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IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

SAN ANTONIO DIVISION

JONATHAN VILLAREAL, 

INDIVIDUALLY AND DERIVATIVELY 

ON BEHALF OF ZROBLACK, LLC;

 Plaintiff,

vs.

JOHN SAENZ

 Defendants.

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5-20-CV-00571-OLG-RBF

REPORT AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

To the Honorable Chief United States District Judge Orlando Garcia:

This Report and Recommendation concerns Defendant John Saenz’s Motion for Judgment 

on the Pleadings, or in the Alternative, Motion to Dismiss the Claims Asserted by Johnathan 

Villarreal, Individually. See Dkt. No. 76. All pretrial matters in this action have been referred for 

resolution pursuant to Rules CV-72 and 1 of Appendix C to the Local Rules for the United States 

District Court for the Western District of Texas. See Dkt. Nos. 22 & 36. Authority to enter this 

recommendation stems from 28 U.S.C. § 636(b)(1)(B). 

For the reasons set forth below, it is recommended that Saenz’s Motion, Dkt. No. 76, be 

GRANTED, and the District Court DISMISS all individually held claims asserted by Plaintiff 

Jonathan Villarreal against Defendant John Saenz, to the extent any such claims remain at issue. 

It is further ORDERED that within 21 days from the date of this Order, Saenz shall address—via 

a motion or as otherwise may be appropriate—whether and to what extent he desires to pursue his 

counterclaims against Villarreal and ZroBlack, LLC. 

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Factual and Procedural Background

Plaintiff Jonathan Villarreal, on behalf of himself and his company ZroBlack, LLC, sued

his former business partner John Saenz, attorney Miguel Villarreal, Jr., and Gunn, Lee & Cave 

P.C. Defendants subsequently moved to dismiss Plaintiffs’ claims. After reviewing Defendants’ 

motions, the Court recommended dismissal of the majority of Plaintiffs’ claims against Saenz. 

See Dkt. No. 59. The Court further recommended that the District Court decline to exercise 

supplemental jurisdiction over Plaintiffs’ claims against the law firm and attorney defendants. See 

id. The District Court adopted the Report and Recommendation. See Dkt. No. 67. Accordingly, 

pursuant to the District Court’s August 4, 2021 Order, remaining are “[o]nly Plaintiffs’ claims 

against Saenz for breach of fiduciary duty and for violations of the CFAA [Computer Fraud and 

Abuse Act (“CFAA”), 18 U.S.C. § 1030(g)], and ACPA [Anti-cybersquatting Consumer 

Protection Act (“ACPA”), 15 U.S.C. § 1125(d)]—insofar as these claims are premised on Saenz’s 

alleged conduct after the parties executed the Release.” See id. at 7. 

On June 25, 2021, while the Report and Recommendation was pending before the District 

Court, the Court granted counsel for Plaintiffs’ motion to withdraw. See Dkt. No. 62. In that 

order, the Court advised Plaintiffs that ZroBlack, an entity organized as a single-member LLC, 

must be represented by counsel to proceed with any claims asserted on its behalf. See Dkt. No. 

62. ZroBlack failed to timely obtain counsel, notwithstanding the Court’s multiple warnings and 

extension of time to do so. See Dkt. No. 66, Aug. 6, 2021 text order & Dkt. No. 74 (summarizing 

the Court’s efforts). Accordingly, the District Court dismissed all claims asserted by ZroBlack 

against Saenz. See Dkt. No. 77 adopting Dkt. No. 75. 

Saenz now moves for judgment on the pleadings with respect to any remaining individual 

claims asserted by Villarreal. See Dkt. No. 76. 

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Analysis

A. Any Remaining Claims Brought By Plaintiffs Should Be Dismissed.

Saenz’s motion should be granted. Although the District Court permitted a subset of 

“Plaintiffs’ claims” against Saenz—for breach of fiduciary duty and for violations of the CFAA 

and ACPA—to proceed, a review of Plaintiff’s live Complaint reveals that these three surviving 

claims have only been asserted by, and in fact necessarily belong to, ZroBlack as a matter of law.

Specifically, Plaintiffs plead that Saenz breached his fiduciary duty to ZroBlack—not Villarreal—

causing the company damage. See First Amend. Compl.1¶¶ 186-187, 189. Indeed, under Texas 

law, members in a limited liability company don’t owe a formal fiduciary duty to one another. 

See Chase v. Hodge, No. 1:20-cv-0175-RP, 2021 WL 1948470, at *8 (W.D. Tex. May 14, 2021). 

And, although an informal fiduciary relationship may under certain circumstances exist between 

members,

2 Villarreal fails to plead any facts to suggest that such is the case here. Nor may 

Villarreal individually recover for injuries allegedly suffered by ZroBlack, even though he may 

have been indirectly injured by the decrease in value of his LLC membership interest. See Chase 

2021 WL 1948470, at *7. Accordingly, any remaining breach-of-fiduciary-duty claim should be 

dismissed. 

A similar result pertains to the remaining claims for violation of the CFAA and ACPA. 

These claims are premised on Saenz’s alleged intentional access of ZroBlack’s domain (or mark)

on GoDaddy, deletion of ZroBlack’s webpage and email server, and refusal to release ZroBlack’s 

GoDaddy account. See Amend. Compl. ¶¶ 164, 170-173, 177-178. These alleged actions, 

1 A copy of the full sealed First Amended Complaint can be located at Docket Entry Number 33. 

A redacted copy for the public record is at Docket Entry Number 35. 

2

See Higher Perpetual Energy, LLC v. Higher Power Energy, LLC, No. 4:17-CV-00414, 2018 

WL 3020328, at *4 (E.D. Tex. Jun. 18, 2018). 

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according to Plaintiffs, caused ZroBlack to “lose major contracts,” data, and new clients. See id.

¶¶ 173, 178. Accordingly, as pleaded, Plaintiffs’ claims for CFAA and ACPA belong solely to 

ZroBlack, not Villarreal individually. 

B. Saenz Should Advise the Court As to the Next Steps in This Litigation.

Assuming the District Court adopts this Report and Recommendation in full, Saenz’s 

counterclaims against Villarreal and ZroBlack remain. And also remaining is Saenz’s request for 

attorneys’ fees pursuant to the parties’ Release or Texas Civil Practice & Remedies Code 

§ 134.005(b), which the District Court concluded Saenz could request by motion at the close of 

the case. See Dkt. No. 67 at 5-6. Accordingly, within 21 days from the date of this Order, Saenz 

shall notify the Court—via motion or otherwise—whether and to what extent he intends to 

proceed with his counterclaims. Saenz is advised that unless Texas substantive law requires 

otherwise, he shall submit any motion for attorneys’ fees not later than 14 days after entry of 

judgment pursuant to Federal Rule of Civil Procedure 54. See Local Rule CV-54. 

Conclusion and Recommendation

For the reasons discussed above, it is recommended that Saenz’s Motion, Dkt. No. 76, be 

GRANTED and the District Court DISMISS all claims asserted by Plaintiff Johnathan Villarreal 

individually against Defendant John Saenz, to the extent any remaining claims exist. 

It is further ORDERED that within 21 days from the date of this Order Saenz shall 

address how the remainder of the case should proceed. 

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 by certified mail, return receipt 

requested, to those not registered. Written objections to this report and recommendation must be 

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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 objecting party 

shall file the objections with the clerk of the 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, conclusory, 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 

timely file 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 unobjected-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).

IT IS SO ORDERED. 

SIGNED this 4th day of March, 2022.

RICHARD B. FARRER

UNITED STATES MAGISTRATE JUDGE

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