenlaw involved a December 2014 loan by UDF V to Rosehill Reserve, Harrigan 

Development Partners, and Thomas Hargrove:

UDF V agreed to provide up to $42M to partially fund the acquisition of 

property in the Rosehill Reserve development. UDF V was entitled to 100% 

of all profits up to $6 million. The agreement was modified on October 12, 

2016. The outstanding balance was $26.4 million. The borrower entered into 

a new first lien loan for $24.9 million with a different lender. UDF V had to 

subordinate its loan, and its profit participation was reduced. Again, this was 

directly caused by Defendants’ anonymous posts.

In his affidavit, Moayedi averred that Hayman’s posts and statements caused development 

projects Centurion had planned with UDF to fall through. Moayedi attested:

 “In response to the anonymous posts, Centurion suspended entering into 

any new loans with UDF because of the extreme negative reaction to the posts 

from Centurion’s lenders, homebuilder clients, and other third parties. For 

example, prior to December 10, 2015, Centurion had intended to borrow 

 

12 In his affidavit, Greenlaw describes in detail the activities performed by attorneys, law firms, accounting firms, 

and the public relations firm. Attached to Greenlaw’s affidavit are press releases, invoices, and legal bills pertaining 

to these professional services.
–22–

money from UDF in connection with the Mercer Crossing project in Farmers 

Branch. However, because of the package of the anonymous posts and 

Hayman Capital’s publications that was provided to the Mayor and the 

resulting controversy that ensued as to whether UDF’s business was a Ponzi 

scheme, I had to remove UDF as a lender in that project in order to obtain 

project approval. The Farmers Branch Mayor and City Council explicitly 

raised with me some of the same allegations in that package of posts and 

publications,13 specifically that UDF was a Ponzi scheme in order to pressure 

me to remove UDF as a lender on the project, which I did. As reflected in 

the attached article in the Dallas Morning News, Centurion is moving that 

project forward successfully today with other lenders.”

 “Centurion’s loan balance with UDF steadily decreased since the 

anonymous posts. But for the assertions in the anonymous posts [and] the 

intense negative reaction of Centurion’s lenders, homebuilder clients, and 

others, Centurion would have continued entering into new loans with UDF. 

As of December 10, 2015, there was an extensive pipeline of new projects 

where Centurion and UDF had planned to work together as developer and 

lender, amounting to hundreds of millions of dollars. Unfortunately, after 

December 10, 2015, none of those new projects went forward with UDF as 

lender.”

Hayman’s statements also “caused UDF to lose new clients (borrowers) that would have 

become clients of UDF” if Hayman had not falsely attacked UDF’s business. Greenlaw averred:

David Weekley is the largest private homebuilder in the United States. Prior 

to Defendants’ attacks, it had financed projects in Austin and Orlando with 

UDF IV, and was looking to do more projects with UDF. After the Bass 

attacks, Weekley changed course, paid off all outstanding UDF loans in full 

and ceased doing business with UDF.

Another example provided by Greenlaw involved True Homes:

True Homes is the largest builder in North Carolina (Charlotte). An affiliate 

of True Homes did two loans with UDF IV, which have both been repaid in 

full. After December 2015, it did not do any new business with us, although 

there were several True Homes projects in UDF’s pipeline in December 2015. 

It is my understanding based upon UDF’s discussions with this builder that 

it would do business with UDF if it had the capital.

In an affidavit attached to UDF’s response to Hayman’s motion to dismiss, Andrew 

Christofferson, Chief Business Development Officer for Berthel Fisher & Company Financial 

 

13 The Mayor declared that he received a package of anonymous posts and publications and distributed it to the 

City Council.
–23–

Services, Inc. (Berthel), averred that Berthel raised capital for UDF from October 2014 until 

Christofferson read Hayman’s December 10, 2015 post. During that period, Berthel invested over 

$9 million in UDF V. Berthel was also the exclusive broker raising capital for United Residential 

Home Finance (URHF) fund, which was wholly owned by United Mortgage Trust. Berthel raised 

over $8 million in funds for URHF prior to December 10, 2015. Christofferson attested that “in 

direct response” to the “negative statements about [UDF]”, including Hayman’s statements that 

“UDF’s business was a Ponzi scheme instead of a genuine real estate business and that UDF’s 

business was generating returns that were not legitimate,” Bethel “halted all sales to our customers 

of UDF V and URHF.”14

In an affidavit attached to UDF’s response to Hayman’s motion to dismiss, Michael De 

Pol, founder and Chairman of the Board of Nationwide Planning Associates, Inc. (Nationwide)—

an independent securities broker-dealer and full-service financial planning firm—averred that as 

of December 2015, several of Nationwide’s clients were invested in UDF IV, and Nationwide also 

was raising capital for UDF V. From August 2015 through early December 2015, Nationwide’s 

clients invested $2,133,500 in UDF V. “In November 2015 alone, [Nationwide] had $1,233,000 

in UDF V sales.” After reading Hayman’s article on December 10, 2015, De Pol and Nationwide 

became concerned “because of the strong negative statements in the post about UDF’s business. 

Of particular concern to Nationwide and our clients were the statements that asserted that UDF’s 

business was a Ponzi scheme instead of a genuine real estate business and that UDF’s business 

was generating returns that were not legitimate.” “In direct response” to Hayman’s statements, 

Nationwide “immediately stopped all sales of UDF V.” Nationwide also canceled a pending sales 

 

14 A copy of Christofferson’s December 11, 2015 email reflecting Berthel’s decision to “immediately halt sales 

of UDF V and URHF” was attached to his affidavit.
–24–

ticket in the amount of $150,000 that had been sent on December 10, 2015 before De Pol became 

aware of the post.15

Hayman’s Statements Caused UDF to Lose the Opportunity to

Participate In and “Fund the Projects in Its Pipeline”

In contrast with the hundreds of millions of dollars in loans generated by UDF prior to 

Hayman’s posts, Greenlaw averred, “For over a year from the beginning of the attacks, UDF did 

not have any new business. From December 31, 2015 through April 19, 2017, UDF only originated 

$31 million in new loans.”

Prior to December 10, 2015, Centurion financed approximately 30% of its 

loans with various UDF entities. As of September 30, 2015 Centurion had 

outstanding loans from UMT ($3 million), UDF I/II ($57 million), UDF III 

($204 million), UDF IV ($386 million) and UDF V ($29 million). In direct 

response to Defendants’ attack, beginning in December 2015, Centurion had 

to sell off or refinance assets to repay UDF approximately $167 million. This 

was required mainly due to the banks’ withdrawal of UDF’s credit[.]

Centurion also had hundreds of millions of dollars in projected borrowing in 

the pipeline. Since the attack, Centurion has largely turned to other sources 

of financing to replace UDF, as stated in the Affidavit of Merhdad Moayedi.

One of the Centurion projects that UDF lost out on was Mercer Crossing. If 

not for the Defendants’ attacks, Centurion would have financed parts of that 

project with UDF. Centurion has been successfully developing that project 

with other financing sources.

In an affidavit attached to UDF’s response to Hayman’s motion to dismiss, Joseph Straub, 

the president and a partner of Harris & Straub LLC (H&S)—a residential and commercial real 

estate developer—averred H&S worked with UDF entities on several specifically identified H&S 

development projects. Straub attested that on November 12, 2015, H&S reached an agreement 

with UDF III, UDF IV, and URHF regarding an additional specifically identified development 

 

15 A copy of the December 11, 2015 email reflecting the cancelation of the $150,000 UDF V investment was 

attached to De Pol’s affidavit.
–25–

transaction.16 UDF was to fund the development. Straub also granted UDF options to purchase 

specifically identified acres of land or equity interests in the H&S company that owned the land.17 

Straub’s affidavit described the transaction in detail. “[A]s a result” of Hayman’s December 10, 

2015 post and other posts and “negative statements” by Hayman about UDF—“especially the 

statements that asserted that UDF’s business was a Ponzi scheme instead of a genuine real estate 

business, that UDF’S business was generating returns that were not legitimate, that UDF had failed 

to disclose a disagreement between it and Whitley Penn about UDF’s financials that caused 

Whitley Penn’s termination as UDF’s auditor, that the auditor and UDF were concealing known 

reportable events, that UDF was taking advantage of its investors as gullible victims, and other 

statements made throughout various posts”—H&S did not move forward on the development 

project with UDF.18

UDF’s petition alleges many of the facts attested to in these affidavits regarding specific 

pecuniary, economic, and business losses it sustained as a direct result of Hayman’s statements. 

The petition further alleges that UDF IV’s stock price dropped by thirty-five percent on December 

10, 2015, after Hayman published its article, “A Texas-Sized Scheme Exposing the Darkest Corner 

of the REIT Business United Development Funding (UDF).” By December 11, 2015, UDF IV’s 

stock price had fallen by almost fifty percent, and UDF’s trading volumes were over ten times its 

normal average.

STANDARD OF REVIEW AND APPLICABLE LAW

The TCPA provides a mechanism for early dismissal of a lawsuit that is “based on, relates 

to, or is in response to a party’s exercise of the right of free speech, the right to petition, or the 

 

16 A copy of the agreement was attached to Straub’s affidavit.

17 Copies of the purchase option agreements were attached to Straub’s affidavit.

18 A copy of a December 15, 2015 email from Straub to UDF “expressing concern” that Hayman’s “posts would 

interfere with UDF’s ability to raise capital” was attached to his affidavit.
–26–

right of association.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.003. Its purpose is to identify and 

summarily dispose of lawsuits designed only to chill First Amendment rights under the United 

States Constitution, not to dismiss meritorious lawsuits. TEX. CIV. PRAC. & REM. CODE ANN.

§ 27.002; Lipsky, 460 S.W.3d at 589.

The TCPA provides a burden-shifting framework for resolving TCPA motions to dismiss. 

Lipsky, 460 S.W.3d at 586–87; Misko v. Johns, No. 05-18-00487-CV, 2019 WL 1930157, at *3 

(Tex. App.—Dallas May 1, 2019, pet. filed); Dyer, 573 S.W.3d at 424. The initial burden lies 

with the defendant-movant to show by a preponderance of the evidence that the plaintiff’s claim 

is “based on, relates to, or is in response to the [movant’s] exercise of” its First Amendments rights. 

TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b); Lipsky, 460 S.W.3d at 586. If the movant 

satisfies its burden to show a claim is covered by the TCPA, the second step shifts the burden to 

the plaintiff to establish by “clear and specific evidence a prima facie case for each essential 

element of the claim in question.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c); Lipsky, 460 

S.W.3d at 587.

A “prima facie case” refers to “the ‘minimum quantum of evidence necessary to support a 

rational inference that the allegation of fact is true.’” Lipsky, 460 S.W.3d at 590 (quoting In re 

E.I. Dupont de Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004)). “Clear and specific” evidence 

is evidence that is “unambiguous,” “free from doubt,” and “explicit” or “referring to a particular 

named thing.” Lipsky, 460 S.W.3d at 590 (quoting KTRK Television, Inc. v. Robinson, 409 S.W.3d 

682, 689 (Tex. App.—Houston [1st Dist.] 2013, pet. denied)). Thus, the term “clear and specific” 

pertains to the quality of evidence required to establish a prima facie case; and the term “prima 

facie case” pertains to the amount of evidence necessary for a plaintiff to carry its minimal factual 

burden to support a rational inference establishing each essential element of the its claim. See 

Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 882 (Tex. App.—Austin 2018, pet. filed).
–27–

In Lipsky, the Texas Supreme Court explained how this evidentiary standard should be 

applied:

[M]ere notice pleading—that is, general allegations that merely recite the 

elements of a cause of action—will not suffice. Instead, a plaintiff must 

provide enough detail to show the factual basis for its claim.

460 S.W.3d at 590–91 (internal citations omitted). The plaintiff may rely on circumstantial 

evidence that creates an inference establishing a central fact unless the “connection between the 

fact and the inference is too weak to be of help in deciding the case.” Dallas Morning News, Inc. 

v. Hall, No. 17-0637, 2019 WL 2063576, at *4 (Tex. 2019) (quoting Lipsky, 460 S.W.3d at 589); 

see also Lipsky, 460 S.W.3d at 590–91 (TCPA “does not impose a higher burden of proof than that 

required of the plaintiff at trial [and does not] require direct evidence of each essential element of 

the underlying claim to avoid dismissal.”). 

If the plaintiff establishes a prima facie case, the burden shifts back to the defendant to 

establish, by a preponderance of the evidence, each essential element of a valid defense to the 

plaintiff’s claim.19 TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(d). The trial court must dismiss 

the action if the plaintiff fails to carry its burden or the defendant establishes the essential elements 

of a valid defense. Id. § 27.005(b), (c), (d).

We review de novo a trial court’s ruling on a motion to dismiss under the TCPA. Dyer, 

573 S.W.3d at 424; Campbell v. Clark, 471 S.W.3d 615, 623 (Tex. App.—Dallas 2015, no pet.). 

In conducting our review, we consider the pleadings and evidence in a light most favorable to the 

 

19 Hayman does not assert on appeal that it established by a preponderance of the evidence each essential element 

of a valid defense, and Hayman did not make any such argument in its motion to dismiss or in its reply brief in the 

trial court. Our inquiry therefore ends after we determine whether UDF satisfied its burden to state a prima facie case 

for the challenged elements of its claims preserved for our review. We need not reach the question presented in a case 

where the TCPA movant “establishes by a preponderance of the evidence each essential element of a valid defense” 

as being an unconstitutional deprivation of the right to trial by jury. TEX. CONST. art. V, § 10 (right to have a jury 

resolve fact questions).
–28–

nonmovant.20 Lei v. Nat. Polymer Int’l Corp., No. 05-18-01041-CV, 2019 WL 2559756, at *3 

(Tex. App.—Dallas June 21, 2019, no pet. h.); Dyer, 573 S.W.3d at 424; see also Deuell, 508 

S.W.3d at 685.

ANALYSIS

On appeal, UDF does not contend its claims do not fall within the scope of the TCPA. 

Assuming, without deciding, that the TCPA applies to this case, we therefore proceed to determine 

whether UDF met its burden to point to clear and specific evidence establishing a prima facie case 

for the challenged elements of its causes of action preserved for our review. UDF maintains it 

provided more than sufficient—and even overwhelming—evidence detailing the factual basis of 

its claims, and the trial court properly denied Hayman’s motion to dismiss. As relevant to this 

appeal, Hayman argues UDF failed to point to clear and specific evidence for the falsity, actual 

malice, causation, and damages elements of its claims.

Falsity of Statements

Hayman contends UDF failed to satisfy its burden to point to clear and specific evidence 

that Hayman’s publications were false. A publication is false if it is not substantially true. Neely 

v. Wilson, 418 S.W.3d 52, 63 (Tex. 2013). A publication is not substantially true if, taken as a 

whole in light of the surrounding circumstances, it is more damaging to the plaintiff’s reputation 

than a truthful publication would have been. See id.; see also KBMT Operating Co., LLC v. Toledo, 

492 S.W.3d 710, 711 (Tex. 2016). The supreme court refers to “this meaning as the statement’s 

 

20 Section 27.006 of the TCPA, entitled “Evidence,” provides that “[i]n determining whether a legal action should 

be dismissed . . . the court shall consider the pleadings and supporting and opposing affidavits stating the facts on 

which the liability or defense is based.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.006; see also Breakaway Practice, 

LLC v. Lowther, No. 05-18-00229-CV, 2018 WL 6695544, at *2 (Tex. App.—Dallas Dec. 20, 2018, pet. filed) (mem. 

op.). Under this provision, pleadings are to be considered as evidence, regardless of whether they are offered as such. 

See Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex. 2017) (under TCPA, trial court obliged to consider pleadings 

irrespective of whether formally offered as evidence); Breakaway Practice, 2018 WL 6695544, at *2; Martin v. 

Bravenec, No. 04-14-00483-CV, 2015 WL 2255139, at *7 (Tex. App.—San Antonio May 13, 2015, pet. denied) 

(mem. op.) (noting section 27.006(a) is exception to general rule that pleadings are not evidence); see also Walker v. 

Hartman, 516 S.W.3d 71, 79 (Tex. App.—Beaumont 2017, pet. denied) (pleadings are considered “as evidence” under 

TCPA).
–29–

‘gist’.” Id. at 721. We therefore evaluate a statement’s falsity by first ascertaining its gist. See 

Neely, 418 S.W.3d at 63–64.

The gist of a statement is its “main point” or its “essence.” D Magazine Partners, L.P. v. 

Rosenthal, 475 S.W.3d 470, 482 (Tex. App.—Dallas 2015), aff’d in part on other grounds, rev’d 

in part on other grounds, 529 S.W.3d 429 (Tex. 2017). We determine a statement’s gist by 

examining “how a person of ordinary intelligence would view it.” KBMT Operating Co., 492 

S.W.3d at 711 (quoting Turner v. KTRK Television, Inc., 38 S.W.3d 103, 114 (Tex. 2000)). A 

publication can convey a false and defamatory meaning by omitting or juxtaposing facts, “even 

though all [of the publication’s] individual statements considered in isolation were literally true or 

non-defamatory.” Turner, 38 S.W.3d at 115.

In this case, the parties dispute many of the facts underlying UDF’s claims. Each party 

accuses the other of mischaracterizing facts. The parties also disagree on how this Court should 

apply the standard under which UDF’s clear and specific evidence is measured. UDF’s claims are 

premised on its allegations that Hayman flooded the news wire with (1) explicitly false and 

defamatory statements about UDF’s business, and (2) statements that as a whole created a false 

and defamatory impression of UDF’s business by misstating facts, mischaracterizing facts, 

omitting facts, and presenting facts in a misleading context. According to UDF, the gist of 

Hayman’s statements was that UDF was an illegitimate business with nefarious motives, was not 

engaged in loaning funds for bona fide real estate development, was operating a Ponzi scheme 

predicated on fictitious returns, and essentially was a worthless “billion dollar house of cards.” 

UDF complains that Hayman’s repeated assertions likening UDF’s business to a Ponzi scheme 

constituted a “factual assertion [that] was conveyed by numerous individual statements of fact that 

were also false, such as that UDF’s largest borrower was insolvent, that Shahan Prairie was not a 

real development, and that UDF’s business did not generate cash.” As a direct result of Hayman’s 
–30–

false and defamatory posts, UDF alleges it suffered hundreds of millions of dollars in special 

damages including lost profits, loss of credit, loss of investor capital, loss of existing and future 

business, and out-of-pocket costs.

Hayman asserts that the overall “gist” of its posts was substantially true, and that its posts 

should be considered in conjunction with allegations in a complaint filed by the SEC against UDF 

and allegations by a “homebuilder” in “a recently-filed lawsuit against UDF.” It is not the trial 

court’s role, however, to act as a factfinder and to resolve opposing reasonable inferences in 

determining whether the plaintiff satisfied the prima facie proof requirement. See Berry v. ETX 

Successor Tyler, f/k/a E. Tex. Med. Ctr., No. 12-18-00095-CV, 2019 WL 968528, at *7 (Tex. 

App.—Tyler Feb. 28 2019, no pet.) (mem. op.). Instead, the court must determine whether the 

non-movant met its TCPA burden to produce evidence sufficient to present a prima facie case, 

some of which may include relevant evidence from which more than one reasonable inference may 

be drawn. See id.

In Lipsky, the court underscored that the TCPA “does not impose a higher burden of proof 

than that required of the plaintiff at trial.” Lipsky, 460 S.W.3d at 591. A plaintiff may prevail at 

trial by offering sufficient evidence to support a fact finding in its favor, even if the defendant 

offered conflicting evidence. See United Servs. Auto Ass’n v. Croft, 175 S.W.3d 457, 463 (Tex. 

App.—Dallas 2005, no pet.) (“When the evidence is conflicting, the jury’s verdict on such matters 

is generally regarded as conclusive. . . . Accordingly, if there is sufficient competent evidence of 

probative force to support the finding, it must be sustained.”). Therefore, following our precedent, 

we only consider the pleadings and evidence in favor of the plaintiff’s case when determining 

whether it established the requisite prima facie proof. Apple Tree Café Touring, Inc. v. Levatino, 

No. 05-16-01380-CV, 2017 WL 3304641, at *2 (Tex. App.—Dallas Aug. 3, 2017, pet. denied) 

(mem. op.); Moldovan v. Polito, No. 05-15-01052-CV, 2016 WL 4131890, at *5 (Tex. App.—
–31–

Dallas Aug. 2, 2016, no pet.) (mem. op.) (quoting Rosenthal, 475 S.W.3d at 480–81); see also

TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c) (issue is whether claimant established prima facie 

case for each essential claim). It is not this Court’s province to consider and weigh evidence

submitted by Hayman to contradict UDF’s evidence. Moldovan, 2016 WL 4131890, at *5.

Hayman also contends UDF mischaracterizes its internet posts. Sidestepping the allegation 

that Hayman accused UDF of operating a Ponzi scheme, Hayman protests:

[Hayman] never stated that UDF was running a traditional Ponzi scheme; 

instead, [Hayman] accused UDF of exhibiting Ponzi-like characteristics 

insofar as it appeared that UDF was using capital raised in connection with 

newer UDF funds to directly or indirectly fund distributions to investors in 

older UDF funds[.]

Hayman’s objection that the gist of, for example, Bass’ accusation that UDF was “perpetuating a 

Ponzi-like real estate scheme across multiple funds” and was “obscur[ing] the fact [it was] using 

new investors’ money to make payments to existing investors” was substantively different from 

stating that UDF was operating a “traditional” Ponzi scheme, is disingenuous.

UDF adduced clear and specific evidence demonstrating that a reasonable person would—

and did—conclude Hayman’s posts were an exposé of wrongdoing at UDF. Affidavits and 

evidence attached to UDF’s response to Hayman’s motion to dismiss demonstrate Seeking Alpha, 

Citron Research, Value Walk, Origin Bank, Legacy Texas Bank and Brown, Berthel and 

Christofferson, H&S and Straub, Nationwide and De Pol, and Kitchens all read Hayman’s 

statements as an accusation that UDF’s business was a Ponzi scheme on the verge of collapse. For 

example, immediately after and “based wholly on [Hayman’s] anonymous [December 10] post,” 

Seeking Alpha, ValueWalk, and Citron Research published their own press spreading Hayman’s 

news that UDF was misleading and defrauding investors; UDF was operating a Ponzi scheme; and 

UDF was a worthless and illegitimate business.
–32–

Seeking Alpha posted an article titled, “Ponzi scheme Alleged at United Development 

Funding.” ValueWalk posted an article referring to Hayman’s post about UDF as a thesis “on why 

the stock is a zero.” Value Walk tweeted that Bass thinks UDF “is a total Ponzi scheme.” Citron 

Research circulated Seeking Alpha’s article with the title “udf ponzi can Go to $0.” StreetInsider 

re-published the Seeking Alpha and Citron Research tweets.

UDF’s lead banker also read Hayman’s article as a condemnation of UDF as an illegitimate 

Ponzi scheme. In her affidavit, Brown averred:

[Hayman’s] post caused widespread concern at the Bank[,] especially the 

statements that asserted that UDF’s business was a Ponzi scheme instead 

of a genuine real estate business, that UDF’s business was generating 

returns that were not legitimate, that UDF had failed to disclose a 

disagreement between it and Whitley Penn about UDF’s financials that 

caused Whitley Penn’s termination as UDF’s auditor, that the auditor and 

UDF were concealing known reportable events, that UDF was taking 

advantage of its investors as gullible victims, and similar statements made 

throughout the December 10 internet post.21

Brown believed, “[Bass] had distorted and misrepresented [facts] to create the impression UDF’s 

business was operating in a fraudulent manner based on phony real estate developments that 

did not generate legitimate returns.”22

UDF’s petition and the affidavits attached to UDF’s response to Hayman’s motion to 

dismiss identify additional incriminating statements by Hayman:

 The Penn letter asserted accounting irregularities at UDF and stated 

UDF’s relationship with Centurion was improper and part of an overall 

scheme to misappropriate money from shareholders: “Loans to UDF IV’s 

largest borrower, Centurion, do not appear to be arm’s-length transactions.”

 The Penn letter accused UDF of violating auditing standards: “UDF III, 

UDF IV and UDF V fail to fully disclose the business relationships between 

their officers and directors and Centurion as required by Auditing Standard 

No 18—Related Parties.”

 

21 Emphasis added.

22 Emphasis added.
–33–

 The Penn letter claimed Centurion was not creditworthy, did not have 

the ability to pay “585 million in debt” as well as “approximately $75 million 

[of] annual interest expense,” and “may be insolvent.”

 Hayman claimed, “100% of UDF IV loans are classified as fully 

collectible, which is likely a material misrepresentation if the largest 

borrower is insolvent.”

 Hayman asserted that Centurion was not a “seasoned and accomplished” 

developer and that its loans were “irregular,” “non-performing,” and not at 

“arms’ length.”

 Hayman claimed Centurion’s average interest rate of 13% was “more 

than double the current market average for development loans.”

 Hayman declared, “[S]hareholders in UDF’s public companies are being 

victimized by a Ponzi-like real estate scheme”; and “Our research showed 

that UDF exhibited characteristics consistent with a Ponzi scheme, the size 

and scope of which exceeded a billion dollars.”

 Hayman claimed UDF was a “billion dollar house of cards” that was 

“now on the verge of collapse,” and that UDF “faces significant bankruptcy 

risk, which would leave its shares virtually worthless,” and “UDF is using 

new investor money to pay existing investors.”

 Hayman published multiple articles with spectacular and damning titles, 

including: “A Texas-Sized Scheme,” “Exposing the Darkest Corner,” “How 

the Scheme Works,” and “United Development Funding (UDF) One 

Example of Many: How the Scheme Works, from One UDF Fund to the 

Next.”

Properly evaluating Hayman’s posts as a whole in light of the surrounding circumstances, 

and based upon how a person of ordinary intelligence would perceive them, we conclude that a 

reasonable view of the gist of Hayman’s posts and statements is that UDF was running a Ponzi 

scheme predicated on fictitious returns, was an illegitimate business on the verge of collapse, was 

issuing loans to developers who were not actually developing real estate projects, and was duping 

gullible investors into purchasing its worthless stock.

UDF also adduced clear and specific evidence that Hayman’s disparaging statements about 

UDF’s business were false; UDF was a viable, legitimate business, with real earnings and gains; 

and UDF was engaged in growing real estate investments that were paying real dividends:
–34–

 In his affidavit, Kitchens averred that UDF’s returns were not fictitious, 

UDF was not involved in an unlawful fraudulent scheme to generate fictitious 

returns, and investor money was not misappropriated, but rather used for 

legitimate business opportunities typically secured by bona fide real estate.

Kitchens averred, “UDF’s business never should have been characterized as 

a Ponzi scheme or Ponzi-like scheme by [Hayman] as there was no basis for 

doing so.”

Kitchens’ affidavit explained in detail why Hayman’s accusation that UDF 

was running a Ponzi scheme was false. For example, Kitchens averred, “at 

the time of Hayman[‘s] December 10, 2015 anonymous post and thereafter, 

Hayman Capital omitted the facts that each UDF IV loan was backed by 

specific collateral, the value of which was regularly appraised by 

independent appraisers in order to secure the loan, as disclosed in its 2014 

10-K.”

Kitchens averred, “UDF IV’s SEC filings showed that it was in fact 

generating cash, and, moreover, its generation of cash had been steadily 

increasing.”

Kitchens averred, “Hayman Capital asserts that the facts in the ‘Irregular 

Patterns’ posting were grounded in its review of SEC filings, including its 

Forms 10-K; that its information was ‘sourced directly from UDF IV tabular 

disclosures’; and that those eleven loans are ‘representative of loans to 

[Centurion]’ and that ‘significantly more loans demonstrate irregularities.’ 

[To] create its eleven examples for its ‘Irregular Patterns’ posting, Hayman 

Capital extracted from a much larger table, within UDF IV’s 10-K filing, that 

disclosed the data for UDF V’s cash receipts; specifically, Hayman Capital 

extracted loans that were not generating cash receipts while omitting 

dozens of loans that were generating cash receipts, as shown on the 10-K 

from which Hayman Capital sourced its data.”

 In his affidavit, Greenlaw averred that Centurion was not insolvent, it 

was able to service its debt and interest expense, and it had repaid “hundreds 

of millions of dollars [of loans] to UDF.”

 In his affidavit, Moayedi averred, “Centurion has had no involvement in 

any Ponzi scheme” and “UDF is a legitimate business and it is not a Ponzi 

scheme.” Moayedi further averred that Centurion was not insolvent, and 

UDF’s loans to Centurion generated cash by repaying principal and accrued 

interest when a project was completed and sold. 

 Centurion’s CEO, UDF’s CEO and Kitchens all attested that UDF’s 

loans to Centurion “were market rate.”

 In her affidavit, Brown averred that Hayman’s allegations were “not 

consistent with [her] experience with and knowledge of UDF’s business,” 

and that she “regularly reviewed UDF’s collateral and related project 
–35–

developments and found the collateral to be sound and the project 

developments to be consistent with what would be expected of any 

comparable borrower.”

 A letter to the SEC from Whitley Penn confirmed that it stood by its 

audits of UDF and that it had no disagreements with UDF “on any matters of 

accounting principles or practices, financial statement disclosure of auditing 

scope or procedure.”

Considering the pleadings and evidence in a light most favorable to UDF, the nonmovant, 

Dyer, 573 S.W.3d at 424, we conclude that UDF met and exceeded its burden to point to clear and 

specific evidence establishing a prima facie case that Hayman’s disparaging statements about 

UDF’s business were false.

Actual Malice

Having concluded that UDF satisfied its burden to establish a prima facie case that 

Hayman’s internet posts were false, we now turn to Hayman’s contention that UDF failed to point 

to clear and specific evidence establishing a prima facie case of actual malice. UDF responds that 

the actual malice standard does not apply because it is not a general-purpose public figure, and, in 

any case, its pleadings establish a prima facie case of actual malice. For purposes of this 

interlocutory appeal, we assume—without deciding—that UDF is a general-purpose figure, 

because we agree that UDF established a prima facie case of actual malice.

To establish actual malice, UDF must show that a defamatory statement was published 

either with knowledge of its falsity or with reckless disregard as to its truth. See Hearst Corp. v. 

Skeen, 159 S.W.3d 633, 637 (Tex. 2005) (per curiam). The standard for reckless disregard is 

subjective and focuses on the conduct and state of mind of the defendant. Bentley v. Bunton, 94 

S.W.3d 561, 591 (Tex. 2002). Reckless disregard requires more than mere negligence or “a 

departure from reasonably prudent conduct.” Id. (quoting Harte–Hanks Comms., Inc. v. 

Connaughton, 491 U.S. 657, 688 (1989)). It requires evidence that the defendant “entertained 

serious doubts as to the truth of the article at the time it was published” and had a “high degree of 
–36–

awareness” of the probable falsity of the statements. Id. (quoting Harte–Hanks, 491 U.S. at 688). 

Recklessness also “may be found where there are obvious reasons to doubt the veracity of the 

informant or the accuracy of his reports.” Bentley, 94 S.W.3d at 596.

While profit motive, alone, is not sufficient to establish actual malice, it is a relevant factor 

to be considered together with other factors in a determination of actual malice. See Hearst Corp.,

159 S.W.3d at 639 (“A lack of care or an injurious motive in making a statement is not alone proof 

of actual malice, but care and motive are factors to be considered.”) (citing Bentley, 94 S.W.3d at 

596). Moreover, a plaintiff can establish actual malice when the defendant purposefully avoids 

the truth. See Hearst Corp., 159 S.W.3d at 637–38.

A defendant’s state of mind “can—indeed, must usually—be proved by circumstantial 

evidence.” Bentley, 94 S.W.3d at 596; see also Lipsky, 460 S.W.3d at 584 (concluding “clear and 

specific evidence” under the TCPA “includes relevant circumstantial evidence”). Proof of actual

malice is not defeated by a defendant’s self-serving protestation of sincerity. Bentley, 94 S.W.3d 

at 596. And the evidence must be viewed in its entirety. Id.

Here, the parties’ arguments respecting actual malice revolve, in part, around their differing 

characterizations of the quality of Hayman’s investigation before publication of its alleged false 

statements. Hayman insists it “spent approximately a year researching a wide variety of sources,” 

and UDF “fail[ed] to establish” that Hayman did not “honestly believe” that the gist of its

statements was true. Hayman also professes it, “at most[,] ‘drew different conclusions’ from 

publicly-available sources,” and UDF’s claims are no more than a disgruntled quarrel with 

Hayman’s “interpretation” of the facts.

Conversely, UDF claims Hayman’s plan from the outset was to look for and publish only 

those facts designed to effectuate a nosedive of UDF’s stock price. To that end, Hayman 

purposefully avoided facts that did not support its plan to profit from the extraordinary short 
–37–

positions it took against UDF—a company that “had consistently traded in a narrow range of low 

volume” and “pretty much flew below the radar” before Hayman’s posts. See id. (explaining that 

actual malice occurs when a party purposefully avoids the truth, avoids sources to verify its 

allegations, or bases a statement on obviously dubious information.) In its response to Hayman’s 

motion to dismiss, UDF argued:

 Hayman’s posts were part of a “master plan to profit more than $85 

million dollars from the demise of UDF, as well as to profit from shorting 

other stocks [Hayman] believed would crash along with UDF.”

 In addition to taking out a $59 million short position in UDF IV, Hayman 

“had a detailed plan to push all UDF entities into bankruptcy and buy their 

bank debt and assets at a discount,” with “expect[ed] gross returns of $50 to 

$90 million” resulting in “total fees to [Hayman Capital] of $15–25 

million.”23

According to UDF, public information Hayman claims to have thoroughly reviewed and 

relied upon, including statements in UDF’s SEC filings, contradicted Hayman’s accusations and 

evinces Hayman’s actual malice. In his affidavit, Kitchens averred:

Material that Hayman Capital identifies as being part of its review actually 

contradicts its false statements . . . . For example, UDF’s SEC filings show 

that its cash receipts on development projects were steadily increasing, which 

is inconsistent with a Ponzi scheme. Hayman Capital disregarded this 

evidence that UDF’s business was not a Ponzi scheme and instead made 

statements asserting that UDF’s business was not generating cash receipts.

Likewise, Greenlaw averred that Hayman’s statements that Centurion was insolvent and unable to 

pay UDF’s loans are contradicted by UDF IVs public filings, which establish that Centurion made 

significant cash payments.

Greenlaw also attested that public information contradicted Hayman’s statements that 

UDF’s former auditor resigned because of a disagreement with UDF regarding UDF’s financial 

reporting.

 

23 See Hearst Corp., 159 S.W.3d at 639 (injurious motive is “not alone proof of actual malice,” but is among the 

“factors to be considered”).
–38–

[Hayman’s] premise that Whitley Penn’s decision not to stand for 

reappointment was evidence of fraud is directly contradicted by Whitley 

Penn’s November 24, 2015 letter to the SEC which states that its decision 

had nothing to do with any disagreements with UDF, and that Whitley Penn 

stood by UDF’s financial statements that Whitley Penn previously audited.

It is not incumbent upon this Court to decide whether Hayman’s statements were actually 

false to resolve this appeal. UDF can prevail here if there is some evidence Hayman published its 

posts and statements with actual malice. See Hearst Corp., 159 S.W.3d at 637. Hayman employed 

sensationalized, attention-grabbing headlines raising the specter of a billion dollar Ponzi scheme 

that was about to implode, supporting a rational inference that Hayman wanted to draw traffic and 

attention to its posts:

 “PARTICIPANTS IN UDF’s PONZI-LIKE REAL ESTATE 

SCHEME”

 “Shareholders in UDF IV and UDF’s other [REITs] are being 

victimized by UDF management’s Ponzi-like real estate scheme”

 “United Development Funding (UDF) One Example of Many: How 

The Scheme Works, from One UDF Fund to the Next”

 “THE UDF STRUCTURE IS A BILLION DOLLAR PROBLEM”

 “CRACKS IN UDF’S FAÇADE ARE STARTING TO SHOW”

 “ANATOMY OF A BILLION DOLLAR HOUSE OF CARDS THE 

CASE AGAINST UDF IV”

The body of Hayman’s posts buttressed its headlines with accusations and photographs 

purporting to show that UDF was a Ponzi scheme on the verge of collapse and its stock could go 

to zero: “UDF faces significant bankruptcy risk, which would leave its shares virtually

worthless,” “The research on this website exposes how a Texas real estate developer built a billion 

dollar house of cards and why it is now on the verge of collapse.”

Hayman’s initial anonymous posts on a website it created using a false name further 

indicate its state of mind. UDF offered sufficient evidence to support a fact finding that Hayman 

did not want to be identified as the publisher of the posts challenging the legitimacy and legality 
–39–

of UDF’s business so that its statements would be more certain to plunge UDF’s stock value, 

resulting in a huge profit to Hayman, which, in fact, is what happened. See Croft, 175 S.W.3d at 

463. UDF’s petition alleges:

Between October 19, 2016 and October 27, 2016, upon information and 

belief, [Hayman] closed out the vast majority of their short positions in UDF 

IV, purchasing the shares as low as $1.00. Given that, upon information and 

belief, [Hayman] took out a short position of approximately 4 million shares 

when UDF IV was trading over $17, [Hayman] would have profited up to 

$16 per share on this position . . . for a profit of more than $60 million.

UDF adduced clear and specific evidence that public information, including information 

Hayman claims to have researched and reviewed, contradicted many of Hayman’s statements and 

was inconsistent with Hayman’s overall narrative that UDF was a Ponzi scheme and an 

illegitimate, worthless business that was colluding with Centurion to bilk gullible investors. At 

the least, this is circumstantial evidence that Hayman purposefully avoided the truth and posted its 

statements subject of this lawsuit with reckless disregard for the veracity of its individual 

statements as well as the gist of the entirety of its publications. See Lipsky, 460 S.W.3d at 594 

(even if individual statements are not actionable, the gist “depends on a reasonable person’s 

perception of the entirety of a publication and not merely on individual statements”) (quoting 

Bentley, 94 S.W.3d at 579).

This evidence supports a rational inference that Hayman intended to interfere with UDF’s 

economic interests by publishing and disseminating unconfirmed, false, and derogatory statements 

about UDF’s business that were almost certain to have a severe negative impact on UDF’s current 

and prospective business and on UDF’s stock value; and Hayman deliberately distorted facts, 

omitted facts contrary to its “story,” and purposefully avoided discovering facts that might show 

the falsity of its accusations. See Hearst Corp., 159 S.W.3d at 637—39.
–40–

We conclude that UDF met its burden under the TCPA to point to clear and specific 

evidence establishing that Hayman’s allegedly false and disparaging statements about UDF’s 

business were made with actual malice.

Causation of UDF’s Damages

Hayman argues UDF failed to state a prima facie case that its statements and actions were 

the proximate cause of UDF’s alleged damages. According to Hayman, “[UDF has] not pointed 

to any evidence to suggest that it was [Hayman’s] posts, and not the other concerning news around 

the same time, that were the proximate cause of the loan restructurings, loss of credit and other 

damages that [UDF has] alleged.” Bass, however, admitted in his affidavit that “Hayman directed 

its statements” about UDF’s business “to the public marketplace,” and he intended this “critical 

information” to reach “stakeholders including investors, financial institutions, lenders, auditors, 

and investigative authorities related to a matter of public concern, notwithstanding Hayman having 

a financial interest in the situation.”

In response, UDF points to prodigious fact allegations in its petition and affidavits 

illustrating how Hayman’s alleged false statements caused direct pecuniary and economic losses 

to UDF—“evidence [that] goes much further than in most anti-SLAPP appeals.”

A TCPA non-movant is not required to adduce all of the evidence that it would or could 

present at trial as to the existence of damages or the amount or constituent parts of its damages. 

See Lipsky, 460 S.W.3d at 590–91 (pleadings and evidence showing factual basis for claim is 

sufficient to meet TCPA burden). UDF was only required to adduce evidence supporting a rational 

inference as to the existence of its damages. Id. at 590 (TCPA non-movant only required to adduce 

evidence supporting rational inference that fact allegations are true). UDF has gone much further 

than necessary.
–41–

In affidavits attached to its response to Hayman’s motion to dismiss, UDF witnesses as 

well as third-party business partners, customers, lenders, and a forensic accounting expert attested 

to the damages sustained by UDF. Greenlaw averred that UDF incurred fees and expenses for 

attorneys, law firms, accountants, and other professionals for specified services required as a result 

of the fallout from Hayman’s statements, including increased insurance and accounting expenses, 

legal bills submitted by banks for research conducted to confirm their collateral, and attorney’s 

fees in connection with modifications to loan agreements lenders required as a direct result of 

Hayman’s attack. See Waste Mgmt. of Tex., Inc. v. Tex. Disposal Sys. Landfill, Inc., 434 S.W.3d 

142, 161 (Tex. 2014) (special damages recoverable for business disparagement claim includes outof-pocket expenses, such as consultant expenses, to remedy effects of disparaging publication).

Greenlaw detailed a number of specific examples of UDF’s loss of credit, loss of access to 

credit, and modification of UDF’s loan agreements—including with Legacy Texas Bank, Origin 

Bank, and Independent Bank—directly resulting from Hayman’s statements and actions. 

Greenlaw attested that UDF lost investor capital as a direct result of Hayman’s statements, 

including a planned $1 billion capital raise. Greenlaw averred that as a direct result of Hayman’s 

statements, “several True Homes projects in UDF’s pipeline in December 2015” fell through; UDF 

lost Centurion development projects, including “Mercer Crossing”—which Moayedi confirmed in 

his affidavit; and other clients “looking to do more projects with UDF,” such as David Weekley 

Homes, “ceased doing business” with UDF.

Brown from Legacy Texas Bank, Christofferson from Berthel, Strub from H&S, and De 

Pol from Nationwide all averred that as a direct result of Hayman’s statements—particularly 

Hayman’s charges that UDF was a Ponzi scheme and not a genuine real estate business, UDF was 

not generating legitimate returns, and Whitley Penn and UDF were concealing known reportable 

events—they halted and ceased conducting business with UDF; they canceled planned projects 
–42–

with UDF; they canceled pending sales tickets with UDF; they terminated revolving lines of credit 

with UDF; and they terminated outstanding loans with UDF. Their affidavits were supported by 

copies of contracts, agreements, modifications to contracts and agreements, termination of 

agreements, cancelation of customer orders, and correspondence memorializing modifications, 

cancelations, and terminations of orders, agreements, and contracts.

UDF did not make mere general averments as to its alleged damages proximately caused 

by Hayman’s statements. To the contrary, UDF described its damages with specificity, naming 

the parties to and the terms of the contracts and agreements, stating the value of the contracts and 

agreements, and providing the amount of damages UDF sustained. UDF backed up its damages 

claims with affidavits and documentary evidence. When we consider the evidence described 

above in a light favorable to UDF, the non-movant, as we are required to do, that evidence is 

sufficient to support a rational inference that UDF sustained damages as a direct result of 

Hayman’s false and misleading statements about UDF’s business.

We conclude UDF more than met its burden to adduce clear and specific evidence 

establishing a prima facie case that Hayman’s false and disparaging statements proximately caused 

UDF damages and losses.

Business Disparagement

To prevail on a business disparagement claim, a plaintiff must establish: (1) the defendant 

published false and disparaging information about the plaintiff, (2) with malice, (3) without 

privilege, (4) that resulted in special damages to the plaintiff. Lipsky, 460 S.W.3d at 592. Hayman 

argues the trial court erred by not dismissing UDF’s business disparagement claim because UDF 

failed to point to clear and specific evidence showing Hayman (1) made a false statement, (2) acted 

with actual malice, or (3) caused UDF’s damages.
–43–

As explained, supra, we conclude UDF satisfied its burden under the TCPA to provide 

clear and specific evidence establishing that Hayman made a false statement with actual malice 

that proximately caused UDF’s alleged damages and losses. We resolve Hayman’s first, second, 

and third issues against it.

Tortious Interference with Contract

To prevail on a claim for tortious interference with contract, a plaintiff must establish: 

(1) an existing contract subject to interference, (2) a willful and intentional act of interference with 

the contract, (3) that proximately caused the plaintiff’s injury, and (4) caused actual damages or 

loss. Prudential Ins. Co. of America v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000). 

Hayman argues the trial court erred in denying its motion to dismiss because UDF failed to point 

to clear and specific evidence establishing Hayman (1) acted with actual malice, (2) interfered with 

any existing contracts, or (3) caused UDF’s damages.

In the trial court, Hayman did not raise its argument on appeal that it did not interfere with 

UDF’s “existing” contracts. Hayman therefore waived that issue for appellate review. See TEX.

R. APP. P. 33.1; Knapp v. Wilson N. Jones Mem’l Hosp., 281 S.W.3d 163, 170 (Tex. App.—Dallas 

2009, no pet.). As explained, supra, we conclude UDF satisfied its burden under the TCPA to 

provide clear and specific evidence establishing that Hayman acted with actual malice and 

proximately caused UDF’s alleged damages and losses. We resolve Hayman’s fourth issue against 

it.

Tortious Interference with Business Relationships

and

Conspiracy

To prevail on a claim of tortious interference with business relationships, a plaintiff must 

show: (1) there was a reasonable probability that the parties would have entered into a business 

relationship, (2) the defendant committed an independently tortious or unlawful act that prevented 
–44–

the relationship from occurring, (3) the defendant acted with a conscious desire to prevent the 

relationship from occurring or knew the interference was certain or substantially certain to occur 

as a result of the conduct, and (4) the plaintiff suffered actual harm or damages as a result of the 

defendant’s interference. Coinmach Corp. v. Aspenwood Apt. Corp., 417 S.W.3d 909, 923 (Tex. 

2013).

Hayman argues the trial court erred in denying its motion to dismiss UDF’s claim for 

tortious interference with business relationships “for all the reasons . . . [UDF has] not stated a 

prima facie claim for business disparagement.” Likewise, Hayman argues the trial court erred in 

denying its motion to dismiss UDF’s claims for conspiracy to commit the aforementioned causes 

of action “because [UDF has] not established a prima facie case on any other claim.”

Because we conclude UDF stated a prima facie case for business disparagement, we also 

conclude UDF satisfied its burden to provide clear and specific evidence establishing a prima facie 

case for its tortious interference with business relationships claim. Likewise, because we conclude 

UDF stated a prima facie case for its claims for business disparagement, tortious interference with 

contract, and tortious interference with business relationships, we conclude UDF satisfied its 

burden under the TCPA to provide clear and specific evidence establishing a prima facie case for 

its conspiracy claims. We resolve Hayman’s fifth issue against it.

Post-Hearing Evidence 

In its sixth issue, Hayman contends the trial court erred in striking evidence attached to 

Hayman’s post-hearing brief. According to Hayman, the stricken evidence “rebutted eight 

inaccurate factual statements made by [UDF’s] counsel” at the hearing on Hayman’s motion to 

dismiss.

Section 27.005 of the TCPA provides that “[t]he court must rule on a motion under Section 

27.003 not later than the 30th day following the date of the hearing on the motion.” TEX. CIV.
–45–

PRAC. & REM. CODE ANN. § 27.005(a). This deadline is mandatory and gives the trial court no 

discretion to grant extensions of time. Avila v. Larrea, 394 S.W.3d 646, 656 (Tex.App.—Dallas 

2012, pet. denied); see also Direct Commercial Funding, Inc. v. Beacon Hill Estates LLC, 407 

S.W.3d 398, 401 (Tex. App.—Houston [14th Dist.] 2013, no pet.). The trial court’s only options 

are to rule to dismiss or not dismiss the legal action. Avila, 394 S.W.3d at 656. Hayman’s 

proferred reason for its post-hearing submission of evidence, i.e. the Supplemental Bass 

Declaration, without leave of the trial court, was to rebut statements made by UDF’s counsel at 

the hearing.

The trial court did not grant Hayman leave to make the late filing. The following exchange 

occurred at the hearing:

The Court: [So] here’s my question. I had really already reached a ruling 

before the amended brief was filed. You didn’t file another affidavit, did you.

[Hayman’s counsel]: We did. We filed a brief affidavit of Kyle Bass with 

our supplemental briefing.

The Court: Okay. I’m going to strike that. I did not ask for any additional 

evidence when you were here. . . . I don’t allow new evidence to come in 

after a hearing on something like this. I would never finish, especially when 

there’s a deadline on my ruling.

* * * *

[Hayman’s counsel]: . . . . It’s the TCPA, which doesn’t have any preclusion 

against filing a supplemental briefing[.]

The Court: I’m not talking about the briefing. I’m talking about the affidavit 

because I had already considered all the evidence. And I never had anybody 

file an evidentiary affidavit after a very extensive hearing. . . . [S]o then what 

would occur would be [UDF’s counsel] would then probably have to file 

additional affidavits, and [then] I wouldn’t be able to rule on it by the time of 

my deadline.

* * * *

The Court: . . . . [I] do have deadlines on this [TCPA motion to dismiss], so 

it’s even more important that there be a deadline on the evidence. . . . So this 

came as a complete surprise to the Court.
–46–

[UDF’s counsel]: And to us.

The trial court confirmed that it had “30 days after the hearing [was] held” to rule on 

Hayman’s motion to dismiss. Hayman’s counsel verified, “The hearing [on the motion to dismiss] 

had to be held before May 25.” The trial court stated, “[f]or the record I was given . . . nine three 

ring binders of information to look at, and I can’t just keep on adding to it and get a ruling out. So 

I’m going to strike the additional evidence.”24

We conclude the trial court did not abuse its discretion in striking Hayman’s post-hearing 

evidence from the record.

We resolve Hayman’s sixth issue against it. We affirm the trial court’s order.

Whitehill, J., concurring without opinion.

180752F.P05

 

24 In any event, this was merely rebuttal evidence to UDF’s prima facie evidence. As such, we do not consider it. 

See Apple Tree Café Touring, Inc., 2017 WL 3304641, at *2.

/Ken Molberg/

KEN MOLBERG

JUSTICE
–47–

Court of Appeals

Fifth District of Texas at Dallas

JUDGMENT

J. KYLE BASS, ET AL., Appellants

No. 05-18-00752-CV V.

UNITED DEVELOPMENT FUNDING, 

L.P., ET AL., Appellees

On Appeal from the County Court at Law 

No. 3, Dallas County, Texas

Trial Court Cause No. CC-17-06253-C.

Opinion delivered by Justice Molberg. 

Justices Whitehill and Reichek 

participating.

In accordance with this Court’s opinion of this date, the order of the trial court denying 

appellees’ motion to dismiss is AFFIRMED.

It is ORDERED that appellees UNITED DEVELOPMENT FUNDING, L.P., ET AL. 

recover their costs of this appeal from appellants J. KYLE BASS, ET AL.

Judgment entered this 21st day of August, 2019.