JORDAN, LYNCH & CANCIENNE PLLC

Michael Cancienne (SBN 24055256) 

Joseph W. Golinkin II (SBN 24087596) 

1980 Post Oak Blvd., Ste. 2300

Houston, Texas 77056

Telephone: 713.955.4028

Counsel for the Auerbach Defendants

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

SCOTT M. SEIDEL, TRUSTEE; and 

GNET ATC, LLC

Plaintiffs,

v.

18920 N 11th, LLC; JAMES 

GOODMAN; JAMES FRINZI; 

STEVEN ZAKHARYAYEV; 

EVELINA PINKASOVA; PEOPLE 

NQ INC.; JJC & PEOPLE LLC; 

GDMN FAMILY INVESTMENTS 2, 

LLC,

Defendants.

Case No. 22-31641-mvl-7

(Chapter 7)

Adversary Proceeding No. 

23-03090-mvl

DEFENDANTS HUDSON CLEAN ENERGY ENTERPRISES, LLC, 

ALLIANCE TEXAS HOLDINGS, LLC, NEIL Z. AUERBACH, JUDITH 

AUERBACH, AUERBACH PARTNERS, L.P., AND AUERBACH 

CHILDREN’S DYNASTY TRUST U/A/D OCTOBER 9, 2012’S MOTION TO 

DISMISS

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Defendants Hudson Clean Energy Enterprises, LLC (“Hudson”), 

Alliance Texas Holdings, LLC (“Alliance”), Neil Z. Auerbach (“Auerbach”), Judith 

Auerbach, Auerbach Partners, L.P. (“Auerbach Partners”), Auerbach Children’s 

Dynasty Trust u/a/d October 9, 2012, and Auerbach Family Dynasty Trust u/a/d 

October 9, 2012 (collectively, the “Auerbach Defendants”) file this Motion to Dismiss

Plaintiff Scott Seidel’s, as Trustee of Goodman Networks (“the Trustee”), Original 

Complaint under Rules 9 and 12 of the Federal Rules of Civil Procedure.

I. INTRODUCTION

This lawsuit centers around the allegation by the Trustee that in early 

2022, Hudson, Auerbach, and/or Auerbach Partners purchased certain distressed 

bonds issued by Debtor from James Goodman for 35 percent of the bonds’ face value, 

then sold those bonds to the Debtor for 53 percents of the bonds’ face value. As a 

result, they made a profit while also allowing Debtor to retire more than $30 million 

of senior debt at a substantial discount. The Trustee ignores the retiring of the debt 

and attacks Hudson, Auerbach, and/or Auerbach Partners for making a profit by

selling the Bonds to Debtor. In so doing, the Trustee not only ignores the obvious 

benefits Debtor received when it repurchased the Bonds, but also disingenuously 

suggests that the Auerbach Defendants negotiated a distinct third transaction—in 

effect, a kickback—with Debtor’s insiders. But there was no kickback payment or

third transfer, and the fact that the Debtor retired $30 million of senior debt when it

repurchased the Bonds is a crucial fact that defeats the Trustee’s claims against 

Hudson, Auerbach, and/or the Auerbach Partners.

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Indeed, the Trustee has not stated any claims against the Auerbach 

Defendants. As discussed in more detail below, there were no fraudulent transfers 

(actual or constructive) because Debtor received reasonably equivalent value. 

Similarly, Debtor’s civil conspiracy claim fails because the Trustee does not allege 

Auerbach or Auerbach Partners reached any meeting of the minds with Frinzi (at all) 

or a relevant meeting of the minds with Goodman to breach any fiduciary duty. Again, 

all that the Trustee alleges is that Hudson, Auerbach, or Auerbach Partners allowed 

the Debtor to retire $30 million of senior debt for 53 cents on the dollar. Finally, the 

Trustee has improperly attempted to drag two Auerbach Trusts and Judith 

Auerbach, as trustee for the trusts, into this lawsuit without alleging any facts 

against them. And because there is no claim for which the trusts could be vicariously 

liable, and no articulated basis for holding Judith Auerbach liable, the claims against 

these defendants should be dismissed.

II. FACTUAL BACKGROUND

A. The Company, Its Management, and the Senior Secured Bonds.

James Goodman and his family members are the beneficial owners of a 

majority of the outstanding equity issued by the Company. Until January 31, 2022, 

James Goodman served as the sole director of the Company. (ECF 1 at ¶ 21.) On 

February 1, 2022, “Goodman purported to resign as the director of the Debtor.” (Id.)

At that time, Goodman “owned more than $30 million of the Debtor’s bonds.” (Id.)

Those bonds were due to mature on May 11, 2022. (Id. at ¶ 38.)

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B. The Alliance Transactions.

Around the same time, Debtor made it known that it was seeking to 

repurchase these bonds at a discount so that it could reduce the company’s debt 

burden. But a major holder of these bonds—James Goodman—was reluctant to 

directly sell these bonds back to the company on which he previously served as a 

director for fear of having the transactions attacked should the company default. (Id. 

at ¶ 44.) This created an opportunity that the Auerbach Defendants cannily (and 

legally) exploited simultaneously negotiating two separate deals.

First, Alliance negotiated for the acquisition of certain Bonds held by 

Goodman Investment Holdings (“GIH”) and Genesis Networks Inc. (“Genesis” and 

together with GIH, the “J. Goodman Entities”) (such acquisition transaction (the 

“Alliance Purchase Transaction”). The Alliance Purchase BPA provides for the 

purchase by Alliance from the J. Goodman Entities of $31,746,617 in aggregate face 

value of Bonds for $11,131,953 (the “Purchase Transaction Price”) in cash, or roughly 

35.1% of the face value of the Bonds. (Id. at ¶ 1.)

Separately, the Auerbach Defendants negotiated and executed the 

Alliance Sale BPA provides for the sale by Alliance, and the purchase by the Company 

of $31,746,617 in face value of the Bonds for a purchase price of $17,032,060 (the 

“Sale Transaction Price”). (Id. at ¶ 58.) The Sale Transaction Price reflected a 

transaction at approximately 53.6% of the face value of the Bonds.

Thus, by executing these two agreements, the Auerbach Defendants 

effectively bought the Bonds for 35% of their face value and then resold those same 

Bonds to Debtor for 53% of their face value, realizing a profit of roughly $5.9 million. 

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(Id.) In purchasing back the Bonds at a reduced value, the Debtor was able to cancel 

over $14 million dollars of its secured debt.

C. The Bankruptcy and subsequent proceedings.

On September 6, 2022, various petitioning creditors filed an involuntary 

petition (the “Petition”) against the Company in the Bankruptcy Court. The Petition 

commenced a chapter 7 bankruptcy proceeding and created the Company’s chapter 7 

estate. The Bankruptcy Court entered an order for relief against the Debtor on 

December 12, 2022. The Bankruptcy Court appointed Scott M. Seidel as the Trustee 

of the Company and the Estate.

In connection with the Alliance Transactions, and in connection with 

various other transactions of the Company, on February 1, 2023, the Trustee deposed 

James Goodman, and on February 2, 2023, the Trustee deposed Frinzi. The Trustee 

subsequently filed this lawsuit. In it, the Trustee purports to assert eleven causes of 

action, including the following which are the subject of this Motion to Dismiss:

 Constructive Fraudulent Transfer (Bankruptcy Code section 

548(a)(1)(B)) [Count 1, Count 4]

 Actual Fraudulent Transfer (Bankruptcy Code section 548(a)(1)(A)) 

[Count 1, Count 4]

 State Law Constructive Fraudulent Transfer (TUFTA1 §§ 24.005(2), 

24.006(a)) [Count 2, Count 4]

 State Law Actual Fraudulent Transfer (TUFTA 24.005(1)) [Count 2, 

Count 4]

 State Law Civil Conspiracy (Texas Common Law) [Count 9]

1 “TUFTA” means the Texas Uniform Fraudulent Transfer Act, Chapter 24 of the Texas 

Business and Commerce Code.

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 Unjust Enrichment (Texas Common Law) [Count 10]

 Partner Liability (Texas Common Law) [ Count 11], which is a collection 

count seeking to extend any disputed liability of Auerbach Partners, a 

limited partnership, to its general partners.

III. STANDARD

Federal Rule of Civil Procedure 12(b)(6) allows for the dismissal of a 

complaint for the “failure to state a claim upon which relief can be granted.” FED. R.

CIV. P. 12(b)(6). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff’s 

complaint must plead “enough facts to state a claim to relief that is plausible on its 

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L.Ed.2d 929 

(2007). “A claim has facial plausibility when the plaintiff pleads factual content that 

allows the court to draw the reasonable inference that the defendant is liable for the 

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L.Ed.2d

868 (2009). In deciding a Rule 12(b)(6) motion, the Court should “accept all wellpleaded facts as true, drawing all reasonable inferences in the nonmoving party’s 

favor.” Benfield v. Magee, 945 F.3d 333, 336 (5th Cir. 2019). The Court “do[es] not, 

however, accept as true legal conclusions, conclusory statements, or naked assertions 

devoid of further factual enhancement.” Id. at 336–37 (cleaned up).

Additionally, when a plaintiff’s claims are grounded in fraud, the 

plaintiff must satisfy the heightened pleading requirements of Rule 9(b). Rule 9(b)’s 

particularity requirement generally demands the complaint identify the “who, what, 

when, where, and how” of the allegedly fraudulent content. See United States ex rel. 

Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 453 (5th Cir. 2005). Rule 9(b) 

sets a “high bar.” Colonial Oaks Assisted Living Lafayette, L.L.C. v. Hannie Dev., Inc., 

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972 F.3d 684, 694 (5th Cir. 2020). “Naked assertions devoid of further factual 

enhancement will not suffice.” Sharifan v. NeoGenis Labs, Inc., No. 4:21-CV-01940, 

2022 WL 3567010, at *5 (S.D. Tex. Aug. 18, 2022) (citing In re Lindsey, 733 F. App’x 

at 192.).

IV. DISCUSSION

In its Complaint, the Trustee seeks to unwind what it claims are 

fraudulent transfers under state and federal law, and further seeks to hold the 

Auerbach Defendants liable for civilly conspiring with Frinzi and Goodman to breach 

a fiduciary duty and for unjust enrichment. The Trustee also alleges that Auerbach 

Trusts 1 and 2 are jointly and severally liable for any damages caused by Auerbach 

Partners. For the reasons set out below, the Court should dismiss the Trustee’s claims 

against the Auerbach Defendants.

A. There was no $5.9 million dollar transfer.

The Trustee bases multiple causes of action—including, but not limited 

to, Counts 1-2, 4, 7, 8-9, and 10—on the Auerbach Defendants’ supposed involvement 

in something it calls “the $5.9 Million Transfer.” (ECF 1 at ¶¶ 58, 60, 66, 67, 68, 73-

76, 78, 79, 83-92, 107, 123-124, 130, 134, 137-138.) In describing this supposed 

transfer, the Trustee alleges that the Sale Transaction Price is somehow divided into 

two separate transfers: (1) the Purchase Transaction Price ($11,131,953), and (2) the 

Spread, which the Complaint refers to as the “$5.9 Million Transfer.”

Of course, that is not what happened. As the Complaint itself explicitly 

concedes, there was only one transfer—for $17,032,060—to the Auerbach 

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Defendants. (ECF 1 at ¶ 57) Accordingly, there is no legal basis for bifurcating an 

otherwise singular transaction into a “Main Transfer” component and another 

component. In a wire transfer of funds, title to the funds passes from the transferor 

to the transferee when the funds are deposited into the transferee’s bank account. 

See, e.g., Barnhill v. Johnson, 503 U.S. 393, 400 (1992) (holding that “the debtor has 

implemented a mode, direct or indirect . . . of disposing . . . of property or . . . an 

interest in property” when the debtor loses its claim against the bank for the 

transferred funds and the transferee obtains the claim against the bank for the 

deposited funds) (emphasis in original); Regions Bank v. Provident Bank, Inc., 345 

F.3d 1267, 1277 (11th Cir. 2003) (“Title to funds in a wire transfer passes to the 

beneficiary bank upon acceptance of a payment order.”); United States v. BCCI 

Holdings (Luxembourg), S.A., 980 F. Supp. 21, 27 (D.D.C. 1997) (“Because an 

accepted transfer cannot be revoked without the consent of the beneficiary, and the

beneficiary bank incurs an obligation to the beneficiary upon acceptance of the funds, 

the ownership interest in those funds must pass from the originator upon completion 

of the funds transfer.”). 

Once the Company transferred $17,032,060, and once such funds were 

deposited into Hudson’s bank account (acting as agent for Alliance), control of the 

funds, and thus the interest in such property, passed to Alliance (with Hudson acting 

as agent). The later transfers made from Hudson (on behalf of Alliance) to GIH and 

Genesis were caused by Alliance using funds that had become Alliance’s property, 

and the ultimate disposition of the Spread has absolutely no bearing on whether the 

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initial $17,032,060 transfer should be viewed as anything other than a single, unified 

transaction. 

Accordingly, no “$5.9 Million Transfer” was made, and there is no basis 

to bifurcate the transactions in such manner. For this reason, the Trustee’s causes of 

action asserted in Counts 1, 2, 4, and 5 fail.

B. The Trustee’s Claims for Constructive Fraudulent Transfer in 

Counts 1, 2, 4, and 5 must be dismissed, as the Debtor cannot 

plausibly establish that it did not receive reasonably equivalent 

value.

In Counts 1, 2, 4, and 5 of the Complaint, the Trustee seeks to unwind 

Debtor’s decision to buy the Bonds based on its theory that the transaction was a 

“constructive fraudulent transfer” to Hudson, Alliance, Auerbach, and Auerbach 

Partners (“the Transfer Defendants”) because Debtor did not receive “reasonably 

equivalent benefit” or “reasonably equivalent value” for what it paid. (ECF 1 at ¶¶

78, 91, 107, 114.) These allegations fail as a matter of law.

Under section 548(a)(1)(b) of the Bankruptcy Code and under TUFTA 

sections 24.005 and 24.006(a), a transfer is constructively fraudulent when a debtor 

“voluntarily or involuntarily received less than reasonably equivalent value in 

exchange for [a] transfer or obligation . . . while the debtor was insolvent or became 

insolvent as a result of the transfer.” In re Essential Fin. Educ., Inc., 629 B.R. 401, 

442 (Bankr. N.D. Tex. 2021). The Bankruptcy Code does not define “reasonably 

equivalent value” but defines “value” as the “satisfaction . . . of a present or 

antecedent debt of the debtor.” 11 U.S.C. § 548(d)(2)(A). Similarly, under TUFTA, 

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“[v]alue is given for a transfer . . . if, in exchange for the transfer . . . an antecedent 

debt is secured or satisfied.” TEX. BUS. & COM. CODE § 24.004(a).

Accordingly, bankruptcy courts routinely hold that, under the 

Bankruptcy Code and under TUFTA, “a transfer made for or on account of an 

antecedent debt is by definition for a reasonably equivalent value, and so cannot be a 

constructively fraudulent transfer.” In re Arabella Petroleum Co., 647 B.R. 851, 869 

(Bankr. W.D. Tex. 2022) (emphasis added). Thus, “where a payment results in the 

corresponding dollar-for-dollar satisfaction of amounts owing by a debtor under a 

promissory note, then the payment is not avoidable as a constructively fraudulent 

transfer.” In re Jones, No. 16-41283-ELM-7, 2019 WL 1167812, at *8 (Bankr. N.D. 

Tex. Mar. 11, 2019) (citations omitted). See also In re Dual D Health Care Operations, 

Inc., No. 17-41320-ELM, 2021 WL 3083344, at *10 (Bankr. N.D. Tex. July 21, 2021) 

(“When a debtor makes a payment on antecedent debt and receives a dollar-for-dollar 

reduction of that debt, . . . the question is easy because the debtor by definition 

receives reasonably equivalent value—indeed, exactly equivalent value . . .”) (quoting 

Matter of La. Pellets, Inc., 838 F. App’x 45, 50 (5th Cir. 2020) (emphasis in original); 

In re Southeast Waffles, LLC, 702 F.3d 850 (6th Cir. 2012) (“Typically, a dollar-fordollar reduction in debt constitutes—as a matter of law—reasonably equivalent 

value . . . .”); In re Sharp Intern. Corp., 403 F.3d 43 (2d Cir. 2005) (holding conveyance 

that satisfies an antecedent debt is not a fraudulent conveyance); In re Elrod 

Holdings Corp., 421 B.R. 700 (Bankr. D. Del. 2010); In re IFS Financial Corp., 417 

B.R. 419, 441–42 (Bankr. S.D. Tex. 2009) (under relevant fraudulent conveyance law, 

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“value” includes satisfaction of an antecedent debt); In re Central Ill. Energy Coop v. 

Camile’s of Canton, Inc., 2011 WL 3666611, at * 4 (Bank. C.D. Ill. Aug. 22, 2011) 

(recognizing debtor’s payment toward contractual obligations “discharged that 

liability and could not have been fraudulent . . . .”).

The Trustee has not plausibly alleged that the Debtor did not receive 

reasonably equivalent value as part of the transactions at issue, and thus fails to 

state a claim for constructive fraudulent transfer under section 548(a)(1)(B) or under 

section 24.005(a)(2) of TUFTA. In fact, the Trustee’s allegations show just the 

opposite. Payment of the Sale Transaction Price was a transfer made on account of 

an antecedent debt, which allowed the Company to retire over $31 million in face 

value of its outstanding bonds for only $17,032,060—a more than dollar-for-dollar 

credit in reduction of its obligations. (Id. at ¶ 58.) Under both the Bankruptcy Code 

and TUFTA, this transfer was “by definition” for reasonably equivalent value and 

therefore not avoidable as a constructively fraudulent transfer. See In re Dual D 

Health Care Operations, Inc., 2021 WL 3083344, at *10 (“When a debtor makes a 

payment on antecedent debt and receives a dollar-for-dollar reduction of that debt, . 

. . the question is easy because the debtor by definition receives reasonably equivalent 

value.”). Therefore, for the Trustee’s constructive fraudulent transfer claims fail as a 

matter of law.

C. The Trustee’s Actual Fraudulent Transfer Claims alleged in 

Counts 1, 2, 4, and 5 are Insufficiently Plead. 

The Trustee’s allegations against the Transfer Defendants also fail to 

state a claim under both the Rule 9(b) and 8(a) standards for an actual fraudulent 

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transfer under section 548 of the Bankruptcy Code and under TUFTA. In fact, most 

of the Complaint’s factual allegations against the Transfer Defendants consist of 

merely conclusory statements that must be disregarded, leaving only threadbare 

factual allegations that fail to establish the Trustee’s actual fraudulent transfer 

claims. In addition, the Trustee’s allegations of actual fraudulent transfer against the 

Transfer Defendants lack necessary elements to plead these claims.

Though the Fifth Circuit has left open whether Rule 9(b)’s heightened 

pleading standard applies to actual fraudulent transfer cases, several other circuits 

and courts in the Fifth Circuit have held it applies. See Matter of Life Partners.

Holdings, Inc., 926 F.3d 103, 118 (5th Cir. 2019) (declining to decide the issue, but 

listing several courts in the Fifth Circuit and other circuits that have applied the 

heightened pleading standard in Rule 9(b) to fraudulent transfer claims). Following 

other circuits and federal district courts in the Fifth Circuit, this Court should apply 

Rule 9(b) to the Trustee’s actual fraudulent transfer claims and require they be 

pleaded with particularity.

An actual fraudulent transfer claim under both section 548(a)(1)(A) and 

TUFTA § 24.005(a)(1) requires an “actual intent to hinder, delay or defraud.” In re: 

Brown Med. Ctr., Inc., 552 B.R. 165, 170 (S.D. Tex. 2016). One of the “badges of fraud” 

considered by courts to determine whether an actor acted with “actual intent to 

hinder, delay or defraud” under section 548 is knowledge of the financial condition of 

the debtor—specifically that the course of conduct occurred after the onset of financial 

difficulties or pendency or threat of suit by creditors. Id. at 170–71; see In re Hannover 

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Corp., 310 F.3d 796, 800 (5th Cir. 2002) (discussing a transferee’s knowledge as part 

of the § 548 assessment).

The Trustee has failed to allege this with particularity. Instead, it 

simply states that “Auerbach knew of the Debtor’s insolvency . . . .” (ECF 1 at ¶ 1.)

How? Well, the Trustee admits it is just guessing, stating “[u]pon information and 

belief, Auerbach too was made aware of [the Debtor ceasing operations and loss of 

customers], either through Goodman and/or Frinzi, or through his son, Shalom.” (Id. 

at ¶ 35.) These allegations are insufficient. See In re Superior Air Parts, Inc., 486 B.R. 

728, 741 (N.D. Tex. 2012) (“Conclusory allegations made upon information and belief 

are not entitled to a presumption of truth . . . and allegations stated upon information 

and belief that do not contain any factual support fail to meet the Twombly standard.” 

(citations omitted)). Absent factual, non-conclusory allegations to support the 

Auerbach Defendants’ knowledge of the Debtor’s insolvency, the Trustee cannot 

establish a claim against the Auerbach Defendants for actual fraudulent transfer.

Along the same lines, TUFTA § 24.005(b) contains various factors for 

consideration of whether there was actual intent to defraud. In re: Brown, 552 B.R. 

at 171–72. Some factors to consider include whether: (1) “before the transfer was 

made or obligation was incurred, the debtor had been sued or threatened with suit;” 

(2) “the transfer was of substantially all the debtor’s assets;” and (3) “the value of the 

consideration received by the debtor was reasonably equivalent to the value of the 

asset transferred . . . .” TEX. BUS. & COM. CODE § 24.005(b)(4), (5), and (8). The Trustee 

does not allege that the Debtor had been sued or threatened with suit when the 

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alleged fraudulent transaction occurred. In fact, the Trustee concedes that the Bonds 

would not mature until months after the supposedly fraudulent transactions. (ECF 1 

at ¶¶ 38, 49.) The Trustee also does not claim that the amounts involved in the Bond 

Purchase Agreement constituted substantially all of the Debtor’s assets.

Lastly, the Trustee alleges in conclusory fashion that the Debtor did not 

receive “reasonably equivalent value” from the transaction, merely parroting the 

standard. (Id. at ¶¶ 78, 91, 114.) Nevertheless, the Trustee does not explain why or 

how this value is not reasonably equivalent. This allegation also belies the Trustee’s 

other allegations that the transaction was done to allow the Debtor to “cancel as much 

of the Bonds as it could for less than face value, in order to relieve the Debtor of its 

debt burden at a discount” and allowed the Debtor to “retire more than $30 million 

in Bonds” for a little over half of value of those bonds. (Id. at ¶¶ 39, 60,) Given the 

Trustee has failed to allege with particularity the facts suggesting actual fraudulent 

intent, rather than constructive intent, the fraudulent transfer claims against the

Transfer Defendants should be dismissed. See In re Brown, 552 B.R. at 172.

D. The Trustee’s Civil Conspiracy Claim Against The Auerbach 

Defendants Contradicts The Complaint’s Factual Allegations.

The Trustee also purports to state a civil conspiracy claim against 

Auerbach and Auerbach Partners, and on that basis, asks the Court to enter 

“judgment against Auerbach, jointly and severally with Goodman and Frinzi, for the 

damages caused to the Debtor by Goodman’s and Frinzi’s breaches of fiduciary duty 

as otherwise described above, in an amount to be proven at trial.” (ECF 1 at ¶ 135.) 

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“Civil conspiracy is a derivative tort; therefore, liability for a civil 

conspiracy depends on participation in an underlying tort.” Homoki v. Conversion 

Servs., Inc., 717 F.3d 388, 402 (5th Cir. 2013). Therefore, to adequately plead a claim 

for civil conspiracy, the plaintiff must allege both a claim for conspiracy and a claim 

for an underlying tort. Id. The elements of a civil conspiracy include: “(1) two or more 

persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or 

course of action; (4) one or more unlawful, overt acts; and (5) damages as a proximate 

result.” Tri v. J.T.T., 162 S.W.3d 552 (Tex. 2005). Here, the underlying tort the 

Plaintiffs claim is breach of fiduciary duty. “In Texas, ‘[t]he elements of a breach of 

fiduciary duty claim are: (1) a fiduciary duty existed between the plaintiff and the 

defendant; (2) the defendant breached its fiduciary duty to the plaintiff; and (3) the

defendant’s breach resulted in injury to the plaintiff or benefit to the defendant.” 

Homoki, 717 F.3d at 402-04 (quoting Jones v. Blume, 196 S.W.3d 440, 447 (Tex. 

App.—Dallas 2006, pet. denied)).

The “meeting of the minds” element requires parties’ agreement “to 

accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful 

means.” Transp. Ins. Co. v. Faircloth, 898 S.W.2d 269, 278 (Tex. 1995). Additionally, 

there must be a “a preconceived plan and unity of design and purpose.” In re Enron 

Corp. Sec., Derivative & ERISA Litig., 623 F. Supp. 2d 798, 809 (S.D. Tex. 2009) 

(quoting Goldstein v. Mortenson, 113 S.W.3d 769, 779 (Tex. App.—Austin 2003, no 

pet.)). Taking these elements together, “[a] conspiracy to defraud on the part of two 

or more persons means a common purpose, supported by concerted action to defraud, 

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that each has the understanding that the other has that purpose.” Goldstein, 113 

S.W.3d at 779. To satisfy the meeting of the minds requirement, “there must be a 

preconceived plan and unity of design and purpose.” Id. Likewise, the Supreme Court 

of Texas held that for a civil conspiracy to arise, the parties must know about the

harm or wrongful conduct at the beginning of the agreement. See Schlumberger Well 

Surveying Corp. v. Nortex Oil & Gas Corp., 435 S.W.2d 854, 867 (Tex. 1968). A coconspirator must know about the object and purpose of the conspiracy. Id.

The Trustee’s civil conspiracy claim fails for multiple reasons. First, the 

Trustee does not allege that either Auerbach or Auerbach Partners (“the Conspiracy 

Defendants”) ever had a meeting of the minds with Frinzi. Instead, it merely alleges 

that the Conspiracy Defendants knew that “Frinzi owed fiduciary duties to the 

Debtor, which [it] would breach by entering into the transactions described above[.]” 

(ECF 1 at ¶ 134.) As this Court recently observed in another adversary proceeding 

arising out of the Goodman Networks Bankruptcy, this omission defeats the Trustee’s 

attempt to hold Auerbach and Auerbach Partners jointly and severally liable for 

Frinzi’s supposed breaches of fiduciary duty. (Adv. Pro. No. 23-03072-MVL at ECF 

21) (dismissing conspiracy claim because the alleged “unlawful acts were allegedly 

committed by a third-party who is not alleged to have been a co-conspirator.”)

The Trustee also has not appropriately alleged that Auerbach conspired 

with Goodman to breach Goodman’s fiduciary duties. Here, the Trustee alleges 

“Auerbach and Goodman had a meeting of the minds that both would exploit the 

situation for their personal benefits, with each agreeing to the enrichment of the 

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other, at the expense of the Debtor.” (ECF 1 at ¶ 134.) But this allegation ignores the 

Auerbach Defendants role in the transaction, as well as the way the transactions 

were structured. Neither of the Conspiracy Defendants were ever Debtor’s fiduciary, 

and their decision to purchase the Bonds from Goodman did not implicate Goodman’s 

fiduciary duties to Debtor since Goodman owned the Bonds. Along the same lines, 

Auerbach sold the Bonds to Debtor, not Goodman, and the Trustee expressly alleges 

that Frinzi—not Goodman—“personally authorized and instructed” Debtor’s 

purchase of the Bonds from the Conspiracy Defendants. (Id. at ¶ 128.) Given these 

facts and allegations, neither Auerbach nor Auerbach Partners conspired with 

Goodman to breach Goodman’s fiduciary duties as the Trustee alleges in the 

Complaint.

Finally, Plaintiff cannot recover because it cannot establish any injury 

to the Bankruptcy Estate. The Alliance Sale Transaction eliminated more than $31 

million of senior secured debt that creditors “would otherwise have been entitled to 

share pro rata in the distribution of [the] bankruptcy estate.” Matter of Moreno, 892 

F.2d 417, 420 (5th Cir. 1990). The Debtor benefited from the Alliance Sale 

Transaction, leaving more funds available for distribution to unsecured creditors 

than would have been available if the transaction had never occurred.

E. The Trustee has no claim for Unjust Enrichment.

The Trustee purports to state a claim against Hudson, Auerbach, and 

Auerbach Partners for Unjust Enrichment based on their supposed receipt of the 

“$5.9 Million Transfer.” (ECF 1 at ¶ 137-138.) As discussed, there was no $5.9 Million 

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Transfer, and even if there were, the Trustee’s theory is not actionable. “Unjust 

enrichment occurs when [a party] has wrongfully secured a benefit or has passively 

received one which it would be unconscionable to retain.” Crawford v. Bleeden, No. 

3:21-CV-2181-X, 2023 WL 2414009, at *6 (N.D. Tex. Mar. 8, 2023) (citations omitted). 

But the unjust enrichment theory “does not operate to rescue a party from the 

consequences of a bad bargain.” King v. Baylor Univ., 46 F.4th 344, 367 (5th Cir. 

2022) (citations omitted). Specifically, “the enrichment of one party at the expense of 

the other is not unjust where it is permissible under the terms of an express contract.” 

Id.; see also In re IFS Fin. Corp., No. 02-39553, 2007 WL 1308321, at *5 (Bankr. S.D. 

Tex. May 3, 2007) (recognizing the “unjust enrichment claim is precluded if it seeks 

relief that is inconsistent with the contract”).

The Alliance Sale Transaction was executed through a valid agreement 

under which Debtor retired over $30 million of senior secured debt in exchange for 

$17,032,060. The Debtor undeniably achieved a legitimate business purpose at the 

price that it offered, since it extinguished a large amount of debt at a discount. Thus, 

at most, this business deal was more expensive to the Debtor than a hypothetical deal 

with a different bond seller, but the Debtor’s potential ability to have bought the 

Bonds back at a greater discount does not give rise to a viable claim for unjust 

enrichment.

F. Plaintiff has no claim for Partnership Liability.

Finally, the Court should dismiss the Trustee’s claim for “Partnership 

Liability” against Auerbach Trusts 1 and 2. In this claim, the Trustee simply seeks 

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to hold the Auerbach Trusts jointly and severally liable for any damages caused by 

Auerbach Partners. (ECF 1 at ¶ 142.) This claim, however, should be dismissed 

without prejudice since the Trustee has not stated a claim against Auerbach 

Partners.

V. CONCLUSION

In sum, the Trustee has not asserted any viable claim against any of the 

Auerbach Defendants. For that reason, the Court should dismiss each of the Trustee’s 

claims against the Auerbach Defendants.

Respectfully submitted,

JORDAN, LYNCH & CANCIENNE PLLC

By: s/ Jeb Golinkin

Michael Cancienne

State Bar No. 24046330

Joseph (“Jeb”) W. Golinkin II

State Bar No. 24087596

1980 Post Oak Blvd., Ste. 2300

Houston, Texas 77056

713-955-4020 (Telephone)

713-955-9644 (Fax)

mcancienne@jlcfirm.com 

jgolinkin@jlcfirm.com

ATTORNEYS FOR HUDSON CLEAN 

ENERGY ENTERPRISES, LLC, ALLIANCE 

TEXAS HOLDINGS, LLC, NEIL Z. 

AUERBACH, JUDITH AUERBACH, 

AUERBACH PARTNERS, L.P., AND 

AUERBACH CHILDREN’S DYNASTY 

TRUST U/A/D OCTOBER 9, 2012

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CERTIFICATE OF SERVICE

I hereby certify that on this 20th day of February, 2024, I electronically 

filed the foregoing with the Clerk of Court using the CM/ECF system, which will send 

notification of this filing to all counsel of record in this case.

/s/ Jeb Golinkin

Joseph W. Golinkin II

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