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DISTRICT COURT\n NORTHERN DISTRICT OF TEXAS\n DALLAS DIVISION\n\n\n ALBERT C. BLACK III, as TRUSTEE \u00a7\n OF PM SETTLEMENT TRUST and \u00a7\n SUBSTITUTE PLAINTIFF, and as \u00a7\n WIND-UP AGENT OF PETROROCK \u00a7\n MINERAL HOLDINGS, LLC, \u00a7\n \u00a7\n Plaintiff, \u00a7\n \u00a7\n v. \u00a7 Civil Action No. 3:23-CV-02701-E\n \u00a7\n STEFAN T. TOTH, et al., \u00a7\n \u00a7\n Defendants. \u00a7\n\n MEMORANDUM OPINION AND ORDER\n\n Before the Court is Plaintiff\u2019s Amended Motion to Remand (ECF No. 14), filed January\n\n16, 2024. After careful consideration of the motion, response, reply, pleadings, record, and\n\napplicable law, the court GRANTS the motion and REMANDS this action to the 101st Judicial\n\nDistrict Court of Dallas County, Texas.\n\n I. Procedural and Factual Background\n\n This action arises from an oil and gas investment scheme involving complicated investment\n\nvehicles. In 2021, the Securities and Exchange Commission instituted cease-and-desist\n\nproceedings after finding that Thomas Powell and Stefan Toth, and the two entities they\n\nrespectively controlled\u2014Resolute Capital Partners Ltd., LLC and Homebound Resources, LLC\u2014\n\nmade material misrepresentations and omissions in connection with unregistered oil and gas\n\nsecurities offerings in violation of federal securities laws. Notice of Removal at Ex. A (In the\n\nMatter of Resolute Capital Partners LTD, LLC et al., Release No. 33-10987 (U.S.S.E.C. Sept. 24,\n\n\n\n\nMemorandum Opinion and Order - Page 1\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 2 of 15 PageID 2502\n\n\n\n2021)) (\u201cCease-and-Desist Order\u201d) (ECF No. 1-1 at 14-28). 1 The Cease-and-Desist Order also\n\nidentified Petrorock Mineral Holdings, LLC (\u201cPetroRock\u201d) as a relevant entity which, like its sister\n\ncompany Homebound Resources, LLC, is a \u201csubsidiary of Homebound Financial and is managed\n\nby Toth.\u201d Id. (ECF No. 1-1 at 16).\n\n As a result of the Cease-and-Desist Order, and unable to raise additional investor funds to\n\nservice its debts, on May 3, 2022, PetroRock filed a Petition in the 101st Judicial District Court of\n\nDallas County, Texas, in which it asserted claims against various insiders and affiliates, and sought\n\nthe appointment of an agent to wind up its affairs. Id., Pl.\u2019s Orig. Pet. for Court Supervised Wind\n\nUp and Related Relief (\u201cWindup Petition\u201d) (ECF No. 1-1 at 2-13). The Windup Petition alleged a\n\nsecurities fraud \u201cinvolving in excess of $200 million of investor funds\u201d and sought the state court\u2019s\n\n\u201cassistance and supervision to wind up its business and liquidate its assets for the benefit of its\n\ncreditors.\u201d Id., Windup Petition (ECF No. 1-1 at 4).\n\n In June 2022, the state court appointed Albert C. Black, III (\u201cMr. Black\u201d) as Windup Agent\n\nfor PetroRock to assist in winding up the affairs of the business, including liquidating its assets for\n\nthe benefit of the investors and other creditors. Id., Order Appointing Wind-Up Representative\n\n(ECF No. 1-4 at 2-6).\n\n Both before and after Mr. Black\u2019s appointment, groups of individual investors filed\n\npetitions in intervention, asserting claims against PetroRock and related entities based on\n\nfraudulent debt and equity investments in PetroRock. See id., Pet. in Intervention (ECF No. 1-2 at\n\n3); see also Defs.\u2019 Resp. App. , Decl. of Charles E. Jones at Ex. A (July 28, 2022 Second Am. Pet.\n\nin Intervention) (ECF No. 16-1 at 3-32); id. at Ex. B (Sept. 6, 2022 Am. Pet. in Intervention) (ECF\n\nNo. 16-2 at 2-20). In the Second Amended Petition in Intervention, the investors asserted class\n\n\n1\n Citations to the record refer to the CM/ECF page number at the top of each page rather than the parties\u2019\npagination at the bottom of each filing.\n\nMemorandum Opinion and Order - Page 2\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 3 of 15 PageID 2503\n\n\n\naction allegations under Tex. R. Civ. P. 42 against PetroRock. Id. at Ex. A (July 28, 2022 Second\n\nAm. Pet. in Intervention) (ECF No. 16-1 at 15).\n\n On August 31, 2022, all parties to the lawsuit attended mediation before The Honorable\n\nW. Royal Furgeson. That mediation was successful with respect to the claims against PetroRock.\n\nOn September 7, 2022, the parties announced Notice of Settlement and filed a Motion for\n\nPreliminary Approval of Class Action Settlement on September 9, 2022, to which they attached\n\ntheir Settlement Agreement. Id. at Ex. C (ECF No. 16-3 at 2-54). The Settlement Agreement\n\nprovided that the \u201cSettling Parties have reached settlement, which, if approved by the Court, will\n\nend litigation against the Settling Defendant [PetroRock] and permit the Wind-Up Agent [Mr.\n\nBlack] to further liquidate and distribute assets to aggrieved creditors and investors.\u201d Id. at Ex. C\n\n(ECF No. 16-3 at 2).\n\n On November 15, 2022, the state court entered an Amended Order Preliminarily Certifying\n\nClass for Settlement Purposes (the \u201cPreliminary Settlement Order\u201d). See Notice of Removal at Ex.\n\nG (Consolidated Am. Pet. \u00b6 3) (ECF No. 1-7 at 4). This order approved a class action and limited\n\nfund settlement of claims, for settlement purposes only, against PetroRock, only. Id. The\n\nsettlement required PetroRock to contribute all assets, including claims and causes of action it may\n\nhold against directors, officers, and affiliated third parties, into a settlement trust. Id. Similarly,\n\nclass member plaintiffs that chose not to opt out were deemed to have assigned their claims against\n\nPetroRock and its directors, officers, and affiliated third parties to the settlement trust. Id. In\n\nexchange, the class member plaintiffs would share the proceeds of any recoveries. Id.\n\n On April 21, 2023, the state court entered an Amended Order Certifying Class and Final\n\nApproval of Settlement (\u201cFinal Approval of Settlement Order\u201d), in which it confirmed that the\n\nmembers of the class assigned their claims to a liquidating trust, the PM Settlement Trust, and\n\n\n\nMemorandum Opinion and Order - Page 3\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 4 of 15 PageID 2504\n\n\n\napproved the appointment of Mr. Black to serve not only as the Windup Agent, but also as the PM\n\nSettlement Trust Trustee, with authority to prosecute the now-assigned claims asserted against the\n\nnon-settling defendants. Notice of Removal at Ex. C (ECF No. 1-3).\n\n Acting in his dual capacity as Windup Agent to PetroRock and as Trustee to the PM\n\nSettlement Agreement, Mr. Black then filed a Consolidated Amended Petition, asserting claims\n\nagainst PetroRock insiders Stefan Toth and Thomas Powell, as well as dozens of other individuals\n\nand entities. Id. at Ex. G (Consolidated Am. Pet.) (ECF No. 1-7). As relevant here, in the\n\nConsolidated Amended Petition, Mr. Black also asserted claims against Resolute Capital Partners,\n\nLtd., LLC (\u201cRCP\u201d), Resolute Capital Managers, LLC (\u201cRCM\u201d), and Resolute Management\n\nServices, LLC (\u201cRCS\u201d) (collectively, the \u201cRemoving Defendants\u201d). Id. As the court-appointed\n\nWindup Agent, Mr. Black brought the Consolidated Amended Petition in his capacity to sue on\n\nbehalf of the damaged corporate entity, PetroRock, and also as Trustee, in which capacity he\n\nasserted the individual claims of the investors as the assignee of those claims. Id.\n\n On December 8, 2023, the Removing Defendants removed the case to this Court pursuant\n\nto 28 U.S.C. \u00a7\u00a7 1441(a), 1446, and 1453(b), asserting jurisdiction under the Class Action Fairness\n\nAct (\u201cCAFA\u201d), 28 U.S.C. \u00a7 1332(d). See Notice of Removal (ECF No. 1). They contend that,\n\npursuant to 28 U.S.C. \u00a7 1332(d), this matter involves \u201ca class of more than 100 persons, the amount\n\nin controversy exceeds $5 million, at least one class member is from a state different than the\n\nremoving parties, RCP, RCM, and RMS, and less than fifteen percent of the members of the class\n\nare residents of Texas.\u201d Id. \u00b6 22.\n\n Mr. Black asserts that removal under CAFA was improper, and he moves to remand this\n\nmatter to state court for lack of subject matter jurisdiction. See generally Pl.\u2019s Am. Mot. Remand.\n\nThe motion has been fully briefed and is ripe for disposition.\n\n\n\nMemorandum Opinion and Order - Page 4\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 5 of 15 PageID 2505\n\n\n\n II. Legal Standards\n\n A. General Removal Standard\n\n Federal courts are courts of limited jurisdiction. They possess only that power authorized\n\nby Constitution and statute, which is not to be expanded by judicial decree[.]\u201d Kokkonen v.\n\nGuardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). The removal statute,\n\n28 U.S.C. \u00a7 1441, authorizes defendants to remove any civil action from state court to federal\n\ndistrict court if the district court would have original jurisdiction. 28 U.S.C. \u00a7 1441(a). Generally,\n\n\u201c[r]emoval raises significant federalism concerns\u201d because it effectively \u201cdeprive[s] the state court\n\nof an action properly before it.\u201d Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th\n\nCir. 2007) (citation omitted). As a result, courts strictly construe the removal statute. Id. at 281-82\n\n(citations omitted).\n\n B. Removal under CAFA\n\n \u201cCAFA gives federal courts jurisdiction over certain class actions, defined in \u00a7 1332(d)(1),\n\nif the class has more than 100 members, the parties are minimally diverse, and the amount in\n\ncontroversy exceeds $5 million.\u201d Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S.\n\n81, 84-85 (2014) (citing, inter alia, 28 U.S.C. \u00a7 1332(d)(1)-(2), (5)(B)). CAFA defines \u201cclass\n\naction\u201d as \u201cany civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar\n\nState statute or rule of judicial procedure authorizing an action to be brought by one or more\n\nrepresentative persons as a class action.\u201d 28 U.S.C. \u00a7 1332(d)(1)(B).\n\n CAFA also provides federal jurisdiction over \u201cmass actions.\u201d 28 U.S.C. \u00a7 1332(d)(11);\n\nBonin v. Sabine River Auth. of La., 961 F.3d 381, 386 (5th Cir. 2020). To qualify for removal as a\n\nmass action under CAFA, a civil action must: (1) consist of \u201cmonetary relief claims of 100 or more\n\npersons [that] are proposed to be tried jointly on the ground that the plaintiffs\u2019 claims involve\n\n\n\nMemorandum Opinion and Order - Page 5\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 6 of 15 PageID 2506\n\n\n\ncommon questions of law or fact\u201d; (2) satisfy CAFA\u2019s minimal diversity requirement; (3) have an\n\naggregated amount in controversy exceeding $5,000,000; and (4) have at least one plaintiff\u2019s\n\nclaims exceeding $75,000. 28 U.S.C. \u00a7 1332(d)(11)(A)-(B)(i); see also Robertson v. Exxon Mobil\n\nCorp., 814 F.3d 236, 239 (5th Cir. 2015) (citing 28 U.S.C. \u00a7\u00a7 1332(a), (d)(11)(B)(i)).\n\n \u201cCongress enacted CAFA to encourage federal jurisdiction over interstate class action\n\nlawsuits of national interest.\u201d Preston v. Tenet Healthsystem Mem\u2019l Med. Ctr., 485 F.3d 793, 797\n\n(5th Cir. 2007). For this reason, there is \u201cno antiremoval presumption\u201d in cases invoking CAFA.\n\nDart Cherokee, 574 U.S. at 89 (citations omitted).\n\n III. Analysis\n\n A. Plaintiff\u2019s Amended Motion to Remand\n\n In the Notice of Removal, the Removing Defendants assert CAFA as the sole basis for\n\nfederal jurisdiction. See Notice of Removal \u00b6 22. To determine whether it should retain jurisdiction\n\nor remand, the Court must resolve whether this action meets CAFA\u2019s jurisdictional thresholds for\n\neither class actions or mass actions. 2\n\n In his Amended Motion to Remand, Mr. Black argues that (1) this case does not fall within\n\nthe definition of a \u201cclass action\u201d under CAFA and, even if it does, an exclusion or exception to\n\nCAFA jurisdiction applies; and (2) this case does not fall within the definition of a \u201cmass action\u201d\n\nunder CAFA and, even if it did, the Removing Defendants have failed to establish that at least one\n\nplaintiff\u2019s claim satisfies the $75,000 individual amount in controversy requirement. See Am. Mot.\n\nRemand (ECF No. 14 at 14-26).\n\n\n\n\n2\n The Court has also determined that it has no other basis for exercising subject matter jurisdiction over this\nmatter. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999) (\u201c[S]ubject-matter delineations\nmust be policed by the courts on their own initiative even at the highest level.\u201d).\n\nMemorandum Opinion and Order - Page 6\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 7 of 15 PageID 2507\n\n\n\n In response, the Removing Defendants argue that \u201cthis case is in form and in substance a\n\nclass action and belongs in Federal court under [CAFA]. Further, if this case is not a class action,\n\nit is a \u2018mass action\u2019 within the meaning of CAFA.\u201d Defs.\u2019 Resp. Br. (ECF No. 15 at 7).\n\n For the reasons that follow, the Court concludes that this is not a class action or mass action\n\nunder CAFA. The Court, therefore, lacks subject matter jurisdiction and this matter must be\n\nremanded to state court.\n\n 1. \u201cClass Action\u201d under CAFA\n\n The parties do not dispute that this action meets the minimal diversity, numerosity, and the\n\namount-in-controversy requirements for class actions under CAFA. The only contested issue is\n\nwhether this action meets the definition of a \u201cclass action\u201d under \u00a7 1332(d)(1)(B). CAFA defines\n\n\u201cclass action\u201d as \u201cany civil action filed under rule 23 of the Federal Rules of Civil Procedure or\n\nsimilar State statute or rule of judicial procedure authorizing an action to be brought by one or\n\nmore representative persons as a class action.\u201d 28 U.S.C. \u00a7 1332(d)(1)(B).\n\n Defendants contend that this matter is, \u201cin form\u201d and \u201cin substance, a class action within\n\nthe meaning of CAFA.\u201d Defs.\u2019 Resp. Br. (ECF No. 15 at 15, 17). Mr. Black asserts that \u201cneither\n\nthe original Windup Petition, nor the subsequently filed Consolidated Amended Petition, which\n\n[the Removing Defendants] now seek to remove to this Court, is a \u2018class action\u2019 under this\n\ndefinition.\u201d Am. Mot. Remand (ECF No. 14 at 14).\n\n Having reviewed the state court pleadings, the Notice of Removal, and the arguments both\n\nin support of and in opposition to Plaintiff\u2019s Amended Motion to Remand, the Court determines\n\nthis is not a \u201cclass action\u201d within the meaning of CAFA, and the authority upon which the\n\nRemoving Defendants rely to argue otherwise is not binding and, in any event, not persuasive.\n\n In support of remand, Mr. Black asserts that:\n\n\n\nMemorandum Opinion and Order - Page 7\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 8 of 15 PageID 2508\n\n\n\n The only \u201cclass\u201d that has appeared in the State Court proceedings was the one that\n emerged in the context of a settlement agreement between a group of intervening\n Representative [investor] Plaintiffs and [PetroRock]. Mr. Black, the current sole\n plaintiff, only has an indirect relationship to that class, to the extent that he serves\n as a fiduciary for the PM Settlement Trust, and to the extent that the class members\n are beneficiaries of that trust, who may have assigned their claims to that trust.\n\n The State Court certified that class only for the limited purposes of facilitating\n [PetroRock\u2019s] Windup, to the extent that [PetroRock] was permitted to contribute\n all of its assets to the PM Settlement Trust for the benefit of the [PetroRock]\n Investors. The State Court ruled: \u2018Pursuant to Rule 42 of the Texas Rules of Civil\n Procedure, and for the purposes of the Settlement only, the Representative\n Plaintiffs are preliminarily appointed as the class representatives for the Settlement\n Class.\u201d See Amended Order Preliminarily Certifying Class for Settlement Purposes\n (emphasis added).\n\nAm. Mot. Remand (ECF No. 14 at 15) (emphasis in original).\n\n The Removing Defendants appear to assert that, because class claims have been assigned\n\nto the PM Settlement Trust, all actions brought by Mr. Black against transferees should be\n\nclassified as \u201cclass actions\u201d for the purposes of CAFA. See Defs.\u2019 Resp. Br. (ECF No. 15 at 17-\n\n21). The Court disagrees and finds that Mr. Black has the better argument, namely, that the\n\n\u201cconfiguration of rights here approximates a Chapter 7 trustee\u2019s powers under the Bankruptcy\n\nCode, whereby the trustee \u2018steps in the shoes\u2019 of creditors and exercises a dual standing \u2013 that of\n\nthe liquidating estate and its creditors \u2013 to pursue causes of action against liable third parties.\u201d Pl.\u2019s\n\nReply (ECF No. 18 at 9).\n\n Further, the class of PetroRock investors came into being for the sole purpose of settling\n\nthose investors\u2019 claims against PetroRock, only, and not against the non-settling defendants and\n\nthird parties (which include the Removing Defendants). The class came into being for the\n\nsettlement and only survived to the extent that it determined who was a beneficiary to the PM\n\nSettlement Trust. The purpose of the class has been satisfied, the claims settled, and the\n\nconsideration exchanged. The \u201cclass action\u201d is no longer proceeding and no live pleading\n\n\n\nMemorandum Opinion and Order - Page 8\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 9 of 15 PageID 2509\n\n\n\narticulates a class action or class claim. And, unlike in this action, the court in a class action must\n\nreview the adequacy of any settlement and take steps to ensure the proper distribution of any\n\njudgment or settlement. Here, these steps have already taken place.\n\n The Removing Defendants\u2019 reliance on Addison Automatics, Inc. v. Hartford Casualty\n\nInsurance Company, 731 F.3d 740 (7th Cir. 2013), and Williams v. Employers Mutual Casualty\n\nCompany, 845 F.3d 891 (8th Cir. 2017), is similarly misplaced. First, as these are not cases from\n\nthe Fifth Circuit, they are not controlling. The only binding authority on this Court are cases from\n\nthe United States Court of Appeals for the Fifth Circuit and the United States Supreme Court.\n\nAuthority from these courts is notably absent from the Removing Defendants\u2019 briefing. Second,\n\nneither of these decisions really informs what the Court should do with this case. In Williams the\n\nEighth Circuit explained that \u201callowing class-action plaintiffs to avoid federal jurisdiction simply\n\nby omitting explicit reference to the class-action rule they intend to proceed under would promote\n\nthe kind of procedural gaming CAFA was enacted to prevent.\u201d 845 F.3d at 901. In an earlier suit\n\nthat preceded the litigation at issue in Williams, the plaintiff became the class representative in a\n\nclass-action against the owner of a mobile home park. Id. at 894-95. Williams filed the lawsuit as\n\na garnishment action in state court under Missouri law \u201cas class representative, by and through\n\ncounsel.\u201d Id. at 895. The insurers removed the action to federal court under CAFA, and the district\n\ncourt denied Williams\u2019s motion to remand. Id. On appeal, the Eighth Circuit affirmed, because it\n\nwas \u201cclear from the pleadings that Williams can bring this case only because of her status as the\n\nrepresentative of the class certified under [a Missouri procedural rule], an undisputed analogue of\n\nRule 23.\u201d Id. at 900.\n\n Addison involved a certified class representative\u2019s effort to bring a claim in a second suit\n\nagainst the insurer of a third-party that had settled with the class and assigned its rights to insurance\n\n\n\nMemorandum Opinion and Order - Page 9\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 10 of 15 PageID 2510\n\n\n\n funds to the class representative. 731 F.3d at 741-42. Addison attempted to bring the case as an\n\n individual suit, but because it \u201cpursu[ed] the rights assigned to it as class representative in the state\n\n court class action, [the court found it was] necessarily continuing that class action\u201d in the later suit,\n\n thereby justifying removal by the insurer pursuant to CAFA. Id. at 743.\n\n In Addison and Williams, however, the only claims being asserted were class claims that\n\n had been assigned to the plaintiff. Here, the chief claims were once held by PetroRock itself, claims\n\n which have subsequently been assigned to the PM Settlement Trust through the Settlement\n\n Agreement and subsequent state court orders, including the April 21, 2023 Final Order Approving\n\n Settlement. Unlike in the cases upon which the Removing Defendants rely, Mr. Black brings\n\n claims as the court-appointed Windup Agent, with the capacity and standing to sue on behalf of\n\n the damaged corporate entity, PetroRock. He is asserting claims on behalf of the now-defunct\n\n entity PetroRock against its former directors, officers, managers, and control persons for breaches\n\n of fiduciary duty to the corporate enterprise in running what the SEC found was an unlawful oil\n\n and gas scheme. He is also bringing claims as Trustee of the PM Settlement Trust, to which the\n\n individual investors assigned their claims as part of the consideration of a \u201climited fund class action\n\n settlement\u201d in Texas state court. In light of Mr. Black\u2019s dual roles and the terms of the Settlement\n\n Agreement and April 21, 2023 Final Approval of Settlement Order, the Court does not find\n\n Addison or Williams fully on point. That class claims were assigned to the PM Settlement Trust\n\n does not mean that all actions brought by Mr. Black against transferees become \u201cclass actions\u201d for\n\n the purposes of CAFA.\n\n For these reasons, the Court determines it does not have subject matter jurisdiction under\n\n the class action provisions of CAFA, 28 U.S.C. \u00a7 1332(d)(1)-(10). 3\n\n\n 3\n Because the Court concludes this is not a \u201cclass action\u201d as defined by CAFA, the Court need not address\n Mr. Black\u2019s alternative argument that the \u201csecurities exception\u201d to CAFA bars federal jurisdiction.\n\n Memorandum Opinion and Order - Page 10\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 11 of 15 PageID 2511\n\n\n\n 2. \u201cMass Action\u201d under CAFA\n\n Mr. Black maintains that the Removing Defendants have failed to establish that this action\n\n meets the definition of \u201cmass action\u201d because he is the only Plaintiff and, even if the \u201cmass action\u201d\n\n provisions applied, they fail to meet their burden of how many, if any, of the purported mass of\n\n unnamed investors have individual claims worth more than $75,000. Am. Mot. Remand (ECF No.\n\n 14 at 19-22). The Removing Defendants assert that this \u201cmatter is a mass action\u201d and, therefore,\n\n removeable under CAFA. Defs.\u2019 Resp. Br. (ECF No. 15 at 16, 21). For the reasons that follow, the\n\n Court determines that this action does not meet the definition of \u201cmass action\u201d under CAFA. The\n\n Court, therefore, need not consider Mr. Black\u2019s alternative argument.\n\n As previously noted, CAFA defines a mass action as any civil action in which \u201cmonetary\n\n relief claims of 100 or more persons are proposed to be tried jointly on the ground that the\n\n plaintiffs\u2019 claims involve common questions of law or fact.\u201d 28 U.S.C. \u00a7 1332(d)(11)(B)(i). This\n\n definition effectively contains three requirements: monetary relief, numerosity, and commonality.\n\n First, the claims must be for monetary, not equitable or declaratory, relief. Second, these must be\n\n the claims of 100 or more persons. Notably, the Supreme Court has considered the issue and held\n\n that the 100-plus persons must be actual named parties, not unnamed real parties in interest.\n\n Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S 161, 168-169 (2014). Third, Plaintiffs\n\n must propose, either implicitly or explicitly, that these claims be tried jointly because they involve\n\n common questions of law or fact.\n\n Relying on the Supreme Court\u2019s decision in Hood, Mr. Black challenges the second\n\n requirement only, contending this is \u201cnot a \u2018mass action\u2019 within the meaning of the CAFA statute\n\n because there is only one plaintiff.\u201d Am. Mot. Remand (ECF No. 14 at 19). In response, the\n\n Removing Defendants argue that \u201cwhile Black himself may be the only named party, he is in fact\n\n\n\n Memorandum Opinion and Order - Page 11\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 12 of 15 PageID 2512\n\n\n\n asserting the claim of hundreds of other actual plaintiffs.\u201d Defs.\u2019 Resp. Br. (ECF No. 15 at 22).\n\n Based on Hood, the Court rejects the Removing Defendants\u2019 argument and finds that this matter\n\n does not involve \u201cclaims of 100 or more persons\u201d within the meaning of CAFA, 28 U.S.C. \u00a7\n\n 1332(d)(11)(B)(i).\n\n In Hood, the Supreme Court held that \u201ca \u2018mass action\u2019 must involve monetary claims\n\n brought by 100 or more persons who propose to try those claims jointly as named plaintiffs.\u201d Hood,\n\n 571 U.S. at 164 (emphasis added). In so holding, the Court rejected the argument that real parties\n\n in interest should count for the purpose of ascertaining CAFA jurisdiction. Id. at 176 (\u201cCongress\n\n repeatedly used the word \u2018plaintiffs\u2019 to describe the 100 or more persons whose claims must be\n\n proposed for a joint trial. That word refers to actual, named parties\u2014a concept inherently at odds\n\n with the background inquiry into unnamed real parties in interest, who by definition are never\n\n plaintiffs.\u201d).\n\n The Supreme Court\u2019s conclusion that the word \u201cpersons\u201d in the phrase \u201c100 or more\n\n persons\u201d is synonymous with named plaintiffs flowed from a careful statutory analysis. Among\n\n other things, the Court noted that a sister provision to the mass-action provision\u2014namely, the\n\n class-action provision\u2014explicitly permits the numerosity requirement for class members to be\n\n satisfied by counting unnamed parties. Id. at 169. It further noted that, in the mass-action provision,\n\n \u201cCongress chose not to use the phrase \u2018named or unnamed.\u2019\u201d Id. The Court deemed this omission\n\n \u201cintentional.\u201d Id.\n\n After concluding that the \u201c100 or more persons\u201d and the proposed \u201cplaintiffs\u201d are \u201cone and\n\n the same,\u201d the Supreme Court then turned to the meaning of the latter term, starting with how it is\n\n defined in various dictionaries. \u201cThe term \u2018plaintiff,\u2019\u201d the Court said, \u201cis among the most\n\n commonly understood legal terms of art: It means a \u2018party who brings a civil suit in a court of\n\n\n\n Memorandum Opinion and Order - Page 12\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 13 of 15 PageID 2513\n\n\n\n law.\u2019\u201d Id. at 170 (quoting Black\u2019s Law Dictionary 1267 (9th ed. 2009)). A plaintiff, in other words,\n\n is \u201c\u2018one who commences a personal action or lawsuit,\u2019 or \u2018the complaining party in any\n\n litigation.\u2019\u201d Id. (quoting Webster\u2019s Third New International Dictionary 1729 (1961)). \u201cIt certainly\n\n does not mean \u2018anyone, named or unnamed, whom a suit may benefit,\u2019 as respondents suggest.\u201d\n\n Id.\n\n The Removing Defendants attempt to distinguish Hood on the ground that \u201cwhile Black\n\n himself may be the only named party, he is in fact asserting the claim of hundreds of other actual\n\n plaintiffs.\u201d Defs.\u2019 Resp. Br. (ECF No. 15 at 22). But this distinction is irrelevant in light of Hood.\n\n Trustee, Mr. Black, is the only named plaintiff and, as previously explained, he brings\n\n claims in two capacities, as Windup Agent of PetroRock and as Trustee of the PM Settlement\n\n Trust, which vests standing in him to pursue both corporate claims belonging to PetroRock and\n\n the assigned individual claims of investors that were contributed to the PM Settlement Trust. There\n\n are no other named plaintiffs, and the Supreme Court in Hood has foreclosed any analysis that\n\n requires a determination or consideration of who the \u201creal parties in interest to a suit\u201d might be.\n\n Hood, 571 U.S. at 175 (\u201cWe conclude that Congress did not intend the background inquiry to apply\n\n to the mass action provision.\u201d).\n\n Because Mr. Black is the only Plaintiff, the Court finds that this matter does not constitute\n\n a \u201cmass action\u201d under CAFA. 4 For this reason, the Court determines it does not have subject matter\n\n jurisdiction under the mass action provisions of CAFA, 28 U.S.C. \u00a7 1332(d)(11).\n\n\n\n\n 4\n While the Court need not consider Mr. Black\u2019s alternative argument pertaining to whether this matter\n meets the requirements of a \u201cmass action\u201d under CAFA, the Court also agrees with Mr. Black that the\n Removing Defendants have failed to meet their burden on removal of establishing by a preponderance of\n the evidence that at least one investor\u2019s claim satisfies the $75,000 individual amount in controversy\n requirement. Robertson v. Exxon Mobil Corp., 814 F.3d 236, 239 (5th Cir. 2015).\n\n Memorandum Opinion and Order - Page 13\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 14 of 15 PageID 2514\n\n\n\n B. Request for Attorney\u2019s Fees\n\n Mr. Black requests that the Court award him attorney\u2019s fees incurred for obtaining a\n\n remand of this action to state court pursuant to 28 U.S.C. \u00a7 1447(c). Am. Mot. Remand (ECF No.\n\n 14 at 24). Section 1447(c) provides that \u201c[a]n order remanding the case may require payment of\n\n just costs and any actual expenses, including attorney fees, incurred as a result of the removal.\u201d 28\n\n U.S.C. \u00a7 1447(c). There is no \u201cautomatic entitlement to an award of attorney\u2019s fees.\u201d Valdes v.\n\n Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir. 2000). Bad faith is not \u201ca prerequisite to\n\n awarding attorney fees and costs.\u201d Id. (citation omitted). \u201cAbsent unusual circumstances, courts\n\n may award attorney\u2019s fees under \u00a7 1447(c) only where the removing party lacked an objectively\n\n reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists,\n\n fees should be denied.\u201d Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005) (citations\n\n omitted). In this regard, the Court must decide \u201cwhether the defendant had objectively reasonable\n\n grounds to believe the removal was legally proper\u201d at the time of removal, \u201cirrespective of the fact\n\n that it might ultimately be determined that removal was improper.\u201d Valdes, 199 F.3d at 293.\n\n In support of his request for an award of the costs of removal and attorney\u2019s fees, Mr. Black\n\n contends that \u201cthe removal had no procedural basis, and indeed the Notice of Removal was so\n\n vague that it was impossible to determine which part of the State Court proceedings were purported\n\n to be removed.\u201d Am. Mot. Remand (ECF No. 14 at 24). In response, the Removing Defendants\n\n assert that \u201ceven if this Court were to grant the motion to remand, it should deny the request for\n\n attorneys\u2019 fees.\u201d Defs.\u2019 Resp. Br. (ECF No. 15 at 25). In support, they maintain that \u201cno\n\n circumstances suggest that the removal was made in bad faith or otherwise lacked any procedural\n\n basis.\u201d Id.\n\n\n\n\n Memorandum Opinion and Order - Page 14\n\fCase 3:23-cv-02701-E Document 51 Filed 06/22/26 Page 15 of 15 PageID 2515\n\n\n\n Based on the Court\u2019s review of the facts and circumstances and given the complex nature\n\n of the underlying state court proceedings, an award of attorney\u2019s fees is not warranted. This is not\n\n an instance in which the Court can conclude that the Removing Defendants lacked objectively\n\n reasonable grounds to believe that removal was legally proper. Accordingly, the Court will deny\n\n Mr. Black\u2019s request for attorney\u2019s fees.\n\n IV. Conclusion\n\n The Removing Defendants have not met their burden to establish that the instant action\n\n qualifies as either a \u201cclass action\u201d or a \u201cmass action\u201d under CAFA. Further, the Court discerns no\n\n other basis for federal subject matter jurisdiction on the record before it. Accordingly, the Court\n\n GRANTS Plaintiff\u2019s Amended Motion for Remand (ECF No. 14), and DENIES his request for\n\n attorney\u2019s fees. The Court REMANDS this action to the 101st Judicial District Court of Dallas\n\n County, Texas. The Court directs the clerk of court to effect this remand in accordance with the\n\n usual procedure.\n\n It is so ordered this 22nd day of June, 2026.\n\n\n\n\n Ada Brown\n UNITED STATES DISTRICT JUDGE\n\n\n\n\n Memorandum Opinion and Order - Page 15\n\f","ocr_status":null,"date_upload":"2026-07-04T11:19:53.498625-07:00","document_number":"51","attachment_number":null,"pacer_doc_id":"177018717433","is_available":true,"is_free_on_pacer":true,"is_sealed":null,"document_type":1,"description":"Memorandum Opinion and Order","acms_document_guid":""}],"date_created":"2026-06-22T13:10:26.102929-07:00","date_modified":"2026-08-11T09:08:34.951849-07:00","date_filed":"2026-06-22","time_filed":"14:35:05","entry_number":51,"recap_sequence_number":"2026-06-22.001","pacer_sequence_number":254,"description":" MEMORANDUM OPINION AND ORDER: The Court GRANTS Plaintiff's Amended Motion for Remand (ECF No. 14 ), and DENIES his request for attorney's fees. The Court REMANDS this action to the 101st Judicial District Court of Dallas County, Texas. The Court directs the clerk of court to effect this remand in accordance with the usual procedure. 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BLACK III, as TRUSTEE COURT FILE NO. 3:23-CV-02701\n OF PM SETTLEMENT TRUST and\n SUBSTITUTE PLAINTIFF ON\n BEHALF OF PENNY HAAB MOORE,\n CHRISTA PETRUSA, JOSEPH\n PETRUSA, THE KAREN THOMAS\n FAMILY TRUST, ALBEAZUL, LLC,\n JEFF WENDEL, JAMES DUDOVICK, BRIEF IN SUPPORT OF\n ADRIANA VAN HEMERT, POWELL I.P., LLC\u2019s MOTION\n RICARDO YANEZ, THE ESTATE OF TO DISMISS\n MALCOM R. DILLON, JOSE\n GUERRO, SHARON MILLER,\n TERRY SCHACKOW, DEBRA SUE\n TAYLOR, JOHN RENTERIA, DMAR\n FINANCIAL CORP., JONATHON M.\n HICKS, NANCY SMITHERMAN,\n ANDREA LEDBETTER and TED\n WILSON and others similarly situation,\n and as Wind-Up Agent of PetroRock\n Mineral Holdings, LLC,\n\n Plaintiff,\n\n v.\n\n STEFAN T. TOTH, 2X5\n ENTERPRISES LIMITED\n PARTNERSHIP, THE 2X5,\n HOMEBOUND RESOURCES, LLC,\n RESOLUTE CAPITAL PARTNERS\n LTD, LLC; RESOLUTE CAPITAL\n ADVISORS, LLC; RESOLUTE\n CAPITAL MANAGEMENT\n SERVICES, LLC; THOMAS J.\n POWELL, POWELL I.P, LLC;\n MOUNTAIN HIGH CAPITAL, LLC;\n\n\n i\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 2 of 23 PageID 2233\n\n\n\n MOUNTAIN HIGH CAPITAL;\n MANAGEMENT LLC; STRATEGIC\n ENERGY ASSETS, LLC; TENACITY\n HOLDING COMPANY LLC;\n TIBURON HOLDINGS; RESOLUTE\n CAPITAL MANAGERS, LLC; RCP-\n LTD., LLC; RCMG, LLC; RESOLUTE\n ENERGY CAPITAL, LLC; FOX-IP,\n LLC; LOVE 2 LIVE, LLC; LOVE 2\n LIVE HOLDINGS, INC.; STEFAN\n TOTH FAMILY TRUST;\n CONSTANTINE CAPITAL, LLC;\n HOMEBOUND FINANCIAL GROUP,\n LP; TED ETHEREDGE;\n JACQUELINE KUIPER; CANDACE\n POWELL; LEONARD TOTH;\n HOMEBOUND ENERGY, LLC;\n HOMEBOUND, LLC; PETROROCK\n PRODUCTION HOLDINGS, LLC;\n TOTH INVESTMENTS, LLC;\n FELFRAN INVESTMENTS, LLC;\n FRTR REALTY COMPANY, LLC;\n HOMEBOUND CONSTRUCTION\n SERVICES, LLC; PETROROCK\n PIPELINE & SWD, LLC; TPS\n ENERGY, LLC; TPS ENERGY 2,\n LLC; TPS REALTY, LLC; MINERVA\n MIDSTREAM, LLC; MINERVA\n MIDSTREAM MANAGEMENT, LLC;\n CRUDE ANC, LLC; FLINT ROCK\n MARKETING, LLC; N MASTER\n HOLDINGS, LLC; RIVERFRONT\n MINERALS, LLC; ELM CAPITAL,\n LLC; JLTH AT NORTH GP, LLC;\n EDERVILLE PARK TOWNHOMES,\n LLC; and MCKENNY 90\n TOWNHOMES, LLC\n\n Defendants.\n\n\n ii\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 3 of 23 PageID 2234\n\n\n\n\n TABLE OF CONTENTS\n\n Page(s)\n\nTABLE OF AUTHORITIES ..................................................................................... v\n\nINTRODUCTION ..................................................................................................... 1\n\nARGUMENT ............................................................................................................. 4\n\nI. The CAP Fails to State Any Claim on Which Relief Can Be Granted ........... 4\n\n A. Summary of the CAP ............................................................................ 4\n B. Applicable Legal Standards .................................................................. 5\n C. The CAP Fails to Comply with Rules 9 and 12 .................................... 8\n 1. The CAP Improperly Pleads on the Basis of \u201cInformation\u201d\n and Belief\u201d .................................................................................. 8\n 2. The CAP Fails to Identify the Allegedly Wrongful Conduct\n of the Named Parties ................................................................... 9\n D. The CAP Fails to Allege the Elements of the Asserted Claims .......... 11\n 1. The First Claim is Not Adequately Pled ................................... 12\n 2. The Second Claim is Not Adequately Pled .............................. 13\n 3. The Third Claim is Not Adequately Pled ................................. 14\n 4. Claim Four is Not Adequately Pled .......................................... 15\n 5. Claim Five is Not Adequately Pled .......................................... 16\n 6. Claim Six is Not Adequately Pled ............................................ 16\n 7. Claim Seven is Not Adequately Pled ........................................ 18\n 8. Claim Eight is Not Adequately Pled ......................................... 19\n\nII. Three of the Resolute Entities Are Not Subject to Jurisdiction in Texas...... 20\n\nIII. The CAP Fails to Acknowledge the Application Arbitration Clauses .......... 21\n\nCONCLUSION ........................................................................................................ 22\n\n\n\n\n iii\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 4 of 23 PageID 2235\n\n\n\n TABLE OF AUTHORITIES\n\n Page(s)\n\nCases\n\nAllstate Insurance Company v. Benhamou,\n 190 F. Supp. 3d 631 (S.D. Tex. 2016) .......................................................... 17\n\nAshcroft v. Iqbal,\n 556 U.S. 662 (2009)..................................................................................... 5, 6\n\nBell Atl. Corp. v. Twombly,\n 550 U.S. 544 (2007)......................................................................................... 8\n\nBlount v. Bordens Inc.,\n 910 S.W.2d 931 (Tex. 1995) ......................................................................... 18\n\nCampbell v. Tex. Tea Reclamation, LLC,\n 2021 W.L. 2211690 (S.D. Tex. May 6, 2021)............................................... 19\n\nCarroll v. Timmers Chevrolet, Inc.,\n 592 S.W.2d 922 (Tex. 1979) ......................................................................... 17\n\nCrooks v. M1 Real Estate Partners, Ltd.,\n 238 S.W.3d 474 (Tex. App.\u2014Dallas 2007) .................................................. 14\n\nCrosswell v. Rodriguez,\n 2023 W.L. 6206911 (S.D. Tex. 2023) ........................................................... 19\n\nCruz v. Resolute Capital Partners Ltd. LLC,\n Case No. 3:22-cv-02349-E (N. D. Tex. 2023) .......................................... 3, 21\n\nIn re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig.,\n 888 F.3d 753 (5th Cir. 2018) ......................................................................... 16\n\nDodd v. Savino,\n 426 S.W.3d 275 (Tex. App.\u2014Houston [14th Dist.] 2014) ........................... 14\n\nDorsey v. Portfolio Equities, Inc.,\n 540 F.3d 333 (5th Cir. 2008) ........................................................................... 7\n\n\n\n\n iv\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 5 of 23 PageID 2236\n\n\n\n TABLE OF AUTHORITIES (cont\u2019d)\n\n Page(s)\n\nCases\n\nEEMSO, Inc. v. Compex Technologies, Inc.,\n 2006 W.L. 8437456 (N.D. Tex. 2006) .......................................................... 15\n\nFunk v. Stryker Corp.,\n 673 F. Supp. 2d 522 (S.D. Tex. 2009),\n aff\u2019d, 631 F.3d 777 (5th Cir. 2011) ................................................................. 8\n\nUnited States ex rel. Grubbs v. Kanneganti,\n 565 F.3d 180 (5th Cir. 2009) ......................................................................... 17\n\nInnova Hosp. San Antonio, L.P. v. Blue Cross and Blue Shield of Georgia,\n 995 F. Supp. 2d 587 (N.D. Tex. 2014) ....................................................20, 21\n\nInnova Hosp. San Antonio, Ltd. P\u2019ship v. Blue Cross &\nBlue Shield of Georgia, Inc.,\n 892 F.3d 719 (5th Cir. 2018) ........................................................................... 8\n\nIns. Co. of N. Am. v. Morris,\n 981 S.W.2d 667 (Tex. 1998) ......................................................................... 17\n\nJacobowitz v. Range Res. Corp.,\n 596 F. Supp. 3d 659 (N.D. Tex. 2022) ............................................................ 7\n\nIn re Key Energy Servs., Inc. Sec. Litig.,\n 166 F. Supp. 3d 822 (S.D. Tex. 2016)............................................................. 7\n\nMorgan v. Hubert,\n 335 F. App\u2019x 466 (5th Cir. 2009) .................................................................... 5\n\nNavigant Consulting, Inc. v. Wilkinson,\n 508 F.3d 277 (5th Cir. 2007) ......................................................................... 13\n\nNwokedi v. Unlimited Restoration Specialists, Inc.,\n 428 S.W.3d 191 (2014).................................................................................. 19\n\nRamirez v. Allstate Vehicle & Prop. Ins. Co.,\n 490 F. Supp. 3d 1092 (S.D. Tex. 2020)........................................................... 6\n\n\n v\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 6 of 23 PageID 2237\n\n\n\n TABLE OF AUTHORITIES (cont\u2019d)\n\n Page(s)\n\nCases\n\nShoemaker v. Whistler\u2019s Estate,\n 513 S.W.2d 10 (Tex. 1974) ........................................................................... 18\n\nSouthland Sec. Corp. v. Inspire Ins. Sols., Inc.,\n 365 F.3d 353 (5th Cir. 2004) ....................................................................... 6, 8\n\nStrickland v. Bank of New York Mellon,\n 838 F. App\u2019x 815 (5th Cir. 2020) .................................................................... 7\n\nIn re Today\u2019s Destiny,\n 2009 W.L. 1232108 (Bankr. S.D. Tex. 2009) ................................................. 6\n\nIn re Uplift RX, LLC,\n 2023 W.L. 5355353, *13 (Bankr. S.D. Tex. 2023) ....................................... 16\n\nTexas Dept. of Transp. v. Able\n 35 S.W.3d 608 (Tex. 2000) ........................................................................... 18\n\nTriplex Communications, Inc. v. Riley,\n 900 S.W.2d 716 (Tex. 1995) ......................................................................... 18\n\nStatutes\n\nRestatement (Second) of Torts \u00a7 491....................................................................... 18\n\nTex. Bus & Com. Code \u00a7 24.005(a)(1).................................................................... 19\n\nTex. Gov\u2019t Code \u00a7 4008.052.................................................................................... 12\n\nRules\n\nFed. R. Civ. P. 8 .............................................................................................5, 11, 20\n\nFed. R. Civ. P. Rule 9 ........................................................................6, 11, 12, 17, 19\n\nFed. R. Civ. P. Rule 10 .............................................................................................. 8\n\nFed. R. Civ. P. Rule 12 (b)(6) ................................................................................ 5, 6\n\n\n vi\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 7 of 23 PageID 2238\n\n\n\n INTRODUCTION\n\n 1. On May 3, 2022, a Petition was filed in Texas state court on behalf of\n\nan entity called PetroRock Mineral Holdings, Inc. (\u201cPRMH\u201d). This petition sought\n\nan orderly disposition of the assets of PRMH for the benefit of PRMH\u2019s creditors.\n\nIn June 2022, as requested in the initial petition, the court appointed a \u201cWind Up\n\nAgent.\u201d\n\n 2. In the summer of 2022, groups of investors in PRMH filed Petitions in\n\nIntervention seeking recovery from an array of parties for alleged losses resulting\n\nfrom their investment in, and the management of, PRMH. In September 2022, the\n\ninvestors settled their claims against PRMH. The state court certified a class and in\n\nApril 2023 issued an Order stating that investors who did not opt out of the class had\n\nbeen deemed to assign their claims against third parties to Plaintiff.\n\n 3. In September 2023, Plaintiff filed a Consolidated Amended Petition\n\n(\u201cCAP\u201d) in state court. As demonstrated below, this pleading is little more than a list\n\nof defendants and some generalized, vague assertions of wrongful conduct. The CAP\n\nstates that Plaintiff has stepped into the shoes of the investors, consolidates and\n\ncontinues the previously-filed claims, and adds many new third parties.\n\n 4. On December 20, 2023, this Court entered an Order setting the\n\nfollowing deadlines:\n\n\n\n\n 1\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 8 of 23 PageID 2239\n\n\n\n \uf0b7 January 15, 2024: deadline for the Served Defendants to provide\n the required written notification of the issues to be raised in a\n motion to dismiss;\n\n \uf0b7 January 29, 2024: deadline for the parties to \u201cmeet and confer\u201d\n regarding a motion to dismiss;\n\n \uf0b7 February 5, 2024: deadline for Plaintiff to provide the required\n written advisory of Plaintiff\u2019s intent to file an Amended\n Complaint;\n\n \uf0b7 February 12, 2024: deadline for Plaintiff to file an Amended\n Complaint; and\n\n \uf0b7 February 23, 2024: deadline for the Served Defendants to answer\n or otherwise plead (such as by filing a motion to dismiss) in\n response to the Consolidated Amended Petition.\n\n 5. On January 15, 2024, certain entities (referred to as the \u201cResolute\n\nEntities\u201d) provided written notification to Plaintiff of the issues to be raised in a\n\nmotion to dismiss. (Ex. 1.) After the parties \u201cmet and conferred\u201d, Plaintiff stated his\n\nintent to file an amended pleading.\n\n 6. On February 1, 2024, Plaintiff filed a motion to stay. (Doc. 17.) The\n\nMotion to Stay has not been decided, and Plaintiff has not filed an amended pleading.\n\n 7. On February 23, 2024, the Resolute Entities filed a Motion to Dismiss\n\nand a supporting Brief. (Doc. Nos. 22, 23.)\n\n 8. On April 17, 2024, plaintiff filed a Return of Service with the state\n\ncourt, indicating that service had been made upon Powell I.P., LLC.\n\n\n\n\n 2\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 9 of 23 PageID 2240\n\n\n\n 9. Accordingly, Powell I.P., LLC now files this Motion to Dismiss the\n\nConsolidated Amended Petition. This Court should dismiss the CAP as to Powell\n\nI.P. for the following reasons:\n\n First: the CAP does not state any claim on which relief can be granted against\n\nPowell I.P. The CAP does not provide any allegations that Powell I.P. is liable to\n\nany of the investors for the alleged fraud or mismanagement. In fact, except for\n\nparagraph 14, which identifies Powell I.P. as a Nevada LLC, Powell I.P. is not even\n\nidentified in the CAP.\n\n Second: Powell I.P. is not subject to the jurisdiction of the courts in the state\n\nof Texas. The CAP does not allege facts showing that Powell I.P. is subject to\n\njurisdiction in Texas.\n\n ARGUMENT\n\nI. The CAP Fails to State Any Claim on Which Relief Can Be Granted.\n\n A. Summary of the CAP.\n\n 10. The CAP generally alleges securities fraud, mismanagement, and other\n\nconduct that caused a loss of more than $200,000,000, involving thousands of\n\ninvestors, and investments over several years. (CAP, \u00b6 1.) Despite the magnitude of\n\nthe allegations, the CAP is bereft of any details regarding the alleged fraud or other\n\nactionable conduct.\n\n 11. An outline of the CAP illustrates its brevity and lack of substance:\n\n\n\n 3\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 10 of 23 PageID 2241\n\n\n\n \uf0b7 Paragraphs 1-5 contain an incomplete history of the proceedings\n in state court.\n\n \uf0b7 Paragraphs 5-59 list the defendants. Many of the parties listed in\n these paragraphs appear nowhere else in the CAP.\n\n \uf0b7 Paragraphs 60-61 concern venue and jurisdiction.\n\n \uf0b7 Paragraphs 62-89 set forth the \u201cFactual Background\u201d of the\n claims.1\n\n \uf0b7 Paragraphs 90-135 list eight asserted claims, which are:\n o First Claim: Violation of Texas Revised Civil Statute\n Annotated \u00a7 581- \u00a7 33\n\n o Second Claim: Breach of Fiduciary Duty to PRMH and to\n Investors\n\n o Third Claim: Alter Ego and Corporate Veil Piercing\n\n o Claim Four: Constructive Trust\n\n o Claim Five: Aiding and Abetting Breach of Fiduciary\n Duty\n\n o Claim Six: Conspiracy Liability\n\n o Claim Seven: Joint Enterprise\n\n o Claim Eight: Fraudulent Transfers\n\n \uf0b7 Paragraphs 136-139 set forth the basis for the tolling of\n applicable statutes of limitation.\n\n 12. As discussed below, the CAP fails to plausibly allege the factual bases\n\n of the elements of the eight claims.\n\n\n\n\n 1\n Powell I.P. reserves the right to challenge any of the facts stated in the CAP.\n\n 4\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 11 of 23 PageID 2242\n\n\n\n B. Applicable Legal Standards.\n\n 13. Federal Rule of Civil Procedure 12(b)(6) allows parties to seek\n\n dismissal of a lawsuit for failure to state a claim upon which relief may be granted.\n\n A motion to dismiss under Rule 12(b)(6) tests the sufficiency of the complaint\n\n against the legal standard set forth in Rule 8, requiring \u201ca short and plain statement\n\n of the claim showing that the pleader is entitled to relief.\u201d Fed. R. Civ. P. 8(a)(2).\n\n \u201cTo survive a motion to dismiss, a complaint must contain sufficient factual matter,\n\n accepted as true, to \u2018state a claim to relief that is plausible on its face.\u2019\u201d Ashcroft v.\n\n Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,\n\n 570 (2007)). \u201cDetermining whether a complaint states a plausible claim for relief\n\n [is] ... a context-specific task that requires the reviewing court to draw on its judicial\n\n experience and common sense.\u201d Iqbal, 556 U.S. at 679. In deciding a motion to\n\n dismiss under Rule 12(b)(6), the court is not required to \u201caccept conclusory\n\n allegations, unwarranted deductions, or legal conclusions.\u201d Southland Sec. Corp. v.\n\n Inspire Ins. Sols., Inc., 365 F.3d 353, 361 (5th Cir. 2004).\n\n 14. Many of the allegations in the CAP sound in fraud. Rule 9(b) requires\n\n that a party \u201cstate with particularity the circumstances constituting fraud.\u201d Rule 9(b)\n\n applies to any averment of fraud within a claim that has a fraud-based element.\u201d In\n\n re Today\u2019s Destiny, 2009 W.L. 1232108, at *6 (Bankr. S.D. Tex. 2009) citing Lone\n\n Star Ladies Inc. Club v. Schlotzsky's Inc., 238 F.3d 363, 368\u201369 (5th Cir. 2001)).\n\n\n\n 5\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 12 of 23 PageID 2243\n\n\n\n This requirement plays a screening function, standing as \u201c\u2018a gatekeeper to discovery,\n\n a tool to weed out meritless fraud claims sooner than later.\u2019\u201d Ramirez v. Allstate\n\n Vehicle & Prop. Ins. Co., 490 F. Supp. 3d 1092, 1116 (S.D. Tex. 2020) (quoting\n\n United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009)).\n\n 15. In a fraud-based claim, the plaintiff cannot group the defendants\n\n together; instead, the plaintiff must differentiate the parties and inform each\n\n defendant of the allegations regarding each defendant\u2019s alleged participation in the\n\n fraud. See, e.g., Southland Sec. Corp. v. INSpire Ins. Sols., Inc., 365 F.3d 353, 366\n\n (5th Cir. 2004); In re Key Energy Servs., Inc. Sec. Litig., 166 F. Supp. 3d 822, 831\n\n (S.D. Tex. 2016); Jacobowitz v. Range Res. Corp., 596 F. Supp. 3d 659, 687 (N.D.\n\n Tex. 2022).\n\n 16. In addition, the plaintiff must specifically identify the\n\n who/what/when/where/how of the alleged misconduct, must specify what is false\n\n or/misleading about each statement, and must specifically identify the plaintiff\u2019s\n\n reliance upon the false statements. See, e.g., Strickland v. Bank of New York Mellon,\n\n 838 F. App\u2019x 815, 820 (5th Cir. 2020); Dorsey v. Portfolio Equities, Inc., 540 F.3d\n\n 333, 340 (5th Cir. 2008); Southland., 365 F.3d at 362.\n\n C. The CAP Fails to Comply With Rules 9 and 12.\n\n 17. As discussed in paragraphs 17-26 of the Resolute Entities\u2019 Brief (Doc.\n\n 23), which are incorporated here, the CAP improperly pleads on the basis of\n\n\n\n 6\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 13 of 23 PageID 2244\n\n\n\n \u201cinformation and belief\u201d and fails to identify any of the defendants\u2019 allegedly\n\n wrongful conduct. In fact, other than identifying Powell I.P. as a Nevada LLC, the\n\n CAP does not mention Powell I.P.\n\n 18. The CAP thus fails to state any claim against Powell I.P. and should be\n\n dismissed.\n\n D. The CAP Fails to Allege the Elements of the Asserted Claims.\n\n 19. Not only does the CAP fail to plausibly allege the factual bases of the\n\n claims identified in it as required by Rules 8 and 9, it also fails to allege the elements\n\n of those claims.\n\n 1. The First Claim is Not Adequately Pled.\n\n 20. The CAP\u2019s First Claim alleges that \u201cAll Defendants\u201d violated the\n\n \u201cTexas Securities Act Blue Sky Law, Texas Revised Civil Statute Annotated \u00a7 581-\n\n 33.\u201d2 This claim is not adequately pled against Powell I.P.\n\n 21. A private right of action under the Texas Securities Act requires proof\n\n of a sale or offer to sell a security, made to the plaintiff by means of a statement or\n\n omission that is material in light of the circumstances Tex. Gov\u2019t Code \u00a7 4008.052.\n\n Further, the plaintiff must have purchased the security from the defendant. Id. And,\n\n as noted above, under Rule 9, the circumstances regarding fraud must be pleaded\n\n with specificity. While the CAP does not allege these elements against any\n\n 2\n The Securities Act has been recodified, without any substantive or material changes to\n the relevant provisions.\n\n 7\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 14 of 23 PageID 2245\n\n\n\n defendant, it is sufficient here to note that the CAP does not allege these elements\n\n against Powell I.P.\n\n 22. This Court should dismiss the First Claim as to Powell I.P.\n\n 2. The Second Claim is Not Adequately Pled.\n\n 23. The second claim alleges a breach of fiduciary duty to PRMH and the\n\n investors. This claim does not identify the defendants against whom it is asserted.\n\n To the extent it is asserted against Powell I.P., the claim must fail.\n\n 24. A claim for breach of fiduciary duty requires: (1) the existence of a\n\n fiduciary relationship; (2) a breach of the fiduciary duty; and (3) the breach resulted\n\n in injury to the plaintiff or benefit to the defendant. Navigant Consulting, Inc. v.\n\n Wilkinson, 508 F.3d 277, 283 (5th Cir. 2007).\n\n 25. The CAP does not provide any factual basis for any argument that\n\n Powell I.P. owed fiduciary duties to any investor and does not allege any conduct by\n\n Powell I.P. that constituted a breach of any such duty.\n\n 26. This Court should dismiss the Second Claim as to Powell I.P.\n\n 3. The Third Claim is Not Adequately Pled.\n\n 27. The Third Claim purports to state a cause of action for \u201calter ego and\n\n veil piercing.\u201d Without providing any factual support, the claim states that a list of\n\n entities should be held liable on the ground the entities were \u201ca sham to perpetuate\n\n a fraud on investors and PRMH.\u201d (CAP, \u00b6 108.)\n\n\n\n 8\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 15 of 23 PageID 2246\n\n\n\n 28. Veil-piercing doctrines such as alter ego are not independent or\n\n substantive causes of action. Dodd v. Savino, 426 S.W.3d 275, 291 (Tex. App.\u2014\n\n Houston [14th Dist.] 2014, no pet.); Crooks v. M1 Real Estate Partners, Ltd., 238\n\n S.W.3d 474, 488 (Tex. App.\u2014Dallas 2007, pet. denied). Rather, they are a means\n\n of imposing on an individual a corporation\u2019s liability for an underlying cause of\n\n action. Id., citing Crooks, 238 S.W.3d at 488. \u201cWithout an underlying cause of action\n\n creating corporate liability, evidence of an abuse of the corporate form is\n\n immaterial.\u201d Id., citing Cox v. S. Garrett, L.L.C., 245 S.W.3d 574, 582 (Tex. App.\u2014\n\n Houston [1st Dist.] 2007, no pet.) (quoting Specialty Retailers, Inc. v. Fuqua, 29\n\n S.W.3d 140, 147 (Tex. App.\u2014Houston [14th Dist.] 2000, pet. denied)).\n\n 29. Even if the \u201calter ego\u201d and veil piercing were viable claims, here they\n\n are not sufficiently pled. The claim against Powell I.P. is based entirely on\n\n supposition and innuendo. The argument seems to be, not that an individual should\n\n be held liable for a corporation\u2019s conduct, but rather that a long list of entities \u2013\n\n nearly all of which have no alleged connection with the events \u2013 are liable for other\n\n entities\u2019 conduct. The CAP insinuates that the entities identified in paragraph 108\n\n were created for an improper purpose but makes no factual allegations to support its\n\n inflammatory claims.\n\n 30. This Court should dismiss the Third Claim as to Powell I.P.\n\n\n\n\n 9\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 16 of 23 PageID 2247\n\n\n\n 4. Claim Four is Not Adequately Pled.\n\n 31. Claim Four asks the Court to impose a \u201cconstructive trust.\u201d\n\n 32. To the extent a constructive trust is cause of action, such a trust may be\n\n imposed where there is either a \u201c(1) breach of an informal relationship of special\n\n trust or confidence arising prior to the transaction in question, or (2) actual fraud.\u201d\n\n EEMSO, Inc. v. Compex Technologies, Inc., 2006 W.L. 8437456 (N.D. Tex. 2006)\n\n citing Gruber v. Deuschle, 261 F. Supp. 2d 682, 696 (N.D. Tex. 2003). The CAP\n\n does not allege any of these elements against Powell I.P. Therefore, Claim Four\n\n should be dismissed.\n\n 5. Claim Five is Not Adequately Pled.\n\n 33. Claim Five purports to state a claim for \u201caiding and abetting breach of\n\n fiduciary duty.\u201d Again, this claim does not identify the defendants as to which this\n\n claim is asserted. To the extent this claim is purportedly asserted against Powell I.P.,\n\n the claim must fail as currently pled.\n\n 34. Even if Texas law recognizes this cause of action, the claim is not\n\n adequately pled. Again, this claim does not identify the party(ies) who allegedly\n\n owed the fiduciary duty, the contours of the duty, the specific actions that constituted\n\n a breach(es) of the duty, or the actions that constituting an \u201caiding and abetting\u201d of\n\n any such breach(es).\n\n 35. This Court should dismiss Claim Five as to Powell I.P.\n\n\n\n 10\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 17 of 23 PageID 2248\n\n\n\n 6. Claim Six is Not Adequately Pled.\n\n 36. Claim Six alleges that a civil conspiracy to defraud the investors. Once\n\n again, this claim does not identify the defendants as to which this claim is asserted.\n\n To the extent it is purportedly asserted against Powell I.P., the claim must fail.\n\n 37. A claim for civil conspiracy requires proof of the following: 1) two or\n\n more persons; 2) an objective to be accomplished; 3) a meeting of the minds on the\n\n objective or course of action; 4) one or more unlawful, overt acts; 5) resulting\n\n damages. Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 675 (Tex. 1998). To be\n\n jointly and severally liable, an alleged conspirator must have acted \u201cin pursuance of\n\n the common purpose of the conspiracy.\u201d Carroll v. Timmers Chevrolet, Inc., 592\n\n S.W.2d 922, 928 (Tex. 1979).\n\n 38. Rule 9(b) applies to a state-law claim of conspiracy to commit fraud.\n\n Allstate Insurance Company v. Benhamou, 190 F. Supp. 3d 631, 665 (S.D. Tex.\n\n 2016) (emphasis added) (further citations omitted). A plaintiff alleging a conspiracy\n\n to commit fraud must plead with particularity the conspiracy as well as the overt acts\n\n in furtherance of the conspiracy. U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180,\n\n 193 (5th Cir. 2009 \u201c) (quoting FC Inv. Group LC v. IFX Markets, Ltd., 529 F.3d\n\n 1087, 1097 (D.C. Cir. 2008)).\n\n 39. Here, Claim Six merely alleges a combination of two people for an\n\n unlawful purpose. It does not plead any facts in support of the other elements of the\n\n\n\n 11\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 18 of 23 PageID 2249\n\n\n\n claim and does not identify how Powell I.P. is part of any such purpose. This Court\n\n should dismiss Claim Six.\n\n 7. Claim Seven is Not Adequately Pled.\n\n 40. The CAP\u2019s claim for \u201cjoint enterprise\u201d is likewise subject to dismissal.\n\n 41. Joint enterprise liability makes \u201ceach party thereto the agent of the other\n\n and thereby to hold each responsible for the negligent act of the other.\u201d Texas Dept.\n\n of Transp. v. Able, 35 S.W.3d 608 (Tex. 2000), citing Shoemaker v. Whistler\u2019s\n\n Estate, 513 S.W.2d 10, 14 (Tex. 1974). In Shoemaker, the Supreme Court of Texas\n\n adopted the definition of joint enterprise as stated in section 491, comment c of the\n\n Restatement of Torts. That section states:\n\n [t]he elements which are essential to a joint enterprise are\n commonly stated to be four: (1) an agreement, express or\n implied, among the members of the group; (2) a common\n purpose to be carried out by the group; (3) a community of\n pecuniary interest in that purpose, among the members; and (4)\n an equal right to a voice in the direction of the enterprise, which\n gives an equal right of control.\n\n Restatement (Second) of Torts \u00a7 491 cmt. c (1965); see also Blount v. Bordens Inc.,\n\n 910 S.W.2d 931, 933 (Tex. 1995); Triplex Communications, Inc. v. Riley, 900\n\n S.W.2d 716, 718 (Tex. 1995).\n\n 42. The premise of Claim Seven appears to be that every named defendant\n\n participated in a fraud. However, the allegations Seven fail to give any defendant\n\n\n\n\n 12\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 19 of 23 PageID 2250\n\n\n\n any insight as to what the joint enterprise was, how it was carried out or each\n\n defendant\u2019s alleged role in the joint enterprise.\n\n 43. This Court should dismiss Claim Seven.\n\n 8. Claim Eight is Not Adequately Pled.\n\n 44. Claim Eight seeks recovery for alleged fraudulent transfers.\n\n 45. To prevail on a Texas Uniform Fraudulent Transfer Act (\u201cTUFTA\u201d)\n\n claim, a plaintiff must prove that (1) she is a \u201ccreditor\u201d with a claim against a\n\n \u201cdebtor\u201d; (2) the debtor transferred assets after, or a short time before, the plaintiff\u2019s\n\n claim arose; and (3) the debtor made the transfer with the intent to hinder, delay, or\n\n defraud the plaintiff. Crosswell v. Rodriguez, 2023 W.L. 6206911 (S.D. Tex. 2023);\n\n Nwokedi v. Unlimited Restoration Specialists, Inc., 428 S.W.3d 191, 204 (2014);\n\n TEX. BUS. & COM. CODE \u00a7 24.005(a)(1)). Claims under \u00a7 24.005(a)(1) for actual\n\n fraudulent transfer must satisfy Rule 9(b) because \u201can essential element of an actual\n\n fraudulent transfer claim ... is a fraudulent state of mind.\u201d Campbell v. Tex. Tea\n\n Reclamation, LLC, 2021 W.L. 2211690, at *5 (S.D. Tex. May 6, 2021).\n\n 46. As with the other claims, Claim Eight improperly relies on pleading\n\n that actionable conduct \u201clikely\u201d occurred, fails to identify any specific transfers, and\n\n fails to allege that any actual transfers were made without providing reasonably\n\n equivalent value.\n\n 47. Claim Eight should be dismissed.\n\n\n\n 13\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 20 of 23 PageID 2251\n\n\n\n II. Powell I.P. Is Not Subject to Jurisdiction in Texas.\n\n 48. This Court also should dismiss Powell I.P. on the ground that Plaintiff\n\n has not even attempted to identify a basis on which this Court \u2013 or any court in the\n\n State of Texas \u2013 could exercise jurisdiction over it.\n\n 49. The CAP casts a wide net over individuals and entities without \u2013 in\n\n most cases \u2013 making any allegations as to their connections to Texas. Paragraphs\n\n 10-24 list a group of entities that Plaintiff calls \u201cthe Powell Corporate Defendants.\u201d\n\n Powell I.P. appears in that group, but the CAP makes no jurisdictional allegations\n\n with respect to it. (CAP, \u00b6 14.)\n\n 50. Fed. R. Civ. P. 8(a)(1) requires a plaintiff to include a short and plain\n\n statement of the court\u2019s jurisdiction. Federal Rule of Civil Procedure 12(b)(2)\n\n provides that a party may move for dismissal based upon lack of personal\n\n jurisdiction.\n\n 51. When a nonresident defendant presents a motion to dismiss for lack of\n\n personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff bears the burden of\n\n establishing the district court\u2019s jurisdiction. Innova Hosp. San Antonio, L.P. v. Blue\n\n Cross and Blue Shield of Georgia, 995 F. Supp. 2d 587, 615 (N.D. Tex. 2014)\n\n (quoting Rolls\u2013Royce Corp. v. Heros, Inc., 576 F. Supp. 2d 765, 773 (N.D. Tex.\n\n 2008) (further citations omitted). A plaintiff must plead sufficient jurisdictional facts\n\n\n\n\n 14\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 21 of 23 PageID 2252\n\n\n\n to make a prima facie case showing that the defendant has continuous and systematic\n\n contacts in Texas. Innova, 995 F. Supp. 2d at 616.\n\n 52. Here, despite ample opportunity to investigate the facts, the CAP does\n\n not allege any jurisdictional facts regarding Powell I.P.. As a result, this Court should\n\n dismiss the CAP with respect to Powell I.P., with prejudice.\n\n CONCLUSION\n\n 53. For all the reasons stated above, this Court should dismiss the\n\n Consolidated Amended Petition as to Powell I.P., with prejudice.\n\n\n\n [Signature Page to Follow]\n\n\n\n\n 15\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 22 of 23 PageID 2253\n\n\n\n Respectfully submitted,\n\n MOSS & BARNETT, P.A.\n\n Dated: April 18, 2024 By: /s/Charles E. Jones\n CHARLES E. JONES\n charles.jones@lawmoss.com\n MATTHEW R. BURTON\n Pro Hac Vice Motion to be Filed\n matthew.burton@lawmoss.com\n 150 South Fifth Street, Suite 1200\n Minneapolis, MN 55402\n (612) 877-5000 (Telephone)\n (612) 877-5999 (Facsimile)\n\n COBB MARTINEZ WOODWARD PLLC\n\n By: /s/ Matthew E. Last\n DANIEL D. TOSTRUD (#20146160)\n dtostrud@cobbmartinez.com\n MATTHEW E. LAST (#24054910)\n mlast@cobbmartinez.com\n 1700 Pacific Avenue, Suite 3100\n Dallas, TX 75201\n (214) 220-5224 (Telephone)\n (214) 220-5299 (Facsimile)\n COUNSEL FOR DEFENDANTS\n RESOLUTE CAPITAL PARTNERS LTD,\n RESOLUTE CAPITAL MANAGERS LLC\n AND RESOLUTE MANAGEMENT\n SERVICES LLC\n\n\n\n\n 16\n\fCase 3:23-cv-02701-E Document 39 Filed 04/18/24 Page 23 of 23 PageID 2254\n\n\n\n CERTIFICATE OF WORD COUNT\n\n The undersigned certifies that the word count for foregoing Memorandum is\n 4,414, not including the case caption, table of contents, table of authorities, signature\n block and certificates, using the Word Count feature in Microsoft Word.\n\n /s/Charles E. Jones\n Charles E. Jones\n\n\n\n\n CERTIFICATE OF SERVICE\n\n The undersigned certifies that the foregoing Memorandum in Support of the\n Resolute Entities\u2019 Motion to Dismiss was served electronically via ECF to the\n counsel of record in the above-entitled case on April 18, 2024.\n\n /s/Charles E. Jones\n Charles E. 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BLACK III, as TRUSTEE OF PM CASE NO. 3:23-CV-02701\n SETTLEMENT TRUST and SUBSTITUTE\n PLAINTIFF ON BEHALF OF PENNY HAAB\n MOORE, CHRISTA PETRUSA, JOSEPH\n PETRUSA, THE KAREN THOMAS FAMILY\n TRUST, ALBEAZUL, LLC, JEFF WENDEL,\n JAMES DUDOVICK, ADRIANA VAN\n HEMERT, RICARDO YANEZ, THE ESTATE\n OF MALCOM R. DILLON, JOSE GUERRO,\n SHARON MILLER, TERRY SCHACKOW,\n DEBRA SUE TAYLOR, JOHN RENTERIA,\n DMAR FINANCIAL CORP., JONATHON M.\n HICKS, NANCY SMITHERMAN, ANDREA\n LEDBETTER and TED WILSON and others\n similarly situation, and as Wind-Up Agent of\n PetroRock Mineral Holdings, LLC,\n\n Plaintiffs,\n v.\n\n STEFAN T. TOTH, 2X5 ENTERPRISES\n LIMITED PARTNERSHIP, THE 2X5,\n HOMEBOUND RESOURCES, LLC,\n RESOLUTE CAPITAL PARTNERS LTD,\n LLC; RESOLUTE CAPITAL ADVISORS,\n LLC; RESOLUTE CAPITAL\n MANAGEMENT SERVICES, LLC;\n THOMAS J. POWELL, POWELL I.P, LLC;\n MOUNTAIN HIGH CAPITAL, LLC;\n MOUNTAIN HIGH CAPITAL;\n MANAGEMENT LLC; STRATEGIC\n ENERGY ASSETS, LLC; TENACITY\n HOLDING COMPANY LLC; TIBURON\n HOLDINGS; RESOLUTE CAPITAL\n MANAGERS, LLC; RCP-LTD., LLC; RCMG,\n LLC; RESOLUTE ENERGY CAPITAL, LLC;\n FOX-IP, LLC; LOVE 2 LIVE, LLC;\n LOVE 2 LIVE HOLDINGS, INC.;\n STEFAN TOTH FAMILY TRUST;\n CONSTANTINE CAPITAL, LLC;\n HOMEBOUND FINANCIAL GROUP, LP;\n TED ETHEREDGE; JACQUELINE KUIPER;\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 2 of 11 PageID 2014\n\n\n\n CANDACE POWELL; LEONARD TOTH;\n HOMEBOUND ENERGY, LLC;\n HOMEBOUND, LLC; PETROROCK\n PRODUCTION HOLDINGS, LLC; TOTH\n INVESTMENTS, LLC; FELFRAN\n INVESTMENTS, LLC; FRTR REALTY\n COMPANY, LLC; HOMEBOUND\n CONSTRUCTION SERVICES, LLC;\n PETROROCK PIPELINE & SWD, LLC; TPS\n ENERGY, LLC; TPS ENERGY 2, LLC; TPS\n REALTY, LLC; MINERVA MIDSTREAM,\n LLC; MINERVA MIDSTREAM\n MANAGEMENT, LLC; CRUDE ANC, LLC;\n FLINT ROCK MARKETING, LLC; N\n MASTER HOLDINGS, LLC; RIVERFRONT\n MINERALS, LLC; ELM CAPITAL, LLC;\n JLTH AT NORTH GP, LLC; EDERVILLE\n PARK TOWNHOMES, LLC; and\n MCKENNY 90 TOWNHOMES, LLC\n\n Defendants.\n\n\n DEFENDANTS CONSTANTINE CAPITAL LLC, N MASTER HOLDINGS LLC, ELM\n CAPITAL LLC, RIVERFRONT MINERALS LLC, AND PABLO CORTEZ\u2019S\n BRIEF IN SUPPORT OF THEIR MOTION TO DISMISS\n\n Pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b), Defendants Constantine\n\nCapital LLC, N Master Holdings LLC, Elm Capital LLC, Riverfront Minerals LLC, and Pablo\n\nCortez (collectively the \u201cCortez Defendants\u201d) hereby respectfully move to dismiss this lawsuit\n\nagainst them with prejudice for the reasons outlined below.\n\n INTRODUCTION\n\n Plaintiffs\u2019 claims as to the Cortez Defendants should be dismissed with prejudice. At a\n\nfundamental level, Plaintiffs allege that the Cortez Defendants acted fraudulently, yet Plaintiffs\n\nhave only offered one, very limited paragraph of allegations as to the Cortez Defendants that falls\n\nsignificantly short of the heightened pleading standard required by Rule 9(b) of the Federal Rules\n\nof Civil Procedure. Furthermore, three of the Cortez Defendants are entities that were indisputably\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 2\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 3 of 11 PageID 2015\n\n\n\ncreated after the filing of this lawsuit and therefore could not have possibly been involved in any\n\nof the wrongdoing alleged in this lawsuit. Finally, the claims against Defendant Pablo Cortez have\n\nalready been released in the prior bankruptcy court proceedings and are therefore barred in this\n\nmatter. For these reasons, this Court should dismiss the claims as to the Cortez Defendants.\n\n BACKGROUND\n\n This case originated in Texas state court following bankruptcy proceedings initiated by\n\nMinerva Resources, LLC. On May 3, 2022, Plaintiff Albert C. Black III, as Trustee of the PM\n\nSettlement Trust (\u201cPlaintiff\u201d), filed a Petition on behalf of PetroRock Mineral Holding, Inc.,\n\nseeking disposition of PetroRock\u2019s assets for the benefit of its creditors. See Original Petition, ECF\n\nNo. 1-1. The Cortez Defendants incorporate by reference the history of the bankruptcy proceeding\n\nas stated in previous filings. See, e.g., ECF No. 23.\n\n In the bankruptcy proceeding, Plaintiffs\u2019 claims against Defendant Pablo Cortz were\n\nexpressly released. Defendants\u2019 Appendix (\u201cDef. App.\u201d) at 58. Specifically, Article XVI.D of\n\nExhibit A of the Confirmation Order provides a full and complete release by holders of claims\n\n(i.e., creditors) of each \u201cReleased Party.\u201d Def. App. at 58. Article I.A, paragraph 73 of the same\n\ndocument defines \u201cReleased Party\u201d to expressly include Pablo Cortez. Def. App. at 58.\n\n In September 2023, Plaintiffs filed a Consolidated Amended Petition (the \u201cCAP\u201d) in state\n\ncourt. See Petition, ECF No. 1-7. The case was subsequently removed to this Court.\n\n On January 15, 2024, the Cortez Defendants provided notice to Plaintiffs that the Cortez\n\nDefendants intended to file a motion to dismiss. Def. App. at 6-7. During the parties\u2019 meet and\n\nconfer, Plaintiffs indicated their intent to file an amended petition.\n\n\n\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 3\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 4 of 11 PageID 2016\n\n\n\n On February 1, 2024, Plaintiffs filed a Motion to Stay. ECF No. 17. This motion sought to\n\nstay proceedings until this Court resolved Plaintiffs\u2019 Motion to Remand, or in the alternative, an\n\nextension of time until March 15, 2024, to file an amended petition.\n\n On February 22, 2024, the Cortez Defendants responded to Plaintiffs\u2019 Motion to Stay,\n\nstating they were not opposed to the extension of time to file an Amended Complaint but they were\n\nopposed to a stay. ECF No. 20.\n\n To ensure compliance with and in acknowledgment of the Court\u2019s Rules and Procedures,\n\nthe Cortez Defendants filed a notice with the Court on February 23, 2024. The notice explained\n\nthat the Cortez Defendants would give Plaintiffs time to file an amended complaint by March 15,\n\n2024, but if they did not file an amended complaint by that date, the Cortez Defendants would file\n\na Motion to Dismiss no later than March 29, 2024. ECF No. 25.\n\n On March 13, 2024, Plaintiffs filed an Unopposed Motion to Extend Deadline, seeking an\n\nadditional thirty days for Plaintiffs to either respond to previously filed motions to dismiss, or file\n\nan amended petition. 1 ECF No. 28 at \u00b6 5. On March 14, 2024, this Court entered an Order\n\nextending the time for Plaintiffs to respond to the pending motions to dismiss. ECF No. 29.\n\n Out of an abundance of caution and given that Plaintiffs\u2019 timeline for filing an amended\n\ncomplaint remains unclear, the Cortez Defendants now move this Court for dismissal. 2\n\n\n\n\n1\n Plaintiff\u2019s motion was \u201cunopposed\u201d as to the defendants who had already filed motions to dismiss.\n2\n The Cortez Defendants recognize this motion will be rendered moot should Plaintiffs amend the\nComplaint. The Cortez Defendants are also very mindful of the Court\u2019s Rules and Procedures pertaining\nto motions to dismiss and have sought to comply with those Rules and Procedures. However, considering\nthe uncertainty regarding the operative deadlines in this case and in an abundance of caution to preserve\ntheir arguments herein and avoid waiver, the Cortez Defendants file this motion.\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 4\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 5 of 11 PageID 2017\n\n\n\n LEGAL STANDARD\n\n A complaint must be dismissed pursuant to Rule 12(b)(6) when it fails to allege a set of\n\nfacts that, if true, would entitle the plaintiff to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555\n\n(2007); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). A court must accept as true all well-pleaded\n\nfacts in the complaint. Iqbal, 556 U.S. at 678. But a court \u201cwill not accept as true conclusory\n\nallegations, unwarranted factual inferences, or legal conclusions.\u201d Arnold v. Williams, 979 F.3d\n\n262, 266 (5th Cir. 2020) (internal quotation marks omitted). \u201cThreadbare recitals of the elements\n\nof a cause of action, supported by mere conclusory statements, do not suffice.\u201d Ashcroft v. Iqbal,\n\n556 U.S. 662, 6778 (2009).\n\n Further, \u201cRule 9(b)) imposes a heightened pleading standard for fraud claims and requires\n\nthat a party state with particularity facts supporting each element of fraud.\u201d Turner v.\n\nAmericaHomeKey Inc., No. 3:11-cv-0860-D, 2011 WL 3606688, at *7 (N.D. Tex. Aug. 16, 2011)\n\n(citing Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 724 (5th Cir. 2003), aff\u2019d, 514\n\nFed. Appx. 513 (5th Cir. 2013)). \u201cThe Fifth Circuit interprets Rule 9(b) strictly, requiring the\n\nplaintiffs to \u2018specify the statements contended to be fraudulent, identify the speaker, state when\n\nand where the statements were made, and explain why the statements were fraudulent.\u2019\u201d Bagby v.\n\nRydex Invs., No. 3:06-CV-0648-G ECF, 2007 WL 507042 11199, at *7 (N.D. Tex. Feb. 16, 2007)\n\n(citations omitted).\n\n \u201cAt a minimum, Rule 9(b) requires allegations of the particulars of time, place, and\n\ncontents of the false representations, as well as the identity of the person making the\n\nmisrepresentation and what he obtained thereby.\u201d Turner, 2011 WL 3606688, at *7 (quoting\n\nBenchmark Elecs., 343 F.3d at 724) (internal quotation marks omitted). More colloquially,\n\nplaintiffs must plead the \u201cwho, what, when, where, and how\u201d of the fraud. United States ex rel.\n\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 5\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 6 of 11 PageID 2018\n\n\n\nWilliams v. Bell Helicopter Textron Inc., 417 F.3d 450, 453 (5th Cir. 2005) (quoting United States\n\nex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997)).\n\n ARGUMENT\n\n I. All the Cortez Defendants should be dismissed because Plaintiffs fail to meet\n Rule 9\u2019s heightened pleading standard for fraud claims.\n\n Plaintiffs\u2019 conclusory fraud allegations in the CAP fall well short of the heightened\n\npleading standard under Rule 9(b).\n\n Rule 9(b) states that \u201c[i]n alleging fraud or mistake, a party must state with particularity\n\nthe circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions\n\nof a person\u2019s mind may be alleged generally.\u201d\n\n There is nothing that could be fairly characterized as \u201cparticular\u201d in Plaintiffs\u2019 allegations\n\ndirected at the Cortez Defendants. In fact, in the 139-paragraph CAP, merely two paragraphs\n\ncontain any allegations against the Cortez Defendants. Specifically, paragraph 110 of the CAP\n\nconclusively alleges that \u201cCortez is the alter ego or has used the Cortez Corporate Defendants as\n\nmere tools or business conduits, which have been and continue to be used as a sham to perpetuate\n\na fraud on investors.\u201d ECF No. 1-7. And paragraph 134 of the CAP similarly makes conclusory\n\nallegations without providing any of the details required by Rule 9:\n\n \u201cThe Cortez Corporate Defendants are liable for fraudulent transfers to the extent they\n received transfers from PRMH or by and through PRMH that were fraudulent in nature\n and intended to hinder, delay or defraud creditors. The Cortez Corporate Defendants are\n liable for fraudulent transfers to the extent the received transfers from PRMH or its wholly\n owned subsidiaries without providing reasonably equivalent value in exchange because at\n all relevant times PRMH was insolvent or inadequately capitalized. Plaintiff is entitled to\n recovery of such fraudulent transfers for the satisfaction of investor creditor claims or\n creditor claims of PRMH.\u201d\n\n ECF No. 1-7 \u00b6 134 (Claim 8 \u2013 Fraudulent Transfer) (emphasis added).\n\n\n\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 6\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 7 of 11 PageID 2019\n\n\n\nThese broad, hollow \u201cto the extent\u201d allegations clearly fall short of the \u201cparticularity\u201d required by\n\nRule 9. Fed. R. C. P. 9(b).\n\n Plaintiffs fail to allege the specific \u201cwho,\u201d \u201cwhat,\u201d \u201cwhen,\u201d and \u201cwhere,\u201d of the alleged\n\nfraudulent transfers sufficient to meet Rule 9(b)\u2019s heightened pleading standard as to any of the\n\nCortez Defendants, let alone each and every Cortez Defendant. United States ex rel. Williams, 417\n\nF.3d at 453. Plaintiffs also fail to identify any specific facts surrounding the fraudulent transfers\n\nthat would provide each of the Cortez Defendants the details sufficient to investigate the claims\n\nlevied against them. Plaintiffs\u2019 accusatory allegations are vague at best and, under the heightened\n\npleading standards of both Rule 12(b)(6) and Rule 9(b), Plaintiffs have failed to meet their burden.\n\n II. Three of the Cortez Defendant corporate entities should be dismissed under Rule\n 12(b)(6) because they were not formed until after the filing of this action.\n\n Plaintiffs\u2019 CAP alleges claims against three Cortez Defendant entities that were not even\n\nin existence at the time Plaintiffs\u2019 lawsuit was filed. Specifically, Defendants N Master Holdings\n\nLLC, Riverfront Minerals LLC, and Elm Capital LLC were non-existent at the time Plaintiffs\n\ncommenced this case in state court.\n\n As is readily apparent on the face of the Certificates of Filing with the Office of the\n\nSecretary of the State of Texas for each of these three Defendant entities, they were each formed\n\non July 24, 2023. Def. App. at 8-13. However, this lawsuit commenced on May 3, 2022, over a\n\nyear before these entities were formed. See ECF No. 1-1.\n\n Because N Master Holdings LLC, Riverfront Minerals LLC, and Elm Capital LLC were\n\nall formed after the filing of the lawsuit, it is not possible that any of these three Cortez Defendant\n\nentities engaged in any business or transactions with Plaintiff, let alone any fraudulent or otherwise\n\nwrongful business or transactions. For this additional reason, respectfully, the Court should\n\ndismiss N Master Holdings LLC, Riverfront Minerals LLC, and Elm Capital LLC from this case.\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 7\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 8 of 11 PageID 2020\n\n\n\nSee Colonial Oaks Assisted Living Lafayette, L.L.C. v. Hannie Development, Inc., 972 F.3d 684,\n\n688 n. 9 (5th Cir. 2020) (noting courts can take judicial notice of public filings). 3\n\n III. Claims against Defendant Pablo Cortez are barred by the broad release ordered\n by the Bankruptcy Court.\n\n Plaintiffs\u2019 claims against Mr. Cortez also fail because the Bankruptcy Court released Mr.\n\nCortez from the same claims Plaintiffs now pursue. According to the Joint Plan of Liquidation of\n\nMinerva Resources, LLC and Cronus Minerva Holdings, LLC under Chapter 11 of the Bankruptcy\n\nCode (which was approved by U.S. Bankruptcy Judge Christopher Lopez in the Southern District\n\nof Texas), all claims as to Mr. Cortez individually have been released pursuant to Article I.A.\n\n(paragraph 73) and Article XVI.D of the Confirmation Order Def. App. at 58.\n\n Specifically, Article XVI.D of Exhibit A of the Confirmation Order provides a full and\n\ncomplete release by holders of claims (i.e., creditors) of each \u201cReleased Party.\u201d Def. App. at 58.\n\nArticle I.A, paragraph 73 of the same document defines \u201cReleased Party\u201d to expressly include\n\nPablo Cortez. Def. App. at 58. Therefore, pursuant to the Confirmation Order, the claims at issue\n\nagainst Mr. Cortez are barred.\n\n CONCLUSION AND PRAYER\n\n Plaintiff\u2019s allegations fall well short of federal pleading requirements under Rule 9(b) and\n\nRule 12(b)(6). Based on these failures, the Cortez Defendants respectfully request that the Court\n\ngrant their Motion to Dismiss and grant the Cortez Defendants all legal or equitable relief this\n\nCourt deems proper.\n\n\n\n\n3\n As for the fourth Cortez Defendant corporate entity, Constantine Capital (\u201cConstantine\u201d), paragraph 51\nof the CAP alleges that Constantine is \u201cpart owner of HomeBound Resources.\u201d ECF No. 1-7 \u00b6 51. However,\nConstantine is not an owner of HomeBound Resources and Mr. Cortez does not have any ownership in\nHomeBound Resources or PetroRock.\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 8\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 9 of 11 PageID 2021\n\n\n\nDated: March 29, 2024\n\n Respectfully submitted,\n\n /s/ Grant K. Schmidt\n Grant K. Schmidt\n Texas Bar No. 24084579\n HILGERS GRABEN PLLC\n 7859 Walnut Hill Lane, Suite 335\n Dallas, TX 75230\n Telephone: 469-751-2819\n Fax: 402-413-1880\n gschmidt@hilgersgraben.com\n\n Michael Merriman\n Texas Bar No. 24050761\n 655 W. Broadway, Suite 900\n San Diego, CA 92101\n Telephone: 619-369-6232\n Fax: 402-413-1880\n mmerriman@hilgersgraben.com\n\n Attorneys for Constantine Capital LLC, N\n Master Holdings LLC, Elm Capital LLC,\n Riverfront Minerals LLC, and Pablo Cortez\n\n\n\n\nDEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 9\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 10 of 11 PageID 2022\n\n\n\n CERTIFICATE OF WORD COUNT\n\n The undersigned certifies that the word count for foregoing brief is 2202 words, not\n including the case caption, table of contents, table of authorities, signature block and certificates,\n using the Word Count feature in Microsoft Word.\n\n /s/ Grant K. Schmidt\n Grant K. Schmidt\n\n\n\n\n CERTIFICATE OF CONFERENCE\n As outlined above and in compliance with this Court\u2019s Standing Order, the undersigned\n counsel informed the Plaintiffs of the basis of the foregoing motion on January 15, 2024. Plaintiffs\n have not yet filed an amended petition.\n /s/ Grant K. Schmidt\n Grant K. Schmidt\n\n\n\n\n DEFENDANTS\u2019 BRIEF IN SUPPORT OF MOTION TO DISMISS\n 10\n\fCase 3:23-cv-02701-E Document 33 Filed 03/29/24 Page 11 of 11 PageID 2023\n\n\n\n CERTIFICATE OF SERVICE\n\n I certify that the foregoing document was served upon all counsel of record through the\n Court\u2019s e-filing system on March 29, 2024.\n\n /s/ Grant K. Schmidt\n Grant K. 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