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IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

SAN ANTONIO DIVISION

CARNEGIE TECHNOLOGIES, LLC, 

PLAINTIFF,

 Plaintiff,

vs.

TRILLER, INC., DEFENDANT,

 Defendant.

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SA-20-CV-00271-FB

REPORT AND RECOMMENDATION AND ORDER

OF UNITED STATES MAGISTRATE JUDGE

To the Honorable United States District Judge Fred Biery:

This Report and Recommendation concerns Plaintiff Carnegie Technologies, LLC’s 

Motion for Summary Judgment [#33] and Defendant’s Motion for Leave to File Limited Answer 

[#60]. All dispositive pretrial matters in this case have been referred to the undersigned for 

disposition pursuant to Western District of Texas Local Rule CV-72 and Appendix C [#18]. The 

undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). In 

issuing this report and recommendation, the undersigned has also considered the following 

responses and replies thereto [#35, #36, #39, #40, #41, #42, #43, #44, #45, #61, #63]. For the 

reasons set forth below, it is recommended that Plaintiff’s Motion for Summary Judgment be 

GRANTED and Defendant’s Motion for Leave to File Limited Answer be DENIED. 

In making this recommendation, the undersigned has also resolved Defendant’s 

evidentiary objections to Plaintiff’s summary judgment evidence. The undersigned has authority 

to enter an order on the objections pursuant to 28 U.S.C. § 636(b)(1)(A). 

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I. Procedural Background

This case is a breach of contract action between Plaintiff Carnegie Technologies, LLC 

(“Carnegie Technologies”) and its affiliate, Defendant Triller, Inc. (“Triller”). Carnegie 

Technologies’ Original Complaint alleges that it provided Triller certain administrative services 

pursuant to an Administrative Services Agreement dated December 1, 2017, but that Triller was 

unable to pay for the services. (Compl. [#1] at ¶ 5.) The Complaint alleges that Triller was 

purchased by a third party in 2019, and the parties executed an Amended and Restated 

Administrative Services Agreement on September 9, 2019. (Id. at ¶ 6.) In connection with the 

transaction, Triller signed a Promissory Note payable to Carnegie Technologies in the amount of 

$4,280,109. (Id. at ¶ 7.) 

Carnegie Technologies contends that it made a written demand to Triller for payment of 

the past-due invoices in an amount of $339,284.53 on January 10, 2020, and gave Triller 30 days 

to make payment. (Id. at ¶ 10.) According to Carnegie Technologies, no payment has been 

received; Triller is in default as to the unpaid invoices; and Carnegie Technologies has 

accelerated payment of the unpaid principal amount and interest due under the Promissory Note. 

(Id. at ¶ 11.) 

Carnegie Technologies filed this suit on March 5, 2020, to recover the amounts due under 

the Services Agreement and Promissory Note. The Complaint asserts causes of action for breach 

of the parties’ Services Agreement and for suit on the Promissory Note. (Id. at ¶¶ 13–18.) Soon 

after the suit was filed, Triller moved to dismiss Carnegie Technologies’ Complaint for failure to 

state a claim pursuant to Rule 12(b)(6) based on the affirmative defense of novation. In the 

motion, Triller argued that documents incorporated by reference into the Promissory Note 

attached to Carnegie Technologies’ Complaint establish as a matter of law that Triller’s debt was 

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transferred and assigned to a subsidiary of a sister company of Carnegie Technologies, Triller 

Legacy, and that this assignment constitutes a novation extinguishing any contractual obligation 

of Triller under the Promissory Note. The Court denied the motion, concluding that Triller had 

not established its affirmative defense as a matter of law on the face of the agreements before the 

Court because the assignment did not specifically discharge or release Triller of its contractual 

obligations.

Carnegie Technologies thereafter filed the motion for summary judgment that is the 

subject of this report and recommendation. In the motion, Carnegie Technologies argues that it 

is entitled to judgment as a matter of law and is entitled to damages under the Services 

Agreement and the Note. 

After Carnegie Technologies filed its motion for summary judgment, Triller moved to 

compel arbitration, arguing that multiple written agreements executed in connection with the 

Triller sale and these agreements contain arbitration provisions that govern the parties’ dispute in 

this case. The Court denied the motion, concluding that the contracts that were executed 

between Carnegie Technologies and Triller (the Services Agreement and Promissory Note) do 

not contain arbitration provisions and Triller had failed to establish that the parties to this suit 

intended and agreed to arbitrate the claims at issue in this suit or that the related contracts 

containing the arbitration provisions required arbitration of Carnegie Technologies’ claims. 

After the Court denied the motion to compel, Triller filed the motion for leave to file a 

limited answer, which is also before the Court. By this motion, Triller asks the Court to extend 

the deadline to file a limited answer in order to assert the additional affirmative defense of 

illegality and to formalize Triller’s already briefed affirmative defense of novation, as Triller 

neglected to file an answer in this case. 

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Both Carnegie Technologies’ motion for summary judgment and Triller’s motion for 

leave to file a limited answer are ripe for review. Carnegie Technologies’ motion for summary 

judgment was filed on November 11, 2020, soon after the Court denied Triller’s motion to 

dismiss based on the defense of novation. At the time the motion was filed, there were 

approximately three months left in the discovery period. Triller’s response to the motion argued 

that the motion was premature because meaningful discovery had yet to take place. 

This argument is now moot. The discovery period has now been closed since February 

22, 2021. (Scheduling Order [#28].) The day after discovery closed, Triller asked the Court to 

extend the discovery deadline so that it could obtain certain documents and communications 

between various parties involved in the negotiation of the Triller 2019 transaction. (Motion to 

Compel [#46].) Triller attempted to convince the Court that these documents could evidence the 

parties’ intent to discharge Triller from its obligations under the Promissory Note, prove its 

novation defense, and defeat Carnegie’s motion for summary judgment. The Court denied the 

motion, finding that the internal communications at issue could not establish the requisite intent 

to extinguish the Note and completely release Triller’s obligations under it, as the parties’ written 

agreements were controlling. (Order [#57].) The parties have had ample time to complete any 

relevant discovery and to brief the Court fully on the issues raised in Carnegie’s motion for 

summary judgment. 

II. Carnegie Technologies’ Motion for Summary Judgment

Carnegie Technologies moves for summary judgment on its claim of breach of contract

on the parties’ Services Agreement and for its suit on the Promissory Note, arguing that it is

entitled to judgment as a matter of law against Triller and to damages under both the Agreement

and the Note. The motion should be granted.

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A. Summary Judgment Standard

Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure

only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together

with the affidavits, if any, show that there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S.

317, 322 (1986); see also Fed. R. Civ. P. 56(c). A dispute is genuine only if the evidence is such

that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). 

Once the movant carries its burden, the burden shifts to the nonmoving party to establish

the existence of a genuine issue for trial. Anderson, 477 U.S. at 248; Matsushita Elec. Indus.

Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Wise v. E.I. Dupont de Nemours &

Co., 58 F.3d 193, 195 (5th Cir. 1995). The non-movant must respond to the motion by setting

forth particular facts indicating that there is a genuine issue for trial. Miss. River Basin Alliance

v. Westphal, 230 F.3d 170, 174 (5th Cir. 2000). The parties may satisfy their respective burdens

by tendering depositions, affidavits, and other competent evidence. Topalian v. Ehrman, 954

F.2d 1125, 1131 (5th Cir. 1992). The Court will view the summary judgment evidence in the

light most favorable to the non-movant. Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993). 

“After the non-movant has been given the opportunity to raise a genuine factual issue, if

no reasonable juror could find for the non-movant, summary judgment will be granted.” 

Westphal, 230 F.3d at 174. However, if the party moving for summary judgment fails to satisfy

its initial burden, the motion must be denied, regardless of the nonmovant’s response. Little v.

Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).

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B. Objections to Summary Judgment Evidence

Triller has filed objections to Carnegie Technologies’ summary judgment record. (See

Objections [#42].) Triller objects to numerous paragraphs of the Declaration of Karen Leger, the

Controller of Carnegie Technologies. (Leger Decl. [#33-1].) Triller argues that Ms. Leger lacks

foundation or personal knowledge to make the statements contained in her Declaration and that

the probative value of her statements is substantially outweighed by the considerations set forth

in Rule 403 of the Federal Rules of Evidence—unfair prejudice, confusing the issues, and

wasting time. (Objections [#42].) Triller’s objections are for the most part without merit. 

Rule 103 of the Federal Rules of Evidence requires a party objecting to evidence to state

the reasons for the objection with specificity. Fed. R. Evid. 103(a)(1). Triller’s objections fail to

do so. The objections are not in the form of a memorandum containing legal argument regarding

Triller’s concerns about the various portions of Ms. Leger’s Declaration. Triller merely provides

the Court with a chart with quoted excerpts from Ms. Leger’s Declaration and a bulleted list of

objections with citations to various rules of evidence. The chart lacks any explanation as to how

the cited rule of evidence applies to the declaration excerpt, and the logical connection between

the two is far from clear in most instances. 

For example, Triller objects to Paragraph 2 of Leger’s Declaration for lack of foundation/

knowledge and the risk of undue prejudice. Paragraph 2 states the following:

I am the Controller of Carnegie Technologies, LLC (“Carnegie

Technologies Technologies”). My duties include overseeing accounts and

finances of Carnegie Technologies’ affiliates, including Denali Digital

Media, LLC (“Denali Digital Media”), and Triller Legacy, LLC (“Triller

Legacy”). I am an authorized representative of Carnegie Technologies

and, as such, I am authorized to make this declaration on behalf of the

company.

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(Leger Decl. [#33-1] at ¶ 2.) This paragraph provides Ms. Leger’s title and duties. Triller does

not explain why Ms. Leger would not have personal knowledge of these matters, such that her

declaration runs afoul of Federal Rule of Evidence 602. See Fed. R. Evid. 602 (“A witness may

testify to a matter only if evidence is introduced sufficient to support a finding that the witness

has personal knowledge of the matter.”). 

Triller similarly objects to Paragraphs 3 and 4 of the Declaration, in which Ms. Leger

describes the relationship between Carnegie Technologies and Triller both before and after the

sale of Triller in 2019. Ms. Leger states that “Denali Digital Media initially acquired . . . Triller

in late 2017” and that since the acquisition Carnegie Technologies “has provided administrative

services to Triller pursuant to an Administrative Services Agreement dated December 1, 2017.” 

(Leger Decl. [#33-1] at ¶ 3.) Ms. Leger describes the types of services provided by Carnegie

Technologies to Triller and states that “Triller recorded liability on its books for these services

but did not have the ability to pay its debt in cash.” (Id.) Ms. Leger goes on to describe the

October 2019 sale of Triller in which “a third party acquired majority ownership and control” of

the company and the execution of the Amended and Restated Administrative Services

Agreement.” (Id. at ¶ 4.) Again, aside from generally asserting that Ms. Leger lacks foundation

and personal knowledge and questioning the probative value of these statements, Triller has not

provided the Court with any explanation for the basis of these objections. 

The objections continue like this, challenging almost every single paragraph of the Leger

Declaration, without explanation or apparent legal basis. The objections even challenge Ms.

Leger’s authentication of various documents at issue in this case, some of which are attached to

Triller’s response to Carnegie Technologies’ motion for summary judgment, such as the

Contribution and Purchase Agreement for the 2019 sale of Triller. The Court is unclear the

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precise basis of Triller’s objection that the probative value of these documents is outweighed by

the danger of undue prejudice or how Ms. Leger lacks foundation to authenticate these

documents, the authenticity of which does not even seem to be at issue. 

The objections also contain reference to a “Motion to Set Aside Default and Default

Judgment and for Leave to Defend the Action,” where there are no such motions pending before

the Court or filed at any time in this case. It is possible that these objections were filed in some

other related proceeding involving the parties and that Triller failed to thoroughly edit them for

the purpose of their use here.

There are, however, a few narrow objections that the Court will sustain. In Paragraph 5,

Ms. Leger states that “it was clear to all parties to the transaction that the debt accrued by Triller

under the Services Agreement would not be forgiven or otherwise extinguished.” (Id. at ¶ 5.) 

Leger does not have personal knowledge of Triller’s point of view as to the debt at the time of

the 2019 sale. The Court will disregard this statement in so far as it purports to represent what

was clear to anyone other than Ms. Leger or her company in evaluating Carnegie Technologies’

summary judgment motion.

Additionally, the Court will disregard certain statements in Paragraphs 7 and 9 of Leger’s

Declaration that are legal conclusions. For example, Leger states that ‘[t]he assignment [of the

Promissory Note to Triller Legacy, LLC] did not serve to release Triller from liability under the

Note.” (Id. at ¶ 7.) She also states that “[f]ailure to pay the amounts due under the invoices was

a material breach of the Services Agreement and constituted an Event of Default under the

Note.” These are legal conclusions material to Carnegie Technologies’ claims for breach of

contract and suit on the Promissory Note. Thus, these are issues for the Court to decide. 

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The Court will overrule all of Triller’s other objections for failure to state them with the

specificity required under the Federal Rules of Evidence. 

C. Summary Judgment Record

Having resolved the evidentiary issues raised by Triller, the summary judgment record

establishes the following undisputed facts. Triller is the owner of certain valuable social media

application, referred herein as the Triller App. (Lu Decl. [#35-1] at ¶ 2.) Until October 2019,

Triller was owned by an investment group that included Carnegie Technologies, Triller Legacy,

and others. (Id.)

Carnegie Technologies historically provided administrative services to Triller pursuant to

an Administrative Services Agreement dated December 1, 2017. (Leger Decl. [#33-1] at ¶ 3.) 

These services included payroll, accounting services, and other management and administrative

services. (Id.) Triller recorded a liability on its books for these services but did not have the

ability to pay its debt in cash. (Id.) 

In October 2019, a third party—Triller Hold Co, LLC—acquired majority ownership and

control of Triller for approximately $27,800,000. (Id. at ¶ 4; Purchase Agreement [#33-5] at 2–

20; Gura Decl. [#35-4] at ¶ 3; Lu Decl. [#35-1] at ¶ 2.) In anticipation of the closing, Carnegie

Technologies and Triller executed an Amended and Restated Administrative Services

Agreement, which addressed Carnegie Technologies’ continued assistance to Triller during the

transition period.1 (Leger Decl. [#33-1] at ¶ 4; Services Agreement [#33-2] at 2–19.) On the

closing date of the October 2019 transaction, Triller’s debt for administrative services was

recorded as a Promissory Note payable to Carnegie Technologies in the amount of $4,280,109. 

1

 The Services Agreement was executed on September 9, 2019. (Leger Decl. [#33-1] at 

¶ 6; Services Agreement [#33-2] at 2–19.) Due to a scrivener’s error, the Note references a 

Services Agreement dated August 29, 2019. (Leger Decl. [#33-1] at ¶ 6; Note [#33-3] at 2.) 

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(Leger Decl. [#33-1] at ¶ 5; Note [#33-3] at 2–4.) There were additional agreements executed at

the time of the sale—the Contribution and Purchase Agreement, the Limited Liability Company

Agreement of Triller HoldCo LLC, and the Management Consulting Agreement—between

related parties other than Carnegie Technologies and Triller. (Gura Decl. [#35-4] at ¶ 3;

Purchase Agreement [#33-5] at 2–20; LLC Agreement [#35-4] at 79–130; Management

Consulting Agreement [#35-4] at 153–65.) 

Contemporaneous with the closing of the October 2019 transaction, the Note payable to

Carnegie Technologies was assigned to Triller Legacy. (Gura Decl. [#35-4] at ¶ 7; Assignment

[#33-4] at 2–9.) Triller takes the position that this assignment was a novation, in that it released

all of Triller’s obligations under the Note upon the assignment. Carnegie Technologies takes the

position that the assignment did not forgive or release the debt recorded by the Note, and that

Triller remains liable for the amounts due and owing on the Note. 

During the 60-day transition period referenced in the Services Agreement, Carnegie

Technologies’ personnel provided continued services for the benefit of Triller. (Leger Decl.

[#33-1] at ¶ 8.) Carnegie Technologies determined appropriate percentages of those employees’

time and salary to allocate to Triller. (Id.) Carnegie Technologies also paid, with its own funds,

invoices for goods and services provided to Triller by outside vendors. (Id.) Carnegie

Technologies then sent invoices to Triller to both receive compensation for employee time and to

receive reimbursement for bills paid on Triller’s behalf. (Id.) Triller failed to pay the invoices. 

(Id.)

Karen Leger, Controller of Carnegie Technologies, sent a letter to Mike Lu, Chief

Executive Officer of Triller, on January 10, 2020, notifying him of Carnegie Technologies’

intent to accelerate the amount due under the Note as a consequence of the failure to pay the

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invoices due and owing under the Services Agreement. (Id. at ¶ 9; Default Ltr. [#33-8] at 2–3.) 

After Triller refused to pay the invoices, Carnegie Technologies requested its counsel to

accelerate the Note in a letter dated February 26, 2020. (Leger Decl. [#33-1] at ¶ 9; Acceleration

Ltr. [#33-9] at 2–4.) Triller has continued to refuse to pay the Services Agreement invoices and

the amount due under the Note. (Leger Decl. [#33-1] at ¶ 9.)

On April 22, 2020, Triller HoldCo and Triller Acquisition submitted an arbitration

demand in California against Triller Legacy, Carnegie Technologies, and its affiliated companies

(Carnegie Technologies Holdings, Denali Digital Media, and Denali Publishing) for intentional

misrepresentation in connection with the Triller sale. (Gura Decl. [#35-4] at ¶ 4; Arbitration

Demand [#35-4] at 199–213.) 

Carnegie contends that as of the date of Leger’s declaration (October 30, 2020), Triller

remains indebted to Carnegie Technologies in the amount of $4,280,109 in principal, plus all

overdue and unpaid interest in the amount of $457,679.50. (Leger Decl. [#33-1] at ¶ 12.) 

Carnegie also contends that Triller remains indebted to Carnegie Technologies in the amount of

$339,360.81, plus overdue and unpaid interest in the amount of $28,177.99 for transition services

provided under the Services Agreement after the closing of the October 2019 transaction. (Id. at

¶ 16; Carnegie Technologies Invoices [#33-7] at 2–4.) 

D. Analysis

This case pleads a breach-of-contract action based on the alleged breach of Triller’s 

obligations under the Amended Services Agreement and brings suit under the Promissory Note. 

As this case arises under the Court’s diversity jurisdiction, Texas law governs this action. See 

Hermann Holdings Ltd. v. Lucent Techs., Inc., 302 F.3d 552, 558 (5th Cir. 2002). Texas law 

also governs the construction of the parties’ Agreement and the Promissory Note underlying this 

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suit. (Services Agreement [#33-2] at 15, ¶ 17.10.) However, California law governs the 

construction of the Note Assignment that allegedly relieves Triller of its liability to Carnegie 

Technologies. (Assignment [#33-4] at ¶ 7.) 

i. Carnegie Technologies is entitled to summary judgment on its claim for breach of 

the Services Agreement.

Carnegie Technologies argues it is entitled to summary judgment on its claim for breach 

of the Services Agreement. The Court agrees. Texas law requires proof of the following 

elements for a breach of contract claim: (1) existence of a valid contract between the parties; (2) 

performance by the plaintiff as required by the contract; (3) defendant’s breach of the contract; 

and (4) damages suffered by the plaintiff as a result of defendant’s breach. Pathfinder Oil & 

Gas, Inc. v. Great Western Drilling, Ltd., 574 S.W.3d 882, 890 (Tex. 2019). 

There is no dispute that the Services Agreement is a valid contract executed between 

Carnegie Technologies and Triller on September 9, 2019. (Services Agreement [#33-2] at 2–19.) 

The stated purpose of the Services Agreement was for Carnegie Technologies to continue to 

provide administrative services for a period of 60 days following the termination of the Services 

Agreement by a Change of Control in the company. (Id. at 2.) These services are defined by the 

Agreement as “Tax Services, HR services, MIS Services, Accounting Support Services, and 

Management Services.” (Id. at 4.)

Triller Acquisition gained control of Triller on October 8, 2019, under the Contribution 

and Purchase Agreement. (Purchase Agreement [#33-5] at 1.) Carnegie Technologies was 

therefore required to provide the transition administrative services described in the Services 

Agreement to Triller for the following 60 days, or until December 7, 2019. Carnegie 

Technologies provided these services during the relevant time period, thereby completing its 

performance under the contract. (Leger Decl. [#33-1] at ¶ 8.) 

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Triller’s refusal to pay the past-due invoice amounts is a material breach of its obligations 

and agreements under the Services Agreement. Carnegie Technologies made a written demand 

for payment of the invoices on January 10, 2020, and gave Triller the requisite 30-day period to 

cure the breach by paying the balance of $339,284.53 plus the per diem interest rate of $92.70. 

(Default Ltr. [#33-8] at 2–3.) The letter warned Triller that if it did not receive payment in full 

for the balance under the Services Agreement by February 10, 2020, it would accelerate the 

principal balance due and owing under the Note. (Id. at 2.) 

Triller failed to pay the past-due invoices within the 30-day cure period. (Acceleration 

Ltr. [#33-9] at 2–4.) Carnegie Technologies sent Triller a letter, dated February 26, 2020, 

providing formal written notice of the acceleration of the Note due to Triller’s failure to satisfy 

its obligations under the Services Agreement, demanding payment of the full amount due and 

owing under the Note. (Id.) Triller has still failed to pay the invoices billed for the services 

provided under the Agreement. (Leger Decl. [#33-1] at ¶ 8.) Due to Triller’s failure to pay the 

amounts due, Carnegie Technologies has suffered damages. (Id. at ¶ 16.) 

Triller has not provided any summary judgment evidence to refute Carnegie 

Technologies’ evidence that it performed the services required under the Services Agreement, 

that monies are owed, that notice of default was given, and that payment was not made. 

Carnegie Technologies has therefore established that Triller has breached the parties’ Services 

Agreement and that it is entitled to summary judgment on this claim. 

ii. Carnegie Technologies has established its entitlement to enforce the Promissory 

Note.

Carnegie Technologies has also established that it is entitled to enforce the Promissory 

Note. To prevail on a motion for summary judgment to enforce a promissory note, the plaintiff 

must establish that: (1) a note exists, (2) the plaintiff is the legal owner and holder of the note, (3) 

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the defendant is the maker of the note, and (4) a certain balance remains due and owing under the 

note. Suttles v. Thomas Bearden Co., 152 S.W.3d 607, 611 (Tex. App.—Houston [1st Dist.] 

2004, no pet.). 

It is undisputed that the Promissory Note dated October 8, 2019, executed between 

Carnegie Technologies and Triller exists. (Note [#33-3] at 2.) By the Note, Triller promises to 

pay to the order of Carnegie Technologies the principal sum of $4,280,109, together with all 

interest accruing at a fixed rate of 10% per annum. (Id.) To establish the existence of the note,

the holder need only provide “[a] photocopy of the promissory note, attached to an affidavit in 

which the affiant swears that the photocopy is a true and correct copy of the original note.” 

Blankenship v. Robins, 899 S.W.2d 236, 238 (Tex. App.—Houston [14th Dist.] 1994, no writ). 

Leger has sworn that the copy of the Note is true and correct; that Carnegie is the holder of the 

Note; and that Triller is the maker. (Leger Decl. [#33-1] at ¶ 10.) 

Finally, the balance remains due and owing under the Note. The Promissory Note 

provides that an “Event of Default” gives Carnegie Technologies “the right to accelerate 

payment of the unpaid Principal Amount and all accrued, unpaid interest payable with regard to 

the Note.” (Note [#33-3] at 2–3.) The Note defines an Event of Default” as “(a) Failure by 

Triller to make any required payment of principal, accrued interest or any other amount under 

this Note when due and payable; or (b) The failure of Triller to materially comply with any of its 

obligations, agreements and covenants herein or in the Services Agreement.” (Id.)

After Triller failed to cure its default within the 30-day cure period by paying the 

outstanding invoices under the Services Agreement, Carnegie Technologies sent Triller a letter, 

dated February 26, 2020, providing formal written notice of the acceleration of the Note based 

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on Triller’s failure to comply with obligations under the Services Agreement. (Feb. 26, 2020 

Ltr. [#33-9] at 2–4.) To date, Triller has not tendered payment to Carnegie Technologies. 

Carnegie has therefore established all four elements of its suit on the Promissory Note. 

The only remaining issue before the Court is whether there is merit to Triller’s affirmative 

defense of novation. Triller argues that it is no longer liable as the maker of the Note because the 

assignment of the Note constituted a novation that released it of all of its contractual obligations. 

The Court already considered this argument at the motion-to-dismiss stage and rejected it, 

concluding that Triller had failed to prove the defense as a matter of law from the face of the 

contracts attached to or referenced by the pleadings. In its Order denying Triller’s motion to 

dismiss, the Court left open the possibility that Triller could provide additional evidence to prove 

its defense in a motion for summary judgment or at trial. 

iii. The Court will consider Triller’s novation argument despite its failure to formally 

plead the affirmative defense.

Under Texas law, a novation is an affirmative defense to a claim for breach of contract. 

Fulcrum Cent. v. Autotester, Inc., 102 S.W.3d 274, 277 (Tex. App.—Dallas 2003, no pet.). As 

previously noted, Triller never filed an answer in this case and has therefore not formally pleaded 

the affirmative defense of novation. “The failure to plead an affirmative defense generally 

results in waiver of that defense.” Garrison Realty, L.P. v. Fouse Architecture & Interiors, P.C., 

546 Fed. App’x 458, 465 (5th Cir. 2013); see also Fed. R. Civ. P. 8(c). “A court may excuse the 

failure to plead an affirmative defense, however, if the opposing party is not prejudiced.” 

Garrison Realty, 546 Fed. App’x at 465. 

Carnegie Technologies has had notice of Triller’s novation defense since the filing of 

Triller’s early motion to dismiss. It has therefore had ample opportunity to argue why the 

defense of novation does not defeat its suit on the Promissory Note and will not suffer prejudice 

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by the Court’s consideration of the defense in the context of Carnegie Technologies’ summary 

judgment motion. See Std. Waste Sys. v. Mid-Continent Cas. Co., 612 F.3d 394, 398 (5th Cir. 

2010) (excusing failure to plead affirmative defense because there was no unfair surprise or 

prejudice to opposing party). The Court will therefore excuse Triller’s failure to formally plead 

the defense and evaluate the merits of the defense, now with the benefit of a summary-judgment 

record. 

iv. Triller cannot prevail on its novation defense.

“Novation is the creation of a new obligation in the place of an old one, by which the 

parties agree that a new obligor will be substituted to perform the duties agreed upon by the old 

contract, while the original obligor is released from performing those duties.” Vandeventer v. All 

Am. Life & Cas. Co., 101 S.W.3d 703, 712 (Tex. App.—Fort Worth 2003, no pet.). 

The elements of a novation under Texas and California law are essentially the same. To 

establish a novation, the party raising the defense must prove: (1) the existence of a previous, 

valid obligation; (2) a mutual agreement of the parties to a new contract; (3) the extinguishment 

of the old contract; and (4) the validity of the new contract. RM Crowe Prop. Servs. Co., L.P. v. 

Strategic Energy, L.L.C., 348 S.W.3d 444, 448 (Tex. App.—Dallas, no pet.) (citing Vickery v. 

Vickery, 999 S.W.2d 342, 356 (Tex. 1999)); Harper v. Charter Commc’ns, LLC, No. 2:19-CV00902-WBS-DMC, 2019 WL 3683706, at *6 (E.D. Cal. Aug. 6, 2019) (citing Young v. Benton, 

21 Cal. App. 382, 384 (3d Dist. 1913)). Where a novation occurs, only the new agreement may 

be enforced. Honeycutt v. Billingsley, 992 S.W.2d 570, 576 (Tex. App.—Houston [1st Dist.] 

1999, pet. denied). 

Not every assignment constitutes a novation. See In re Trejos, 374 B.R. 210, 217 (9th 

Cir. B.A.P. 2007) (“An assignment by its very nature substitutes one entity for another as a 

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holder of rights. To hold that this substitution in and of itself constitutes a novation would be to 

hold that every assignment constitutes a novation of the underlying contract.”). The critical 

distinction between assignment and novation is the intent to completely release the original 

obligor of its obligations under the original contract. Both Texas and California law on novation 

emphasize this requirement. See Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 

342, 347 (Tex. 2006); Grand Ave. Partners, L.P. v. Goodan, 25 F. Supp. 2d 1064, 1068 (C.D. 

Cal. 1996). 

“Generally speaking, a party cannot escape its obligations under a contract merely by 

assigning the contract to a third party.” Seagull Energy E & P, 207 S.W.3d at 346–47. “Thus, as 

a general rule, a party who assigns its contractual rights and duties to a third party remains liable 

unless expressly or impliedly released by the other party to the contract.” Id. at 347. Similarly, 

under California law, to establish a complete release of the original obligor, it must “clearly 

appear” that the parties “intended to extinguish rather than merely modify the original 

agreement.” Grand Ave. Partners, 25 F. Supp. 2d at 1068 (internal citation and quotation 

omitted). See also Quicksilver Res., Inc. v. Eagle Drilling, L.L.C., No. CIV.A. H-08-868, 2009 

WL 1312598, at *8 (S.D. Tex. May 9, 2009) (“It is stated as a general rule that ‘a party to a 

contract may not, unless authorized by the other party, either in the contract itself of otherwise, 

so assign the contract as to escape liability for the performance of the acts or duties imposed 

upon him by its terms,’ but the assignor remains liable to the other party for the proper 

performance by his assignee.”) (quoting Walker v. Mills, 78 P.2d 697, 699 (Okla. 1938) (quoting 

American Jurisprudence and Corpus Juris Secundum)). 

The assignment at issue here was executed in conjunction with the October 2019 Triller 

sale and effectuates the assignment of the Promissory Note from Triller, as assignor, to Triller 

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Legacy, as assignee. (Note Assignment [#33-4].) The Assignment describes the “Intercompany 

Debt” owed by Triller to Carnegie Technologies pursuant to the Services Agreement that is 

evidenced by the Promissory Note. (Id. at 2.) The Assignment memorializes Triller’s desire “to 

assign, transfer, and convey the Note in its entirety” to Triller Legacy. (Id.) By the assignment, 

Triller Legacy “expressly assume[d] all rights, obligations, liabilities, and duties of [Triller] 

arising with respect to the Note.” (Id. at ¶ 1.) Triller Legacy specifically agreed “to perform any 

and all unperformed obligation of Assignor under and pursuant to the Note (including, without 

limitation, the obligation to pay all interest accruing on the outstanding balance of the 

Intercompany Debt after the Effective Date).” (Id.)

Triller bears the burden of proving its affirmative defense of novation. Fulcrum Cent., 

102 S.W.3d at 277. The Court already concluded, in reviewing the language of the Assignment, 

that it contains no language expressly discharging or releasing Triller of its contractual 

obligations. Triller now argues that the terms “transfer” and “convey” are not typically used in 

the assignment of contractual rights and obligations and their use is evidence of an intent to 

completely extinguish the original agreement and release Triller of its liability under the Note. 

Triller also points to the absence of language indicating that Triller would remain liable under 

the Promissory Note, principally or otherwise. Yet, Triller does not cite any legal authorities that 

support these assertions under California or Texas law. 

It may be true that novations typically include language assigning, transferring, and 

conveying contractual rights, but what is missing from the Assignment is clear language 

releasing and discharging Triller from its obligations under the Note or otherwise clearly 

expressing the shared intent of the parties to effectuate a novation. An example of such language 

would be a provision similar to the following: 

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[The Assignment] shall constitute a novation where Assignee shall assume 

all rights, liabilities, debts, and other obligations of Assignor, and 

Assignor shall be released and forever discharged from any debts, 

obligations, claim, causes of action, duties, or other demands upon it to 

perform . . . .

Almont Ambulatory Surgery Ctr., LLC v. UnitedHealth Group Inc., No. CV 14-03053 MWF, 

2018 WL 1157752, at *9 (C.D. Cal. Mar. 2, 2018). This type of language does not appear in the 

Assignment or any of the other agreements executed at the October 2019 closing.

Furthermore, an intent to release Triller from liability on the Note cannot be inferred 

from these or any of the other contracts executed at the October 2019 closing in the summary 

judgment record. The Purchase Agreement does reference the “forgiveness” of various 

intercompany debts and includes letters noting the forgiveness or repayment of these debts, but 

the Promissory Note is not among those debts listed as forgiven. (Purchase Agreement [#33-5] 

at 4, 13–19.) Section 1.6(a)(vii) of the Purchase Agreement provides that Triller Legacy would 

deliver at closing “[e]vidence of the forgiveness or assignment of the obligations of [Triller] in 

respect of the indebtedness and other accounts payable as set forth on Schedule 1.5(a)(vii).” 

(Purchase Agreement [#33-5] at 4.) Schedule 1.5(a)(vii) of the Purchase Agreement’s 

Disclosure Schedules references the forgiveness of “the August Note described on Schedule 

2.12(iv)” but does not list the October 2019 Promissory Note as forgiven. (Disclosures [#33-6] 

at 3.) Instead, Schedule 1.5(a)(vii) describes the assignment of “the Intercompany Note 

described on Schedule 2.19” to Triller Legacy. (Id.) Section 2.19 discloses the “Intercompany 

Note” as an existing liability but again does not reference the forgiveness of the Note. 

(Disclosures [#33-6] at 4.) There is no language in the Note Assignment or the Purchase 

Agreement and its Disclosure Schedule that “clearly” evidences an intent to extinguish the 

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original Note, rather than merely modify the original agreement by assigning the debt to Legacy. 

See Grand Ave. Partners, 25 F. Supp. 2d at 1068. 

Finally, Triller’s summary-judgment evidence, which consists of various declarations by 

those involved in the sale and closing regarding their understanding of the effect of the 

Assignment, does not alter the Court’s interpretation of the contracts at issue. Triller’s summary 

judgment evidence consists of four declarations, all of which aver that the intent of the parties 

was to engage in a “debt-free” transfer of a controlling interest in Triller. (Lu Decl. [#35-1]; 

Flock Decl. [#35-2]; Lee Decl. [#35-2]; Gura Decl. [#35-2].) These declarations all state that it 

was the understanding of Triller that the parties intended to release Triller of its obligations 

under the Note. 

Mike Lu, Chief Executive Officer of Triller, states in his declaration that “[b]ased on my 

understanding of the day-to-day negotiations of the material terms of the transactions leading to 

the Triller sale, the Triller sale transaction was at all times contemplated and intended to be a 

takeover of Triller on a debt-free basis, and that all debt of Triller would be either paid off or 

forgiven, including but not limited to the debt evidenced by the Promissory Note.” (Lu Decl. 

[#35-1] at ¶ 3.) Mr. Lu further states that it was in reliance on oral and written representations 

the attorneys for Carnegie Technologies that the takeover of Triller would be on a debt-free basis 

that he executed the Closing Documents. (Id. at ¶ 4.) John Flock, an attorney actively involved 

in the Triller sale as counsel for Triller HoldCo, similarly states in his declaration that he was 

informed by Carnegie Technologies’ attorneys that “Triller’s liability under the Promissory Note 

would be wholly extinguished following the Closing.” (Flock Decl. [#35-2] at ¶ 7.) Evan Lee, 

another attorney representing Triller HoldCo in the sale, explains that the decision to assign 

rather than forgive the Promissory Note was a last-minute change to the structure of the Triller 

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sale, and that he was assured that “this change in structure would not affect the ultimate goal of 

extinguishing Triller’s liability pursuant to the Promissory Note.” (Lee Decl. [#35-3] at ¶ 9.) 

Mr. Lee states that, although he was not provided a draft version of the Assignment or 

Promissory Note, that he reviewed these documents at closing and that it was his understanding 

based on the language of the Assignment that the Assignment extinguished Triller’s liability 

under the Note. (Id. at ¶ 11.) These declarations take the position that Carnegie Technologies 

actively misrepresented its intent and misled Triller into agreeing to the Assignment rather than 

forgiveness of the Promissory Note. 

That Triller perceived the Assignment to extinguish its contractual obligations is not 

determinative of whether the Assignment had the legal effect of a novation. The undersigned 

already addressed this issue in its Order denying Triller’s motion to compel discovery, which 

sought production of e-mail communications related to the execution of the Assignment and 

Note in an attempt to prove the parties’ intent to discharge Triller of its obligations. (See Order 

[#57].) The Assignment at issue in this case contains an integration clause, providing that the 

Assignment “is the final expression of, and contains the entire agreement between, the parties 

with respect to” the assignment of the Note. (Assignment [#33-4] at ¶ 6.) The undersigned 

previously held and reiterates here that “a party to a written contract cannot justifiably rely on 

oral misrepresentations regarding [a] contract’s unambiguous terms.” Barrow-Shaver Resources 

Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 498 (Tex. 2019). Additionally, the “parol 

evidence rule bars consideration of evidence that contradicts, varies, or adds to the terms of an 

unambiguous written agreement.” Id. at 483. “Surrounding facts and circumstances cannot be 

employed to make the language say what it unambiguously does not say or to show that the 

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parties probably meant, or could have meant, something other than what their agreement stated.” 

URI, Inc. v. Kleberg County, 543 S.W.3d 755, 757 (Tex. 2018) (internal citations omitted). 

Although Triller may indeed have misunderstood the effects of the contracts at issue, 

Triller was represented by counsel during the 2019 sale, and Mr. Lee attests that he reviewed the 

language of the Assignment and Promissory Note prior to the execution of the documents. The 

parties are sophisticated business entities, and the contracts were executed by way of an arm’s 

length transaction. “A party to an arm’s length transaction must exercise ordinary case and 

reasonable diligence for the protection of his own interests . . . .” JPMorgan Chase Bank, N.A. v. 

Orca Assets G.P., L.L.C., 546 S.W.3d 648, 658 (Tex. 2018). Triller cannot prevail on its 

novation defense because it has not carried its burden to prove that the parties had a meeting of 

the minds as to the intent to discharge and release Triller of all contractual obligations flowing 

from the Promissory Note. 

In summary, nothing in the Purchase Agreement, Disclosure Schedules, or Assignment 

releases Triller from its obligations under the Note or reflects the intent of the parties to do so. 

Because Triller has not established its novation defense as a matter of law, it remains liable on 

the Note, despite the Assignment of the Note to Triller Legacy on the closing date of the October 

2019 transaction. 

This ruling, if adopted by the District Court, is not the last word on the rights and 

obligations of the parties associated with the Triller 2019 sale. Triller is involved currently in the 

pending arbitration in California. This recommendation does not address the various other 

claims and causes of action that might be raised among and between the parties with respect to 

the liabilities associated with the Services Agreement and Promissory Note. It merely addresses 

the legal questions presented before the Court by this breach-of-contract action. 

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 III. Triller’s Motion for Leave to File a Limited Answer

Before the Court is also Triller’s motion for leave to file a limited answer. Triller asks 

the Court to permit it to file a belated answer to formalize its affirmative defense of novation and 

to assert for the first time the affirmative defense of illegality. The Court should deny the 

motion.

The Court denied Triller’s motion to dismiss on October 20, 2020, making Triller’s 

answer due on or before November 3, 2020. See Fed. R. Civ. P. 12(a)(4)(A) (answer due within 

14 days after denial of motion to dismiss). Triller filed its motion for leave to file a limited 

answer on April 6, 2021, approximately five months later, months after the expiration of the 

deadline to file amended pleadings and all Scheduling Order deadlines in this case, after 

Carnegie Technologies’ motion for summary judgment had been fully briefed and pending for 

over four months, after the Court denied Triller’s motion to compel arbitration, and after the 

Court denied Triller’s motion to compel discovery. 

Triller argues that the Court should excuse its late filing and permit it to assert the 

defense of illegality because all of the elements of the defense are apparent from Carnegie 

Technologies’ pleadings, such that Carnegie Technologies would suffer no prejudice from 

permitting the late answer. Yet, allowing Triller to re-litigate this case under a new theory and 

new defense at this late stage of the proceedings would prejudice both Carnegie and the Court, 

require the issuance of a new scheduling order and an entirely new round of dispositive motions, 

and set an undesirable precedent condoning Triller’s piecemeal litigation approach. Triller 

argues that the pleadings themselves demonstrate the illegality of enforcing the Note against 

Triller, yet Triller neglected to assert the defense of illegality at any prior stage in the 

proceedings, despite having access to all information necessary to do so. Triller, facing defeat on 

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its novation defense and other motions it has brought before the Court, simply wishes to relitigate this case under a different theory. It should not be permitted to do so.

Moreover, Triller has not demonstrated the excusable neglect or good cause required to 

permit it to file an untimely answer. Rule 6 of the Federal Rules of Civil Procedure addresses 

the extension of time where an act must be done within a specified time and requires a showing 

of good cause. See Fed. R. Civ. P. 6(b)(1)(B). Where the time has expired to perform the act at 

issue, the party must present a motion demonstrating excusable neglect. Id. “The good cause 

standard requires the party seeking relief to show that the deadlines cannot reasonably be met 

despite the diligence of the party needing the extension.” Sw. Bell Tel. Co. v. City of El Paso, 

346 F.3d 541, 546 (5th Cir. 2003) (internal citations and quotations omitted). Triller has offered 

no explanation for its failure to file an answer in this case or its decision to wait until this late 

stage in the proceedings to attempt to remedy this failure, other than admitting that it simply 

failed to understand the governing federal rules, to calendar the deadline, and to meet its 

pleading obligations in this case. Because Triller has not satisfied its burden to demonstrate 

good cause and excusable neglect, and permitting it to assert new defenses at this late stage in the 

proceedings would result in prejudice, the Court should deny the motion.

IV. Damages

Carnegie Technologies has established its entitlement to summary judgment on its claim 

for beach of the Services Agreement and its suit on the Promissory Note. Carnegie Technologies 

is therefore entitled to a final judgment awarding damages under the Services Agreement and the 

Note. 

The following chart illustrates the balance due and owing under the Services Agreement:

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Invoice # Due Date Amount Days Per Diem Interest Total Interest Due

1230 12/29/2019 $203,050.84 306 $55.63 $17,022.89

1231 1/2/2020 $114,238.56 302 $31.30 $9,452.07

1232 1/9/2020 $21,071.41 295 $5.77 $1,703.03

TOTAL $338,360.81 TOTAL 

INTEREST

$28,177.99

(Leger Decl. [#33-1] at ¶ 16; Invoices [#33-7] at 2–4; Services Agreement [#33-2] at 5, § 3.3.) 

Carnegie Technologies is entitled to damages in the amount of $338,360.81, plus accrued interest 

as of October 30, 2020, in the amount of $28,177.99. 

With respect to the Promissory Note, Carnegie Technologies is entitled to judgment in 

the amount of $4,280,109 (original amount of the debt) plus interest accrued in the amount of 

$457,678.50, for a total amount due of $4,737,787.50, plus any additional interest owed. (Leger 

Decl. [#33-1] at ¶ 10.) 

V. Conclusion and Recommendation

Having considered the motions before the Court, the responses and replies thereto, the 

relevant contracts, and the governing law, the undersigned recommends the following:

• Plaintiff Carnegie Technologies, LLC’s Motion for Summary Judgment [#33] be 

GRANTED and the Court order, adjudge, and decree that Triller is liable to Carnegie 

Technologies for $5,104,326.30, comprised of (1) liability under the Services Agreement 

of $366,538.80, plus $28,177.99 in overdue and accrued interest for a total amount of 

$366,538.80; and (2) liability under the note of $4,280,109.00, plus $457,678.50 in 

overdue and accrued interest, for a total amount of 4,737,787.50, plus any additional 

interest owed. 

• Defendant’s Motion for Leave to File Limited Answer [#60] be DENIED.

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VI. Instructions for Service and Notice of Right to Object/Appeal

The United States District Clerk shall serve a copy of this report and recommendation on 

all parties by either (1) electronic transmittal to all parties represented by attorneys registered as 

a “filing user” with the clerk of court, or (2) by mailing a copy to those not registered by certified 

mail, return receipt requested. Written objections to this report and recommendation must be 

filed within fourteen (14) days after being served with a copy of same, unless this time period is 

modified by the district court. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The party shall file 

the objections with the Clerk of Court and serve the objections on all other parties. A party filing 

objections must specifically identify those findings, conclusions or recommendations to which 

objections are being made and the basis for such objections; the district court need not consider 

frivolous, conclusive or general objections. A party’s failure to file written objections to the 

proposed findings, conclusions and recommendations contained in this report shall bar the party 

from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149–52 (1985); 

Acuña v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to file 

timely written objections to the proposed findings, conclusions and recommendations contained 

in this report and recommendation shall bar the aggrieved party, except upon grounds of plain 

error, from attacking on appeal the un-objected-to proposed factual findings and legal 

conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415,

1428–29 (5th Cir. 1996) (en banc).

SIGNED this 7th day of June, 2021.

ELIZABETH S. ("BETSY") CHESTNEY

UNITED STATES MAGISTRATE JUDGE

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