Court Opinion

ID: 4070643
Source: CourtListenerOpinion
Date Created: 2016-09-30 01:22:36.23083+00
Date Added: 2024-06-11T14:33:08.380053
License: Public Domain

ACCEPTED
                                                                             01-15-00604-cv
                                                                 FIRST COURT OF APPEALS
                                                                         HOUSTON, TEXAS
                                                                       10/5/2015 5:43:39 PM
                                                                      CHRISTOPHER PRINE
                                                                                     CLERK

                       NO. 01-15-00604-CV
       __________________________________________________
                              In the                    FILED IN
                                                 1st COURT OF APPEALS
                    FIRST COURT OF APPEALS           HOUSTON, TEXAS
                                at               10/5/2015 5:43:39 PM
                        HOUSTON, TEXAS           CHRISTOPHER A. PRINE
                                                         Clerk

                    ****************

D & R CONSTRUCTORS, INC., MICHAEL RUSHING, STEPHANIE RUSHING,
PENN RUSHING AND FLORENCE RUSHING, Appellants

                                v.

TEXAS GULF ENERGY, INC. ON BEHALF OF CS BANKERS V LLC AND
TEXAS GULF FABRICATORS, Appellees

                    ****************
               On Appeal from the 270th District Court
                      of Harris County, Texas
                 Trial Court Cause No. 2013-00543
       __________________________________________________
                     BRIEF OF APPELLANTS

                    ****************
                          THE GORE LAW FIRM, P.C.
                          George W. Gore
                          Lead Counsel
                          State Bar No. 24029582
                          6200 Savoy, Suite 1150
                          Houston, Texas 77036
                          (713) 224-2000 (Telephone)
                          (713) 224-2004 (Facsimile)

                       ATTORNEYS     FOR     D   &    R
                       CONSTRUCTORS,    INC.,  MICHAEL
                       RUSHING, STEPHANIE RUSHING, PENN
                       RUSHING AND FLORENCE RUSHING.
ORAL ARGUMENT REQUESTED
                       NO. 01-15-00604-CV
       __________________________________________________
                              In the
                    FIRST COURT OF APPEALS
                                at
                        HOUSTON, TEXAS

                    ****************

D & R CONSTRUCTORS, INC., MICHAEL RUSHING, STEPHANIE RUSHING,
PENN RUSHING AND FLORENCE RUSHING, Appellants

                               v.

TEXAS GULF ENERGY, INC. ON BEHALF OF CS BANKERS V LLC AND
TEXAS GULF FABRICATORS, Appellees

                    ****************
               On Appeal from the 270th District Court
                      of Harris County, Texas
                 Trial Court Cause No. 2013-00543
       __________________________________________________
                     BRIEF OF APPELLANTS

                    ****************
                          THE GORE LAW FIRM, P.C.
                          George W. Gore
                          Lead Counsel
                          State Bar No. 24029582
                          6200 Savoy, Suite 1150
                          Houston, Texas 77036
                          (713) 224-2000 (Telephone)
                          (713) 224-2004 (Facsimile)

                       ATTORNEYS     FOR     D   &    R
                       CONSTRUCTORS,    INC.,  MICHAEL
                       RUSHING, STEPHANIE RUSHING, PENN
                       RUSHING AND FLORENCE RUSHING.
ORAL ARGUMENT REQUESTED
                     IDENTITY OF PARTIES AND COUNSEL

D & R CONSTRUCTORS, INC................................................ Intervenor/Appellant

MICHAEL RUSHING, STEPHANIE RUSHING, PENN RUSHING AND
FLORENCE RUSHING. .......................... Defendants/Counter Plaintiffs/Appellants

George W. Gore .Counsel for Defendants, Intervenor & Counter Plaintiffs/Appellants
The Gore Law Firm, P.C.
6200 Savoy, Suite 1150
Houston, Texas 77036

Texas Gulf Energy, Inc., CS Bankers V, LLC, Texas Gulf Fabricators, Inc., and
Timothy Connolly ………………….……………..Plaintiffs                  &        Counter
Defendants/Appellees

Gary M. Jewell .................. Counsel for Defendants & Counter Plaintiffs/Appellants
Christian Smith & Jewell
2302 Fannin, Suite 500
Houston, Texas 77002

Texas Gulf Fabricators, LLC, Brian Hendry and Lester Smith
…………………………………….…………………………..Cross
Defendants/Appellees

Paul Dobrowski .......................................... Counsel for Cross Defendants/Appellees
Dobrowski, Larkin & Johnson, LLP
4601 Washington Ave, Suite 300
Houston, Texas 77007

                                               i
                                       TABLE OF CONTENTS
                                                                                  Page(s)
IDENTITY OF PARTIES AND COUNSEL .............................................................i

TABLE OF CONTENTS .......................................................................................... ii

INDEX OF AUTHORITIES .....................................................................................iv

STATEMENT OF THE CASE .................................................................................. 1

REQUEST FOR ORAL ARGUMENT ..................................................................... 5

ISSUES PRESENTED ............................................................................................... 6

        Point of Error One ............................................................................................
               change of ownership The District Court committed error by
               granting summary judgment on the issue of foreclosure:
           a) the evidence attached to the Appellee's summary judgment
               motions establishes the foreclosure was improper. As such, the
               summary judgment in favor of Appellees should be set aside and
               this Court court should render a judgment in favor of Appellants.
           b) the foreclosure was also improper because the evidence presented
               established Appellees blocked the notice of foreclosure and made
               it impossible to make payments.
          c) the foreclosure was also improper for a variety of other reasons. . . .

        Point of Error Two
        The District Court committed error which caused the rendition of an
              improper order when it entered judgment dismissing the Quiet
              Title cause of action. Since the foreclosure was improper, the
              quiet title cause of action should also be set aside and the issue
              resolved in accordance with the foreclosure ruling... .............................

        Point of Error Three. ..........................................................................................
              The District Court committed error by ignoring at least one cause
              of action and signing orders exceeding the relief requested in
              summary judgment motions

                                                          ii
        Point of Error Four
        The District Court committed error which caused the rendition of an
              improper temporary injunction when it granted no-evidence
              summary judgment and did not compel discovery responses... ..............

        Point of Error Five. ............................................................................................
              The District Court committed error which caused the rendition of
              an improper order when it entered summary judgment on fraud,
              breach of contract, quantum meruit, negligent misrepresentation,
              breach of fiduciary duty, conversion, conspiracy, and tortuous
              interference. .............................................................................................

        Point of Error Six
        The District Court committed error which caused the rendition of an
              improper order when it entered sanctions in this matter .........................

        Point of Error Seven. .........................................................................................
              The District Court committed error which caused the rendition of
              an improper order when it entered a judgment for attorneys’ fees
              without proper segregation or support and which contradicts case
              law requiring trial on whether the attorney’s fees are reasonable
              and necessary. ..........................................................................................

STATEMENT OF FACTS ........................................................................................ 7

SUMMARY OF THE ARGUMENT ...................................................................... 10

ARGUMENT AND AUTHORITIES ...................................................................... 11

        C Point of Error One ..................................................................................... 11
              change of ownership The District Court committed error by
              granting summary judgment on the issue of foreclosure:
           a) the evidence attached to the Appellee's summary judgment
              motions establishes the foreclosure was improper. As such, the
              summary judgment in favor of Appellees should be set aside and
              this Court should render a judgment in favor of Appellants.

                                                          iii
    b) the foreclosure was also improper because the evidence presented
        established Appellees blocked the notice of foreclosure and made
        it impossible to make payments.
   c) the foreclosure was also improper for a variety of other reasons. . . .

Point of Error Two
The District Court committed error which caused the rendition of an
      improper order when it entered judgment dismissing the Quiet
      Title cause of action. Since the foreclosure was improper, the
      quiet title cause of action should also be set aside and the issue
      resolved in accordance with the foreclosure ruling... ......................... 23

Point of Error Three. ...................................................................................... 24
      The District Court committed error by ignoring at least one cause
      of action and signing orders exceeding the relief requested in
      summary judgment motions __________3

Point of Error Four
The District Court committed error which caused the rendition of an
      improper temporary injunction when it granted no-evidence
      summary judgment and did not compel discovery responses... .......... 24

Point of Error Five. ............................................................................................
      The District Court committed error which caused the rendition of
      an improper order when it entered summary judgment on fraud,
      breach of contract, quantum meruit, negligent misrepresentation,
      breach of fiduciary duty, conversion, conspiracy, and tortuous
      interference. ......................................................................................... 25

Point of Error Six
The District Court committed error which caused the rendition of an
      improper order when it entered sanctions in this matter ..................... 37

Point of Error Seven. ..................................................................................... 39
      The District Court committed error which caused the rendition of
      an improper order when it entered a judgment for attorneys’ fees
      without proper segregation or support and which contradicts case

                                                  iv
                   law requiring trial on whether the attorney’s fees are reasonable
                   and necessary. ........................................................................................ 3

PRAYER .................................................................................................................. 41

APPENDIX .............................................................................................................. 43

CERTIFICATE OF SERVICE ................................................................................ 44

                                                             v
                          INDEX OF AUTHORITIES

Cases                                                                     Page(s)

Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-16 (Tex. 2003)
M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000)
City of Houston v. McDonald, 946 S.W.2d 419, 420 (Tex. App.—Houston [14th Dist.]
1997, writ denied).
Casso v. Brand, 776 S.W.2d 551, 556 (Tex. 1989).
City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979).
Jones v. Tex. Pac. Indem. Co., 853 S.W.2d 791, 794 (Tex. App.—Dallas 1993, no
writ).
Sullivan v. Hardin, 102 S.W.2d 1110 (Tex. Civ. App. 1937)
Smith v. Albright (Tex. Com. App.) 288 S.W. 178.
Allbright v. Smith (Tex. Com. App.) 5 S.W.2d 970.
Reisenberg v. Hankins (Tex. Civ. App.) 258 S.W. 904, 910.
Park Place Hosp. v. Estate of Milo, 909 S.W.2d 508, 511 (Tex. 1995).
Longview Constr. & Dev., Inc. v. Loggins Constr. Co., 523 S.W.2d 771, 779 (Tex.
Civ. App.—Tyler 1975, writ dism'd by agr.).
Adebo v. Litton Loan Servicing, L.P., 2008 Tex. App. LEXIS 3935 at *10, No. 01-07-
00708-CV (May 29, 2008).
Jaster v. Comet II Constr., Inc., 2014 Tex. LEXIS 567 at *13.
Brown v. Cates, 99 Tex. 133 (1905).
Duty v. Graham, 12 Tex. 214 (1854).
Univ. Sav. Ass'n v. Springwoods Shopping Ctr., 644 S.W.2d 705, 706 (Tex. 1982).
League City State Bank v. Mares, 427 S.W.2d 336, 340 (Tex. Civ. App.--Houston
[14th Dist.] 1968, writ ref'd n.r.e.).
UMLIC VP LLC v. T & M Sales and Envtl. Sys., Inc., 176 S.W.3d 595, 610 (Tex.
App.--Corpus Christi 2005, pet. denied).
Harwath v. Hudson, 654 S.W.2d 851, 853 (Tex. App. Dallas 1983).
Longview Constr. & Dev., Inc. v. Loggins Constr. Co., 523 S.W.2d 771, 779 (Tex.
Civ. App.—Tyler 1975, writ dism'd by agr.).
Woodard v. Southwest States, Inc., 384 S.W.2d 674, 675 (Tex. 1964).
Miller v. Graves, 185 S.W.2d 745, 1945 Tex. App. LEXIS 649 (Tex. Civ. App. 1945),
writ ref'd),. Scott v. Walker, 141 Tex. 181, 170 S.W.2d 718 (Tex. 1943).
Vortt Exploration Co. v. Chevron U.S.A., Inc., 787 S.W.2d 942 (Tex. 1990).
Clower v. Brookman, 325 S.W.2d 440 (Tex.Civ.App. -- San Antonio, 1959, no writ).
 Ferrous Prods. Co. v. Gulf States Trading Co., 323 S.W.2d 292, 296-97 (Tex. Civ.

                                        vi
App.—Houston, 1959), aff'd, 160 Tex. 399, 332 S.W.2d 310, 312 (Tex. 1960).
Colbert v. Dallas Joint Stock Land Bank of Dallas, 129 Tex. 235, 102 S.W.2d 1031-
1034 (1937).
Gonzales v. McHugh, 21 Tex. 256.
Excess Underwriters at Lloyd's, London, 246 S.W.3d at 50.
Dallas Elec. Supply Co. v. Branum Co., 143 Tex. 366, 185 S.W.2d 427, 429 (Tex.
1945).
Rankin v. Naftalis, 557 S.W.2d 940, 944 (Tex. 1977).

Fitzgerald v. Hull, 237 S.W.2d 256, 264 (Tex. 1951).

Kinzbach Tool Co. v. Corbett-Wallace Corp., 160 S.W.2d 509, 514 (Tex. 1942).

Hunter Bldgs. & Mfg., L.P. v. MBI Global, L.L.C., 436 S.W.3d 9, 15-16 (Tex. App.
Houston 14th Dist. 2014).
Chon Tri v. J.T.T., 162 S.W.3d 552, 556 (Tex. 2005).
Kelly v. Galveston County, 520 S.W.2d 507, 513 (Tex. Civ. App. Houston 14th Dist.
1975).
John Paul Mitchell Sys. v. Randalls Food Mkts., 17 S.W.3d 721, 730 (Tex. App.
Austin 2000).
Southwestern Bell tel. Co. v. John Carlo Tex., Inc., 843 S.W.2d 470, 472 (Tex. 1992).

GTE Comms Sys. V. Tanner, 856 S.W.2d 725, 730 (Tex. 1993).
Lake Travis ISD v. Lovelace, 243 S.W.2d 244, 254 (Tex.App.—Austin 2007, no pet.).
Koch Oil Co. v. Wilber, 895 S.W.2d 854, 867 (Tex. App.—Beaumont 1995, writ
denied).
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006).
AU Pharm., Inc. v. Boston, 986 S.W.2d 331, 336 (Tex. App.—Texarkana 1999, no
pet.).
Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10-11 (Tex. 1991), modified on
other ground., Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006).
City of Garland v. Dallas Morning News, 22 S.W.3d 351, 367 (Tex. 2000); Bocquet v.
Herring, 972 S.W.2d 19, 20-21 (Tex. 1998).
Fuqua v. Oncor Elec. Delivery Co., 315 S.W.3d 552, 2010 Tex. App. LEXIS 2323
(Tex. App. Eastland 2010).

Rules                                                                        Page(s)

                                         vii
TEX. R. CIV. P. , Rule 13 ..............................................................................................

Tex. R. App. P., Rule 39 ..............................................................................................

Statutes and Other Authorities                                                                                       Page(s)

Property Code 51.002-51.0075 ....................................................................................
Tex. R. Civ. P. 166a(i).

Secondary Sources                                                                                                    Page(s)

Williston .......................................................................................................................

                                                              viii
TO THE COURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS:

      Appellants, D & R Constructors, Inc. (“D&R”), George W. Gore and Michael

Rushing, Stephanie Rushing, Penn Rushing and Florence Rushing (“Rushings”)

(jointly “Appellants”), comes, by and through their attorney of record, and pursuant to

Rule 38.1 of the TEXAS RULES      OF   APPELLATE PROCEDURE presents this Brief of

Appellants and pray that the orders and judgment entered against Appellants from

Cause No. 2013-00543, Texas Gulf Energy, Inc. on Behalf of CS Bankers V, LLC and

Texas Gulf Fabricators v. Michael Rushing, Stephanie Rushing, Penn Rushing and

Florence Rushing, in the 270th District Court of Harris County, Texas, be set aside

(including all summary judgment orders, the final order including attorney’s fees, and

the sanctions order), that judgment be rendered in favor of Appellants on the issues of

foreclosure and quiet title, and, that the remaining causes of action be remanded to the

Trial Court with instructions to enter a new docket control order allowing a discovery

period of at least five months on the remaining causes of action before trial.

                          STATEMENT OF THE CASE

      The Appellees initiated this case as a suit for conversion and an application for

an injunction.    Appellants counter claimed for fraud, conversion, wrongful

foreclosure, intentional wrongful foreclosure, quiet title, tortuous interference,

negligent representation, breach of fiduciary duty, breach of contract, conspiracy,

                                           1
quantum meruit and promissory estoppel. Appellants also brought in Hendry and

Smith as counter defendants to quiet title and for their participation in directing the

fraud.

         The trial court granted several summary judgment orders which were

incorporated into one final order. There was no trial. As shown below, the summary

judgments fail to address all causes of action and are erroneous for other reasons as

well.

August 28, 2014; Order titled – CS Bankers’ Partial Summary Judgment on
Foreclosure; Doc # 62235529: CRI 593
October 31, 2014; Order titled - Final Summary Judgment; Doc # 63014312 (Smith);
 CRI 1580
November 14, 2014; Order titled – Order Granting Joint Motion for Entry of
Supplemental Order; Doc # 63213850: CRII 1944
November 19, 2014; Order titled - Final Summary Judgment; Doc # 63290903
(Hendry & TGF) : CRII 1946
December 17, 2014; Order titled – Order Granting Texas Gulf Energy, Inc.’s Motion
for Partial Summary Judgment on the “Letter of Intent”; Doc # 63638422: CRII 1972
February 3, 2015; Order titled - Final Summary Judgment; Doc # 64155446: CRII
2027
February 3, 2015; Order titled – Order Assessing Sanctions; Doc # 64155445: CRII
2025
April 6, 2016; Order denying – Order Denying Appellants’ Motion for Summary
Judgment: CRI 976
April 13, 2015; Order titled – Final Judgment; Doc# 65332341: CRI 977

          D&R Constructors is a second generation family company owned and

controlled by the Rushing family. The primary asset owned by D&R is a fabrication

plant, along with the equipment and tools located on that site. This case concerns a

                                          2
dispute where Texas Gulf Energy (“TGE’) representatives convinced the Rushings to

join into a joint venture. In connection with that joint venture, CS Bankers V, LLC

(“CSB”), a subsidiary of TGE, purchased the note from the bank (approximately

$435,000 owed – Facility and equipment valued at over $2,000,000.00). In addition, a

lease was executed under which the lease payment was directed to CSB to cover any

payments as they became due. A Binding Letter of Intent (“BLOI”) containing the

major terms was signed at the same time. TGE did not follow through on its promises,

including never providing final paperwork or making a payment of $100,000.00

which was due only ten days after the BLOI was signed. Emails have been discovered

that indicate TGE had decided not to work with the Rushings (whether this was before

or shortly after the Binding Letter of Intent was signed is still in dispute). Instead of

terminating the joint venture and the lease, TGE promised final paperwork and

negotiated with the Rushings for about six months – but CSB secretly foreclosed on

the Facility as fast as it could - which was within three months. Since TGE was

leasing the Facility, it sent the foreclosure notice to itself and simply refused the

foreclosure notice by having its employees advise the postman that D&R was no

longer at that location. But, in truth, Michael and Penn Rushing were still working

there in connection with trying to get the joint venture moving and, along with D&R,

was still receiving mail there – except for the one foreclosure notice that was refused

                                           3
by TGE staff. The funny thing is that the notice was defective anyway (no auction

time on mailed notice makes it defective as a matter of law). Still, in addition to

setting the improperly noticed trustee sale, the court should allow a cause of action for

intentional wrongful foreclosure with punitive damages due to the intentional blocking

of the notice.

      Eventually, after about six month of continuing to negotiate with the Rushings

while “the attorneys prepared the paperwork,” TGE advised the Rushings they were

no longer welcome and that the locks would be changed. At that point, equipment and

other items were removed from the Facility and Appellees then filed suit and sought

orders in District Court requiring the return of equipment. Appellants counter claimed

for wrongful foreclosure, fraud, conversion and other claims as listed above.

      The District Court denied multiple motions to compel discovery and depositions

against the Plaintiffs. Plaintiffs did not provide any meaningful discovery responses

and quashed all deposition notices (the lack of response is even more egregious

considering Plaintiffs waived their objections when they unilaterally terminated a Rule

11 agreement). Still, instead of ordering Plaintiffs to produce experts and corporate

representatives – and provide responses to discovery where it waived its objections,

the District Court found it more convenient to grant summary judgments (the oddest

was when, in response to a motion to compel documents and depositions from

                                           4
Appellees, the trial court granted months old no evidence summary judgments). As

discussed in detail below, this was unfair and improper. Plaintiffs’ tactics are a sad

example of the games lawyers should not play – and, in this case, the District Court let

it slide through. All judgments in Appellees’ favor should be set aside, the case

remanded and a proper period for discovery be allowed.

       This case also involves a sanctions issue. Emails were presented indicating

Lester Smith was controlling or directing TGE, Connolly, Hendry and others. As

such, he was sued by Appellants. However, the Rushings never had face to face

contact with Lester Smith. The District Court found that since there was no direct

contact, the causes of action for fraud and conspiracy to commit fraud were

sanctionable. However, it is not appropriate to sanction a party and counsel for

bringing a cause of action that should extended to be applicable to the case at hand.

Clearly, the cause of action should extend to cover a puppet master and not just the

minions.

       TGE and its representatives made representations and executed a binding letter

of intent to obtain use of the Facility and to get the Rushing to work there. TGE now

claims the BLOI is not a contract. If it is a contract, then it should be enforced. If it is

not a contract, then the Rushings should still be able to recover their damages under

Quantum Meruit or Promissory Estoppel (a cause of action that was simply never

                                             5
addressed by the Trial Court). Simply put, at the end of the day it is uncontested that

TGE took Appellants Facility. So, either it is damages for breach of contract

(Appellees claim the Facility was to come to them as part of the deal), quantum meruit

or promissory estoppel (if no contract then equity applies).

         In short, the foreclosure notice was clearly defective and the appellate court

should render in Appellants favor and further quiet title back to D&R (there are many

reasons to set it aside but the most obvious and clear is the sworn evidence filed by the

Appellees clearly showing a defect). The other orders should be set aside and the case

should be remanded to allow discovery and then proceed to trial on the fraud and other

issues.

                               REQUEST FOR ORAL ARGUMENT

         Appellants respectfully submit that this case merits oral argument under Rule

39 of the Texas Rules of Appellate Procedure because oral argument would

significantly aid the Court in the determination of the legal and factual issues

presented in this appeal of a complex, tripartite action.

                                           ISSUES PRESENTED

Point of Error One .......................................................................................................
change of ownership The District Court committed error by granting summary
judgment on the issue of foreclosure:
          a) the evidence attached to the Appellee's summary judgment
             motions establishes the foreclosure was improper. As such, the
                                                            6
              summary judgment in favor of Appellees should be set aside and
              this Court should render a judgment in favor of Appellants.
          b) the foreclosure was also improper because the evidence presented
              established Appellees blocked the notice of foreclosure and made
              it impossible to make payments.
         c) the foreclosure was also improper for a variety of other reasons. . . .

Point of Error Two: The District Court committed error which caused the
rendition of an improper order when it entered judgment dismissing the Quiet
Title cause of action. Since the foreclosure was improper, the quiet title cause
of action should also be set aside and the issue resolved in accordance with the
foreclosure ruling.

Point of Error Three: The District Court committed error by ignoring at least one
cause of action and signing orders exceeding the relief requested in summary
judgment motions.

Point of Error Four: The District Court committed error which caused the
rendition of an improper temporary injunction when it granted no-evidence
summary judgment and did not compel discovery responses.

Point of Error Five: The District Court committed error which caused the rendition of
an improper order when it entered summary judgment on fraud, breach of contract,
quantum meruit, negligent misrepresentation, breach of fiduciary duty, conversion,
conspiracy, and tortuous interference.

Point of Error Six: The District Court committed error which caused the
rendition of an improper order when it entered sanctions in this matter.

Point of Error Seven: The District Court committed error which caused the rendition
of an improper order when it entered a judgment for attorneys’ fees without proper
segregation or support and which contradicts case law requiring trial on whether the
attorney’s fees are reasonable and necessary.

                                     I.
                             STATEMENT OF FACTS

                                            7
        TGE, Connolly and CSB worked together to convince the Appellants to turn

over their Facility (including equipment and personal property located at the Facility)

and to work with them on a joint venture where Mike and Penn Rushing worked at the

Facility to produce jobs (Appellees promised a multi-million dollar backlog which did

not exist). RRI 782-800. To induce this turnover, Appellees executed a binding letter

of intent and a lease while promising to prepare the final agreement which would

include other terms requested by the Appellants. Id. But, after getting possession of

the Facility, Appellees refused to prepare the final paperwork and foreclosed on the

Facility without notifying the Appellants. Then, they changed the locks and advised

Appellants to leave and then sued to terminate the agreement. The end result of the

deal was the Appellees taking possession of Appellants Facility, personal property and

equipment to their benefit and to the detriment of the Appellants – despite supposedly

working “with” them in a joint venture. Id.

        Texas Gulf Energy, Inc. (“TGE”) and its affiliates, CS Bankers V, LLC,

(“CSB”) and Texas Gulf Fabricators, Inc. (“TGF”), are controlled by a variety of

people, which are working together to defraud the Rushing family of their business

and their property. One of these people is Tim Connolly. He is the manager of TGF,

represents TGE in business dealings, created CSB and owned a portion of CSB and

now appears to own all of CSB. In addition, Appellees executed a Binding Letter of

                                          8
Intent that has been breached and also breached a lease agreement. Cites below.

Appellees are simply trying to take the Appellants Property for themselves and not

pay for it. They want to steal a facility that is worth over two million dollars for less

than the five hundred thousand dollars they paid for the Note and ignore the dealings

that put them in position to take that property.

      First, CSB legally did not even exist in 2012. And, even though it identified

itself as a Texas company, there is no such company in Texas then, now or ever. In

fact, even this suit was originally filed on behalf of the imaginary CSB, “A Texas

Corporation.” (See Page 1 of Original Petition). There is a CSB in Nevada that was

inactive in 2012 due to apparent nonpayment of taxes (since restored in late 2013).

Now, it seems that it has decided that CSB is that Nevada corporation (See Amended

Petition) – and an affiliate of TGE just like TGF. There is no apparent reason to have

involved an affiliate in the transaction other than fraud. TGE is charged with all

knowledge and awareness of its agents and representatives. As its parent, TGE had

equitable title in all of its property and had authority and direct knowledge. At the

time the Posting Letter was fraudulently mailed and intercepted, Connolly was CEO

of Texas Gulf Oil & Gas, Inc., a 100% owned subsidiary of TGE. Connolly was also

majority shareholder and Managing Member of the foreclosing lender, CS Bankers V,

LLC. CRI 517-535. At the same time, TGE purportedly owned a portion CS Bankers,

                                           9
V, LLC. Id. TGF, who appear to currently claim ownership of the Property, was later

sold to CSB for the benefit of Connolly. CRI 517-535 at Exhibit G. And, through the

entire process, Connolly is bargaining on behalf of all the parties. Id at Exhibits H

(first deal offer), I (emails with TC offering portion of deal to Hendry).

        This case revolves around one key event: the Defendants letting Appellees

take possession of the Facility after being fraudulently induced into entering a joint

venture with TGE on July 11, 2012. Id. Exhibit B. The purpose of that joint venture

was to form Texas Gulf Fabrication, Inc. – which would be 81% owned by the

Rushings. At the same time, TGE presented page 9 of the Loan Sale Agreement for

signature and stated they were going to purchase the Note so there were no concerns

about making the payments (this page does not identify CSB). The Defendants were

under the impression that the Note was being purchased by the joint venture. Instead

it was purchased by CS Bankers V LLC – which, as a subsidiary is owned, controlled

and part of TGE. CSB has been identified as “an affiliate of TGE” in the last amended

petition filed by TGE and CSB on July 16, 2014. An “affiliate” is defined as a person

or organization attached to a larger body.

      It is important to note that during negotiations leading up to the execution of the

contract on July 11, 2012, several proposals had been made where the facility would

be foreclosed – and each was refused. Id at Exhibit H. The Rushings repeatedly

                                          10
refused to agree to give up their facility. Id at Affidavits. That is why the Binding

Letter of Intent did not include them giving up their property. That is why a lease

agreement was executed. The sole purpose of the lease was to make it clear that the

Note payments were covered and that TGE was moving into the Property. But, on

July 24, Tim Connolly communicated to the Ayeds and other, excluding the

Appellants, that he had the foreclosure attorney set up to foreclose the property for the

cost of $1000. Exhibit J. Clearly, he was planning to foreclose – despite the fact that

the Rushing had said it was not allowed. Simply put, Connolly had a plan that

involved the facility and he was going to get it one way or the other. That plan

included taking over the facility, breaching the Binding LOI which it never intended

to follow, preventing the Rushings from getting any notices related to the foreclosure

in an attempt to take ownership and then kicking them out – which is exactly what

happened.

                                  II.
                       SUMMARY OF THE ARGUMENT

      The facts are that the Appellants owned a Facility and Equipment before

dealing with Appellees. Seven months later, Appellees claimed to legally own

everything and Appellants received nothing for it and were simply locked out with

nothing. Justice and equity serve to prevent this type of injustice.

                                           11
      It is about as clear as it gets that the foreclosure sale was improper, both

technically and because it was actively concealed. The summary judgment evidence,

which was provided by Appellees, shows that there was no notice of time, which

renders it improper as a matter of law. In addition, there are a lot of other defects as

listed below. Then, there are fact issues such as TGE actively intercepting the notice

and having it returned. In sum, the foreclosure sale must be set aside and judgment

rendered in favor of Appellants..

      There are other clear mistakes. The first being that the District Court ignored an

open cause of action for promissory estoppels. The only order that might be

applicable is based on a no evidence summary judgment motion that never mentions

or seeks relief on promissory estoppel. The order is clearly defective for granting

relief not sought and the cause of action is still valid.

      There were other causes of action brought relating to the actions taken by

Appellees. The court made errors with each and ignored fact issues. However, one

issue that applies across the board to each issue is the fact that the District Court

refused to compel discovery responses or depositions from the Appellees. It is

improper to grant a no-evidence summary judgment motion when you are not allowed

to take proper discovery.

                                           12
      The sanctions issue was also improperly addressed as it was based on

Appellants attempts to extend a cause of action. It is not harassing or sanctionable to

make a good faith argument to extend a cause of action. Here, Appellants sought to

extend a conspiracy to commit fraud cause of action to a puppet master that controlled

and profited from the conspiracy but never had direct contract with the defrauded

party. If the argument is colorable, even if not applied to extend the current case law,

it is sufficient and sanctions were not proper.

      The attorney fees award in this matter is based on a non-segregated fees request

which is improper and in direct conflict with case law stating attorney’s fees may not

be granted in without trial.

                                 III.
                       ARGUMENT AND AUTHORITIES

                                 Point of Error One

The District Court committed error by granting summary judgment on the issue
of foreclosure:
          a) the evidence attached to the Appellee's summary judgment
              motions establishes the foreclosure was improper. As such, the
              summary judgment in favor of Appellees should be set aside and
              this Court court should render a judgment in favor of Appellants.
          b) the foreclosure was also improper because the evidence presented
              established Appellees blocked the notice of foreclosure and made
              it impossible to make payments.
         c) the foreclosure was also improper for a variety of other reasons.

      The Court erred by granting the motion for summary judgment because TGF

                                          13
and Hendry, as well as CSB, did not meet their burden of proving, as a matter of law,

the elements of foreclosure. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d
211, 215-16 (Tex. 2003); M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d
22, 23 (Tex. 2000); City of Houston v. McDonald, 946 S.W.2d 419, 420 (Tex. App.—

Houston [14th Dist.] 1997, writ denied). Unless the movant meets its burden, the

burden never shifts to the nonmovant. M.D. Anderson, 28 S.W.3d at 23; Casso v.

Brand, 776 S.W.2d 551, 556 (Tex. 1989); City of Houston v. Clear Creek Basin Auth.,

589 S.W.2d 671, 678 (Tex. 1979). The Court erred by granting the motion for

summary judgment because Appellants raised a fact issue on the element of

foreclosure. Jones v. Tex. Pac. Indem. Co., 853 S.W.2d 791, 794 (Tex. App.—Dallas

1993, no writ). The Court also erred because the “Notice of Posting” letter mailed to

Appellants was defective on its face because there was no time for the sale in the

letter. Property Code 51.002(c). In addition, there are several reasons that the

foreclosure was improper as listed below.

Strict Compliance

      “Because sales by mortgagees and trustees under powers are more liable to

abuse, they are more zealously watched by courts of equity, and upon slight proof of

unfair conduct or violation of the powers given by the instrument, they will be set

aside. While it is true that the presumption of regularity exists generally in favor of

                                          14
judicial sales, it is well-settled that no such presumption prevails as to trustee's sales

under powers granted by deeds of trust, the reason for the rule being that the exercise

of such powers is a harsh remedy and that it can only be exercised by strictly

complying with the terms and conditions imposed upon the power of sale by the

maker of the trust instrument.” Sullivan v. Hardin, 102 S.W.2d 1110 (Tex. Civ. App.

1937); Smith v. Albright (Tex. Com. App.) 288 S.W. 178; Allbright v. Smith (Tex.

Com. App.) 5 S.W.2d 970; Reisenberg v. Hankins (Tex. Civ. App.) 258 S.W. 904,

910. Simply put, there is no presumption to benefit the trustee. As such, when a sale

has an error, it must be set aside. Here, there are multiple errors, the sale must be set

aside.

The Evidence Shows Mailed Notice Was Defective

         Any defect is sufficient to set aside a foreclosure, especially in a situation such

as we have here when the value of the foreclosed property greatly exceeds the amount

claimed on the lien. CRI 1688-1694. The only evidence presented to the Trial Court

of the notice mailed to D&R was filed by CS Bankers, who filed two affidavits

identifying the notice that was mailed to D&R. Appendix J; CRI 122-126; first MSJ

attempt: 439-448, Granted MSJ. Both affidavits identify three pages – and only three

pages as being mailed. Id. On page two, the “Notice of Posting” letter references an

attachment, but no such attachment was ever included – and the affidavits have

                                             15
verified this fact twice (this makes sense because the attachments could not have been

prepared on the 13th since Schlanger was not trustee until a day later). Since the

attachment was not included, the notice is defective:

1 – It fails to identify the time of the sale as required under Section 51.002(c).

This one fact that Appellees evidence has established requires that judgment be

rendered in favor of Appellants.

2 – It fails to identify the location of the sale as required by Section 51.002(b)1.

3 – It fails to identify the substitute trustee. Section 51.0075(e) of the Property Code

requires that the notice provide a name and address for the substitute trustee. Here,

the letter does include the name and address of Schlanger, but it fails to actually

identify him as the substitute trustee that is going to conduct the sale.

4 – The Notice of Posting identifies Schlanger as a “debt collector” trying to collect a

debt. At the same time on the posting notice filed with the property clerk, Schlanger

is claiming to be the substitute trustee and, in fact, conducted the foreclosure sale as

substitute trustee. However, Section 51.0075(b) prohibits him from acted in both

capacities – “A trustee or substitute trustee is not a debt collector.”         Section

51.0074(b)1 further clarifies that “A trustee may not be: (1) assigned a duty under a

security instrument other than to exercise the power of sale in accordance with the

terms of the security instrument.” Thus, Schlanger is not allowed to act as trustee and

                                           16
perform other duties such as debt collection and acceleration. The letter he sent to

Appellants claimed he was a debt collector and that he was accelerating the debt. As

such, any later actions he took as a substitute trustee should be invalid – or the actions

taken in any other capacity should be invalid. Clearly, one cannot simply have dual

roles at the same time or change their role back and forth to claim the protections

afforded by the rules and not be bound by them. Here, Schlanger sent a letter

claiming to be a debt collector at the same time that he filed notices at the courthouse

claiming to be trustee. If Schlanger would have attached the “Notice of Substitute

Trustee’s Sale” to the Notice of Posting then he would be claiming a dual role in the

same letter. The Rule is clear - - - you cannot have a dual role. Thus, the actions and

notices should be found improper and set aside.

        Again, Appellants presented their summary judgment motion on this issue.

CRI 2905-3022. Appellees did not even provide an exhibit in their response related to

this point or contest the issue. CRII 951-967. Appellees finally addressed this issue

in its supplement response to a new trial request – by claiming “the Rushing

Defendants intentionally present the Court with an incomplete copy of the letter.”

Appellants simply presented the sworn evidence that Appellees presented in both of

their summary judgment motions. Appellees also attached a non-sworn copy of the

Notice of Posting claiming the Notice of Substitute Trustee’s Sale was attached. First,

                                           17
it is not sworn and is not evidence. Second, the sworn evidence says the attachment

was left off by Schlanger – not by the “Rushing Defendants.” It is too late to doctor

the evidence – Schlanger did not include the attachment and it is defective. The

evidence and black letter law demand judgment be rendered for Appellant finding the

foreclosure notice and sale improper.

Evidence Shows Notice was Blocked and Fact Issues Abound

       The Court erred by granting the motion for summary judgment because there

is a disputed fact issue about the foreclosure being improper, including notice of the

foreclosure by CSB being fraudulently blocked from delivery, which must be

submitted to the jury. See Park Place Hosp. v. Estate of Milo, 909 S.W.2d 508, 511

(Tex. 1995).

Wrongful Interference

      Appellees stated only half of the facts when they claimed that they gave

Defendants and D & R notice of the foreclosure. A defective notice letter was sent in

the mail, but TGE personnel working at the Property refused to sign for the letter and

falsely advised the postman that D&R no longer was there. CRI 464-536.             By

intervening to prevent Defendants and D & R from receiving the foreclose notice,

Plaintiffs failed to comply with Section 51.002's notice requirements. Under Texas

law, when one party's wrongful interference prevents the other party's performance of

                                         18
a contract, not only is the other party's performance excused, but the interfering party

has committed a breach of contract for which the other party may recover damages

sustained from the breach. Longview Constr. & Dev., Inc. v. Loggins Constr. Co., 523
S.W.2d 771, 779 (Tex. Civ. App.—Tyler 1975, writ dism'd by agr.). In this case, even

though the lease had been executed by TGF, TGE was occupying and running the

business located at the Property. CSB has identified itself as an affiliate. As such, it

effectively sent notice to itself – not to D&R. Then, it refused acceptance of the

certified mail claiming D&R was not at that address and no forwarding address was

available. Oddly, TGE allowed the Rushings, who were working there, to receive

other mail for D&R at that address during this time period. Id at 482-485; Exhibit A.

But, as shown in the attached booklet and affidavit, the notation on the letter shows

that “Delivery Attempted, addressee not known at place of address.”

CRI 510-516; Exhibit G, USPS Booklet. So, CSB and TGE fraudulently prevented

the notice from getting to D&R by refusing the notice.

      Section 51.002 requires a creditor to provide notice to the debtor notice of a

pending foreclosure sale. Section 51.002 and its predecessors were enacted to stop the

sort of abuse that Plaintiffs are attempting to perpetrate here. See Armenta v.

Nussbaum, 519 S.W.2d 673, 677-78 (Tex. Ct. App. 13th Dist. –1975); see also Wylie

v. Hays, 263 S.W. 563, 567 (Tex. 1924). I n the late 1800's creditors, routinely preyed

                                          19
upon defaulting property owners by deleting notice requirements in deeds of trust, and

holding foreclosure sales in counties distant from the property. See Armenta, 519
S.W.2d at 677-78 (phrasing the creditors acts as “an evil that was calculated to work

against the public welfare”). Although Section 51.002 creates constructive notice

when the creditor deposits the foreclose notice in the mail, the long history of Texas

foreclosure law shows that the creditor cannot then prevent actual notice and seize the

property.

Texas Law Permits the Admission of Evidence that Plaintiffs Prevented Delivery of the
Foreclosure Notice.

      When analyzing whether a party's evidence is legally sufficient to raise an issue

of fact, a court looks to whether the evidence would ultimately be admissible at trial,

and whether it would “enable reasonable and fair-minded people to reach the verdict

under review.” See Adebo v. Litton Loan Servicing, L.P., 2008 Tex. App. LEXIS

3935 at *10, No. 01-07-00708-CV (May 29, 2008). When a debtor alleges that the

creditor failed to comply with Section 51.002's notice requirement, the debtor must

show that the creditor failed to serve the foreclosure notice. Id.

      Here, Defendants and D & R alleged that Plaintiffs failed to meet the notice

requirements of Section 51.002 because Plaintiffs prevented Defendants and D & R

from receiving service. As stated above, despite Plaintiffs' claiming to conform with

Section 51.002(e)'s enumerated provisions, Plaintiffs cannot meet Section 51.002's

                                          20
service requirement because they prevented the notice from reaching Defendants and

D & R. Consequently, Defendants and D & R have shown that 51.002(e) is not a legal

defense to their counterclaim, and thus 51.002(e) does not bar their evidence showing

that Plaintiffs wrongfully foreclosed the Property due to insufficient notice. See

Adebo, 2008 Tex. App. LEXIS 3935 at *10-11. Defendants' and D & R's evidence of

Plaintiffs' interference with the foreclosure notice's service would be admissible at

trial, and given every reasonable inference, is sufficient to raise an issue of fact to be

resolved by a jury. See Limestone Prods. Distrib., Inc., 71 S.W.3d at 308. As such,

summary judgment must be set aside.

Other Defects

No Amount Due A fact that must be established before a party is able to foreclose is

that there is a legal basis upon which to foreclose. In other words, there has to be a

legal instrument that gives a party a right to foreclose in certain circumstance and

those circumstances exist. In this case, there is no amount due – which means there

was no right to foreclose. Essentially, in July of 2012, three things happened as part

of one transaction: the note was assumed, the Binding LOI was executed and the lease

was signed. The purpose of the Lease was to work hand in hand to insure the Note

was paid and Appellants did not have to worry about ownership of the Property. CRI

482-485; Exhibit A. TGE took possession of the Property and was legally bound to

                                           21
pay the Lease (note that TGF lease so tie it in and boost it up). If the Note is not in

default, there is no basis to foreclose. Brown v. Cates, 99 Tex. 133 (1905). The debt

is the “principal thing.” Duty v. Graham, 12 Tex. 214 (1854). Thus, claiming a debt

is owed because it breached by not paying itself should not be a basis for foreclosure.

Appellants contested that there was any amount due and Appellees failed to establish

any amount due. In fact, there is never a number presented anywhere. Thus, since

there is a fact issue as to whether there is any amount due, the summary judgment

must be set aside.

CSB violated the Deed of Trust by not notifying the Guarantors.

      Section 14c of the Deed of Trust requires notice to all debtors obligated to pay

the debt G. CRI 517-535; Exhibit H, Deed of Trust at page 9. Exhibit A-1, a

modification of the Note, acknowledges the Guaranties by William Penn Rushing and

Charles Leon Rushing. No such notices were ever sent. Id. In and of itself, this

failure of notice is a breach of the deed of trust. Thus, not only was the deed of trust

violated, the foreclosure notice is inaccurate and defective.

CSB did not notify D&R of its purchase, address, balance, etc.

      The original injunction in this matter required CSB to present its full

“foreclosure file” and it has stated it has done so. Yet, the only communication in the

file is the foreclosure notice. This lack of documentation shows CSB did not

                                          22
accelerate the loan, notify that it would accelerate the loan, ask for a payment or even

notify D&R that a payment may be due. CSB failed to provide any D&R with an

address which made it impossible for D&R to provide a change of address or make a

payment. Id; Affidavits. Appellants, due to the lease that was in place, did not

believe any amounts were due and did not receive any invoice or demands for

payment which would support the fact that no amounts were due. Id.

      The previous lender may have accelerated the loan years prior – but had taken

payments and rescinded that acceleration. Id. In fact, the previous lender had sent a

notice that it would accelerate if payments were not made – but never accelerated. Id.

 So, at the time that CSB purchased the loan the loan had not been accelerated no

demand other than the normal billing statements had been received. After CSB

purchased the Note, D&R did not receive any correspondence no demands for

payment, no invoices, – no amounts were due and no amount had been demanded.

True, according to the terms of the Note, payments should have become due and the

previous lender had even sent statements to that regard prior to the transfer – but no

action was taken by the lender with that regard. CSB simply refused to notify D&R

that it had bought the Note or provide information which would show an amount was

due and where it could be paid. In short, CSB made it impossible to perform.

The Notice Letter is Defective and CSB acted in bad faith

                                          23
      Even of the Notice of Foreclosure had not been blocked by CSB, the notice was

defective beyond the fact that no time was given. Even if the Notice of Foreclosure

had not been blocked by CSB, the notice was defective. In a foreclosure situation,

even a small error is a basis to set aside the foreclosure. Harwath v. Hudson, 654
S.W.2d 851, 853 (Tex. App. Dallas 1983) citing Slaughter v. Qualls, 139 Tex. 340,

162 S.W.2d 671 (1942).

      The notice letter has several errors:

-Introductory Paragraph states it is a Texas company which is incorrect. CSB is a

Nevada company and there is no such company in Texas. Thus, the notice is for a

company that does not exist and is invalid.

-Paragraph 1 states D&R was notified of a default, that the default had not been cured

and the cure period had expired. Again, CSB never sent a notice of default (or

demand for payment). There was no cure period provided. The entire paragraph is

incorrect. Id.

-Paragraph 2 states the “entire amount” is due but fails to provide an amount. It

further states it is due under the terms of the Note – which does not provide for

payment to CSB or an address for CSB.

-Paragraph 3 states to “contact the lender” for the amount due and costs that are being

added on. However, again there no contact information for the lender and the lender

                                          24
is incorrectly identified as a Texas Company. There is no phone number to contact

CSB. Simply, it was impossible to perform.

-Paragraph 4 and 5 generally references Lender without providing information.

-Paragraph 6 purports to be a notice of default and an acceleration – without

identifying what it is accelerating, what amount was in default, the total amount or

what amount is due.

-Paragraph 7 grants D&R the right to reinstate after acceleration. But, again, provides

no amount or information which would allow reinstatement. Also, taken in context

with paragraph 6 claiming to be an acceleration, grants a right but in a method where

it is impossible to perform.

-Paragraph 8 acknowledges it is required to give notice to the guarantors and states it

is providing notice to “each guarantor.” But, it simply did not do so. Id.

      So, out of 9 paragraphs, 7 are incorrect and the other 2 simply do not provide

information which should be in the notice. Seriously, how can you provide a valid

notice of default without identifying the amount in default, the balance or how to cure.

Especially when you acknowledge you are allowing cure in paragraph 1 – but then

fail to state how to cure, where to cure and incorrectly state who the cure should be

made with. CSB executed a lease making no amount due and misled D&R into

believing that no amount was due, and further made it impossible for D&R to make a

                                          25
payment or obtain any information regarding the Note. Then, it sent a defective notice

in its attempt to foreclose.

Final summary of foreclosure errors:

  - All evidence established notice of posting attachment was not sent, which
establishes the notice mailed did not include a time for the sale, identify the trustee or
location.
 -The Posting Letter and posted Notice identify a Texas company that does not exist
(CS Bankers is a Nevada company to was not in good standing at the time of
foreclosure).
 -Paragraph one of the Posting Letter incorrectly states D&R was notified of default
and a cure period – when in fact, no contact had ever been made by CS Bankers.
 -The Posting Letter demands the “entire amount,” but fails to state a number – or
who to pay, or where.
 -Paragraph 8 claims it is noticing each guarantor, as required by the deed of trust and
Section 51.002(b)3, but no such notices were ever sent.
 -No amount was due under the Note. The joint venture included no payments being
due and lease executed by TGE and D&R was to show all payments were covered.
 - Property Code prevents Schlanger form acting as substitute trustee and debt
collecter.
 -Wrongful interference – TGE blocked delivery of the notice. These actions deem
the notice and foreclosure invalid. At the very least, this is a fact issue to be presented
to a jury.
 -No notice to guarantors – The code and deed of trust required notice to each debtor,
still no such notice was provided – even thought the notice letter said it was sent.
 -Impossibility of Performance - CS Bankers never contacted D&R, never made a
payment demand, never provided information by which it could be contacted, never
provided an address for payments, never provided an address by which D&R could
provide written notice of a change of address, etc. Simply put, CS Bankers hid from
D&R and made it impossible for them to be contacted.

        Any one of these errors is sufficient to set aside the foreclosure sale. The

additional fact that no time, no address of sale and no identification of new substitute

trustee was provided, simply shows how much was hidden. The Court should set

                                            26
aside the foreclosure order, all orders related to it and render a decision that the

foreclosure was improper for each of the reasons above.

                                  Point of Error Two

      Point of Error: The district court committed error which caused the
      rendition of an improper order when it entered judgment dismissing the
      Quiet Title cause of action. Since the foreclosure was improper, the quiet
      title cause of action should also be set aside and the issue resolved in
      accordance with the foreclosure ruling.

        Quiet Title is related:

        The issue of quiet title is secondary and follows any ruling related to

foreclosure. As noted in Appellants live petition, the property in dispute is now

owned by TGF – even though it was foreclosed by CSB. RRI 781-800. As such, it

would be improper to dismiss the quiet title action until the foreclosure action is

addressed properly. In addition, there are no claims against TGF and Hendry

regarding foreclosure – only that they conspired with CSB and later ended up with the

Property. There are no counter claims or affirmative defenses to the cause of action.

As such, there is no basis for the relief granted on the Order issued by the trial court.

This court should render a finding that since the foreclosure was improper, title should

be quieted back in favor of D&R.

                                  Point of Error Three

                                           27
      Point of Error: The district court committed error by ignoring at least one
      cause of action and signing orders exceeding the relief requested in
      summary judgment motions.

        Plaintiff’s multiple summary judgment motions fail to address the promissory

estoppel claims at all. (see all summary judgment motions) In addition, the breach of

the lease agreement is not addressed. Therefore, at a minimum, the promissory

estoppel claims are still outstanding against Plaintiffs in addition to the any other

outstanding claims that were not granted by summary judgment.

The Order Exceeds Requested Relief

        The Order signed on February 3, 2015, dismisses all of Appellants’ claims

against TGE, TGF and Timothy Connolly. RRI 2027. The summary judgment

motion never mentions promissory estoppels – which was an outstanding cause of

action. RRI 1346-1375 This order exceeds the relief sought because it dismisses

claims which were not mentioned in the no evidence motions for summary judgment.

Id.

Specifically, the last amended petition states:

      The acts above show that D&R and the Rushings were deprived of their
      property, business and livelihood due to the actions and promises of the TGE,
      TGFI, TGF, TC and CSB. Under quantum meruit and promissory estoppel,
      D&R and the Rushings seek the return of their business and property or at least
      monetary damages equivalent to the loss of services, material and property.

RRI 781-800. Clearly, promissory estoppel appears as a cause of action based on this

                                          28
language. Clearly, it is not even mentioned in the no evidence motion for summary

judgment. Thus, the order granting the motion exceeds the relief sought and is

improper. In addition, there are no other motions or orders that should apply to the

promissory estoppels cause of action and the case should be remanded for it to be

addressed.

                                Point of Error Four

        Point of Error: The district court committed error which caused the
        rendition of an improper temporary injunction when it granted no-
        evidence summary judgment and did not compel discovery responses.

         Inadequate Time for Discovery

         It is clear that the Court erred by granting the no-evidence motion for

summary judgment because there had not been adequate time for discovery. Tex. R.

Civ. P. 166a(i). Specifically, Appellants requested discovery and it simply was not

produced – and depositions were quashed. At the time the summary judgment

motions were filed, parties were still well in the discovery period which did not expire

until 2015. Appellants timely sought to compel discovery and the Court refused to

rule.   While it appeared that this case had been on file for quite a while, docket

control orders were in place prohibiting discovery for most of the case (due to removal

and remand early in the case). Even after a new docket control order was entered in

January of 2014, there were multiple parties that were not served (some were never

                                          29
served) and discovery was delayed waiting for those parties. Simply put, the Order

should be set aside because the discovery period still had not concluded and

Appellants were attempting to force responses because the responding parties simply

refused to sends responsive documents and quashed the deposition notices.

                                 Point of Error Five

        Point of Error: The district court committed error which caused the
        rendition of an improper order when it entered summary judgment on
        fraud, breach of contract, quantum meruit, negligent misrepresentation,
        breach of fiduciary duty, conversion, conspiracy, and tortuous
        interference.

        Each of these causes of action, except breach of contract, was ruled on as a no

evidence ruling. There was evidence creating a fact issue with each as shown below.

CRI 1593-1715 (argument below refers the exhibits numbers for easier reference

within these pages). In addition, there was evidence showing a contract (the BLOI)

and the evidence presented was not sufficient to grant summary judgment on this

issue. CRI 1716-1839 (same).

Fraud

        Connolly and TGE provided the Appellants with various deal offers and met

with them discussing their Facility. CRI 1593-1715: Exhibits E (RRI 1649), H (RRI

1654), I (RRI 1670); Affidavits at RRI 1608-1609. TGE provided representations

through its officers Craig Crawford (Crawford”) and David Mathews (“Mathews”) as

                                           30
well as Connolly who, as shown below was a manager and owner of CSB as well as a

negotiator for TGE. Exhibits E; Affidavits. Connolly was an agent of TGE as well as

CSB and operated for himself. Exhibit C (RRI 1617), H. Connolly, Crawford and

Mathews knew the deal could not be performed as offered and only made such offers

to induce the Appellants into a deal where Appellees could take the Appellants

Facility, labor and Personal Items (“Assets”) Exhibit I, K (RRI 1677). Mathews even

discusses that the deal needs to be redone but acknowledges TGE owes the Rushings

the first $100,000 that is coming due – which was never paid. Id. Connolly even

promised that the TGE stock Appellants would receive would be worth around two

million dollars – and it was never delivered. Exhibit H. A lease was executed

wherein payments to CSB were to be satisfied and no payment would be due on the

Note. Exhibit D. Crawford and Mathews promised that there was a backlog of

business and that the joint venture would be so profitable that Appellants would make

$34 million dollars. Affidavits. The Appellants relied upon the representations and

have lost their Facility, labor and Personal Items to Appellees because they believed

the assertions put forth by Connolly, CSB and TGE representatives. Affidavits.

Simply put, Crawford, Mathews and Connolly, on behalf of themselves as well as

TGE and CSB, made direct representations to the Appellants which were either totally

false – or so far fetched that he knew that what he was promising was impossible and

                                         31
those promises led to the Appellants losing their Assets which were taken for the

benefit of Connolly, CSB and TGE. At a minimum, the evidence presented creates a

fact issue for a jury.

Negligent Misrepresentation

       As shown, TGE and Connolly received compensation. Exhibit G (RRI 1654), L

(RRI 1679). Connolly participated in the dealings between Appellants and Appellees

and proposed deal points that were not possible and were clearly nothing but an

incentive for the Appellants to deal with the Appellees. Exhibit H, E. Crawford,

Mathews and Connolly made promises and executed a binding LOI leading

Appellants into tendering their Assets for use by the joint venture. Affidavits. TGE,

through Crawford and Mathews, represented a backlog of business which would

create a large amount of revenue. Affidavits. Connolly joined in and encouraged this

position by referring to possible income. Exhibit H. TGE and Connolly also

represented that the TGE stock that the Appellants would receive was worth over two

million dollars. Id. Based on these representations and more made by Appellees,

Appellants entered into the transaction with the Appellees and suffered the loss of its

business, Facility, labor and Personal Items.           Affidavits.    Sadly, despite

acknowledging the $100,000 debt, it was never paid. Exhibit K. The evidence is and

was sufficient to create a fact issue for a jury.

                                            32
Breach of Contract

      Connolly made promises though himself and TGE. Affidavits (RRI 1726-

1730); Exhibit E (RRI 1769), H (RRI 1786). Appellees have claimed the binding

letter of intent is not sufficient since it was not formalized into a more comprehensive

agreement. The only reason the contract was not formalized with a more complete

writing is the bad acts of Appellees – they simply refused to finish the paperwork once

they got what they wanted. TGE secretly acknowledged its debt and desire to redo the

deal. Exhibit K. Laches and unclean hands serve to prevent Appellees from being

able to profit from such underhanded dealings. Specifically, Appellees are hoping to

profit from improperly refusing to finish the paperwork or make payments which was

their responsibility under the BLOI. To allow them to avoid liability under the

contract would be inequitable and a clear example of one profiting from its own bad

actions – a situation laches and unclean hands directly prevents.

      Under Texas law, when one party's wrongful interference prevents the other

party's performance of a contract, not only is the other party's performance excused,

but the interfering party has committed a breach of contract for which the other party

may recover damages sustained from the breach. Longview Constr. & Dev., Inc. v.

Loggins Constr. Co., 523 S.W.2d 771, 779 (Tex. Civ. App.—Tyler 1975, writ dism'd

by agr.). In this case, Appellees interfered with the BLOI and prevented it from being

                                          33
refined into a comprehensive agreement as set out in its own terms. Affidavits. As

such, Appellees may not claim the contract does not exist.

      Even if the BLOI is found to not be complete, in such a case, the parties must

look at the situation where there is clearly a contract, even if it is not clearly defined

by writing. This situation is referred to as Quantum Meruit or Quasi contract – which

are the same. In this case, TGE and its agents negotiated the binding LOI and is

clearly involved in either the binding LOI or a quasi contract/quantum meruit situation

because it took the benefits of the bargain from the Appellants. TGE acknowledged

the debt under the BLOI where is discusses the $100,000 it is about to pay the

Rushing (email sent during the 10 days after execution before the payment was due).

Connolly took benefits of the bargain and was directly involved in moving the title of

the real property by foreclosure while avoiding the execution of a real estate contract.

Connolly, as manager of everyone involved, also took the benefits of the bargain as

shown by the separation agreement of CSB. Exhibit G. So, in this case, it is clear and

undisputed that the Appellants performed and tendered their Facility, Assets and

services to the Appellees and suffered the loss of the Facility and Assets. Affidavits.

Appellees breached by not performing under the Binding LOI. Affidavits(RRI 1726-

1730). In addition, even if the Binding LOI is found to not be complete, then there is

a quasi contract/quantum meruit situation created by the actions of the parties.

                                           34
Quantum Meruit

      As shown above, The Rushings provided services, equipment and real property

to the Appellees. CRI 1593-1715;1716-1839. These items were taken and used by

the TGE, CSB and Connolly while they were aware that the Appellants expected

compensation. See Attached Affidavits; see Exhibits H, E, K. In the end, TGE and

Connolly profited by taking Appellants Assets to the detriment of the Appellants.

      As shown in the facts above, Appellants expected a lot of compensation for

getting involved with Plaintiffs. Not only was there immediate cash ($100k never

received that was due in 10 days) but there was also supposed to be $34 million in

value. Exhibit E, K. It is undisputed that Appellants provided their property, real and

personal, located at the Property. It is undisputed that the Property has been used for

the benefit of TGE and Connolly. Affidavits; Exhibits C, D. As discussed above, each

of these parties were aware of the LOI and that the Appellants expected compensation

for their contribution – it would be insane to claim that the Appellants were simply

donating their Property, personal property and time. Affidavits; Exhibits H, E. As

such each element is satisfied and this cause of action stands.

Quantum Meruit is Applicable for Damages for Loss of Real Property

      The Trial Court accepted the idea that Quantum Meruit only applied to loss of

items and labor, not real estate. It did not consider a situation where loss of property

                                          35
is the largest part of damages. There was no deed of trust or other transfer of the deed

of the property in this case. This is a deal where the Appellants agreed to work with

the opposing parties and allow them the use of their facilities and during that time the

opposing parties took possession of the real property and then foreclosed it. All of

which would not have been possible if the parties were not working under a binding

letter of intent.

       If the binding letter of intent fails, then this becomes a quantum meruit situation

since no contract would be in place to control. There are no exclusions for real

property in quantum meruit – only for contracts. Quantum meruit is in place to

compensate a party that put forth value to its detriment where the other party has

profited off of its contribution – such as this case. And, Promissory Estoppel would

be the next backup position. In short, those three cause of action should work in hand

to cover all possibilities.

The law is clear that "(where) there exists a valid express contract covering the subject

matter, there can be no implied contract," and hence no recovery in quantum meruit.

Woodard v. Southwest States, Inc., 384 S.W.2d 674, 675 (Tex. 1964). It is black letter

law that a contract for the transfer of land must be in writing. As such, a typical real

estate transaction requires a contract – to be enforceable under the statute of frauds.

Thus, in a typical real estate transaction, quantum meruit would simply not be

                                           36
applicable – but this does not mean it will not apply in a non-typical transaction. Such

as the situation here where the opposing party took possession of the real property

without a written contract. In this case, Appellants seek to recover under a contract –

but opposing parties are claiming no contract exists. In such a situation, Appellants

must seek recovery under alternative causes of action and since the real property was

not covered by contract – it falls into a quantum meruit cause of action. “The

expected payment does not have to be monetary; it may be any form of compensation.

Accordingly, quantum meruit recovery has been allowed when the original payment

sought was an interest in land, Miller v. Graves, 185 S.W.2d 745, 1945 Tex. App.

LEXIS 649 (Tex. Civ. App. 1945), writ ref'd), and the devise of a residence. Scott v.

Walker, 141 Tex. 181, 170 S.W.2d 718 (Tex. 1943).” Vortt Exploration Co. v.

Chevron U.S.A., Inc., 787 S.W.2d 942 (Tex. 1990).

      It is true that an express contract and quantum meruit are distinct and different

relationships and inconsistent ideas, but the same record may contain evidence which

will support either theory. A plaintiff may allege both theories and recover as the

evidence may show. Clower v. Brookman, 325 S.W.2d 440 (Tex.Civ.App. -- San

Antonio, 1959, no writ).      As Williston explains, "in situations involving true

contracts"—those created by "promise or mutual assent of the parties, express or

implied"—"the parties' rights are determined by law and by the terms of the contract;

                                          37
by contrast, when quasi-contract [i.e. quantum meruit] is involved, liability is

determined by principles of equity and justice and the intent of the parties is

immaterial." Williston, § 1:6; see Ferrous Prods. Co. v. Gulf States Trading Co., 323
S.W.2d 292, 296-97 (Tex. Civ. App.—Houston, 1959), aff'd, 160 Tex. 399, 332
S.W.2d 310, 312 (Tex. 1960). Thus, "[a] court properly resorts to quasi-contract only

in the absence of an express contract or contract implied-in-fact." Williston, § 1:6.

      The right to recover on quantum meruit does not grow out of the contract, but is

independent of it. It is based upon the promises implied by law to pay for

consideration rendered and knowingly accepted. Colbert v. Dallas Joint Stock Land

Bank of Dallas, 129 Tex. 235, 102 S.W.2d 1031-1034 (1937). When there has been

partial performance and an acceptance of the benefits, if any, arising there from by the

other party, then a recovery can be had for a quantum meruit; not by force of the

contract but independent thereof. Gonzales v. McHugh, 21 Tex. 256. In this case,

TGE has admitted the parties acted as if an agreement was in place and in that process

ended up receiving services from the Rushings and ownership of the real property –

which was the key element of the entire deal since it was not possible to have a joint

venture of any kind without the real property.

      Many Texas cases speak of an “express” contract barring recovery in quantum

meruit, courts have recognized that contracts in which some or all of the terms are

                                          38
implied-in-fact will also bar recovery in quantum meruit. This rule makes

jurisprudential sense because "mutual assent" is present in a contract "[r]egardless of

whether [it] is based on express or implied promises," and courts will not override

mutual assent by imposing a different bargain on the parties in quantum meruit.

Excess Underwriters at Lloyd's, London, 246 S.W.3d at 50; Dallas Elec. Supply Co. v.

Branum Co., 143 Tex. 366, 185 S.W.2d 427, 429 (Tex. 1945). Moreover, a contrary

rule that only express contracts in which every single term is stated by the parties can

bar recovery in quantum meruit would be extremely difficult to administer.

      In other words, if the opposing parties had a contract for transfer of the real

property for which Appellants are seeking or a contract covering their dealings, then

that would preclude a quantum meruit claim on that property. Anything short of that

is simply not a proper basis to deny recovery under quantum meruit or promissory

estoppel.

Breach of Fiduciary Duty

      Joint venturers owe a fiduciary duty to each other in dealings within the scope

of the joint venture. Rankin v. Naftalis, 557 S.W.2d 940, 944 (Tex. 1977); Fitzgerald

v. Hull, 237 S.W.2d 256, 264 (Tex. 1951). In addition, partners are fiduciaries.

Indeed, “it is well established in Texas that the mere failure of [a party] to disclose to

[a co-venturer] all aspects of their inducement in the transaction is in itself a breach of

                                            39
his fiduciary duty”. Kirby, 688 S.W.2d at 165. It is clear that Connolly and TGE

breached their fiduciary duty to the Appellants when they foreclosed on the Facility,

when they attempted to negotiate other deals, when they profited, when they simply

refused to pay under the BLOI, when they caused the comprehensive agreement to not

be provided and when they did not deal with the Appellants with integrity. CRI 1726-

1730, 1608-1610; see Exhibits K (CRI 1675) (acknowledging $ not paid), M. They

did all these things while Appellants were led to believe they were acting under a

binding letter of intent. Id. A party that knowingly induces a breach of fiduciary duty

or participates can be held liable as a joint tortfeasor. Kinzbach Tool Co. v. Corbett-

Wallace Corp., 160 S.W.2d 509, 514 (Tex. 1942). “Under Texas common law, if a

third party knowingly participates in a defendant's breach of a fiduciary duty owed to

a plaintiff, the third party is jointly liable with the defendant for damages to the

plaintiff proximately caused by this breach of fiduciary duty, and the plaintiff has the

same equitable remedies against the defendant and the third party based upon this

breach.” Hunter Bldgs. & Mfg., L.P. v. MBI Global, L.L.C., 436 S.W.3d 9, 15-16

(Tex. App. Houston 14th Dist. 2014). Thus, since Connolly and TGE worked together

as mutual agents and to profit off of the Appellants, they are jointly liable.

      These actions caused the Appellants to lose their Facility, personal items,

equipment and the value of their services for the joint venture – directly to CSB and

                                          40
TGE who profited off of the transaction. Affidavits. Clearly, Appellants suffered and

Appellees directly profited despite being in a fiduciary relationship. The evidence

shows at least a fact issue and this issue should be remanded for further proceedings.

Conversion

      The Rushings owned equipment, personal items and various other items,

including a sound studio (the “Personal Items”), that was located at the Facility. CRI

1726-1730, 1608-1610.      Only D&R Constructors signed the Deed of Trust, and

consequently that document only reaches personal property owned by D&R

Constructors. The Deed of Trust cannot reach the personal property of Appellants

Michael, Florence or Penn Rushing that was at the Property. In addition to the

personal property located at the Property, on January 28, 2013, this Court ordered

Appellants to return personal property which had been removed back to the Property

until a final disposition in this case. Some of the returned personal property belonged

to Michael Rushing. Id. Accordingly, they took possession of the Property, they also

took possession of Michael Rushing’s personal property – and were subject to the

injunction for the returned property as well as the property that had not been removed

which belonged to the Rushings. Since then, the property has not been returned to the

Rushing and much of that property has been disposed of and is no longer at the

Property. CRI 1609.

                                          41
      Connolly, personally and as agent and manager for CSB and TGF, had direct

control of the location and property for a period of time. CSB owned the Facility

under the TGE umbrella as shown above. The Personal Items have not been returned

and they were personal property of the Appellants. CRI 1726-1730, 1608-1610.

Appellees each had control over the item and have not returned them – in fact,

Appellees have claimed they trashed many of the personal items. Id. Accordingly,

there is at least a fact issues and this cause of action stands should stand as asserted.

Conspiracy

      A cause of action for conspiracy requires: 1) two or more persons; 2) an object

to be accomplished; 3) a meeting of the minds on the object or course of action; 4) one

or more unlawful, overt acts; and 5) damages as a proximate result. Chon Tri v. J.T.T.,

162 S.W.3d 552, 556 (Tex. 2005).

      Here, the basic elements are met since Connolly is an agent for all Appellees,

CSB, TGE and Connolly. Since each is charged with awareness, there is clearly a

meeting of the minds on any actions taken. So, the parties had a meeting of the minds

on the subject since they reached deals where money was paid and property was

transferred – to Appellees benefit and to Appellants harm. Affidavits; See Exhibit G

(CRI 1654). Damage is clear since the Appellants were deprived of their Property,

real and personal, in addition to their family business. CRI 1726-1730, 1608-1610;

                                           42
Exhibit N, Expert Report (CRI 1688-1694). The only other element in question is

regarding the unlawful or overt acts which is addressed within the rest of the motion

(ie fraud exists therefore conspiracy to defraud exists and so on). Thus, for each

active cause of action, there is evidence that conspiracy stands.

      In this matter, Smith did not directly participate in the fraud since he never had

direct contact with the Appellants. However, the emails and other evidence indicate

he is the puppet master of the entire conspiracy to defraud. Appellants propose that a

conspiracy to defraud cause of action should apply to a puppet master who is directing

the activities of others and profiting from their actions as was alleged in this matter.

As such, the cause of action for conspiracy to defraud should be extended to cover a

puppet master and this claim against Smith should be remanded for further

proceedings.

Tortious Interference

      Tortious interference with contract requires: 1) a valid contract, 2) the defendant

willfully and intentionally interfered with the contract, 3) the interference proximately

caused the plaintiff’s injury, and 4) damage. Here, Appellants held a lease with the

joint venture, which leased the Property from D&R Constructors, Inc. Exhibit D (CRI

16291648). Appellants also held a joint venture contract with TGE. Exhibit E (CRI

                                           43
1649-1651). Tortious interference requires only that the defendant had knowledge of

facts and circumstances that would lead a reasonable person to believe there was a

contract in which the party had an interest. Kelly v. Galveston County, 520 S.W.2d
507, 513 (Tex. Civ. App. Houston 14th Dist. 1975); see also, e.g., John Paul Mitchell

Sys. v. Randalls Food Mkts., 17 S.W.3d 721, 730 (Tex. App. Austin 2000). Here,

TGE, CSB and Connolly knew that Appellants and TGE were joint venture partners

and had a lease for the Property. Here, it is clear that if the lease had been paid, then

the foreclosure would be improper. By causing no payments, Connolly, CSB and

TGE interfered with the lease. Connolly and CSB also interfered with the BLOI by

causing it to never be memorialized as promised and doing other self dealing. CRI

1726-1730, 1608-1610., 1654-1686; exhibit G, L. Of course, planning to foreclose

fourteen days after signing the deal without advising the Appellants is also a violation

of disclosure, self dealing etc. CRI 1675; Exhibit J. Thus, there is at least a fact issue

and this Court should set aside the summary judgment on this issue.

      By negotiating with Hendry and Smith, Connolly and CSB caused TGE to

breach the binding letter of intent, or the quasi contract status they were operating

under, and due to that interference, the Appellants failed to receive the value of the

contract and lost their real property, personal property and the labor they contributed

to the joint venture with TGE. CRI 1726-1730, 1608-1610.

                                           44
      Intentional interference requires that the defendant intend to interfere with the

contract. Southwestern Bell tel. Co. v. John Carlo Tex., Inc., 843 S.W.2d 470, 472

(Tex. 1992). For these purposes, the intent requirement includes inducing one party to

breach an existing contract. John Paul Mitchell Sys., 17 S.W.3d at 730-31. Here,

Brian Hendry knew that Appellants and TGE, and Appellants and the joint venture,

had contracts. CRI 1726-1730, 1608-1610; Exhibit E. Consequently, there is an issue

of fact regarding whether Brian Hendry’s offer to purchase the Property induced TGE

to breach the Binding Letter of Intent, and breach the lease as a joint venture partner.

Again, there are fact issues here that should be presented to a jury.

                                  Point of Error Six

      Point of Error: The district court committed error which caused the
      rendition of an improper order when it entered sanctions in this matter.

There is a good-faith argument to extend existing law – therefore not “groundless”

        A groundless pleading is one that has no basis in law or fact and is not

warranted by a good-faith argument for the extension, modification, or reversal of

existing law. TRCP13; GTE Comms Sys. V. Tanner, 856 S.W.2d 725, 730 (Tex.

1993). If there is sufficient basis to extend existing law to be applicable, the argument

is not groundless. Lake Travis ISD v. Lovelace, 243 S.W.2d 244, 254 (Tex.App.—

Austin 2007, no pet.). In this case, Appellants presented evidence showing Smith was

                                           45
working with the other parties (emails showing meetings at his house, requesting

release on his behalf, referring to him as investor, etc.). RRII 2421-2445. Appellants

asserted that this situation, where a party interacts, or even controls, the other

members conducting the fraud, that a conspiracy cause of action is valid even if there

is no direct contact. While the Court is bound to follow current precedent, it is not

sanctionable to present a good faith argument to challenge current precedent. In this

case, if the fraud had been proven against the other members of the conspiracy, it

would have been irresponsible to not have included the person that appears to be the

puppet master. Thus, Appellants and Gore should have the opportunity to extend

current law to cover this situation – and not be sanctioned for such actions.

       A review of the pleading show that the “Third Amended Claims” as referenced

in the Sanctions Order, only contains claims for conspiracy to commit fraud. The

pleading:

Page 3: Emails established assertions regarding meeting at Smith’s home were true
(also referenced on page 5) and the quoted language was in the email attached to
Response.
Page 4: Appellants presented transcript recording of Crawford negotiating to get
Smith and Hendry a release – just as asserted in the pleading.
Page 5: “On information and belief, Lester Smith orchestrated and directed the,
members of the Gulf Group to make the deal happen.” This assertion, while
admittedly in the fraud section, only asserts conspiracy.
Pages 14-15: The conspiracy section outlining the conspiracy allegation.

RRI 782-800. As such, if this Court finds that conspiracy to commit fraud should

                                         46
apply to a puppet master who, while not directly committing fraud, directed the

actions of other who did and profited from it, then the sanctions order must be set

aside. Further, to set aside the sanctions order, it is not necessary for current law to be

extended – it only has to be found that there is a basis to put forth the argument.

Appellants believe it is proper to find a puppet master liable for conspiracy to commit

fraud. There is no bad faith here and no evidence was presented showing there was.

At the very least, it makes sense to include a puppet master and it is not bad faith to

present the argument for extending current precedent.

        So, again, Appellants assert there was no bad faith involved. Appellants are

challenging existing law because it seems that a puppet master should have liability.

As such, the claims are neither groundless nor made in bad faith.

Sanction Excessive and No Evidence on Attorney’s Fees

        Appellants object to any evidence presented regarding attorney’s fees because

Smith’s counsel rested their case before any such evidence was presented. RR pg. 69.

 Claimant did not introduce evidence on attorney’s fees during his portion of the

hearing. Instead, there was testimony in between his closing and Gore’s conclusion –

which should not be considered evidence.

      The testimony presented on attorney’s fees was for Hendry and Smith together.

There was no evidence of apportionment. Hendry, the other party represented, would

                                            47
have required at least ninety percent of the same services (motions, appearances, etc.),

if not all. It would be unjust to let a sanction stand that covers his legal fees simply

because they had the same counsel. Further, the testimony on the stand contradicted

itself and shows all fees were attributable to Hendry, not Smith.         In sum, the

sanction should not have been levied and it is definitely excessive. As such, it should

be set aside.

                                Point of Error Seven

      Point of Error: The district court committed error which caused the
      rendition of an improper order when it entered a judgment for attorneys’
      fees without proper segregation or support and which contradicts case law
      requiring trial on whether the attorney’s fees are reasonable and
      necessary.

      TGE and CSB are not entitled to the amount of attorney fees claimed, if entitled

to any fees at all. A party seeking recovery of attorney fees has the burden to show

that the claim is one for which attorney fees are permitted and that the fees were

incurred against the particular defendant sought to be charged. Koch Oil Co. v.

Wilber, 895 S.W.2d 854, 867 (Tex. App.—Beaumont 1995, writ denied). In this case,

they did not show proof that they properly segregated the attorney fees incurred in this

dispute. CRII 2696-2873. When a case involves more than one claim, fees may be

recovered only for those claims falling within the statute or contract. Tony Gullo

Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006); AU Pharm., Inc. v.

                                          48
Boston, 986 S.W.2d 331, 336 (Tex. App.—Texarkana 1999, no pet.). Here, there

were multiple claims and causes of action and Appellees did not identify or attempt to

identify which fees were applicable to which cause of action, which party or anything.

Also, when a plaintiff seeks to charge multiple defendants with liability in one suit,

the plaintiff must segregate the fees so defendants are charged only for the fees for

which they are responsible. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10-11

(Tex. 1991), modified on other grounds, Tony Gullo Motors I, L.P. v. Chapa, 212
S.W.3d 299 (Tex. 2006). Here, there is no division of claims and no division of

Defendants. Id. In fact, there is no explanation as to how the claimed number was

determined.   Id.   Instead, they claim they believe it is reasonable – with no

explanation. Such a claim with no explanation or division is simply not proper.

      Their request for attorney fees in the event of appeal fail for the same reason.

No division of claims or people and no explanation as to why such a number is

reasonable. If one cause of action is remanded, then the fees must be set aside because

it is impossible to tell which applies. This same argument is why the fees should just

be set aside – you cannot tell what they were awarded for or why. Appellants objected

to the affidavits because they are insufficient as a matter of law. They simply cannot

say it is reasonable in a self serving manner without explanation.

                                          49
Attorney Fees Prohibited: Case law directly on point concludes attorney fees are not

proper in this situation:

      Section 37.009 provides that "the court may award costs and reasonable and
      necessary attorney's fees as are equitable and just" in a declaratory judgment
      proceeding. Pursuant to Section 37.009, the judge is to determine whether an
      award of attorney's fees is equitable and just; however, even when declaratory
      relief has been determined by summary judgment, the issue of whether
      attorney's fees are reasonable and necessary is a question of fact for the jury to
      determine when the jury is the trier of fact. City of Garland v. Dallas Morning
      News, 22 S.W.3d 351, 367 (Tex. 2000); Bocquet v. Herring, 972 S.W.2d 19,
      20-21 (Tex. 1998).

Fuqua v. Oncor Elec. Delivery Co., 315 S.W.3d 552, 2010 Tex. App. LEXIS 2323

(Tex. App. Eastland 2010). Thus, no attorney fees should be granted without a trial in

this situation. Thus, all attorney fees should be set aside.

                                      PRAYER

      Appellants, D & R Constructors, Inc. (“D&R”), George W. Gore and Michael

Rushing, Stephanie Rushing, Penn Rushing and Florence Rushing (“Appellants”),

pray that the orders and judgment entered against Appellants from Cause No. 2013-

00543, Texas Gulf Energy, Inc. on Behalf of CS Bankers V, LLC and Texas Gulf

Fabricators v. Michael Rushing, Stephanie Rushing, Penn Rushing and Florence

Rushing, in the 270th District Court of Harris County, Texas, be set aside (including

all summary judgment orders, the final order including attorney’s fees, and the

sanctions order), that judgment be rendered in favor of Appellants on the issues of

                                          50
foreclosure and quiet title, and, that the remaining causes of action be remanded to the

Trial Court with instructions to enter a new docket control order allowing a discovery

period of at least five months on the remaining causes of action before trial.

                                        Respectfully submitted,

                                        THE GORE LAW FIRM, P.C.

                                        By:___/s/ George W. Gore____
                                        George W. Gore
                                        State Bar No. 24029582
                                        6200 Savoy, Suite 1150
                                        Houston, Texas 77036
                                        (713) 224-2000
                                        (713) 224-2004

                                          51
                                  APPENDIX

A.    Orders: August 28, 2014; Order titled – CS Bankers’ Partial Summary
      Judgment on Foreclosure; Doc # 62235529: CRI 593
B.     October 31, 2014; Order titled - Final Summary Judgment; Doc # 63014312
(Smith); CRI 1580
C.     November 14, 2014; Order titled – Order Granting Joint Motion for Entry of
Supplemental Order; Doc # 63213850: CRII 1944
D.     November 19, 2014; Order titled - Final Summary Judgment; Doc # 63290903
(Hendry & TGF) : CRII 1946
E.     December 17, 2014; Order titled – Order Granting Texas Gulf Energy, Inc.’s
Motion for Partial Summary Judgment on the “Letter of Intent”; Doc # 63638422:
CRII 1972
F.     February 3, 2015; Order titled - Final Summary Judgment; Doc # 64155446:
CRII 2027
G.     February 3, 2015; Order titled – Order Assessing Sanctions; Doc # 64155445:
 CRII 2025
H.     April 6, 2016; Order denying – Order Denying Appellants’ Motion for
Summary Judgment: CRI 976
I.     April 13, 2015; Order titled – Final Judgment; Doc# 65332341: CRI 977

J.    Appellee Summary Judgment Evidence: Posting Notice Letter

                                       52
                         CERTIFICATE OF SERVICE

      I hereby certify that a true and correct copy of the above and foregoing
instrument has been served upon all counsel of record, via hand delivery, facsimile
and/or electronic service, on this 5th day of October, 2015:

Gary Jewell
Adam L. Tepper
CHRISTIAN, SMITH & JEWELL, LLP
2302 Fannin, Suite 500
Houston, Texas 77002
713.659.7617 (telephone)
713.659.7641 (facsimile)

Paul J Dobrowski
Cody Stafford
DOBROWSKI, LARKIN & JOHNSON, LLP
4601 Washington Ave, Suite 300
Houston, Texas 77007
T (713)659-2900
F (713)659-2908
                             By: /s/George W. Gore
                                    George W. Gore

                     CERTIFICATE OF COMPLIANCE

      I hereby certify that this brief is under 15,000 words. The number is 14,753.

                               By: /s/George W. Gore
                                      George W. Gore

                                        53