Court Opinion

ID: 4455658
Source: CourtListenerOpinion
Date Created: 2019-11-14 11:12:49.556254+00
Date Added: 2024-06-11T14:45:24.254978
License: Public Domain

AFFIRMED and Opinion Filed November 12, 2019

                                          Court of Appeals
                                                           S     In The

                                   Fifth District of Texas at Dallas
                                                      No. 05-19-00091-CV

                                          BYRON CURTIS COOK, Appellant
                                                     V.
                                           RONALD SIMMONS, Appellee

                                On Appeal from the 417th Judicial District Court
                                             Collin County, Texas
                                    Trial Court Cause No. 417-02850-2018

                                         MEMORANDUM OPINION
                                      Before Justices Myers, Osborne, and Nowell
                                              Opinion by Justice Osborne
          Appellee Ronald Simmons sued appellant Byron Curtis Cook alleging securities fraud. The

trial court denied Cook’s motion to dismiss under the Texas Citizens Participation Act. TEX. CIV.

PRAC. & REM. CODE §§ 27.001–27.011 (“TCPA”).1 Because Simmons’s legal action is not

factually predicated on Cook’s protected activity, we affirm the trial court’s order.

                                                           BACKGROUND

          In 2013, Simmons invested $74,000 in Cypress Income Fund, L.L.C. (“CIF”). In 2018, he

brought suit against Cook, CIF, and Legacy Income Properties, L.L.C. (“Legacy”), alleging claims

for fraud, breach of fiduciary duty, and violations of the Texas Securities Act in connection with

      1
        The TCPA was recently amended, effective September 1, 2019. Act of May 17, 2019, 86th Leg., R.S., ch. 378, §§ 1–9, § 12, sec. 27.001,
27.003, 27.005–.007, 27.0075, 27.009–.010 (to be codified at TEX. CIV. PRAC. & REM. CODE § 27.001, 27.003, 27.005–.007, 27.0075, 27.009–
.010). The foregoing amendments do not apply to this case, which was filed before the amendments’ effective date. Id. § 11.
his investment. He alleged that Cook was jointly and severally liable with Legacy and CIF

“because of his direct control of Legacy or CIF as the issuer or offeror or because of his material

aid to Defendants Legacy or CIF with intent to deceive or defraud or with reckless disregard for

the truth or the law.” Simmons’s operative petition added allegations that Cook was the alter ego

of Legacy and CIF.

       Cook filed a TCPA motion to dismiss Simmons’s claims. He argued that Simmons filed

suit “in bad faith at the behest of his friend Ken Paxton as part of an intimidation and disparagement

campaign” against Cook, in “retaliation for Cook’s cooperation and participation in the criminal

investigation and prosecution of Paxton for securities fraud.” Texas Attorney General Paxton had

solicited Cook’s investment in Servergy, Inc. (an entity that is not a party to this case), and the

Texas Rangers interviewed Cook in connection with an investigation of Paxton and Servergy.

Paxton was subsequently indicted on charges including securities fraud in connection with the

solicitation, and the Securities and Exchange Commission filed a civil action against him. Cook

argued that in cooperating with law enforcement’s investigation, he was exercising protected

speech rights, so that Simmons’s suit “relates to or is in response to” Cook’s exercise of the right

of free speech. He also contended that his statements to law enforcement “regarding possible

criminal activity” were an exercise of his right to petition. Cook also argued that Simmons could

not show clear and specific evidence to support his prima facie case, and that in any event

Simmons’s claims were barred by limitations.

       The trial court permitted limited discovery at the parties’ request. After a hearing, the trial

court denied Cook’s motion to dismiss. This appeal followed. In three issues, Cook argues that the

TCPA applies, Simmons failed to establish a prima facie case on each element of his claims by

clear and specific evidence, and Simmons’s claim for securities fraud was barred by limitations.

                                                 –2–
                                     STANDARDS OF REVIEW

       We review de novo the trial court’s ruling on a motion to dismiss under the TCPA. Dyer

v. Medoc Health Servs., 573 S.W.3d 418, 424 (Tex. App.—Dallas 2019, pet. denied). “In

conducting this review, we consider, in the light most favorable to the non-movant, the pleadings

and any supporting and opposing affidavits stating the facts on which the claim or defense is

based.” Fishman v. C.O.D. Capital Corp., No. 05-16-00581-CV, 2017 WL 3033314, at *5 (Tex.

App.—Dallas July 18, 2017, no pet.) (mem. op.); see also TCPA § 27.006(a). Whether the TCPA

applies to Simmons’s claims is an issue of statutory interpretation that we also review de novo.

Dyer, 573 S.W.3d at 424.

                                           DISCUSSION

       In Riggs & Ray, P.C. v. State Fair of Texas, this Court explained:

       In order to trigger the TCPA’s protection, the legal action must be factually
       predicated on the alleged conduct that falls within the scope of the TCPA’s
       definition of the right of free speech, petition, or association. If this nexus is
       missing, then the statute does not apply.

No. 05-17-00973-CV, 2019 WL 4200009, at *4 (Tex. App.—Dallas Sept. 5, 2019, no pet. h.)

(mem. op.) (internal quotations and emphasis omitted). In his first issue (“Does the [TCPA] apply

to bar a meritless lawsuit brought in retaliation for a defendant’s cooperation in a criminal

investigation and prosecution, even when the plaintiff’s pleadings do not specifically reference the

defendant’s participation in the criminal proceedings?”), Cook acknowledges that Simmons’s

petition says nothing about the criminal investigation. But Cook explained in his motion to dismiss

that “this suit seeks to gin up securities fraud claims so that Paxton can accuse Cook of the same

kind of misconduct for which Paxton is being prosecuted.”

       Cook argues that he and Paxton were both managers of a limited liability company called

Unity Resources, L.L.C. which, through several related LLCs, arranged private offerings in CIF

and other oil and gas investment funds. He contends that Paxton would have responsibility equal
                                                –3–
to his for any liability to Simmons in this suit. He concludes that Simmons’s failure to join Paxton

in this suit is evidence of (1) Simmons’s retaliatory motive, (2) the groundlessness of Simmons’s

claims, and (3) the effort to discredit Cook in the Paxton investigation. Cook also argues that

Simmons is represented in this suit by Paxton’s defense counsel in the SEC suit, and the same

counsel also represent other Paxton allies who have been recruited to bring identical suits against

Cook. Cook also quotes from an article by “Paxton spin doctor Jon Cassidy” that Simmons read

before filing suit. Cassidy opined that the suits by Paxton’s allies alleging that Cook engaged

securities fraud—the same conduct alleged against Paxton in the SEC’s suit—weakened Cook’s

credibility in the proceedings against Paxton and put Cook “in a bind.”

        In sum, Cook contends Simmons’s claims “were part of a retaliatory scheme against Cook

as a key witness against Paxton.” He contends that Simmons brought this suit “in response to” his

protected speech and his right to petition. See TCPA § 27.003 (party may file motion to dismiss

action that is based on, relates to, or is in response to party’s exercise of right of free speech, right

to petition, or right of association). “‘Exercise of the right of free speech’ means a communication

made in connection with a matter of public concern.” TCPA § 27.001(3). Cook argues that his

statements to the Texas Rangers related to Paxton’s criminal conduct, a matter of public concern

relating to economic or community well-being under TCPA section 27.001(7)(B), and to a “good,

product, or service in the marketplace” under TCPA section 27.001(7)(E). He also argues that he

exercised his right to petition because his communications with the Texas Rangers were “in or

pertaining to” a judicial proceeding or official proceeding as defined in TCPA sections

27.001(4)(A)(i), 27.001(4)(A)(ii), 27.001(4)(B), and 27.001(4)(C).

        We first note that Cook did not plead or show the content of any particular

“communication” he alleges he made to the Texas Rangers, nor did Simmons’s petition make any

                                                  –4–
such reference.2 The TCPA’s definitions of the right of free speech and the right to petition both

require a “communication.” See TCPA § 27.001(3), (4). As defined in the TCPA, a

“communication” “includes the making or submitting of a statement or document in any form or

medium, including oral, visual, written, audiovisual, or electronic.” TCPA § 27.001(1). Without

pleading or evidence of the alleged communication’s content, it is difficult to review Cook’s

contention that Simmons’s suit is “in response to” the communication, even under the supreme

court’s directive that a communication’s “tangential relationship” to a matter of public concern is

sufficient to establish exercise of the right of free speech. See ExxonMobil Pipeline Co. v.

Coleman, 512 S.W.3d 895, 900 (Tex. 2017) (per curiam). This is especially true because neither

Paxton nor Servergy, the alleged subjects of the communication, is a party to this lawsuit. This

difficulty is compounded in reviewing Cook’s allegation that the communication was “reasonably

likely to encourage consideration or review of any issue by a legislative, executive, judicial, or

other governmental body or in another governmental or official proceeding” under TCPA section

27.001(4)(C), because Cook does not identify the “issue” that might prompt review.

           Although Cook relies on several cases for the proposition that filing a police report

constitutes the exercise of the right to petition for purposes of the TCPA, in each case, the

substance of the report was included in the record. See Robert B. James, DDS, Inc. v. Elkins, 553
S.W.3d 596, 602 (Tex. App.—San Antonio 2018, pet. denied) (defendants made statements to

police department that plaintiff stole money from a dental practice); Ford v. Bland, No. 14-15-

00828-CV, 2016 WL 7323309, at *1 (Tex. App.—Houston [14th Dist.] Dec. 15, 2016, no pet.)

(mem. op.) (plaintiff filed complaint with police alleging that defendant switched stone in his

     2
       In an affidavit submitted to the trial court, Cook stated: “During the Spring of 2015, I met with the Texas Rangers at their request to answer
questions about Paxton’s solicitation of my investment in a company called Servergy Inc. I understood that I was cooperating and participating in
an investigation into potential criminal conduct on Paxton’s part.” He continued, “Subsequently, in July 2015, a Collin County grand jury indicted
Paxton on criminal securities fraud charges related in part to Paxton’s solicitation of investments in Servergy.” As Simmons pointed out in his
response to Cook’s TCPA motion, “Simmons’ pleadings in no way reference the communications made by Cook to Texas Rangers.” He also
argued, “it is impossible to say whether Cook’s alleged communications to Texas Rangers involved a ‘matter of public concern’ such that he can
base his Motion on the exercise of his right to free speech.”

                                                                       –5–
wife’s wedding ring during refurbishment); Murphy USA, Inc. v. Rose, No. 12-15-00197-CV, 2016
WL 5800263, at *3 (Tex. App.—Tyler Oct. 5, 2016, no pet.) (mem. op.) (gas station manager

reported to police that plaintiff attempted to steal gas). And in each case, in contrast to Cook’s

Texas Rangers interview, the report to law enforcement was about a party to the lawsuit. For the

reasons we discuss below, however, even if we were to conclude that Cook has shown a

“communication” by a preponderance of the evidence, he has not met his burden to show that

Simmons’s legal action is “in response to” that communication. See TCPA § 27.005(b).

       Cook argues that as long as he shows that Simmons’s suit is “in response to” Cook’s

exercise of protected rights, he need not show that it is “based on” or “relates to” that exercise. See

TCPA § 27.005(b) (court may dismiss legal action if moving party shows the action “is based on,

relates to, or is in response to the party’s exercise of” protected right). In Riggs & Ray, however,

we explained that “[a]ny activities by the movant that are not a factual predicate for the non-

movant’s claims are not pertinent to our inquiry regarding whether the TCPA applies.” Riggs &

Ray, 2019 WL 4200009, at *4; see also Stroud v. Clearview Energy, No. 05-18-00729-CV, 2019
WL 1930176, at *6–8 (Tex. App.—Dallas May 1, 2019, no pet.) (mem. op.) (where plaintiff’s

claims were not in response to matters expressed in defendant’s email, TCPA did not apply).

       “We cannot ‘blindly accept’ attempts by the movant to characterize the claims as

implicating protected expression.” Damonte v. Hallmark Fin. Servs., Inc., No. 05-18-00874-CV,

2019 WL 3059884, at *5 (Tex. App.—Dallas July 12, 2019, no pet.) (mem. op.) (quoting Sloat v.

Rathbun, 513 S.W.3d 500, 504 (Tex. App.—Austin 2015, pet. dism’d)). “To the contrary, we view

the pleadings in the light most favorable to the non-movant, favoring the conclusion that its claims

are not predicated on the protected expression.” Id. at *5. Cook relies on the Damonte concurring

opinion for the proposition that “there is no statutory requirement that the communication’s content

be the subject of the provoked legal action.” Id. (Whitehill, J., concurring). But as that opinion

                                                 –6–
recognizes, the movant bears the burden of “[p]roving that the subject communication prompted

the challenged legal action” by a preponderance of the evidence, which “may be difficult when the

subject pleading does not assert a claim based on the communication’s content.” Id. We conclude

that Cook did not meet that burden. Cook does not dispute that Simmons’s pleadings do not

mention Cook’s interview with the Texas Rangers or make any reference to Paxton or Servergy.

Nor is there any evidence that Simmons was involved in any way with the Texas Rangers’s

investigation. According to Cook, his interview was about Paxton, not Simmons. Simmons’s

allegations are that Cook made misrepresentations in the sale of securities. “Any activities [by

Cook] that are not a factual predicate for [Simmons’s] claims are not pertinent to our inquiry

regarding whether the TCPA applies.” Damonte, 2019 WL 3059884, at *5.

       We conclude Cook did not meet his burden to establish by a preponderance of the evidence

that Simmons’s legal action is based on, relates to, or is in response to Cook’s exercise of the right

of free speech or the right of association. See TCPA § 27.005(b). Consequently, the TCPA does

not apply. See Riggs & Ray, 2019 WL 4200009, at *6. We decide Cook’s first issue against him.

       Cook’s second and third issues are dependent on the TCPA’s application to Simmons’s

claims and Cook’s limitations defense. See TCPA § 27.005(c), (d) (burden-shifting to establish

prima facie case and essential elements of defense); In re Lipsky, 460 S.W.3d 579, 586–87 (Tex.

2015) (orig. proceeding) (discussing burden-shifting under TCPA). For that reason, we need not

consider them. Riggs & Ray, 2019 WL 4200009, at *6 (pretermitting remaining issues and cross-

appeal after concluding TCPA did not apply); Sullivan v. Tex. Ethics Comm’n, 551 S.W.3d 848,

856 n.6 (Tex. App.—Austin 2018, pet. denied) (“Because we hold that the TCPA does not apply,

we do not reach the second step in the TCPA analysis of whether [the non-movant] met its burden

to prove a prima facie case.”).

                                                 –7–
                                        CONCLUSION

      We affirm the trial court’s order denying Cook’s motion to dismiss.

                                               /Leslie Osborne/
                                               LESLIE OSBORNE
                                               JUSTICE

190091F.P05

                                            –8–
                                        S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      JUDGMENT

 BYRON CURTIS COOK, Appellant                       On Appeal from the 417th Judicial District
                                                    Court, Collin County, Texas
 No. 05-19-00091-CV         V.                      Trial Court Cause No. 417-02850-2018.
                                                    Opinion delivered by Justice Osborne.
 RONALD SIMMONS, Appellee                           Justices Myers and Nowell participating.

       In accordance with this Court’s opinion of this date, the trial court’s order denying the
motion of appellant Byron Curtis Cook to dismiss is AFFIRMED.

       It is ORDERED that appellee Ronald Simmons recover his costs of this appeal from
appellant Byron Curtis Cook.

Judgment entered November 12, 2019

                                              –9–