JORDAN, LYNCH & CANCIENNE PLLC

Michael Cancienne (SBN 24055256)

Joseph W. Golinkin II (SBN 24087596)

1980 Post Oak Blvd., Ste. 2300

Houston, Texas 77056

Telephone: 713.955.4020

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.

HUDSON CLEAN ENERGY 

ENTERPRISES, LLC; ALLIANCE 

TEXAS HOLDINGS, LLC; NEIL Z. 

AUERBACH; JUDITH AUERBACH; 

AUERBACH PARTNERS, L.P.; 

JAMES GOODMAN; JAMES 

FRINZI; GOODMAN INVESTMENT 

HOLDINGS, LLC; GENESIS 

NETWORKS, INC.; GENESIS 

NETWORKS GLOBAL SERVICES, 

LLC; AUERBACH CHILDREN’S 

DYNASTY TRUST U/A/D 

OCTOBER 9, 2012; and 

AUERBACH FAMILY DYNASTY 

TRUST U/A/D OCTOBER 9, 2012,

Defendants.

Case No. 22-31641-mvl-7

(Chapter 7)

Adversary Proceeding No. 

23-03090-mvl

THE AUERBACH DEFENDANTS’ REPLY IN SUPPORT OF THEIR

MOTION TO DISMISS

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Defendants Hudson Clean Energy Enterprises, LLC, Alliance Texas Holdings, 

LLC, Neil Z. Auerbach, Judith Auerbach, Auerbach Partners, L.P., 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 Reply in 

Support of their Motion to Dismiss the Original Complaint of Plaintiff Scott Seidel, 

as Trustee of Goodman Networks (“the Trustee”).

DISCUSSION

A. The Collapsing Doctrine Does Not Save the Trustee’s Fraudulent 

Transfer Claims against the Auerbach Defendants.

The Court should dismiss the Trustee’s fraudulent transfer claims because 

those claims are based on a transfer—the so called $5.9 Million Transfer—that never 

happened. The Trustee admits this, but argues that “common sense” or, alternatively, 

the so called “collapsing doctrine” authorizes the Court to indulge the fiction that 

Debtor did not buy the bonds from the Auerbach Defendants at all, but instead simply 

wired them $5.9 million for “nothing”. (ECF 13 at ¶¶13–14.)

Neither the Fifth Circuit nor any state or federal court based in Texas has ever 

sanctioned the use of the “collapsing doctrine” in a case governed by Texas law.1 But 

relevant caselaw also demonstrates that the Trustee is flipping the “collapsing 

 

1 The phrase “collapsing doctrine” only appears in two opinions issued by Texas-based courts 

(state or federal). See In re Slamdunk Enterprises, Inc., No. 17-60566, 2021 WL 389081, at *14 (Bankr. 

E.D. Tex. Jan. 29, 2021) (“Though the Defendants seek to utilize similar-sounding terminology from 

the collapsing doctrine jurisprudence and to conflate it with their “circular contemporaneous 

transaction,” it simply has no application to the evaluation of whether Slamdunk possessed an 

ownership interest in the funds transferred to it by Tate as a capital contribution”); In re Wesco Aircraft 

Holdings, Inc., No. 23-90611, 2024 WL 156211, at *20 (Bankr. S.D. Tex. Jan. 14, 2024) (applying New 

York “collapsing doctrine” jurisprudence in case governed by New York law).

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doctrine” on its head. In states where this doctrine is used, the collapsing doctrine is 

nearly always used to evaluate situations where the debtor “buys” an asset that it 

turns around and transfers to a third party for little to no consideration:

“Two prongs must be satisfied in order to apply the collapsing doctrine. 

‘First, the consideration received from the first transferee must be 

reconveyed by the debtor for less than fair consideration or with 

an actual intent to defraud creditors. If the debtor retains the 

consideration, or transfers it for valuable consideration, its estate is not 

unfairly diminished and the initial transfer is not fraudulent. Second, 

the initial transferee must have actual or constructive knowledge of the 

entire scheme that renders the exchange with the debtor fraudulent.’”

In re Lyondell Chem. Co., 567 B.R. 55, 146–47 (Bankr. S.D.N.Y. 2017) (emphasis 

added) (quoting Official Comm. of Unsecured Creditors v. JP Morgan Chase Bank, 

N.A., 394 B.R. 721, 731 (Bankr. S.D.N.Y. 2008)).

That is not what happened here. Instead, the Trustee alleges Auerbach and/or 

Auerbach Partners (he doesn’t bother to commit either way) purchased Debtor’s 

distressed bonds from James Goodman for 35 percent of the bonds’ face value, then 

sold those bonds to the Debtor for 53 percent of the bonds’ face value. The Trustee 

takes issue with the structure of the transaction because Auerbach structured the 

deal so that he received and could sell the bonds before his obligation to actually fund 

his purchase from Goodman came due. But the Trustee cannot ignore what actually 

happened just because he thinks Goodman should have sold the bonds back to Debtor 

directly. That the Trustee would even try to argue otherwise confirms that he 

understands the Debtor received reasonably equivalent value as a matter of law. In 

re Dual D Health Care Operations, Inc., No. 17-41320-ELM, 2021 WL 3083344, at *11 

(Bankr. N.D. Tex. July 21, 2021) (“When a debtor makes a payment on antecedent 

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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.”).

B. The Trustee’s Civil Conspiracy Claim Against the Auerbach 

Defendants Contradicts the Complaint’s Factual Allegations.

The Trustee’s attempt to save its conspiracy claim is even more misguided. For 

decades, the Texas Supreme Court has repeatedly warned against imposing informal 

fiduciary obligations except in cases where the parties have a demonstrated history 

of special, long-established trust and confidence. Meyer v. Cathey, 167 S.W.3d 327, 

330 (Tex. 2005) (“To impose an informal fiduciary duty in a business transaction, the 

special relationship of trust and confidence must exist prior to, and apart from, the 

agreement made the basis of the suit.”); see also Belliveau v. Barco, Inc., 987 F.3d 

122, 135 (5th Cir. 2021). Thus, under Texas law, “a fiduciary duty will not be lightly 

created since it imposes extraordinary duties and requires the fiduciary to put the 

interests of the beneficiary ahead of its own if the need arises.” Melanson v. Navistar, 

Inc., No. 3:13-CV-2018-D, 2014 WL 4375715, at *10 (N.D. Tex. Sept. 4, 2014)

(dismissing breach of fiduciary duty case where plaintiff alleged defendant “had a 

high degree of control and Melanson placed a significant amount of trust and 

confidence” in defendant).

The Trustee ignores all of this and argues that it can use civil conspiracy to, in 

effect, impose a fiduciary duty on a counterparty (Auerbach) to look out for the 

interests of a company (Debtor) with which he had no preexisting business 

relationship, no alleged relationship of trust or confidence, and with which Debtor

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was negotiating as a counterparty. This proposition is plainly ludicrous, and no court 

in this state has ever sanctioned anything remotely like it.2

In any event, the Trustee still does not understand the basics of conspiracy 

law. In its Response, the Trustee asks the Court to spare its civil conspiracy claim 

because “Goodman, Frinzi, and Auerbach agreed to hide the true nature of the 

persons involved and the payments and transactions involved.” (ECF 13 ¶41.) But 

this admission only highlights the claim’s deficiencies. As discussed previously, a 

party cannot recover for civil conspiracy unless they allege that party’s alleged overt 

act proximately caused damage to the plaintiff. First United Pentecostal Church of 

Beaumont v. Parker, 514 S.W.3d 214, 224 (Tex. 2017) (“[F]or conspirators to have 

individual liability as a result of the conspiracy, the actions agreed to by the 

conspirators must cause the damages claimed.”).

Here, the Trustee’s allegations seek to recover the damage Debtor allegedly 

sustained when it allegedly overpaid for the bonds. (ECF 13 at ¶44.) It does not allege 

the so called “hiding” of the “true nature” of the transactions caused any damage. This 

deficiency is fatal to Count 9 regardless of what label the Trustee attaches to it.

Parker, 514 S.W.3d at 224.

C. The Trustee Has No Claim For Unjust Enrichment.

In its Response, the Trustee acknowledges that it cannot recover for unjust 

enrichment if the sale of the bonds at issue were governed by a valid contract. (ECF 

 2 The real life implications of allowing such a claim would be endless. In effect, adversarial 

counterparty’s would find themselves joined as defendants in virtually every breach of fiduciary duty 

case based on the unsatisfactory performance of an executive in an ill-advised business transaction.

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13 at ¶47.) But the Trustee insists these cases do not apply because “there was no 

valid contract because Alliance could not contract to sell Bonds it had not paid for 

and did not own” and because “there was no contract between the Debtor and 

Auerbach Partners, the recipient of the $5.9 Million Transfer.” (Id.)

The Trustee appears to be making this up as it goes. Again, there was no $5.9 

Million Transfer and the Trustee admits that Debtor executed and wired the Main 

Transfer pursuant to the terms of a written agreement. (ECF 1 at ¶1.) The fact that 

the Trustee claims that Frinzi should not have executed the agreement, or that his 

doing so violated a fiduciary duty, does not change the fact that the transactions are 

the subject of a written agreement.

CONCLUSION

Because the Trustee has not stated a claim for relief against the Auerbach 

Defendants, the Auerbach Defendants respectfully request that the Court dismiss all 

of the Trustee’s claims against them.

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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 THE AUERBACH 

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

CERTIFICATE OF SERVICE

I hereby certify that on this 25th day of March, 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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