Opinion issued May 13, 2014

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-12-00539-CV

———————————

ANGLO-DUTCH PETROLEUM INTERNATIONAL, INC. AND ANGLODUTCH (TENGE), LLC, Appellants

V.

CASE FUNDING NETWORK, LP, 3K PARTNERSHIP, PROSPERITY 

SETTLEMENT FUNDING, INC., LAWSUIT FINANCIAL, LLC, FUTURE 

SETTLEMENT FUNDING OF SC, INC., ROBERT M. PRESS, NEW 

AMSTERDAM CAPITAL PARTNERS, INC., RYAN BROOKS, JOSEPH 

DINARDO, JOSEPH GIURINTANO, PLAINTIFF SUPPORT SERVICES, 

INC., ROBERT E. HILL, AND ANZAR SETTLEMENT FUNDING CORP.,

Appellees

On Appeal from the 127th District Court

Harris County, Texas

Trial Court Case No. 2004-23845-A
2

O P I N I O N

Appellants, Anglo-Dutch Petroleum International, Inc. and Anglo-Dutch 

(Tenge), LLC (collectively, “Anglo-Dutch”), challenge the trial court’s March 6, 

2012 amended final judgment, entered after a bench trial, in favor of appellees, 

Prosperity Settlement Funding, Inc. (“Prosperity”), Robert M. Press (“Press”), and 

Anzar Settlement Funding Corp. (“Anzar”) (collectively, “the release investors”),

in their suit against Anglo-Dutch for breach of contract and fraudulent inducement

to sign releases. In four issues, Anglo-Dutch contends that the trial court erred in 

denying its plea in abatement and concluding that Prosperity and Anzar had the 

capacity to bring suit in Texas, there is insufficient evidence to support the trial 

court’s finding that Anglo-Dutch fraudulently induced the release investors to sign 

release agreements, and the trial court erred in awarding the release investors their

attorneys’ fees and not awarding Anglo-Dutch its attorneys’ fees.

We affirm. 

Background

In 2000, Anglo-Dutch, which is engaged in the oil and gas exploration 

business, filed a lawsuit against Halliburton Energy Services, Inc. (“Halliburton”)

and Ramco Oil & Gas, Ltd (“Ramco”),

1 alleging that Halliburton and Ramco 

 1 The matter was styled Anglo-Dutch (Tenge) L.L.C., et al. v. Ramco Oil & Gas, 

Ltd., Cause No. 2000-22588, in the 61st Judicial District Court of Harris County.
3

misappropriated Anglo-Dutch’s trade secrets and breached confidentiality 

agreements, which the parties executed during their development of an oil and gas 

field in Kazakhstan (the “Halliburton lawsuit”). In order to pay the expenses of 

prosecuting the Halliburton lawsuit, “meet its operating expenses,” and “avoid 

bankruptcy,” Anglo-Dutch raised money from thirty-three investors who agreed to 

finance the Halliburton lawsuit. The investors entered into Claims Investment 

Agreements (the “investment agreements”), “which required [Anglo-Dutch] to pay 

[the investors] a certain sum of money from any cash recovery in the suit against 

Halliburton.” With minor investor-specific variations, the investment agreements 

defined the terms of the parties’ relationships and set forth formulas for calculating 

any returns that the investors would be entitled to receive in the event that AngloDutch obtained a cash recovery in the Halliburton lawsuit.

2

 The investment 

agreements defined the “Investor’s Total Return” as the sum of their investment 

plus “an amount equal to [a specified percentage] of its Investment,” plus an 

amount equal to [a specified percentage of the Investor’s Investment for each one 

year term (using a 365-day year) following (a specified date) and ending on the 

 2 Although the investment agreements differed in some respects, including the 

amount of the investment and any return, all of the agreements were similarly 

structured. Also, although the formula used to calculate the “Investor’s Total 

Return” varied from agreement to agreement, the “driving factor” in determining 

the pertinent return was the amount of time that had elapsed from the date of 

investment.
4

date Anglo-Dutch receives its Cash Recovery.” After a jury rendered a verdict on 

October 24, 2003, the district court, in January 2004, entered a judgment against 

Halliburton and Ramco, awarding Anglo-Dutch damages in the amount of 

approximately $81 million, including $10 million in attorneys’ fees. 

On November 30, 2003, in the aftermath of the Halliburton lawsuit,

3 Scott 

Van Dyke,4 the president and majority shareholder of both Anglo-Dutch entities, 

reported to the investors that the district court had ordered the parties to attend 

 3 The Halliburton lawsuit and Anglo-Dutch’s subsequent settlement with 

Halliburton has spawned a series of lawsuits and appeals involving the original 

judgment and the investors who signed the litigation funding agreements, as well 

as litigation by one of Anglo-Dutch’s attorneys regarding attorneys’ fees. See 

Anglo-Dutch Petroleum Int’l Inc. v. Greenberg Peden, P.C., 267 S.W.3d 

454 (Tex. App.—Houston [14th Dist.] 2008, pet. granted), rev’d by, 352 

S.W.3d 445 (Tex. 2011) (attorneys’ fees dispute); Anglo–Dutch Petroleum 

Int’l, Inc. v. Smith, 243 S.W.3d 776 (Tex. App.—Houston [14th Dist.] 2007, pet. 

denied) (investor refused reduced payment on investment agreement and sued 

Anglo-Dutch for fraud, breach of fiduciary duty, conversion and breach of 

contract); Anglo–Dutch Petroleum Int’l, Inc. v. Littlemill Ltd, No. 14–06–00921–

CV, 2007 WL 2826900 (Tex. App.—Houston [14th Dist.] Oct. 2, 2007, pet. 

denied); Case Funding Network, L.P. v. Anglo–Dutch Petroleum Int’l, Inc., 264 

S.W.3d 38 (Tex. App.—Houston [1st Dist.] 2007, pet. denied); Anglo–Dutch 

Petroleum Int’l, Inc. v. Haskell, 193 S.W.3d 87 (Tex. App.—Houston [1st Dist.] 

2006, pet. denied). Anglo–Dutch’s judgment against Ramco was reversed on 

appeal. See Ramco Oil & Gas Ltd. v. Anglo-Dutch (Tenge) LLC, 207 S.W.3d 801

(Tex. App.—Houston [14th Dist.] 2006, pet. denied). Another investor also sued 

Anglo-Dutch for fraud involving the Tenge Joint Enterprise for the development 

of the oil and gas field in Kazakhstan. See Anglo-Dutch Petroleum Int’l, Inc. v. 

Shore Harbour Capital Mgmt. Corp., No. 01-09-00417-CV, 2011 WL 862117 

(Tex. App.—Houston [1st Dist.] March 10, 2011, no pet.). 

4 The release investors alleged in their petition that Van Dyke, as president of 

Anglo-Dutch, has “acted on [its] behalf at all times in connection with the facts, 

events and occurrences forming the basis of this lawsuit.” 
5

mediation. Anglo-Dutch, Halliburton, and Ramco attended mediation in early 

December 2003, and Van Dyke told the investors that “[a]t the conclusion of the 

mediation, Halliburton’s and Ramco’s offers were too low for us to accept.” In a 

January 21, 2004 email, Van Dyke stated to the investors that despite continued 

settlement negotiation efforts between Anglo-Dutch and Halliburton, including 

several face-to-face meetings with the president of Halliburton, John Gibson, “the 

amount Halliburton is willing to pay to settle the case remains a small fraction of 

the jury verdict. We have refused to accept their small settlement offer.” On April 

2, 2004, Van Dyke and Gibson had a meeting, after which they signed a settlement 

agreement in which Halliburton agreed to pay Anglo-Dutch $51 million in 

damages. Halliburton and Anglo-Dutch then executed on April 16, 2004 a formal 

settlement agreement entitled, “Compromise and Settlement Agreement,” which 

Halliburton funded the same day.

On April 12, 2004, Van Dyke, on behalf of Anglo-Dutch, sent a letter to the

investors stating that, subsequent to the entry of the final judgment in the 

Halliburton lawsuit, the Texas Supreme Court had issued an opinion “impact[ing] 

Anglo-Dutch’s position with respect to the appeal process and the settlement of the 

lawsuit.” He also stated that the district court had entered an amended final 

judgment, “significantly reduc[ing]” the value of the original judgment. Van Dyke 

represented that “[i]n light of current Texas law, it is Anglo-Dutch’s strong desire 
6

to settle the Lawsuit. Halliburton is expressing willingness to settle the case at this 

time, but for a significantly lower amount than what we ever expected.” Thus, in 

order to “achieve a resolution” of the Halliburton lawsuit, he “request[ed] everyone 

who entered into a Claims Investment Agreement to accept a lower payment” than 

that prescribed by the investment agreements. Van Dyke set forth proposed 

payment terms, a specific payout amount (characterized as a “return on 

investment”), and an annual percentage rate based “on terms being given to 

everyone.”

Van Dyke attached to his letter the proposed settlement and release 

agreements. He also represented in his April 12 letter that “[m]any of the parties 

who entered into Claims Investment Agreements have executed their respective 

Settlement and Releases and returned them to us.” The settlement and release 

agreements provided, 

To induce Anglo-Dutch to accept settlement terms substantially less 

than Anglo-Dutch had anticipated to receive and/or to help facilitate 

an early payment between Anglo-Dutch and the defendants in the 

[Halliburton lawsuit] . . . Investor agrees to accept a lower payment 

from Anglo-Dutch than what is provided for in the Investment 

Agreements. . . . All Investment Agreements . . . shall terminate, and, 

by receiving such money, Investor releases Anglo-Dutch from any 

and all obligation with respect to the Investment Agreements. 

The settlement and release agreements further recited that they were being entered

“for good and valuable consideration, the sufficiency of which is hereby 

acknowledged by both parties,” and they set forth a date certain by which Anglo-
7

Dutch would make payment. Only six investors executed the settlement and 

release agreements, and three of the six are “the release investors.” Richard L. 

Oakes executed the release agreement on behalf of Anzar and returned it on April 

7, 2004. Anglo-Dutch then sent to Anzar two checks, which Oakes cashed, in 

amounts totaling $255,473.61. Prosperity executed the release agreement and 

returned it to Anglo-Dutch on April 12, 2004. Anglo-Dutch then sent to Prosperity 

a check for $69,153.35. Press executed the release agreement on April 13, 2004, 

and Anglo-Dutch sent to Press a check for $59,582.19. The remaining twentyseven investors refused to sign Anglo-Dutch’s April 12, 2004 settlement request.

On April 23, 2004, Anglo-Dutch sent the remaining twenty-seven investors 

a letter in which it disputed the validity of the investment agreements, asserting 

that they were “contrary to Texas public policy” and “unenforceable under Texas 

law.” Anglo-Dutch enclosed a check for each of the investors for “less than the 

amount called for” under their investment agreements. Anglo-Dutch asserted to 

these investors that by depositing the check, they would be acknowledging an 

“accord and satisfaction,” discharging Anglo-Dutch from further obligation under 

the investment agreements. The remaining investors all signed and deposited the 

checks. Ten of these investors (the “accord investors”) cashed their checks, but 

later, along with the release investors, sued Anglo-Dutch. 
8

In 2004, thirteen investors, including the ten accord investors and the three 

release investors, sued Anglo-Dutch for breach of contract, alleging that AngloDutch had failed to pay them in accordance with the investment agreements, and 

torts stemming from the investment agreements and negotiations related to the 

investment agreements, including fraud, fraudulent inducement, breach of 

fiduciary duty, and conversion. Anglo-Dutch counterclaimed for breach of 

contract, breach of the release agreements, fraud, and it sought to recover its 

attorneys’ fees. 

The investors and Anglo-Dutch filed several summary-judgment motions. 

The investors sought summary judgment on their breach of contract claims. And 

Anglo-Dutch sought summary judgment, asserting that the investors’ claims were 

barred by the affirmative defenses of release and accord and satisfaction. AngloDutch also asserted that no evidence supported the investors’ tort and statutory

claims. 

On September 22, 2006, the trial court, subject to Anglo-Dutch’s affirmative 

defenses, granted the summary judgment motion of the thirteen investors to 

recover on their claims that Anglo-Dutch beached the investment agreements. The 

trial court denied Anglo-Dutch’s summary-judgment motion “on grounds related to 

the contract issues,” which included Anglo-Dutch’s contention that the investment 

agreements constituted usurious loans, violated Texas public policy, and 
9

constituted unregistered securities. However, the trial court granted Anglo-Dutch

summary judgment against the investors who had cashed Anglo-Dutch’s April 22, 

2004 checks on the grounds of accord and satisfaction and release. It specifically 

held that Anglo-Dutch had “established as a matter of law that there was an accord 

and satisfaction of the underlying debt” between Anglo-Dutch and the accord 

investors. The trial court further held that the three release investors had “released 

[Anglo-Dutch] by separate release agreements.” Additionally, the trial court 

granted Anglo-Dutch’s no-evidence summary-judgment motion on all of the 

investors’ tort and statutory claims “other than fraud in the inducement.” It also 

granted Van Dyke summary judgment “on all claims.” However, the trial court 

concluded that the release investors had raised a “material issue of fact” as to 

whether they had been “induced by fraud” to enter into the release agreements. 

Thus, the trial court denied Anglo-Dutch summary judgment on the release 

investors’ fraudulent-inducement claims. 

In sum, the trial court granted Anglo-Dutch and Van Dyke summary 

judgment against all investors and on all claims, except for the release investors’ 

claims against Anglo-Dutch for fraud in the inducement. In a separate order, the 

trial court severed the release investors’ fraudulent-inducement claim and Anglo-
10

Dutch’s counter-claim for breach of contract into the instant lawsuit.

5 The trial 

court subsequently granted the release investors’ matter-of-law and no-evidence 

motion for summary judgment on Anglo-Dutch’s breach-of-contract 

counterclaims. 

After a bench trial conducted between January 4 and 9, 2012, the trial court 

entered judgment in favor of the release investors’ claims for fraud and fraudulent 

inducement in the execution of the release agreements. The trial court found that 

Anglo-Dutch had fraudulently induced the release investors to enter into the 

release agreements, and it awarded damages, including pre-judgment interest to

Press in the amount of $76,422.60, Anzar in the amount of $325,100.06, and 

Prosperity in the amount of $84,211.64. It also awarded the release investors postjudgment interest and attorneys’ fees including appellate attorneys’ fees. 

Plea in Abatement

In its first issue, Anglo-Dutch argues that two of the release investors, Anzar 

and Prosperity, do not have the capacity to maintain this suit because they 

“forfeited their corporate charters prior to trial,” were not authorized to do business 

in Texas, and “refused to remedy the issue.” Anglo-Dutch further argues that 

because Anzar and Prosperity transacted intrastate business in Texas, they were 

required to register with Texas to maintain their suit. Anglo-Dutch filed a plea in 

 5 The accord investors did not assert a fraudulent-inducement claim in regard to the 

accord-and-satisfaction agreements. 
11

abatement, asserting that Anzar and Prosperity were not “valid existing corporate 

entities in their home state of Nevada” and are not “properly registered to [do] 

business in the State of Texas.” Anglo-Dutch asked the trial court to abate the 

lawsuit until Anzar and Prosperity were “properly registered to do business in 

Texas,” or, alternatively, dismiss the lawsuit. On December 8, 2011, the trial court 

abated the lawsuit for fifteen days, but it explained during a pre-trial hearing that it 

had done so merely “to make everyone happy” and because of its concerns for

scheduling during the holiday season.

We review a trial court’s decision on a plea in abatement for an abuse of

discretion. Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 248 (Tex. 1988); 

Shutter v. Wells Fargo Bank, 318 S.W.3d 467, 469–70 (Tex. App.—Dallas 2010, 

pet. dism’d w.o.j.). A trial court abuses its discretion when it acts in an 

unreasonable and arbitrary manner, or without reference to any guiding rules or 

principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex.

1985). As the party challenging capacity, Anglo-Dutch had the burden to prove 

lack of capacity. Christi Bay Temple v. GuideOne Specialty Mut. Ins. Co., 330 

S.W.3d 251, 253 (Tex. 2010). 

The trial court made the following pertinent findings of facts and 

conclusions of law:

[1.] [Anzar] is a Nevada Corporation that ceased doing business in 

2004.
12

[2.] Anzar was properly registered to do business in Texas when it 

was doing business in Texas and has paid all franchise taxes 

due in Texas when it was doing business in Texas.

[3.] On August 9, 2001, Anzar wire-transferred $75,000 from its 

bank account with the Nevada State Bank in Nevada to [AngloDutch] pursuant to the terms of the Anzar Claims Investment 

Agreement.

[4.] On September 21, 2001, Anzar exercised its opinion under the 

Anzar Claims Investment Agreement by forwarding to [AngloDutch] a $25,000 check drawn on its bank account with the 

Nevada State Bank in Nevada.

[5.] [Prosperity] is a Nevada corporation.

[6.] Prosperity’s business address is located in Greeneville, 

Tennessee.

[7.] Prosperity has never had any offices, employees, agents or 

other type of business presence in Texas since its inception.

[8.] Prosperity has never transacted any business in Texas.

[9.] On September 12, 2011, Prosperity wire-transferred $12,500 

from its Nevada bank account to [Anglo-Dutch] pursuant to the 

terms of the First Prosperity Claims Investment Agreement.

[10.] On February 28, 2003, Prosperity wire-transferred $25,000 

from its Nevada bank account to [Anglo-Dutch] pursuant to the 

terms of the Second Prosperity Claims Investment Agreement.

[11.] On August 18, 2003, Prosperity forwarded a check for $2,500 

drawn upon its Nevada bank account to [Anglo-Dutch] 

pursuant to the terms of the Third Prosperity Claims Investment 

Agreement. 

[12.] All of the Claims Investment Agreements that Prosperity signed 

with [Anglo-Dutch] were transacted in interstate commerce as 

Prosperity was located in Tennessee and negotiated and signed 
13

all agreements with [Anglo-Dutch] from its offices in 

Tennessee.

[13.] Prosperity and Anzar are Nevada corporations. Under Nevada 

law, the administrative revocation of a Nevada corporation’s 

charter does not result in the termination of such corporation or 

forfeiture of its capacity to sue. Accordingly, Prosperity and 

Anzar have the capacity to bring and prosecute their lawsuit in 

this case.

[14.] Section 9.051(b) of the Texas Business Organizations Code 

(“BOC”) only precludes unregistered foreign filing entitles 

from pursuing Texas litigation if such litigation involves any 

“cause of action that arises out of the transaction of business in 

this state.”[

6

] Section 9.251 of the BOC states that “activities 

that do not constitute transaction of business in this state 

include: (9) transacting business in interstate commerce.”[

7

] 

Since the cause of action brought by Prosperity and Anzar 

constitute transaction business in interstate commerce, they do 

not arise out of the “transaction of business in this state.” 

Accordingly, Texas law permits Prosperity and Anzar to bring 

and prosecute their claims in this lawsuit irrespective of 

whether they are registered to do business in Texas.

[15.] Section 9.001(b) of the BOC provides that “[a] foreign entity 

described by Subsection (a) must maintain the entity’s 

registration while transacting business in this state.”[

8

] Neither 

Anzar nor Prosperity is “transacting business in this state” as 

both entities have ceased doing business in any state. 

Moreover, Section 9.251 of the BOC provides that “activities 

that do not constitute transaction of business in this state 

include: maintaining or defending an action or suit.”[

9

] 

Accordingly, Texas law permits Prosperity and Anzar to bring 

 6 TEX. BUS. ORGS. CODE ANN. § 9.051(b) (Vernon 2011).

7 TEX. BUS. ORGS. CODE ANN. § 9.251 (Vernon 2011).

8 TEX. BUS. ORGS. CODE ANN. § 9.001(b) (Vernon 2011).

9 TEX. BUS. ORGS. CODE ANN. § 9.251.
14

and prosecute their claims in this lawsuit irrespective of 

whether they are registered to do business in Texas.

[16.] Anzar also has the capacity to bring and prosecute their claims 

in this litigation because it was registered to do business in 

Texas when it was transacting business in Texas.

[17.] [Anglo-Dutch has] failed to meet [its] burden to prove that 

Prosperity and Anzar do not have the capacity to bring and 

prosecute their claims in this litigation.

[18.] [Anglo-Dutch’s] Plea in Abatement is denied.

Nevada Corporate Status

Anglo-Dutch argues that Anzar and Prosperity cannot maintain their lawsuit 

in Texas because their corporate charters were revoked in Nevada, their state of 

formation, they “ceased to exist” in their home state, and they could not validly 

obtain a Certificate of Authority to do business in Texas. In order to obtain a 

Certificate of Authority to do business in Texas, a foreign corporation must exist as 

a valid foreign-filing entity under the laws of its jurisdiction of formation. See

TEX. BUS. ORGS. CODE ANN. § 9.004(b)(5). And when a foreign entity ceases to 

exist in its jurisdiction of organization, it must terminate its registration in Texas. 

See TEX. BUS. ORGS. CODE ANN. § 9.011(a). Anzar was a Nevada corporation and 

received its corporate charter on March 9, 1999. Prosperity was incorporated in 

Nevada on July 1, 1999. The Nevada Secretary of State revoked Anzar’s corporate 

charter on April 1, 2007 and Prosperity’s corporate charter on August 1, 2008. 
15

Under Nevada law, once a corporation is in existence, it is entitled “[t]o sue and be 

sued in any court of law or equity,” and, even after dissolution, a “corporation 

continues as a body corporate for the purpose of prosecuting and defending suits.” 

NEV. REV. STAT. ANN. §§ 78.060, 78.585 (West 2013). Thus, the date on which a 

corporation gains the capacity to sue and be sued is that on which it files its articles 

of incorporation. See De la Garza v. Clean Oil Innovations, Inc., No. 4:12-CV1715, 2013 WL 1222109, at *2 (S.D. Tex. March 20, 2013) (interpreting Nevada 

statutes). In regard to the penalty for an administrative revocation of a Nevada 

corporate charter:

On the first day of the first anniversary of the month following the 

month in which the filing was required, the charter of the corporation

is revoked and the right to transact business is forfeited. 

NEV. REV. STAT. ANN. § 78.175(2) (West 2013). Section 78.175 does not provide 

for the termination of the corporation’s existence, nor does it reference a forfeiture 

of a right to sue or continue the prosecution of ongoing litigation upon revocation. 

The Nevada Supreme Court has not addressed the issue of whether the 

revocation of a corporate charter and the forfeiture of the “right to transact 

business” includes the right to sue and be sued. However, the court has addressed, 

in regard to a similar statute, the issue of whether a Nevada limited liability 

company forfeits the “right to transact business” also forfeits the ability to sue and 

be sued. See AA Primo Builders, LLC v. Washington, 245 P.3d 1190, 1195 (Nev. 
16

2010). The statutory penalties for administrative defaults by Nevada corporations 

and limited liability companies are identical. See NEV. REV. STAT. ANN. §§

78.175(2), 86.274(2) (West 2013). In AA Primo Builders, the court reversed a trial 

court’s dismissal of AA Primo’s lawsuit that had been pending for three years 

based upon the administrative revocation of its limited liability company charter. 

245 P.3d at 1197. The supreme court concluded that the forfeiture of the “right to 

transact business” upon the revocation of a limited liability company’s charter does 

not include the forfeiture of the capacity to sue and be sued. Id. at 1195. 

Accordingly, we conclude that under Nevada law, the loss of the capacity to 

maintain a lawsuit is not among the penalties imposed for the administrative 

default of a corporation. Because Anzar and Prosperity did not lose their corporate 

existence or their ability to sue and be sued, they were still eligible to register as

valid foreign-filing entities in Texas and maintain this lawsuit. See TEX. BUS.

ORGS. CODE ANN. § 9.004(b)(5). 

Foreign-Filing Entities Maintaining Suit in Texas 

Anglo-Dutch further argues that Anzar and Prosperity lack capacity to 

maintain this lawsuit because they failed to register to do business in Texas. In 

Texas, 

[a] foreign filing entity . . . may not maintain an action, suit, or 

proceeding in a court of this state, brought either directly by the entity 

or in the form of a derivative action in the entity’s name, on a cause of 
17

action that arises out of the transaction of business in this state unless 

the foreign filing entity is registered in accordance with this chapter. 

TEX. BUS. ORGS. CODE ANN. § 9.051(b) (Vernon 2012). However, there are

exceptions as to what constitutes the transaction of business in Texas, including the 

transaction of business in interstate commerce. See TEX. BUS. ORGS. CODE ANN. §

9.251(9) (Vernon 2012) (“[f]or purposes of this chapter, activities that do not 

constitute transaction of business in this state include: transacting business in 

interstate commerce.”); see also Ero Indus., Inc. v. Be-In Buttons Co. of Houston, 

473 S.W.2d 677, 679 (Tex. Civ. App. 1971) (noting certificate of authority or 

registration is necessary for a foreign corporation to conduct interstate business in 

Texas or to sue on an intrastate transaction). Here, the trial court concluded that 

Anzar and Prosperity could maintain their lawsuits in Texas because their claims 

“do not arise out of the transaction of business in this state.” 

 Anzar

The release investors filed suit in 2004, at which time, the Texas Business 

Corporations Act provided that “[n]o foreign corporation shall have the right to 

transact business in this State, until it shall have procured a certificate of authority 

so to do from the Secretary of State.” Act of May 20, 1985, 69th Leg., R.S., ch. 

128 § 21, 1983 Tex. Gen. Laws 592, 600 (expired Jan. 1, 2010). Anzar maintained 

its principal place of business in Texas, and it provided evidence that it had 

obtained a certificate of authority from the Texas Secretary of State in 2000 and 
18

has maintained its registration continuously since that time. The trial court found 

that “Anzar was properly registered to do business in Texas when it was doing 

business in Texas and has paid all franchise taxes due in Texas when it was doing 

business in Texas.” Therefore, Anzar did not violate section 9.051 as a foreignfiling entity maintaining a lawsuit in Texas. Accordingly, we hold that the trial 

court did not err in denying Anglo-Dutch’s plea in abatement regarding Anzar. 

Prosperity

Prosperity never registered to do business in Texas and did not obtain a 

certificate of authority. Therefore, Prosperity may only maintain this lawsuit in 

Texas if it falls under the interstate-commerce exception to section 9.051’s 

requirement that foreign-filing entities register with the state of Texas in order to 

bring a lawsuit on a cause of action arising out of the transaction of business in 

Texas. See Hochmetal Africa, Ltd. v. Metals, Inc., 566 S.W.2d 715, 717 (Tex. 

Civ. App.—Corpus Christi 1978, no writ) (interpreting predecessor to section 

9.051 as only forbidding suits on intrastate transactions by corporations that fail to 

register to do business in Texas); Ero Indus., 473 S.W.2d at 679 (no certificate of 

authority or registration is necessary for foreign corporation to conduct interstate 

business in Texas or to sue on interstate transaction).

We examine the transaction at the core of the suit, i.e., the transaction from 

which the suit arises. See Terroco Indus. Ltd. v. Am. Home Assur. Co., No. 2:07–
19

CV–437, 2009 WL 901488, at *3 (E.D. Tex. Mar. 30, 2009) (examining section 

9.251’s interstate-commerce exception to section 9.051(b)’s requirement that 

foreign-filing entity obtain certificate of authority). Here, the investment 

agreements are the transactions that gave rise to Prosperity’s cause of action, and 

they did not constitute the “transaction of business” in Texas under section 9.251

because they involved interstate commerce. 

Prosperity, a Nevada corporation, did not transact any business funding 

litigation outside of Tennessee except for the investment agreements. Prosperity 

negotiated and signed its investment agreements in Tennessee, and it wired the 

money to fund the investment agreements from bank accounts held in Nevada. 

And all of the communications directed to Prosperity were directed to and received

by it in its office in Tennessee. In fact, Van Dyke and Mary Khalilian-Reese, the 

owner of Prosperity, never met in person before the trial of Prosperity’s fraudulent 

inducement claims.

We conclude that Anglo-Dutch has not met its burden to show that 

Prosperity transacted intrastate business in Texas. See Hochmetal, 566 S.W.2d at 

716–17 (concluding that plaintiff’s purchase of scrap metal from defendants was 

not transaction in intrastate commerce). The business that Prosperity transacted in 

Texas was solely through interstate commerce. See Rylander v. Bandag Licensing 

Corp, 18 S.W.3d 296, 298 (Tex. App.—Austin 2000, pet. denied) (analyzing 
20

article 8.01 of Texas Business Corporations Act, predecessor to section 9.251, and

concluding Bandag conducted business in Texas solely through interstate 

commerce as it had no real or tangible personal property in Texas, had no 

employees in Texas, had no franchises in Texas, and did not distribute goods or 

services in Texas).

Anglo-Dutch argues that Prosperity conducted interstate commerce in Texas 

because the investment agreements funded a lawsuit in Texas. However, even 

when the subject matter of a contract is in Texas, courts look to the transaction 

itself and whether the transaction occurred “entirely within one state.” Terroco 

Indus., 2009 WL 901488 at *3; see Guardian Underwriters Reassurance Ltd. v. 

Thompson, Coe, Cousins & Irons, LLP, No. Civ. 303CV0133H, 2003 WL 

22077945, at *3 (N.D. Tex. Sept. 2, 2003) (concluding that fact that insurance 

policies were sold in Texas did not transform transaction involving interstate “risk” 

into an intrastate transaction); Killian v. Trans Union Leasing Corp., 657 S.W.2d 

189, 191 (Tex. App.—San Antonio 1983, pet. ref’d n.r.e.) (concluding that 

transaction constituted interstate commerce as lease agreement was entered into 

with Illinois leasing company, payments were made in Illinois, and Illinois leasing 

company had no agency relationship with company that installed equipment in 

Texas for use in Texas); Mehaffey v. Barrett Mobile Home Transp., Inc., 473 

S.W.2d 643, 647 (Tex. Civ. App.—Fort Worth 1971, no writ) (concluding that 
21

contract to transport mobile home from North Dakota for delivery in Texas was 

transaction in interstate commerce).

Here, the transactions between Prosperity and Anglo-Dutch were conducted 

in interstate commerce, and it was not necessary for Prosperity to register to do 

business in Texas. Accordingly, we hold that the trial court did not err in denying 

Anglo-Dutch’s plea in abatement regarding Prosperity. 

We overrule Anglo-Dutch’s first issue.

Fraudulent Inducement

In its third issue, Anglo-Dutch argues that the trial court erred in finding that 

it fraudulently induced the release investors to sign the release agreements because 

it had refused to disclose the proposed settlement amount of the Halliburton 

lawsuit to the release investors and, thus, the release investors “could not have 

relied on this lack of information “to their detriment.” Anglo-Dutch further argues 

that the release investors’ claim for fraudulent inducement fails because it “made 

no actionable affirmative misrepresentations” to them, they “did not rely on any 

misrepresentation in executing the releases,” and they ratified the release 

agreements and waived any right to damages.10

 10 Although Anglo-Dutch cites to the standard of review for factual sufficiency and 

asserts in its post-submission brief that it has made a factual-sufficiency challenge, 

all of its arguments relate to the legal sufficiency of the evidence. Accordingly, 

we address its challenge to the legal sufficiency of the evidence supporting the 

trial court’s findings. 
22

Standard of Review

In an appeal of a judgment rendered after a nonjury trial, a trial court’s 

findings of fact have the same weight as a jury’s verdict, and we review the legal 

sufficiency of the evidence used to support them just as we would review a jury’s 

findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). In conducting a 

legal-sufficiency review of the evidence, we must consider all of the evidence in 

the light most favorable to the verdict and indulge every reasonable inference that 

would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). In 

determining whether legally-sufficient evidence supports the finding under review, 

we must consider evidence favorable to the finding, if a reasonable fact finder 

could consider it, and disregard evidence contrary to the finding, unless a 

reasonable fact finder could not disregard it. Id. at 827. When a party attacks the 

legal sufficiency of an adverse finding on which it did not have the burden of 

proof, it must demonstrate that there is no evidence to support the adverse finding. 

Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Bellino v. Comm’n for 

Lawyer Discipline, 124 S.W.3d 380, 385 (Tex. App.—Dallas 2003, pet. denied). 

We will sustain a legal-sufficiency or “no evidence” challenge if the record shows 

one of the following: (1) a complete absence of evidence of a vital fact, (2) rules of 

law or evidence bar the court from giving weight to the only evidence offered to 

prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a 
23

scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact.

City of Keller, 168 S.W.3d at 810.

We review a trial court’s conclusions of law de novo, and we will uphold the 

conclusions if the judgment can be sustained on any legal theory supported by the 

evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.

2002). Although a trial court’s conclusions of law may not be challenged for 

factual sufficiency, we may review the legal conclusions drawn from the facts to 

determine whether the conclusions are correct. Id. If we determine that a 

conclusion of law is erroneous, but the trial court nevertheless rendered the proper 

judgment, the error does not require reversal. Id. Finally, we note that the trial 

court acts as fact finder in a bench trial and is the sole judge of the credibility of 

witnesses. HTS Servs., Inc. v. Hallwood Realty Partners, L.P., 190 S.W.3d 108, 

111 (Tex. App.—Houston [1st Dist.] 2005, no pet.). “We may not pass upon the 

credibility of the witnesses or substitute our judgment for that of the trier of fact, 

even if a different answer could be reached upon review of the evidence.” Rich v. 

Olah, 274 S.W.3d 878, 884 (Tex. App.—Dallas 2008, no pet.).

Fraudulent Inducement by Affirmative Misrepresentation

To prevail on a claim for fraudulent inducement, a plaintiff must establish 

that (1) the defendant made a false material misrepresentation with knowledge that 

it was false when made or that the defendant asserted without knowledge of its 
24

truth or falsity, (2) the defendant intended the misrepresentation to be acted on, (3)

the plaintiff relied on the misrepresentation, and (4) the misrepresentation caused 

injury. See Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 

960 S.W.2d 41, 47 (Tex. 1998); Gulf Liquids New River Project, LLC, Gulsby 

Eng’g, Inc., 356 S.W.3d 54, 72 (Tex. App.—Houston [1st Dist.] 2011, no pet.).

“As a rule, a party is not bound by a contract procured by fraud.” Formosa 

Plastics, 960 S.W.2d at 46. “The law long ago abandoned the position that a 

contract must be held sacred regardless of the fraud of one of the parties in 

procuring it.” Id. (quoting Bates v. Southgate, 308 Mass. 170, 182, 31 N.E.2d 551, 

558 (1941)). Fraudulent inducement is a particular species of fraud that arises only 

in the context of a contract and requires the existence of a contract as part of its 

proof. Haase v. Glazner, 62 S.W.3d 795, 796 (Tex. 2001) (holding that “plaintiff 

cannot assert a fraudulent inducement claim in the absence of a contract”); Clark v. 

Power Mktg. Direct, Inc., 192 S.W.3d 796, 799 (Tex. App.—Houston [1st Dist.] 

2006, no pet.). In other words, with a fraudulent-inducement claim, the elements 

of fraud must be established as they relate to an agreement between the parties. 

Haase, 62 S.W.3d at 798–99.

A representation, even if actually true, is actionable if it is used to create an 

impression substantially false. Blanton v. Sherman Compress Co., 256 S.W.2d 884 

(Tex. Civ. App.—Dallas 1953, no writ). A false representation may consist of a 
25

deceptive answer to a question or any other indirect but misleading language. 

Reservoir Systems, Inc. v. TGS-NOPEC Geophysical Co., L.P., 335 S.W.3d 297, 

306 (Tex. App.—Houston [14th Dist.] 2010, pet. denied).

Affirmative Misrepresentations

Although Anglo-Dutch asserts that it made no actionable affirmative 

misrepresentations, the record reveals legally-sufficient evidence that it did. In 

regard to Prosperity and Robert Press, Anglo-Dutch, on April 12, 2004, sent to 

Press and Mary Khalilian-Reese letters with an enclosed release agreement. The 

letters were identical with only minor differences relating to the specific amount 

that each would receive upon execution of the release. Press testified that he 

received the April 12 letter via email and met with Van Dyke at his office later that 

day. Although Van Dyke stated in the letter that “many” investors had already 

signed a release, Van Dyke, at his meeting with Press, told Press that “all” of the 

investors had signed a release except for Press and Press was the “last person that 

he had to get this agreement from.” Press also testified that Van Dyke had 

previously stated via email in January 2004 that they were in negotiations with

Halliburton, but Halliburton’s offer had been “very small.” In deciding to execute 

the release, Press stated that he relied on Van Dyke’s representations. KhalilianReese testified that she did not have any conversations with Van Dyke at the time, 

so the only representations he made to her were those contained within his April 12 
26

letter. In deciding to execute the release, Khalilian-Reese stated that she relied on 

Van Dyke’s representations made in the letter. 

In the April 12, 2004 letter, Van Dyke made the following affirmative 

statements:

[1.] Subsequent to the entry of the Final Judgment, [in the 

Halliburton lawsuit] on January 30, 2004, the Texas Supreme 

Court decided Kerr-McGee Corporation v. Helton, 2004 WL 

22458 (Tex.),[

11] a case which has impacted Anglo-Dutch’s 

position with respect to the appeal[] process and the settlement 

of the Lawsuit. As you are aware, on April 1, 2004, Judge 

Donovan signed an “Amended Final Judgment” which 

significantly reduced the value of our judgment.

[2.] In light of current Texas law, it is Anglo-Dutch’s strong desire 

to settle the Lawsuit.

[3.] Halliburton is expressing willingness to settle the case at this 

time, but for a significantly lower amount than what we ever 

expected.

[4.] To achieve a resolution of the Lawsuit with Halliburton, AngloDutch is respectfully requesting everyone who entered into a 

Claims Investment Agreement to accept a lower payment than 

what is set forth in their Claims Investment Agreement(s). 

[5.] Many of the parties who entered into Claims Investment 

Agreements have executed their respective Settlement & 

Release and have returned them to us. Since time is of the 

essence, we need you to please execute the attached Settlement 

& Release and return it by fax to us by tomorrow, April 13, 

2004 by 12 noon Houston time.

In regard to Anzar, Oakes testified that before he received and signed the 

release agreement on April 6, 2004, he had had two conversations with Van Dyke. 

 11 Kerr-McGee Corp. v. Helton, 133 S.W.3d 245 (Tex. 2004).
27

And Van Dyke testified that he “may very well” have told Oakes that “in light of 

current Texas law,” it was Anglo-Dutch’s strong desire to settle the Halliburton 

lawsuit and he did tell Oakes that it was a “risk that concerned [him].” Oakes 

noted that, in a telephone conversation that occurred before he signed the release 

agreement, Van Dyke told him that if the investors did not sign the release, the 

case would go to the Texas Supreme Court, which had thrown out a similar case in 

which the plaintiffs could not “re-try” their case. Van Dyke also told Oakes that 

the expert-witness testimony in both the Halliburton lawsuit and the Kerr-McGee

case was “virtually identical” and the court had disallowed it because the “expert 

witness [in Kerr-McGee did not] testify in a manner consistent with legal code.” 

Van Dyke further told Oakes that he was the “last person to sign,” “everybody else 

had signed but [him],” and, if he did not sign the release, the Halliburton lawsuit

would be appealed and “thrown out” because Halliburton would not settle the case. 

When Van Dyke telephoned Oakes a second time, he urged Oakes to sign the 

release, stating that “[he] would [not] get any money and no one else would 

either.”12 Oakes further testified that in deciding to execute the release, he relied 

on the representations made to him by Van Dyke. 

 12 Van Dyke denied telling Oakes that he was the last person to sign. 
28

Representations Regarding the Kerr-McGee Opinion

Anglo-Dutch argues that Van Dyke’s oral and written statements to the 

release investors about the Texas Supreme Court’s opinion in Kerr-McGee Corp. 

v. Helton, and the impact that it had on Anglo-Dutch’s position in the Halliburton 

lawsuit, does not constitute actionable fraud because his statements were merely

predictions or statements about a future event. Alternatively, Anglo-Dutch asserts 

that the statements concerned a point of law and are not actionable without Van 

Dyke having a special knowledge of the law that took advantage of the release 

investors’ ignorance of the law.

Van Dyke’s statements regarding the Kerr-McGee opinion were intertwined 

with his statements about the settlement process, which had been going on since 

December 2003, and the possible appeal of the Halliburton lawsuit. Van Dyke 

testified that his intent in writing the April 12 letter was to get the investors to take 

action and sign the release agreements based on his statements. By the time that 

Van Dyke sent the April 12 letter to Press and Khalilian-Reese, he had already 

signed what he believed to be a valid settlement agreement with Halliburton to pay 

Anglo-Dutch $51 million, eighty-percent of the trial court’s judgment. Van Dyke 

also testified that he, on April 2, 2004, believed that by signing an agreement with 

the president of Halliburton, John Gibson, he was “locking down” Halliburton to 
29

the settlement and payment of $51 million so that it could not withdraw, as it had 

previously withdrawn, a settlement offer of $64 million in January 2004.

To the extent that Van Dyke’s statement about the Kerr-McGee opinion 

constituted a prediction about an appeal in the Halliburton lawsuit, it was not 

actionable. See Allen v. Devon Energy Holdings, LLC, 367 S.W.3d 355, 374–75 

(Tex. App.—Houston [1st Dist.] 2012, pet. granted, judgm’t vacated w.r.m.). 

However, to the extent that Van Dyke’s statement about the Kerr-McGee opinion 

constituted a statement about the settlement of the Halliburton lawsuit and AngloDutch’s desire to settle, we hold it was an actionable affirmative misrepresentation

because it was made with the intent to induce the release investors to sign the 

release agreement and accept less money than they were contractually entitled to

receive.

Indeed, Van Dyke told Oakes that if he did not sign the release, the 

Halliburton lawsuit would not be settled but would be appealed to the Texas 

Supreme Court. Likewise, Van Dyke stated in his April 12 letter to Press and 

Khalilian-Reese that the Kerr-McGee opinion impacted Anglo-Dutch’s settlement 

position and, because of the Kerr-McGee opinion, it was Anglo-Dutch’s “strong 

desire” to settle the Halliburton lawsuit. The falsity of Van Dyke’s statements is

evidenced by the fact that he had already entered into a settlement agreement with 

Halliburton on April 2, 2004, and he believed the settlement agreement committed 
30

Halliburton to pay Anglo-Dutch $51 million. In fact, at the time that Van Dyke

spoke to Oakes, sent his April 12 letter to Press and Khalilian-Reese, and spoke to 

Press at his office, the Kerr-McGee opinion could not have impacted AngloDutch’s settlement with Halliburton or caused it to have a “strong desire” to settle 

with Halliburton. Anglo-Dutch, as per Van Dyke, had already settled the 

Halliburton lawsuit. 

Representations That Releases Necessary for Settlement and Many or All of 

the Investors Had Signed and Returned the Release 

Van Dyke’s representation to Press and Prosperity that “many” or “all” of 

the investors had signed the release agreements as of April 12, 2004 was

objectively false. In fact, when Van Dyke sent the April 12 letter to Press and 

Prosperity, only four of the thirty-three investors had signed the release 

agreements. When Van Dyke told Richard Oakes of Anzar that he was the “last 

one” to sign the release and all the other investors had already returned their signed 

release, only three investors of the thirty-three had actually done so. Van Dyke 

acknowledged in his testimony that the “vast majority” of the investors had never 

signed the release agreements, but he denied telling Press, or anyone, that he, or 

they, were the “last” to sign the release. 

Regardless, Van Dyke testified, and Anglo-Dutch asserts on appeal, that four 

of the thirty-three investors, representing twelve percent of the investors “certainly 

constitutes ‘many’” of the investors, making the statement “true.” The word 
31

“many” is defined as a “great indefinite number.” IX OXFORD ENGLISH 

DICTIONARY 345 (2nd Ed. 1991). Four out of thirty-three does not constitute a

great number of the investors.

Press further testified that Van Dyke told him that a settlement with 

Halliburton was “contingent upon me [or] no one would get anything.” In other 

words, Anglo-Dutch would not be able to settle unless all of the investors agreed to 

sign the release agreements and take less money. Likewise, Oakes testified that 

Van Dyke told him that if he did not sign the release, Anglo-Dutch would not be 

able to settle the Halliburton lawsuit, it would be appealed to the Texas Supreme 

Court, and “no one” would get their money. 

Van Dyke’s statements to Press and Prosperity and Oakes could not be true 

because Anglo-Dutch had already entered into a settlement agreement with 

Halliburton. Accordingly, we hold that Van Dyke’s statements that the releases 

were necessary for settlement and “many” or “all” of the other investors had signed 

the release, constitute actionable affirmative misrepresentations.

Reliance 

Anglo-Dutch next argues that even if Van Dyke’s statements about the KerrMcGee opinion and that “many” or “all” investors had already signed and returned 

the release agreements constitute actionable affirmative misrepresentations, 
32

Khalilian-Reese of Prosperity, Robert Press, and Richard Oakes of Anzar did not 

rely on them. 

First, Anglo-Dutch asserts that Khalilian-Reese only relied on the language 

of the release agreement in making her decision to sign it and nothing else. 

However, Khalilian-Reese testified by deposition that she relied on the 

representations made in Van Dyke’s April 12, 2004 letter. Specifically, she noted 

that she relied on his statement that “many others” had executed and returned the 

release agreements, his statements about the Kerr-McGee opinion, and the “sense 

of urgency” that he conveyed in his letter by requesting return of the signed release 

agreement by noon the next day. 

Second, Anglo-Dutch asserts that Press did not rely on Van Dyke’s 

statement that Press was the last investor who needed to sign the release 

agreement. However, Press testified that he relied on Van Dyke’s statements when 

he made the decision to sign the release agreement. And Press noted that he did 

not speak to his daughter and son-in-law who owned a litigation funding company 

that had also invested in the Halliburton lawsuit, which Anglo-Dutch asserts would 

have given him actual knowledge that he was not the last investor to sign the 

release agreement. 

Finally, Anglo-Dutch asserts that Oakes did not rely on Van Dyke’s

statements. Oakes testified that he did rely on the statements made to him by Van 
33

Dyke in their telephone conversations. And Van Dyke admitted that he intended

that the investors take action and sign the release agreements based on his 

statements, representations made in personal conversations, and his April 12, 2004

letter. However, as Anglo-Dutch points out, Oakes testified that after signing the 

release agreement, but before cashing the check, he spoke to another investor, Bob 

Hill, and learned that Hill had not signed the release agreement. Oakes also 

participated in the last portion of a telephone conference call among the investors 

sometime after Van Dyke had sent his April 23, 2004 “accord and satisfaction” 

letter. During the call, the investors discussed suing Anglo-Dutch based on 

possible fraud committed by Van Dyke. For purposes of a fraud claim, a party’s 

reliance on a representation is not justified when the party has actual knowledge of 

the representation’s falsity at the time of alleged reliance. See Allen, 367 S.W.3d 

at 387. Therefore, Van-Dyke’s statement to Oakes that he was the “last” one to 

sign the release agreement is not a basis for an actionable claim by Anzar because 

Oakes obtained actual knowledge of the truth that he was not the last investor to 

sign the release agreement. Regardless, Oakes testified that he relied on other 

statements made to him by Van Dyke. 

Accordingly, we hold that the evidence is legally sufficient to support the 

trial court’s finding that the release investors relied on the affirmative 

representations of Van Dyke in deciding to execute the release agreements.
34

Ratification and Waiver

Anglo-Dutch next argues that the release investors’ claims for fraudulent

inducement fail because there is no evidence to support the trial court’s findings 

that the release investors did not ratify and waive their claims. Here, the trial court

specifically found:

None of Mr. Press, Prosperity or Anzar had or clearly 

manifested any intention of abiding by their respective releases or of 

waiving any or all rights to recover for [Anglo-Dutch’s] fraud or 

deception.

None of Mr. Press, Prosperity or Anzar ratified [AngloDutch’s] fraud and deception or waived their rights to pursue their 

claims in this case.

Anglo-Dutch argues that Oakes ratified the release agreement because he 

had actual knowledge of the falsity of Van Dyke’s statement that he was the “last”

investor to sign the release agreement and still cashed the check that Anglo-Dutch 

had sent to him. However, the record reveals that Oakes had only actual 

knowledge of one of Van Dyke’s misrepresentations, specifically that Oakes had 

knowledge that he was not the “last” investor to sign. Van Dyke also 

misrepresented to Oakes that (1) the Kerr-McGee opinion impacted the possibility 

of settlement with Halliburton and (2) Van Dyke strongly desired to settle with 

Halliburton when, in fact, the settlement had already occurred. Oakes did not have 

any actual knowledge relating to these misrepresentations. 
35

The release investors argue that Anglo-Dutch’s affirmative defenses of 

ratification and waiver are barred by res judicata because “all claims and defenses 

asserted by the parties in the original case were disposed of by the Amended 

Partial Summary Judgment” in 2006. In their original summary-judgment motion

on their breach-of-contract claims, the release investors’ grounds for summary 

judgment included their entitlement to summary judgment as a matter of law on 

Anglo-Dutch’s defense of waiver. The trial court granted the release investors 

partial summary judgment and permitted them to recover on the contracts, subject 

only to Anglo-Dutch’s defense of release. The trial court’s order was made final 

and appealable after the parties filed an Agreed Motion to Sever and Stay. AngloDutch did not appeal the summary judgment granted in favor of the release 

investors on its defense of waiver. See Case Funding Network, 264 S.W.3d at 42. 

Thus, the issue of waiver was litigated and resolved in the release investors’ favor 

in the first suit. The release investors also argue that Anglo-Dutch could have 

asserted its ratification defense in the first suit because the evidence upon which 

Anglo-Dutch relies in its ratification defense in the severed suit, consisting of 

Richard Oakes’s deposition testimony, was available twelve months before the trial 

court granted the severance. 

Anglo-Dutch argues that res judicata does not apply because it never raised 

these defenses in the underlying litigation between it and the investors and it first 
36

raised res judicata as a defense in a supplemental answer to the release investors’ 

claim for fraudulent inducement. However, even assuming that res judicata does 

not bar Anglo-Dutch’s defenses of ratification and waiver, it has not shown that 

there is no evidence to support the trial court’s specific findings. 

Anglo-Dutch first argues that Richard Oakes ratified the release agreement 

because he obtained knowledge that he was not the “last” investor to sign the 

release because there was at least one other investor, Bob Hill, who had not signed 

it. It asserts that Oakes, by listening in on the last portion of a telephone 

conference call among investors discussing possible fraud committed by AngloDutch and a lawsuit concerning the investment agreements, learned of the fraud 

and, thus, ratified the release agreement by later cashing his settlement checks. 

Whether Oakes obtained actual knowledge that one of Van Dyke’s 

misrepresentations was false does not address the fact that Van Dyke also made 

other misrepresentations to Oakes. Additionally, the trial court made it clear that it 

did not believe Van Dyke’s testimony and found him not at all credible. AngloDutch has not conclusively established that the release investors ratified the release 

agreements and waived their right to recover damages on their claims for 

fraudulent inducement. Accordingly, we hold that the evidence is legally sufficient 

to support the trial court’s findings that the release investors did not ratify the 

release agreements and waive their rights. 
37

Having held that the evidence is legally sufficient to support the trial court’s 

findings that Anglo-Dutch made actionable affirmative misrepresentations to the 

release investors with the intent to induce them into signing the release agreements, 

the release investors relied on the misrepresentations, and the release investors did 

not ratify the release agreements and waive their rights to recover damages, we 

further hold that the trial court did not err in entering judgment in favor of the 

release investors on their claims against Anglo-Dutch for fraudulent inducement. 

We overrule Anglo-Dutch’s third issue.

13 

Attorneys’ Fees

In its fourth issue, Anglo-Dutch argues that the trial court erred in awarding 

the release investors their attorneys’ fees because their claims were not for breach 

of contract, but claims for fraud and fraudulent inducement, their attorneys did not 

segregate their fees, and, in any event, they are not entitled to attorneys’ fees after 

September 22, 2006 when the trial court entered its Amended Partial Summary 

Judgment severing the release investors’ claims for fraudulent inducement. The 

release investors argue in response that they are entitled to attorneys’ fees because 

they “were awarded actual contractual damages” for Anglo-Dutch’s breach of the 

 13 Because we have held that the evidence is legally sufficient to support the trial 

court’s findings that Anglo-Dutch made actionable affirmative misrepresentations 

to the release investors, we need not address its second issue in which it contends 

that the trial court erred in finding that it had a fiduciary relationship with the 

release investors.
38

investment agreements. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8)

(Vernon 2008). 

The release investors pleaded for an award of attorneys’ fees and offered 

expert testimony regarding those fees. And the trial court concluded that:

[a]ll claims asserted by [the release investors] in this case are breach 

of contract claims. Accordingly, [the release investors] have no 

obligation to segregate attorneys’ fees between or among claims for 

which attorneys’ fees are recoverable.

In its Amended Partial Summary Judgment, the trial court resolved most of 

the elements of the release investors’ claims for breach of the investment 

agreements, and it provided for further proceedings on the remaining elements. In 

its order, the trial court stated:

A contested material issue of fact has been raised by [the release 

investors that the release agreements] were induced by fraud for 

which there is the remedy of enforcement of each successful [release 

investor’s] original contract. 

As to each [release investor] who prevails as to his or its fraud in the 

inducement claim to set aside the release agreements, each [release 

investor’s] damages are liquidated and subject to calculation as a 

matter of law.

In such event, a prevailing [release investor] is entitled to recover 

attorney’s fees; and 

The amount of each [release investors] reasonable attorney’s fees is a 

contested fact issue at this time.

It is therefore ORDERED ADJUDGED and DECREED that partial 

summary judgment is granted [Anglo-Dutch] against all [investors], 

subject to the claims of fraud in the inducement of the release 
39

agreements as to three [release investors], and is granted Scott Van 

Dyke on all claims.

At the time of trial, jury questions will be submitted as to the fraud in 

the inducement, and, conditioned on a fact finding in the [release 

investors’] favor, the amount of reasonable attorney’s fees. In order 

to liquidate any damages that would result from affirmative findings 

for the [release investors], the summary judgment evidence on file and 

further argument of counsel will be used by the Court to calculate the 

amount of damages under the original [investment agreements] 

between the [release investors] and [Anglo-Dutch].

The release investors sought summary judgment on their claims against 

Anglo-Dutch for its breach of the investment agreement and on Anglo-Dutch’s 

affirmative defense of release on the ground that they were fraudulently induced to 

sign the release agreements. The release investors did not seek summary judgment 

on their claims for fraudulent inducement. The trial court, in its Amended Partial 

Summary Judgment, provided that the release investors could recover on their

investment agreements with Anglo-Dutch, subject only to Anglo-Dutch’s 

affirmative defense of release. The trial court also provided that each release 

agreement would be enforced unless its release investor proved fraudulent 

inducement. We affirmed the Amended Partial Summary Judgment in Case 

Funding, 264 S.W.3d at 42. Moreover, in its Order of Severance, the trial court

describes and refers to the release investors’ severed claims as breach-of-contract 

claims. The release investors asserted several affirmative defenses to the 

enforceability of the release agreements, including fraud and fraudulent 
40

inducement, and they lost on each defense except fraudulent inducement. Thus, 

the release investors were able to enforce their original investment agreements with 

Anglo-Dutch by proving that they were fraudulently induced into signing the 

release agreements. Accordingly, we hold that the trial court did not err in

concluding that the release investors’ claims are for breach of contract and they are 

entitled to attorneys’ fees as the prevailing party. See TEX. CIV. PRAC. & REM.

CODE ANN. § 38.001(8). 

The Texas Supreme Court has articulated the test to determine if attorneys’ 

fees must be segregated as follows:

[I]f any attorney’s fees relate solely to a claim for which such fees are 

unrecoverable, a claimant must segregate recoverable from 

unrecoverable fees. Intertwined facts do not make tort fees 

recoverable; it is only when discrete legal services advance both a 

recoverable and unrecoverable claim that they are so intertwined that

they need not be segregated.

Tony Gullo Motors I, L.L.P. v. Chapa, 212 S.W.3d 299, 313–14 (Tex. 2006). In 

regard to segregation of attorneys’ fees, the trial court made the following relevant 

conclusions of law:

All discrete legal services performed by [the release investors’] 

counsel in this case advance and have advanced each [release 

investors’] breach of contract claims asserted in this case.

All legal services performed by [the release investors’] lawyers in this 

case have been necessary to prosecute [the release investors’] claims 

in this case. 
41

All claims asserted by [the release investors] in this case are breach of 

contract claims. Accordingly, [the release investors] have no 

obligation to segregate attorneys’ fees between or among claims for 

which attorneys’ fees are recoverable and claims for which attorneys’ 

fees are unrecoverable.

The release investors offered testimony that all of their attorneys’ fees were 

attributable to and advanced their claims for Anglo-Dutch’s breach of the 

investment agreement. Fred Hagans, the attorney for the release investors, testified 

that their attorneys’ fees related only to work performed after the trial court’s

severance of the release investors’ claims relating to their defense of fraudulent 

inducement in the signing of the release agreements. Counsel for Anglo-Dutch 

questioned Hagans concerning the segregation of fees, and Hagans explained that 

the fees had not been segregated because “all of the work that was done was in 

connection with the fraudulent inducement defense, which is part of the contract 

claim. So I have not done any segregation to apply it to anything other than 

contract, because that’s all that’s left, as I understand it, after reviewing” the trial 

court’s order. Hagans further noted that the attorney work performed generally 

advanced the claims of all of the investors. The release investors did seek

attorneys’ fees related to defending against Anglo-Dutch’s counterclaims. 

However, to prove their entitlement to recover for Anglo-Dutch’s breach of the 

investment agreements, the release investors had to overcome Anglo-Dutch’s 

counterclaims. Attorneys’ fees incurred to defeat a counterclaim that must be 
42

overcome to recover fully on a contract need not be segregated. Varner v. 

Cardenas, 218 S.W.3d 68, 69 (Tex. 2007) (holding that fees incurred in 

successfully defending against counterclaim in order to collect full amount of note 

need not be segregated). 

Accordingly, we hold that the trial court did not err in concluding that the 

release investors were not required to present evidence of segregated attorneys’ 

fees and awarding the release investors their attorneys’ fees.

We overrule Anglo-Dutch’s fourth issue.

Anglo-Dutch’s Attorneys’ Fees

In its fifth issue, Anglo-Dutch argues that the trial court erred in granting

summary judgment for the thirteen investors on its counterclaim for breach of

contract, because their filing of the instant lawsuit for breach of the investment 

agreements constitutes “some evidence” of their breach of the release agreements 

and the accord and satisfaction agreements. Thus, Anglo-Dutch asserts that it is 

entitled to recover its attorneys’ fees incurred in defending against the investors’

claims. 

Unless expressly provided for by statute or contract, attorneys’ fees incurred 

as a result of the defense or prosecution of a lawsuit are generally not recoverable. 

Turner v. Turner, 385 S.W.2d 230, 233 (Tex. 1964). However, equitable 

principles allow the recovery of such fees as actual damages when a party is 
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required to prosecute or defend a prior legal action as a consequence of a wrongful 

act of an opposing party. See id. at 234. For this equitable exception to apply, the 

plaintiff must have incurred the attorneys’ fees in a prior action, which must have 

involved a third party. Id. These two prerequisites are not present here. The 

attorneys’ fees that Anglo-Dutch seeks are those that were incurred in the instant 

case. Moreover, Anglo-Dutch did not provide summary-judgment evidence to 

raise a fact issue in regard to attorneys’ fees as actual damages. Consequently, 

Anglo-Dutch has provided no evidence that any incurred attorneys’ fees were 

reasonable and necessary. Id.

We overrule Anglo-Dutch’s fifth issue. 

Conclusion

We affirm the judgment of the trial court.

Terry Jennings

Justice 

Panel consists of Justices Jennings, Sharp, and Brown.