Pursuant to5 T H C IR . R . 47 .5, the court has determined thatthis opinion should not * be publishe d and is not precedent except under the limited circu mstance s set forth in 5 T H C IR . R. 47.5 .4. 

### INTHE UNITED S TATESCOU RT OFAPPEALS

FORTHEFIFTH CIRCU IT

N o. 09- 20261

EVANS TON I NSURANCE COM PA NY , P la in tiff v. DI LLARD DEPART M ENT S TORE S I NC, D efen da n t
- T h i rd P art y P l ai n t i f f

- A pp el l ee

v. D A M O N J. C H A R G O IS , C L E T U S P
. E R N S T E R , III , T h i rdP a rty D efen d a n ts – A p p ell a n ts

A pp eal s f

rom t h e U n i t ed S t ates D i st ri ctC ou rt f or th e Sou t h ern D i st ri ctof T exas U SD C N o. 4: 03- C V

- 4888

B ef ore R E AV L E Y , C L E M E N T , an d S O U T H W IC K , C i rcui tJu dg es . P E R C U R IA M: * D am o n Char go i s a nd Cl e t us Er ns t e ra ppe alt he di s t r i c tc o ur t ’ s j udg m e nt ho l di ng t he m per s o nall y l i ab l e t o D i l l ar d D e pa r t m e ntSt o r e s , I nc . f o raj udg m e nt United States Court of App eals

Fifth Circuit 

### F I L E D Janua ry 15, 2010 Cha rl es R. F ulb ru g e II I Clerk Case: 09-20261 Document: 00511005628 Page: 1 Date Filed: 01/15/2010N o. 09- 20261

2 ori gi n al l y en t ered aga i n stt h ei r l aw firm partnershi p. For t h e f ol l ow i n g reasons, w e a ffir m th e ju d g m e n t o f th e d is tr ic t c o u r t. F A CT S A ND P ROC E E DI NGS D am on C hargo i s and C l et us Ernster f or m ed a l aw par t ner shi p i n 2002. T h ey regi st ered i tas a li m ited l i abili t y pa rt n ershi p, kn ow n as C h argoi s & E rnster , L
. L
. P
. ( C E L L P ) , w i t h t h e State of T exas i n 200 2. C E L L P prosecuted l aw suit s againstD i l l ar d D epar t m entSt or es , I nc. (D i l l ar d’ s) , all egi ng t hat D illa r d ’s r a c ia llyd is c r im in a te da g a in s t it s cu s to m e r s . In a n a tt e m p t t o s o lic it bus i ne s s , CE LLP de ve l o pe d aw e bs i t e i n June 20 03 w hi c h i nc l ude d a l i nk us i ng th e “D i l l a rd ’ s” n a m e a n dl og o. C l i ck i n g th i s l i n ktoo kvisitors to dil l ar ds al e r t
. c o m , as e pa r at e w e bs i t e do c um e nt i ng ac t s o f a l l e g e dr a c i a lp r o f

i l i ng by the dep art m en tst ores. O nJu ly 1 4 , 2 0 0 3 , D illa rd ’ s s u e dC E L L P inT e x a s s ta te co u rt fo r tr a d e m ark i n f ri n gem en tan d va ri ou s busi n ess t ort s. I tsough tdam ages an d an i nj u n ct i on a g a in s tC E L L P ’s u s e o f i t s tr a d e m a r k . O n O c t o b e r3 1 , 2 0 0 3 , C E L L P ’s professi on all i abili t y i n surer, E van st on I n suran ce C o. , f i l ed a d ecl arator y ju d g m e n t a c tio n infe d e r a l d is tr ic t c o u r t, s e e k in g ad e c la r a tio n th a t it s p o lic yd id
n o t i n sure C E L L P againstD i l l ard’ s c l ai m s. O n N ovem ber 21, 200 3, af t er vo l unt ari l y di s m i s s i ng t he s t at e c o ur t l awsuit , D i l l ar d’ s f i l e d ac r o s s - c l ai m i n t he E vanst on c as e a gai nstC E LL P re as se r t i ng i t s all eg a t i ons and addi ng fede r al
c yb e r pir ac y an d t r ad e m ar k c l ai m s . On Ja nuary 15 , 2 00 4, pur s uantt o t he p a rtie s’ a g re e m e n t, th e co u rt d ism iss e dE v a n sto n ’ s cla im s fo r d e cla ra to ryre li e f. D i l l ar d’ s t hi r d- pa r t y c l ai m s a ga i ns tCE LLP w e r e a l lt hatr e m ai ne d. O n F ebru ary 9, 200 4, w h i l e t h e l i t i gati on conti n u ed, C h argoi s and E rnster
e xe c ut e d as e pa r at i on a gr e e m e ntt hatpr o vi de d f o r“ di s s o l ut i o n” o f

t he pa rt n ershi p on F ebru ary 27, 200 4 . C E L L P ’ s r egi st rat i on as an L L P w as not
r e n e we da n d , o n J u l y25 , 20 0 4 , t h e r e g i s t r a t i o n e x p i r e du n d e rT e x a s l a w. N o t w it h s t a n d in gth e s e fa c t s , t h e d e fu n c tL L P r e m a in e dap a r t yto th e D il la r d ’s Case: 09-20261 Document: 00511005628 Page: 2 Date Filed: 01/15/2010N o. 09- 20261

O n J u n e 2 9 , 2 0 0 6 , C le tu s E r n s te r , a c tin gin d iv id u a lly , file dala w s u it in 1 T e x a s s t a t e c o u r t a g a in s t D illa r d ’ s a n dits co u n s e l. E r n s te ra lle g e dth a t in seeki n g t o coll ectit s j u dg m en t , D i l l ard’ s had f i l ed fal se pu bl i c r e cords w h i ch i n t erf ered w i t h E rnster ’ s abi l i t y t o p u rc h ase realest ate andcom m en ce a new l a w pr a cti ce. D il l a rd ’ s m ov edto enj oinpr oce ed i n gs i n E rn ster’ s state law su i t, ar gui ng t hata n i nj unc t i o n was ne c e s s ary f o rt he fe de r alc o ur tt o pr o t e c ta nd ef fect u ate it s j u dg m en t
. Th e d i st ri ctcourtgran t ed D i l l ard’ s m ot i on . E rnster a p p e a le da n dth is co u r t s u m m a r ilya ffir m e d
. E v a n s to n I n s . Co . v . D il la r dD e

p ’t S t ores, I

n c. , 2 2 8 F . A p p ’ x4 7 8 (5 th C ir . 2 0 0 7 ) (u n p u b lis h e d). 3 l i t i ga t i o n, a nd no par t y w as sub s t i t ut e d on i t s be half
. O n N o ve m be r2 , 2 00 4, t he
c our tent er ed a f

i n a lj udgm entor der i ng “ C hargo i s & E r nst er , L. L. P. ” t o pay D i l l ar d’ s $143, 500. D i l l ard’ s at t em pt t o coll ecton the j u dg m en td i d n otsu cceed. O n Jan u ary 1 1 0 , 20 0 8 , i n the do ck et of th e E va n ston cas e, D i l l a rd ’ s f i l eda th i rd -pa rty
c o m p la i n t f

or a de cl a ra toryj u d gm en t ag a i n st C h a rg ois an dE rn ster i n the ir i n divi du alcapaci t i es. D i l l ard’ s s ou gh ta decl arati on t h at th e t w o w ere persona l l y l i able, j oi n t l y an d several l y, f or th e 200 4 f

i n alj u dg m en tentered ag ai ns tCE LLP
. Both Char goi s an d E r ns t e rw e r e pe r s o nall y s e rve d wi t h t he th i rd -pa rty com p l a i n t, an d e a ch m ov edto dism i ss. D i l l a rd ’ s th en resty l edi ts t hi r d- pa r t y c o m pl ai nta s af i r s ta m e nde d c o m pl ai nt , w hi c h r e as s e r t e d the all e ga t i o ns o f

pe r s o nall i ab i l i t y ag ai ns tC har go i s and Er ns t e r(he r e i naf t e r , t he “20 0 8 action ”)
. D i l l a rd ’ s f ile d a m o tion f

or su m m a ryj u d gm en t, to w h i ch bo th defenda n t s r espon dedw i t h l en gthy op posi t i on bri efs. Th e courtgran t ed j u dg m en tforD i l l ard’ s i n the am ou n tof $1 43, 500 a gainstC h argoi s and E rnster , j o i nt l y ands e ve r all y, a nd e ac h a ppe al e d. S TA NDARD OF RE VI EW “W e r e view a d i stri ct cou rt’ s gra n t of su m m a ryj u d gm en t de no vo .” G o o d m a n v. Ha rr is Co u n ty , 571 F
. 3d388 , 393 ( 5th C ir. 2 0 0 9 ). “ S u m m ary ju d g m e n t is a p p r o p r ia te ‘if th e p le a d in g s , th e d is c o v e r y a n dd is c lo s u r e m a te r ia ls on f i l e, and any af

f i davi t s sho w t hatt her e i s no ge nui ne i ss ue as t o a ny m at er i al Case: 09-20261 Document: 00511005628 Page: 3 Date Filed: 01/15/2010N o. 09- 20261

4 fact an dtha t th e m ov a n t is en titl edto j u d gm en t as am a tter of l a w . ’” I d. ( quo t i ng F ED . R. C IV . P. 5 6 (c )). “W e co n s id e rth e e v id e n c e inali g h t m o s t fa v o r a b le t o . . . t h e non - m ovan t , bu t[h e] m u stpoi n tt o evi den ce s h ow i n g t h at th ere i s a ge n u i n e fa ct i ssu e f or t ri a l to su rv ive su m m a ry j u d gm en t. ” I d. ( qu ot ati on o m itted ). DI S CU S S I ON Char go i s a nd Er ns t e rpr e s s f o urm ai n a r gum e nt s , t w o o f w hi c h pr e s e nt i ssues of

federallaw a n d t w o of w h i ch present i ssues of T exas l aw . W e c on si der th e co n te n tio n s u n d e rfe d e r a l la w b e fo r e tu r n in gto th e s ta te la w is s u e s . A . FederalLaw (1) S u bj ectMatt er Ju ri sdic t i on A ppel l ant s f

i r stc ont end thatsum m ar y j udgm enti n t he 2008 ac t i on w as i m proper becau se th e di st ri ctcou rt l acked subj ectm att er j u ri sdi ct i on . Th ey a r g u e th a t t h e co u r t e x c e e d e dth e b o u n d s o f its a n c illa r y , o rs u p p le m e n ta l, ju r is d ic tio n . S ee ge ne r al l yPe ac o c k v . Tho m as , 5 1 6 U .S . 3 4 9 (1 9 9 6 ); K okko nen v. G u a r d i a n L if

e I n s . Co . of

A m. , 5 11 U
. S
. 375 ( 199 4)
. Th i s argum en tfai l s because itig n o r e s d iv e r s it yo f c it iz e n s h ip a s th e p r im a r yb a s i s fo rt h e d is t r ic tc o u r t ’s j ur i s di c t i o n. The pa r t i e s t o t h e 2 00 8 ac t i o n a r e c i t i z e ns o f dif fe r e nts t at e s a nd t he am ount
- i n- c ont r ove r syex c ee ded $75 , 000; t hus, t he r equi r em en ts o f 28 U
. S
. C
. § 1332 w ere pl ai n l y sati sf i ed an d the di st ri ctcourtha d su bj ectm att er j ur i s di c t i o n. ( 2) D u e Proces s A p p e ll a n t s n e x t a r g u e t h a t t h e y w e r e d e n ie d d u e p r o c e s s b y t h e c o u r t ’s gran tof su m m a ry j u dg m en ti n D i l l ard’ s favor. Th ey argu e t h at th ey di d n ot p a r t ic ip a t e in th e o r ig in a l 2 0 0 3 la w s u itin v o lv in gC E L L P a n dth a tth e c o u r t ’s i m po s i t i o n of

p ers o nall i ab i l i t y upo n t he m i n 2 00 8 am o unt s t o ade ni alo f due p r o c e s s . Case: 09-20261 Document: 00511005628 Page: 4 Date Filed: 01/15/2010N o. 09- 20261

E r nst eral soar gues t hatan i nt er l oc ut or y or der of t he di st r i c t c our tw as 2 contrary t o l aw . I n 2 008 , the court ordered E rnsterto deposi tal lproceeds f rom hi s c as e s a ga i ns tD i l l ar d’ s i nt o t he c o ur t ’ s r e gi s t r y. H e a r gue s t hatc o nt i nge nt fe e co n tr a c ts fo rle g a l s e rv ic e s m a y n o t b e a s s u m e d b ya n o th e rp a r ty
. S ee In re T on ry , 724 F
. 2d4 67, 4 69 ( 5th C i r. 1 984 )
. H i s argum en toverst ates t h e sc ope of t h e di st ri ctcourt ’ s or der; it s ter m s d i d n otrequ i re hi m t o assi gn conti n gen tfee c o n tr a c ts b u t o n lyto d e p o s it “ a ll fu n d s co lle c te d in th o s e a c tio n s .” E r n s te rfa ils t o dem on st rat e err or i n t h e di st ri ctcourt ’ s or der. 5 T h ey rely on Nelson v. A d am s US A , I n c. f o rt he pr oposi t i o n t hat“ ‘ [t] he l aw , at i t s m ostf

u n da m en t al , does not r en der j u dg m en tsi m pl y becau se a person m i ghthave bee n f

oun d li a b l e had he bee n char ged. ’” 529 U
. S. 460, 471 ( 2000) ( quot i ng O h i o Cel l u lar Prods. Corp . v . A d am s US A , I n c. , 175 F. 3d 1343, 1354 ( Fed
. Ci r . 1 99 9) ( N e w m an, J
. , di s s e nt i ng) )
. I n Nelson , l i abili t y w as i m posed upo n t he i ndivi dua ls har e ho l de ro f ade fe nda ntc o r po r at i o n a tt he s am e m o m e nt th e p le a d in g s w e r e a m e n d e dto a d dth a t s h a r e h o ld e ra s ad e fe n d a n t. I d. at 466. Th e s hare hol derhad no “ oppor t uni t y t o r es pond and c ont es thi s per so nal l i abili t y f

or th e aw ard aft er he w a s m a d e a p art y an d befor e t h e entry of ju d g m e n t a g a in s t h im ,” a n dw a s th e r e fo r e d e p r iv e do f d u e p r o c e s s . I d. at463. C h a r g o is a n dE r n s te r , o n th e o th e rh a n d , h a da n o p p o r tu n ityto co n te s t t h e ir persona ll i abili t y f

or C E L L P ’ s j u dg m en tan d, i n fact , vi gorousl y di d so bef ore a j u dg m en tw as entered againstt h em i n divi du al l y. Th e Nelson C ou rtem ph asi zed t hat“the ri ghttocont es ton t he m er i t s [ one’ s] per so nall i abil i t y . . . . i s j ustw hat d u e p roce ss a ff

ord s. ” I

d. at4 72. Becaus e Ch ar goi s and E r nst erhad t hat opp ort u n i t y ( an d, i n deed , avail ed them selves of it) , t h ere w as no d u e process de pr iva t i o n. 2 B . St at e Law Itis u n di spu t ed that C E L L P w as f orm ed i n 200 2 an d ceased to exi stas a regi st ered L L P on Ju l y 25, 200 4. T h eref ore, the T exas R evi sed P art n ershi p A ct (T R P A) a p p lie s to th is d is p u te
. S eeT R P A§ 11
. 0 3 (c) (cod i fi edat T EX . R EV . C IV . Case: 09-20261 Document: 00511005628 Page: 5 Date Filed: 01/15/2010N o. 09- 20261

E v e n th o u g h th e T R P Ae x p ir e dJ a n u a r y1 , 2 0 1 0 , i tc o n t in u e s to a p p ly 3 he r e . I n 2 00 3, t he Tex as l e gi s l at ur e e nac t e d t he Tex as Busi ne s s O r ga ni z at i o ns C ode (T B O C ) , w h i ch, ef fect ive Jan u ary 1, 200 6, gove rn e d dom est i c entit i es fo r m e da fte rt h a t d a te
. S eeT EX . B US . O RGS . C ODE§ 402. 001 ( a) ( 1)
. C E L L P i s not suc h a n e nt i t y be c aus e itw as f o r m e d i n 2 00 2 and , m o r e i m po r t ant , no l o nger exi st ed w h en t h e T B O C becam e ef fect ive. E ven i f C E L L P st i l lexi st ed an d w ere no w s ubj e c tt o t he TBO C, t he TBO C m ak e s c l e art hatpr i o rlaw , s uc h a s t he T R P A , w o u ldh a v e a p p lie dto th is d is p u te
. Se ei d. § 4 0 2 .0 0 6
. 6 S TAT . A NN . art
. 6 13 2b

- 11. 03(c) )
. A pp el l an t s adva n ce t w o m ai n argu m en t s un der 3 state law
. F i rst, t h e ycon ten dtha t T ex a s p a rtn ersh i p l a w con fers i m m u n i ty upo n t he m as i ndivi dua l pa r t ne r s , w he t he r o f an LLP o r ge ne r alpartner s hi p. S econd , t h ey contendt h at th e st atute of l i m i t ati on s bars D i l l ard’ s 2008 act i on t o h o l dt he m p e r s o na l l yl i a b l e f o rt hej ud g m e nta g a i ns tCELLP. (1) Im m u n ity fro m Perso n a l L ia b ili ty a. TR PA§§ 3. 04 and 3. 08 A s a general m att er, t h e T R P Aim poses j oi n tan d severall i abili t y on i ndivi dualpar t ner s f oralldebt s and obli gat i ons of a par t ner shi p. Sec t i on 3. 04 of t h e T R P Aprovi des:

E x c e p t a s p r o v i d e db yS e c tio n 3 .0 7 o r3 .0 8 (a ), a ll p a rtn ers a re li a b l e j oin tly a n d s e ve ra l l y for a l lde b ts an d obl i gati on s of t h e pa rt n ershi p un l ess otherw i se a g r e e db yt h e c l a i ma n to rp r o v i d e db yl a w. T EX . R EV . C IV . S TAT . A NN . art
. 613 2b-3. 04. U n der t h i s p rovi si on , a pp el l an t s are l i able f or th e debts a n d o b li gati on s of C E L L P un l ess on e of t h e enu m erat ed
e x c e p tio n s a p p lie s . Se e, e . g. , R O B E R T W. H AMI LT ON ETAL . , 19 T EXAS P RA CT I CE § 8
. 5 ( 2de d. 2 00 9) (“ I n g e ne r al , e ac h pa r t ne r i s pe r s o nally l i ab l e f o ra l lde bt s a nd
o bli ga t i o ns o f

t he pa r t ne r s hi p. ” )
. The f i r s te xc epti on , § 3
. 07 , c o nc e r ns t he lia b ilityo f in c o m in gp a r tn e r s a n dis n o t r e le v a n t in th is ca s e . A s f or th e sec on d excepti on , T R P A§ 3. 08(a) li m i t s l i abili t y f or part n ers of regi st ered L L P s. I tprovi des: Case: 09-20261 Document: 00511005628 Page: 6 Date Filed: 01/15/2010N o. 09- 20261

7 (a ) L i a b i lityo f P a r tn e r . (1 ) E x c e p t a s p r o v id e din S u bsect i on ( a) ( 2) , a partne r in a regi st ered l i m i t ed lia b ilityp a r tn e r s h ip is n o t in d iv id u a lly lia b le , d ir e c tly or i n di rect l y, by contribu t i on , i n dem n i t y, or ot h erw i se, f or d e bts an d obli gati on s of t h e partnershi p i n curred w h i l e th e p a rtn ersh i p i s a re gistered l i m i tedl i a b i l i ty pa r t ne r s hi p. (2 ) A part neri n a r egi st er ed li m i t ed li abil i ty p a rtnership i s not i n divi du al l y l i able, di rect l y or i n di rect l y, by contribu t i on , i n dem n i t y, or oth erw i se, f or deb t s and obl i gati on s of t h e partner sh ip ari si n g f rom error s, o m iss i on s, neg l i gen ce, i n com petence, or m al f easan ce c om m i t t ed w h i l e t h e partnershi p i s a r e gi s t e r e d li m i t e d li ab i l i t y pa r t ne r s hi p a nd i n t he course of

t h e partnersh i p bu si n ess by an ot h er part n er o rar e pr e sentativeo f t he pa r t ne r s hi p no tw o r ki ng u n der t h e sup ervi si on or di rect i on of t h e f i rstpartner u n l ess t h e f

i rstpartner: (A) w a s d ir e c tlyin v o lv e dinth e s p e c ifica c tiv ityin w h i ch t h e err o r s , o m i s s i o ns , ne gl i ge n ce, i nco m pet enc e, orm al fe a s a nce w er e c om m it t ed by t h e ot h er part n er orrepresentat ive; or ( B ) ha d n ot i ce ork n ow l edg e of t h e err ors, om i ssi o n s, neg l i gen ce, i n com petence, or m a lfea sa n ce b y th e o th er part n er or representat ive at the t i m e of occurrence and t h en fai l ed to t ak e reasonab l e st eps t o preven tor cure t h e err ors, om i ssi on s, neg l i gen ce, i n com petence, or m al feasan ce. Case: 09-20261 Document: 00511005628 Page: 7 Date Filed: 01/15/2010N o. 09- 20261

W e n o te th a t § 3 .08 w a s a m e n d e din1 9 9 7 to a d dsu b s e c tion (a)(1 ), 4 i n cl u d i n g th e k eyreferen ce to w h en a d eb t oro b l i ga ti on is “incu rred
. ” S ee1997 T ex. Sess. L aw Serv. C h
. 375 , § 113. Th e am en dm en tm o vedt h e content of f or m ers ubse c t i on ( a) ( 1) t o s ubse c t i on ( a) ( 2)
. I n l i ght of t hi s c hange, t he Texas B ar C om m i t t ee’ s 199 3 com m en t , w h i ch m i gh tapp ear t o sup port a constr u ct i on c o n tr a r yto th a t a d o p te dh e r e , seeT EX . R EV . C IV . S TAT . A NN . ar t
. 6132b- 3. 08 bar c om m i t t ee ’ s 1993 cm t
. ( “ Su bs ec t i on ( a) ( 1) cl ar i f i es thatthe par t ner shi p m ustbe a r e gi s t e r e d l i m i t e d li ab i l i t y pa r t ne r s hi p a tt he t i m e o f t he e r r o r s a nd o m i s s i o ns f o rw hi c h par t ne rl i ab i l i t y i s l i m i t e d. ” ) , no l o nge rre fe r s t o t he co r r e c ts ubs e c t i o n. T h e pa rti es ch a ra cterize th e 20 0 4 j u d gm en t a ga i n st C E L L P as a “de b t” 5 r a th e rth a n a n “o b l i g a t i o n .” W e a s s u m e , w ith o u t d e c id in g , th a t t h is ch a ra cterizationi s corre ct. D i l l ard’ s does not argu e t h at perso n all i abili t y shou l d be i m posed 6 p u rs u a n t to th e ex ce p tion to lia b ilityp ro te c t io n c o n ta in e din§ 3 .08 (a)(2). N e i t he rChar go i s no r Erns t e r ar gue s t hat he c anno t be he l d l i ab l e be c aus e t he L L P ’ s debt aros e f

rom t h e m al feasan ce of t h e ot h er part n er. 8 T EX . R EV . C IV . S TAT . A NN . ar t
. 6132b- 3. 08. App ell ant s ar gue th a t§ 3. 08( a) ( 1) 4 i ns ul at e s t he m f

r o m l i ab i l i t y be c aus e CE LLP ’ s de bt w as i nc ur r e d when t he 5 in fr in g in gw e b s ite w a s cr e a te din J u n e 2 0 0 3 , a t w h ic h tim e C E L L P w a s s till a
r e gi s t e r e d li m i t e d li ab i l i t y pa r t ne r s hi p. Di l l ar d’ s , m e anwhi l e , c o nt e nds t hatt he debtw as i ncur r ed w hen t he j udgm entw as en tered on N ove m ber2, 2004, at
w h i ch ti m e t h e ers t w h i l e L L P ha d l ostit s li abili t y- l i m i t i n g att ribu t es. 6 In T exas, “ [t] h e m ean i n g of a st atute i s a l egal qu est i on , ” w h i ch i s r evi ew ed

“ deno v o to as certa i n an dgive e ff ect to the L eg i slatu re’ s i n ten t. ” E n terg yG u lf S t ate s, I

n c. v. S u m m ers , 2 82 S
. W
. 3d433 , 437 (T ex. 200 9)
. “W h ere t ext i s c l ear, tex t is d eterm i n a tive o f th a t i n ten t. ” I d. “W e m us t i nt e r pr e t a s t at ut e a c c o r di ng to its te r m s , g iv in g m e a n in gto th e la n g u a g e co n s is te n t w ith o th e rp r o v is io n s in th e s ta tu te. ” D allas Cou n ty C m ty. Col l
. D i st . v. B ol t on , 1 8 5 S. W
. 3 d 8 6 8, 874 (T ex . 2 0 0 5 ). “O n l y w h en [th e l eg i slatu re’ s] w ord s a re am b i gu ou s d o w e resort to
ru l es of con stru cti on or ex tri n sic a i d s. ” E n t ergy G u lf S t ate s , 282 S. W
. 3d at 437 (q u o ta tio n o m itt e d). Case: 09-20261 Document: 00511005628 Page: 8 Date Filed: 01/15/2010N o. 09- 20261

9 A lth o u gh th e te r m s “d e b t” a n d“in c u r r e d” a r e n o t d e fin e db yth e T R P A , a pl ai n r e ad i ng o f t he s t at ut e ’ s t e xt s upp o r t s D i l l ar d’ s pr o f ferred i nt e r pr e t at i o n. N e i t he rpa r t ne rw as ne c e s s ar i l y aw ar e i n J une 2 00 3 t hatdi s pl ay i ng t he D illa r d ’ s m a r ko n th e la w fir m w e b s ite w o u ldu ltim a te lyle a dto ap a r tn e r s h ip deb t
. T h e u n derl yi n g cond u ctgave ri se t o t h e possi bi l i ty of a futu re d eb t, bu t t o s ayt hata de btw as “i nc ur r e d” a tt hatt i m e unr e ali s t i c all y di s t o r t s t he m e ani ng of t he w or d. Af

t erall , C E LL P’ s c onductm ay have gone und et ec t ed, i t m ay have been adj u dg ed p erf

ect l y i n n ocent, or D il l ard’ s m ay hav e opted not t o sue. U n der
an y of t h ose scenari os, n o deb t w ou l d ever h ave been i n curred, l et al on e i n curred i n June 2 00 3. I tw as o nly w he n t he di s t r i c tc o ur te nt e r e d j udg m e ntagainst C E L L P i n N ovem ber 2 004 tha ta p aya bl e d ebt cam e into exi st en ce. Itw as t h en t hatCE LLP i nc ur r e d the de btw i t hi n t he m e ani ng o f t he pr o vi s i o n. M o r e o ve r , t he ne i ghb o r i ng l ang uag e o f § 3
. 08 ( a) ( 2) de m o ns t r at e s t hatt he Texas l egi sl at ure , w h en it soc hoos es , i s c apabl e o f dr af t i ng a pr ovi si on t hat f o c us e s o n t he co m m i s s i o n of ev e nt s t hatl e adt o l i ab i l i t y, r athe rt han t he f i xi ng of consequ en tl i ab il ity f rom t h ose events. I n t h at provi si on , t h e l egi sl ature i n sul ated a n L L P partner f rom persona ll i abili t y “ ari si n g f rom err ors, om i ssi on s, n egl i gen ce, i n com petence, or m al feasan ce com m i t t ed” b ya n o th e rp a r tn e r“w h ile t he par t ner shi p i s a r egi st er ed l i m i t ed l i abil i t y par t ner shi p. ” TR PA§ 3. 08( a) ( 2) ( em ph asi s add ed). Th u s, t o deci de w h et h er th e f i rstpartner’ s li abili t y i s li m i t ed for t h e se con dpa rtn er’ s m a l fea s a n c e u n d er §3
. 0 8 (a)( 2 ), a co u rt m u st l oo kto
w h en t he s e c o nd p ar t ne rc o m m i t t e d the m alf e as anc e . H adt he l e gi s l ature in te n d e dto e n a c t t h e s a m e “w h e n c o m m itt e d” a p p r o a c h fo r § 3 .0 8 (a )(1 ), it c o u ld h a v e u s e d t h e l a n g u a g e fr o m § 3 .0 8 (a )(2 ). S ee2 A N ORMAN J. S I NGERETAL ., S UT HERLAND S TATUT ESAND S TAT UT ORY C O NS TRUC T I ON § 4 6: 6 (“ [W ] he n t he l e gi s l at ur e us e s c e r t ai n l an gu age i n o ne pa r to f t he s t at ut e a nd d i f fe r e nt Case: 09-20261 Document: 00511005628 Page: 9 Date Filed: 01/15/2010N o. 09- 20261

T h e st atutor y t esti s not am bi gu ou s. O u r r eference t o a rul e of 7 c o n s tr u c t io n , seeE n t ergy G u lf S t ate s , 28 2 S
. W
. 3 dat 43 7 , de m on strate s th a t, even if itw ere, our concl u si on w ou l d n otdi f fer. T h e d i stri ct cou rt did n ot ex p ress l y re l y o n § 3.08 (a) to su p p ort i ts 8 j u dg m en t
. I n st eadit s f i n di n g of

per son all i abili t y w as basedon a con cl u si on t hatC hargo i s and E r nst ercont i nued doi ng busi nes s under t he l aw f i r m ’ s nam e r a th e rth a n w in du p th e p a r tn e r s h ip , a n dth a t, in s o d o in g , th e y“e s s e n tia lly r at i f i e d the f i r m ’ s de bt s . ” Bec aus e a sum m ary j udg m e ntm ayb e a f f i r m e d o n a ny g r o u n d s u p p o r te d b y th e r e c o r d , s e eMcI nt os h v. Part r i dge , 540 F. 3d 315, 326 ( 5th Ci r . 2 00 8) , w e ne e d no ta s s e s s t hi s a l t e r nat ivedi s po s i t i o n. 10 la n g u a g e ina n o th e r, th e co u rt a ss u m e s d iff e re n t m e a n in g s w e re in te n d e d .”)
. 7 Itchose, how ever, to u se d i f ferent l an gu age, an d creat ed a regi m e i n w h i ch pa rt n ers coul d be h e l d i n divi du al l y l i able f or debts an d obli gati on s i n curred
w h en t h e partnershi p w as not a regi st ered L L P [ § 3. 08(a)(1)] , bu ti n w h i ch p a rtners w ou l d n otbear l i abili t y f or one an ot h er’ s i n dep en den tm al feasan ce c o m m itt e dw h ile th e L L P e x is te d[§ 3 .0 8 (a )(2 )]. B e ca u se C E L L P ’ s r egi st rat i on ha d exp i red, itw as not a val i d regi st ered L L P at t h e t i m e it s d e b tw as i n curred. Th eref ore, § 3. 08 d oes not f orecl ose i n d ivid u a ll i a b i l i ty a n d§ 3.04 ’ s d efau l t rule op era tes to h old a p p ell a n ts p erso n a l l y li a b l e for C E L L P ’ s d eb t. 8 b. TR PA§ 3. 05 A ppel l ants fu rt herar gue thati n addi t i on t o s ui ng C E LL P i n 2003, D i l l ard’ s w as requir ed to sue the pa rt n ers t h em selves on the t radem ark an d tor t
c l a i m s i n o r d e rt o l a t e rh o l dt he m i nd iv i d ua l l y l i abl e . Th e yr e l yo n TRPA § 3. 05(c) , w h i ch provides:

Aj u d g m e n t a g a in st a p a rtn e rs h ip is n o t b yitse lf a j udgm entagai nsta par t ner , buta j udgm entm ay be en tered ag a i n st a p a rtn er w h o h a s be en serv edw i th p r o c e s s inas u it a g a in s t t h e p a r tn e r s h ip
. Case: 09-20261 Document: 00511005628 Page: 10 Date Filed: 01/15/2010N o. 09- 20261

11 T EX . R EV . C IV . S TAT . A NN . ar t
. 6132b- 3. 05. Th i s pro vi si on i s unh el p ful t o ap pe l l ant s , ho w e ve r , b e c aus e D i l l ar d’ s do e s no tr e l y o n t he 2 004 j udg m e nt aga i n stt h e L L P “by i t self ” t o sup port t h ei r i n divi du alli abili t y. I n st ead , itreli es on t he 2008 j udgm entitob t ai ned agai nstt hem i ndivi dual l y. Appe l l ant s ’r e l i anc e o n K ao Ho l di ngs, L. P. v. You ngi s al sounavai l i ng. 2 6 1 S .W .3 d6 0 (T e x . 2 0 0 8 ). C o n s tr u in g§ 3 .0 5 (c ), th e T e x a s S u p r e m e C o u r t h e ld t hat its p u r p o s e a p p e a r s to b e to m a k e c l e a rth a t w h ile

p a r t n e r s a r e g e n e r a ll ylia b le fo rth e p a r t n e r s h ip ’s obl i gati on s, a j u dg m en tagains tt h e partnershi p i s not aut om at i c al l y a j udgm ent agai nst t he par t ner , and t hat j udgm entc annotbe r ender ed ag ai nstap a rt ne rw ho has n ot been served m erely becau se j u dg m en t h a s been r e nde r e d a ga i ns tt he pa r t ne r s hi p. I d. a t6 4 (f

o o t no t e o m i t t e d)
. H e r e , t he re c o r d be l i e s any ar gum e ntt hatj udg m e nt aga i n stt h e partners w as e nt e r e d “ aut o m atic ally”; i n st ead , C h argoi s and E rnster
w e r e d e fe n d a n ts inad if fe r e n ta c tio n th a t t h e ylo s t a fte rd e fe n d in gth e ir in d iv id u a l in te r e s ts v ig o r o u s lyo n th e m e r its
. Co th ru m D rill i ng Co. v. Part ee , cit ed byapp el l an t s, i s al so di st i n gu i sha bl e. 79 0 S. W
. 2d7 96 (Tex
. App. 1 99 0)
. I n Cot hr um D r i l l i ng , a T ex a s i n term ed i a te ap pel l ate c ou rthel d that j u dg m en tcoul d not be en t ered aga i n st t h ose part n ers “w h o w ere n ot serv edw i thci tati on be fore th e sta tu te of li m i tati on s h a dru n . ” I d. at80 0
. Th atc as e i nvolved t he pot ent i all i abil i t y o f i ndivi dual pa r t ne r s — al o ngs i de t he i rpa r t ne r s h ip — f o rth et o r to f

c o nve r s i o n. I tdi d no t , l i ke t hi s c as e , i nvo lve a s e pa r at e l awsuits e e ki ng t o e nf o r c e apr e e xi s t i ng j udg m e nt b yh o ld in gin d iv id u a l p a r tn e r s lia b le fo rth e p a r tn e r s h ip ’ s d e b t. ( 2) St at ut eof

Li m i t at i o ns Fi n al l y, a ppe l l ant s a s s e r tt hatD i l l ar d’ s 2 00 8 ac t i o n i s b ar r e d b y t he st atute of

l i m i ta ti on s. Th e i n qu i ry depen ds on th e na t u re of D i l l ard’ s c au se of Case: 09-20261 Document: 00511005628 Page: 11 Date Filed: 01/15/2010N o. 09- 20261

12 a cti on . D i l l a rd ’ s con ten d s th a t th e ca u se o f a cti on i s on e for de b t, tha t i s, to
e n fo r c e th e 2 0 0 4 ju d g m e n t a g a in s t t h e p a r tn e r s o n th e b a s is o f th e irs ta tu to r ily
com pel l ed i n divi du all i abili t y. A pp el l an t s, m ean w h i l e, argu e t h at th e causes of
a c t i o n a r e f

o r t o r t a n d t r a d e ma r k i n f r i n g e me n t ; a p p e l l a n t s v i e w t h e 2 0 0 8 c l a i ms a s i d e nt i c a lt o t ho s e c o nt a i ne di n Di l l a r d ’ s 2 0 0 3 c r o s s - c l a i m a g a i ns tCELLP. D ill ar d’ s am ended c om pl a i n t do es n ot con tainan y a l l eg a ti on s of i n d ivid u al
w rongd oi n g, nor does i t i den t i f y t h e i n divi du alcondu ctof eit h er app el l an tas a b a sis for p erso n a lli a b i l i ty. If, co u n terfactu a l l y, D i l l a rd ’ s w ere s u i n g a p p ell a n ts f or personalw rongd oi n g i n Ju n e 20 0 3

— th e s am e condu ctf or w h i ch i tsued C E L L P

— t h en it s c au se of act i on w ou l d hav e accrued at t h at t i m e an d the t ort or t radem ark l i m i t ati on s p eri od w ou l d ap pl y. I n st ead , D i l l ard’ s s eeks to i m pose l i a b i l i t yo n Ch a r g o i s a n dEr n s t e rfo rp a r t n e r s h i p d e b tb yo p e r a t i o n o f T e x a s l a w. In T exas, a person m u stbri n g a suitf or debt “ n o t lat er th an f ou r years af t er t he day t he c ause of ac t i on ac c r ues. ” T EX . C IV . P RA C . & R EMED IES C ODE A NN . § 16. 004 ( a) ( 3)
. T h e cau se of act i on accr u ed, at t h e earl i est , up on entry of j udg m e nta ga i ns tC EL LP o n N o ve m be r2 , 2 00 4. Bec aus e D i l l ar d’ s f i l e d it s t hi r dpa rt y com pl ai n t(w h i ch w as ev en t u al l y repl aced by i t s am en dedcom pl ai n t) on J a n u a r y1 0 , 2 0 0 8 , its a c tio n fe ll w ith in t h is fo u r -y e a rlim ita tio n s p e r io da n dis
n o t t im e -b a r r e d
. R e le v a n t c a s e la w a ls o s u p p o r ts o u rco n c lu s io n . In reJon es , deci ded pri or to the T R P A ’ s en a ctm en t, i s on po i n t. 16 1 B
. R
. 18 0 ( B a n k r. N
. D
. T ex . 19 9 3 ). In th a t c a s e , a t r u s te e o b ta in e dafin a l ju d g m e n t a g a in s t a p a r tn e r s h ip b u t c o u ld
no tr e c o ve rf

ul l y f r o m it
. The t r us t e e t he n b r o ugh ta se pa r at e a c t i o n “ ag ai ns tt he p a rtn ers t o col l ect th e rem a i n d er of the j u d gm en t. ” Id
. a t 1 8 3
. T h e co u r t h e ld t hatt he l i m i t at i o ns pe r i o d “be ga n t o r un a gai ns tt he pa r t ne r s o nly w he n t he di st r i c tcou rt’ s j udgm entbe c am e f i nal , ” and t hat§ 16. 004( a) ( 3) ’ s f our - year lim ita tio n s p e r io da p p lie d
. I d. The c o ur tr e as o ne d: Case: 09-20261 Document: 00511005628 Page: 12 Date Filed: 01/15/2010N o. 09- 20261

In a n e ffor t to co n te st th e re lev a n ce of Jon es , app el l an t s c i t e Su nse r iv. 9 Proct or , w hi c h r e quir e d ac l ai m antt o s ue i ndivi dua lpa r t ne r s w i t hi n t he l i mi t a t i o n s p e r i o df

o rt h e u n d e r l y i n gw r o ng . 4 8 7 F
. S u p p . 2 d9 0 5 , 9 0 8 ( E. D. M ic h . 2 0 0 7 ), aff’d , 286 F
. A pp ’ x 930 ( 6th C i r. 200 8) (u n pu bl i shed )
. Th e S u n ser i c o ur ts t at e d:

W h ere, as h ere, a pl ai n t i f f obtai n s a j u dg m en tagainst t he pa r t ne r s hi p a s a n e nt i t y, b u tfa i l s t o o bt ai n a bi n di n g j u dg m en ta gainsta partner’ s i n divi du alasset s, an d conseq u en t l y can n otenfor ce th at j u dg m en tagainst t h e partner, t h e p l ai n t i f f m u stsue t h e partner based on t h e un derl yi n g m i scondu ct
. W h i l e t h e pl ai n t i f f m ay u se coll ater alest opp elt o preven tt h e partner f rom r e litig a tin gt h e is s u e o f lia b ility , th e p la in tiff m u s t s till bri n g sui tw i t h i n t h e app l i cabl e l i m i t a tions peri od f or t he under l yi ng w r ong. I d. T h e S u n ser i c as e i nvo lve d an at t e m pt t o e nf o r c e a N e w Yor k j udg m e nti n a M i chi gan court an d “l ook[ed] t o M i chi gan ’ s st atutes of l i m i t ati on s r egard l ess of 13 U ndert he e nt i t y t heor y o f par t ner ships , i ti s l ogi c al th a t a p a r tn e rh a s n o lia b ilityu n til t h e p a r tn e r s h ip lia b ilityis e s ta b lis h e d
. T h e r e is n o th in gw r o n gin all o w i ng t h e p ar t ne r s t o b e s ue d a l o ng w i t h t he p a r t n e r s h ip s o th a t o n c e th e p a r tn e r s h ip lia b ilityis e s t ab l i s he d, aj udg m en tcan be r e nde r e d a ga i ns tt he pa rt n ershi p an d the pa rt n ers. O n the ot h er h an d, t h ere i s no t hi ng w r o ng w i t h t he pa r t ne r s hi p b e i ng s ue d a nd, i f i t s l i ab i l i t y i s e s t ab l i s he d, a s ubs e que ntsui tb e i ng f i l ed agai n stt h e partners on thei r p ers on al l i ab i l i ty f or t h e part n ers h i

p’ s obl iga t i on .

. . . O nc e t he l i ab i l i t y o f

t he par t ne r s hi p be c am e f i xe d, t he on l y i ssue rem ai n i n g w as w h et h er t h e D efen da n t s are p a rtn e rs of [th e p a rtn e rs h ip ].
I d. at 183

- 84 (em ph asi s add ed). Th e Jon es s itu a tio n is n e a r lyid e n tic a l to th is
ca se: ra th er th a n liti ga te th e p a rtn ers’li a b i l i ty for th e con d u ct th a t g a ve rise to t h e debt, t h e t rustee soug h tto en f orce t h e partnershi p j u dg m en tagainstt h em si m pl y by vir t u e of

t h ei r s t atus as partners. 9 Case: 09-20261 Document: 00511005628 Page: 13 Date Filed: 01/15/2010N o. 09- 20261

w h a t st a te ’ s p a r tn e r s h ip la w a p p lie s to th e s u b s ta n tiv e is s u e s re m a in in ginth is su i t. ” I d. a t 9 0 9
. Jon es , o n th e o th e rh a n d , co n s tr u e s § 1 6 .0 0 4 , th e a p p lic a b le T exas st atu te o f li m i t ati on s, an d the predecessor t o T R P A§ 3. 04. I n l i gh tof Jon es ’ s c l os e s i m i l ar i t y t o t hi s c as e, w e i nco r por at e i t s r eas oni ng i n favorof t hat of a n on b i n d i n g d i stri ct cou rt de ci sionf rom a sister circu i t. M e a n w h ile , V

alley Nati on al B an k of A rizonav. A
. E
. R ou se & Co. , c i t ed by appell ant s, ac t ual l y u nder m i nes theirargum ent
. 121 F
. 3d 1332 ( 9t h C i r . 1997) (a p p lyin gA riz o n alaw ). T h e re , t h e N in t h C ircu it re co g n ize dth e v ia b ilityof a deb tact i on againstan i n divi du alpartner w h ere a j u dg m en tha d alr ead y been e n te r e da g a in s t t h e p a r tn e r s h ip
. I d. at1338. 14 D i l l ar d’ s de bta c t i o n t o ho l d Char go i s a nd Er ns t e rpe r s o nall y l i ab l e f o rt he deb tof C E L L P w as not barred by the ap pl i cabl e st atute of l i m i t ati on s. CO NC L US I ON F o rth e fo r e g o in gre a s o n s , th e ju d g m e n t o f th e d is t r i c tc o u r t is A F F IR M E D
. Case: 09-20261 Document: 00511005628 Page: 14 Date Filed: 01/15/2010