Daniel W. Van Horn, Admitted Pro Hac 

Adam M. Langley, Admitted Pro Hac

R. Campbell Hillyer, Admitted Pro Hac

Butler Snow LLP 

6075 Poplar Ave., Ste. 500 

Memphis, TN 38119 

(901) 680-7200 

Martin A. Sosland, TX Bar No. 18855645 

Candice Carson, TX Bar No. 24074006 

Butler Snow LLP 

2911 Turtle Creek Blvd., Ste. 1400 

Dallas, TX 75219 

(469) 680-5502 

Attorneys for FedEx Supply Chain Logistics & Electronics, Inc. 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

In re: ) 

 ) 

GOODMAN NETWORKS, INC., ) Case No. 23-31641-mvl-7 

 ) 

 Debtor. ) (Chapter 7) 

 ) 

 

SCOTT M. SEIDEL, TRUSTEE, ) 

 ) 

 Plaintiff, ) Adversary Proceeding 

 ) No. 23-03091 

v. ) 

 ) 

FEDEX SUPPLY CHAIN LOGISTICS ) 

& ELECTRONICS, INC., ) 

 ) 

 Defendant. ) 

FEDEX SUPPLY CHAIN LOGISTICS & ELECTRONICS, INC.’S 

MEMORANDUM IN OPPOSITION TO THE TRUSTEE’S 

MOTION FOR PRELIMINARY INJUNCTION 

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TABLE OF CONTENTS 

TABLE OF AUTHORITIES .......................................................................................................... ii

INTRODUCTION .......................................................................................................................... 1

JURISDICTION ............................................................................................................................. 4

FACTS ............................................................................................................................................ 8

LAW AND ARGUMENT .............................................................................................................. 9

A. FSCLE Owns the Claims at Issue and Thus the Trustee Fails to Establish a Substantial 

Likelihood of Success on the Merits. .......................................................................... 10

(1)The Fraudulent Scheme Was Targeted at FSCLE – Not the Debtor and Not Other 

Creditors. ............................................................................................................... 11

(2)FSCLE Owns the RICO Claims Asserted. ........................................................... 13

(3)FSCLE Has Valid Claims for Theft, Fraud, and Unjust Enrichment Based on the 

Express Intent Not to Perform at the time the Invoices Post November 3 Were Sent.

 ......................................................................................................................... 16

(4)Constructive Trust is an Appropriate Remedy for the Fraud Done to FSCLE. .... 20

(5)The Trustee Is Barred from Asserting Several of the Claims Against a Number of 

the Defendants. ..................................................................................................... 24

B. The Estate Does Not Face Any Irreparable Harm. ..................................................... 27

C. The Harm to FSCLE in Granting an Injunction Is Severe. ......................................... 29

D. The Public Interest Does Not Favor an Injunction. .................................................... 30

E. FSCLE Has Not Violated the Automatic Stay. ........................................................... 31

(1)FSCLE Has Not Brought Any Claims Against the Debtor................................... 31

(2)FSCLE Has Not Asserted a Claim or Cause of Action that Belongs to the Estate. .. 

 ......................................................................................................................... 33

CONCLUSION ............................................................................................................................. 34

CERTIFICATE OF SERVICE ..................................................................................................... 35

 

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ii 

TABLE OF AUTHORITIES 

Cases

AAB Logistics, Inc. v. Forward Air, Inc., 2016 WL 8672773 (N.D. Tex. Nov. 18, 2016) ........... 17 

Apple Barrel Productions, Inc. v. Beard, 730 F.2d 384 (5th Cir.1984) ......................................... 9 

Armco Industrial Credit Corp. v. SLT Warehouse Co., 782 F.2d 475 (5th Cir. 1986) ........... 12, 16 

Brickley for CryptoMetrics, Inc. Creditors’ Trust v. ScanTech Identification Beam Systems, 

Inc., 566 B.R. 815 (W.D. Tex. 2017) ....................................................................................... 26 

Chiasson v. J. Louis Matherne and Assocs., 4 F.3d 1329 (5th Cir.1993) ..................................... 22 

Clayton Mountain Dev., LLC v. Ruff, 2021 WL 3414953 (Tex. App. – Eastland Aug. 5, 

2021) ......................................................................................................................................... 21 

Commonwealth Oil Ref. Co. v. U.S.E.P.A., 805 F.2d 1175 (5th Cir. 1986) ................................... 9 

Corpus Christi Area Teachers Credit Union v. Hernandez, 814 S.W.2d 195 (Tex. App. – 

San Antonio 1991) .................................................................................................................... 20 

DSC Commc'ns Corp. v. DGI Techs., Inc., 81 F.3d 597 (5th Cir.1996) ....................................... 29 

Edge Petroleum Operating Co. v. GPR Holdings, LLC, 483 F.3d 292 (5th Cir. 2007) ................. 5 

Enter. Int'l, Inc. v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d 464, (5th 

Cir.1985) ................................................................................................................................... 28 

Finova Capital Corp. v. Lawrence, 2000 WL 1808276 (N.D. Tex. Dec. 8, 2000) ...................... 24 

Floyd v. Hefner, 556 F.Supp.2d 617 (S.D. Tex. 2008) ................................................................. 27 

Gray v. Sangrey, 428 S.W. 3d 311 (Tex. App. – Texarkana 2014) .............................................. 20 

Grimmett v. Brown, 75 F.3d 506 (9th Cir. 1996) .......................................................................... 13 

In re Adobe Energy, Inc., 82 Fed. Appx. 106 (5th Cir. 2003) ....................................................... 18 

In re CEI Roofing, Inc., 315 B.R. 61 (Bankr. N.D. Tex. 2004) ...................................................... 5 

In re Chiron Equities, LLC, 552 B.R. 674, 697–98, 2016 WL 3621008, (Bankr. S.D. Tex. 

July 1, 2016) ............................................................................................................................... 9 

In re Colonial Realty Co., 980 F.2d 125 (2nd Cir. 1992) ....................................................... 32, 33 

In re E.F. Hutton Southwest Properties II, Ltd., 103 B.R. 808 (Bankr. N.D. Tex. 1989) ............ 13 

In re Educ. Grp. Health Trust, 25 F.3d 1281 (5th Cir. 1994) ................................................... 8, 10 

In re Enron Corp. Securities, Derivative & “ERISA” Litigation, 2007 WL 789141 (S.D. 

Tex. March 12, 2007 ........................................................................................................... 24, 25 

In re FoodServiceWarehouse.com, LLC, 601 B.R. 396 (E.D. La. 2019) ..................... 5, 6, 7, 9, 28 

In re GenOn Mid-Atlantic Development, LLC, 42 F.4th 523 (5th Cir. 2022) ........................... 5, 31 

In re Infinity Business Group, Inc. 31 F.4th 294 (4th Cir. 2022) ................................................... 25 

In re Jamuna Real Estate, LLC, 2010 WL 2773395 (Bankr. E.D. Pa. July 13, 2010) ................. 14 

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iii 

In re Kalispell Feed & Grain Supply, 55 B.R. 627 (Bank. D. Mont. 1985) ................................. 13 

In re Leitner, 236 B.R. 420 (Bankr. D. Kan. 1999) ...................................................................... 21 

In re NE40 Partners, Ltd., 411 B.R. 352 (Bankr. S.D. Tex. 2009) ........................................ 20, 21 

In re Newpower, 233 F.3d 922 (6th Cir. 2000) ....................................................................... 22, 23 

In re Seven Seas Petroleum, Inc., 522 F.3d 575 (5th Cir. 2008) .................................... 6, 8, 10, 15 

In re Today’s Destiny, Inc., 388 B.R. 737 (S.D. Tex. 2008) ........................................................ 24 

In re TXNB Internal Case, 483 F.3d 292 (5th Cir. 2007) ................................................. 27, 31, 33 

In re Vantage Benefits Administrators, Inc., 2021 WL 1815065 (N.D. Tex., May 5, 2021) ....... 24 

In re Wilborn, 609 F.3d 748 (5th Cir. 2010) ................................................................................... 5 

In re With Purpose, Inc., 654 B.R. 715 (Bankr. N.D. Tex. 2023) ............................ 5, 8, 10, 13, 15 

In re Zale Corp., 62 F.3d 746 (5th Cir. 1995) .................................................................... 5, 6, 7, 9 

Ingalls v. Gressett (In re Bradley), 326 Fed. Appx. 838 (5th Cir.2009) ....................................... 25 

Jones v. Hyatt Legal Services (In re Dow), 132 B.R. 853 (Bankr. S.D. Ohio 1991) .................... 26 

Kinsel v. Lindsey, 526 S.W.3d 411 (Tex. 2017) ........................................................................... 20 

Lake Charles Diesel, Inc. v. Gen. Motors Corp., 328 F.3d 192 (5th Cir. 2003) ............................ 9 

Matter of Approximately $80,600.00, 537 S.W.3d 207 (Tex. App.—Houston [1st Dist.] 

2017) ................................................................................................................................... 11, 22 

Matter of Haber Oil Co., Inc., 12 F.3d 426 (5th Cir. 1994) ................................................... 21, 22 

Matter of Okedokun, 968 F.3d 378 (5th Cir. 2020) .......................................................... 11, 22, 30 

Matter of Quality Holstein Leasing, 752 F.2d 1009 (5th Cir. 1985) ............................................ 21 

Matter of Vitek, Inc., 51 F.3d 530 (5th Cir. 1995) .......................................................................... 4 

Newman v. Link, 866 S.W.2d 721 (Tex. App. – Houston [14th Dist.] 1993) ................................ 12 

Nwokedi v. Unlimited Restoration Specialists, Inc., 428 S.W.3d 191 (Tex. App. – Houston 

[14th Dist.] 2014) ....................................................................................................................... 20 

Official Committee of Unsecured Creditors of PSA, Inc. v. Edwards, 437 F.3d 1145, (11th 

Cir. 2006) .................................................................................................................................. 25 

Picard v.. JPMorgan Chase & Co., 2011 WL 5170434 (S.D.N.Y. Nov. 1, 2011) ...................... 26 

Saint Paul Commodities, LLC v. Crystal Creek Cattle Co., 2012 WL 3135574 (N.D. Tex. 

Aug. 1, 2012) ...................................................................................................................... 19, 32 

Sherman v. Main Event, Inc., 2003 WL 251653 (N.D. Tex. Feb. 3, 2003) .................................. 25 

Sinclair Hous. Fed. Credit Union v. Hendricks, 268 S.W.2d 290 (Tex. App. - Galveston 

1954) ......................................................................................................................................... 22 

SPIC v. Bernard L. Madoff Investment Securities, LLC, 429 B.R. 423 (Bankr. S.D.N.Y. 

2010) ......................................................................................................................................... 15 

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iv 

Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432 (Tex. 1986) ............................................. 18, 32 

Steinberg v. Buczynski, 40 F.3d 890 (7th Cir.1994) ..................................................................... 25 

Taylor v. State, 450 S.W.3d 528 (Tex. Crim. App. 2014) ................................................ 17, 18, 32 

Teachers Credit Union v. Hernandez, 814 S.W.2d 195 (Tex. App. – San Antonio, 1991) ......... 12 

Texans for Free Entr. v. Tex. Ethics Comm’n, 732 F.3d 535 (5th Cir. 2013) ................................ 9 

Texas Co. v. Miller, 165 F.2d 111 (5th Cir. 1947) ........................................................................ 21 

Troxel v. Bishop, 201 S.W.3d 290 (Tex. App. – Dallas 2006) ..................................................... 21 

United States v. Toney, 598 F.2d 1349 (5th Cir. 1979) ................................................................ 16 

Uranga v. Holiday Mkt., Inc., 2014 WL 349716 (N.D. Tex. Jan. 31, 2014) ................................ 32 

Wedgeworth v. Fibreboard Corp., 706 F.2d 541 (5th Cir. 1983) ................................................. 32 

Statutes

11 U.S.C. § 105 ........................................................................................................................... 4, 9 

11 U.S.C. § 362 ....................................................................................................................... 27, 31 

11 U.S.C. § 541(a)(1) .................................................................................................................... 10 

11 U.S.C. § 544 ............................................................................................................................. 26 

28 U.S.C. § 1334 ......................................................................................................................... 4, 5 

Restatement (Second) of Torts § 229 cmt. D (1965) .................................................................... 22 

Texas Civil Practice and Remedies Code §134.002 ..................................................................... 16 

Texas Penal Code §31.03 .............................................................................................................. 17 

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1 

TO THE HONORABLE MICHELLE V. LARSON, U.S. BANKRUPTCY JUDGE: 

 Comes now FedEx Supply Chain Logistics & Electronics, Inc. (“FSCLE” or “FedEx”) and 

for its Memorandum in Opposition to the Trustee’s Motion for Preliminary Injunction [Dkt. # 4 

and 5] states as follows: 

INTRODUCTION 

 This is an adversary proceeding involving a fraud targeted at FSCLE and FSCLE’s right 

to advance causes of action that are unique and particularized to it. On October 27, 2023, FSCLE 

filed suit in the United States District Court for the Northern District of Texas against James 

Goodman, Jim Frinzi and a number of other persons and entities for the damages they caused 

FSCLE. (Exhibit 1, the “District Court Lawsuit” or “Compl.”). The Trustee seeks to enjoin 

FSCLE from asserting some but not all of the causes of action in the District Court Lawsuit – 

causes of action that belong to FSCLE and are not property of the estate. 

In late 2021 and early 2022, insiders within Goodman Networks, Inc. (“Goodman 

Networks” or “Debtor”) hatched and implemented a plan to invoice FSCLE millions of dollars 

without any intent to perform those invoices for the purpose of creating a cashflow that they could 

then launder for their own benefit. 

The commercial relationship between FSCLE and Goodman Networks, in practice, 

involved FSCLE purchasing certain inventory from Goodman Networks that FSCLE also sold to 

it. In effect, Goodman Networks invoiced FSCLE, FSCLE paid Goodman Networks and then a 

reversing transaction occurred wherein all but less than 1% of the original amount paid by FSCLE 

to Goodman Networks came back to FSCLE from Goodman Networks.1 

1

 In the Trustee’s motion, the Trustee casts the relationship between FSCLE and Goodman Networks as one designed 

to create artificial minority business credits. The aspersion cast at FSCLE is unnecessary and unwarranted. On July 

30, 2015, FedEx purchased a company called GENCO that owned ATC Logistics, the party that already had this 

contract in place and had negotiated the contract in the first place. FedEx did not negotiate the original contract nor 

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2 

 In internal communications, Goodman Networks described the relationship with FSCLE 

as follows: 

GNET ATC, LLC has automated purchase order and invoice transactions in D365 

(previously was automated in Great Plains) that account for the purchase of mobile 

device accessories from FedEx and sale back to FedEx at .2% margin. In other 

words, the sales price is .2% higher than the purchase price. . . . Around the 15th of 

the following month, FedEx will confirm final pallet moves for the prior month and 

GNET ATC will invoice actual revenue in D365 which will be offset by the revenue 

reversing accrual from the previous month end. 

(See Exhibit 2) (emphasis added). Thus, each time Goodman Networks invoiced FSCLE there 

was to be a related reversing transaction back to FSCLE of all that FSCLE paid Goodman 

Networks less .2% and less payment for actual pallet moves. The representation in each invoice 

Goodman Networks sent to FSCLE was that the reversing transaction would also happen. This 

relationship worked well until November 2021. 

Beginning on November 3, 2021, Goodman Networks insider and CEO Jim Frinzi directed 

that Goodman Networks was to “suspend all other payments to FedEx after this payment.” (See 

Exhibit 3). Despite barring further payments to FSCLE, Frinzi caused Goodman Networks to 

continue to invoice FSCLE with no intent to engage in the reverse transactions. Between 

November 3 and 23, 2021, Goodman Networks sent FSCLE thirty (30) separate batches of 

invoices representing 1,436 transactions with a dollar value of more than $36.6 million. (See the 

Compl. at ¶¶ 152 – 182). Frinzi and the other insiders did this with no intent to perform the 

reversing transactions. 

On November 23, 2021, Frinzi authored a document saying, “Goodman Networks 

Incorporated (the ‘Company’) no longer has any remaining revenue source. At this point in time, 

did FedEx buy GENCO to obtain the contract. Moreover, FedEx did not and does not need this particular contract to 

demonstrate its enduring commitment to doing business with minority, women, veteran and disabled owned 

businesses. 

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3 

a Shareholder’s Meeting will be requested to dissolve the Company.” (See Exhibit 3). Despite 

this statement, Frinzi insisted that invoices continue to be sent to FSCLE. Between November 23 

and December 18, 2021, Goodman Networks sent FSCLE nineteen (19) separate batches of 

invoices representing 717 transactions with a value of more than $8 million. (Compl. at ¶¶ 183 – 

203). Frinzi and the other insiders did this with no intent to perform the reversing transactions and 

after the statement that Goodman Networks had no revenue sources and needed to dissolve. 

FSCLE paid Goodman Networks more than $66 million after November 3, 2021. (Compl. at ¶ 

208). 

 In effect, the insiders used Goodman Networks to defraud FSCLE of tens of millions by 

sending FSCLE invoices with no intent to perform the reversing transactions associated with those 

invoices and while providing fraudulent and intentionally false technical excuses to FSCLE as to 

why repayment pursuant to the reversing transactions was delayed. The first stop in the path of 

laundering the funds back to themselves was the 4352 Account at Prosperity Bank which was used 

by Goodman Networks to hold payments from FSCLE pursuant to the automated process in place 

prior to the fraud beginning. The insiders then worked with the other defendants in the District 

Court Lawsuit to launder the money by removing the funds from Goodman Networks and sending 

it through a myriad of transactions. 

 The fact that the stolen funds from FSCLE went first to Goodman Networks and Goodman 

Networks is now in bankruptcy does not bar FSCLE from pursuing its claims and causes of action 

against the third parties who committed the fraud and then worked in concert to launder the money. 

The damages inflicted upon FSCLE are unique to it and are separate and apart from the Debtor. 

No other creditor can claim to be a victim of the specific fraud in question and the Debtor (and 

thus the Trustee) has no standing to claim injury from the fraud committed. 

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As set forth herein, the Trustee is barred from bringing a number of the claims asserted by 

FSCLE. FSCLE – and only FSCLE – may assert these claims. The Trustee does, however, have 

the right to assert other causes of action and claims that neither FSCLE nor any other creditor may 

bring including claims for breach of fiduciary duty and avoidance actions to set aside certain 

transfers provided the assets to be sought are assets of the estate. FSCLE does not seek to assert 

those claims. Instead, FSCLE seeks to assert its unique causes of action in parallel2 with the 

Trustee to make sure that those who damaged FSCLE are brought to account for their wrongful 

acts to FSCLE. 

The relief sought by the Trustee would merely add insult to injury and further harm FSCLE 

by denying it its right to pursue its own claims against third parties who are liable for the wrongful 

acts set forth in the District Court Lawsuit. The Trustee cannot show that the claims asserted are 

property of the estate and therefore fails to show a likelihood of success on the merits. The Court 

must therefore deny the relief sought by the Trustee. 

JURISDICTION 

 FSCLE agrees that the Court has jurisdiction to hear and resolve the question of whether 

to grant a preliminary injunction. 28 U.S.C. § 1334(b) and (e); 11 U.S.C. § 105(a). However, 

because the claims asserted by FSCLE are not claims that belong to the estate, the Court does not 

have jurisdiction to grant the relief sought by the Trustee. See Matter of Vitek, Inc., 51 F.3d 530, 

536 (5th Cir. 1995) (holding that if the property in question is not property of the estate, then the 

court has no authority to enjoin suits related to it). 

 The Court’s subject matter jurisdiction is limited to bankruptcy cases and proceedings that 

2

 In addition to the amounts defrauded it by third parties and then laundered, there are also amounts that FSCLE paid 

the Debtor prior to November 3, 2021 which would be general creditor claims. FSCLE thus hopes that the Trustee 

can recover as much as possible for the creditors. Further, FSCLE has every right to assert the full amount of its loss 

(both general claims and the loss from the fraud) in its proof of claim. 

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arise under the Bankruptcy Code, arise in a bankruptcy case, or are related to a bankruptcy case. 

28 U.S.C. § 1334. A proceeding arises under the Bankruptcy Code if a plaintiff asserts a right 

created by the Bankruptcy Code. In re Wilborn, 609 F.3d 748, 752 (5th Cir. 2010); In re With 

Purpose, Inc., 654 B.R. 715, 726 (Bankr. N.D. Tex. 2023). A proceeding arises in a bankruptcy 

case if the plaintiff asserts a claim that could not exist outside bankruptcy. Id. An action is “related 

to” a bankruptcy case if the outcome could conceivably affect the bankruptcy estate. In re GenOn 

Mid-Atlantic Development, LLC, 42 F.4th 523, 534 (5th Cir. 2022). “Certainty is unnecessary; an 

action is ‘related to’ bankruptcy if the outcome could alter, positively or negatively, the debtor’s 

rights, liabilities, options, or freedom of action or could influence the administration of the 

bankruptcy estate.” Edge Petroleum Operating Co. v. GPR Holdings, LLC, 483 F.3d 292, 298 

(5th Cir. 2007). Jurisdiction can only exist over a proceeding that does not arise under title 11 or 

in a case under title 11 if the matter relates to the estate itself and it affects the debtor. In re Zale 

Corp., 62 F.3d 746, 752-55 (5th Cir. 1995). Neither shared facts between the proceeding and the 

conflict between the debtor and creditor nor considerations of judicial economy alone will justify 

the finding of subject matter jurisdiction over an otherwise unrelated proceeding. In re With 

Purpose, 654 B.R. at 726 (citing to In re CEI Roofing, Inc., 315 B.R. 61,66 (Bankr. N.D. Tex. 

2004)). 

 In In re FoodServiceWarehouse.com, LLC, 601 B.R. 396, 402 (E.D. La. 2019), the Eastern 

District of Louisiana was presented with an appeal of a motion for a preliminary injunction by the 

trustee in a chapter 7 case seeking to enjoin a creditor from asserting claims against third parties. 

The bankruptcy court denied in part and granted in part the requested injunction finding that the 

some of the claims asserted by the creditor against third parties were not assets of the estate but 

belonged to the creditor, and thus there was no “related to” jurisdiction to enjoin those claims. Id. 

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at 402-03 and 411. However, the bankruptcy court also found that certain other claims belonged 

to the estate and thus could be enjoined. Id. at 403 and 411. 

Judge Zainey ruled that the bankruptcy court had no “related to” jurisdiction to enjoin any 

of the claims. Id. at 411-412. As to the question of whether a claim was the property of the estate 

or belong to the creditor asserting it, Judge Zainey noted that, “it is entirely possible for a 

bankruptcy estate and a creditor to own separate claims against a third party arising out of the same 

general series of events and broad course of conduct.” Id. at 405 (citing to In re Seven Seas 

Petroleum, Inc., 522 F.3d 575, 585 (5th Cir. 2008)). “Therefore, the existence of common parties 

and shared facts between the debtor’s bankruptcy and the creditor’s cause of action does not 

necessarily mean that the claims asserted by the creditor are property of the estate.” Id. Citing to 

the analysis set forth in Seven Seas, 522 F.3d 575, Judge Zainey wrote that whether a particular 

claim belongs to the estate or to the creditor turns on whether the debtor cold have raised the claim 

at the commencement of the case. FoodServiceWarehouse.com, 601 B.R. at 406. In other words, 

if the debtor lacks standing to assert the claim, then the claim is not property of the estate, is not 

subject to the automatic stay found in 11 U.S.C. § 362 and the bankruptcy court lacks “related to” 

jurisdiction to enjoin those claims. Id. at 406. Judge Zainey examined the claims asserted by the 

creditor and found they all belonged to the creditor and not the estate. Id. at 410-412. Therefore, 

the bankruptcy court was affirmed in its decision to deny an injunction based on a lack of 

jurisdiction to grant the injunction and reversed to the extent that it found any of the claims 

belonged to the estate. Id. 

The trustee appealed the denial of an injunction arguing that some of the claims sought 

recoveries that could also go to the estate and thus there was a race to recover assets. In Zale, 62 

F.3d at 759-761, the Fifth Circuit found that an injunction could be issued under “unusual 

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circumstances” to bar the diminishment of assets that could be recovered for an estate. “Such 

unusual circumstances include when the nondebtor and the debtor enjoy such an identity of 

interests such that the suit against the nondebtor is essentially a suit against the debtor, and when 

the third party action will have an adverse impact on the debtor’s ability to accomplish 

reorganization.” Id. at 761 (emphasis added). “Absent a finding that such unusual circumstances 

exist, the court may not enter an injunction of the third party action.” Id. Citing to and 

distinguishing Zale, Judge Zainey noted that Zale was a chapter 11 reorganization case and that 

bankruptcy jurisdiction extends more broadly in a chapter 11 reorganization case than it does in a 

chapter 7 liquidation case. FoodServiceWarehouse.com, 601 B.R. at 411. 

FoodServiceWarehouse.com was a chapter 7 liquidation, thus Judge Zainey found that there 

should have been no injunction against pursuing assets that could have also been recovered for the 

estate and that there was no “related to” jurisdiction to issue an injunction against those claims. 

Id. at 411-412. Judge Zainey ruled that: 

The bankruptcy court was also unmoved by the Trustee’s argument that Pride and 

the estate would be competing for the same limited pool of funds. The bankruptcy 

court specifically found this situation insufficient justification to enjoin Pride’s 

claims, even if temporarily.3 The bankruptcy court was not persuaded that such an 

injunction should issue in the absence of an extraordinary showing of damage to 

the estate. That showing was simply not present in this case. 

This Court agrees. Section 105(a) allows for an order, in this case a temporary 

injunction, if it is necessary or appropriate to carry out the provisions of Title 11. 

The Trustee’s confessed purpose in enjoining Pride’s claims is to clear the field of 

competition from any other claimants when pursuing FSW’s claims against LaPorte 

so that the Trustee can obtain the entirety of the available insurance proceeds 

without interference from Pride. This way all of the creditors, including Pride, can 

share in the benefits of the Trustee’s efforts. To be sure, equality of distribution 

among creditors is an important general policy of bankruptcy (internal citations 

omitted), but Pride is not similarly-situated to the other creditors who do not possess 

a personal cause of action against LaPorte for direct injury. No principle of 

3

 In Zale, the Fifth Circuit found that if a temporary injunction was warranted under “unusual circumstances” it was 

only warranted during the pendency of the bankruptcy estate. In re Zale, 62 F.3d at 760. There was no jurisdiction 

to issue a permanent injunction against the creditor pursuing claims against third parties. Id.

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bankruptcy law suggests that Pride should be impoverished on its direct claims so 

that other creditors will be better off. 

Id. (emphasis in original). Thus, this Court certainly has jurisdiction to decide the preliminary 

injunction. If the Court finds that the claims asserted by FSCLE belong to the estate, it has 

jurisdiction to issue an injunction against FSCLE pursuing them during the pendency of the 

bankruptcy. If, however, the Court finds that the claims belong to FSCLE, then the Court would 

lack jurisdiction to issue any injunction against those claims proceeding forward. 

FACTS 

 The Trustee’s brief contains a fact section. When evaluating whether a claim is property 

of the estate or of the creditor, a court does not consider whether the creditor’s allegations are 

sufficient to state a cause of action under the law upon which it relies, or to speculate as to what 

set of facts might ultimately be proven in support of recovery. Seven Seas Pertrol., 522 F.3d at 

587. The fact that the creditor ultimately may be unable to prevail on the claim does not render 

the claim property of the estate. Id. at 587-88. That the third party defendant may have a valid 

and meritorious defense on the merits goes to the resolution of the claim and does not determine 

what is or what is not property of the bankruptcy estate. In re Educ. Grp. Health Trust, 25 F.3d 

1281, 1286 (5th Cir. 1994). The actual merits of the claims asserted by FSCLE are not under 

scrutiny when evaluating whether to issue an injunction or to deny one. With Purpose, 654 B.R. 

at 725. Thus, most of the “facts” set forth in the Trustee’s brief are irrelevant to the Court’s inquiry. 

All that is relevant is the date of the bankruptcy petition, the fact that the case is being administered 

as a chapter 7 liquidation and the parties, the allegations and causes of actions set forth in FSCLE’s 

complaint. The existence of each of these is not reasonably in question. That the Trustee has filed 

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certain adversary claims against some of the same parties is irrelevant4 to the question of whether 

the claims asserted by FSCLE belong to FSCLE or the estate. 

LAW AND ARGUMENT 

 A preliminary injunction is an “extraordinary remedy.” Texans for Free Entr. v. Tex. 

Ethics Comm’n, 732 F.3d 535, 536 (5th Cir. 2013). When considering whether to issue a 

preliminary injunction pursuant to 11 U.S.C. § 105(a), a bankruptcy court must consider the 

traditional factors governing preliminary injunctions issued pursuant to Rule 65 of the Federal 

Rules of Civil Procedure. Zale, 62 F.3d at 765. In this case, the Trustee bears the burden of 

proving: (1) a substantial likelihood of success on the merits [that the claims at issue are property 

of the estate]; (2) a substantial threat that the estate will suffer irreparable injury if the injunction 

is not granted; (3) the threatened injury to the estate outweighs the threatened harm an injunction 

may cause the party against which the injunction is sought; and (4) the public interest will be 

served by the granting of the injunction. Id.; Commonwealth Oil Ref. Co. v. U.S.E.P.A., 805 F.2d 

1175, 1189 (5th Cir. 1986). A preliminary injunction is an extraordinary remedy which should 

not be granted unless the party seeking the injunction clearly carries the burden on all four 

elements. Lake Charles Diesel, Inc. v. Gen. Motors Corp., 328 F.3d 192, 195-96 (5th Cir. 2003). 

The Trustee has the burden of persuasion on each of the four elements. Apple Barrel Productions, 

Inc. v. Beard, 730 F.2d 384, 386 (5th Cir.1984); see also In re Chiron Equities, LLC, 552 B.R. 

674, 697–98, 2016 WL 3621008, at *18 (Bankr. S.D. Tex. July 1, 2016). 

Because the claims at issue belong to FSCLE, the Trustee is unable to establish a substantial 

likelihood of success on the merits and unable to show harm to the estate. The harm to FSCLE if 

4

 The Trustee is in essence making the same “race to the courthouse” arguments made by the trustee in 

FoodServiceWarehouse.com, 601 B.R. at 411-12, and rejected by the bankruptcy court and Judge Zainey 

therein. 

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an injunction is issued substantially outweighs theoretical harm to the estate. Finally, the public 

interest does not favor enjoining claims against third parties where the Trustee is barred from 

bringing the claims or the claims are not assets of the estate. 

A. FSCLE Owns the Claims at Issue and Thus the Trustee Fails to Establish a 

Substantial Likelihood of Success on the Merits. 

The filing of a bankruptcy petition creates an estate that is comprised of “all legal or 

equitable interests of the debtor in property as of the commencement of the case.” 11 U.S.C. § 

541(a)(1). This includes “rights of actions” such as claims based on state or federal law. Seven 

Seas Petrol., 522 F.3d at 584. If a cause of action belongs to the bankruptcy estate, the Trustee 

has exclusive standing to assert the claim. Educators Group Health Trust, 25 F.3d at 1284. If, 

however, a cause of action belongs solely to the estate’s creditors, the Trustee has no standing to 

bring the cause of action. Id.; With Purpose, 654 B.R. at 721. 

Whether a particular cause of action belongs to the estate depends on whether under 

applicable law the Debtor could have raised the claim as of the commencement of the case. Id. 

As part of the inquiry, the Court must look at the nature of the injury for which relief is sought and 

consider the relationship between the Debtor and the injury. Seven Seas, 522 F.3d at 584. 

“If a cause of action alleges only indirect harm to a creditor (i.e., an injury which derives 

from harm to the debtor), and the debtor could have raised a claim for its direct injury under the 

applicable law, then the cause of action belongs to the estate.” With Purpose, 654 B.R. at 721. 

“Conversely, if the cause of action does not explicitly or implicitly allege harm to the debtor, then 

the cause of action could not have been asserted by the debtor as of the commencement of the case, 

and thus is not property of the estate.” Id. at 721-22 (citing to Educators Group Health Trust, 25 

F.3d at 1284) 

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(1) The Fraudulent Scheme Was Targeted at FSCLE – Not the Debtor and 

Not Other Creditors. 

The fraudulent scheme in this case was targeted at FSCLE. As alleged in the District Court 

Lawsuit, Jim Frinzi and James Goodman made the decision to stop further payments to FSCLE 

while ordering Goodman Networks to keep sending FSCLE invoices to be paid knowing that they 

and Goodman Networks had no intention to perform the reversing transactions. (Compl. at ¶¶ 10, 

13, 23-24, 85-132). The funds FSCLE paid pursuant to this fraud went exclusively to an account 

at Prosperity Bank, the 4352 Account. (Compl. at ¶ 118). Frinzi and others within Goodman 

Networks even referred to the 4352 Account as the “FedEx account” and as containing the “FedEx 

trust funds.” (Compl. at ¶ 135). The fraud and theft FSCLE seeks to redress is the fraud and theft 

that caused it to send money to Goodman Networks in the first place under these false pretenses. 

As alleged in the Complaint, the wire fraud and the fraudulent representations included the 

sending of invoices to FSCLE on and after November 3, 2021 when Frinzi, James Goodman and 

Goodman Networks made the decision not to perform any further. (Compl. at ¶ 151 – 214). 

FSCLE does not assert that the subsequent transfer of funds out of the 4352 account is the original

theft or fraud that forms the basis of its claims and causes of action. Rather, the movement of the 

funds out of the 4352 Account is nothing more than the next step in the chain to continue to steal 

the funds, defraud FSCLE and launder the funds for the defendants’ own use. 

 This is not a case in which the funds were lawfully obtained by Goodman Networks from 

FSCLE on or after November 3, 2021. See Matter of Okedokun, 968 F.3d 378, 390 (5th Cir. 2020) 

(citing Matter of Approximately $80,600.00, 537 S.W.3d 207, 211 (Tex. App.—Houston [1st Dist.] 

2017) (holding that the party obtaining stolen property does not obtain legal title to it.) Frinzi 

provided written instructions on that day to stop all other payments to FSCLE (Exhibit 2 and 

Compl. at ¶ 115). No one with Goodman Networks informed FSCLE that there would be no 

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reversing transactions. (Compl. at ¶ 116). To the contrary, Frinzi instructed others to continue to 

stall FSCLE and provide a cover story as to why no payments were going back to FSCLE. (Compl. 

at ¶¶ 117, 125, 126, 133, 136, 139). Despite making the decision that they would not pay FSCLE 

any further funds on or after November 3, 2021, Goodman Networks sent FSCLE hundreds of 

invoices demanding tens of million in payments even after Frinzi wrote that Goodman Networks 

was effectively defunct. (See the Compl. at ¶¶ 130, 152 – 203). The fraud here was specifically 

targeted at FSCLE. 

 This is not a case in which the harm is general to all creditors or to Goodman Networks. 

FSCLE agrees that its payments to Goodman Networks prior to November 3 are general claims 

and should be treated in conformity with other creditor claims. FSCLE filed a proof of claim that 

includes these claims as a subset. The world changed on November 3, 2021. What was an ordinary 

course of commercial dealing transformed into fraud aimed at FSCLE. No other creditor has 

remotely similar claims based on the acts on and after November 3, 2021. FSCLE has a unique, 

direct and particularized set of claims from these acts that simply do not belong to the Trustee or 

to any other creditor. 

The other defendants are largely sued for either being in a conspiracy to accomplish this 

theft and fraud or for aiding and abetting these unlawful acts. See Armco Industrial Credit Corp. 

v. SLT Warehouse Co., 782 F.2d 475, 485-86 (5th Cir. 1986) (liability for aiding and abetting a 

civil RICO enterprise); United States v. Westbo, 746 F.2d 1022, 1025 (5th Cir. 1984) (one who 

enters a civil conspiracy is becomes liable for the prior conduct and remains liable for subsequent 

conduct of others); Teachers Credit Union v. Hernandez, 814 S.W.2d 195, 198-99 (Tex. App. – 

San Antonio, 1991) (liability for those who received benefits from fraud even if committed by 

others); and Newman v. Link, 866 S.W.2d 721, 725 (Tex. App. – Houston [14th Dist.] 1993) 

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(constructive trust imposed over those who received the improperly obtained property even if they 

did not participate in the original wrong). 

In With Purpose, 654 B.R. 715 at 723, this Court analyzed whether claims asserted by a 

creditor against third parties were claims of the estate or claims that belonged to the creditor. The 

Court noted that misrepresentations made to get that creditor to invest in the debtor were 

particularized to that creditor and were distinguishable from misrepresentations made after an 

investment in a company. Id. The Court noted that the misrepresentations and unlawful acts in 

With Purpose did not damage the debtor and in fact benefited it. Id. The same is true in this case. 

The misrepresentations to FSCLE were the continued invoicing of FSCLE with no intent 

to perform the reversing transactions and the lies told to FSCLE as to why the reversing 

transactions were delayed. Only FSCLE could have relied on those misrepresentations – not the 

Debtor and not any other creditors. Goodman Networks was not injured by those 

misrepresentations and in fact benefited from it. Just as in With Purpose, the Court must find that 

these claims belong to FSCLE. 

(2) FSCLE Owns the RICO Claims Asserted. 

In In re E.F. Hutton Southwest Properties II, Ltd., 103 B.R. 808, 815-16 (Bankr. N.D. Tex. 

1989), the Northern District of Texas Bankruptcy Court was tasked with determining whether 

individual creditors could assert claims, including RICO claims, against third parties for damage 

to them as opposed to damage to a partnership. The court ruled that the individual creditors’ 

claims, including RICO claims, were not property of the estate and could not be asserted by the 

trustee or a committee of creditors standing in the shoes of the trustee. Id.; see also Grimmett v. 

Brown, 75 F.3d 506, 515-16 (9th Cir. 1996) (creditor asserting RICO claim may separately assert 

the claim and does not have to wait for the parallel bankruptcy proceeding to run its course); In re 

Kalispell Feed & Grain Supply, 55 B.R. 627, 629 (Bank. D. Mont. 1985) (creditor may bring a 

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separate RICO claim parallel to a bankruptcy proceeding). 

The cases cited by the Trustee are all distinguishable and do not stand for the proposition 

that FSCLE either has no RICO claim or that FSCLE’s RICO claim is property of the estate. The 

Trustee cites to Holmes v. SPIC, 503 U.S. 258, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992), for the 

proposition that FSCLE must prove direct causation as to each and every defendant against whom 

a RICO claim is asserted. (Trustee’s Brief at ¶ 64). Holmes is a securities fraud case and 

essentially has nothing to do with the case before this court other than the cite taken completely 

out of context that causation is a required element of a RICO claim. FSCLE does not dispute that 

causation is a required element. However, in Holmes the lack of causation was found because the 

plaintiffs in that case sued for alleged injury for not investing in certain manipulated securities and 

thereby missing out on the artificial rise in the securities. Id. at 259. There was no showing that 

the plaintiffs had relied upon any particular representation to decide not to invest in a security. Id. 

Holmes is simply inapplicable to this case. 

The Trustee similarly cites to and relies upon In re Jamuna Real Estate, LLC, 2010 WL 

2773395, *9 (Bankr. E.D. Pa. July 13, 2010) for the proposition claims derivative of harm 

sustained to another will not suffice to assert a claim under RICO. (Trustee’s Brief at ¶ 64). 

FSCLE does not dispute that general proposition of law. However, the actual facts and holding in 

Jamuna support FSCLE’s position. In Jamuna, the RICO complaint alleged that there were 

misrepresentations that induced a loan, lies as to what the loan was for, theft of the funds obtained 

by the loan, lies about what happened with the loan proceeds and then acts with others to launder 

the stolen funds. Id. at *2. Those facts are similar to allegations brought by FSCLE in this case. 

In Jumana, the court held the fraudulent loan and the subsequent effort to launder the stolen funds 

constituted a RICO enterprise. Id. at *3. The Jumana court also held that there was sufficient 

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direct connection between the RICO acts and the damage to the plaintiff because the plaintiff had 

been defrauded and then the other acts were undertaken to launder those stolen funds. Id. at *10. 

Those facts and that holding support FSCLE claims rather than undermine them. 

The Trustee also erroneously relies upon SPIC v. Bernard L. Madoff Investment Securities, 

LLC, 429 B.R. 423 (Bankr. S.D.N.Y. 2010) for the proposition that an injunction can be issued 

against creditors asserting RICO claims against third parties. (Trustee’s Brief at ¶ 65). Again, 

FSCLE does not dispute the general proposition that an injunction against bringing a RICO claim 

against third parties can be reasonable if the claims asserted belong to the estate and not the 

individual creditors. That is what the Madoff case found – that the claims were general and 

belonged to the estate. The court specifically found that the creditors in that case could not point 

to a misrepresentation made to their clients and instead were relying upon damage to all who held 

an interest in the Madoff ponzi scheme. Id. at 431-32. Here, FSCLE does assert a particularized 

injury, the misrepresentations, wire fraud and theft that caused FSCLE to send money to Goodman 

Networks after November 3 and then the subsequent effort to launder those specific funds. FSCLE 

does not rely upon generalized injury. 

Of course, many of the Trustee’s arguments really go to his interpretation of the merits of 

FSCLE’s RICO claims as opposed to whether those claims belong to the estate or to FSCLE. As 

this Court has noted, when considering whether a claim belongs to the estate or to FSCLE, the 

Court is not to delve into the merits of the claims. With Purpose, 654 B.R. at 724. Additionally, 

the Fifth Circuit has made it clear that “it is entirely possible for a bankruptcy estate and a creditor 

to own separate claims against a third party arising out of the same general series of events and 

broad course of conduct.” Seven Seas, 522 F.3d at 585. Thus, the fact that FSCLE has RICO 

claims predicated upon money laundering for the specific dollars stolen and defrauded from it and 

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the bankruptcy estate may also have certain claims to recover certain funds does not render 

FSCLE’s RICO claim property of the estate. The point of stealing the funds from FSCLE in the 

first place was to launder those funds back to Frinzi, Goodman and others. This is not a case where 

funds otherwise owed to Goodman Network went to Goodman Network after November 3 and 

then were laundered in a first theft from Goodman Networks. The money laundering efforts that 

occurred in 2021and 2022 were a continuance of the enterprise to steal the funds from FSCLE in 

the first place (as opposed to the sums paid to Goodman Networks prior to November 3). Thus, 

those who worked with Frinzi, James Goodman and others to support the original theft and to 

launder the funds back to them are each fully liable for the entire damage done to FSCLE. See 

Armco, 782 F.2d at 485-86 (RICO liability for aiding and abetting predicate acts); United States v. 

Toney, 598 F.2d 1349, 1355 (5th Cir. 1979) (co-conspirators under RICO conspiracy are liable for 

all the acts of other members of the enterprise). In addition, RICO carries with it the prospect of 

treble damages. That means that these co-conspirator third parties are each liable to FSCLE in 

amounts that far exceed the claims that the Trustee can bring. FSCLE has the right to assert its 

RICO claims for the particularized harm done to it and the Trustee has a right to seek claims 

available to it. 

(3) FSCLE Has Valid Claims for Theft, Fraud, and Unjust Enrichment 

Based on the Express Intent Not to Perform at the time the Invoices 

Post November 3 Were Sent. 

The Texas Civil Liability Theft Act5 provides a civil remedy for criminal theft. Texas Civil 

Practice and Remedies Code §134.002. Pursuant to the Act, “theft means unlawfully appropriating 

property or unlawfully obtaining services as described by Section 31.03 . . . of the Penal Code.” 

5

 One of the reasons FSCLE filed the District Court Lawsuit when it did was the statute of limitations associated with 

this statute. Trustee’s counsel repeatedly told FSCLE to file its claims and the statute of limitations on this claim was 

fast approaching. 

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Id. Pursuant to Section 31.03 of the Penal Code, “a person commits an offense if he unlawfully 

appropriates property with intent to deprive the owner of the property.” Texas Penal Code §31.03. 

In Taylor v. State, 450 S.W.3d 528, 536 (Tex. Crim. App. 2014), the Court of Criminal 

Appeals held that theft under § 31.03 can be shown in cases where there is a contract between the 

victim and the accused if “at the time that money is exchanged pursuant to the contract, the accused 

either intends not to, or at least knows he will not, perform his part of the bargain.” See also AAB 

Logistics, Inc. v. Forward Air, Inc., 2016 WL 8672773, *4 (N.D. Tex. Nov. 18, 2016) 

(“Deception” under the Civil Liability Theft Act includes inducing action with no intent to perform 

one’s part of a transaction or contract). Courts are to look at the events occurring before, during 

and after commission of the theft to determine if the accused had the intent not to perform the 

contract. Taylor, 450 S.W.3d at 536. “A contractor may yet be found guilty of theft if, at some 

point after formation of the contract, he formulates the requisite intent to deprive and appropriate 

additional property by deception, that is induces his customer to make further payment on the 

contract while no longer intending to perform, or at least knowing he will not.” Id. at 537 

(emphasis added). “Moreover, the fact that partial or even substantial work has been done on a 

contract will not invariably negate either the intent to deprive or the deception necessary to 

establish the unlawfulness of the initial appropriation.” Id. at 537. 

Taylor was a case in which a contractor induced customers to pay additional sums after the 

contract had been signed on the promise to perform certain acts. However, at the time those 

additional payments were induced, the contractor was in financial trouble and had no intention to 

perform. Rather, the contractor took the funds for his own purposes. The facts of Taylor are very 

similar to the theft committed by Frinzi, James Goodman and others aligned with them. The 

contract between FSCLE and Goodman Networks went back several years and until November 3, 

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2021, there was performance by both sides. Goodman Networks would invoice FSCLE. FSCLE 

would pay those invoices and Goodman Networks would then engage in the reversing transaction 

by which all but less than 1% of the amount paid by FSCLE to Goodman Networks was sent back 

to FSCLE. However, by November 3, 2021, Frinzi expressly stated that there would no further 

payments to FSCLE. Goodman Networks was in financial trouble by then. Thus, each invoice 

sent to FSCLE on or after November 3, 2021 came with no intention to perform the matching 

reversing transaction and no intention to perform. FSCLE would not have sent any funds to 

Goodman Networks after November 3 had it been informed that there would be no reversing 

transactions. As with the contractor in Taylor, Frinzi, James Goodman and those associated with 

them used the stolen funds for their own benefit. FSCLE thus has a valid claim for theft for all 

invoices sent to it on or after November 3, 2021. 

Similarly, a claim for fraud may be based on “a promise to do an act in the future . . . when 

made with the intention, design and purpose of deceiving with no intention of performing the act.” 

In re Adobe Energy, Inc., 82 Fed. Appx. 106, 112 (5th Cir. 2003); Spoljaric v. Percival Tours, Inc., 

708 S.W.2d 432, 434 (Tex. 1986) (when one enters into a contract with no intention to perform, 

they may be sued for fraud). Based on both the actual contract that existed between FSCLE and 

Goodman Networks and the course of performance over years, when Goodman Networks sent an 

invoice to FSCLE for payment, that invoice came with the representation that the reversing 

transaction sending all but less than 1% back to FSCLE would be made the following month. 

Goodman Networks was simply not entitled (ever) to retain more than something less than 1% of 

the total originally paid by FSCLE. Sending invoices with no intention to perform the reversing 

transaction is a representation with no intent to perform in the future. 

In Saint Paul Commodities, LLC v. Crystal Creek Cattle Co., 2012 WL 3135574, *4 (N.D. 

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Tex. Aug. 1, 2012), the Northern District of Texas was presented with the question whether 

conduct in which one party with a contract with another could constitute breach of contract, fraud 

and liability under the Texas Civil Liability Theft Act. In the Saint Paul case, the aggrieved party 

originally filed suit for breach of contract and obtained summary judgment for the breach of 

contract. Id. at *1. In post-judgment discovery, Saint Paul learned that there had been no intent 

to perform at the time the defendant had induced action by Saint Paul that was the basis of the 

original breach of contract claim. Id. at *2. Thus, Saint Paul filed a new lawsuit based on the 

same conduct as the first lawsuit but in the new lawsuit asserted claims for fraud and under the 

Texas Civil Liability Theft Act. Id. The defendants moved to dismiss the new lawsuit arguing the 

prior lawsuit acted as res judicata to bar the second lawsuit. Id. The Northern District of Texas 

rejected the res judicata argument finding that even though the breach of contract, fraud and civil 

theft liability claims shared the same operative facts, each claim had sufficiently different elements 

to state valid causes of action. 

Specifically, the court found that the civil theft liability act claim had additional elements 

not required to prove breach of contract. Id. at *4. For purposes of the civil liability theft statute, 

“deception” includes promissory performance that is likely to affect the judgment of another in a 

transaction without the intention to perform or knowing that performance is unlikely. Id. “Thus, 

civil theft includes the element of intent, which is not present in a breach of contract claim.” Id. 

Denying the motion to dismiss, the Northern District of Texas held, “despite arising from the same 

business transaction, the sets of claims are not so similar so as to bar the second suit under res 

judicata.” Id. at *4-5. Saint Paul is yet another example of a case in which claims for civil theft 

and fraud were permitted to move forward despite the existence of a contract between the plaintiff 

and the defendant.

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Liability for civil theft and fraud extends to those who knew of the unlawful acts and 

benefited from them. See Corpus Christi Area Teachers Credit Union v. Hernandez, 814 S.W.2d 

195, 198-99 (Tex. App. – San Antonio 1991) (holding that all those who participated in the fraud 

or who received benefits therefrom are liable in damages to the party defrauded). Similarly, it is 

not essential for FSCLE to prove that each and every defendant made a misrepresentation to it to 

sue the defendants for liability in fraud. In re NE40 Partners, Ltd., 411 B.R. 352, 360-61 (Bankr. 

S.D. Tex. 2009) (holding that parties that did not make a misrepresentation may be held liable for 

fraud if they either acquiesced in the misrepresentation or had knowledge of it and benefited from 

it.) Finally, a corporate officer who knowingly participates in tortious or fraudulent acts may be 

held individually liable to third parties even though they performed acts as agents of a corporation. 

Nwokedi v. Unlimited Restoration Specialists, Inc., 428 S.W.3d 191, 201 (Tex. App. – Houston 

[14th Dist.] 2014). Thus, whether it is Frinzi, James Goodman or any of the others who participated 

or benefited from the theft and fraud perpetrated against FSCLE, FSCLE has a cause of action to 

sue them for the damage done to it. 

(4) Constructive Trust is an Appropriate Remedy for the Fraud Done to 

FSCLE. 

The Trustee does not appear to dispute that FSCLE may have a cause of action for fraud 

but does dispute that FSCLE may seek a constructive trust6 as a remedy for that fraud. (Trustee’s 

Brief at ¶¶ 60-62). A constructive trust is a legal fiction, a creation of equity to prevent a 

wrongdoer from profiting from her wrongful acts. Gray v. Sangrey, 428 S.W. 3d 311, 315 (Tex. 

App. – Texarkana 2014). Constructive trusts are remedial in character and have the broad function 

of remediating wrongs or unjust enrichment in basic principles of equity and justice. Id. 

6

 FSCLE agrees that a constructive trust is a remedy for a fraud and not a separate cause of action. Kinsel v. Lindsey, 

526 S.W.3d 411, 425 (Tex. 2017). 

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To obtain a constructive trust, the proponent must prove: (1) breach of a special trust, 

fiduciary relationship or actual fraud, (2) unjust enrichment, and (3) tracing of an identifiable res. 

Id.; Troxel v. Bishop, 201 S.W.3d 290, 297 (Tex. App. – Dallas 2006) (emphasis added). The 

imposition of a constructive trust is an available remedy where there has been a showing of actual 

fraud. NE40 Partners, 411 B.R. at 368. The constructive trust attaches when the fraud is 

committed, and the funds or property are transferred to the wrongdoer. Matter of Quality Holstein 

Leasing, 752 F.2d 1009, 1114 (5th Cir. 1985); Texas Co. v. Miller, 165 F.2d 111, 116 (5th Cir. 

1947); In re Leitner, 236 B.R. 420, 424 (Bankr. D. Kan. 1999) (“Although a constructive trust may 

not be judicially decreed until many years subsequent to the transaction giving rise to the trust, the 

accepted theory is that the constructive trust is in existence at the inception of the transaction, ... 

and the beneficiary is possessed with an equitable interest in the trust property prior to the 

declaration of the constructive trust.”) The constructive trust is imposed not only on the wrongfully 

taken property but also the proceeds or revenues generated from the property. Clayton Mountain 

Dev., LLC v. Ruff, 2021 WL 3414953, *12 (Tex. App. – Eastland Aug. 5, 2021). 

First, it is important to note that FSCLE seeks a constructive trust over the funds stolen 

from it in the District Court Lawsuit and not yet in the bankruptcy court. FSCLE is cognizant that 

the proper vehicle to assert a constructive trust in a bankruptcy case is to initiate an adversary 

proceeding. Haber Oil,12 F.3d at 437-38. FSCLE has not yet filed such an adversary proceeding 

in this bankruptcy for at least two reasons: (1) as a practical matter, there has not yet been a 

recovery of funds into the estate over which FSCLE contends there is constructive trust, and (2) 

the pre-November 3, 2021 payments by FSCLE to the debtor are not subject to a constructive trust. 

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Most importantly, Texas law7 makes clear that “[t]he general rule is that when property is 

stolen, the party who acquires the stolen property does not acquire its title.” Matter of Okedokun, 

968 F.3d 378, 390 (5th Cir. 2020) (citing Matter of Approximately $80,600.00, 537 S.W.3d 207, 

211 (Tex. App.—Houston [1st Dist.] 2017, pet. denied)). Rather, “title remains with the original 

owner, who can recover the property8 or its value from whomever has received it.” Id. Where 

property held by the debtor is stolen, the stolen property, while appearing in legal form to be 

property of the debtor, is not property of the estate because the equitable title resides in the victim 

of the stolen property. Id.; Matter of Haber Oil Co., Inc., 12 F.3d 426, 435 (5th Cir. 1994). Thus, 

the estate in this case does not and cannot include the funds stolen from FSCLE and FSCLE is free 

to pursue its claims for a constructive trust on those stolen funds. The Trustee’s argument that 

once the stolen funds went into a Goodman Networks’ bank account that the funds became assets 

of the estate (Trustee’s Brief at ¶ 62) is therefore both factually and legally in error and is not a 

basis to enjoin FSCLE’s causes of action. 

In In re Newpower, 233 F.3d 922 (6th Cir. 2000), the Sixth Circuit examined whether stolen 

funds were or were not assets of the bankruptcy estate of the thief and thus subject to the automatic 

stay. Like the Fifth Circuit, the Sixth Circuit first determined that the person or entity which steals 

money or property does not obtain any title to the property stolen. Id. at 929 (citing to Michigan 

law and to the Restatement (Second) of Torts § 229 cmt. D (1965)). On that basis, the Sixth Circuit 

held that, “the debtor's bankruptcy estate has no property interest in such embezzled funds which 

7

 In the absence of controlling federal bankruptcy law, the substantive nature of the property rights held by a bankrupt 

and its creditors is defined by state law. Chiasson v. J. Louis Matherne and Assocs., 4 F.3d 1329, 1334 (5th Cir.1993). 

8

 One exception to this rule is stolen money. Okedokun, 968 F.3d at 390. “One who receives money which has been 

illegally obtained by a third party in due course of business, in good faith, and for valuable consideration, can keep it 

without liability to him from whom it was stolen.” Sinclair Hous. Fed. Credit Union v. Hendricks, 268 S.W.2d 290, 

295 (Tex. App. - Galveston 1954). In its complaint, FSCLE alleges that the third parties which received the stolen 

FSCLE funds knew of their original source. (e.g. Compl. at ¶ 318). Thus, the exception would not apply to FSCLE’s 

complaint.

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are now in the hands of third parties. As discussed, debtor never had a legal interest in such funds 

and appellants should be allowed to pursue third party recipients to recover embezzled funds and 

property traceable to such funds to the extent that the law allows.” Id. at 931. The Sixth Circuit 

did find that if the debtor had any property purchased with the stolen funds, the property purchased 

and still in the debtor’s possession would be assets of the estate. Id. 

Here, all the funds stolen from FSCLE were removed from a Goodman Networks bank 

account long before the bankruptcy petition was granted. None of those funds were used to 

purchase anything that went back into Goodman Networks’ possession or control. Rather, as in 

Newpower, the stolen funds here went to persons and entities other than Goodman Networks. 

Indeed, that was the point of the enterprise, conspiracy and scheme as alleged by FSCLE. The 

funds were stolen from FSCLE and then laundered through others to Frinzi, James Goodman and 

entities controlled by them. As in Newpower, the Court should find that the stolen funds are not 

and were not assets of the estate and should find that FSCLE is free to pursue those funds from 

those who hold them now. 

The Trustee’s other attacks on FSCLE’s right to pursue a constructive trust remedy 

similarly fail. The Trustee claims that there has been no showing of any fraud. (Trustee’s Brief 

at ¶ 51(ii)). As detailed above, that is plainly incorrect. The Trustee also contends that FSCLE 

cannot identify a specific res. (Trustee’s Brief at ¶ 51(iv)). That is also incorrect. The bulk of 

FSCLE complaint is spent showing in detail the payments from FSCLE to Goodman Networks 

pursuant to the fraudulent invoices. Then, FSCLE traces the flow of funds out of the 4352 Account 

to fund the various money laundering schemes engaged in by Frinzi, James Goodman and others 

acting with them. (e.g. Compl. at ¶¶ 240 – 283). FSCLE can trace the bulk of the funds stolen 

into: Goodman Investment Holdings, the Frinzi Family Trust and Endeavor Managed Services. 

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In addition, FSCLE has been able to trace in detail the payments made to the Auerbachs and others 

as payment to facilitate the money laundering. (e.g. Compl. at ¶¶ 302 – 319). Those payments all 

came from stolen FSCLE funds. FSCLE has absolutely set forth a colorable claim for a 

constructive trust including fraud, unjust enrichment and tracing an identifiable res. 

(5) The Trustee Is Barred from Asserting Several of the Claims Against a 

Number of the Defendants. 

The Trustee’s motion must be denied for an additional reason: a trustee does not have 

standing to pursue actions on behalf of individual creditors. Finova Capital Corp. v. Lawrence, 

2000 WL 1808276, *2 (N.D. Tex. Dec. 8, 2000). A trustee may, under certain circumstances, be 

barred from pursuing certain claims under the doctrine of in pari delicto if the defense appears on 

the face of the complaint to be enjoined. In re Vantage Benefits Administrators, Inc., 2021 WL 

1815065, *15 (N.D. Tex., May 5, 2021) (In pari delicto may bar a trustee’s claims but the analysis 

is intensely factual); but see In re Today’s Destiny, Inc., 388 B.R. 737, 747-49 (S.D. Tex. 2008) 

(finding that in pari delicto did not bar a trustee’s claims in that case). 

This very issue arose and was addressed by the Southern District of Texas in connection 

with the Enron bankruptcy. In In re Enron Corp. Securities, Derivative & “ERISA” Litigation, 

2007 WL 789141, *7-8 (S.D. Tex. March 12, 2007), a group of creditors sued JPMorgan Chase 

for misrepresentations they claimed JPMorgan Chase worked with Enron management to make. 

Id. at *1. JPMorgan Chase moved to dismiss the complaint in part on the argument that the fraud 

claim belonged to the bankruptcy estate and could not be asserted by the creditor plaintiffs. Id. 

The Southern District of Texas, Judge Harmon, conducted an analysis to determine who the claims 

belonged to under bankruptcy law and Texas law. Specifically, Judge Harmon considered whether 

the claims were derivative or constituted direct injury. Judge Harmon granted JPMorgan Chase’s 

motion to dismiss on other unrelated grounds but first found that the claims belonged to the 

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creditors and could not as a matter of law be brought by the bankruptcy estate. Id. at *8. 

In so holding, Judge Harmon said: 

The bankruptcy trustee may only assert claims on behalf of the debtor corporation 

and generally cannot sue third parties on behalf of the estate's creditors. Shearson 

Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 118 (2d Cir.1991), citing Caplin v. 

Marine Midland Grace Trust Co. of N.Y., 406 U.S. 416, 434, 92 S.Ct. 1678, 32 

L.Ed.2d 195 (1972) (holding that a trustee in bankruptcy may not pursue an action 

against a third party that could not have been brought by the debtor); Educators 

Group Health Trust, 25 F.3d at 1284. 

Moreover, if the debtor has joined a third party in defrauding creditors, the trustee 

does not have standing to sue the third party for damages to 

creditors. Wagoner, 944 F.2d at 113. “A claim against a third party for 

defrauding a corporation with the cooperation of management accrues to the 

creditors, not to the guilty corporation.” Id. at 120. The trustee can only sue if 

the corporation has suffered damage distinct from the damage to the creditor. Id. at 

118-19. 

In re Enron, 2007 WL 789141 at *7 (emphasis added); see also Ingalls v. Gressett (In re 

Bradley), 326 Fed. Appx. 838, 839 (5th Cir.2009) (citing Caplin v. Marine Midland Grace Trust 

Co., 406 U.S. 416, 92 S.Ct. 1678 (1972) (holding that a trustee lacked standing to sue a third party 

for damages incurred by debenture holders of the corporate debtor)); In re Infinity Business Group, 

Inc. 31 F.4th 294, 302-03(4th Cir. 2022) (barring a trustee pursuant to in pari delicto from pursuing 

claims against a third party who was alleged to have worked with management to make a 

fraudulent statement); Official Committee of Unsecured Creditors of PSA, Inc. v. Edwards, 437 

F.3d 1145, 1152-56 (11th Cir. 2006) (holding that a trustee in bankruptcy is barred under in pari 

delicto from pursuing claims against third party co-conspirators in RICO for a fraud the insiders 

worked with others to perpetrate); Steinberg v. Buczynski, 40 F.3d 890, 893 (7th Cir.1994) ( 

“When a third party has injured not the [debtor] itself but a creditor of [the debtor], the trustee in 

bankruptcy cannot bring suit against the third party. He has no interest in the suit.”); Sherman v. 

Main Event, Inc., 2003 WL 251653, *5 (N.D. Tex. Feb. 3, 2003) (trustee stood in the shoes of the 

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debtor who was engaged in the fraud that underpinned the RICO activity and could not sue the coconspirators as there would be no reasonable reliance on the part of the debtor); Picard v.. 

JPMorgan Chase & Co., 2011 WL 5170434, *3 (S.D.N.Y. Nov. 1, 2011) (trustee of Bernard 

Madoff bankruptcy estate lacked standing to pursue on behalf of victims of ponzi scheme common 

law damage claims for aiding and abetting fraud and conversion); Jones v. Hyatt Legal Services 

(In re Dow), 132 B.R. 853, 861–62 (Bankr. S.D. Ohio 1991) (trustee without standing to bring 

claim that the defendants assisted the debtor in furtherance of the debtor's scheme of fraudulently 

conveying property with the intent to hinder, delay, or defraud creditors). 

Similarly, in Brickley for CryptoMetrics, Inc. Creditors’ Trust v. ScanTech Identification 

Beam Systems, Inc., 566 B.R. 815, 842-43(W.D. Tex. 2017), the district court affirmed the 

dismissal of certain claims brought by a trustee against third parties including RICO claims based 

in part on the doctrine of in pari delicto. The Court held that: 

The Court finds that the in pari delicto defense appears on the face of the 

Complaint, i.e., that one wrongdoer, CryptoMetrics via the trustee, is seeking to 

recover from another, the Stolzar defendants, when CryptoMetrics' own intentional 

wrongdoing (through its officers) contributed to its injuries. Barra and Vitale were 

co-CEOs of CryptoMetrics. Their acts are “presumptively imputed to 

CryptoMetrics, who is responsible for such acts even if they were 

unauthorized. (Internal cite omitted). The trustee now stands in the shoes of 

CryptoMetrics, and the “debtor's misconduct is imputed to the trustee 

because, innocent as he may be, he acts as the debtor's 

representative.” (Internal cite omitted). The Complaint alleges that Stolzar 

acted with Barra and Vitale to fraudulently obtain financing for 

CryptoMetrics. See Am. Compl. 258–87. This was a fraud in which the debtor 

company, via its officers, participated in. 

Id. at 842. (Emphasis added). 

 Advancing the “Waggoner” Rule and the in pari delicto doctrine, FSCLE does not 

suggest that the Trustee has no avenue of recovery against debtor’s insiders or those who 

received funds from the debtor. Pursuant to 11 U.S.C. § 544, the Trustee has the statutory 

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right to seek avoidance actions separate and apart from any actions which the debtor may 

have had as of the petition date. However, “[s]ection 544 is limited to avoidance actions 

and does not give the trustee standing to pursue tort claims that were not the property of 

the estate at the commencement of the case.” 5 Collier on Bankruptcy ¶ 544.01 (16th ed. 

2011) (footnote omitted) (Section 544 “does not transform the trustee into a ‘super 

creditor.’ ”). Moreover, the Trustee may well have claims against the Debtor’s insiders for 

breach of fiduciary duties that would not be barred by the doctrine of in pari delicto. See 

Floyd v. Hefner, 556 F.Supp.2d 617, 658-59 (S.D. Tex. 2008). 

 Thus, both the Trustee and FSCLE have separate and independent claims against 

the Debtor’s insiders and against those who engaged in unlawful activity. The Trustee has 

exclusive jurisdiction to bring avoidance actions and claims against the insiders for breach 

of their fiduciary duties. FSCLE does not assert those claims. FSCLE has claims against 

the insiders and those in league with them for the fraud perpetrated against FSCLE 

including sounding in RICO, fraud, theft and constructive trust. The Trustee may not assert 

these claims and should not be granted an injunction to stop FSCLE from remedying the 

wrongs done to it. 

B. The Estate Does Not Face Any Irreparable Harm. 

The Trustee argues that he need not demonstrate irreparable harm because he 

claims that the District Court Lawsuit is a violation of the automatic stay. 11 U.S.C. § 

362(a). (Trustee’s Brief at ¶¶ 78-80). The Trustee’s argument fatally relies upon the 

presumption that FSCLE’s District Court Lawsuit violates the automatic stay. If the claims 

at issue are not property of the estate, there is no violation of the automatic stay. See In re 

TXNB Internal Case, 483 F.3d 292, 301 (5th Cir. 2007) (holding that the automatic stay in 

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Section 362 does not apply to or bar claims that are not property of the bankruptcy estate). 

Aside from this flawed argument, the Trustee does not even attempt to argue irreparable 

harm. 

The Fifth Circuit has described an injury as “irreparable” if it “cannot be undone 

by a monetary remedy.” Enter. Int'l, Inc. v. Corporacion Estatal Petrolera 

Ecuatoriana, 762 F.2d 464, 472–73 (5th Cir.1985). “The absence of an available remedy 

by which the movant can later recover monetary damages, however, may also be sufficient 

to show irreparable injury.” Id. at 473. In other part of the Trustee’s brief, he argues that 

if the District Court Lawsuit is permitted to move forward that the “Trustee” (as opposed 

to the Debtor’s Estate) would be required to expend valuable resources monitoring and 

litigating matters for two independent subsidiaries of the Debtor that are not themselves in 

bankruptcy. (Trustee’s Brief at ¶24). The Trustee also argues that “other parties” 

(unconnected to the Debtor) would also have to expend money defending claims against 

them. (Trustee’s Brief at ¶24). Finally, the Trustee argues in various places in his brief 

that he is seeking recovery of funds for the benefit of all creditors. None of these arguments 

are sufficient to establish irreparable harm. 

First, most of the arguments are not asserting alleged harm to the Debtor. Second, 

the Trustee has an obligation to manage the independent subsidiaries no matter and the 

automatic stay simply does not apply to them. Third, the expense incurred or not incurred 

by third parties simply cannot as a matter of law be irreparable harm. Finally, the Trustee’s 

race to recover assets argument is the exact argument considered and rejected by Judge 

Zainey in FoodServiceWarehouse.com, 601 B.R. at 411. None of the Trustee’s arguments 

constitute irreparable harm. 

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C. The Harm to FSCLE in Granting an Injunction Is Severe. 

The third factor requires this Court to balance the equities between the opposing 

parties. DSC Commc'ns Corp. v. DGI Techs., Inc., 81 F.3d 597, 600 (5th Cir.1996). 

Specifically, this Court must balance the harm that would be suffered by FSCLE if the 

preliminary injunction is granted against the claimed harm that would result to the estate if 

the injunction is denied. 

The Trustee’s arguments all center on the alleged harms to the Debtor in the period 

between the filing of the motion for a preliminary injunction in late November 2023 and 

the hearing on the adversary complaint in 2024. (Trustee’s Brief at ¶¶ 82-83). The Trustee 

makes no arguments on the balancing of the harms on a go forward basis. 

As to the balancing of the equities between the time the Trustee filed his motion for 

a preliminary injunction and the hearing of the adversary complaint, FSCLE has balanced 

the interest of all parties by agreeing to an expedited hearing on the adversary complaint 

and by agreeing that all that FSCLE will do in the District Court Lawsuit between now and 

then is perfect service on the various defendants therein. FSCLE also wants a resolution 

of the legal issues raised by the Trustee’s motion. There is no strong weighing of the 

equities between FSCLE and the Debtor as to the period between the filing of the motion 

for a preliminary injunction and the hearing of the adversary complaint. 

As to the period from the adversary complaint hearing forward, the equities strongly 

favor FSCLE and a denial of the requested injunction. As set forth herein, FSCLE has 

unique claims of particularized harm to it that are not assets of the estate. Neither the 

Debtor nor the Trustee has a valid claim to the causes of action asserted by FSCLE. FSCLE 

and only FSCLE suffered the harm from the fraud and theft perpetrated against it. The 

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Debtor did not suffer from that harm. The Debtor benefited from it, at least temporarily. 

The fraud and theft were perpetrated by Debtor insiders who stole the money from FSCLE 

with the intent to ultimately launder it back to themselves or for their benefit. These are 

claims that are unique to FSCLE. The stolen funds never became assets of the estate. 

Matter of Okedokun, 968 F.3d at 390. Thus, if an injunction were to be issued, FSCLE 

would be further harmed in not being able to pursue recovery for funds that were uniquely 

and particularly stolen from it. Conversely, the Debtor would not be harmed by a denial 

of an injunction because the funds were never the Debtor’s in the first place, were not in 

the Debtor’s possession at any time after the filing of the petition in bankruptcy and the 

claims are not assets of the estate. 

The Trustee argues that FSCLE can be equitably treated by participating with all 

other creditors based on assets recovered by the Trustee. Some of FSCLE’s claims are 

general creditor claims (the amounts paid to Debtor prior to November 3, 2021). As to 

these claims, FSCLE agrees. However, as to the funds paid to the Debtor after November 

3, 2021, FSCLE cannot and will not be equitably treated by having the funds stolen from 

it go to any other creditor. FSCLE is not like any other creditor for its claims on and after 

November 3, 2021. The equities strongly favor a denial of an injunction. 

D. The Public Interest Does Not Favor an Injunction. 

Here, the only public interest that can be asserted is promotion of and support for 

the bankruptcy process itself including honoring the automatic stay and the treatment of 

creditors in classes in accordance with bankruptcy procedure. FSCLE certainly agrees that 

those are strong public interests that would support the issuance of an injunction for claims 

for funds paid to the Debtor prior to November 3, 2021. FSCLE’s claim to those funds can 

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be found in its proof of claim in this bankruptcy – not in the District Court Lawsuit. As to 

the claims from November 3, 2021 forward, those claims are not claims of the estate and 

thus there is no public interest in issuing an injunction. 

In paragraph 84 of the Trustee’s Brief, the Trustee asserts that the public interest 

runs against the race to the courthouse. As to claims prior to November 3, 2021, FSCLE 

agrees. However, from November 3, 2021 forward the payments from FSCLE to Goodman 

Networks are the product of fraud and theft. From November 3, 2021 forward, the 

Trustee’s claim to clear the field and avoid the race to the courthouse is exactly the 

argument rejected in FoodServiceWarehouse.com, 601 B.R. at 411. 

E. FSCLE Has Not Violated the Automatic Stay. 

The Trustee repeatedly decries FSCLE’s complaint in the District Court Lawsuit as a 

violation of the automatic stay found in 11 U.S.C. § 362(a). Section 362(a) operates as a stay only 

as to actions against a debtor and its property. Id.; In re TXNB Internal Case, 483 F.3d at 301. 

(1) FSCLE Has Not Brought Any Claims Against the Debtor. 

In paragraphs 72-75 of his brief, the Trustee argues that FSCLE has sued Goodman 

Networks. That argument is facially inaccurate and legally flawed. First, Goodman Networks is 

not named as a party in the District Court Lawsuit. The style of the District Court Lawsuit shows 

that Goodman Networks is not a named defendant. In fact, FSCLE expressly states in the District 

Court Lawsuit that it is not asserting any claim against Goodman Networks. (Compl. at ¶ 415 “No 

claims are brought in this case against Goodman Networks.”) Moreover, FSCLE does not seek 

any recovery against the Debtor in the District Court Lawsuit. 

Despite expressly stating that FSCLE is not suing Goodman Networks, the Trustee argues 

that FSCLE is allegedly suing the Debtor because the name “Goodman Networks” allegedly 

appears three hundred ninety (390) times in the District Court Lawsuit. (Trustee’s Brief at ¶ 72). 

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There is no way to tell the story of the theft and fraud perpetrated by Frinzi, James Goodman and 

others without explaining that they used Goodman Networks to perpetrate that fraud and theft 

against FSCLE. The fact that the corporate name appears frequently in the District Court Lawsuit 

is neither surprising nor evidence that Goodman Networks is actually a defendant. 

The Trustee next argues that FSCLE is asserting a breach of contract claim against the 

Debtor. (Trustee’s Brief at ¶ 73). That is also facially inaccurate. FSCLE does not assert a breach 

of contract9 claim against any party in the District Court Lawsuit. As set forth above and supported 

by caselaw, when one either enters into a contract with no intent to perform or after entering the 

contract decides not to perform any further and takes acts that induces the other party to the 

contract to continue to perform, those acts constitute theft and fraud. See Taylor, 450 S.W.3d at 

357 (theft); Spoljaric, 708 S.W.2d at 434 (fraud). Trustee’s arguments completely fail to address 

these lines of cases or the fact that something that is a breach of contract can also be a cause of 

action for theft and fraud without having to assert the breach of contract claim in the case. See

Saint Paul Commodities, 2012 WL 3135574 at *4. Further, having bases of recovery against the 

Debtor in the Proof of claim for certain amounts does not preclude or stay recoveries against “cotortfeasors, or other non-debtors.” Uranga v. Holiday Mkt., Inc., 2014 WL 349716, at *1 (N.D. 

Tex. Jan. 31, 2014); Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 544 (5th Cir. 1983) (“ . . . 

the protections of § 362 neither apply to co-defendants nor preclude severance.”) FSCLE has not 

asserted a breach of contract claim against the Debtor in the District Court Lawsuit. 

Lastly, the Trustee mistakenly relies upon and cites to In re Colonial Realty Co., 980 F.2d 

125, 132 (2nd Cir. 1992), as alleged support for the proposition that FSCLE claims against third 

9

 FSCLE does raise breach of contract as one of its claims in its Proof of Claim. (POC No. 32-1, ¶ 1). The 

amounts paid to Goodman Networks prior to November 3, 2021 but not paid back to FSCLE less the agreed 

upon amounts do constitute a breach of contract. That claim is not asserted in the District Court Lawsuit. 

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parties are claims against the Debtor. In Colonial Realty, two individuals and the real estate firm 

they operated were put into an involuntary bankruptcy after their real estate investments failed. Id. 

at 127. The real estate firm they ran had loans between 1985 and 1990 with a variety of banks 

which then also failed in a cascading fashion. Id. The FDIC stepped in as receiver of the failed 

banks and sought to recover the amounts owed on the loans. Id. In the months right before the 

involuntary bankruptcy, one of the individual debtors fraudulently transferred funds to his wife 

and others to keep them from being recovered by either the bankruptcy trustee or the FDIC. Id. at 

128. The FDIC then filed suit to set aside the fraudulent transfers and the trustee argued that the 

action to set aside the fraudulent transfers violated the automatic stay. Id. 

Colonial Realty is factually distinguishable because there is no allegation in that case that 

the funds obtained from bank loans or otherwise then transferred out just prior to the bankruptcy 

were themselves originally obtained by fraud or theft. This is a key factual distinction. In Colonial 

Realty, the funds which were transferred out were funds that otherwise were assets of the individual 

and corporate debtors prior to being fraudulently transferred. Here, the funds in question were 

obtained originally through fraud and theft. Moreover, unlike the FDIC in Colonial Realty, FSCLE 

has not brought a fraudulent transfer claim against any of the third parties. There is a distinction 

between claims for the direct tort liability of the third parties, as asserted by FSCLE, and a claim 

for setting aside a fraudulent transfer. 

(2) FSCLE Has Not Asserted a Claim or Cause of Action that Belongs to 

the Estate. 

As set forth in detail above, FSCLE has not violated the automatic stay with the claims 

asserted in the District Court Lawsuit because none of those claims belong to the estate. If a claim 

does not belong to the estate, there is no violation of the automatic stay. In re TXNB Internal Case, 

483 F.3d at 301. 

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CONCLUSION 

 FSCLE suffered a unique and particularized harm in this case. Frinzi, James Goodman 

and others defrauded and stole tens of millions from FSCLE using invoices that they never 

intended to perform. Under controlling Texas and Fifth Circuit law, these claims belong to 

FSCLE. The Trustee cannot even bring a number of these claims. FSCLE should not be damaged 

further by denying it the right to pursue those who damaged it and those who acted in concert to 

steal tens of millions. The Trustee’s motion must be denied. FSCLE should be free to pursue the 

claims that belong to it and the Trustee should pursue the claims that belong to the estate. 

Dated: January 10, 2024 

Respectfully submitted, 

BUTLER SNOW LLP 

s/ Danny Van Horn 

Adam M. Langley (admitted pro hac vice) 

R. Campbell Hillyer (admitted pro hac vice) 

Danny Van Horn (admitted pro hac vice) 

6075 Poplar Avenue, Suite 500 

Memphis, TN 38119 

Telephone: (901) 680-7316 

adam.langley@butlersnow.com 

cam.hillyer@butlersnow.com 

danny.vanhorn@butlersnow.com 

and 

Candice Carson (TX Bar No. 24074006) 

Martin A. Sosland (TX Bar No. 18855645) 

2911 Turtle Creek Blvd., Suite 1400 

Dallas, Texas 75219 

Telephone: (469) 680-5502 

candice.carson@butlersnow.com

martin.sosland@butlersnow.com 

Counsel for FedEx Supply Chain 

Logistics & Electronics, Inc. 

 

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CERTIFICATE OF SERVICE 

 I hereby certify that a true and correct copy of the foregoing document was served 

concurrently with the filing of the same via the Court’s CM/ECF electronic filing system upon all 

persons who have filed ECF appearances in this case and via email to Trustee’s Counsel: 

Michael J. Quilling, Esq. 

(Texas Bar No. 16432300) 

Joshua L. Shepherd, Esq. 

(Texas Bar No. 24058104) 

QUILLING, SELANDER, LOWNDS, 

WINSLETT & MOSER, P.C. 

2001 Bryan Street, Ste. 1800 

Dallas, TX 75201 

(214) 871-2100 

mquilling@qslwm.com 

jshepherd@qslwm.com 

 s/ Danny Van Horn 

85316625.v1 

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