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IN THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF TEXAS 

SAN ANTONIO DIVISION 

JONATHAN VILLARREAL, 

Individually and derivatively on behalf 

Of ZROBLACK, LLC 

 Plaintiffs, 

v. 

JOHN SAENZ, et al., 

 Defendants. 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

 CASE NO. 20-571-OG 

 

 

MOTION TO DISMISS WITH PREJUDICE ALL CLAIMS AND CAUSES OF ACTION 

AGAINST DEFENDANTS MIGUEL VILLARREAL, JR. AND GUNN, LEE & CAVE, 

P.C. PURSUANT TO FED. R. CIV. P. 12(b)(6) 

TO THE HON. ORLANDO GARCIA, UNITED STATES CHIEF DISTRICT JUDGE: 

 NOW COME Defendants Miguel Villarreal, Jr. (“M. Villarreal”) and Gunn, Lee, & Cave, 

PC (“Gunn Lee”, and together with M. Villarreal, the “Gunn Lee Defendants”) and file their 

Motion to Dismiss with Prejudice all Claims and Causes of Action Against Defendants Miguel 

Villarreal and Gunn, Lee, & Cave, PC Pursuant to Fed. R. Civ. P. 12(b)(6) (“Motion to Dismiss”) 

and in support thereof, respectfully shows the Court as follows: 

I. INTRODUCTION 

1. Plaintiff filed his Original Complaint (“Complaint”) (Dkt. No. 1) on May 8, 2020 

asserting the following federal and state law claims: 

Count 1 - Defend Trade Secrets Act (18 U.S.C. § 1836). 

Count 2 - Computer Fraud and Abuse Act (18 U.S.C. § 1030(g)). 

Count 3 - Anti-cybersquatting Consumer Protection Act (15 U.S.C. § 1125(d)). 

Count 4 - Breach of Contract. 

Count 5 – Breach of Fiduciary Duty. 

Count 6 – Negligence against Gunn Lee Firm. 

Count 7 – Breach of Fiduciary Duty against the Gunn Lee Firm and Michael Villarreal. 

Count 8 – Tortious Interference with Prospective Relations. 

Count 9 – Conversion. 

Count 10 - Violation of Texas Theft Liability Act. 

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2. The Defendants all moved to dismiss the Complaint pursuant to Fed. R. Civ. P. 

12(b)(6). See Dkts. 8, 11. In response to those Motions, Plaintiffs sought leave to amend their 

Complaint, which was granted. Plaintiffs filed the redacted version of their First Amended Verified 

Complaint [Dkt. 35] (the “Amended Complaint”) on January 15, 2021. In accordance with the 

stipulation entered into by the Parties, the Court established February 4, 2021 as the deadline for 

Defendants to either answer or respond to the Amended Complaint. 

3. In the Amended Complaint, Plaintiffs Jonathan Villarreal (“J. Villarreal”)1 and 

ZroBlack, LLC (“ZroBlack”, and together with J. Villarreal, “Plaintiffs”) assert that the Gunn 

Lee Defendants were negligent in the course of negotiations between J. Villarreal and Defendant 

John Saenz (“Saenz”) related to disputes about the business and assets of ZroBlack, a limited 

liability company in which J. Villarreal and Saenz were equal members. See generally, Amended 

Complaint. 

4. Only Counts 6 and 7 of the Amended Complaint pertain to the Gunn Lee 

Defendants. See Amended Complaint, ¶¶ 200 - 231. 

5. The Amended Complaint does not cure the pleading defects raised in the Gunn Lee 

Defendants’ initial Motion to Dismiss. As the Gunn Lee Defendants previously argued, Plaintiffs’ 

claims against them must fail as a matter of law, and no amount of repleading can alter that 

fundamental defect. Further, because Plaintiffs have had an opportunity to amend the complaint, 

and because the claims are barred as a matter of law, dismissal with prejudice is warranted. 

II. BACKGROUND FACTS 

6. J. Villarreal and Saenz formed a business – called ZroBlack – and substantially 

agreed to terms with a Foreign Customer, all without the benefit of counsel. Amended Complaint 

1

 There is no familial relationship between M. Villarreal and J. Villarreal. 

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¶¶ 18, 20-23, 29-30, 35. The agreement was for certain technology to be provided/sold by 

ZroBlack to the Foreign Customer in exchange for a sum of money and other consideration. See 

Amended Complaint, ¶ 31. 

7. ZroBlack engaged M. Villarreal to represent ZroBlack at the tail end of the 

negotiations with the Foreign Customer.2 See id., ¶35. Approximately two weeks later, ZroBlack 

and the Foreign Customer reached a final agreement in the form of a Professional Services 

Agreement, dated April 15, 2019 (“PSA”). See id. ¶30.3 The PSA included, inter alia, a payment 

to ZroBlack in the amount of $1.5M dollars and also potential future earnings based on a certain 

percentage of certain revenue generated from the sales of products incorporating the sold 

technology within a certain period of time following execution of the PSA. See id., ¶31; see also

Exhibit B. 

8. Almost three months passed before ZroBlack—either via J. Villarreal or Saenz—

contacted M. Villarreal again concerning the PSA. See Amended Complaint, ¶¶ 54, 58-59. 

Unfortunately, this time, the reason for reaching out to M. Villarreal was because a dispute had 

arisen between J. Villarreal and Saenz relating to complaints about the respective amount of work 

each of J. Villarreal and Saenz was contributing in relation to the PSA and whether the potential 

future earnings should continue to be equally divided among them. See id. ¶ 53. Their 

disagreement reached an impasse. ZroBlack, J. Villareal, and Saenz engaged M. Villarreal to 

assist them in resolving their disagreement consensually. See id. ¶¶ 54, 58-59. 

2

 A true and correct copy of the signed Engagement Letter, dated March 30, 2019, is attached as Exhibit A hereto and 

incorporated by reference herein. The Engagement Letter is central to the Amended Complaint and therefore, can be 

considered as evidence in adjudicating this Motion to Dismiss. See Collins v. Morgan Stanley Dean Witter, 224 F.3d 

496, 498-499 (5th Cir. 2000). 

3

 A true and correct copy of the PSA is attached as Exhibit B hereto and incorporated by reference herein. The PSA 

is central to the Amended Complaint and is attached thereto as Exhibit 11 to the Appendix. Therefore, it can be 

considered as evidence in adjudicating this Motion to Dismiss. See Collins, 224 F.3d at 498-499. 

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9. The Texas Rules of Disciplinary Professional Conduct (“Disciplinary Rules”) 

expressly provide for an attorney to serve as an intermediary between clients. Disciplinary Rule 

1.07, entitled “Conflict of Interest: Intermediary,” provides, in pertinent part: 

(a) A lawyer shall not act as intermediary between clients unless: 

(1) the lawyer consults with each client concerning the 

implications of the common representation, including the 

advantages and risks involved, and the effect on the attorney-client 

privileges, and obtains each client’s written consent to the common 

representation; 

(2) the lawyer reasonably believes that the matter can be 

resolved without the necessity of contested litigation on terms 

compatible with the client’s best interests, that each client will be 

able to make adequately informed decisions in the matter and that 

there is little risk of material prejudice to the interests of any of the 

clients if the contemplated resolution is unsuccessful; and 

(3) the lawyer reasonably believes that the common 

representation can be undertaken impartially and without improper 

effect on other responsibilities the lawyer has to any of the clients. 

The Gunn Lee Defendants’ conduct falls squarely within this Rule. 

10. M. Villarreal advised the parties that he could assist ZroBlack, J. Villarreal and 

Saenz only if each party waived any and all conflicts between them. See Exhibit C (Conflict 

Waiver).4

 After this discussion, they agreed and engaged M. Villarreal in the capacity of an 

intermediary to help them resolve their disagreements consensually, waiving all conflicts – 

existing or potential – with the simultaneous representation. See id.; see also Exhibit C.

11. As set forth in the Conflict Waiver, M. Villarreal advised J. Villarreal and Saenz 

that the Gunn Lee Defendants could assist the parties in achieving a consensual resolution of their 

disputes relating to ZroBlack, that they could not advise one party at the expense of the other, and 

that the discussions with either party would not be privileged as to the other party. See Exhibit C. 

4

 A true and correct copy of the Waiver of Conflict letter, dated July 15, 2019, signed by all parties involved, is 

attached as Exhibit C hereto and incorporated by reference herein. The Waiver of Conflict letter is central to the 

Amended Complaint and therefore, can be considered as evidence in adjudicating this Motion to Dismiss. See Collins, 

224 F.3d at 498-499. 

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Each party was provided the opportunity to retain separate counsel should they desire independent 

advice or wish to discuss matters privately and was strongly recommended to seek independent 

counsel to advise that party as to the meaning and effect of the Conflict Waiver. See id. J. 

Villarreal and Saenz each—both in their individual capacities and in their capacities as corporate 

representatives of ZroBlack—consented in writing to M. Villarreal acting as an “intermediary,” as 

defined in Rule 1.07 of the Disciplinary Rules. See id.

12. With M. Villarreal’s assistance, ZroBlack, J. Villarreal and Saenz resolved their 

disputes and entered into a Release.5 See Amended Complaint ¶ 72; see also Exhibit D. The 

Release, dated Aug. 9, 2019, resolved all issues between all parties and included the agreed upon 

further subdivision of the potential future earnings percentages as between J. Villarreal and Saenz, 

with the lion’s share of the subdivision of the potential future earnings percentages going to J. 

Villarreal. Exhibit D at Section 2. 

13. Another month passed before ZroBlack (via J. Villarreal) or Saenz would contact 

M. Villarreal again concerning the PSA (now amended twice without assistance of M. Villarreal) 

and the Release. See Amended Complaint ¶97. J. Villarreal and Saenz once again requested M. 

Villarreal assist in resolving their differences. See id. ¶¶101-103. Several attempts were made to 

bring J. Villarreal and Saenz together. See id. The parties were not able to resolve their 

differences. See id. ¶103. 

14. The issues complained of by Plaintiff J. Villarreal against the Gunn Lee Defendants 

were not issues of dispute between the parties at the time the Release was executed. See, e.g., 

Amended Complaint ¶¶ 86-100 (describing disputes that arose after execution of Release). Nor 

5

 A true and correct copy of the Release is attached hereto as Exhibit D. The Release is central to the Amended 

Complaint and is attached thereto as Exhibit 15 to the Appendix. Therefore, it can be considered as evidence in 

adjudicating this Motion to Dismiss. See Collins, 224 F.3d at 498-499. 

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were these issues brought to M. Villarreal’s attention before the Release was executed. See id. ¶ 

97 (first allegation that M. Villarreal was made aware of the $740,000 dispute via email dated 

September 13, 2019).

15. J. Villarreal now complains that the Gunn Lee Defendants were negligent because 

(a) the Release did not impose certain obligations on Saenz and/or (b) Saenz has not complied with 

his obligations in the Release. However, those claims are not supported by well-pleaded facts or 

reasonable inferences drawn therefrom. Further, the claims are barred by law. 

16. As set forth below, even after the Court granted J. Villarreal the opportunity to 

amend his complaint, J. Villarreal has no cognizable claims against the Gunn Lee Defendants. 

Allowing J. Villarreal to amend his again pleading would be futile. Accordingly, the Amended 

Complaint should be dismissed with prejudice as to all claims against the Gunn Lee Defendants. 

III. LEGAL STANDARD 

17. Fed. R. Civ. P. 12(b)(6) codifies the complete affirmative defense that a party has 

failed to state a claim upon which relief can be granted. Under the liberal pleading standards of 

the Federal Rules of Civil Procedure, while a complaint “does not need detailed factual 

allegations,” the claimant’s obligation to “provide the grounds of his entitlement to relief requires 

more than labels and conclusions, and a formulaic recitation of the elements of a cause of action 

will not do. Factual allegations must be enough to raise a right to relief above the speculative 

level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). 6 

18. The Supreme Court has further explained that 

[u]nder Federal Rule of Civil Procedure 8(a)(2), a pleading must 

contain a short and plain statement of the claim showing that the 

pleader is entitled to relief. As the Court held in Twombly, the 

pleading standard Rule 8 announces does not require detailed factual 

allegations, but it demands more than an unadorned, the-defendant6

 Unless otherwise noted, all internal quotation marks, citations, and brackets are omitted. 

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unlawfully-harmed-me accusation. A pleading that offers labels and 

conclusions or a formulaic recitation of the elements of a cause of 

action will not do. Nor does a complaint suffice if it tenders naked 

assertions devoid of further factual enhancement. 

Ashcroft v. Iqbal, 556 U.S. 662, 677–78 (2009). 

19. The Fifth Circuit has construed these standards as requiring that a complaint 

contain sufficient factual matter, if accepted as true, to state a claim 

to relief that is plausible on its face. A claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to 

draw the reasonable inference that the defendant is liable for the 

misconduct alleged. 

Anderson v. Valdez, 845 F.3d 580, 589 (5th Cir. 2016). This standard comports with the Supreme 

Court’s interpretation in Iqbal and Twombly that “[t]he plausibility standard is not akin to a 

‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted 

unlawfully.” Iqbal, 556 U.S. at 678. In addition to the face of the Amended Complaint, the Court 

may consider documents that are central to the Amended Complaint, admissions made in the 

original Complaint, and matters in the judicial record. The Court may consider admissions in the 

original complaint, even if they do not appear in the amended complaint. See Collins, 224 F.3d at 

498-499 (documents central to complaint); Abraham v. Leigh, 17-CV-5429 (KPF), 2018 WL 

3639930, at *4 (S.D.N.Y. June 27, 2018) (admissions in original complaint); Devore v. Lyons, 

3:16-CV-01083-BN, 2016 WL 6277810, at *4 (N.D. Tex. Oct. 25, 2016) (matters of public 

record). 

20. The Complaint does not meet the standards of Fed. R. Civ. P. 8, as interpreted by 

Iqbal, Twombly, and their progeny. Furthermore, because Plaintiffs cannot plead facially plausible 

claims, allowing them leave to further amend their complaint would be futile. See Pervasive 

Software Inc. v. Lexware GmbH & Co. KG, 688 F.3d 214, 232 (5th Cir. 2012) (amendment would 

be futile where claims were barred as a matter of law). 

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IV. ARGUMENT & AUTHORITIES 

21. The majority of J. Villarreal’s claims are asserted against Saenz, not the Gunn Lee 

Defendants. For purposes of this Motion to Dismiss, the relevant Counts in the Complaint are: 

 Count 6: Negligence Against the Gunn Law Firm (Amended Complaint, ¶¶ 200 - 

221). 

 Count 7: Breach of Fiduciary Duty against the Gunn Law Firm and Michael [sic] 

Villarreal (Id., ¶¶ 222 - 231). 

22. This Court must apply substantive Texas law to evaluate the plausibility of J. 

Villarreal’s claims under Count 6 and Count 7 because they are brought pursuant to this Court’s 

supplemental jurisdiction as permitted by 28 U.S.C. § 1367. See Amended Complaint ¶ 7 

(asserting supplemental jurisdiction over non-federal claims); United Mine Workers of Am. v. 

Gibbs, 383 U.S. 715, 726 (1966) (under the Erie doctrine, federal courts exercising supplemental 

jurisdiction over state law claims are “bound to apply state law” in adjudicating those claims). 

23. The relevant factual allegations from the Amended Complaint are as indicated in 

the Appendix, attached as Exhibit E hereto and incorporated by reference herein. The Court 

previously granted Plaintiffs the opportunity to amend their complaint to address the defects 

asserted by the Gunn Lee Defendants. If the Court accepts the well-pleaded factual allegations as 

true, and draws every reasonable inference favorable to Plaintiffs, the Court should conclude, 

despite Plaintiffs’ amendment, that Plaintiffs still have not – and cannot – plead plausible claims 

for relief against the Gunn Lee Defendants. Plaintiffs cannot plead plausible claims for relief and 

they have already had an opportunity to amend their complaint to address the defects asserted by 

the Gunn Lee Defendants. Further amendment is not warranted. Dismissal with prejudice is 

appropriate at this juncture. 

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A. Plaintiff fails to state a plausible claim against the Gunn Lee Defendants for 

negligence. 

24. In Count 6,7

 J. Villarreal asserts the Gunn Lee Defendants were negligent because 

they allegedly failed to: 

a. Include carve-out provision in the Release that except[ed] from 

the Release Saenz’s ongoing obligations to preserve the 

confidentiality of ZroBlack’s trade secrets; 

b. Include a requirement in the Release that Saenz return all 

intellectual property to ZroBlack; 

c. Include a requirement in the Release that Saenz return all of 

ZroBlack’s physical personal property, including the laptop 

computer; 

d. Include a requirement that Saenz release to ZroBlack the 

ZroBlack domain name, web page, and email server; and 

e. Include a requirement in the Release that Saenz return the 

$740,000 he took from ZroBlack. 

Amended Complaint ¶ 218. 

25. Under Texas law, to state a claim for relief for attorney negligence, the plaintiff 

must show: “the defendant owed the plaintiff a duty, the defendant breached that duty, the breach 

proximately caused the plaintiff’s injury, and the plaintiff suffered damages.” Akin, Gump, 

Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 112 (Tex. 2009). 

26. Plaintiffs cannot state a plausible claim for attorney negligence based on the facts 

pleaded because the Amended Complaint does not contain sufficient allegations to support the 

necessary finding of causation, i.e., that any act or omission by the Gunn Lee Defendants was the 

proximate cause of any injury to Plaintiffs. Specifically, Plaintiffs cannot plausibly plead that (a) 

if the Gunn Lee Defendants had acted differently, Saenz would have agreed to a Release with 

express terms requiring the return of $740,000 and other property to ZroBlack; (b) the alleged 

7

 Plaintiffs assert that many of the facts underlying their negligence claim are “undisputed”. Plaintiffs provide no 

evidentiary support for the proposition that those facts are “undisputed.” In fact, many of those allegations are 

“disputed” and the contention that they are “undisputed” is not a well-pleaded fact that has to be taken as true. 

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negligence of the Gunn Lee Defendants is the proximate cause of Plaintiffs’ alleged injuries rather 

than the superseding actions of Saenz; or (c) Plaintiffs ever raised the issues or insisted they be 

included in the Release. 

1. Plaintiffs’ Amended Complaint does not sufficiently allege facts establishing that 

Saenz would have agreed to a Release that contained express terms requiring the return 

of $740,000 and other property to ZroBlack.

27. Under Texas law, to show that a lawyer’s alleged negligence was the “cause in fact” 

of a client’s injury requires examination of the hypothetical result if the lawyer had not acted 

negligently. See, e.g., Rogers v. Zanetti, 518 S.W.3d 394, 404 (Tex. 2017). In this case, Plaintiffs 

must show that if the Gunn Lee Defendants had acted differently, Saenz would have (a) agreed to 

abide by the confidentiality obligations of ZroBlack’s contracts, and (b) returned the $740,000 and 

other property allegedly belonging to ZroBlack, including intellectual property and the laptop 

computer. 

28. There is no plausible allegation of causation. On its face, the Amended Complaint 

does not allege that if Gunn Lee had done anything different, Saenz would have agreed to the 

conditions Plaintiffs allege should have been included in the Release. Moreover, the additional 

allegations of the Amended Complaint indicate that Saenz would not have agreed to those terms 

and/or could not have complied with them. 

29. Specifically, paragraph 32 of the Amended Complaint alleges that well before the 

Gunn Lee Defendants were involved in assisting with the negotiation of the Release, Saenz had 

spent most of the $740,000 he transferred from ZroBlack to his personal account. The original 

complaint specifically pleaded that, prior to the involvement of the Gunn Lee Defendants in the 

dispute between J. Villarreal and Saenz, Saenz had spent a significant portion of the $740,000 on 

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home renovations and invested most or all of the remainder in the stock market.8

 See Amended 

Complaint ¶ 51-52. Additionally, Plaintiffs allege that before the involvement of the Gunn Lee 

Defendants, Saenz was already asking the $740,000 be treated as a “gift” for tax purposes, 

indicating that the money was no longer available to Saenz. See Amended Complaint, ¶ 71 

(alleging that Saenz asked the $740,000 be treated as a gift as early as July 2019). Thus, the facts 

pleaded by Plaintiffs in the Amended Complaint and Complaint indicate that Saenz would not 

have agreed to return the money – or any portion of it – to ZroBlack, or that he could have complied 

with such an obligation even if he did agree to it. See Akin, Gump, 299 S.W.3d at 112 (in a legal 

malpractice claim stemming from prior representation, “the plaintiff must prove and obtain 

findings as to the amount of damages that would have been recoverable and collectible if the other 

case had been properly prosecuted” (emphasis added)). 

30. Finally, Plaintiffs allege the consistent failure or refusal of Saenz to return to 

ZroBlack any of the complained of money or property. See, e.g., Amended Complaint ¶¶ 86, 87, 

89, 99, 100 & 104. Saenz’s alleged repeated refusals on multiple occasions demonstrate that Saenz 

would not have agreed to return either the money or property and/or would not have complied with 

such an agreement. The Gunn Lee Defendants could not have done anything to change that. Nor 

does the Amended Complaint plausibly allege otherwise. Thus, it is readily apparent that Plaintiffs 

cannot plausibly claim that Saenz would have agreed to the Release if it contained the obligations 

now demanded by Plaintiffs or that Saenz would have complied with such obligations if they were 

included in the Release. 

8

 Dkt. No. 1, ¶ 27. 

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2. The superseding acts of Saenz preclude the plausibility of any allegation in the 

Amended Complaint that any alleged negligence of the Gunn Lee Defendants was the 

proximate cause of Plaintiffs’ alleged injuries.

31. The Amended Complaint further maintains that when Saenz agreed to assign all his 

interest in ZroBlack as set forth in the Release, he was agreeing to return all property that he held 

on behalf of ZroBlack or arising out of his membership interest in ZroBlack. See, e.g., Amended 

Complaint ¶¶ 159, 181, 183. Assuming for the sake of this Motion to Dismiss that Plaintiffs’ 

position is correct, the failure to return tangible and intangible property as required under the terms 

of the Release is an intentional act by Saenz constituting a superseding cause that precludes the 

alleged negligence by the Gunn Lee Defendants as the proximate cause of any injury to Plaintiffs. 

32. Under Texas law, the intentional acts of a third party may be a superseding cause 

of the plaintiff’s injury such that the allegedly negligent actor cannot be held liable to the plaintiff. 

See generally Phan Son Van v. Pena, 990 S.W.2d 751, 752 (Tex. 1999). Relying on section 448 

of the Restatement (Second) of Torts, the Texas Supreme Court explained that the intentional act 

of a third party is a superseding cause “unless the [alleged negligent] actor at the time of his 

negligent conduct realized or should have realized the likelihood that such a situation might be 

created, and that a third person might avail himself of the opportunity to commit” the intentional 

act. Nixon v. Mr. Prop. Mgmt. Co., Inc., 690 S.W.2d 546, 550 (Tex. 1985). 

33. In Phan Son Van, the Texas Supreme Court recited the criteria set forth in section 

442 of the Restatement (Second) of Torts to clarify when it should be foreseeable that a negligent 

act by one party would lead to intentional harmful acts by the third party. 990 S.W.2d at 754. 

Several of those factors weigh in favor of finding Saenz’s intentional conduct to be a superseding 

case of the injury asserted by J. Villarreal. 

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a. The intervening acts operated independently of any situation created by the 

Gunn Lee Defendants. 

34. First, as to the $740,000, as pleaded in the Complaint and the Amended Complaint, 

Saenz had allegedly transferred the money to his personal account (1) well before ZroBlack, J. 

Villarreal and Saenz came to M. Villarreal requesting assistance in resolving their difference, and 

(2) well before the Gunn Lee Defendants acted as an intermediary and brokered the Release. By 

the time of the Release, Saenz had spent or invested the money (Amended Complaint ¶¶ 51-52), 

and was already asking it to be treated as a gift for tax purposes (id. ¶ 71), so it could not have 

been returned to ZroBlack, even if the Release had required it to be returned. 

35. Similarly, as to the computer and intellectual property, Saenz’s alleged failure or 

refusal to return these items is independent of any situation created by the Gunn Lee Defendants. 

As pleaded, Saenz threatened to “muck up” J. Villarreal’s life after the Release had already been 

negotiated and signed. See Amended Complaint, ¶105. Treating this allegation as true as required 

by Rule 12(b)(6), it can reasonably be inferred from these pleaded facts that Saenz is purposefully 

refusing to comply with the requirements of the Release because J. Villarreal/ZroBlack will not 

characterize the $740,000 distributed to Saenz as a gift for tax purposes. 

36. The Gunn Lee Defendants did not create the situation that makes it impossible for 

Saenz to comply with the obligation to return property (i.e., they did not cause the money to be 

spent) nor the conditions that are allegedly motivating Saenz to willfully refuse to return property 

(i.e., the alleged dispute over the characterization of the $740,000). Plaintiffs could not plausibly 

plead otherwise. 

b. Plaintiff’s Complaint alleges independent statutory bases for Saenz’s 

liability to Plaintiff, not simply breach of contract. 

37. Second, the Amended Complaint alleges that Saenz’ conduct is independently 

wrongful, particularly with regard to Saenz’s refusal to return the company’s intellectual property. 

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Pertinent to this point, the Amended Complaint alleges independent statutory bases for Saenz’s 

liability to Plaintiffs, not simply breach of contract. See, e.g., Amended Complaint, Counts 1-3. 

38. Significantly, there are no allegations in the Amended Complaint that the Gunn Lee 

Defendants knew or should have known that Saenz would commit these alleged intentional acts 

(or acts like them) as a result of the Gunn Lee Defendants’ alleged negligence, specifically, failing 

to include in the Release express provisions requiring the return of the tangible and intangible 

property. In paragraph 102 of the Amended Complaint, Plaintiffs cite from an email M. Villarreal 

sent on September 26, 2019, indicating M. Villarreal’s belief that J. Villarreal and Saenz were 

“both willing to work in good faith” to resolve their apparent dispute about the meaning and/or 

requirements of the Release. There is no well-pleaded factual allegation or a reasonable inference 

that the Gunn Lee Defendants could have anticipated Saenz’s alleged intentional conduct. 

3. Plaintiff’s Complaint does not sufficiently allege facts establishing that Plaintiff 

insisted upon the inclusion of language in the Release requiring the return of the money 

and other property to ZroBlack or that Plaintiff deemed these issues important enough 

to even raise these as issues prior to or at the time the Release was executed.

39. As alleged, both J. Villarreal and Saenz treated the upfront payment from the 

Foreign Customer as their respective salaries for 2019. See Amended Complaint ¶ 35. There is 

no allegation in the Amended Complaint that J. Villarreal informed M. Villarreal prior to August 

9, 2019 that it was imperative for the Release to address the return of the $740,000 or the laptop 

The only dispute of which M. Villarreal was aware prior to the negotiation and execution of the 

Release was the dispute about the division of future payments. See Amended Complaint ¶¶ 57 – 

62 (alleging prior to the drafting of the Release, M. Villarreal suggested that J. Villarreal set 

specific tasks for Saenz or that the CEO duties be incorporated into the ZroBlack governing 

documents); id. ¶ 72 (alleging Release provided agreed division of future payments at 2% and 

14.5% for Saenz and J. Villarreal, respectively). 

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40. The original disagreement between J. Villarreal and Saenz was the perceived 

disparity in the amount of work that was being done by each in connection with the PSA and the 

Foreign Customer. See id. ¶¶ 43, 46 – 53. 

41. Accordingly, a substantial portion of the Release comprises compensation as 

between the parties. See Exhibit D at 2 (heading entitled “Compensation”) (providing that the 

parties would split Earn-Out Obligation payments “with . . . (12.5%) going to J. Villarreal and . . . 

(2%) going to Saenz”)); see also Amended Complaint ¶72 (describing the split of the Earn-Out 

Obligation payments memorialized in the Release). Indeed, this is consistent with what J. 

Villarreal was complaining of: that Saenz was not pulling his weight in the company and, 

therefore, did not deserve and should not continue to be entitled to half of the 14.5% of the EarnOut payments going forward. See id.. The Release properly and accurately memorialized and 

resolved the entirety of the dispute between ZroBlack, J. Villarreal and Saenz. 

42. Moreover, pursuant to the Release, each Parties released all claims, whether known 

or unknown, against the other Parties and others affiliated with them, including without limitation 

“legal representatives” and “attorneys”. See Exhibit D at 4. 

43. Based on the foregoing, Plaintiffs have not pleaded sufficient facts to support a 

facially plausible claim that the Gunn Lee Defendant’s alleged negligence is the proximate, legal 

cause of any injury to Plaintiffs. They do not plead that if the Gunn Lee Defendants had acted 

differently, Saenz would have agreed to the terms Plaintiffs now insist should have been included 

in the Release. Plaintiffs do not contend that if Saenz had agreed to those terms, Saenz would have 

complied with those obligations. Rather, the Amended Complaint sets forth factual allegations 

that support a finding that Saenz’s failure and/or refusal to return tangible and intangible property 

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to ZroBlack is a superseding cause that precludes holding the Gunn Lee Defendants liable for any 

injury suffered by Plaintiffs. 

44. These defects were raised in the Gunn Lee Defendants’ prior motion to dismiss, 

Dkt. 11, but the Amended Complaint still failed resolve the deficiency. The well-pleaded facts of 

the Amended Complaint facially contradict any possible allegation that Saenz would have agreed 

to the express terms now demanded by Plaintiffs or that Saenz could have complied with those 

requirements if they had been agreed to and included in the Release. The factual assertions, as 

currently pleaded, are insufficient to support a finding of causation against the Gunn Lee 

Defendants. A second opportunity to amend (Plaintiffs’ third bite at the apple) would be futile. 

The negligence claim against them (Count 6 of the Amended Complaint) warrants dismissal with 

prejudice pursuant to Rule 12(b)(6). 

B. Plaintiff fails to state a plausible claim for breach of fiduciary duty as such claim 

violates the anti-fracturing rule and is, thus, barred under Texas law. 

45. In Count 7 of the Amended Complaint, Plaintiffs contend the Gunn Lee Defendants 

breached their fiduciary duties to each of their clients – Saenz, J. Villarreal, and ZroBlack. For 

the reasons set forth below, the breach of fiduciary duty claim fails as a matter of law and should 

be dismissed with prejudice. 

1. The breach of fiduciary duty claim is identical to the negligence claim. 

46. Count 7 is simply a recharacterization of the attorney negligence claim pleaded in 

Count 6, which is prohibited under the anti-fracturing rule. Texas law is perfectly clear 

that a case arising out of an attorney’s alleged bad legal advice or 

improper representation may not be split out into separate claims for 

negligence, breach of contract, or fraud (or any other nonnegligence theory) because the real issue remains one of whether the 

professional exercised that degree of care, skill, and diligence that 

professionals of ordinary skill and knowledge commonly possess 

and exercise. 

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Beck v. Law Offices of Edwin J. (Ted) Terry, Jr., P.C., 284 S.W.3d 416, 426–27 (Tex. App.—

Austin 2009, no pet.) (brackets omitted); see also Murphy v. Gruber, 241 S.W.3d 689, 698 (Tex. 

App.—Dallas 2007, pet. denied). As the Texas Fourth Court of Appeals further explained, 

The rule against dividing or fracturing a negligence claim prevents 

legal-malpractice plaintiffs from opportunistically transforming a 

claim that sounds only in negligence into other claims. If the gist of 

a client’s complaint is that the attorney failed to exercise the degree 

of care, skill, or diligence that attorneys of ordinary skill and 

knowledge commonly possess, then the legal malpractice claim is 

based on negligence. Such a claim encompasses a cause of action 

based on an attorney giving a client bad legal advice or otherwise 

improperly representing the client. 

Riverwalk CY Hotel Partners, Ltd. v. Akin Gump Strauss Hauer & Feld, LLP, 391 S.W.3d 229, 

236 (Tex. App.—San Antonio 2012, no pet.). 

47. The face of the Amended Complaint makes it clear that Count 7 is premised on the 

allegation that the Gunn Lee Defendants failed to exercise the degree of care, skill, or diligence 

required of attorneys. In particular, Plaintiffs assert that the alleged “breach of fiduciary duty” 

resulted in an agreement between J. Villarreal and Saenz that did not accomplish what J. Villarreal 

contends should have been agreed to and memorialized, especially with respect to J. Villarreal’s 

argument that Saenz could have – and should have – been made to agree to return $740,000 to 

ZroBlack (despite the contrary factual allegations indicated that the money had long since been 

spent or invested and was not available to Saenz, as discussed above) and that “put Plaintiffs in a 

worse position” than they were in prior to the agreements. See Amended Complaint ¶¶ 228-230. 

As such, Count 7 is impermissible “fracturing” of the negligence claim raised in Count 6. 

2. The Amended Complaint does not – and cannot – assert an independent basis for a 

breach of fiduciary duty claim separate from the negligence claim. 

48. There are no factual allegations that would support a breach of fiduciary duty claim 

independent of the negligence claim. There is no well-pleaded allegation that the Gunn Lee 

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Defendants subordinated the client’s interest to their own, retained client funds, engaged in selfdealing, improperly used client confidences, or made misrepresentations to achieve those ends, all 

of which could give rise to an independent breach of fiduciary duty claim. See id. (citing Kimleco 

Petroleum, Inc. v. Morrison & Shelton, 91 S.W.3d 921, 923 (Tex.App.-Fort Worth 2002, pet. 

denied).). 

49. Failing to disclose conflicts of interest may give rise to an independent claim for 

breach of fiduciary duty. See id. However, Plaintiffs judicially admitted that the potential conflict 

was expressly disclosed to both J. Villarreal and Saenz in both their individual capacities and in 

their capacities as corporate representatives of ZroBlack. See Complaint ¶ 32; Exhibit C.

9

 

Moreover, “[u]nlike conflicts of interest between jointly represented clients, the types of conflicts 

of interest which could give rise to a breach of fiduciary duty are those in which the lawyer has a 

direct pecuniary interest in the litigation that is adverse to the client, and the attorney pursues his 

own interest to the client’s detriment.” Riverwalk CY Hotel Partners, 391 S.W.3d at 236 (citing 

Beck, 284 S.W.3d at 436); see also Beck v. Law Offices of Edwin J. (Ted) Terry, Jr., P.C., 284 

S.W.3d 416, 436 (Tex. App.—Austin 2009, no pet.) (listing cases in which attorneys were found 

to have direct financial conflicts with the clients, which the attorneys did not disclose, such that 

independent claims for breach of fiduciary duty could proceed). Therefore, even if there was a 

conflict that could not be waived effectively by the jointly represented clients, which the Gunn Lee 

Defendants do not concede, such conflict does not give rise to an independent claim for breach of 

fiduciary duty under Texas law. 

9

 In the Amended Complaint, Plaintiffs maintain that “there was never a meaningful waiver of conflict” but that bare 

conclusion is not supported by any specific factual allegations and need not be taken as true for purposes of this motion 

to dismiss. 

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3. Fabrications do not a well-pleaded allegation make.

50. The Amended Complaint alleges that M. Villarreal had a “cozy” relationship with 

Saenz and the Gunn Lee Defendants were discounting Saenz’ share of the fees while charging J. 

Villarreal his full share. See Amended Complaint ¶ 108-109. These allegations are false. There 

is no evidentiary support for this statement. J. Villarreal’s affidavit even states that “M. Villarreal 

failed to disclose the extent of his relationship with Saenz,” but contains no explanation or evidence 

of that supposed close relationship. See Dkt. 35-2, ¶ 52. Yet, from fabricated allegations, Plaintiffs 

then extrapolate the accusation that the Gunn Lee Defendants favored Saenz to protect the Firm’s 

financial interest in an ongoing relationship with Saenz. The Court need not “strain to find 

inferences favorable to the plaintiff” and therefore, “to avoid a dismissal for failure to state a claim, 

a plaintiff must plead specific facts.” Greater Houston Transp. Co. v. Uber Techs., Inc., 155 F. 

Supp. 3d 670, 681 (S.D. Tex. 2015). This conclusory allegation does not constitute a “wellpleaded” allegation that the Court must treat as true. Plotkin v. IP Axess Inc., 407 F.3d 690, 696 

(5th Cir. 2005). 

51. Here, the pertinent allegations are simply conclusory and false. Plaintiffs’ incorrect 

conclusions are wholly unsupported by any other well-pleaded facts in the Complaint. There are 

no specific allegations, for example, that the Gunn Lee Defendants had previously represented 

Saenz in a particular matter or that Saenz recommended the Gunn Lee Defendants because he had 

worked with them previously. Moreover, the Engagement Letter (Exhibit A) sets out that 

ZroBlack was the original client. And the Conflict Waiver (Exhibit C) notes that Plaintiffs and 

Saenz together requested the assistance of the Gunn Lee Defendants in resolving issues between 

them provided the appropriate safeguard, e.g., waiver of conflict, was in place. In other words, 

the incorrect assumption that the Gunn Lee Defendants had a prior relationship with Saenz that 

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caused them to favor Saenz in connection with the Release is a naked conclusion not supported by 

any well-pleaded facts. Therefore, the Court should not accept it is as true for purposes of 

adjudicating the Motion to Dismiss. 

52. Similarly, Plaintiffs have no direct knowledge of the Gunn Lee Defendants’ billing 

practices. The allegation that the Gunn Lee Defendants charged Saenz less than they charged 

Plaintiffs is not based on any other evidence or specific allegations. It is an untrue, bare conclusion 

that the Court does not need to accept as true for purposes of the Motion to Dismiss. Moreover, 

the Engagement Letter (Exhibit A) illustrates the falsity (implausibility) of this allegation as any 

invoices for service performed were sent to the client, i.e., ZroBlack, named in the Engagement 

Letter. How ZroBlack decided to pay the invoices or allocate the obligation amongst its members 

was beyond the control of the Gunn Lee Defendants. 

53. The unsupported (and untrue) allegation that the Gunn Lee Defendants discounted 

the fees charged to Saenz, but charged J. Villarreal their full fees, does not give rise to a separate 

claim for breach of fiduciary duty. Based on the face of the Amended Complaint, it is apparent 

that Plaintiffs’ claim denominated as “breach of fiduciary duty” is, in substance, an allegation that 

the Gunn Lee Defendants failed to properly advise and inform the Plaintiffs in connection with the 

Release. See, e.g., Complaint ¶32. Under Texas law, that claim is a claim for professional 

negligence, not breach of fiduciary duty. 

54. Notably, the Amended Complaint does not allege that any conflict between J. 

Villarreal and Saenz was not waivable. Indeed, J. Villarreal admits he signed the Waiver of 

Conflict. See Complaint ¶ 32; Exhibit C (Waiver of Conflict). 

55. Additionally, while the Amended Complaint recites that the Gunn Lee Defendants’ 

fiduciary duty required them to put the interests of the client above their own interests, there are 

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no factual allegations that the Gunn Lee Defendants pursued their own interests at the expense of 

their clients. Any such claim fails to meet even the liberal pleading standard of Fed. R. Civ. P. 8. 

4. The Gunn Lee Defendants acted as an intermediary between J. Villarreal, ZroBlack, 

and Saenz, in conformance with Disciplinary Rule 1.07. 

56. Finally, the joint representation in this instance meets the criteria under which an 

attorney may act as an intermediary to assist potentially adverse parties in consensually resolving 

their dispute: (a) each party provides written consent after consultation with the lawyer, (b) the 

lawyer reasonably believes that the matter can be resolved without litigation on terms compatible 

with the client’s best interests, and (c) the lawyer reasonably believes that the common 

representation can be undertaken impartially and without improper effect on other responsibilities 

the lawyer has to any of the clients. 

57. As to the first criterion, the Conflict Waiver – signed by each party individually and 

as a member of ZroBlack – establishes that the Gunn Lee Defendants advised the parties of the 

advantages and disadvantages of joint representation, including the effect on attorney-client 

privilege. See Exhibit C (Conflict Waiver). 

58. As to the second criterion, the Amended Complaint is devoid of any well-pleaded 

facts indicating that it was unreasonable for M. Villarreal to believe that the disputes between J. 

Villarreal and Saenz could be resolved without litigation in a manner compatible with the parties’ 

best interests. Bare, conclusory statements, such as those contained in paragraph 68 of the 

Amended Complaint, do not constitute “well pleaded facts” for purposes of Rule 12(b)(6). See 

Plotkin, 407 F.3d at 696 (when adjudicating a motion to dismiss, the court does not “accept as true 

conclusory allegations, unwarranted factual inferences, or legal conclusions”). 

59. Indeed, the well-pleaded facts of the Amended Complaint support an inference that 

it was reasonable for the Gunn Lee Defendants to believe that the parties could achieve a 

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consensual resolution that served each parties’ interests. Prior to engaging the Gunn Lee 

Defendants as an Intermediary, J. Villarreal and Saenz had already determined that they needed to 

terminate their business relationship. See, e.g., Amended Complaint ¶ 67. The only question was 

how best to accomplish the business divorce. The well-pleaded facts of the Amended Complaint 

do not support a finding that either party was unable to make adequately informed decisions. 

60. Additionally, the well-pleaded facts of the Amended Complaint do not support a 

finding that either party would have been materially prejudiced if the parties were unable to reach 

a consensual resolution through the efforts of the intermediary. Specifically, the negotiations 

between the parties took place just a few months after the actions complained of, well within the 

statute of limitations for any claims that J. Villarreal, ZroBlack, and Saenz had against each other. 

Therefore, if the parties had been unable to reach a consensual resolution, their positions would 

not have been materially prejudiced. 

61. Finally, as to the third criterion, there are no well-pleaded factual allegations that 

support a finding that the Gunn Lee Defendants could not have reasonably believed that they could 

act impartially in the representation. The Amended Complaint alleges that M. Villarreal had a 

“cozy” relationship with Saenz and the Gunn Lee Defendants were discounting Saenz’ share of 

the fees while charging J. Villarreal his full share. See Amended Complaint ¶ 109. As addressed 

above, this conclusory allegation does not constitute a “well-pleaded” allegation that the Court 

must treat as true. 

62. Furthermore, even if the Court did accept as true the unfounded allegations in the 

Complaint that the Gunn Lee Defendants had an undisclosed pre-existing relationship with Saenz 

and/or that the Gunn Lee Defendants billed Saenz less, those allegations are insufficient to support 

a plausible claim for a discrete breach of fiduciary duty claim under Texas law. 

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63. Based on the foregoing, the Gunn Lee Defendants’ representation of J. Villarreal 

and Saenz as an Intermediary to facilitate the consensual termination of their business relationship 

falls squarely within Disciplinary Rule 1.07 and does not present an impermissible conflict of 

interest that could give rise to an independent claim for breach of fiduciary duty under Texas law. 

64. The claim for breach of fiduciary duty asserted in Count 7 is an impermissi9ble 

attempt to fracture Plaintiffs’ negligence claim. Count 7 is barred as a matter of law. Plaintiffs 

cannot allege any plausible facts to support this claim. Claim 7 should be dismissed with prejudice. 

V. ADDITIONAL AMENDMENT OF THE COMPLAINT WOULD BE FUTILE. 

65. Plaintiff’s claims against the Gunn Lee Defendants (i.e., Counts 6 and 7) fail 

because the Amended Complaint lacks any factual basis to support a claim for negligence or for 

breach of fiduciary duty. The former lacks any plausible factual allegations to support the 

necessary finding that any act or omission by the Gunn Lee Defendants was the proximate cause 

of any injury to Plaintiffs. The latter is barred as a matter of law under the anti-fracturing rule. 

This is not a situation where Plaintiffs inadvertently may have not alleged an element of his cause 

of action or provided too little of the applicable factual background. There is simply no factual 

basis for Plaintiff’s causes of action. Plaintiffs had an opportunity to address these defects, but the 

Amended Pleading still does not state plausible claims for relief. Further amendment of Plaintiffs’ 

Complaint would be futile because no rephrasing of the applicable facts as alleged could make 

Plaintiffs’ claims plausible. Pisharodi v. Columbia Valley Healthcare Sys., L.P., 615 F. App’x 

225, 226 (5th Cir. 2015) (stating that “an amendment is futile if it would fail to state a claim upon 

which relief could be granted”) (internal quotation omitted). Consequently, Plaintiffs’ claims as 

to the Gunn Lee Defendants should be dismissed with prejudice. 

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VI. CONCLUSION 

66. Plaintiffs failed to satisfy their pleading burden. The Amended Complaint does not 

– and cannot – assert facially plausible claims for relief against the Gunn Lee Defendants. 

Plaintiffs’ claim of negligence (Count 6) suffers from fatal defects as to the element of causation. 

First, the Amended Complaint does not contain the necessary assertions that a different result could 

have been achieved if the Gunn Lee Defendants had acted differently. To the contrary, the wellpleaded facts of the Amended Complaint indicate that the results Plaintiffs now envision could not 

have been realized under the factual circumstances as pleaded in the Amended Complaint. Second, 

the Amended Complaint contains factual allegations that, if taken as true, establish Saenz’s 

independent, intentional conduct as a superseding cause of the injuries complained of, such that 

the Gunn Lee Defendants cannot be held liable. These defects cannot be cured by further 

amending the Amended Complaint. Count 6 should be dismissed with prejudice. 

67. Additionally, the claim for breach of fiduciary duty asserted in Count 7 is simply a 

re-casting of the negligence claim in Count 6, which violates the anti-fracturing rule and, thus, is 

barred under Texas law. There are no allegations in the Amended Complaint that give rise to an 

independent breach of fiduciary duty that would be recognized under Texas law. As with Count 

6, there is no possibility that Count 7 could be amended to state a plausible claim for relief. 

Therefore, Count 7 should also be dismissed with prejudice. 

WHEREFORE, PREMISES CONSIDERED, the Gunn Lee Defendants respectfully pray 

that the Court enter an order dismissing Count 6 and Count 7 with prejudice, order that the 

Plaintiffs take nothing from the Gunn Lee Defendants, and for such other relief to which they are 

entitled at law or equity. 

Dated February 4, 2021. 

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 Respectfully submitted, 

/s/ Natalie F. Wilson 

LANGLEY & BANACK, INCORPORATED 

745 E. Mulberry, Suite 700 

San Antonio, Texas 78212 

(210) 736-6600 Telephone 

(210) 735-6889 Telecopier 

Email: nwilson@langleybanack.com 

GEORGE H. SPENCER, JR. 

State Bar No. 18921001 

NATALIE F. WILSON 

State Bar No. 24067769 

COUNSEL TO MIGUEL VILLARREAL, JR., and 

GUNN, LEE & CAVE, PC 

CERTIFICATE OF SERVICE 

 I hereby certify that on February 4, 2021, a true and correct copy of the above and foregoing 

instrument was served via the Court’s electronic transmission facilities and via electronic on: 

Steven A. Castello 

scastello@vethanlaw.com 

Joseph L. Lanza 

jlanza@vethanlaw.com 

Charles M.R. Vethan 

cvethan@vethanlaw.com 

VETHAN LAW FIRM

11459 Huebner Road, Suite 101 

San Antonio, TX 78230 

210-824-2220 

Fax: 713-526-2230 

Counsel to Plaintiffs 

David A. Vanderhider 

dvanderhider@dykema.com 

Ryan J. Sullivan 

rsullivan 

DYKEMA COX SMITH

112 E. Pecan Street - Suite 1800 

San Antonio, TX 78205 

210-554-5484 

Fax: 210-226-8395 

Counsel to Defendant John Saenz 

 /s/ Natalie F. Wilson 

 NATALIE F. WILSON 

Case 5:20-cv-00571-OLG Document 40 Filed 02/04/21 Page 25 of 25