ORAL ARGUMENT REQUESTED

NO. ____________ 

In the Court of Appeals 

For the ____________ District of Texas 

Houston 

IN RE THE LAW OFFICES OF ART DULA, ARTHUR M. DULA, INDIVIDUALLY,

AND D/B/A THE LAW OFFICES OF ART DULA, ANAT FRIEDMAN,

INDIVIDUALLY, AND D/B/A THE LAW OFFICES OF ART DULA, J. BUCKNER 

HIGHTOWER, AND THE ROBERT A. AND VIRGINIA HEINLEIN PRIZE TRUST,

THROUGH ITS TRUSTEES ARTHUR M. DULA AND J. BUCKNER HIGHTOWER,

Relators. 

 

Original Proceeding from the 

55th District Court, Harris County, Texas 

Cause No. 2014-65947 

PETITION FOR WRIT OF MANDAMUS 

 

BAKER & HOSTETLER LLP 

Eric W. Kristiansen 

ekristiansen@bakerlaw.com 

State Bar No. 24027428 

Joshua C. Thomas 

jthomas@bakerlaw.com

State Bar No. 24066185 

811 Main St., Suite 1100 

Houston, TX 77002 

(713) 751-1600 Telephone 

(713) 751-1717 Facsimile 

Michael R. Levin 

Pro Hac Vice Application to be Filed

mlevin@bakerlaw.com 

Florida Bar No. 351326 

200 S. Orange Avenue, Suite 2300 

Orlando, Florida 32801 

Telephone (407) 649-4000 

Facsimile (407) 841-0168 

ATTORNEYS FOR RELATORS

ACCEPTED

14-05-00535-CV

FOURTEENTH COURT OF APPEALS

HOUSTON, TEXAS

6/23/2015 9:50:11 AM

CHRISTOPHER PRINE

CLERK

 FILED IN 14th COURT OF APPEALS HOUSTON, TEXAS 6/23/2015 9:50:11 AM CHRISTOPHER A. PRINE Clerk
i 

IDENTITY OF PARTIES AND COUNSEL

The following is a list of the Parties and their respective counsel 

pursuant to Rules 52.2 and 52.3(a) of the Texas Rules of Appellate 

Procedure: 

Relators: The Law Offices of Art Dula, Arthur 

M. Dula, Individually, and d/b/a the 

Law Offices of Art Dula, Anat 

Friedman, Individually, and d/b/a 

the Law Offices of Art Dula, J. 

Buckner Hightower, and the Robert 

A. and Virginia Heinlein Prize 

Trust, Through its Trustees Arthur 

M. Dula and J. Buckner Hightower 

Attorneys for Relators: Eric W. Kristiansen 

ekristiansen@bakerlaw.com 

State Bar No. 24027428 

Joshua C. Thomas 

jthomas@bakerlaw.com

State Bar No. 24066185 

BAKER & HOSTETLER LLP 

811 Main St., Suite 1100 

Houston, TX 77002 

Telephone: (713) 751-1600 

Facsimile: (713) 751-1717 

Michael R. Levin 

Pro Hac Vice Application to be Filed

Florida Bar No. 351326 

mlevin@bakerlaw.com 

200 S. Orange Avenue, Suite 2300 

Orlando, Florida 32801 

Telephone (407) 649-4000 

Facsimile (407) 841-0168 
ii 

Respondent: The Honorable Judge Jeff Shadwick 

Presiding Judge, 

55th Judicial District Court 

Harris County, Texas 

Harris County Civil Courthouse 

201 Caroline, 9th Floor 

Houston, Texas 77002 

Telephone: (713) 368-6055 

Real Parties in Interest: The Law Offices of Art Dula; 

Arthur M. Dula, Individually, and 

d/b/a the Law Offices of Art Dula; 

Anat Friedman, Individually, and 

d/b/a the Law Offices of Art Dula; 

J. Buckner Hightower; 

The Robert A. and Virginia Heinlein 

Prize Trust, Through its Trustees 

Arthur M. Dula and J. Buckner 

Hightower; and 

Takafumi Horie 

Counsel for Takafumi Horie: Lloyd E. Kelley 

THE KELLEY LAW FIRM

2726 Bissonnet, Ste 240 PMB 12 

Houston, TX 77005 

Telephone (281) 492-7766 

Facsimile (281) 652-5973 

James D. Pierce 

1 Sugar Creek Center, Ste. 1080 

Sugar Land, Texas 77478 

Telephone (713) 650-0150 

Facsimile (713) 650-0146 
iii 

TABLE OF CONTENTS

Identity Of Parties And Counsel ................................................................. i

Table Of Contents ..................................................................................... iii

Index Of Authorities .................................................................................. vi

Brief References ......................................................................................... ix

Statement Of The Case .............................................................................. x

Statement Of Jurisdiction ......................................................................... xi

Issue Presented ......................................................................................... xii

I. STATEMENT OF FACTS ............................................................... 1

A. Horie’s Investment in EA ............................................... 2

B. The Settlement Agreement ............................................ 4

C. The Original and Amended Petitions ............................ 8

D. The Rulings Below ........................................................ 11

II. SUMMARY OF THE ARGUMENT ................................................. 12

III. ARGUMENT & AUTHORITIES ..................................................... 15

A. Horie Faces a “Heavy Burden” to Resist the 

Application of the Forum Selection Clause ................. 15

B. Relators Are Entitled to Enforce the Forum 

Selection Clause ............................................................ 17

C. Horie Cannot Avoid the Forum Selection Clause 

by Falsely Claiming that Dula was his Attorney ........ 26

D. Horie Cannot Avoid the Forum Selection Clause 

by Pleading Fraud ......................................................... 31

IV. CONCLUSION & PRAYER ........................................................... 33
iv 

Certification Of Factual Statements ....................................................... 35

Certificate Of Compliance ........................................................................ 35

Certificate Of Service ............................................................................... 36

Appendix ................................................................................................... 37
vi 

INDEX OF AUTHORITIES

 

Cases

Accelerated Christian Educ., Inc. v. Oracle Corp., 

925 S.W.2d 66 (Tex. App.—Dallas 1996)........................................ 24 

Bay Area Healthcare Grp., Ltd. v. McShane, 

239 S.W.3d 231 (Tex. 2007) ............................................................. 10 

Brock v. Entre Computer Ctrs., Inc., 

740 F. Supp. 428 (E.D. Tex. 1990) .................................................. 24 

Clark v. Power Mktg. Direct, Inc., 

192 S.W.3d 796 (Tex. App.—Houston [1st Dist.] 2006, no 

pet.) .................................................................................................. 32 

CU Lloyd’s of Texas v. Hatfield, 

126 S.W.3d 679 (Tex. App.—Houston [14th Dist.] 2004, 

pet. denied) ...................................................................................... 20 

Deep Water Slender Wells, Ltd. v Shell Int’l Exploration 

& Prod. Inc., 

234 S.W.3d 679 (Tex. App.—Houston [14th Dist.] 2007, 

pet. denied) .............................................................................. passim 

Falk & Fish L.L.P. v Pinkston’s Lawnmower & Equip., Inc., 

317 S.W.3d 523 (Tex. App.—Dallas 2010, no pet.) ................ passim 

Ginter ex. rel. Ballard v Belcher, Prendergast, & Laporte, 

536 F.3d 439 (5th Cir. 2008) ........................................................... 11 

Holeman v. Nat’l Bus. Inst., Inc., 

94 S.W.3d 91 (Tex. App.—Houston [14th Dist.] 2002, 

pet. denied) ...................................................................................... 32 

In re ADM Investor Servs., Inc., 

304 S.W.3d 371 (Tex. 2010) ....................................................... 16, 17 
vii 

In re AIU Ins. Co., 

148 S.W.3d 109 (Tex. 2004) (orig. proceeding) .......................... xi, 17 

In re Automated Collection Techs., Inc., 

156 S.W.3d 557 (Tex. 2004) (orig. proceeding) .......................... xi, 17 

In re AutoNation, Inc., 

228 S.W.3d 663 (Tex. 2007) (orig. proceeding) .......................... xi, 17 

In re Boehme, 

256 S.W.3d 878 (Tex. App.—Houston [14th Dist.] 2008, 

orig. proceeding) .............................................................................. 15 

In re Int’l Profit Assocs., 

274 S.W.3d 672 (Tex. 2009) (orig. proceeding) ......................... 11, 32 

In re Laibe Corp., 

307 S.W.3d 314 (Tex. 2010) (orig. proceeding) .................... xi, 15, 16 

In re Lyon Fin. Servs., Inc., 

257 S.W.3d 228 (Tex. 2008) (orig. proceeding) .......................... xi, 17 

In re Tyco Electronics Power Sys., Inc., 

No. 05–04–01808–CV, 2005 WL 237232 

(Tex. App.—Dallas Feb. 2nd, 2005, orig. proceeding) .................... 24 

LeBlanc v. Lange, 

365 S.W.3d 70 (Tex. App.—Houston [1st Dist.] 2011, no pet.) ...... 27 

My Cafe-CCC, Ltd. v. Lunchstop, Inc., 

107 S.W.3d 860 (Tex. App.—Dallas 2003, no pet.) ........................ 31 

Phoenix Network Techs. (Europe) Ltd. v. Neon Sys., Inc., 

177 S.W.3d 605 (Tex. App.—Houston [1st Dist.] 2005, 

no pet.) ........................................................................... 15, 17, 21, 23 

Smith v. Kenda Capital, LLC, 

451 S.W.3d 453 (Tex. App.—Houston [14th Dist.] 2014, no 

pet.) .................................................................................................. 23 
viii 

Westchester Fire Ins. Co. v. Lowe, 

888 S.W.2d 243 (Tex. App.—Beaumont 1994, no writ) ................. 10 

Constitutional Provisions

TEX. CONST. art. V, § 6 ............................................................................... xi 

TEX. GOV'T CODE § 22.221(b)(1) ................................................................. xi 

 
ix 

BRIEF REFERENCES

 

Arthur M. Dula, individually and 

d/b/a The Law Offices of Art Dula 

Anat Friedman, individually and 

d/b/a The Law Offices of Art Dula 

J. Buckner Hightower 

The Robert A. and Virginia Heinlein 

Prize Trust, Through its Trustees 

Arthur M. Dula and J. Buckner 

Hightower 

Takafumi Horie 

 “Dula” 

“Friedman” 

“Hightower” 

The “Heinlein Trust” 

“Horie” 

Mandamus Record “MR” followed by the page 

number 

Appendix Documents “App.” followed by its Tab 

letter designation and page 

number, if appropriate. 

 
x 

STATEMENT OF THE CASE

 

Nature of the case: This is an original proceeding to 

enforce a forum selection clause 

requiring the claims in the 

underlying lawsuit to be litigated 

in the Isle of Man. The underlying 

suit involves claims by Horie 

against Relators for fraud and 

breach of fiduciary duty, among 

others. 

Trial Court: The Honorable Judge Jeff 

Shadwick, 55th Judicial District 

Court, Harris County, Texas. 

Trial Court disposition: The trial court denied Relators’ 

Supplemental Motion to Dismiss 

based on the forum selection 

clause. The trial court then 

denied Relators’ Motion for 

Reconsideration and stayed 

discovery in the underlying case 

during the pendency of this 

original proceeding. 

Action from which relief is 

sought: 

Relators seek mandamus relief 

from the trial court’s April 22, 

2015 Order Denying Motion to 

Dismiss (App. A), and from the 

trial court’s June 1, 2015 Order 

from the bench denying the 

Motion for Reconsideration (App. 

D), issued in Cause No. 2014-

65947; in the 55th Judicial 

District, Harris County, Texas. 
xi 

STATEMENT OF JURISDICTION

This Court has jurisdiction over this Petition for Writ of 

Mandamus pursuant to Article V, Section 6 of the Texas Constitution 

and Section 22.221(b)(1) of the Texas Government Code. The Texas 

Supreme Court repeatedly holds that mandamus is the proper remedy 

when a trial court erroneously refuses to enforce a forum selection 

clause, because the party attempting to enforce such a clause has no 

adequate remedy by appeal. See In re Laibe Corp., 307 S.W.3d 314, 316 

(Tex. 2010) (orig. proceeding); In re Int’l Profit Assocs., 274 S.W.3d 672, 

677 (Tex. 2009) (orig. proceeding); In re ADM Investor Servs., 304 

S.W.3d 371, 374 (Tex. 2010); In re Lyon Fin. Servs., Inc., 257 S.W.3d 

228 (Tex. 2008) (orig. proceeding); In re AutoNation, Inc., 228 S.W.3d 

663 (Tex. 2007) (orig. proceeding); In re Automated Collection Techs., 

Inc., 156 S.W.3d 557 (Tex. 2004) (orig. proceeding); In re AIU Ins. Co., 

148 S.W.3d 109 (Tex. 2004) (orig. proceeding). 
xii 

ISSUE PRESENTED

In Texas, parties resisting enforcement of a forum selection clause 

bear a heavy burden of proof. Such clauses are enforceable even 

by non-signatories to the agreement containing the forum 

selection clause if the plaintiff asserts interdependent and 

concerted misconduct among signatories and non-signatories. 

Here, Relators are included in the scope of a release in a prior 

settlement agreement. The Settlement Agreement contains a 

mandatory forum selection clause requiring all claims arising out 

of or in connection with the agreement to be brought in the Isle of 

Man. Plaintiff Takafumi Horie asserts claims against the Relators 

and alleges interdependent and concerted misconduct between 

Relators and the signatories to that agreement. 

The issue is whether the trial court abused its discretion in 

refusing to enforce the mandatory forum selection clause in the 

prior settlement agreement and to dismiss the claims against 

Relators. 
1 

I. STATEMENT OF FACTS

On November 10, 2014, Horie, a Japanese billionaire investor, 

filed the underlying lawsuit against the Relators and three other 

entities: Excalibur Limited; Excalibur Almaz Limited; and Excalibur 

Almaz USA, Inc. (collectively, “Excalibur”). (MR 1). Horie alleged that 

he was duped into investing $49,003,000 in Excalibur Almaz Limited 

(“EA”), an Isle of Man company whose business is private commercial 

space flight. (MR 1-4).1 As discussed below, Horie later amended his 

petition to replace references to the Excalibur entities with generalized 

references to a “space enterprise” or “space business.” (MR 77). 

More than four years before this suit was filed, on June 29, 2010, 

Horie, EA, and others entered into a Deed of Assignment and 

Settlement (“Settlement Agreement”) settling all claims related to 

Horie’s $49,003,000 investment. (MR 262-83). The Settlement 

Agreement included a mandatory forum selection clause requiring 

resolution of all disputes in the Isle of Man: 

This Deed and any dispute or claim arising out of or in 

connection with it or its subject matter, existence, 

negotiation, validity, termination, or enforceability 

 

1 The Isle of Man is a self-governing island member of the United Kingdom, located 

between the islands of Great Britain and Ireland. 
2 

(including non-contractual disputes or claims) shall be 

governed by and construed in accordance with the laws of 

the Isle of Man. 

Each Party irrevocably agrees that the Courts of the Isle of 

Man shall have exclusive jurisdiction in relation to any 

dispute or claim arising out of or in connection with this 

Deed or its subject matter, existence, negotiation, validity, 

termination, or enforceability (including non-contractual 

disputes or claims). 

(MR 277, Settlement Agreement, at §13.1-13.2). The broad forum 

selection clause covers all claims “arising out of or in connection with” 

the “subject matter” of the Settlement Agreement, or its “negotiation” or 

“enforceability.” (Id.). Thus, Horie irrevocably agreed to a mandatory 

and exclusive forum in the Isle of Man for resolution of all conceivable 

claims arising in connection with the subject matter of the Settlement 

Agreement. (Id.). The subject matter of the Settlement Agreement 

specifically includes Horie’s $49,003,000 investment in EA. 

A. Horie’s Investment in EA 

The Settlement Agreement includes recitals that refer to several 

prior agreements reflecting the evolution of Horie’s investment in EA. 

(MR 264-65). On October 16, 2005, Horie (doing business as “Japan 

Space Dream” or “JSD”) entered into a Memorandum of Understanding 

(“MOU”) with EA to develop a commercial spaceflight business using 
3 

Almaz space capsules. (MR 285-88). In the MOU, Horie agreed to 

purchase 75% of EA’s stock for $49,003,000, payable in three tranches, 

the first upon execution of the MOU, the second on January 31, 2006, 

and the third on January 31, 2007. (MR 285). The MOU states that 

“[d]isputes shall be settled according to the laws of both Japan and The 

Isle of Man.” (MR 288). 

Shortly after entering into the MOU, Horie was arrested in 

January 2006 and charged with securities fraud relating to 

manipulations of the publicly traded stock in his company, then known 

as “Livedoor Holdings.” (MR 319-22). Subsequently, he was tried, 

convicted, and sentenced to prison on March 16, 2007. (MR 324-26). 

After his arrest but prior to his conviction, Horie defaulted on the 

third tranche of his investment in EA, due in January 2007. (MR 285, 

290). As a result, on June 10, 2007, while the criminal case was on 

appeal, Horie/JSD entered into a Side Agreement with EA to amend the 

MOU. (MR 290-93). The Side Agreement provides, among other things, 

that Horie’s shares in EA would be held in trust by a mutually 

acceptable, independent third-party trustee “until such time that Mr. 

Horie is found to be innocent or completes his sentence ....” (MR 292). 
4 

The Side Agreement also provides that all disputes between Horie and 

EA would be resolved by binding arbitration in the Isle of Man. (Id.). 

In accordance with the Side Agreement, Horie established the “Abbey 

Trust” on March 14, 2008, and conveyed his shares in EA to the Trust. 

(MR 295-317). Thus, as of March 2008, Horie was no longer an EA 

shareholder, although he retained a beneficial interest in the EA shares 

through the Abbey Trust. 

In the wake of Horie’s securities fraud conviction, his former 

company (which changed its name from Livedoor to LDH Corporation, 

“LDH”), sued Horie for damages. (MR 244-45; MR 328, at ¶C; MR 334-

35, at ¶(F), 2; MR 356-37, at ¶(F), 2). To settle these claims, Horie 

entered into three separate agreements, each dated December 25, 2009, 

and irrevocably assigned his ownership interest in EA, including his 

beneficial interest in the Abbey Trust, to LDH. (MR 328-76). Thus, as 

of December 2009, Horie no longer owned any shares of EA, or any 

interest in the commercial space flight business undertaken by EA. 

B. The Settlement Agreement 

As noted above, in June 2010, Horie, EA, LDH, and George Abbey 

(trustee of the Abbey Trust) entered into the Settlement Agreement. 
5 

(MR 262). The Settlement Agreement included recitals concerning the 

prior agreements relating to Horie’s investment—including the MOU, 

Side Agreement, and Abbey Trust—and provided that those agreements 

would be terminated. (MR 267). The underlying purpose of the 

Settlement Agreement was to redeem the EA stock that was originally 

acquired by Horie in 2005 for $49,003,000, and then transferred to LDH 

in 2009, as described above, and to resolve any other remaining issues 

among the parties. 

Therefore, under the Settlement Agreement, EA redeemed the 

shares in exchange for payment of “Redemption Proceeds” to LDH. (MR 

265-67). However, as a condition for redemption of these shares, it was 

necessary for Horie to be a party to the Settlement Agreement, and to 

participate in the mutual releases contained therein. Accordingly, 

Horie specifically released EA and “its Affiliates, shareholders, 

subsidiaries, employees, officers, directors, trustees, assigns, 

transferees, representatives, principals and agents (individually and 

collectively, the “Company Group”) from any Claims that Mr. Horie ... 

might have against the Company Group.” (MR 267, Settlement 
6 

Agreement, at §5.1.2). The term “Claims” is broadly defined in the 

Settlement Agreement to include: 

a claim, potential claim, counterclaim, potential 

counterclaim, right of set-off, indemnity, liability, cause of 

action, right or interest of any kind or nature whatsoever, 

whether known or unknown, suspected or unsuspected, 

contingent or actual, however and whenever arising and in 

whatever capacity and jurisdiction, including, without 

limitation arising out of or in connection with termination of 

any agreement or arrangement contemplated in Clause 4 of 

this Deed. 

(MR 278). 

The Relators are each within the definition of the “Company 

Group.” Specifically, Dula and Hightower are alleged to be officers and 

directors of EA. (MR 5-6). Dula and Hightower are also alleged to have 

acted as representatives or agents of EA in their capacities as trustees 

for the Heinlein Trust. (MR 20). Friedman is general counsel of 

Excalibur Almaz USA, Inc. (MR 16), which is an “Affiliate” of EA. (MR 

278).2 Thus, Friedman is a part of the Company Group. (MR 267). The 

Law Offices of Art Dula is alleged to be the alter ego of Dula. (MR 5, 

 

2 The Settlement Agreement defines “Affiliates” as, “in relation to a Party, any 

other person which directly or indirectly Controls, is Controlled by, or is under 

direct or indirect common Control with, that Party from time to time.” (MR 278, 

Settlement Agreement, at Sch. 1, §1). 
7 

20). The Relators, as members of the Company Group, are entitled to 

enforce the forum selection clause. 

Finally, the Settlement Agreement recites that: 

Each Party has either had the terms and effect of this Deed 

explained by independent legal counsel or had the full 

opportunity to have its terms and effect explained by 

independent legal counsel; and each Party enters into this 

Deed freely, knowingly and voluntarily, free from duress of 

any kind. 

(MR 274, Settlement Agreement, at §11.4). As described below, this 

provision is inconsistent with Horie’s argument below that the 

Settlement Agreement should somehow be viewed as an agreement 

between an attorney and his client. 

All of these provisions make it abundantly clear that the purpose 

of the Settlement Agreement was to allow EA to redeem the shares 

Horie originally purchased (then owned by LDH) and for all interested 

parties, represented by independent counsel, to mutually release any 

and all claims relating to Horie’s investment in EA. As parties subject 

to this Settlement Agreement, Relators are entitled to enforce the forum 

selection clause, and insist that the Isle of Man is the exclusive 

jurisdiction for Horie’s claims. 
8 

C. The Original and Amended Petitions 

Horie ultimately lost all of his appeals and was incarcerated in 

Japan from June 2011 to March 2013. (MR 244). Horie filed his 

Original Petition in this lawsuit in November 2014, asserting claims 

directly against EA, a party to the Settlement Agreement, the Excalibur 

entities, and the Relators. (MR 1-2). The Original Petition falsely 

alleged that Dula was Horie’s lawyer when Dula “induced” Horie to 

invest in EA in 2005. (MR 2-3). Horie also alleged that Dula and 

Hightower were directors of EA and the Chief Executive Officer (“CEO”) 

and Executive Vice President (“EVP”), respectively, and that EA was 

the alter ego of Dula. (MR 5-6). The Defendants, then including the 

Relators and the Excalibur entities, filed a Motion to Dismiss to enforce 

the mandatory forum selection clause in the Settlement Agreement, and 

set the Motion to Dismiss for hearing on Monday, March 9, 2015. (MR 

30-65). 

In an obvious attempt to avoid the forum selection clause, Horie 

filed an Amended Petition one business day before the oral hearing on 

Relators’ Motion to Dismiss. (MR 76-88). The Amended Petition does 

not contradict the Original Petition or change the substance of Horie’s 
9 

claim. In the Amended Petition, Horie still seeks to recoup his 

investment of the very same $49,003,000. (MR 81-82). The Amended 

Petition simply makes the same factual allegations in more generalized 

terms. 

For example, both the Original Petition and the Amended Petition 

include the following allegation: 

Dula represented he had connections with the Russian 

aerospace company NPO Mashinostroyenia (“NPOM”) who 

would provide hardware and technical expertise to build a 

commercial space business. He represented that he had 

acquired rights to NPOM space-proven capsules that could 

be used in a space program. Dula represented that he was 

well-connected and could assemble the professionals 

necessary to build a commercial space program. However, 

from the beginning, Dula had no intent to build a space 

program, but only to take Plaintiff’s monies for his own use, 

utilizing a complex ruse, contrary to the interests of his 

cestui que trust. Dula convinced Plaintiff to place 

$49,003,000.00 into Dula’s trust account for purposes of 

doing due diligence, and later setting up a space program in 

conformity with U.S. law and regulations (Dula claimed and 

continues to claim to be a “space law” expert).... 

(MR 7-8 (Original Petition); MR 81-82 (Amended Petition)). The 

Original Petition alleges that Dula used the Excalibur entities for this 

purpose, while the Amended Petition refers more generally to a 

“schemes and devices.” (MR 82). However, the use of the more 

generalized term does not change the Plaintiff’s essential allegations. 
10 

In fact, the primary change in the Amended Petition is the effort 

to replace all specific references to the Excalibur entities with more 

general references to a “space business” or “space enterprise,” and to 

obscure the Relators’ connections to the Excalibur entities. (See, e.g., 

MR 77-80, 82-85). The Original Petition provides explanation and 

context for these intentionally vague allegations in the Amended 

Petition.3 

The central allegation in the Amended Petition is that Dula made 

false representations concerning the proposed “commercial space 

business,” and convinced Horie to invest $49,003,000 in that business. 

(MR 7-8 (Original Petition); MR 81-82 (Amended Petition)). Despite 

Plaintiff’s unusual but artful effort to plead more vaguely and generally 

in the Amended Petition than in the Original Petition, both Petitions 

refer to the same $49,003,000 investment. The Original Petition can 

and should be relied upon to explain that the “space business or 

enterprise,” as it is called in the Amended Petition, refers directly to the 

Excalibur entities and Relators’ connection therewith. 

 

3 Superseded pleadings are admissible evidence as party admissions that “remain 

forceful” even after subsequent pleadings have been filed. Bay Area Healthcare 

Grp., Ltd. v. McShane, 239 S.W.3d 231, 235 (Tex. 2007); Westchester Fire Ins. Co. v. 

Lowe, 888 S.W.2d 243, 252 (Tex. App.—Beaumont 1994, no writ). 
11 

D. The Rulings Below 

On April 9, 2015, Relators filed a Supplemental Motion to 

Dismiss, arguing that Horie’s artful pleading4 could not evade the 

application of the forum selection clause in the Settlement Agreement. 

(MR 93-214). A hearing on the Supplemental Motion to Dismiss was 

held on April 20, 2015. (App. C, MR 216). The trial court denied the 

Motion, drawing three erroneous conclusions. (App. A). The court first 

stated that the “pending cause of action is against Defendants in 

capacities different than their capacities under which they were 

signatories (in the case of Dula and Hightower)” of the Settlement 

Agreement. (App. A, MR 232). The court then noted that “the courts of 

the Isle of Man may not have jurisdiction over the parties, thus leaving 

Plaintiff without a remedy.” (App. A, MR 232-33). Finally, the court 

stated that “considering that settlement of claims by a client against his 

attorney require specific and additional proof, the Court at this time 

 

4 As used here, “artful pleading” includes deliberately making allegations vague to 

avoid forum selection clause. As the Texas Supreme Court has explained, the 

applicability of forum selection clauses must be determined based on the “substance 

of the claim, not artful pleading.” In re Int’l Profit Assocs., 274 S.W.3d 672, 677 

(Tex. 2009) (orig. proceeding). Because artful pleading cannot defeat a binding 

forum selection clause, the court must use a “common-sense examination of the 

claims and the forum-selection clause to determine if the clause covers the claims.” 

Id. (citing Ginter ex. rel. Ballard v Belcher, Prendergast, & Laporte, 536 F.3d 439, 

444 (5th Cir. 2008)). 
12 

observes that the release does not appear to include these claims 

against these Defendants.” (App. A, MR 233). 

Relators Dula and Hightower filed a Motion for Reconsideration 

on May 13, 2015. (MR 238-499). An oral hearing was held on this 

motion and several pending discovery motions. (App. D, MR 235-37). 

The trial court denied the Motion for Reconsideration, but stayed 

discovery in the underlying suit. (App. D). This proceeding followed. 

II. SUMMARY OF THE ARGUMENT

In his Amended Petition, Horie brings claims related to his 

$49,003,000 investment in Excalibur, a space-related business. 

However, in the July 2010 Settlement Agreement, Horie released all 

claims against Relators related to this $49,003,000 investment. (MR 

267-68). The Settlement Agreement contains a mandatory forum 

selection clause providing that the Isle of Man is the exclusive 

jurisdiction for resolving disputes relating to the Settlement Agreement. 

(MR 277). Texas law imposes a heavy burden of proof upon parties 

resisting the enforcement of a forum selection clause. Horie did not 

even attempt to meet this burden in the lower court, and cannot do so 

as a matter of law. Therefore, the Relators are entitled to dismissal of 
13 

the claim brought by Horie in a Texas court. 

The Relators are entitled to enforce the mandatory forum selection 

clause because they are each members of the “Company Group” defined 

as released parties in the Settlement Agreement. (MR 267). Moreover, 

under binding Texas precedent, Relators are entitled to enforce the 

binding forum selection clause because Horie has alleged that the 

Relators have acted in concert with one another as part of a “private 

commercial space program”—Excalibur. Where, as here, a plaintiff 

alleges interdependent and connected misconduct between a party to 

the Settlement Agreement (EA) and non-parties (Relators), the nonparties may enforce the forum selection clause. See Deep Water Slender 

Wells, Ltd. v Shell Int’l Exploration & Prod. Inc., 234 S.W.3d 679 (Tex. 

App.—Houston [14th Dist.] 2007, pet. denied). 

Horie argued to the trial court that he could avoid the burden of 

resisting the forum selection clause by falsely alleging that Dula was 

his attorney. This argument is unavailing. First, the same “heavy 

burden” in resisting a forum selection clause also applies to forum 

selection clauses in contracts between an attorney and client. Falk & 

Fish L.L.P. v Pinkston’s Lawnmower & Equip., Inc., 317 S.W.3d 523, 
14 

527 (Tex. App.—Dallas 2010, no pet.). Horie has done nothing to meet 

this burden. Second, Horie has not even alleged, let alone provided an 

affidavit or other evidence, that Dula represented Horie in 2010, when 

the Settlement Agreement was reached. Indeed, the Settlement 

Agreement itself recites that the parties had access to independent 

counsel. (MR 274). Third, it is simply not true that Dula was ever

Horie’s attorney. Plaintiff has only provided the most naked and 

conclusory allegation of an attorney-client relationship between Horie 

and Dula when the investment was made in 2005. No proof of this 

relationship has been provided, and the record contains unrebutted 

evidence to the contrary. (MR 378-80). 

Horie also cannot meet this “heavy burden of proof” under any 

other theory. The recognized public policy favoring enforcement of 

mandatory forum selection clauses of this nature cannot be defeated 

simply by artfully pleading in generalities about space businesses 

instead of specifically identifying the Excalibur entities. Nor can the 

forum selection clause be evaded simply by pleading fraud, particularly 

given the language of this particular Settlement Agreement. 

Given all of the foregoing, the Amended Petition does not allege 
15 

that Relators acted “in capacities different then their capacities under 

which they were signatories” of the Settlement Agreement. (App. A). 

To the contrary, Relators are entitled to enforce the forum selection 

clause in the Settlement Agreement, and to have the courts of the Isle 

of Man determine that the release in the Settlement Agreement bars 

Horie’s alleged $49,003,000 claim. The trial court’s failure to dismiss 

Horie’s claims pursuant to the forum selection clause was an abuse of 

discretion. Mandamus is required.

III. ARGUMENT & AUTHORITIES

A. Horie Faces a “Heavy Burden” to Resist the 

Application of the Forum Selection Clause 

Under Texas law, a contractual forum selection clause is 

presumed to be valid and enforceable. In re Laibe Corp., 307 S.W.3d 

314, 316–17 (Tex. 2010) (orig. proceeding). Phoenix Network Techs. 

(Europe) Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 611 (Tex. App.—

Houston [1st Dist.] 2005, no pet.) (holding that a forum selection clause 

is prima facie valid); In re Boehme, 256 S.W.3d 878, 881 (Tex. App.—

Houston [14th Dist.] 2008, orig. proceeding); Deep Water Slender Wells, 

Ltd., 234 S.W.3d at 692. The party opposing the enforcement of a forum 
16 

selection clause bears a heavy burden of proof. In re Laibe Corp., 307 

S.W.3d at 316.

“In determining whether to enforce a mandatory forum selection 

clause, courts must determine whether the claims in the case at hand 

fall within the scope of the forum selection clause and whether the court 

should enforce the clause.” Deep Water Slender Wells, Ltd., 234 S.W.3d 

at 687. In cases such as this one, courts must also determine “whether 

nonsignatories to the contract can enforce the forum selection clause.” 

Id. If the claims fall within the scope of the clause, enforcement is 

mandatory unless the party opposing enforcement clearly shows “(1) 

enforcement would be unreasonable or unjust, (2) the clause is invalid 

for reasons of fraud or overreaching, (3) enforcement would contravene 

a strong public policy of the forum where the suit was brought, or (4) 

the selected forum would be seriously inconvenient for trial.” In re 

Laibe Corp., 207 S.W.3d at 316 (quoting In re ADM Investor Servs., Inc., 

304 S.W.3d 371, 375 (Tex. 2010)). 

Texas courts routinely hold that mandamus is the proper remedy 

when a trial court erroneously refuses to enforce a forum selection 

clause. In re Laibe Corp., 307 S.W.3d at 316 (citing In re ADM Investor 
17 

Servs., 304 S.W.3d at 374); In re Int’l Profit Assocs., 274 S.W.3d at 677; 

In re Lyon Fin. Servs., Inc., 257 S.W.3d 228 (Tex. 2008) (orig. 

proceeding); In re AutoNation, Inc., 228 S.W.3d 663 (Tex. 2007) (orig. 

proceeding); In re Automated Collection Techs., Inc., 156 S.W.3d 557 

(Tex. 2004) (orig. proceeding); In re AIU Ins. Co., 148 S.W.3d 109 (Tex. 

2004) (orig. proceeding). 

Although the standard for reviewing the trial court’s refusal to 

enforce a forum selection clause is abuse of discretion, “to the extent 

[this Court’s] review involves the construction or interpretation of an 

unambiguous contract, the standard of review is de novo.” Deep Water 

Slender Wells, Ltd., 234 S.W.3d at 687 (citing Phoenix Network Techs.,

177 S.W.3d at 687). Here, the applicability of the forum selection clause 

depends in part on the Court’s interpretation of an unambiguous 

contract—including whether Relators are within the “Company Group” 

defined in the Settlement Agreement. If so, Relators are entitled to 

enforce the forum selection clause. 

B. Relators Are Entitled to Enforce the Forum Selection 

Clause 

Although the Relators are not directly named parties in the 

Settlement Agreement, they are entitled to enforce the forum selection 
18 

clause for two reasons. First, the express terms of the Settlement 

Agreement include the Relators in the definition of the “Company 

Group” that was released. (MR 267). Second, Horie sued both 

signatories and non-signatories to the Settlement Agreement, and 

alleged interdependent and concerted misconduct among these 

defendants, which allows the Relators to invoke the forum selection 

clause. Deep Water Slender Wells, 234 S.W.3d at 693-94. 

1. The Relators are in the “Company Group” 

The named parties to the Settlement Agreement are Horie, 

George Abbey (trustee of the Abbey Trust), LDH, and EA.5 (MR 262). 

In the Settlement Agreement Horie released not only EA, but also: 

[I]ts Affiliates, shareholders, subsidiaries, employees, 

officers, directors, trustees, assigns, transferees, 

representatives, principals and agents (individually and 

collectively, the “Company Group”) .... 

(MR 267). Horie initially sued EA directly and also sued “Affiliates” of 

EA (MR 5-6), but later amended his petition and removed the Excalibur 

entities. The amendment has no effect on the Relators’ ability to 

 

5 Dula and Hightower each signed the Settlement Agreement as directors of EA. 

(MR 162). 
19 

enforce the forum selection clause, because the Relators are part of the 

“Company Group.” (MR 267). 

As noted above, Dula is alleged to be a director and CEO of EA. 

(MR 5). Hightower is alleged to be a director and the EVP of EA. (MR 

6). As officers and directors of EA, it is beyond dispute that Dula and 

Hightower are a part of the “Company Group” defined in the Settlement 

Agreement. (MR 267). 

Dula and Hightower are also alleged to have acted as 

representatives or agents of EA in their capacities as trustees for the 

Heinlein Trust. (MR 77, 85). In fact, the only allegation in the 

Amended Petition relating to the Heinlein Trust is that “Dula used his 

position as trustee” of the Heinlein Trust to carry out the alleged 

wrongdoing. (MR 77). Horie asserts no cause of action against the 

Heinlein Trust directly, but only claims that Dula and Hightower 

“operated the Heinlein Prize Trust as his alter-ego ... thus it bears the 

same liability for his acts as does” Dula. (MR 85). Since the Amended 

Petition claims only that the Heinlein Trust is the alter ego of Dula, 

then the Heinlein Trust must be considered a part of the Company 

Group, to the same extent as Dula. 
20 

Likewise, Horie named “the Law Offices of Art Dula” as a separate 

party in the caption of his Amended Petition, but there are no separate 

allegations against the Law Offices of Art Dula; in fact, there is no 

mention of the Law Offices of Art Dula in the Amended Petition 

whatsoever, other than that it is a “d/b/a” of Dula. (MR 80). Horie has 

not alleged that the Law Offices of Art Dula is a separate business 

entity, essentially only claiming that it is a sole proprietorship, which 

has no separate legal existence. See CU Lloyd’s of Texas v. Hatfield, 

126 S.W.3d 679, 684 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) 

(“Under Texas law, a sole proprietorship has no separate legal existence 

apart from the sole proprietor.”). Therefore, the Law Offices of Art Dula 

is alleged to be the same as Dula, and thus must be considered a part of 

the Company Group. 

Horie alleged that Friedman was general counsel of Excalibur 

Almaz USA, Inc. (MR 16). Excalibur Almaz USA, Inc. is an “Affiliate” 

of EA as defined in the Settlement Agreement. (MR 278, Settlement 

Agreement, at Sch. 1, §1). Thus, Friedman is part of the Company 

Group. (MR 267). Further, Friedman’s name appears only three times 

in the Amended Petition: in the caption, in the first paragraph listing 
21 

defendants, and in the identification of “Parties.” (MR 76, 80). The only 

“allegation” is that Friedman “is a lawyer at the law office of Art Dula.” 

(MR 80). Because there are no other allegations against her, Friedman 

would be included in the Company Group to the same extent as the Law 

Offices of Dula. Thus, all of the Relators fall within the Company 

Group that was released by Horie in the Settlement Agreement, and 

therefore are entitled to invoke the forum selection clause. 

2. Relators Can Enforce the Forum Selection Clause as 

Non-Signatories 

Even aside from the express and unambiguous definition of 

“Company Group” in the Settlement Agreement, Relators would still be 

entitled to enforce the forum selection clause. Under Texas law, “[a] 

non-signatory defendant can invoke a forum-selection clause if the 

signatory plaintiff “has sued signatory and non-signatory defendants 

based on substantially interdependent and concerted misconduct by all 

defendants.” Phoenix Network Techs., 177 S.W.3d at 622; Deep Water 

Slender Wells, Ltd., 234 S.W.3d at 693-94. 

The Deep Water case is directly on point and compels enforcement 

of the forum selection clause. In Deep Water, the 14th Court of Appeals 

considered the defendants’ attempt to enforce a forum selection clause 
22 

between the plaintiff and a related Dutch corporation that was not part 

of the litigation. 234 S.W.3d at 683-84. The forum selection clause 

called for exclusive jurisdiction in the Netherlands. Id. The plaintiff 

sued a Delaware corporation and three individuals, pleading that the 

Delaware corporation was an alter ego and successor to the Dutch 

corporation, and that the individual defendants engaged in 

“interdependent and concerted tortious conduct” with the Dutch 

corporation with the intent to defraud the plaintiff. Id. at 694. 

The Deep Water court recognized that “courts should apply 

equitable estoppel when a signatory to the contract containing the 

forum-selection clause raises allegations of substantially 

interdependent and concerted misconduct by both nonsignatories and 

one or more signatories to the contract.” Id. Accordingly, recognizing 

the presumption in favor of the enforceability of forum selection clauses 

and the heavy burden imposed upon those resisting them, the Deep 

Water court found that the nonsignatory corporation and individuals 

were entitled to enforce the forum selection clause. Id. 

The facts here are similar since Horie has sued Relators, alleging 

that they engaged in “substantially interdependent and concerted 
23 

misconduct” with EA, which is a named party to the Settlement 

Agreement. Horie continues to allege that the Relators collectively 

operated a “space business,” which clearly refers to EA and the other 

Excalibur entities. (MR 77-79). Further, Horie names Dula and 

Hightower as defendants, who both signed the Settlement Agreement 

as directors of EA. (MR 80-81, 162). The Amended Petition is replete 

with allegations of concerted interdependent and concerted misconduct, 

essentially claiming throughout the pleading that Dula, acting through 

or in concert with all the Relators, defrauded Horie out of $49,003,000. 

(See, e.g., MR 85) (“Each of the causes of action herein is pled against all 

Defendants, individually and collectively.”). 

Accordingly, all Relators are entitled to invoke the forum selection 

clause contained in the Settlement Agreement. Deep Water Slender 

Wells, Ltd., 234 S.W.3d at 693-94; see also Smith v. Kenda Capital, 

LLC, 451 S.W.3d 453, 458 (Tex. App.—Houston [14th Dist.] 2014, no 

pet.); Phoenix Network Techs., 177 S.W.3d at 622 (concluding that the 

equitable-estoppel theories regarding non-signatories to arbitration 

agreements should also be applied to forum-selection clauses that do 

not involve arbitration); Accelerated Christian Educ., Inc. v. Oracle 
24 

Corp., 925 S.W.2d 66 (Tex. App.—Dallas 1996), overruled in part on 

other grounds by In re Tyco Electronics Power Sys., Inc., No. 05–04–

01808–CV, 2005 WL 237232 (Tex. App.—Dallas Feb. 2nd, 2005, orig. 

proceeding) (“[A] valid forum selection clause governs all transaction 

participants, regardless of whether the participants were actual 

signatories to the contract.”); see also Brock v. Entre Computer Ctrs., 

Inc., 740 F. Supp. 428, 431 (E.D. Tex. 1990). 

Notwithstanding the foregoing, the trial court’s Order notes that 

the Deep Water case “directs and authorizes the Court to consider a 

number of factors including the strong possibility, according to counsel 

at the oral argument of this motion, that the courts of the Isle of Man 

may not have jurisdiction over the parties, thus leaving Plaintiff 

without a remedy if this matter is dismissed.” (App. A, MR 232-33). 

This conclusion misapplies the Deep Water decision. 

First, the Deep Water court actually rejected the argument that 

the party enforcing the forum selection clause must prove that the 

forum selection clause was enforceable in the chosen forum. 234 S.W.3d 

at 695. Indeed, the Deep Water court found that amenability to the 

selected jurisdiction was not relevant to consideration of the 
25 

enforceability of the forum selection clause. Id. Therefore, contrary to 

the court’s finding otherwise, Relators do not have the burden to prove 

that the forum selection clause would be enforceable in the Isle of Man. 

Second, the Deep Water court expressly rejected the plaintiff’s 

claim that the forum selection clause “would be so manifestly and 

gravely inconvenient to the resisting party that the resisting party 

effectively would be deprived of a meaningful day in court.” Id. at 693. 

It is Horie’s burden to make a “strong showing” that he would be 

deprived of a meaningful day in court if the forum selection clause is 

enforced. But Horie offered no affidavits or other evidence whatsoever 

in this regard. The Deep Water case does not authorize the court to 

reject a valid and binding forum selection clause where Horie offers no 

evidence whatsoever in support of the “strong showing” necessary to 

avoid a contractual mandatory forum selection clause. 

Third, Horie’s counsel claimed at the hearing, without authority 

or proof, that the Isle of Man did not have jurisdiction. (App. C, at p. 6-

7). As a matter of law, this is inadequate to support the denial of the 

motion to dismiss. In any event, for avoidance of doubt, Dula and 

Hightower have acknowledged that they are subject to the jurisdiction 
26 

of the courts of the Isle of Man as a result of their positions as CEO and 

Executive Vice President of EA. (MR 240, App. D, at p. 5). Thus, none 

of the concerns expressed by the trial court in its order defeat 

applicability of the forum selection clause under Deep Water. 

C. Horie Cannot Avoid the Forum Selection Clause by 

Falsely Claiming that Dula was his Attorney 

This is a case between sophisticated businessmen, not an attorney 

and client. Significantly, Horie does not assert a claim for legal 

malpractice. But Horie does make bare allegations in the Amended 

Petition that Dula was his lawyer. (MR 77). Even if the fiction of Dula 

as Horie’s lawyer was believed, the forum selection clause would still be 

enforceable. Under Texas law, forum selection clauses are valid and 

enforceable, even in contracts between attorneys and clients. Falk & 

Fish, 317 S.W.3d at 527 (stating, in context of an attorney-client 

agreement, that “[f]orum selection clauses are generally enforceable”). 

Indeed, the heavy burden of resisting application of a forum selection 

clause is the same in contracts between attorneys and clients as it is in 

other contracts; this is clear from Falk & Fish—the very same authority 

that Horie relies on. Id. (“A party attempting to show that such a clause 
27 

should not be enforced bears a heavy burden to prove the clause is 

invalid.”). 

Horie has not come close to meeting this heavy burden of proof. 

He has not provided one scintilla of evidence that Dula was his lawyer 

at any time. There is no affidavit from Horie, or any other evidence 

whatsoever, to support the naked assertions in his pleading. At best, 

Horie alleges—without evidence—that Dula was his lawyer in 2005 

when he decided to invest in EA. (MR 77 (alleging that Horie engaged 

Dula when he invested $49,003,000 for the purpose of setting up a space 

travel business)). There is not even an allegation, much less evidence, 

that the purported representation continued to 2010.6 Horie was 

represented by independent counsel when he entered into the 

Settlement Agreement. (MR 378-80). Horie represented in the 

 

6 Horie’s allegation that Dula was his lawyer is pure fiction. But even as alleged by 

Horie, the case is similar to LeBlanc v. Lange, 365 S.W.3d 70, 79 (Tex. App.—

Houston [1st Dist.] 2011, no pet.), where the plaintiff claimed that a business 

associate was also his personal lawyer. In that case, an attorney (Lange) and a 

businessman (LeBlanc) formed several corporate entities together. Id. at 73-75. A 

dispute between LeBlanc and the company arose, and ended with a settlement 

agreement. Id. at 75-76. Rather than abide by the terms of the settlement 

agreement, LeBlanc sued the company and Lange, claiming that Lange had 

represented him personally in connection with the business and the settlement 

agreement. Id. at 78. The court concluded that, while Lange had previously 

represented LeBlanc personally, there was no evidence (other than LeBlanc’s 

subjective belief) that the attorney-client relationship existed during the time period 

relevant to the settlement agreement. Id. at 82. 
28 

Settlement Agreement that he had “either had the terms and effect ... 

explained by independent legal counsel or had the full opportunity to 

have its terms and effect explained by independent legal counsel.” (MR 

274, Settlement Agreement, at §11.4). This representation is contrary to 

any inference that Dula was still representing him in connection with 

the agreement. (See id.). 

Horie has not pointed to any evidence which remotely suggests 

that the Settlement Agreement is an attorney-client contract, and there 

is no such indication in the four corners of that document. But even in 

the context of attorney-client contracts, the party resisting enforcement 

of the forum selection clause bears the burden of proof, Falk & Fish, 317 

S.W.3d at 527, and Horie relies on nothing but bare allegations in the 

pleadings, and even those bare allegations are insufficient. 

Falk & Fish, the only authority that Horie cited in the underling 

action for the proposition that the allegation of an attorney-client 

relationship defeats the forum selection clause, is readily 

distinguishable. In that case, a Dallas law firm was retained to 

represent a North Carolina client in a North Carolina lawsuit. 317 

S.W.3d at 525. The attorney-engagement agreement contained a forum 
29 

selection clause stating that “the applicable courts of Dallas, Texas 

shall be the for a (sic) for all attorney-client disputes.” Id. 

Subsequently, the parties found themselves in a billing dispute, and the 

law firm sued the client in Dallas. Id. The trial court refused to enforce 

the forum selection clause and dismissed the firm’s complaint for lack of 

personal jurisdiction. Id. at 526 

On appeal, the Falk court recognized the presumed enforceability 

of a forum selection clause, and the heavy burden placed upon the party 

resisting the clause. Id. at 527. However, unlike the instant case, the 

client had submitted affidavits indicating that he did not understand 

that disputes would be resolved in Texas rather than North Carolina, 

where he lived, and that his attorney did not explain that he was 

acquiescing to an inconvenient forum in Texas. Id. at 529. While the 

court recognized that a client’s failure to read the contract did not 

excuse performance, the fact that it was an attorney-client contract, 

coupled with the typographical error and consequent ambiguity of the 

clause, caused the Falk court to find that the client in that case met his 

burden to avoid enforcement of the forum selection clause. Id. at 530. 
30 

The Falk case is readily distinguishable on several grounds. First, 

in contrast to the clause at issue in this case, the forum selection clause 

in Falk was indefinite, non-exclusive, and contained a typographical 

error that did render it ambiguous. Id. at 529. The forum selection 

clause here contains no such infirmity. Second, the party resisting the 

forum selection clause in Falk actually did submit affidavits to sustain 

its burden to oppose enforcement of the clause. Id. Here, Horie has 

submitted no affidavits or other evidence. Third, and most importantly, 

in Falk the forum selection clause was unquestionably found in an 

attorney engagement agreement. Id. at 525. In direct contrast, as 

discussed above, the Settlement Agreement is not a contract between 

an attorney and client, and there is not even an allegation that Dula 

was Horie’s lawyer in 2010. The Settlement Agreement recites that 

Horie had independent legal counsel, or had the full opportunity for 

review by independent legal counsel. (MR 274). Given Horie’s multiple 

legal problems, including the appeal of his criminal conviction and 

sentence, and the defense of the claim by his former corporation, it is 

clear that Horie had an array of counsel representing his interests when 

the Settlement Agreement was signed in 2010. (MR 378-80). Clearly, 
31 

while the Falk case confirms the heavy burden of proof Horie faces even 

if his allegations about Dula are true, Falk does not control the outcome 

of this case. Horie clearly failed to meet his heavy burden of proof. 

D. Horie Cannot Avoid the Forum Selection Clause by 

Pleading Fraud 

Horie’s allegations that the Settlement Agreement was entered 

into as a result of fraud does not allow him to escape the reach of the 

forum selection clause for three reasons. 

First, the plain language of the forum selection clause provides 

that any claim made in connection with the contract’s negotiation or 

validity is subject to the exclusive jurisdiction of the Isle of Man’s 

courts. (MR 277) (stating that the Isle of Man is the proper forum for 

any dispute or claim arising out of or in connection with the contract’s 

“existence, negotiation, validity, termination or enforceability”). 

Second, Texas law is unequivocal that allegations of fraudulent 

inducement do not render a forum selection clause invalid or 

unenforceable. “[S]imply alleging fraud in the inducement of a contract 

is not sufficient to make a forum selection clause unenforceable.” My 

Cafe-CCC, Ltd. v. Lunchstop, Inc., 107 S.W.3d 860, 867 (Tex. App.—

Dallas 2003, no pet.) (upholding dismissal of suit because forum 
32 

selection clause in agreement necessarily applied to fraudulent 

inducement claim); see also In re Int’l Profit Assocs., 274 S.W.3d at 678. 

“When . . . the forum selection clause encompasses all causes of action 

concerning the contract, the claim that a party was fraudulently 

induced to enter the contract does not avoid the forum selection clause.” 

My Cafe-CCC, 107 S.W.3d at 867. “To allow a party to avoid its 

obligations under a presumptively valid contract with a prima facie 

valid forum-selection clause simply because the party might carry its 

burden at trial would give the party an end run around ....” Clark v. 

Power Mktg. Direct, Inc., 192 S.W.3d 796, 800 (Tex. App.—Houston [1st 

Dist.] 2006, no pet.) (upholding dismissal of suit in which Plaintiff 

alleged fraudulent inducement because forum selection clause provided 

for different forum than one in which suit was brought). “[A] court 

determining whether or not to enforce a forum-selection clause will not 

inquire into the enforceability of the contract in which that clause is 

found.” Id. (quoting Holeman v. Nat’l Bus. Inst., Inc., 94 S.W.3d 91, 102 

(Tex. App.—Houston [14th Dist.] 2002, pet. denied) (rev’d on other 

grounds)). 
33 

Third, the definition of “Claim” precludes any allegation of 

fraudulent inducement. In the Settlement Agreement, Horie expressly 

bargained away and released claims that were “known and unknown” 

and “suspected and unsuspected.” (MR 278). He cannot claim that he 

was fraudulently induced into entering into the Settlement Agreement 

because of the alleged concealment of facts that he did not know and did 

not suspect, when he has expressly released all such unknown and 

unsuspected claims. Accordingly, Horie cannot escape the reach of the 

forum selection clause to which he agreed by alleging that the contract 

was entered into as a result of fraudulent conduct. 

IV. CONCLUSION & PRAYER

Relators request that this Court grant this Petition and issue a 

Writ of Mandamus ordering the trial court to vacate its April 22, 2015 

Order Denying Motion to Dismiss (App. A), and its denial of the Motion 

for Reconsideration (App. D), and issue orders dismissing all claims in 

the case. Relator further requests such other and further relief to 

which it may be entitled. 

 
34 

 Respectfully submitted, 

BAKER & HOSTETLER LLP

/s/Joshua C. Thomas 

Eric W. Kristiansen 

TBA No. 24027428 

ekristiansen@bakerlaw.com 

Joshua C. Thomas 

TBA No. 24066185 

jthomas@bakerlaw.com

811 Main, Suite 1100 

Houston, Texas 77002-6111 

Telephone (713) 751-1600 

Facsimile (713) 751-1717 

Michael R. Levin 

Pro Hac Vice Application to be Filed

Florida Bar No. 351326 

mlevin@bakerlaw.com 

200 S. Orange Avenue, Suite 2300 

Orlando, Florida 32801 

Telephone (407) 649-4000 

Facsimile (407) 841-0168 

ATTORNEYS FOR RELATORS 
35 

CERTIFICATION OF FACTUAL STATEMENTS

Pursuant to Rule 52.3(j) of the Texas Rules of Appellate 

Procedure, I have reviewed this Petition and concluded that every 

factual statement in the Petition is supported by competent evidence in 

the appendix or record. 

/s/Joshua C. Thomas 

Joshua C. Thomas 

CERTIFICATE OF COMPLIANCE

 Pursuant to Rule 9.4(i)(3) of the Texas Rules of Appellate 

Procedure and relying on the word-count function of the computer 

program used to prepare this document, I certify that the total number 

of words in this document is 6,764. 

/s/Joshua C. Thomas 

 Joshua C. Thomas 
36 

CERTIFICATE OF SERVICE

I hereby certify that the foregoing Petition for Writ of Mandamus 

has been served in accordance with the Texas Rules of Appellate 

Procedure via electronic filing service and/or certified mail, return 

receipt requested on this 22nd day of June, 2015. 

The Honorable Jeff Shadwick 

Presiding Judge, 

55th Judicial District Court 

Harris County, Texas 

Harris County Civil Courthouse 

201 Caroline, 9th Floor 

Houston, Texas 77002 

Telephone No.: (713) 368-6055 

Lloyd E. Kelley 

THE KELLEY LAW FIRM

2726 Bissonnet, Ste 240 PMB 12 

Houston, TX 77005 

Telephone (281) 492-7766 

Facsimile (281) 652-5973 

James D. Pierce 

1 Sugar Creek Center, Ste. 1080 

Sugar Land, Texas 77478 

Telephone (713) 650-0150 

Facsimile (713) 650-0146 

/s/Joshua C. Thomas 

Joshua C. Thomas 
37 

APPENDIX

TO PETITION FOR WRIT OF MANDAMUS

TAB DESCRIPTION

A April 22, 2015 Order Denying Motion to Dismiss 

B First Amended Petition 

Original Petition 

C Transcript of April 20, 2015 Hearing on Supplemental 

Motion to Dismiss 

D Transcript of June 1, 2015 Hearing on Motion for 

Reconsideration and Discovery Motions 
TAB A
CertifiedDocumentNumber:65135810-Page1of2

CAUSE NO. 2014-6594 7 

TAKAFUMI HORIE § 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

IN THE DISTRICT COURT OF 

vs 

F I TJ ED 

HARRIS COUNTY, T~aniel 

District Clerk 

THE LAW OFFICES OF ART DULA, 

et al. Time: APR 2 2 201Jo~ 3 i 11--

Harris County, Texjtf A ~~ _ 

By: ...,r~ 55TH JUDI CIAL.--,Dru;:ISsrTmR~WR'::mJ!r.L\Y-~~ 

ORDER DENYING MOTION TO DISMISS 

Upon consideration of Defendants' Supplemental Motion to Dismiss, 

Plaintiffs response, the exhibits submitted, and argument of counsel, the Court 

rules that the motion is DENIED. 

While Plaintiffs Original Petition is part of the file and available to the Court 

for use in understanding the universe of facts, it is the Plaintiffs First Amended 

Petition which is the active claim which will be dismissed or not. The pending 

cause of action is against Defendants acting in capacities different than their 

capacities under which they were signatories (in the case of Dula and Hightower) of 

the Deed of Assignment and Settlement (the "Agreement"). Under the pleading and 

the plain reading of the Agreement, the Court cannot say that this action is subject 

to the release and forum selection clause as Defendants urge. 

Further, Deep Water Slender Wells, Ltd. v. Shell Int'l Exploration & Prod., 

Inc. 234 S.W.3d 679 (Tex.App. - Houston [14th] 2007, pet denied) directs and 

authorizes the Court to consider a number of factors including the strong 

possibility, according to counsel at the oral argument of this motion, that the courts 

232
CertifiedDocumentNumber:65135810-Page2of2

of the Isle of Mann may not have jurisdiction over the parties, thus leaving Plaintiff 

without a remedy if this matter is dismissed. 

It may be that Defendants ultimately succeed through a motion for summary 

judgment in demonstrating that the release in the Agreement does indeed apply to 

Plaintiffs claims in this case, but the Court cannot make that determination at this 

time. Under the pleadings and the Agreement, and considering that settlement of 

claims by a client against his attorney require specific and additional proof, the 

Court at this time observes that the release does not appear to include these claims 

and these Defendants. 

IT IS SO ORDERED. 

Z2 SIGNED on the day of __ +-----

J 

2 

233
In accordance with Texas Government Code 406.013 electronically transmitted authenticated



documents are valid. If there is a question regarding the validity of this document and or seal



please e-mail support@hcdistrictclerk.com

HARRIS COUNTY, TEXAS

Chris Daniel, DISTRICT CLERK

I, Chris Daniel, District Clerk of Harris 



County, Texas certify that this is a true and 



correct copy of the original record filed and or 



recorded in my office, electronically or hard 



copy, as it appears on this date. 



Witness my official hand and seal of office

Certified Document Number: 65135810 Total Pages: 2

this June 5, 2015

234
TAB B
CAUSE NO. 2014- _________ 

§ IN THE DISTRICT COURT OF 

TAKAFUMI HORIE, § 

§ 

§ 

Plaintiff, § 

v. § 

 § HARRIS COUNTY, TEXAS

THE LAW OFFICES OF ART DULA, § 

ARTHUR M. DULA, individually, and d/b/a § 

THE LAW OFFICES OF ART DULA, § 

ANAT FRIEDMAN, individually, and d/b/a § 

THE LAW OFFICES OF ART DULA, § 

J. BUCKNER HIGHTOWER, § 

THE ROBERT A. AND VIRGINIA § 

HEINLEIN PRIZE TRUST, through its § 

trustees ARTHUR M. DULA AND § 

J. BUCKNERHIGHTOWER, § 

EXCALIBUR LIMITED, § 

EXCALIBUR ALMAZ LIMITED, and § 

EXCALIBUR ALMAZ USA, INC., § 

 § 

Defendants. § ____TH DISTRICT COURT

PLAINTIFF’S ORIGINAL PETITION 

I. 

INTRODUCTION

This is a case werhe fraud occurred in the private spaceflight market. 

Houston lawyer Art Dula and his law firm, the Law Office of Art Dula, 

utilizing offshore shell corporations in the Isle of Man, defrauded a Japanese 

billionaire investor, Takafumi Horie, out of $49 million cash, using Russian 

made "Almaz" class spacecraft as the bait. 

11/10/2014 4:44:45 PM

Chris Daniel - District Clerk Harris County

Envelope No. 3128824

By: Sharon Carlton

Filed: 11/10/2014 4:44:45 PM

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II. 

Takafumi Horie files this Original Petition against Defendants The Law Offices of Art 

Dula, Arthur M. Dula, individually and d/b/a The Law Offices of Art Dula, J. Buckner 

Hightower, Anat Friedman, individually and d/b/a The Law Offices of Art Dula, The Robert A. 

and Virginia Heinlein Prize Trust, Excalibur Limited, Excalibur Almaz Limited, and Excalibur 

Almaz USA, Inc. for breach of fiduciary duty, violations of the Isle of Man Company Acts of 

1931 and 2006, fraud, money had and money received, statutory theft, statutory fraud, violation 

of the Texas Securities Act, an accounting, constructive and or resulting trust, and alternatively 

for conversion, negligence and breach of contract. Plaintiff seeks rescission/damages in the 

amount of his $49,003,000.00 original investment, plus interest, attorneys’ fees, and damages

allowed at law or equity, including punitive damages. 

III. 

CASE SUMMARY

This is a case about Houston attorney Art Dula, who took advantage of Japanese 

entrepreneur Takafumi Horie, by claiming that he could set up a commercial space

transportation program to carry cargo, scientific experiments, and people into low Earth orbit 

to the International Space Station and other space destinations. Dula was, and is, the lawyer and

a trustee for The Robert A. and Virginia Heinlein Prize Trust ("Heinlein Trust"). Heinlein was a 

prolific science fiction author who was famous for writing about manned space exploration. 

Dula used his position as trustee of the Heinlein Trust to promote his law firm in getting business 

under the premise of establishing "new space business enterprises." Using his position as trustee 

of the Heinlein Trust, Dula, through an intermediary, sought out Horie and solicited him as a 

client and investor. 

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IV.

Horie engaged Dula as his attorney, and then trusted him enough to give Dula

$49,003,000.00 in trust for purposes of setting up a business to accomplish space travel. The 

money was sent to Dula's Texas IOLTA client trust fund account to accomplish the goals for 

Dula's client Horie. The Defendant corporations were set up by Art Dula, and the sole capital 

for these companies was Plaintiff’s funds. Dula never intended to engage in a commercial space 

program, and in fact continually misrepresented, concealed facts and defrauded his client 

Takafumie Horie d/b/a Japanese Space Dream (“Horie”). His intent was to take his clients’ 

money over time through a complex scheme under the guise that he was building a space 

program. 

V.

Dula has gone to great lengths to hide and conceal his bad acts. Plaintiff Horie only 

recently discovered the wrongs perpetrated against him by Defendants, because the facts were

concealed by Defendant Dula, and Dula never advised Horie of his wrong doing. Plaintiff relied 

on and trusted Defendant Dula in Dula’s position as his attorney, his fiduciary, and because of

his representations as to his expertise concerning his spaceflight project and his investment 

therein. 

VI.

Plaintiff Horie became aware of Dula’s scam when he read an article by Alexander 

Forbes that Dula had sold at auction one of the spacecraft articles purchased with Plaintiff’s

money. The Forbes article implied that the company was liquidating, and indicated the 

spacecraft was only suitable for display in a museum, and not as a potential flight article as had 

been falsely represented to Plaintiff Horie from the beginning. The supposed space program was 

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a sham, as Dula never had the rights or ability to utilize the spacecraft purchased with Plaintiff’s 

money for anything other than display purposes. However, this fact was kept secret from 

Plaintiff and other persons associated with the Excalibur Almaz project for years. Plaintiff never 

authorized the funds held in trust be utilized to purchase spacecraft sold for display purposes. 

Plaintiff never authorized funds held in trust to be utilized to set up a "space program" incapable 

of space travel. Plaintiff never authorized funds held in trust to be utilized to set up a business 

other than a true "space business enterprise." Had this information been known to Plaintiff, he 

would have never invested in the first place, and if known after he had invested, Plaintiff would 

have petitioned for dissolution of the Defendant Excalibur Almaz Limited under provisions of 

the Isle of Man Company Acts of 1931 and 2006, and recovered his investment years ago as the 

companies were created for a fraudulent purpose. By additional fraudulent acts, Dula ultimately 

obtained complete control of Plaintiff's funds and has utilized them for his own benefit, and, on 

information and belief, has fraudulently transferred the funds to his wife, Tamea, a prominent 

Houston lawyer, and his children Russell and Austin. The continuing fraud and breach of 

fiduciary duty has damaged Plaintiff in excess of the minimum jurisdictional amounts of this 

court. 

VII. 

Plaintiff Horie seeks by this suit to recover damages, assets of the Defendant enterprises 

which are held in trust for Plaintiff, and to obtain other damages allowed by law for himself, and, 

if appropriate, alternatively, by joining any other putative interested party shareholders, including 

LDH Corporation and/or Oceanedge Development Limited, pursuant to Rule 39, Texas Rules of 

Civil Procedure. 

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VIII. 

DISCOVERY LEVEL AND REQUEST FOR DISCLOSURE

Discovery should to be conducted under Level 2 pursuant to Texas Rule of Civil 

Procedure 190.3. Plaintiff requests disclosure of the items set forth in Tex. R. Civ. P. 194.2 a-k. 

IX. 

PARTIES

A. Plaintiff Takafumi Horie is a citizen and resident of Japan, and at all relevant times 

was doing business as Japan Space Dream. Horie was solicited in Japan from Texas lawyer 

Defendant Art Dula to invest US $49,003,000.00 for creation of a private operating spaceflight

program. Dula created companies for Horie, including Excalibur Almaz Limited.

B. Defendant Arthur M. Dula, individually and d/b/a the Law Office of Art Dula, is a 

resident of Houston, Harris County, Texas. He may be served with process at his place of 

business at 3106 Beauchamp Street, Houston, Texas 77009. 

 C. Defendant Anat Friedman is a lawyer at the law office of Art Dula and is a resident of 

Houston, Harris County, Texas. She may be served with process at his place of business at 3106 

Beauchamp Street, Houston, Texas 77009. 

D. Defendant Robert A. and Virginia Heinlein Prize Trust (“Heinlein Prize Trust”) may 

be served by serving either of its trustees, Arthur M. Dula or J. Buckner Hightower, at 3106 

Beauchamp Street, Houston, Texas 77009. 

 E. Defendant Excalibur Limited is an Isle of Man corporation. It has operated for all 

relevant time periods as the alter-ego of Defendant Dula from Houston, Texas. Excalibur 

Limited may be served with process by serving its CEO Arthur M. Dula at his place of business 

at 3106 Beauchamp Street, Houston, Texas 77009. 

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 F. Defendant Excalibur Almaz Limited is an Isle of Man corporation. It has operated 

for all relevant time periods as the alter-ego of Defendant Dula from Houston, Texas. Excalibur 

Almaz Limited may be served with process by serving its CEO Arthur M. Dula at his place of 

business at 3106 Beauchamp Street, Houston, Texas 77009. 

 G. Defendant Excalibur Almaz USA, Inc. is a Texas corporation headquartered in 

Houston, Harris County, Texas It has operated for all relevant time periods as the alter-ego of 

Defendant Dula from Houston, Texas. Excalibur Almaz USA operates the business affairs of 

Excalibur Almaz Limited under the terms of a service contract. Excalibur Almaz USA, Inc. may 

be served with process by serving its Chairman of the Board and sole shareholder Arthur M. 

Dula at his place of business at 3106 Beauchamp Street, Houston, Texas 77009. 

 H. Defendant J. Buckner Hightower is a Texas citizen and resident, and is the claimed 

current CEO of Excalibur Almaz USA, Executive Vice President of Excalibur Almaz Limited, 

recently became a minority shareholder of Excalibur Limited, and on the Board of Directors of 

all three of those corporate Defendants comprising the enterprise. Defendant Hightower 

conspired, aided and abetted and/or facilitated Defendant Dula in committing and concealing the

illegal acts complained of herein. He engaged in actions designed to cover up and keep facts

secret from the public auditors and the government. He may be served with process at his place 

of business at 3106 Beauchamp Street, Houston, Texas 77009. 

X. 

JURISDICTION

This Court has subject matter jurisdiction over this dispute because the amount in 

controversy exceeds its jurisdictional threshold. See Tex. Gov’t Code Ann. §§ 24.007 - 24.008. 

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This Court has personal jurisdiction over Defendants because: (1) they are actively 

engaged in business in the State of Texas; (2) they reside in the State of Texas; (3) they 

performed services in this state pursuant to a contract and/or entered into a contract that was 

performable in whole or in part in this state; and/or (4) they committed torts and statutory 

violations in whole or in part in this state. See Tex. Civ. Prac. & Rem. Code § 17.042. 

 Venue is proper under Tex. Civ. Prac. & Rem. Code § 15.002. All or a substantial part of 

the events or omissions giving rise to Plaintiff’s claims occurred in this County. 

XI. 

FACTUAL BACKGROUND

The Plaintiff is a Japanese citizen, who was interested in the development and 

advancements in space exploration. Art Dula sought Plaintiff out representing that he was a

"space attorney" who could assist him in the development of a space program. Dula requested 

that Horie give him approximately $50,000,000 in trust, so that Dula could facilitate Plaintiff's 

dream in developing a private commercial space program. Dula represented he had connections 

with the Russian aerospace company NPO Mashinostroyenia (“NPOM”) who would provide 

hardware and technical expertise to build a commercial space business. He represented that he 

had acquired rights to NPOM space proven capsules that could be used in a space program. Dula 

represented that he was well connected and could assemble the professionals necessary to build a 

commercial space program. However, from the beginning, Dula had no intent to build a space 

program, but only to take Plaintiff's monies for his own use, utilizing a complex ruse, contrary to 

the interests of his cestui que trust. Dula convinced Plaintiff to place $49,003,000.00 into Dula's 

trust account for purposes of doing due diligence, and later setting up a space program in 

conformity with U.S. law and regulations (Dula claimed and continues to claim to be a "space 

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law" expert). Defendant Dula formed Defendant Excalibur Limited (“EL”) with long-time 

associate Buckner Hightower and Chris Stott (spouse of NASA astronaut Nicole Stott). EL was 

to act as the holding company for Dula's interest in Excalibur Almaz Limited (“EA”). EA was to 

be the operating commercial space company, and is the entity into which Plaintiff's monies were 

placed and which owned all the "space hardware," intellectual property, and other assets. Other 

than Plaintiff's funds, no other capital or income was received by EA. EA was managed by a 

Texas corporation formed and wholly-owned by Defendant Dula called Excalibur Almaz USA, 

Inc. (“EA USA”). Dula utilized EA USA to take funds and monies from EA as he desired. 

XII. 

Using Plaintiff's funds, Dula purchased four Almaz spacecraft capsules and two space 

stations from NPOM. This space hardware came from a Soviet-era secret space program, and

Dula represented to Plaintiff that a key advantage was that the spacecraft and space stations

being acquired had undergone rigourous flight testing. He represented to Plaintff and others that 

the hardware could be made "flight worthy," and that he could refurbished, modify and update

the equipment so that it would be certified for flight. The purchase contracts had to be approved 

by the Russian government, and unbeknownst to Plaintiff and on information and belief, 

expressly excluded the right to modify the Russian hardware, thus relegating it to display uses 

only! The items were only museum pieces, a secret Dula would keep until well after he acquired 

control of Plaintiff's investment. 

XIII.

Dula took Horie's money out of the IOLTA trust account and used it improperly. Dula 

first wired the funds to an account that he controlled in the Isle of Man. Then Dula set up with 

the funds an investment structure that provided Horie a 75% share in EA. Dula, despite 

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providing zero of his own capital, drafted the investement agreement to provide that his company 

EL acquire additional equity, if the entity EA met certain development milestones: (1) 

certification of the Almaz capsules for unmanned flight (EL increased to 35.25%), (2) successful 

unmanned orbital flight of an Almaz capsule (EL increased to 45.5%), (3) certification of Almaz 

capsules for manned flight (EL increased to 55.8%), and (4) successful orbital manned flight of 

an Almaz capsule (EL increased to 66%). Defendants Dula and EA have never to this date 

accomplished any of the milestones, nor did Dula ever have any intention of doing so. 

XIV. 

At the time he solicited the investment from Plaintiff, Defendant Dula was a lawyer 

licensed inTexas, who held himself out as an expert in "space law," in properly establishing and 

organizing space enterprises, in advising concerning contracts with NASA, in negotiating and 

drafting "space agreements." Dula drafted a "Private Placement Memorandum" which he 

represented to Plaintiff was a part of the legal documentation necessary to create a legal space 

program which he represented to be a proper "space agreement" to establish a "space enterprise." 

Per Dula's instructions, Plaintiff wired over time $49,003,000.00 to Dula’s attorney trust account 

in Houston, Texas. Thereafter, Defendant Dula transferred the money to an account in the Isle of 

Man associated with Excalibur Almaz Limited; an account with Dula controlled. Later, on 

information and belief, funds were sent to his wife Tamea and his children Russell and Austin 

Dula.

XV. 

On Dula's request funds were provided in tranches, with the final one-third being $16 

million. Dula falsely claimed a delay in the final payment interferred with Dula's ability to 

achieve the milestones that he included in the initial documentation. He falsely advised his 

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client and cestui que trust that he could legally take Plaintiff’s entire investment, leaving him 

nothing if Plaintiff did not acknowledge the milestones were achieved. Plaintiff relied on Dula’s 

advice which was given in violation of his fiduciary duty, and in reliance upon the representation 

that a real space program would be achieved. Being a part of a real space program was Plaintiff's 

dream, and if that could be achieved the ownership percentages were insignificant compared to 

being involved in a pioneering new business. Further, Plaintiff trusted Dula to act in Plaintiff's 

best interests, and relied on his representations that a space program would be created. In fact 

the milestones and spaceflight in general could never be accomplished, and Dula knew at the 

time he made the representations the milestones could not be accomplished. The representations 

made to Plaintiff were false and Dula omitted to state facts necessary to make the statements that 

were made not misleading. However, in reliance on the truth of the misrepresentations and that 

Dula would continue to act in Plaintiff's best interest and build a space venture, Plaintiff accepted

a reduction in his equity ownership to 34%, as though all milestones had been met (even though 

not a single milestone had been accomplished), and to place his remaining interest into a Trust

with a trustee suggested by Dula. Thereafter, Plaintiff Horie did make the last investment 

tranche payment, bringing his total investment to $49,003,000.00. 

XVI. 

Excalibur Almaz Limited could not accomplish its represented purpose of modifying and 

flying the Almaz spacecraft, therefore under Isle of Man law, Plaintiff or any shareholder had the 

right to dissolved EA pursuant to Isle of Man (“IOM”) law and obtained the return of the 

investment. As counsel for Plaintiff, Dula should have advised Plaintiff of this right, but failed to 

do so. The premise upon which Excalibur Almaz Limited was created – to modify and fly the 

Almaz spacecraft – could not be accomplished, and had any shareholder known this fact the 

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shareholder could have forced the dissolution under IOM law. EA assets at all times relevant 

had a value of at least $34,000,000. Any interest Dula obtained through his ownership in EL, 

was obtained contrary to his fiduciary duty and his obligations as an attorney, and accordingly as 

a matter of law, his breach of fiduciary duty results in all interests being forfeited. Plaintiff 

Horie was denied this option because Defendant Dula fraudulently concealed the fact that the 

purchase contracts for the spacecraft did not allow modifying the spacecraft, as would be 

required to launch them into space and fly them as represented. The reduction in Horie’s interest 

by Defendant Dula, and Dula's advice to place Horie's shares into a Trust controlled by a 

business associate of Dula's, was a direct result of material misrepresentations and breaches of 

fiduciary duty that furthered Dula's plan to take Plaintiff's monies. 

XVII.

Defendant Dula purported to control EA by virtue of his majority ownership of EL, 

which in fact he held in trust for Plaintiff. But Defendant Dula could personally claim only 45% 

of EA (the company with all the assets) – and he wanted to own and control it all. Defendant 

Dula began a systemantic fraudulent plan to get it, at a time when EA had total assets of at least

$34 million, which included approximately $29 million in cash, plus space hardware with a book 

value of over $5 million. But Dula was incentivized by more than the money to own the entire 

enterprise himself – he thought he had to in order to forever bury his secret that he had induced 

Plaintiff to invest in the first place with the lie that he had procured legal rights to modify and fly 

the spacecraft articles purchased from the Russians.

XVIII.

EA never could accomplished any of its milestones. Defendant Dula told his putative

shareholders – LDH and the Stotts – that his assessment was that more investment would be 

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needed, and even then it would be hard to do. Dula then falsely told his putative shareholders 

that he was committed to spending all the money in the enterprise to attempt to achieve the 

objective of commercial spaceflight. However, secretly Dula knew this objective could not be 

done because EA did not own the legal rights to modify and fly the space hardware he had 

purchased from the Russians. 

XIX.

 Breaching his fiduciary duty, Dula "magically" transformed Horie’s entire initial 

investment remaining at that time – upon informantion and belief over $34 million -- into his 

own name. But he had to lie again to get it done. 

XX.

On information and belief, Chris Stott resigned as an employee of EA USA and as Board 

member of EA because of disagreements with how the enterprise was being run and for family 

reasons having mostly to do with the time commitment required of him as his wife trained for 

her first flight as a NASA astronaut. The Stotts maintained their interest in EA indirectly 

through EL by way of their wholly-owned entity Oceanedge Development Limited, but became

inactive in the management of the company. 

XXI

On information and belief, Defendant Dula sent a team of EA USA employees from 

Texas to the Isle of Man, including two members of the Board of EA and its CFO, to negotiate a 

buy out with Bryan Stott, one of the members representing the interests of the Stotts in EL and

EA. During these negotiations, Chris Stott, then in Houston, Texas, was also consulted. The EA 

team was directed by Dula to represent, and did represent, to the Stotts (1) that EA owned four 

Almaz capsules and two space stations that could be and were going to be used to build an 

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orbital space transportation company, (2) that EA intended to use all of the funds invested by 

Horie to accomplish that goal, and would be looking for additional funds, and (3) that Horie and 

LDH continued to back the enterprise, hopefully with additional funding. These representations 

were known by Defendant Dula to be false at the time they were made, and the Stotts were in no 

position under IOM law to out vote Dula: Dula controlled EL (in which the Stotts were the 

minority shareholder), and through EL Dula controlled EA (in which LDH was the minority 

shareholder). On information and belief, because of these false representations, the Stotts, 

believing that Dula would ultimately fail and that there was no alternative to letting Dula waste 

the assets of the enterprise down to zero, agreed to have their interest in EL bought out for 

$300,000 – less than 3% of the value of their interest if LDH had been bought out first and EL

had thereafter been dissolved. On information and belief, the Stotts were provided with EA’s 

confidential internal business plans to support the false representations (1) that EA owned the 

Russian space hardware with rights to modify it for flight and (2) that Dula would consume all of 

the current cash then in the enterprise to try to achieve a commercial spaceflight objective that 

the enterprise did not have the legal right to do (by showing proposed budgets and capital raise 

requirements).

XXII.

On information and belief, after the Stotts sold out their interest to Dula, Defendant Dula 

then used the same misrepresentation tactics and, in addition, touted the calculated share value in 

EA achieved in the Stott buy out as the fair market value of EA stock, in order to fraudulently 

induce a similar buy out of Horie’s assigned stock interest from LDH for a mere $475,000. At 

the time LDH held a 34% interest in EA, valued at about $12 million, more than $10 million of 

which was cash. The only reason LDH would have ever agreed to such a lop-sided deal was if 

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they believed Dula had the rights he claimed to the spacecraft to modify them for flight – which 

he did not – and that he was going to spend all the cash in the enterprise to try to achieve that 

objective; again, an objective he did not have the legal right to pursue. Just as with the Stotts, as 

a minority shareholder in EA, LDH did not have the legal right under IOM law to prevent Dula 

from pursuing that objective, unless they had known at the time that the representation as to 

ownership rights in the space hardware was false – which, of course, they did not know. 

XXIII.

On information and belief, Defendant Dula negotiated the LDH buy out himself. He

made the same two false representations that he had made to the Stotts in order to induce LDH 

and Plaintiff Horie into selling the EA shares to him for pennies on the dollar. In addition, he 

provided LDH information about the fraudulently induced Stott transaction, claiming that it set 

the fair market value for EA stock. The deal was memorialized in a written agreement, which

included express and specific reference to confidential information being provided under a 

nondisclosure agreement, including the same confidential internal business plans that had been 

provided to the Stotts, in order to falsely bolster all three misrepresentations. 

XXIV.

On information and belief, Dula's scheme was to buy out other owners of EA for less 

than 3% of the liquid value of their interests – a sale of securities valued at more than $34 

million, most of which was cash. After Dula executed his scheme, Plaintiff Horie and the

putative minority shareholders, LDH and the Stotts, were completely out of the enterprise, and 

EA still had some $28 million in cash left, plus the display purpose space hardware. 

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XXV.

 Defendant Dula had by lies and deceit convinced the minority shareholders in EA that the 

company had a true market value of only $1.4 million because of the control he could exercise 

and his misrepresentations about the legal ability of the corporation to be able to modify and fly 

the Almaz spacecraft and space stations, effectively fraudulently locking the $28 million in cash 

and the other assets in an illiquid corporate structure. 

XXVI.

Even more striking, Defendant Dula had funded the buy-outs with money from Plaintiff’s 

initial investment, some of which was laundered through his wholly-owned entity, Excalibur 

Almaz USA. Thus, Defendant Dula had spent some $775,000 of Horie’s money in order transfer 

$28 million of Horie’s money (plus the space hardware) into his own name – and now he thought 

he had it all for himself. But the law is not so kind when greed is satisfied by fraud and 

dishonest conduct. 

XXVII. 

Dula knew all along that his representations were false. Employees within EA USA 

learned only later that the contracts that supposedly gave EA ownership of the space hardware 

only transferred ownership rights for the purpose of displaying the hardware, e.g., at air shows, 

trade shows or in museums. Thus, Defendants Dula and EA had no rights to the capsules 

necessary to refurbish and modify them in order to certify them to fly humans in space. Without 

such rights, the representation that EA owned the space hardware to accomplish the objectives of 

the enterprise was false. Had Horie or LDH known this they would have insisted on their full 

share in any buy out, or would have insisted that EL and EA be dissolved in accordance with the 

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Isle of Man Company Acts of 1931 and 2006, because it was legally impossible to achieve the

stated objectives of the enterprise, as well as for other reasons under those Acts. 

XXVIII. 

 Recognizing they were about to be caught, Defendant Dula and the General Counsel Anat 

Friedman, an associate lawyer of Dula and counsel of EA USA, purportedly attempted to get the 

Russians and NPOM to modify the sales contracts, thus admitting the deficiencies in legal rights; 

but that was never accomplished. On information and belief, examination of EA’s books 

revealed that during his space hardware purchase contract negotiations with NPOM, Defendant 

Dula made cash payments – fraudulently concealed by Defendant Dula as fictitious contract 

payments – to Pavel Shirokov, Deputy General Director of NPOM and the head officer at NPOM 

in charge of negotiating the contracts for the space hardware, and importantly, for getting those 

contracts approved by the Russian Space Agency, Roscosmos. Arguably, these cash payments to 

Mr. Shirokov not only incentivized NPOM to enter into the contracts with Dula, but also paved 

the way for Mr. Shirokov to obtain Russian government approval. They were in effect cash 

payments made to a Russian government official and/or an agent of the Russian government in 

order to get a sales contract. Such actions by Defendant Dula could constitute a violation of the 

Foreign Corrupt Practices Act. If the contracts for the space hardware were obtained by criminal 

conduct, then they are void and the enterprise was not able as a legal matter to accomplish its 

stated objectives. Horie did not authorize funds to leave the trust to purchase items in violation 

of the law. Obviously, had Plaintiff Horie known the truth he would not have invested in the 

supposed space enterprise. On information and belief, if the Stotts or LDH had known this at the 

relevant times, they would have insisted on their full share in any buy out, or would have insisted 

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that EL and EA be dissolved at the relevant time, because it was legally impossible to achieve 

the stated objectives of the enterprise. 

XXIX. 

 Additionally on information and belief, Defendant Dula at an EA Board meeting

revealed to his Board for the first time that he may not have the intent to use the money then 

remaining in the enterprise to try to accomplish the stated objective of developing a space 

transportation system. He argued instead, that he had the right as sole owner to deploy the funds 

into any activity he saw fit – especially ventures that might be less risky and have a better chance 

of success. Had Horie realized that Defendant Dula might take the money in the company and 

enter another business or take it for himself – contrary to his representations to them – Horie 

would never had invested in the first place. 

XXX. 

Upon information and belief, it was the representation made to both the Stotts and LDH

that Dula and EA intended to spend all the remaing money on attempting to develop a 

commercial space business that caused them to sell out so cheaply, given their minority 

shareholder positions in EL and EA, respectively. Dula was actually challenged at a Board 

meeting by Directors Gruver and Chiao, and as a result, Dula agreed to state in writing that he 

had “no present intention to dissolve the company and take the money for himself.” But it was a 

lie, stated only to get the Board to approve the LDH transaction, as was later proven when 

Defendant Dula stated to the Board that he now intended to dissolve the company, when it would 

still have substantial cash, plus the space hardware still carried on the books at over $5 million

(but which Dula had opined at the time may be far more valuable if sold to be utilized as donated 

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museum pieces for wealthy individuals who could benefit from the substantial tax advantages of

such transactions). 

XXXI. 

On information and belief, faced with these admissions from Dula, Director Chiao called 

for a special Board meeting to put forth a resolution to prohibit Dula from disolving the 

enterprise and selling off the space hardware, because of the liability that would arise given the 

earlier false representations to the Stotts and LDH to secure the lop-sided buy out deals. This 

resolution was supported by Director Okubo. Defendants Dula and Hightower, along with CFO 

Gruver, voted to defeat the resolution with Friedman giving support to Dula. The next day 

Directors Chiao and Okubo were removed from the Board by a vote of the shareholders, 

Defendants Dula and Hightower. Director Chiao resigned from the enterprise altogether shortly 

thereafter, including from his employment. 

XXXII. 

Upon information and belief, at least one employee of EA USA petitioned the CFO, 

Richard Gruver, in accordance with Company procedures, to have the Board of Directors direct 

that Defendant Dula fix the fraud he had perpetrated by obtaining revised contracts with NPOM

to allow modifcation of the Almaz spacecraft so that they could be refurbished and flown, as 

initially represented to Plaintiff Horie to induce his $49 million investment. CFO Gruver passed 

the petition to Defendant Hightower, who, presumably in concert with Defendant Dula, 

terminated the employment of that employee.

XXXIII. 

Now recent events at the May 2014 auction make it clear that Defendant Dula intended to 

dissolve EA and take the substantial assets for himself and his annoited co-shareholder in EL, 

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Defendant Buckner Hightower, in contravention of the express representations made to Plaintiff 

Horie. Plaintiff Horie did not suspect until recently that the reason no milestone had been 

accomplished under his initial investment contract was because the Russian space hardware that 

Defendant Dula had represented that EA owned, had limited uses, i.e., as museum pieces. 

Defendant Dula knew all along that he had purchased only the rights to use two Almaz capsules 

and two spacestations for the purpose of display and marketing, and legally, under his contracts 

with the Russians, could not modify them for flight. Dula has bought on numerous occasions 

additional spacecraft under the same limited terms, while representing the opposite to his 

investor, employees, and potential customers. In addition, Defendant Dula may have acquired 

even these limited rights by violating the Foreign Corrupt Practices Act, as explained above, 

which would also void those contracts. Dula's fraud was intentional, malicious, and warrants 

punitive damages. Further, the exemplary damages are not capped because the conduct of Dula 

falls withing Tex. Civ. Pract. Rem. Code Section 41.008(c). 

XXXIV. 

Had Mr. Horie known at the time that Defendant Dula was lying about the ownership of 

the space hardware he had acquired from NPOM for EA, and that EA could never complete any 

of the milestones, he would never had invested a penny with Dula, never would have authorized 

funds to leave Dula's trust, would have never reduced his equity position, and would have

dissolved EA pursuant to IOM law (as was his absolute right as a 75% equity owner) and 

recovered his $45 million in cash, plus whatever value the space hardware would have had as 

museum pieces. This is precisely what Defendant Dula feared might happen – thus he lied

repeatedly to Plaintiff Horie to keep his enterprise intact. 

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XXXV. 

CAUSES OF ACTION

1. Joint and Several Liability: Defendant Dula owns and/or has controlled each of the 

Corporated Defendants (EL, EA, and EA USA) and the Defendant Heinlein Prize Trust during 

the relevant time period, and as such committed the acts complained of herein through one or all 

of them at various times, such that those entities have joint and several liability herein. 

Defendant Dula has also operated the Corporate Defendants as his alter-ego from his offices in 

Houston, Texas; thus, they each bear the same liability for his acts as does Defendant Dula. 

From the beginning, Defendant Buckner Hightower, as Dula's friend, as a co-trustee of the 

Heinlein Prize Trust, and later as an equity participant in Defendant EA, has supported and 

conspired with Defendant Dula to further and cover up the wongful acts of Dula, as set forth 

herein. Each of the causes of action herein is pled against all Defendants, individually and 

collectively.

2. Breach of Trust, Constructive Trust, Resulting Trust. All actions taken by Dula were 

with funds he held for Plaintiff in trust. Actions with respect to the Trust funds were taken 

without authority or effective consent. Therefore, all monies and assets acquired by any of the 

Defendants are held in a Constructive/Resulting Trust for Plaintiff and should be delivered to 

Plaintiff. Plaintiff is also entitled to damages for assets squandered or lost in violation of the 

trust(s).

3. Violation of Rights under the Isle of Man Company Acts: Defendants have violated 

the rights of Plaintiff Horie under the Isle of Man Company Acts of 1931 and 2006. 

4. Under each Act, a 75% shareholder has the right to dissolve an IOM company. Had 

Plaintiff Horie been told the truth about the legal inability of EA to accomplish the purpose for 

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which he was enticed to invest before he was forced to reduce his interest to 34%, Plaintiff 

Horie could have dissolved EA and recovered his investment. 

5. Under Section 162(6) of the Isle of Man Company Act of 1931, the court may order that 

a company be wound up and its assets distrubuted to its shareholders if it is of the opinion that it 

is “just and equitable” to do so. Had Plaintiff Horie been informed by Defendants that EA did 

not own sufficient rights in the spacecraft hardware to permit modifying them for flight, he 

would have petitioned the court for a “just and equitable” winding up . This would have allowed 

recovery of substantial cash and assets, with which he could have better settled his financial 

difficulties at the time. Had Plaintiff Horie known the truth, he could have immediately 

petitioned the court for a “just and equitable” winding up, thereby recouping most of his 

investment. Defendant Dula knew this posed a risk to accomplishing his plans to control and 

takeover for himself the entireity of Plaintiff’s investment, and thus he concealed the truth from 

Plaintiff Horie, and later the other minority shareholders in EL and EA, and his employees. 

6. Under Section 180 of the Isle of Man Company Act of 2006, a shareholder is entitled to 

petition the court for involuntary dissolution if the company has been operated in a way which is 

or might become “oppressive or unfairly prejudicial” to him. Additionally, under Section 197 of 

the Act a shareholder may petition the court to gather evidence in support of such involuntary 

dissolution, where the business was formed or is being conducted dishonestly or with the intent 

to defraud, or is associated with any other entity or person engaged in fraud or deceit. The 2006 

Act expressly adopts the provisions of the 1931 Act in executing involuntary dissolution, and it 

would be handled under Section 162(6) of the 1931 Act as a “just and equitable” winding up of 

the company. As Horie's attorney Dula should have advised of his legal rights and remedies. 

As to the conflict of interest that existed between Dula the attorney and Dula the individual 

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attempting to steal Horie's money, Dula had a duty to advised him to obtain separate independent 

legal counsel. Directing Horie to get legal advice from Friedman in Dula's office did not solve 

the problem. 

7. Thus, regardless of which Act the Defendant companies were incorporated under, or later 

re-registered, both EA and EL were subject to a “just and equitable” winding up at any time on a 

petition by a minority shareholder. Plaintiff Horie was a shareholder of record in EA until after 

Dula fraudulently advised him to assign the remainder of his EA investment to a Trust and 

Dula's business associate Trustee and later to LDH. But for Defenadant Dula’s fraud and breach 

of fiduciary duty to Plaintiff Horie, he could have effected the dissolution of EA and recouped 

his entire investment of $49 million. After the transfer of the remainder of his EA investment to 

LDH, Plaintiff Horie today remains entitled, at a minimum, to actual damages measured by the 

difference between his initial investment and the market value of EA at the time of the transfer. 

Thus, Plaintiff Horie is now entitled to actual damages. 

8. Fraud: Defendants have commited fraud by inducing Plaintiff Horie to invest and to 

later reduce his equity ownership in EA from 75% to 34% by false and material 

misrepresentations of material fact and by failure to reveal material facts, as set forth herein. Mr. 

Horie relied to his detriment on the misrepresentations and failures to reveal material facts to 

effectively sell out his controlling interest in EA and become a minority shareholder, and to 

forego his right under Isle of Man law to have dissolved the corporation at that time and recover 

his investment. 

9. Upon information and belief, Defendants furthered the fraud by inducing the Stotts and 

LDH to sell out their interest in EL and EA by false and material misrepresentations of material 

fact and by failure to reveal material facts, as set forth herein. The Stotts and LDH relied to their 

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detriment on the misprepresentations and failures to reveal material facts to sell out their interests 

to Defendants for less than 3% of its then true liquid value. Though the Stotts and LDH signed

releases of all claims in connection with their respective buy-outs, both contracts are void for 

having been fraudulently induced by express material misrepresentations made a part of the deal 

to bolster the oral misrepresentations that were made to get each of the parties to negotiatiate the 

lop-sided deals in the first place, all as described above herein. “Fraus omnia corrumpit: fraud 

vitiates everything it touches.” 

10. Thus, Plaintiff Horie and the putative minority shareholders have suffered damage as a 

direct result of Defendants’ fraudulent conduct. Defendant Dula’s dishonest conduct was and 

remains egregious, unlawful and unethical, and should be punished by the assessment of punitive 

damages. 

11. Breach of Fiduciary Duty: Defendant Dula as Horie's lawyer and trustee breached his 

fiduciary duty to his investor and shareholder Plaintiff Horie by enticing him to invest in the first 

place, and then later misleading him into selling out his controlling interest in EA by 

negotiationing with him in bad faith and on the basis of fraudulent statements and failure to 

reveal facts within his knowledge relevant to the consideration of the transaction proposed by 

Defendant Dula, whereby Plaintiff drastically reduced his equity ownership in EA, as set out 

herein. Had Defendant Dula been honest with his client and investor Plaintiff Horie, it would 

have allowed Horie the opportunity to dissolve EA and recoup his entire investment. After 

having assigned the remainder of his EA stock to LDH, Plaintiff Horie is now entitled to recoup 

that part of his investment measured by the difference between the initial investment and the true 

market value of EA at the time of the transaction with LDH, as set out above.

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12. Defendant Dula also breached his fiduciary duty to his minority shareholders LDH and

the Stotts by misleading them into selling out their interests in EL and EA at an unconscionably 

low price by negotiating with them in bad faith and on the basis of fraudulent statements and 

failure to reveal facts within his knowledge relevant to the consideration of the buy out 

transaction proposed by majority shareholder Dula. 

13. Defendant Dula has also wasted the assets of the Defendant enterprises. 

14. All these actions by Defendant Dula have caused damage to Plaintiff Horie, LDH, and

the Stotts, and further his conduct is dishonest and unethical and should be punished by the 

assessment of punitive damages. 

15. Statutory Fraud: Defendants have commited statutory fraud by violating the provisions 

of TEX. BUS. & COMM. CODE § 27.01 by inducing Plaintiff Horie to invest, to later sell out 

his controlling equity position in the stock of the corporation EA, and to then support and 

approve the transaction by which LDH was bought out, all by false misrepresentations of past or

existing material facts or by false promises to do an act in the future, all as set out herein. 

16. Defendants are liable for the actual damages of Plaintiff Horie for reasonable and 

necessary attorney’s fees, expert witness fees, costs of copies of depositions, and costs of court. 

Defendant Dula caused the mispresentations and false promises to made with actual awareness 

that they were false, and as a result Defendants are liable for exemplary damages.

17. Breach of Contract: Plaintiff Horie entered into an original investment contract, which 

was later modified based upon false representations and breaches of fiduciary duty to reduce his 

equity position and to implement other terms favorable to Defendants. Upon advice of Dula, 

Plaintiff placed his stock interest in a Trust with Dula's business associate. Thereafter, LDH 

sold its EA stock position to Defendant Dula, HIMSELF, by way of a stock redemption

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agreement to which Horie was a necessary party. This agreement purported to replace the prior 

investment contract. At no time did Plaintiff Horie transfer or assign his rights to claims asserted 

herein. Moreover, all of these contracts are voidable at the discretion of Plaintiff, in whole or in 

part, because they were induced by fraud. Defendants Dula and the Corporate Defendants have 

breached the investment contracts by which Plaintiff Horie made his original investment and by 

which he was later induced to reduce his equity position, and later allow transfer of that stock 

position, as set out herein. Thus, Defendants are liable to Plaintiff Horie for damages, attorneys’ 

fees and interest as allowed by law, and alternatively, rescission of the investment agreements. 

18. Texas Securities Act: Defendants have violated Article 581-33(B) of the Texas 

Securities Act (“TSA”) by purchasing Plaintiff Horie’s interest in EA “by means of an untrue 

statement of material fact or an omission to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they are made, not misleading,” as 

set out herein. 

19. Defendant Dula, aided and abetted by the Corporate Defendants, has also violated Article 

581-33(B) of the Texas Securities Act (“TSA”) by purchasing the Stotts’ interest in EL and 

LDH’s interest in EA “by means of an untrue statement of material fact or an omission to state a 

material fact necessary in order to make the statements made, in light of the circumstances under 

which they are made, not misleading,” as set out herein. 

20. The TSA is a strict liability statute with no scienter requirement on the part of the buyer 

(the Defendants herein) and no reliance or causation requirements on the part of the seller 

(Plaintiff Horie and LDH). The TSA is to be construed “to protect investors” and “because 

article 581-33 is remedial in nature in the civil context, it ‘should be given the widest possible 

scope.’ 

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21. Defendants are strictly liable for rescission damages under the TSA to Plaintiff Horie and 

LDH as sellers in the amount of the value of the securities at the time of the transaction in 

question plus any income received by Defendants, less the consideration already paid to the 

LDH, plus costs and attorney’s fees. Art. 581-33(D)(4)(6)(7). Further, the rights and remedies 

under the TSA “are in addition to any other rights (including exemplary or punitive damages) or 

remedies that may exist at law or in equity.” Art. 581-33(M).

22. Piercing the Corporate Veil: For the purpose of each cause of action the corporate veil 

between EA, EL, and EA USA may be pierced on behalf of Plaintiff and LDH, because 

Defendant Dula effectively controlled each corporation and operated them as his alter-ego to 

commit the acts complained of herein. Indeed, Defendant Dula used the separate corporate EL 

structure to prevent Horie or LDH to over-ride his control of EA, thus allowing Defendant Dula 

to execute his fraudulent plan. 

23. Monies Had and Received: The Defendants have been unjustly enriched by 

appropriating Plaintiff's funds. Accordingly, Defendants are liable to Plaintiff for monies had 

and received and unjust enrichment.

24. Statutory Theft and/or Conversion: The conduct of the Defendants gives rise to a 

claim under Chapter 134 of the Texas Civil Practice & Remedies Code and/or conversion. 

Plaintiff is entitled to his actual damages, expemplary damages and pursuant to Chapter 134 

reasonable attorney fees.

25. Accounting: Plaintiff is entitled to an accounting of funds placed in trust with the 

Defendants.

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26. Negligence: The conduct of the Defendants was negligent. Defendants owed Plaintiff a 

duty of ordinary care, and breached that duty causing Plaintiff damages in excess of the 

minimum jurisdictional amounts of this court.

27. Joinder: In the alternative, Plaintiff Horie joins LDH as a Plaintiff herein pursuant to 

Rule 39, Texas Rules of Civil Procedure, because it may be necessary as a practical matter to 

protect its interests and prevent persons already parties from incurring the risk of multiple or 

inconsistent recoveries.

XXXVI. 

JURY TRIAL DEMAND

28. Plaintiff requests a trial by jury. 

Prayer

Plaintiff Horie d/b/a Japan Space Dream respectfully requests that the Court grant the 

relief requested for actual damages, for punitive and exemplary damages as allowed by law,

prejudgment and post-judgment interest as allowed by law, attorneys’ fees as allowed by law,

and such other and further relief to which Plaintiff may be justly entitled. 

 

 Respectfully submitted,

 The Kelley Law Firm

 By: /s/ Lloyd E. Kelley_____ 

 Lloyd E. Kelley

 Texas Bar No. 11203180 

 kelley@lloydkelley.com 

The Kelley Law Firm

 2726 Bissonnet, Suite 240, PMB 12 

 Houston, TX 77005 

 (281) 492-7766 (main) 

 (281) 652-5973 (fax) 

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James D. Pierce, Attorney At Law

By: /s/ James D. Pierce____ 

James D. Pierce

 Texas Bar No. 15994500 

jim@jamespierce.com 

 1 Sugar Creek Center, Suite 1080 

 Sugar Land, TX 77478 

 (713) 650-0150 (main) 

 (713) 650-0146 (fax) 

ATTORNEYS FOR 

 Plaintiff Takafumi Horie d/b/a 

 Japan Space Dream

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In accordance with Texas Government Code 406.013 electronically transmitted authenticated



documents are valid. If there is a question regarding the validity of this document and or seal



please e-mail support@hcdistrictclerk.com

HARRIS COUNTY, TEXAS

Chris Daniel, DISTRICT CLERK

I, Chris Daniel, District Clerk of Harris 



County, Texas certify that this is a true and 



correct copy of the original record filed and or 



recorded in my office, electronically or hard 



copy, as it appears on this date. 



Witness my official hand and seal of office

Certified Document Number: 63120901 Total Pages: 28

this June 5, 2015

29
CAUSE NO. 2014-65947 

§ IN THE DISTRICT COURT OF 

TAKAFUMI HORIE, § 

§ 

§ 

Plaintiff, § 

v. § 

 § HARRIS COUNTY, TEXAS

THE LAW OFFICES OF ART DULA, § 

ARTHUR M. DULA, individually, and d/b/a § 

THE LAW OFFICES OF ART DULA, § 

ANAT FRIEDMAN, individually, and d/b/a § 

THE LAW OFFICES OF ART DULA, § 

J. BUCKNER HIGHTOWER, § 

THE ROBERT A. AND VIRGINIA § 

HEINLEIN PRIZE TRUST, through its § 

trustees ARTHUR M. DULA AND § 

J. BUCKNER HIGHTOWER, § 

 § 

Defendants. § 55 TH DISTRICT COURT

PLAINTIFF’S FIRST AMENDED PETITION 

I. 

INTRODUCTION

Takafumi Horie, individually and d/b/a Japan Space Dream, (“Horie”) files this 

Amended Original Petition against Defendants Arthur M. Dula, individually and d/b/a The Law 

Offices of Art Dula, and Anat Friedman, individually and d/b/a The Law Offices of Art Dula, and 

The Robert A. and Virginia Heinlein Prize Trust, through its trustees Arthur M Dula and J. Buckner 

Hightower for breach of fiduciary duty, fraud, statutory fraud, breach of trust, money had and 

received, an accounting, and negligence, and alleges as follows:

3/6/2015 1:49:40 PM

Chris Daniel - District Clerk Harris County

Envelope No. 4401773

By: Tammy Tolman

Filed: 3/6/2015 1:49:40 PM

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II.

CASE SUMMARY

This is a case about Houston attorney Art Dula, who took advantage of Japanese 

entrepreneur Takafumi Horie, by claiming that he could set up a commercial space transportation 

program to carry cargo, scientific experiments, and people into low Earth orbit to the 

International Space Station and other space destinations. Dula was, and is, the lawyer and a trustee 

for The Robert A. and Virginia Heinlein Prize Trust ("Heinlein Trust"). Heinlein was a prolific 

science fiction author who was famous for writing about manned space exploration. Dula used his 

position as trustee of the Heinlein Trust to promote his law firm in getting business under the 

premise of establishing "new space business enterprises." Using his position as trustee of the 

Heinlein Trust, Dula, through an intermediary, sought out Horie and solicited him as a client and 

investor. Horie offered his services as a “space” lawyer who could set up entities to make space 

travel possible and fraudulenty induced Plaintiff to trust him and give him $49 million in trust to 

further this enterprise of space travel. 

III. 

Horie engaged Dula as his attorney, and then trusted him enough to give Dula 

$49,003,000.00 in trust for purposes of setting up a business to accomplish space travel. The 

money was sent to Dula's Texas IOLTA client trust fund account to accomplish the goals for Dula's 

client Horie. Art Dula misapproiated funds to engage in a scheme to steal Plaintiffs’ money and 

divert it to himself and his conspirators. In reliance on Dula’s promises that Plaintiff’s investment 

would be used to establish a cutting-edge, profitable commercial spaceflight program, Horie 

engaged Dula as his attorney. Horie subsequently gave Dula $49,003,000.00, which Horie sent to 

Dula's Texas IOLTA client trust fund account. However, Dula never intended to engage in a 

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commercial space program, and in fact continually misrepresented, concealed facts and defrauded 

his client Takafumie Horie d/b/a Japanese Space Dream (“Horie”). His intent was to take his 

clients’ money over time through a complex scheme under the guise that he was building a space 

program. 

IV.

Dula has gone to great lengths to hide and conceal his true conduct by acts of both 

commission and omission, all of which would constitute fraud if perpetrated under the normal 

morals of the marketplace but which also constitute breach of fiduciary duty when undertaken in 

the context of the attorney-client relationship. Horie only recently discovered the wrongs 

perpetrated against him by Defendants, because, in violation of his fiduciary duties to Horie, Dula 

never disclosed the true facts to him, but rather continually mispresented and/or concealed those 

facts throughout their relationship. Horie relied on and trusted Dula as his attorney, his fiduciary, 

and as an apparent expert in the nascent field of private spaceflight. Dula took advantage of his 

position as Horie’s attorney and a self-proclaimed expert to convert his clients’ funds for his own 

uses and purposes. Accordingly, to the extent Defendants plead the statute of limitations as a 

defense to any of Horie’s claims, Horie is entitled to the benefit of the discovery rule. Horie further 

pleads that Defendants fraudulently concealed their misconduct, which excuses the failure to sue 

within the limitations period.

Plaintiff Horie only recently discovered the wrongs perpetrated against him by 

Defendants, because the facts were concealed by Defendant Dula, and Dula never advised Horie 

of his wrong doing. Plaintiff relied on and trusted Defendant Dula in Dula’s position as his 

attorney, his fiduciary, and because of his representations as to his expertise concerning his 

spaceflight project and his investment therein. The Defendants had a fiduciary duty to Plaintiff 

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and Defendants fraudulently concealed the facts to prevent Plaintiff from learning of their 

fraudulent behavior and to prevent Plaintiff from seeking legal redress. Alternatively, Defendants 

owed Plaintiff a fiduciary duty and they failed to disclose facts they were aware of which prevented 

Plaintiff from bringing suit earlier. 

V.

Plaintiff Horie became aware of Dula’s scam when he read an article by Alexander Forbes 

that Dula had sold at auction one of the spacecraft articles purchased with Plaintiff’s money. The 

Forbes article implied that Dula was liquidating, and indicated the spacecraft was only suitable for 

display in a museum, and not as a potential flight article as had been falsely represented to Plaintiff 

Horie from the beginning. The supposed space program was a sham, as Dula never had the rights 

or ability to utilize the spacecraft purchased with Plaintiff’s money for anything other than display 

purposes. However, this fact was kept secret from Plaintiff. Plaintiff never authorized the funds 

held in trust be utilized to purchase spacecraft sold for display purposes. Plaintiff never authorized 

funds held in trust to be utilized to set up a "space program" incapable of space travel. Plaintiff 

never authorized funds held in trust to be utilized to set up a business other than a true "space 

business enterprise." Had this information been known to Plaintiff, he would have never given 

any money to Defendants in the first place, and if known after he had placed his money in trust to 

Dula, Plaintiff would have immediately petitioned for redress. 

By additional fraudulent acts, Dula ultimately obtained complete control of Plaintiff's funds 

and has utilized them for his own benefit, and, on information and belief, has fraudulently 

transferred the funds to his wife, Tamea, a prominent Houston lawyer, and his children Russell 

and Austin. The continuing fraud and breach of fiduciary duty has damaged Plaintiff in excess of 

the minimum jurisdictional amounts of this court. 

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VI. 

Plaintiff Horie seeks by this suit to recover damages, acutal and consequential, of the 

monies Defendants took and which the law treats now as held in trust for Plaintiff, and to obtain 

other damages allowed by law for himself.

VII.

DISCOVERY LEVEL AND REQUEST FOR DISCLOSURE

Discovery should to be conducted under Level 3 pursuant to Texas Rule of Civil Procedure 

190.3. Plaintiff requests disclosure of the items set forth in Tex. R. Civ. P. 194.2 a-k. 

VIII. 

PARTIES

A. Plaintiff Takafumi Horie is a citizen and resident of Japan, and at all relevant times was 

doing business as Japan Space Dream. Horie was solicited in Japan from Texas lawyer Defendant 

Art Dula to invest US $49,003,000.00 for creation of a private operating spaceflight program. 

B. Defendant Arthur M. Dula, individually and d/b/a the Law Office of Art Dula, is a 

resident of Houston, Harris County, Texas. Defendant has appeared and answered herein. 

C. Defendant Anat Friedman is a lawyer at the law office of Art Dula and is a resident of 

Houston, Harris County, Texas. Defendant has appeared and answered herein.

D. Defendant Robert A. and Virginia Heinlein Prize Trust (“Heinlein Prize Trust”) 

Houston, Harris County, Texas. Defendant has appeared and answered herein. 

 E. Defendant J. Buckner Hightower is a Texas citizen and resident. Defendant Hightower 

conspired, aided and abetted and/or facilitated Defendant Dula in committing and concealing the 

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illegal acts complained of herein. He engaged in actions designed to cover up and keep facts secret 

from the public auditors and the government. He has been served and answered. 

IX.

JURISDICTION

This Court has subject matter jurisdiction over this dispute because the amount in 

controversy exceeds its jurisdictional threshold. See Tex. Gov’t Code Ann. §§ 24.007 - 24.008. 

This Court has personal jurisdiction over Defendants because: (1) they are actively engaged 

in business in the State of Texas; (2) they reside in the State of Texas; and/or (3) they committed 

torts and statutory violations in whole or in part in this state. See Tex. Civ. Prac. & Rem. Code § 

17.042. 

 Venue is proper under Tex. Civ. Prac. & Rem. Code § 15.002. All or a substantial part of 

the events or omissions giving rise to Plaintiff’s claims occurred in this County. 

X. 

FACTUAL BACKGROUND

The Plaintiff is a Japanese citizen, who was interested in the development and 

advancements in space exploration. Art Dula sought Plaintiff out, representing that he was a 

"space attorney" who could assist Plaintiff in the development of a space program. Dula requested 

that Horie give him approximately $50,000,000 in trust, so that Dula could facilitate Plaintiff's 

dream of developing a private commercial space program. Dula represented he had connections 

with the Russian aerospace company NPO Mashinostroyenia (“NPOM”) who would provide 

hardware and technical expertise to build a commercial space business. He represented that he 

had acquired rights to NPOM space-proven capsules that could be used in a space program. Dula 

represented that he was well-connected and could assemble the professionals necessary to build a 

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commercial space program. However, from the beginning, Dula had no intent to build a space 

program, but only to take Plaintiff's monies for his own use, utilizing a complex ruse, contrary to 

the interests of his cestui que trust. Dula convinced Plaintiff to place $49,003,000.00 into Dula's 

trust account for purposes of doing due diligence, and later setting up a space program in 

conformity with U.S. law and regulations (Dula claimed and continues to claim to be a "space law" 

expert). Dula used several schemes and devices to fraudulently take Plaintiff’s money out of the 

IOLTA trust account and eventually placed it into his own hands in violation of his duty of utmost 

trust. 

XI. 

Using Plaintiff's funds, Dula purchased four Almaz spacecraft capsules and two space 

stations from NPOM. This space hardware came from a Soviet-era secret space program, and 

Dula represented to Plaintiff that a key advantage was that the spacecraft and space stations being 

acquired had undergone rigourous flight testing. He represented to Plaintff and others that the 

hardware could be made "flight worthy," and that he could refurbish, modify and update the 

equipment so that it would be certified for flight. The purchase contracts had to be approved by 

the Russian government, and unbeknownst to Plaintiff and on information and belief, expressly 

excluded the right to modify the Russian hardware, thus relegating it to display uses only! The 

items were only museum pieces, a secret Dula would keep until well after he acquired control of 

Plaintiff's investment. 

XII.

Dula took Horie's money out of the IOLTA trust account and used it improperly. Dula first 

wired the funds to an account that he controlled. At the time he solicited the investment from 

Plaintiff, Defendant Dula was a lawyer licensed in Texas, who held himself out as an expert in 

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"space law," in properly establishing and organizing space enterprises, in advising concerning 

contracts with NASA, and in negotiating and drafting "space agreements." Dula drafted a "Private 

Placement Memorandum" which he represented to Plaintiff was a part of the legal documentation 

necessary to create a legal space program which he represented to be a proper "space agreement" 

to establish a "space enterprise." Per Dula's instructions, Plaintiff wired over time $49,003,000.00 

to Dula’s attorney trust account in Houston, Texas. Thereafter, Defendant Dula transferred the 

money to an account Dula controlled. Later, on information and belief, funds were sent to his wife 

Tamea and his children Russell and Austin Dula. 

Being a part of a real space program was Plaintiff's dream, and if that could be achieved 

the ownership percentages were insignificant compared to being involved in a pioneering new 

business. Further, Plaintiff trusted Dula to act in Plaintiff's best interests, and relied on his 

representations that a space program would be created. In fact the milestones and spaceflight in 

general could never be accomplished, and Dula knew at the time he made the representations the 

milestones could not be accomplished. The representations made to Plaintiff were false and Dula 

omitted to state facts necessary to make the statements that were made not misleading. However, 

in reliance on the truth of the misrepresentations and that Dula would continue to act in Plaintiff's 

best interest and build a space venture, Plaintiff continued to believe him and took no action to 

seek redress. In fact, Dula intentionaly gave Plaintiff false information to prevent Plaintiff from 

filing suit. 

XIII. 

 Breaching his fiduciary duty, Dula "magically" transformed Horie’s entire initial 

investment remaining at that time – upon informantion and belief over $34 million – into his own 

name. But Dula had to lie again to get it done. 

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Dula knew all along that his representations to Plaintiff were false. Dula knew that the 

contracts that supposedly gave the space program ownership of the Russian space hardware only 

transferred ownership rights for the purpose of displaying the hardware, e.g., at air shows, trade 

shows or in museums. Thus, Defendants never acquired any rights to the capsules necessary to 

refurbish and modify them in order to certify them to fly humans in space. Without such rights, 

the representation that they owned or were acquiring the space hardware to accomplish the 

objectives of the enterprise was false. 

XIV. 

Because the Russian space hardware that Defendant Dula represented could be owned 

completely and modified for space use turned out to have limited/restricted uses, i.e., as museum 

pieces, the entire scheme was a scam. Defendant Dula knew all along that he could only acquire 

the rights to use two Almaz capsules and two spacestations for the purpose of display and 

marketing, and legally, under the contracts with the Russians he eventually obtained he could 

never modify them for flight. Dula has bought on numerous occasions additional spacecraft under 

the same limited terms, while representing the opposite to Plaintiff and others. Dula's fraud was 

intentional, malicious, and warrants punitive damages. Further, the exemplary damages are not 

capped because the conduct of Dula falls within Tex. Civ. Pract. Rem. Code Section 41.008(c). 

XV.

Had Mr. Horie known at the time that Defendant Dula was lying about the ownership of 

the space hardware he eventually acquired from NPOM, he would have never invested a penny 

with Dula, and never would have authorized funds to leave Dula's trust. Plaintiff seeks to recover 

his $45 million in cash, plus whatever value the space hardware would have had as museum pieces. 

9 

CertifiedDocumentNumber:64525805-Page9of13

84
This is precisely what Defendant Dula feared might happen – thus Dula lied repeatedly to Plaintiff 

Horie to keep his enterprise intact. 

XVI. 

CAUSES OF ACTION

1. Claims: Horie brings suit against Defendants for breach of trust, fraud, and statutory fraud,

breach of fiduciary duty, monies had and received, an accounting, and for negligence. Plaintiff 

seeks rescission/damages in the amount of his $49,003,000.00 original investment, plus interest, 

attorneys’ fees, and damages allowed at law or equity, including punitive damages. 

2. Joint and Several Liability: Defendant Dula owns has controlled the Defendant Heinlein 

Prize Trust during the relevant time period, and as such committed the acts complained of herein 

through one or all of them at various times, such that those entities have joint and several liability 

herein. Defendant Dula has also operated the Heinlein Prize Trust as his alter-ego from his offices 

in Houston, Texas; thus, it bears the same liability for his acts as does Defendant Dula. From the

beginning, Defendant Buckner Hightower, as Dula's friend, as a co-trustee of the Heinlein Prize 

Trust, has supported and conspired with Defendant Dula to further and cover up the wongful acts 

of Dula, as set forth herein. Each of the causes of action herein is pled against all Defendants, 

individually and collectively. 

3. Breach of Trust, Constructive Trust, Resulting Trust. All actions taken by Dula were 

with funds he held for Plaintiff in trust. Actions with respect to the Trust funds were taken without

authority or effective consent. Therefore, all monies and assets acquired by any of the Defendants 

are held in a Constructive/Resulting Trust for Plaintiff and should be delivered to Plaintiff. 

Plaintiff is also entitled to damages for assets squandered or lost in violation of the trust(s).

10 

CertifiedDocumentNumber:64525805-Page10of13

85
4. Fraud and Statutory Fraud: Defendants have commited fraud by inducing Plaintiff 

Horie to given in trust money to Dula by false and material misrepresentations of material fact and 

by failure to reveal material facts, as set forth herein. Mr. Horie relied to his detriment on the 

misrepresentations and failures to reveal material facts of Dula. Plaintiff sues Defendants for fraud 

and statutory fraud (TEX. BUS. & COMM. CODE § 27.01). 

5. “Fraus omnia corrumpit: fraud vitiates everything it touches. Thus, Plaintiff has suffered 

damage as a direct result of Defendants’ fraudulent conduct. Defendant Dula’s dishonest conduct 

was and remains egregious, unlawful and unethical, and should be punished by the assessment of 

punitive damages. 

6. Breach of Fiduciary Duty: Defendant Dula as Horie's lawyer and trustee breached his 

fiduciary duty to his client Plaintiff by enticing him to give in trust his money amounting to $49 

millon in the first place, and then later misleading him to prevent Plaintiff from realizing the extent 

of the breach of fiduciary duty to prevent him from filing a suit. 

7. All these actions by Defendant Dula have caused damage to Plaintiff and further his 

conduct is dishonest and unethical and should be punished by the assessment of punitive damages.

8. The continuing fraud and breach of fiduciary duty has damaged Horie in excess of the 

minimum jurisdictional amounts of this court.

9. Monies Had and Received: The Defendants have been unjustly enriched by appropriating 

Plaintiff's funds. Accordingly, Defendants are liable to Plaintiff for monies had and received and 

unjust enrichment.

10. Accounting: Plaintiff is entitled to an accounting of funds placed in trust with the 

Defendants.

11 

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86
11. Negligence: The conduct of the Defendants was negligent. Defendants owed Plaintiff a 

duty of ordinary care, and breached that duty causing Plaintiff damages in excess of the minimum 

jurisdictional amounts of this court.

XVII. 

JURY TRIAL DEMAND

12. Plaintiff requests a trial by jury. 

Prayer

Plaintiff Horie d/b/a Japan Space Dream respectfully requests that the Court grant the relief 

requested for actual damages, for punitive and exemplary damages as allowed by law, prejudgment 

and post-judgment interest as allowed by law, attorneys’ fees as allowed by law, and such other 

and further relief to which Plaintiff may be justly entitled.

 

 Respectfully submitted,

 The Kelley Law Firm

 By: /s/ Lloyd E. Kelley_____ 

 Lloyd E. Kelley

 Texas Bar No. 11203180 

 kelley@lloydkelley.com 

 2726 Bissonnet, Suite 240, PMB 12 

 Houston, TX 77005 

 (281) 492-7766 (main)

 (281) 652-5973 (fax) 

 

James D. Pierce, Attorney At Law

By: /s/ James D. Pierce____ 

James D. Pierce

 Texas Bar No. 15994500 

jim@jamespierce.com 

12 

CertifiedDocumentNumber:64525805-Page12of13

87
1 Sugar Creek Center, Suite 1080 

 Sugar Land, TX 77478 

 (713) 650-0150 (main) 

 (713) 650-0146 (fax) 

ATTORNEYS FOR 

 Plaintiff Takafumi Horie d/b/a

Japan Space Dream

CERTIFICATE OF SERVICE

This is to certify that a true and correct copy of the above and foregoing instrument 

has been forwarded to all counsel of record via electronic filing and or e-mail on this the 6th

day of March 2015. 

/s/: Lloyd E. Kelley _________________ 

LLOYD E. KELLEY

13 

CertifiedDocumentNumber:64525805-Page13of13

88
In accordance with Texas Government Code 406.013 electronically transmitted authenticated



documents are valid. If there is a question regarding the validity of this document and or seal



please e-mail support@hcdistrictclerk.com

HARRIS COUNTY, TEXAS

Chris Daniel, DISTRICT CLERK

I, Chris Daniel, District Clerk of Harris 



County, Texas certify that this is a true and 



correct copy of the original record filed and or 



recorded in my office, electronically or hard 



copy, as it appears on this date. 



Witness my official hand and seal of office

Certified Document Number: 64525805 Total Pages: 13

this June 5, 2015

89
TAB C
 1

Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

REPORTER'S RECORD 

VOLUME 1 OF 1 VOLUMES 

TRIAL COURT CAUSE NO. 20140=-65927 

TAKAFUMI HORIE ) IN THE DISTRICT COURT 

 ) 

vs. ) HARRIS COUNTY, TEXAS 

 ) 

THE LAW OFFICES OF ART 

DULA, ET AL 

 ) 55TH JUDICIAL DISTRICT 

_____________________________________________ 

MOTION TO DISMISS

_____________________________________________ 

 

On the 20th day of April, 2015, the following

proceedings came on to be held in the above-titled

and numbered cause before the Honorable Jeff

Shadwick, Judge Presiding, held in Houston, Harris

County, Texas. 

Proceedings reported by computerized stenotype

machine.

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

APPEARANCES

Lloyd E. Kelley

SBOT NO. 11203180

The Kelley Law Firm

3726 Bissonnet, Suite 240

PMB 12

Houston, Tx 77005

Telephone: 281.492.7766

Fax: 281.652.5973

E-mail: kelley@lloydkelley.com

Attorney for Plaintiff

James D. Pierce

SBOT NO. 15994500

1 Sugar Creek Center, Suite 1080

Sugar Land, Tx 77478

Telephone: 713.650.0150

Fax: 713.650.0146

E-mail: jim@jamespierce.com

Attorney for Plaintiff

Michael R. Levin

SBOT NO. 0351326

Baker & Hostetler LLP

200 South Orange Avenue

Sun Trust Center, Suite 2300

Orlando, FL 32801

Telephone: 407.649.4000

Fax: 407.841.0168

Counsel for Defendants

Joshua C. Thomas

SBOT NO. 24027428

Baker & Hostetler LLP

811 Main, Suite 1100

Houston, Tx 77002-6111

Telephone: 713.751.1600

Fax: 713.751.1717

E-mail: jthomas@bakerlaw.com

Counsel for Defendants

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

THE COURT: I'm going to put this on the

record because we might want to refer back to this

later.

This is Case No. 2014-65947, Horie -- am I

pronouncing that right -- verses Law Offices of Art

Dula. Can I get appearances, please?

MR. KELLEY: Lloyd Kelley for the plaintiffs

and James Pierce.

MR. LEVIN: For the defendants, Michael Levin

of Baker Hostetler. With me is my colleague Josh

Thomas.

THE COURT: I've got a motion to continue this

hearing because you wanted to take Mr. Dula's depo.

MR. KELLEY: And the latest on her affidavit

with her name on it, Annese -- Annette Fronot.

THE COURT: Then the substantive motion,

motion to dismiss based upon the forum clause?

MR. LEVIN: Yes.

THE COURT: Okay. Let me just throw my

thoughts out there. You know my practice -- and you've

been here before and whoever doesn't like what I just

said, comment.

I'm not sure I understand why you need to take

anybody's deposition to decide whether or not there is a

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

forum selection clause that would cause me to read on

the motion to dismiss. I read that your reason is that

you think there may be some fraud involved in it. But

my look at the case law was, I'm not sure that fraud

gets you out of the forum selection clause. So I'm

going to want you to talk to me why you need to take --

what are you looking for in this deposition that would

help -- that you need to know or what at least suspect?

MR. KELLEY: We have objected to their

evidence. We looked at it today in the lighter posture,

they have no evidence to support their forum selection

clause.

THE COURT: Okay. So, but we do have the

agreement that was signed, right?

MR. KELLEY: We are not -- they have nothing

to support that. They have an affidavit which purports

to be a business record, and we've objected to that

affidavit. We think it's defective. Even past that,

they don't have anything to connect any of the facts

that they have got to that contract. I'll give you an

example.

THE COURT: The cause of action is not related

to the agreement.

MR. KELLEY: Oh, better yet. The parties.

The Heinlein Trust, when you look at the Heinlein Trust

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

as a defendant and you look in that contract, you will

never find it.

THE COURT: This is the question for these

guys. The thing I want you guys to talk about is how is

it that these -- where do I find these parties on the

agreement? Like Mrs. Dula, for example. The defendant

is "the law office of." Then I saw that he signed the

agreement, but he signed it in capacity as -- I've

forgotten now.

MR. LEVIN: Two points, Your Honor. First,

the contract is not hearsay. If we need case law, I

have it, but under Texas law, the contract is not

hearsay; therefore, their objection to the contract is

moot but --

THE COURT: Before I do that, can I ask you a

question? Is this a situation where this contract is

coming in. I mean, I want to make sure I don't think

this is just a technical objection.

MR. KELLEY: It's a technical objection.

THE COURT: So, assuming that they remember

how to practice law and they lay the foundation and they

have the right affidavit and the document is in. Then

let's just in our mind jump to that spot, the document

is in. It does have a forum selection clause, which

would cause me to move it, and so then --

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

MR. KELLEY: For certain parties.

MR. LEVIN: Let me get to the parties.

THE COURT: So, the question is -- once we get

to the substance, the question is, are these parties and

this cause of action subject to that contract which has

the forum selection clause. That's the real meat of the

action.

MR. KELLEY: Before you go any further, we

object to the rest of it. It's hearsay, because all

they have is this contract is valid and no connection

between the parties and the contract --

THE COURT: Okay.

MR. KELLEY: -- in that capacity.

THE COURT: But that's the issue. The issue

is whether or not these facts as they are alleged in

this -- that come into evidence, those facts and these

parties are subject to the --

MR. KELLEY: In that capacity.

THE COURT: Right. In that clause. So if

they are -- then you agree I have to dismiss it, it goes

to the Isle of Man?

MR. KELLEY: No. There are still other

grounds. In Texas, you still have to show other things.

You have a contractual one, but then you have to show

that they're going to make themselves, the defendants

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

here, are willing and are willing to not only have it

there but are putting it there. That is, if I go to the

Isle of Man and they are resisting jurisdiction there,

so the Heinlein Trust says, I've got four -- for

instance the Isle of Man says, I have no jurisdiction

over the Virginia Heinlein Trust. It has no ability to

ever come in this court by consent or otherwise, because

you can't always just give us. If that's the case, then

the Court can't dismiss that piece of it.

THE COURT: That's a decent point. You can't

have a situation where there is no jurisdiction anywhere

in the world. 

MR. KELLEY: And that's what they created was

the ability to say move it over there but we are never

going there. If that's the case, then the Court here

has to keep it. Remember, this is more like venue.

It's a forum selection clause for an action that

ultimately has to happen. If it can't happen there or

it's not going to happen there, then you have to keep

it, so the motion dismiss is improper because the motion

to dismiss and should have been a motion to abate if

they wanted to go that way.

THE COURT: I've got my bearings now.

MR. LEVIN: Your Honor, it's a motion to

dismiss because the Supreme Court of Texas tells us the

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

procedural vehicle is motion to dismiss. I'm going to

answer your question about the parties first.

THE COURT: Let's do that question, since you

brought it up first. Would it make -- if I agree with

you, would it make sense for me to sign an order abating

the case pending us all seeing that it actually does go

get filed in the Isle of Man and Isle of Man takes

jurisdiction?

MR. LEVIN: No, sir, because you're told by

the Texas Supreme Court the vehicle is a motion to

dismiss. Exclusive jurisdiction has been filed there.

Now let me address the parties issue.

THE COURT: But my brain is still stuck on the

other topic. How do we resolve Mr. Kelley's issues that

if I dismiss it and it gets refilled in the Isle of Man

and that Court says, "I don't have personal

jurisdiction" or whatever they say, "over -- over some

of these parties," then we have a situation where maybe

there is no place in the world to bring the case.

MR. LEVIN: The 14th -- I can take them one by

one. The 14th District in the Deep Water slander case,

which I understand is an appellate court decision --

jurisdiction.

THE COURT: Standing right on my shoulders.

MR. LEVIN: The decision in that case by Judge

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

Gooseman, who is now affirmed in the Supreme Court, they

addressed this issue, and they said you don't -- it's

not a defense to the enforceability of a forum selection

clause to go review the enforceability of it in the

foreign jurisdiction. In that case -- in that case,

it's a very similar situation because the parties who

successfully enforced the forum selection clause were

not parties to the agreement. That what the Court says

was -- the facts there are instructive. The forum

selection clause was found in a consulting agreement

with a Dutch company. And then there was a second

agreement with a corporate defendant in that case. And

then there were three defendants, three individuals who

were also -- and neither the corporate defendant in that

case nor the three individuals were parties to the

agreement with the forum selection clause. But because

the pleadings by the plaintiff, just as Mr. Kelley has

pled here, has brought those folks within the purview of

the forum selection clause. For example, the

corporation was alleged to have been an alter ego of the

corporation's forum selection clause. Mr. Kelley has

alleged, Mr. Pierce has alleged, that Art Dula was an

alter ego of Excalibur, which were in the first

petition, which remains as an admission against interest

and, therefore, binds the plaintiff. So that goes to

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

Dula. 

Hightower and Anat Friedman and the Heinlein

Trust, if I can pronounce it correctly, the Heinlein

Trust, they are alleged to be joint and severally

liable. What the Court says is that, in the Deep Water

case, is because the plaintiff alleged that these other

folks, non-signatory parties, were substantially

interdependent in concerted actions with the entity with

the forum selection clause, the plaintiff is bound and,

in fact, equitable estopped, from contesting the

applicability of the forum selection.

THE COURT: So your reaction to Mr. Kelley's

comment that the facts that you bring me are hearsay or

lack of foundation or whatever, that I can grant -- that

I must grant -- I must grant your motion based on his

pleadings because we take then, if what he's saying is

true -- if what he's saying is true, then your argument

is supported and I grant the motion. So I should forget

any affidavits you guys have attached from your clients.

That's what you are saying, though?

MR. LEVIN: The records upon which you perform

your judicial labor is the petition and the amended

petition and the contract. The contract is not hearsay.

The business record affidavit was fine. It's also a

declaration by a party opponent, and it's also admission

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

against interest because it's a ruling. So it's

admissible six ways from Sunday. And you don't need

evidence or discovery because he doesn't need discovery

about his own allegations. There are his allegation.

He made them. He had a specific detailed petition. We

filed our original motion to dismiss. And then he

produced a sanitized petition that eliminated reference

to Excalibur, but it doesn't make the first petition go

away. This is not like a motion to transfer venue.

It's completely different.

THE COURT: I understand. So what's going to

happen in the Isle of Man?

MR. LEVIN: Well, in the Isle of Man, first of

all, the original corporate defendant to whom Mr. Horie

gave his money certainly have jurisdiction. Mr. Duly is

the CEO. Mr. Hightower is a director and an executive

vice president. 

THE COURT: So the Isle of Man court has

jurisdiction?

MR. LEVIN: I'm not here to speak

intelligently about the jurisdiction of Isle of Man

court. I say if I impose, you know, international

federal jurisdictional concept upon the Isle of Man

jurisprudence, I would say that these folks have

purposely availed themselves of the privileges of doing

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

business in Isle of Man but you don't have to dismiss it

with prejudice.

THE COURT: When does the statute run?

MR. KELLEY: It's running. It's running. We

are in a gray area because of the fiduciary nature of

Mr. Dula.

THE COURT: That's my interest if I'm able to

and abate instead of dismissing.

MR. LEVIN: I'm here to say to you that I do

not know and cannot speak to Isle of Man jurisdiction,

I'm not contending that we are not subject to the Isle

of Man jurisdiction. There is a difference. They can't

make these folks show up on this isle the middle of the

Irish Sea, but they can still bring the claims against

them. So, you know, this is a -- this is not --

THE COURT: Subpoena power jurisdiction is

different.

MR. LEVIN: This is not someone living here in

Bellaire that's trying to bring a suit against a local

lawyer. This is a Japanese billionaire Internet tycoon

that put $49 million into a Isle of Man company to buy

soviet space craft.

THE COURT: That's funny that you mentioned

that, because I have once enforced a venue provision

against two Houston residents where they agreed venue

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

would be Warsaw, Poland, or something like, because the

purpose of the agreement was to make it nearly

impossible for them to sue each other. I said, well, if

that was your deal, I'm forcing it. So I'm okay if this

thing going to the Isle of Man if that's what the

agreement was.

MR. KELLEY: Let's back up. He's made some

factual assertions that he has no support for, which we

have counter support for.

THE COURT: Hang on. But that's why I wanted

to make sure to clarify that if I carve out everything

that doesn't appear in your petition --

MR. KELLEY: We've already did a first

amendment. He's wrong. We have amended and that got

rid of the first one. All of the stuff he talks about,

well, it doesn't go away. Yes, it does.

THE COURT: I understand. I know what your

operative pleading is, but I'm working on the concept

that if I take your position -- if I carve out all of

the facts as he alleged them that don't appear in your

current active pleading, I look solely at your current

active pleading, is that a way to do it?

MR. KELLEY: Sure. Because we have already

done your work for you. That's why he's complaining.

He's said we've sanitized it. We have eliminated any

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

reference to alter ego or anything like that. We

focused -- remember, the money originally went to

Mr. Dula in his IOTA trust account.

THE COURT: I know. But part of this is me

learning, because I know that if that's what I hung my

hat on today, they would just get a better affidavit

that alleged the facts. I mean, I like to get past the

procedure and get to the substance, at least while I

have lawyers standing in front of me. So, let's pretend

like everything gets fixed, I want to hear the argument.

MR. KELLEY: Here's the main argument. The

guys that he's talking about in this lawsuit are not

parties to the agreement that he wants to go with.

THE COURT: I know.

MR. KELLEY: The second thing is that

agreement is not what our lawsuit is about. We are not

suing on that deed. At best -- at best, he has a cause

of action that he ought to be bringing in the Isle of

Man.

THE COURT: Yeah, but there is a pretty -- the

provisions -- the venue provision is pretty broad.

MR. KELLEY: The parties agree about this

deed. Then the parties are defined clearly as four

people.

THE COURT: I know.

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

MR. KELLEY: Only Mr. Horie. The other two

are not here, Abbey, the corporation and Excalibur

Almaz. The only way he's getting there now is to argue,

oh, in the first petition he argued he was the alter

ego. He doesn't want to confess that I'm the alter ego.

So if you take your argument, but that's gone now. The

first amendment took it out. So, now he's left with,

you are not the party, but I'm going to stretch it

because the relief supposedly goes against the officers

and employees. We are not suing them in that capacity

at all. It doesn't talk about his law firm. It doesn't

talk about his legal work. It doesn't talk about the

trust at all. There is no way to get the trust in here

and his work on behalf of the trust. And there is no

way to go the lawyers in his office released who worked

on this stuff. His associates. How does that come in

here? I'm going to get my law firm released, because

some board member or director, I signed a document that

releases the directors but now it's going to include

everybody in my law firm at Vinson & Elkins? That's not

going to work.

MR. LEVIN: The company -- there are two ways

we get the non-signatories. One is the way that I think

the Court tells us, the 14th District, in the Deep Water

slander cases. The other is the company group

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

definition. The company group definition in the

agreement says that the release and, therefore, the

ability to enforce it thereof applies to officers and

directors, and that's Mr. Dula and Mr. Horie. It

applies to affiliates, and that's Anat Friedman. And

the only way they get to -- the only way they get to the

Heinlein Trust is by the actions of Mr. Dula and

Mr. Hightower. These are distinguished between their

actions as director as, lawyer, and so forth. So they

all fall within that company. 

But I want to go back to, you know, the cases

he's relying upon about forum selection clause, yeah, he

has a case where they have to translate it from Polish,

and he's got the case of Massachusetts and Ohio. This

is a very broad forum selection clause. And it looks

backwards and includes specifically noncontractual

claims. It's not venue exclusive jurisdiction. It

applies to everything that happened when the man

invested his money to when they had all of these

dealings, and he got out of it.

THE COURT: It's very broad. I read that with

Mr. Kelley's. What I'm going to go back and think about

a little bit is why it was captured non-signatories in

the capacities that they signed. Because you have to

wonder if I sign a document as -- in my capacity as

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524
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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

trustee of this trust, am I thinking to myself, you

know, I bet this binds me individually, too. And it

would be helpful to -- I'll go back and read it.

MR. LEVIN: Deep Water, from the 14th.

THE COURT: But I want to feel better about

that part of it.

MR. LEVIN: Well, I think that case and also

the International Profit case also will -- will

alleviate your concerns in that regard. But in a motion

to transfer venue, you have -- only have discovery

because there is affidavits contesting the pleadings.

Here we are entitled to rely -- Bay Area case says we're

entitled to rely upon the supersedeas pleadings, whether

he wants to run away from it now or not. So we think

that the records, as I read all of these cases, heavy

burden -- it's a heavy burden that the resisting party

has to overcome the forum selection clause. This is now

like an arbitration clause in this case, not like venue,

but an arbitration clause that favors -- the United

States Supreme Court says they are favored, and he has a

heavy burden. And he has not done anything other than

attack what his admission in his pleadings and the

admissibility of this contract. He's not met his heavy

burden to overcome the forum selection clause.

THE COURT: All right. I've got it.

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

MR. KELLEY: A lawyer who is being sued

because of his legal work and fiduciary duty cannot

simply say, ship me out to the Isle of Man because we

are not coming under this agreement saying I'm suing on

that, the Isle of Man gets there and says, I have no

ability to enforce the ethical rules of Texas in

relationship to the lawyer and his client.

THE COURT: But your lawsuit goes beyond just

that, though.

MR. KELLEY: That's pretty much basically it,

and the trust. Our lawsuit is, what you did as a lawyer

in going to him and representing him, telling him you're

going to do these things, and taking his money into

IOLTA account. It's not a complaint. Our pleadings say

you took the money, you put it your IOLTA account, you

held it in trust and then you took that money, and you

did things with it that you weren't supposed to do and

you created these companies and you put the forum

selection clause and did all of these things, and then

you took the money yourself. So the lawyer ends up with

the 50 million. If you look at the whole scheme, he

takes the fifty from him, puts it in his trust, does

this circuitous route and then comes back with the

lawyer having the money. We are saying, you as the

lawyer breached your fiduciary duties.

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526
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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

THE COURT: I get that.

MR. KELLEY: And you can't get a release as a

lawyer -- this is the second ground. You cannot

contractually stick in a release in some other document

without having first -- and the whole purpose -- the

only thing he's got in the entire document is he gave us

a release as an employee or officer. So if that's it,

the lawyer by definition cannot have -- we have got --

on a breach of fiduciary duty, if he claims that I stuck

it in there and got release from my lawyer stuff, that's

an independent act of breach of fiduciary duty. None of

that comes under the deed.

THE COURT: I understand. As I read your

pleadings, though, I had a hard time separating the

transaction, you know, the space business investment

thing from the stuff about the lawyer and his trust

account. I had a hard time separating that out.

MR. KELLEY: But the Isle of Man is not going

to take a breach of fiduciary duty, because he's not

even admitting that we are not going to go there.

THE COURT: I tried to get him to say that on

the record. 

MR. KELLEY: I'll step back so we can get that

clear. But when they get up there, they're going to

say, oh, no, blah, blah. By the way, the rules do not

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527
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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

provide, even on a change of venue, the rules do not

provide you stall discovery. They have a rule in there

for venue that says this clearly doesn't do it. And

under the hearing you have no time limit or anything on

treating this. It's not treated under 21-day limit.

O'Conner points out that -- so, there is no abatement of

discovery. 

So my other request was, I have a right to go

forward with discovery. They are here. Dula is who.

Mr. Friedman is here. I have a right the take their

deposition. I've requested it properly. I've got a

motion to compel. That's what before you. I'm saying,

look, unless you are willing to abate it today or grant

their motion, I am able to go forward, and I can test

some of these theories. His argument is that money

went --

The ruling is this. In reviewing this, four

months, the Court will take any depositions, any

discovery product, any affidavit. So clearly it

contemplates taking in whatever evidence is before it.

There is no rule of procedure that says if you file a

motion to dismiss based on this, it halts discovery.

They've got no order from the Court halting discovery.

I have pending discovery with them that they have simply

said we're not going to allow you to do.

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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

THE COURT: My question on that was whether or

not I needed the discovery to rule on the motion because

once I rule, you are either here or you're not here.

MR. KELLEY: Or it's abated.

THE COURT: Last word. I have got it.

MR. LEVIN: Rule 88 does not apply because in

a motion to transfer venue actually says in the rule,

Rule, I think, 87, it says, it shall not be dismissed.

It shall instead be transferred to another jurisdiction.

That's why discovery is permitted in the motion to

transfer venue context, because if the case is ongoing,

it might go to different county. The case law says, the

accelerated cases say, it is not a motion to change of

venue here, instead transfer it and ongoing which allows

discovery, this is dismissed. The party bargained to go

to a forum selection clause in counter to that to allow

discovery to go on.

THE COURT: I know. I just said that. It's a

question of whether or not I need the information to

rule on the motion j.

MR. LEVIN: The last point I just want to

leave you with if I may, on the legal malpractice side.

I just point out Section 11.4 of the deed of assignment

recites that each party has either had the terms and

effectiveness either explained by independent legal

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529
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Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

counsel or had the full opportunity to have its terms

and effects explained by independent legal counsel. 

So Mr. Horie signed -- not only signed this

deed, he initialed every page, because he was

represented by independent legal counsel, not Mr. Dula.

MR. KELLEY: And nowhere in here does it say

that my work as your lawyer gets a release from my legal

work, and we are going to put that capacity in. This

doesn't make it. 

THE COURT: I have a trial that is in its

third week that's coming back tomorrow. And I've got

the charge conference this afternoon, so I don't see any

reason this -- and I'm now playing in the HBA golf

tournament on Thursday. I don't see me reaching this --

if I don't finish it today, then don't expect anything

until Friday. 

MR. LEVIN: That's better punctuality that I

get from a lot.

THE COURT: I've not done this a couple of

times where I just needed to think about it longer, but

I always rule by the end of the day on Friday on

anything I've gotten during the week. Otherwise, I

forget what happens and next week stuff comes up.

Right.

(End of hearing.)

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530
 23

Scotty Baldwin

Deputy Official Court Reportert 

Motion to Dismiss

April 20, 2015

STATE OF TEXAS 

COUNTY OF HARRIS 

I, Scotty Baldwin, Official Court Reporter in

and for the 55TH District Court of Harris, State of

Texas, do hereby certify that the above and

foregoing contains a true and correct transcription

of all portions of evidence and other proceedings

requested in writing by counsel for the parties to

be included in this volume of the Reporter's Record

in the above-styled and numbered cause, all of which

occurred in open court or in chambers and were

reported by me.

I further certify that this Reporter's Record

of the proceedings truly and correctly reflects the

exhibits, if any, offered by the respective parties.

I further certify that the total cost for the

preparation of this Reporter's Record is $276.00 

and was paid by Baker Hostetler .

 /s/Scotty Baldwin 

 Scotty Baldwin, CSR 

 Texas CSR 1019 

 Deputy Court Reporter 

 55TH District Court 

 Harris County, Texas 

 3610 E. Peach Hollow Cir. 

 Houston, Texas 77002 

 Telephone: 713.208.9524 

 Expiration: 12/31/2015 

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531
TAB D
 1

Gina Wilburn, CSR

Official Court Reporter

55th District Court

REPORTER'S RECORD 

VOLUME 1 OF 1 VOLUMES 

TRIAL COURT CAUSE NO. 2014-65947 

TAKAFUMIE HORIE ) IN THE DISTRICT COURT 

) 

vs. ) HARRIS COUNTY, TEXAS 

) 

LAW OFFICES OF ART DULA ) 55TH JUDICIAL DISTRICT 

_____________________________________________ 

DOCKET HEARING

_____________________________________________ 

 

On the 1st day of June, 2015, the following 

proceedings came on to be held in the above-titled and 

numbered cause before the Honorable Jeff Shadwick, Judge 

Presiding, held in Houston, Harris County, Texas. 

Proceedings reported by computerized stenotype 

machine. 

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532
 2

Gina Wilburn, CSR

Official Court Reporter

55th District Court

APPEARANCES

Lloyd Kelley 

SBOT NO. 11203180 

Attorney At Law 

2726 Bissonnet, Suite 240 

Houston, Tx 77005 

Telephone: 281-492-7766 

Counsel for Plaintiff 

Josh Thomas 

SBOT NO. 24027428 

BakerHostetler 

811 Main Street 

Suite 1100 

Houston, TX 77002-6111 

Telephone: 713-646-1331 

Counsel for Defendant 

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533
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Gina Wilburn, CSR

Official Court Reporter

55th District Court

THE COURT: Okay. This is Case

No. 2014-65947, Takafumi Horie versus Law Offices of Art

Dula.

MR. KELLEY: Hi, Judge. I'm Lloyd --

Lloyd Kelley. I forgot what team I'm on. This is Jim

Pierce.

MR. PIERCE: James Pierce.

MR. LEVIN: Your Honor, I'm Mike Levin

from Orlando, BakerHostetler. With me is my colleague,

Josh Thomas, from Houston BakerHostetler.

THE COURT: Welcome back.

MR. LEVIN: Thank you. Good to see you,

Judge.

THE COURT: So you've traveled twice on

this topic to show me how sure you are that you're right

and I'm wrong.

MR. LEVIN: I came here once for a hearing

just to watch you before.

THE COURT: And now you know me to be

reasonable and openminded. Although, I still I think I

got this right. And I read your motion to reconsider.

And fortunately, there is a quick remedy. It's a venue

type ruling, which means it's mandamusible. Don't you

agree?

MR. LEVIN: It's not a venue type ruling,

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534
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Gina Wilburn, CSR

Official Court Reporter

55th District Court

but it is mandamusible.

THE COURT: And so the Court of Appeals

will correct me or not quickly enough so that there

is -- the bulk of the case will happen where it's

supposed to happen, whether here or the Isle of Man. So

my intention is to deny the motion to reconsider.

MR. LEVIN: If I might, just two points

just procedurally underlying why I move for

reconsideration.

THE COURT: Okay.

MR. LEVIN: One, if it does go up on

mandamus, that would be our intention if you deny it. I

want to make -- it's a significant enough issue that I

wanted to make sure the record is fully robust that

we're not on mandamus, they say, well, you didn't argue

that in front of the trial court judge.

THE COURT: Sure. And I'm all about

letting lawyers lawyer and you tee your case up and I

don't want the Court of Appeals to waste its time or you

waste your time, of course.

MR. LEVIN: But the second is there was --

because the motion in opposition to the supplemental

motion to dismiss was filed on the Friday right before

the hearing, there were some things that we didn't get a

full-blooded chance to address and I would like to

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535
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Gina Wilburn, CSR

Official Court Reporter

55th District Court

just -- understanding what you've said, I would like to

lay out for you --

THE COURT: Let 'er rip, I'm unoffended.

MR. LEVIN: Thank you, sir. The Courts of

this state tell you that the party resisting the

mandatory forum selection clause has a heavy burden to

show why it doesn't apply.

THE COURT: If it applies.

MR. LEVIN: Right. Well, let me set that

one aside for a second.

So your order covered three issues. You

covered the alleged status that Mr. Dula was Mr. Horie's

attorney. Now, that, we say that's just fiction, never

represented the man, but it's pled. So you covered

that. 

You covered whether or not Mr. Dula and

Mr. Hightower would be susceptible to jurisdiction in

the Isle of Man and you've pressed me on that and we've

responded to that in our motion for consideration. And

then you have the issue about the live pleading and the

old pleading. 

THE COURT: Right. 

MR. LEVIN: So dealing with the attorney

issue and the point I wanted to make first is that the

allegation that Mr. Dula was Mr. Horie's attorney is not

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536
 6

Gina Wilburn, CSR

Official Court Reporter

55th District Court

inconsistent with the investment being an Excalibur

investment. Those are two separate thoughts. It's not

an either/or.

So if the forum selection clause does

apply -- and we'll get to that deed of assignment in

just a second -- the point is you said in the last

paragraph of your order, well, status as attorney

affects the interpretation of the release, something to

that effect. I have your order. 

But the truth is even under the decision

cited by Mr. Kelley, the Falk & Fish decision, it's the

only decision unearthed where there's a forum selection

clause that was actually in an engagement letter between

a Texas lawyer and a North Carolina client. And even in

that case, in construing the mandatory forum selection

clause, the Court said that it is the heavy burden on

the client to show that it's unreasonable.

Now, the client met the burden there, but

that's because the client submitted affidavits and -- in

order to demonstrate that it was unreasonable. There

is -- the truth is on this record, Mr. Kelley has

submitted no affidavits on the part of Mr. Horie or

anybody else. There has been nothing by the party

resisting the forum selection clause to show that --

that it's unreasonable. So there's been a failure to

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537
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Gina Wilburn, CSR

Official Court Reporter

55th District Court

meet the burden.

On the second --

THE COURT: Nobody would have to if it

doesn't apply. 

MR. LEVIN: Right. And the second point

you asked me about is could be Mr. -- and you pointed in

your order, could Mr. Dula and Mr. Hightower be under

the jurisdiction of the Isle of Man court. And I've --

and we've said, as you've seen in our motion to

reconsider, yes, CEO of the company, vice president of

the company, they admit they're subject to jurisdiction

of the Isle of Man court.

But, again, it's not our burden to say

there is jurisdiction. It's the burden of the party

resisting the clause to say there is not, and that's not

been met. 

So let's go now to the main issue, the --

the actual deed of assignment and whether it applies to

this situation or not, whether that forum selection

clause applies. 

That forum selection -- that deed of

assignment in the recitals, as we went through in detail

in our motion, covers every facet of Mr. Horie's

involvement with this company. It's -- it covers in the

recitals the memorandum of understanding where he agreed

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538
 8

Gina Wilburn, CSR

Official Court Reporter

55th District Court

to invest this $49 million. It covers the June

agreement where after he got convicted and sentenced, he

assigned his ownership of Excalibur to a trust.

THE COURT: How does it cover his

relationship with an attorney if there was one?

MR. LEVIN: Because it covers his

relationship with Excalibur regardless, regardless of

whether it involves his attorney or not. The question

really is: Why does -- if you have a forum selection

clause that applies to all of Mr. Horie's relationship

with -- regarding this 49 million-dollar investment, the

question is: If it's also regarding his attorney

relating to that investment, you still have a forum

selection clause applying to that investment.

Now, the difference between the original

com -- petition -- I keep calling it complaint because

that's what we call it in Florida -- the original

petition and the amended petition is only -- because

they both talk about the alleged attorney/client

relationship -- is only Mr. Kelley went through and

every time it said Excalibur, he called it a space

business or a space enterprise or a space venture or a

space entity. And one other generalized term that I

can't recall right now. All to substitute for

Excalibur.

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539
 9

Gina Wilburn, CSR

Official Court Reporter

55th District Court

The allegations against Mr. Dula were the

same. We've cited paragraph -- a -- a significant

penultimate paragraph in the complaint that says what it

was all about. So the only question is whether his

status as an alleged attorney excuses Mr. Horie from

having to comply with the forum selection clause and

that becomes --

THE COURT: I don't see that as the

question at all. The status of his relationship as an

attorney is the -- is a separate relationship. If I

hire you to help me make an investment in this parking

lot across the street and I get into -- into a fuss with

the people who own the parking lot across the street and

we settle that case, when I separately -- I would never

sue you, sir; but, I mean, if I separately sue you for

malfeasance somehow in the attorney/client relationship,

the venue or release or the terms of the settlement I've

made with the folks across the street doesn't relate to

that at all.

MR. LEVIN: No, sir.

THE COURT: That's -- that's the link that

you're going to have to make for me.

MR. LEVIN: Yes. The link is that they

allege that Mr. Dula is both the CEO of the parking lot

across the street and the attorney for Mr. Horie, both.

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540
 10

Gina Wilburn, CSR

Official Court Reporter

55th District Court

So it's not me advising you to investment in the parking

lot across the street and giving you negligent advice

about it. It is on their theory -- and again, we've

even attached communications to show that Mr. Dula never

represented this man and this man is the combination of

Steve Jobs and Bernie Madoff in Japan. He has plenty of

lawyers and he was represented by a Silicon Valley firm

in the situation and we attached that e-mail. 

But the situation -- the problem with your

analogy is that if I'm the CEO of the company you

invested in, you invest the money, I'm also your

attorney, then I may or may not be liable to you. That

would come out of the facts. But if our contract has a

forum -- a mandatory forum selection clause under Falk &

Fish --

THE COURT: But my contract with you as my

attorney doesn't.

MR. KELLEY: That's right.

MR. PIERCE: That's right.

MR. LEVIN: The contract relating to

investment in the company you claim I'm the CEO of does.

THE COURT: And in that capacity, you're

released and if I sued you in that capacity, I'd be in

the Isle of Man.

MR. KELLEY: Right.

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541
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Gina Wilburn, CSR

Official Court Reporter

55th District Court

MR. LEVIN: He did sue. He did sue in the

capacity for taking the money. He didn't sue for

advising about the money. He sued for allegedly taking

and misusing the money with regard to the investment in

the Soviet-era spacecraft. That's the allegation. 

THE COURT: Do you need to say anything

before I --

MR. KELLEY: I was going to say, you

probably don't want me to say anything because I --

THE COURT: I'm letting lawyers preserve

their record, so --

MR. KELLEY: One more thing I wanted to

tell you, last time that you had an -- idea, I didn't

put it in -- I did some more research and I was going to

get those cases for you. I just got short on time. 

There is some case law that talks about

moving it to -- this goes in line with your order. I'm

going to tell you how right you are. You may not need

it. 

But there is some case law that says --

because we had this general discussion last time -- if

you say, I want to have this case in Cuba -- this is

before this year -- and you can't go to Cuba, then that

won't work. You can't go to Russia or a communist

country where they won't recognize that. 

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542
 12

Gina Wilburn, CSR

Official Court Reporter

55th District Court

So this is analogous to that because a

malpractice action based on a Texas lawyer's conduct and

Texas lawyers, they're still not saying that the rest of

the people can be sued in the Isle of Man and certainly

they've never said anything about the trust and they've

never said about these other people. And I think

Mr. Pierce would add that on the basis of what they've

done now -- how's it go, the case you've got?

MR. PIERCE: They're trying to control the

litigation and the discovery by moving for protective

orders for other people.

THE COURT: Right.

MR. PIERCE: So under some of the case

law, they've actually even waived the venue motion.

MR. LEVIN: We have not -- we have not --

THE COURT: I don't think it's waived.

Look, I didn't make this part of my order because it

wasn't briefed and I didn't want to do the research

myself. To be honest with you, I think it violates

public policy. The relationship between a client and a

Texas lawyer can be anywhere but Texas. That's not part

of my ruling. But if I was asked, that's what I think.

All right. What's your --

MR. KELLEY: Can we go to the next one?

THE COURT: Yeah, motion to reconsider is

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

denied.

MR. LEVIN: Your Honor --

THE COURT: Do you need to say something

else to preserve your record?

MR. LEVIN: No, sir. I've made my record,

Your Honor, but then we would ask for a stay in this

proceeding so that we can have the petition for mandamus

because to be required to engage in discovery in this

court is contrary to the forum selection clause.

THE COURT: Okay. Here's my reaction to

that: Isn't this the same discovery that you would be

doing in the Isle of Man where you would like to be?

MR. KELLEY: Yes.

MR. LEVIN: No, sir.

THE COURT: Why not? That's why the

motion to stay would be denied. It seems like you're in

the fight whether you want to be or not, which means

you're in discovery whether you want to be or not. What

court that takes place under seems to be unrelated to

your -- to your mandamus.

MR. LEVIN: Well, that's the -- that

assumes that the discovery procedures that occur under

the Texas Rules of Civil Procedure are the same

discovery procedures -- 

THE COURT: That's true.

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55th District Court

MR. LEVIN: -- as would be in the

Isle of Man. If I'm right and the parties did intend

for this forum selection clause to apply to this

dispute, then it's subject to whatever discovery

procedures would apply in the Isle of Man, whatever

evidentiary procedures would apply in the Isle of Man. 

And so the ability to -- we are -- if we

have to go forward with discovery, then we are denied

the ability to avail ourselves of the protections of the

laws of the Isle of Man and so that's why the whole

point of mandamus is you can't rebag the cat, you can't

unring the bell and so we should get a stay on that.

THE COURT: Sort of like sometimes when

you order arbitration and the Rules of Discovery are

different in arbitration or civil court, so I'm sort of

persuaded by this.

MR. KELLEY: Well, but it's different in

this case for this reason -- I'm going to take further

on your idea of the public policy and if we haven't

briefed it, we will. If a lawyer in this state thinks

he can now shield himself by simply saying, all of my

stuff is now going to be in Cuba or in the Isle of Man

and I'm not even going to let you have discovery or

anything like that, that's found unconscionable. 

So you have to have a forum that first can

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Official Court Reporter

55th District Court

apply to that and then you get the same discovery. No

lawyer can say in any contract you can't have your

documents, you can't have your discovery and I'm going

to make sure you're limited because that's now found --

THE COURT: I don't see this as that. If

this was an interlocutory appeal that I thought might be

ruled on in a year, I might -- I might have discovery go

forward, but a mandamus is going to be pretty fast.

MR. KELLEY: But remember, in an

interlocutory appeal, they don't even allow, except in

certain circumstances, a stay on discovery. Why would

you allow a stay on discovery in a mandamus? 

You've said he's wrong. A mandamus is

extraordinary relief. It's not a right of appeal. It's

to say that somehow you've abused your discretion. So

if that's the case, then there should be no stay in the

discovery. We've got to get the case moving forward.

And it could take as long as an interlocutory by the end

of the money.

THE COURT: All right. Well, what do I --

if I grant your stay on appeal, what do I do if you

don't file the mandamus?

MR. LEVIN: We're going to file the

mandamus. And so you could say the stay lasts for a

period of 20 days and if we have it -- and we'll reman

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

in effect if we file our mandamus; otherwise, it

expires. That would be the proper way to do it.

THE COURT: That's not a bad idea.

MR. KELLEY: So we're going to stay here a

year when this thing's locked down? We also sought

discovery as far as the motion that is -- some of this

stuff he says we don't have evidence --

MR. LEVIN: The motion -- excuse me.

THE COURT: Hang on.

MR. KELLEY: So, remember, one of my

objections was, Judge, I don't want you to hear this

motion because we want to do some discovery. Well, when

you denied it, that became moot. I don't want to

have --

THE COURT: That's because you won.

MR. KELLEY: Right, but I would still --

if I still do some of that discovery and we find out

some of the stuff I'm looking for, then on appeal I'll

be able to supplement that mandamus record to support

the decision that you did make. Why should I be backed

off of on discovery because I was right?

MR. LEVIN: Well --

THE COURT: Hang on. But we don't know

what the result of the mandamus is going to be.

MR. KELLEY: It could be, go get your

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Official Court Reporter

55th District Court

discovery -- 

THE COURT: Right. 

MR. KELLEY: -- in which case I've lost

time. I waste six months to a year waiting on a -- 

THE COURT: Man, I don't know. I mean -- 

MR. KELLEY: There's no rule that provides

for it. The mandamus rules don't provide for it. If he

wants that kind of relief, get it from the appeal court.

They'll issue it if they think it's legitimate. 

THE COURT: All right. Here's what would

make me feel better -- 

MR. KELLEY: Okay. Tell me what you want

to do.

THE COURT: -- is if you told me what the

rules of discovery were in the Isle of Man and if

they're substantially similar to what you're asking for,

I'll let it go forward, but I do understand his argument

that --

MR. KELLEY: Then I'll go research it. I

have no idea. Let me go find out.

THE COURT: So I grant his motion to stay.

I put in the little thing that says as long as you

mandamus me quickly, that would be --

MR. LEVIN: 20 days, Your Honor?

THE COURT: That would be the first time

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Official Court Reporter

55th District Court

in history the district court judge says, would you

please hurry up and -- try to mandamus me? But in any

event --

MR. KELLEY: If you're going to do this

then and he loses in the mandamus, then I want an

expedited discovery order that puts this case back on

track.

THE COURT: All right. Well, let's wait

and see what happens after the discovery. What I prefer

that you do is that you file a motion to reconsider the

stay of the discovery if you find out what the rules of

discovery are in the Isle of Man. You understand my

concern, right?

MR. KELLEY: Yeah. You're saying somehow

he gets an advantage as a lawyer because he stuck in

some settlement agreement something about the

Isle of Man. I think that's against public policy -- 

THE COURT: Perhaps -- 

MR. KELLEY: -- that you get any

protection at all.

THE COURT: But walk through the result of

the Court of Appeals agreeing to the mandamus. Okay?

Play that forward. 

MR. KELLEY: If they agree? 

THE COURT: Yeah. 

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

MR. KELLEY: On which ground?

THE COURT: They -- they overturn me.

They say that the venue is proper in the Isle of Man.

MR. KELLEY: For everybody, because

they're only moving now to reconsider two of the them.

THE COURT: Whatever it is that they say. 

MR. KELLEY: Okay. So two of them go and

the other four stay.

MR. LEVIN: Mandamusing for all of them,

so --

THE COURT: In any event, they say that

the case has to go forward in the Isle of Man and the

Isle of Man Courts say, Well, we, the Isle of Man,

basically just look out at the North Atlantic Ocean and

do our -- and we don't like discovery and so you don't

get any, then in that case, the Court having decided the

ill Isle of Man is appropriate, then they have, I guess,

also decided that it doesn't violate public policy or

whatever else happens. 

But -- but I do think it would be

inappropriate for me to begin to -- to order discovery

which is not available in this Isle of Man because if

the Court of Appeals reverses this is --

MR. KELLEY: So all you need to know is if

it's available in the Isle of Man, you'll take off --

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

THE COURT: Then I'll feel better about it

occurring here because it would have occurred there

anyway. 

MR. KELLEY: Okay. I'll go look.

THE COURT: Do you see what I'm saying?

MR. KELLEY: Sure. 

THE COURT: Does that seem -- 

MR. KELLEY: It doesn't seem fair to me,

but I'll do it.

THE COURT: Yeah, it seems fair to you.

MR. KELLEY: No, it doesn't. 

THE COURT: Yes, it does. 

MR. KELLEY: I mean, I don't think that a

Texas --

THE COURT: You're going to go out in the

hallway and say, you know what, Shadwick was right.

MR. KELLEY: No, I'll never think that a

Texas lawyer ought to play by tricks in stealing

50 million --

MR. LEVIN: Excuse me. He's not -- he's

never represented the man. This is a fictional

argument --

MR. KELLEY: See, that's --

THE COURT: Don't worry about it.

MR. KELLEY: -- a fact question and if you

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

want to argue the facts, let's put 12 people over there

and you make that argument, I'll make mine, let's see

what the jury says.

THE COURT: This is just you and me with

our normal banter.

MR. KELLEY: I'm following what you're

saying because you want to be 100 percent right and if

they do it in the Isle of Man and do it in there, then

it can't be in error. Let me go see -- if it turns out

to be correct, then I don't need to fight anymore. So

why don't I do that? 

I think it's wrong that you would get a

stay when the rules don't provide for it and just

because you argue one thing and if delay is all you, you

know, ever want to do you want to, but, hey, you move

your docket pretty fast, so --

MR. LEVIN: I'll submit an order, Your

Honor.

THE COURT: Haven't you already?

MR. LEVIN: We did, but we didn't say with

all the 20 days and the things you've put in today,

so --

THE COURT: Fix that for me, send an order

up.

MR. LEVIN: Sure. I'll run it by

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

Mr. Kelley.

THE COURT: You know, the form not

substance. The motion to reconsider is denied.

MR. LEVIN: Yes, sir.

THE COURT: And is there something else?

MR. LEVIN: The stay and the 20 days and

then there was a motion to quash deposition --

THE COURT: The motion to compel, but if

discovery is stayed, then that's --

MR. KELLEY: Can you -- so I don't have

this problem again, that we agreed to a

confidentiality --

MR. LEVIN: We did not.

MR. KELLEY: They didn't that agree?

Okay, fine, then when we come back to my discovery --

MR. LEVIN: Your Honor --

THE COURT: It's not on my docket --

MR. KELLEY: When it's lifted, I don't

want him to have an advantage for what he's done in

discovery already. So I don't want him to use this stay

to get an advantage that he wouldn't have. Today I was

on a motion to compel --

THE COURT: We'll just have to worry about

that when it comes back.

MR. LEVIN: Can I just say one word about

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

the confidentiality because --

THE COURT: No. I have too many lawyers --

MR. KELLEY: It was send to me yesterday.

THE COURT: Don't worry about it.

MR. KELLEY: Don't worry about it.

THE COURT: In one ear, out the other.

I've got filter and it's limited to what's in front of

me.

MR. LEVIN: Thank you, Judge.

(Court Adjourned.)

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Gina Wilburn, CSR

Official Court Reporter

55th District Court

STATE OF TEXAS 

COUNTY OF HARRIS 

I, Gina Wilburn, Official Court Reporter in and for 

the 55th District Court of Harris, State of Texas, do 

hereby certify that the above and foregoing contains a 

true and correct transcription of all portions of 

evidence and other proceedings requested in writing by 

counsel for the parties to be included in this volume of 

the Reporter's Record in the above-styled and numbered 

cause, all of which occurred in open court or in 

chambers and were reported by me. 

I further certify that this Reporter's Record of the 

proceedings truly and correctly reflects the exhibits, 

if any, offered by the respective parties. 

I further certify that the total cost for the 

preparation of this Reporter's Record is $ and 

was paid/will be paid by Josh Thomas. 

WITNESS MY OFFICIAL HAND on this, the 18th day of 

June, 2015. 

 /s/ Gina Wilburn 

 Gina Wilburn, CSR 

 Texas CSR 5885 

 Official Court Reporter 

 55th District Court 

 Harris County, Texas 

 201 Caroline, 9th Floor 

 Houston, Texas 77002 

 Telephone: 713-368-6056 

 Expiration: 12/31/2015 

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