John T. Preston and C Change Investments, LLC v. Emjo Investments, Ltd. and H.J. Von Der Goltz

ACCEPTED 01-15-00390-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 6/12/2015 9:25:40 PM CHRISTOPHER PRINE CLERK No. 01-15-00390-CV _______________________________________________________________ FILED IN 1st COURT OF APPEALS IN THE FIRST COURT OF APPEALS HOUSTON, TEXAS HOUSTON, TEXAS 6/12/2015 9:25:40 PM _______________________________________________________________ CHRISTOPHER A. PRINE Clerk JOHN T. PRESTON and C CHANGE INVESTMENTS, LLC, Appellants, v. EMJO INVESTMENTS, LTD. and H.J. VON DER GOLTZ, Appellees. _______________________________________________________________ On Appeal from the 215th District Court of Harris County, Texas, Hon. Elaine H. Palmer, presiding Trial Court Cause No. 2011-44058 ____________________________________________________________________ BRIEF OF APPELLANT JOHN T. PRESTON ____________________________________________________________________ Jane Langdell Robinson Texas Bar No. 24062970 Monica Uddin Texas Bar No. 24075195 Jamie A. Aycock Texas Bar No. 24050241 AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING 1221 McKinney Street, Ste. 3460 Houston, Texas 77010 Telephone: (713) 655-1101 Facsimile: (713) 655-0062 jrobinson@azalaw.com muddin@azalaw.com Counsel for Appellant Oral Argument Requested  No. 01-14-00703-CV JOHN T. PRESTON and C CHANGE INVESTMENTS, LLC, Appellant, v. EMJO INVESTMENTS, LTD. and H.J. VON DER GOLTZ, Appellees. IDENTITY OF PARTIES AND COUNSEL Appellants: John T. Preston and C Change Investments, LLC Trial counsel for Sean Gorman, Texas Bar No. 08218100 appellants: sgorman@azalaw.com Jamie A. Aycock, Texas Bar No. 24050241 jamieaycock@azalaw.com AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING 1221 McKinney St., Ste. 3460, Houston, Texas 77010 Telephone: (713) 655-1101; Facsimile: (713) 655-0062 Appellate counsel Jane Langdell Robinson, Texas Bar No. 24062970 for appellants: jrobinson@azalaw.com Monica Uddin, Texas Bar No. 24075195 muddin@azalaw.com AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING 1221 McKinney St., Ste. 3460, Houston, Texas 77010 Telephone: (713) 655-1101; Facsimile: (713) 655-0062 2 Appellees: Emjo Investments, Ltd. H.J. von der Goltz Trial counsel for F. Eric Fryar, Texas Bar No. 07495770 appellees: eric@fryarlawfirm.com Matthew Buschi, Texas Bar No. 24064982 mbuschi@fryarlawfirm.com Christina Richardson, Texas Bar No. 24070495 crichardson@fryarlawfirm.com Fryar Law Firm, P.C. 1001 Texas Ave., 14th Floor, Houston, Texas 77002 Telephone: (281) 715-6396; Facsimile: (281) 715-6397 Trial and appellate Kelley M. Keller, Texas Bar No. 11198240 counsel for kkeller@ellison-keller.com appellees: Tracey N. Ellison, Texas Bar No. 15054720 tellison@ellison-keller.com ELLISON KELLER 5120 Woodway Dr., Ste. 6019, Houston, Texas 77056 Telephone: 713-266-8200; Fax: 713-266-8201 3  TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL .........................................................2  TABLE OF CONTENTS ........................................................................................4  INDEX OF AUTHORITIES ...................................................................................7  INDEX OF RECORD REFERENCES ................................................................10  STATEMENT OF THE CASE .............................................................................11  STATEMENT ON ORAL ARGUMENT ............................................................12  ISSUE PRESENTED .............................................................................................12  I.  INTRODUCTION ..................................................................................13  II.  STATEMENT OF FACTS ....................................................................14  A.    The lawsuit arises out of a failed coal gasification startup. .....................14  B.    The bankruptcy court dismisses all but two causes of action. .................16  C.    Only two claims remain against Preston. .................................................18  D.    Appellees do not allege a single act taken in Texas by Preston, much less any act in Texas that is connected to their surviving misrepresentation claims........................................................................................................18  E.    Preston does no individual business and maintains no presence in Texas. .......................................................................................................23  1.   Preston does not do business in Texas in his individual capacity. ....23  2.   Preston does not maintain any presence in Texas..............................25  F.    After two years and jurisdictional discovery, Appellees fail to allege a single act by Preston in Texas that gives rise to their surviving claims, and fail to show systematic and continuous Texas contacts that render Preston “at home” in Texas. .....................................................................25  III.  SUMMARY OF THE ARGUMENT ....................................................30  IV.  STANDARD OF REVIEW ...................................................................33  A.    De novo review applies. ...........................................................................33  B.    Jurisdiction over nonresidents requires allegations or proof of purposeful availment. .................................................................................................34  4  1. The plaintiff bears the initial burden to plead allegations showing jurisdiction over the defendant. ........................................................34  2.   The long-arm statute is limited by due process considerations. ........34  3. When the plaintiff fails to meet its initial burden of alleging sufficient purposeful minimum contacts, the fact that the defendant is a nonresident defeats personal jurisdiction. ........................................35  V.  ARGUMENT ..........................................................................................38  A.    Appellees failed to meet their initial burden of pleading facts to show that Preston is subject to personal jurisdiction in Texas. ................................38  B.    Because Appellees do not allege that any of Preston’s alleged contacts with Texas give rise the surviving claims and no evidence suggests any link, there is no specific jurisdiction as a matter of law...........................40  1. Specific jurisdiction requires that the alleged jurisdictional contacts give rise to the plaintiff’s alleged injury...........................................42  2.  There are no allegations in the intervenors’ petition that could give rise to specific jurisdiction over Preston...........................................44  3.  There are no allegations or evidence in Appellees’ special appearance briefing that could give rise to specific jurisdiction over Preston. .............................................................................................45  4.  Appellees’ claim that Preston “could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury” because of his alleged misrepresentations is not a basis for specific jurisdiction as a matter of law. ............................................53  C.    Because Preston’s alleged contacts with Texas are not substantial, continuous, or systematic, there is no general jurisdiction as a matter of law. ...........................................................................................................54  1.  General jurisdiction requires the defendant to have substantial, continuous, and systematic contacts with Texas. .............................54  2.  The sporadic contacts with Texas in a representative capacity that Appellees allege are nothing like the substantial, continuous, and systematic contacts required to establish general jurisdiction..........56  5  3.  Preston lacks any substantial, continuous, or systematic contact that would render him at “at home” in Texas. .........................................68  VI.  CONCLUSION AND PRAYER ...........................................................70  6  INDEX OF AUTHORITIES Cases Access Telecom, Inc. v. MCI Telecom. Corp., 197 F.3d 694 (5th Cir. 1999) ...............................................................................69 All Star Enter., Inc. v. Buchanan, 298 S.W.3d 404 (Tex. App.—Houston [14th Dist.] 2009, no pet)............... 36, 59 Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801 (Tex. 2002) ..................................................................................57 Ashdon, Inc. v. Gary Brown & Assocs., Inc., 260 S.W.3d 101 (Tex. App.—Houston [1st Dist.] 2008, no pet.) .......................69 BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) ............................................................... 33, 43, 46, 54 Frank A. Smith Sales, Inc. v. Atl. Aero, Inc., 31 S.W.3d 742 (Tex. App.—Corpus Christi 2000, no pet.) ................................39 Garza v. Alviar, 395 S.W.2d 821(Tex. 1965) .................................................................................68 Glencoe Capital Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157 (Tex. App.—Fort Worth 2008, no pet.) ....................................43 Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 180 L. Ed. 2d 796 (2011) ............................................. 34, 42, 55 Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223 (Tex. 1991) .......................................... 51, 55, 62, 64, 65 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 104 S. Ct. 1868 (1984) ............................. 51, 52, 62, 64, 65, 69, 70 Hoffmann v. Dandurand, 180 S.W.3d 340 (Tex. App.—Dallas 2005, no pet.) .................................... 58, 59 7 Howell v. Hilton Hotels Corp., 84 S.W.3d 708 (Tex. App.—Houston [1st Dist.] 2002, pet. denied) ..................67 International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945) ................................................35 Johnston v. Multidata Sys. Intern. Corp., 523 F.3d 602 (5th Cir. 2008) ...............................................................................70 Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653 (Tex. 2010) ........................................................................ passim Kulko v. Cal. Super. Ct., 436 U.S. 84, 98 S. Ct. 1690 (1978) ......................................................... 62, 64, 65 Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777 (Tex. 2005) ................................................................... 35, 36, 54 Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569 (Tex. 2007) ............................................................. 34, 35, 37, 42 Nat'l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769 (Tex. 1995) ................................................................................44 Perkins v. Benguet Consol. Mining Co., 42 U.S. 437, 72 S. Ct. 413 (1952) ................................................................ 69, 70 PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163 (Tex. 2007) ........................................................................ passim Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333 (Tex. 2009) ......................................................................... 35, 43 Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266 (5th Cir. 2006) ...............................................................................43 Serv. Corp. Intern. v. Guerra, 348 S.W.3d 221 (Tex. 2011) ................................................................................68 8 Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) ................................ 45, 57 Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434 (Tex. 1982) ................................................................... 40, 44, 58 Stuart v. Spademan, 772 F.2d 1185 (5th Cir. 1985) .............................................................................58 Tryco Enter., Inc. v. Robinson, 390 S.W.3d 497 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d) ................60 Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95 (Tex. App.—Houston [14th Dist.] 1995, writ denied) ........ 40, 59 Washington DC Party Shuttle, LLC v. IGuide Tours, 406 S.W.3d 723 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) ....... 38, 58 Waterman Steamship Corp. v. Ruiz, 355 S.W.3d 387 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) ... 39, 43, 69 Wright v. Sage Eng’g, Inc., 137 S.W.3d 238 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) ................58 Statutes TEX. CIV. PRAC. & REM. CODE § 17.042 ..................................................................35 Rules TEX. R. CIV. P. 45 .....................................................................................................41 TEX. R. CIV. P. 120a .......................................................................................... 41, 67 Other 4 Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 1067.5 ............................55 9  INDEX OF RECORD REFERENCES CR Clerk’s Record filed May 21, 2015 Citation to documents included in the Appendix are noted by “Tab #.” 10  STATEMENT OF THE CASE Nature of Case: This is a case alleging “common law and statutory securities fraud” by investors in a failed technology startup. Course of Proceedings: The intervenors, including Appellees, intervened in an original petition against Preston and other defendants. Preston specially appeared and asserted that he was not subject to personal jurisdiction in Texas because he is a nonresident, and does not have sufficient minimum contacts with Texas for the exercise of personal jurisdiction. Because the claims involved a corporation, NC12, Inc., that subsequently declared bankruptcy, defendants removed the case to bankruptcy court. The bankruptcy court dismissed or abated all the claims in the original petition and all the claims in the intervenors’ petition but two: fraud and conspiracy to commit fraud with respect to alleged misrepresentations regarding the value of NC12 shares. The bankruptcy court remanded these remaining two claims to the district court. Trial Court Disposition: Of the intervenors, only Appellees opposed Preston’s special appearance. Preston filed his special appearance on September 28, 2011. The court denied the special appearance on November 17, 2014. Preston appeals from that order. 11  STATEMENT ON ORAL ARGUMENT If upheld, the trial court’s ruling will significantly broaden the reach of Texas long-arm jurisdiction over foreign defendants. The trial court’s ruling departed considerably from existing precedent by asserting jurisdiction over a nonresident not alleged to have conducted any activity in Texas giving rise to the claims in the lawsuit, and whose only alleged contacts with Texas consists of periodic business trips on behalf of other entities over the last 25 years. This is an important issue and Appellant believes oral argument could assist the panel in considering it. Appellant therefore requests oral argument. ISSUE PRESENTED Sole issue: The trial court erred by denying Preston’s special appearance because Appellees failed to plead sufficient allegations to establish personal jurisdiction and because Preston is not subject to specific or general jurisdiction in Texas. 12  I. INTRODUCTION This lawsuit was brought by disgruntled investors in a failed technology startup in an attempt to recover their investments from the now-bankrupt company’s directors and officers. The investors’ claims related almost exclusively to harms to the company, and when the bankruptcy court dismissed these claims as belonging to the bankruptcy trustee, the investors were left with a detailed petition that has little to do with the surviving claims, and nothing to do with any action taking place in Texas. It is difficult to see how Texas courts have any interest in this case, much less personal jurisdiction over Preston. There is no allegation that Preston took any action in Texas connected in any way to the surviving claims. Preston is a Massachusetts resident who has never conducted business in Texas in his personal capacity, and none of the intervenors (the only plaintiffs remaining in this lawsuit) are Texas residents either. The only Texas contacts Appellees allege concern Preston’s mere status as a board member in Nevada corporations with offices in Texas, and Preston’s periodic business trips to Texas on behalf of a variety of other entities. There are no facts that could give rise to specific jurisdiction because there are no allegations that any of the surviving claims arise from or relate to any action by Preston in Texas. There is no basis for general jurisdiction because almost all 13 of Preston’s alleged contacts with Texas took place in his representative capacity and still come nowhere close to the continuous and systematic contacts with Texas that would render Preston at home here. The mere fact that a startup with some Texas operations went out of business does not warrant the exercise of personal jurisdiction over a Massachusetts resident in a fraud suit brought by nonresident investors who do not allege he did anything in Texas that gives rise to their claims. The trial court’s order overruling Preston’s special appearance runs contrary to both Texas and federal law limiting the exercise of personal jurisdiction over nonresidents. It should be reversed. II. STATEMENT OF FACTS1 A. The lawsuit arises out of a failed coal gasification startup. This suit arises out of a developmental technology intended to produce synthetic natural gas and other fuels from coal, also known as coal gasification. CR 114–16 (Tab 2).2 A Nevada corporation, Texas Syngas, Inc. (“TSI”), acquired the technology and began seeking investors in 2007. CR 116 (Tab 2). In 2009 another Nevada corporation, NC12, Inc. (“NC12”), acquired the technology from TSI. CR 122 ¶ 63 (Tab 2). Despite extensive efforts and the partial development 1 Sections II.A and II.B are the same in this brief and C Change’s appellant’s brief. 2 Certain of the plaintiffs’ and intervenors’ allegations are recited in this statement of facts for the Court’s background, but Preston does not concede any of the plaintiffs’ or intervenors’ allegations. 14 of a test reactor in Massachusetts, NC12 did not succeed. CR 118–19, 127–29 (Tab 2); CR 138; CR 208 (Tab 3). As often happens when businesses fail, litigation ensued. The original plaintiffs, primarily NC12 shareholders, sued several of NC12’s directors and officers on July 26, 2011, including directors Michael Sydow, Christoph Henkel, and John Preston. CR 6. NC12 declared bankruptcy in October 2011. CR 208 (Tab 3). In November 2011, several NC12 investors, including Appellees, intervened in the lawsuit. CR 102–08 (Tab 2). The intervenors had invested variously in convertible notes and shares of TSI and NC12. CR 104–08 (Tab 2). When NC12 acquired the gasification technology and attracted more investment, the intervenors’ TSI shares and notes converted into NC12 shares. Accordingly, all of the intervenors3 are now shareholders in NC12. Id. Both the original plaintiffs’ and the intervenors’ petitions attacked the defendants’ management of TSI and NC12. See CR 28–37; CR 129–33 (Tab 2). The original plaintiffs alleged breach of fiduciary duty and conversion claims. CR 35–37. The intervenors alleged four causes of action: (1) breach of fiduciary duty against Sydow, Henkel, and Preston; (2) shareholder oppression by Sydow, 3 One possible exception is appellee H.J. von der Goltz. It is unclear whether von der Goltz is an NC12 shareholder or simply a creditor. CR 105 ¶ 5 (Tab 2) (“all Intervenors are currently common shareholders of NC12, Inc.”); CR 108 ¶ 23 (Tab 2) (stating only that von der Goltz holds an NC12 promissory note). 15 Henkel, and Preston; (3) “Knowing Participation/Civil Conspiracy” against all 10 defendants; and (4) “Securities Fraud—Common Law Fraud and Statutory4 Fraud” against Sydow and Preston. CR 109–10, 129–33 (Tab 2). B. The bankruptcy court dismisses all but two causes of action. The defendants removed the case to the bankruptcy court on December 15, 2011 on the grounds that the plaintiffs’ and intervenors’ claims alleging mismanagement of TSI / NC12 belonged to the bankruptcy estate. CR 198–205. The intervenors moved to remand the case to state court. CR 206–07 (Tab 3). On August 31, 2012, Bankruptcy Judge Marvin Isgur granted in part and denied in part the motions to remand, significantly limiting the claims that remain in this case. CR 207, 237 (Tab 3). Judge Isgur dismissed all of the original plaintiffs’ and intervenors’ claims relating to harms to TSI5 and NC12, holding that these claims belonged to the bankruptcy estate. See CR 198–205. Judge Isgur reasoned that any claims based on the defendants’ alleged asset-stripping, self- dealing, dilution of corporate value, and misappropriation of corporate assets 4 Although the title of the cause of action refers to “Statutory Fraud,” the intervenors do not reference any statute. See CR 132–33 (Tab 2). 5 The bankruptcy court order treats NC12 as TSI’s successor and thus refers to them collectively as NC12. CR 211 (“NC12 began as a Texas limited liability company named Texas Syngas, LLC.”), CR 212 (“Texas Syngas was reorganized as a new Nevada corporation, Texas Syngas, Inc., in May 2006.”), CR 214 (“Also in 2009, Texas Syngas became NC12.”) (Tab 3). 16 stemmed from harm to NC12 and, accordingly, may only be asserted by the bankruptcy trustee on behalf of the bankruptcy estate. CR 237 (Tab 3). The bankruptcy court dismissed or abated all of the original plaintiffs’ claims. CR 237, 225–27, 234–35 (Tab 3). As a result, none of the original plaintiffs’ claims were remanded to state court and those claims are not at issue here. CR 237 (Tab 3). With respect to the intervenors’ claims, the bankruptcy court held that the intervenors’ shareholder oppression and breach of fiduciary duty claims belonged to the estate and therefore dismissed those claims. CR 221–27, 237 (Tab 3). The court also dismissed the intervenors’ conspiracy claim to the extent it related to the dismissed causes of action. CR 235–37 (Tab 3). This left only causes of action for fraud and conspiracy to commit fraud. CR 237 (Tab 3). In remanding the fraud and conspiracy claims, the court instructed: Because the Intervenors are shareholders, their fraud claim is based on the alleged difference between the price they paid in reliance on the alleged misrepresentations and the actual value of NC12’s shares at the time of their investment. The Intervenors may not recover damages for the difference between the price they paid for the shares and what the shares would have been worth if not for the alleged post-purchase misconduct in the operation of the corporation. CR 228 (Tab 3) (emphasis added). 17 C. Only two claims remain against Preston. The only remaining causes of action against Preston are “Securities Fraud— Common Law Fraud and Statutory6 Fraud” asserted against Preston and Sydow, and “Knowing Participation/Civil Conspiracy,”7 asserted against all 10 defendants. CR 237 (Tab 3); CR 132–33 ¶¶ 89–90 (Tab 2). Significantly, these claims survive only to the extent they deal with the alleged misrepresentation of NC12’s value at the time of the intervenors’ investment (hereinafter, the “surviving claims” or “misrepresentation claims”). CR 228 (Tab 3). The last alleged investment by any intervenor occurred in August 2010. CR 104–08, 105 ¶ 8 (Tab 2). D. Appellees do not allege a single act taken in Texas by Preston, much less any act in Texas that is connected to their surviving misrepresentation claims. The only basis for jurisdiction over Preston in the intervenors’ petition are the generic allegations that “Preston has engaged in business in Texas” and “the tortious conduct alleged herein occurred in or was directed at the State of Texas.” CR 110 ¶ 33, 114 ¶ 44 (Tab 2). The intervenors explicitly plead that Preston is a Massachusetts resident who is employed in Cambridge, Massachusetts. CR 110 ¶ 33 (Tab 2). Yet in their 6 Although the title of the cause of action refers to “Statutory Fraud,” the intervenors do not reference any statute. See CR 132–33 (Tab 2). 7 Judge Isgur’s Order also mentions “Intervenors’ aiding and abetting claims” relating to fraud. CR 237 (Tab 3). Since the intervenors did not plead an aiding and abetting claim (see CR 129– 33 (Tab 2)), it is treated here as part of the conspiracy claim. 18 petition, the intervenors fail to allege any act performed by Preston in Texas, much less an act involving the intervenors’ surviving misrepresentation claims. This is perhaps unsurprising, as none of the intervenors are Texas residents who might have relied on misrepresentations in Texas. See CR 105–08 (Tab 2) (showing intervenors reside in Luxembourg, Guatemala, the British Virgin Islands, Panama, Germany, New York, the Bahamas, Montana, Tennessee, the Cayman Islands, and Florida, but not Texas). The few allegations in the intervenors’ petition that relate to Preston say nothing to indicate a Texas connection, as shown below:  In fall 2007, Preston “approached the shareholders of Atomic Ordered Materials (AOM), another company in which Preston was involved” and “brought Sydow and Collins to an AOM shareholders’ meeting,” where Sydow presented the [TSI] technology and “solicited investments in that company.” CR 116 ¶ 51 (Tab 2). The intervenors do not allege that any of Preston’s representations to AOM8 or its shareholders were made in Texas.  After the AOM meeting, Preston “approached” intervenor von der Goltz, who had been in attendance. CR 117 ¶ 52 (Tab 2). Preston “informed von der Goltz that [Preston] had negotiated a $100 million pre-money investment valuation for [TSI] and was trying to raise $12 million to build a demonstration reactor . . . .” Id. 8 The intervenors do not allege any other facts regarding AOM whatsoever, much less allege that AOM is a Texas entity or has offices in Texas. 19   “Preston represented that the value of the technology was in excess of $100 million but suggested that von der Goltz meet with Collins and Sydow to negotiate a discounted valuation to put together an initial investor group for the $12 million needed. Preston represented that he was assisting [TSI], but never disclosed that he owned or controlled any equity interest in [TSI].” Id. The intervenors do not allege that Preston’s representations to von der Goltz were made or relied on in Texas. Nor is there any basis to make such an inference. Von der Goltz is a Florida resident. CR 108 ¶ 23 (Tab 2).  “In November 2007, von der Goltz met with Collins and Sydow in Houston. Collins and Sydow agreed to accept new investors based on a pre-money valuation of $78 million and a post-money valuation of $90 million.” CR 117 ¶ 52 (Tab 2).  Von der Goltz “brought the opportunity to friends, family, and business associates, who ultimately invested $11.75 million . . . . Among this group were the Shareholder Intervenors. Sydow and Preston represented to the Shareholder Intervenors, both directly and through Mr. von der Goltz, that the value of the technology exceeded $100 million and that the money being raised would be used primarily for building the demonstration reactor.” CR 117 ¶ 53 (Tab 2). The intervenors do not allege that Preston attended the November 2007 Houston, Texas meeting or even that any misrepresentation was made to von der Goltz at this meeting. There are no allegations, or basis for any inference, that any Preston representation was made or relied on in Texas—whether directly or “through von der Goltz.” Neither Preston nor any intervenor, including the Shareholder Intervenors, are residents of Texas. CR 105–08 (Tab 2). None of the intervenors’ 20 detailed allegations include any suggestion that any of the alleged representations or “promises” were made in Texas:  Preston made various representations in 2008 to “[TSI] shareholders” that the value of the company was now $300 million as a result of a gas utility contract; representations regarding new financing, and representations regarding the company’s purchase of Fall River, Massachusetts property. CR 118 ¶ 55 (Tab 2).  Preston and Sydow “had no intention of using shareholder money as represented to the shareholders,” squandered shareholder money, and engaged in self-dealing. CR 119 ¶ 58 (Tab 2).  “Despite his numerous promises and despite being compensated to do so Preston failed to raise additional funds for [TSI] in 2009, and by mid-year [TSI] desperately needed funding.” CR 120 ¶ 60 (Tab 2). Moreover, these alleged representations, as the intervenors themselves plead, were addressed to TSI’s shareholders and were thus made after their investment in TSI. These allegations are thus relevant only to the intervenors’ dismissed claims concerning the management of TSI, not their surviving misrepresentation claims. See CR 223–28 (Tab 3).  “Preston and Sydow again turned to Mr. von der Goltz for assistance.” CR 120 ¶ 60 (Tab 2). Von der Goltz raised $6.1 million in investment from the Note Holder Intervenors. Id. “Preston and Sydow, both directly and through their statements to von der Golz, represented to the Note Holder Intervenors that [TSI] was worth $300 million as of 2009, based on the value of the technology and the [gas utility] and Turkish contracts. However, Preston and Sydow failed to disclose that the [gas utility] contract had been canceled.” CR 121 ¶ 61 (Tab 2). 21   “Preston and Sydow also represented [to the Note Holder Intervenors] that the money would be used primarily to build the test reactor; however, their later conduct and misuse of the funds demonstrate that they had no intention of using the money for that purpose.” Id. The intervenors do not allege that any Preston representation to any Note Holder Intervenor or to von der Goltz (or to anyone) was made or relied on in Texas. And any representations regarding the ultimate use of the solicited investment funds are beyond the scope of the surviving claims. CR 223–28 (Tab 3). Similarly, every subsequent reference to Preston in the remaining 14 pages of the intervenors’ petition concerns political infighting on the TSI / NC12 board of directors, alleged mismanagement and asset-stripping of the entity, and alleged self-dealing. CR 121–29 (Tab 2). These allegations only relate to the fiduciary duty, shareholder oppression, and shareholder fraud claims that have been dismissed from this matter. The remaining references to Preston do not support any surviving claim against him. See CR 223–28 (Tab 3). And still, none of the remaining allegations state or suggest any action taken by Preston in Texas. In sum, not a single allegation in the intervenors’ petition—the only petition containing any live claims—connects Preston to Texas. 22 E. Preston does no individual business and maintains no presence in Texas. Preston filed a special appearance on September 28, 2011 objecting to the court’s exercise of personal jurisdiction over him.9 CR 74 (Tab 1). 1. Preston does not do business in Texas in his individual capacity. Preston is a resident of Massachusetts and is employed in Massachusetts. CR 86–87 ¶¶ 3, 8 (Tab 1); CR 110 ¶ 33 (Tab 2). He has not been a resident of Texas for the last 60 years.10 In the last 60 years, Preston has not travelled to or visited Texas in his individual capacity. CR 86 ¶ 4 (Tab 1). In the last 30 years, Preston has visited Texas exclusively on behalf of entities for whom he served as a director, principal, or managing partner, including a Delaware nonprofit, Molten Metal Technologies, Inc. (“MMT”), Quantum Catalytics, LLC (“Quantum”), C Change Investments, LLC (“C Change”), NC12, and Transformative Energy & Materials Capital, Inc. (“TEM Capital”), or on behalf of the Massachusetts Institute of Technology (“MIT”), where he was a faculty member and Director of Technology and Licensing, and retains an appointment. See CR 87 ¶¶ 5–6 (Tab 1); CR 330–31, 356 at 63:18–23 (Tab 4); CR 672–73 ¶¶ 3–8 (Tab 6); CR 118 ¶ 53 (Tab 2). Preston served as a director of two 9 Preston’s special appearance was filed before the intervenors filed their petition. CR 74 (Tab 1); CR 102 (Tab 2). 10 Preston, who was 61 years old at the time of his affidavit executed in 2011, resided in Texas for less than one year when he was an infant. See CR 86 ¶ 4 (Tab 1); CR 672 (Tab 6) (showing date of birth). 23 Texas entities, one from 2004–2006 and the other from 2012–2014 and has otherwise never been a director, officer, or employee of a Texas person or company. CR 330, 388 (Tab 4); CR 87 ¶ 8 (Tab 1). While Preston was an officer of TSI and NC12, both Nevada corporations with a Texas office, Preston participated in board meetings from Massachusetts, Switzerland, or Germany, but never Texas.11 See CR 86–87 ¶¶ 2, 7 (Tab 1); CR 325, 328 (Tab 4). Preston has never done business in Texas in his individual capacity. CR 86 ¶ 4 (Tab 1). Preston has never maintained an office in Texas, or employed any person who either resides or regularly travels to Texas in connection with his or her business. CR 87 ¶¶ 8, 9 (Tab 1). Preston has never engaged in routine sales or other profit-making activities in Texas. Id. ¶ 8. Preston owns no private Texas businesses. Id. In his individual capacity, Preston has never entered into any contracts in Texas or with Texas residents, contracts calling for performance in Texas, or contracts with mandatory venue provision in Texas, other than contracts with his defense counsel. Id. Because Preston does not do business in Texas, he does not maintain a registered agent in Texas and is not required to do so. Id. As he does not work or 11 There are no allegations that Preston made any misrepresentation, or any action in furtherance of any conspiracy to make any misrepresentation, while participating in any board meetings. 24 own property in Texas, Preston has never personally incurred or paid any taxes in Texas, nor filed a personal tax return in Texas. CR 87 ¶ 9 (Tab 1). 2. Preston does not maintain any presence in Texas. As Preston’s Texas ties consist exclusively of his status as director of predominantly foreign entities and business trips to Texas in his representative capacity, Preston has no presence in Texas. He has never maintained an office or any other facility, telephone listing, post office box, or mailing address in Texas. CR 87 ¶ 9 (Tab 1). Preston has never rented, owned, or possessed any real property or personal property in Texas. Id. He does not hold a mortgage or other lien on any real or personal property in Texas. Id. He does not have any investments or assets in Texas. Id. Preston has never taken out a loan in Texas or guaranteed any debt owed to a Texas resident. Id. F. After two years and jurisdictional discovery, Appellees fail to allege a single act by Preston in Texas that gives rise to their surviving claims, and fail to show systematic and continuous Texas contacts that render Preston “at home” in Texas. The intervenors had two years and the opportunity to conduct jurisdictional discovery between the bankruptcy court’s remand order and the hearing on Preston’s special appearance. CR 102 (Tab 2); CR 206 (Tab 3); CR 613. Yet they never amended their petition to add any allegations connecting any aspect of their surviving claims to Texas. This is because no such connection exists. 25  To evade this problem, Appellees concocted a tornado of smoke and innuendo in response to Preston’s special appearance. They doggedly conflate the two distinct types of personal jurisdiction (specific and general), jumble allegations about dismissed claims in discussing surviving claims, confuse individual with representative actions by Preston, and mix diverse assertions of Preston’s tangential links to Texas: business trips for other entities, decade-old business calls with original plaintiff and former TSI director Collins, a personal check, and a convoluted story about a 2012 Texas corporation that is allegedly an alter-ego of Preston’s, allegedly created to pursue claims against Collins in a different lawsuit. These attenuated links to Texas have nothing to do with any of the surviving claims, and fall far short of establishing the continuous contact with Texas that is otherwise required to support general personal jurisdiction. Appellees alleged the following forum contacts by Preston: (a) Director of foreign entities. Preston served as a director of three foreign entities which registered to do business in Texas. CR 287 (“MMT”), CR 281 (Texas Syngas, Inc. (“TSI”)), CR 284 (NC12) (Tab 4). There are no allegations that Preston did anything in Texas in connection with these entities that gives rise to any of the intervenors’ claims. (b) Business trips to Texas. In the past 25 years, Preston has allegedly made the following brief business trips to Texas: 26  o 1990s: Five board meetings in Texas for a Delaware nonprofit and three board meetings for MMT. CR 87 ¶ 5 (Tab 1). o 1990s: Approximately three business trips for MMT.12 CR 408 ¶ 4, CR 409 ¶ 12, CR 260 (Tab 4). o 2004: Three trips on behalf of Quantum. CR 409 ¶¶ 6–8 (Tab 4); CR 673 ¶ 8 (Tab 6). o 2008–11: Five one-day trips on behalf of C Change.13 CR 319 at 25:3–28:21, 335–38, 343–48 (Tab 4); CR 672–73 ¶¶ 5–6 (Tab 6). o 2009–10: One trip on behalf of C Change or MIT. CR 262, 323 at 49:13-24 (Tab 4). o 2010: One trip on behalf of NC12 to testify in Sydow’s divorce proceeding. CR 352–70, 339–42 (Tab 4). o 2011: One two-day trip on behalf of TEM Capital for a foreclosure sale and to inspect a cement plant. CR 349– 50 (Tab 4); CR 673 ¶ 7 (Tab 6).14 There is no allegation that any of these trips relate to the claims in this lawsuit. (c) 2004: Phone calls and mail. Collins claims that in 2004, Preston telephoned him and shipped him “records regarding 12 It is not clear from the record whether these trips are distinct from those on which Preston attended MMT board meetings. CR 87 ¶ 5 (Tab 1). 13 Preston initially mistakenly identified these trips as on behalf TEM Capital, and submitted a correction in a subsequent declaration. See CR 87 ¶ 5; CR 330–31 (Tab 4); CR 672 ¶ 5 (Tab 6). Former C Change director Russell Read testified C Change “effectively merged” into TEM Capital in 2011. CR 320 at 31:5–10 (Tab 4). 14 In their special appearance briefing, Appellees refer to, but attach no evidence regarding, allegations made by nonparty EMC Cement, BV in an unrelated 2014 lawsuit suggesting that Preston made two other visits to Texas in August 2010 and January 2011 with C Change or TEM Capital. See CR 263–64 (Tab 4) (failing to attach EMC complaint). 27  MMT and its patented technology” following Preston’s 2004 business trips to meet with Collins. CR 409 ¶ 9 (Tab 4). These trips and communications concerned catalytic energy processing (“CEP”) technology patents belonging to Quantum. Id. ¶¶ 5–8; CR 673 ¶ 8 (Tab 6). There are no allegations linking these communications to the claims in the lawsuit. (d) 2006: Alleged address at TSI office for foreign entity Metal Catalyst Ventures. Preston was listed as a director of Nevada corporation Metal Catalyst Ventures, Inc. in June 2006. CR 315 (Tab 4). Preston’s “address” was the same as TSI’s. See id.; CR 281 (Tab 4). Preston did not prepare the document. CR 315 (Tab 4); CR 673 ¶ 9 (Tab 6). The intervenors allege no other facts regarding Metal Catalyst Ventures, and there are no allegations linking Metal Catalyst Ventures to the surviving claims. (e) 2008: Personal check to foreign entity BOS, Inc. In 2008, Preston allegedly wrote a personal check to BOS, Inc., a Turks and Caicos corporation with, allegedly, an office and bank account in Texas. CR 387 (Tab 4); CR 25 ¶ 2. In 2010, BOS, Inc. wired Preston back the same sum. CR 384 (Tab 4). There are no allegations linking these payments to the claims in the lawsuit. (f) 2012: Alleged purchase of claims in unrelated Kaiser Litigation via alleged alter ego JK Claims. JK Claims was formed by Quantum to purchase the plaintiffs’ claims in Cause No. 2007-38533, Jeffrey B. Kaiser v. Texas Syngas LLC, Michael A. Collins, Michael D. Sydow and M. Sameer Ahmed, in the 152nd District Court of Harris County, Texas (the “Kaiser Litigation”).15 CR 432, 495 at 57:2–3, 498 at 66:19– 15 Kaiser brought suit on behalf of himself and “all similarly situated” members of Texas Syngas LLC. CR 432 (Tab 5). Quantum, a member of Texas Syngas LLC, had intervened in the Kaiser Litigation. CR 452 (Tab 5). 28  67:20 (Tab 5). After Kaiser filed for bankruptcy, JK Claims purchased the Kaiser Litigation claims from the bankruptcy estate with the approval of the bankruptcy trustee. CR 534–41, 545–47 (Tab 5). In a supplemental response to the special appearance, Appellees assert that JK Claims is Preston’s alter ego and that JK Claims’ contacts with Texas should be imputed to Preston. CR 414 (Tab 5). Appellees’ own evidence shows that Quantum, not Preston, is the sole owner of JK Claims. CR 495 at 57:2–3, 498 at 66:19–67:20 (Tab 5). See also CR 673 ¶ 10. Yet Appellees never allege that Quantum is an alter ego of Preston. There are no allegations linking these actions to the claims in the lawsuit. Most significantly, all alleged JK Claims actions took place after this lawsuit was filed and are therefore outside of the relevant jurisdictional period, as discussed below. Almost none of these tenuous forum contacts are pleaded in the intervenors’ petition. See section II.D, supra. None have anything to do with any alleged misrepresentation to TSI or NC12 investors, and none demonstrate continuous and systematic contacts that would establish that Preston is “at home” in the state of Texas. After briefing and argument, however, the trial court denied Preston’s special appearance. CR 674–75 (Tab 7). Preston timely appealed to this Court. CR 678–80; CR 681–83. 29  III. SUMMARY OF THE ARGUMENT There is no basis for asserting personal jurisdiction over Preston. Appellees, neither of whom reside in Texas, bring claims of fraud and conspiracy to commit fraud in relation to representations about TSI / NC12’s value. Appellees do not allege that any representations were made or relied on in Texas. The petition does not contain a single allegation that places Preston in Texas or describes any act that Preston is alleged to have done in Texas, much less any act in Texas that gives rise to the claims in this case. Appellees have never amended their petition to include such allegations because no such facts exist. Appellees failed to meet their burden to plead sufficient allegations to establish personal jurisdiction over Preston. It is the plaintiff’s initial burden to plead sufficient allegations to allege personal jurisdiction over a defendant. Because Appellees have failed to do so, Preston needed only to establish that he does not reside in Texas to negate personal jurisdiction. There is no dispute: Preston resides in Massachusetts and is not a Texas resident. The trial court erred in overruling Preston’s special appearance on this basis alone. Appellees’ special appearance evidence supports neither specific nor general jurisdiction. Texas courts can exercise personal jurisdiction over a nonresident only if the plaintiff’s claims arise out of the defendant’s contacts with the forum (specific jurisdiction) or if the defendant has continuous and systematic 30 contacts with the forum (general jurisdiction). Though it is not clear from their briefing below, Appellees appear to argue that there is both specific and general jurisdiction over Preston. See CR 270 (Tab 4). Appellees are wrong on both counts. There is no specific jurisdiction because Appellees fail to link any alleged action by Preston giving rise to their claims to Texas. Appellees contend there is specific jurisdiction over Preston because “[t]he acts and events complained of in this litigation all arise directly from Preston’s activities as a director of and fund raiser for TSI and NC12 – both Texas companies” and because “[i]n raiding funds for TSI and NC12, through fraudulent misrepresentations and then denuding the companies of their assets, Preston . . . could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury.” CR 269–70 (Tab 4). The mere fact that Preston was a director of a corporation with a Texas office while allegedly making misrepresentations to nonresident investors outside of Texas is insufficient to establish that any alleged misrepresentation relates to Preston’s contacts with Texas. The “reasonable foreseeability” test has been rejected by the Texas Supreme Court. And Appellees’ “denuding” claims are not germane: the bankruptcy court dismissed all claims relating to harms to TSI and NC12. The only surviving claims regard alleged misrepresentations made by 31 Preston in connection with the value of TSI / NC12 at the time of the intervenors’ investment, and conspiracy to commit those misrepresentations. For jurisdictional purposes, the relevant location for fraudulent misrepresentation is the place where the misrepresentation was made. There are no allegations that Preston committed any acts giving rise to these claims in Texas, either in the petition or in Appellees’ voluminous briefing below. As a matter of black-letter law, there is no specific jurisdiction over Preston. There is no general jurisdiction because all of Preston’s forum contacts were in his representational capacity and still do not amount to continuous and systematic contacts with Texas. Preston is a Massachusetts resident who lives and works in Massachusetts. Other than periodically traveling to Texas on business trips on behalf of foreign entities, Preston has no Texas ties at all. Preston’s contacts with Texas on behalf of corporations do not subject him to general jurisdiction absent a showing either that these contacts themselves were tortious or that the corporations were his alter ego. While Appellees claim one corporation, JK Claims, is Preston’s alter ego, JK Claims’ alleged contacts with Texas began in June 2012—one year after the Appellees filed their suit—and are thus outside of the relevant period to determine jurisdictional contacts. There is no evidence of any purposeful contacts with Texas so substantial that it would render 32 Preston “at home” in the state of Texas. There is no general jurisdiction over Preston as a matter of law. For all of these reasons, the trial court erred in overruling Preston’s special appearance. IV. STANDARD OF REVIEW16 A. De novo review applies. Whether a court can exercise personal jurisdiction over a nonresident defendant is a question of law reviewed de novo by this Court. Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 657 (Tex. 2010) (Tab 8). When, as here, a trial court does not issue findings of fact and conclusion of law with its special appearance ruling, this Court implies all the facts necessary to support the judgment as long as those facts are supported by the evidence. Id.; CR 678–80; CR 684–86. The appellant can challenge the sufficiency of the evidence to support the implied facts. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002) (Tab 9). 16 Section IV is the same in both this brief and C Change’s appellant’s brief, excluding Section IV.B.4 of C Change’s brief. 33 B. Jurisdiction over nonresidents requires allegations or proof of purposeful availment. 1. The plaintiff bears the initial burden to plead allegations showing jurisdiction over the defendant. In suits involving a challenge to personal jurisdiction, the Texas Supreme Court has “consistently held that the plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident defendant within the reach of Texas’s long-arm statute.” Kelly, 301 S.W.3d at 658 (Tab 8). “When the pleading is wholly devoid of jurisdictional facts, the plaintiff should amend the pleading to include the necessary factual allegations.” Id. at 659. 2. The long-arm statute is limited by due process considerations. The exercise of personal jurisdiction “exposes defendants to the State’s coercive power” and therefore it must comply with the Fourteenth Amendment’s due process clause. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2850, 180 L. Ed. 2d 796 (2011). “A nonresident defendant is subject to the personal jurisdiction of Texas courts if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction does not violate federal and state constitutional due process guarantees.” Kelly, 301 S.W.3d at 657 (Tab 8). The critical inquiry is whether the exercise of jurisdiction comports with due process because the Texas long-arm statute reaches “as far as the federal constitutional requirements of due process will allow.” Id. (quoting Moki Mac 34 River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007); TEX. CIV. PRAC. & REM. CODE § 17.042. Because the due process requirement arises out of federal constitutional law, the Texas Supreme Court relies on precedent from the United States Supreme Court and other federal courts in evaluating the exercise of personal jurisdiction. PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 166 (Tex. 2007) (Tab 10). The exercise of personal jurisdiction over a nonresident defendant is consistent with due process when the defendant “has established minimum contacts with the forum state, and the exercise of jurisdiction comports with traditional notions of fair play and substantial justice.” Kelly, 301 S.W.3d at 657 (Tab 8) (quoting Moki Mac, 221 S.W.3d at 575 and International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945). 3. When the plaintiff fails to meet its initial burden of alleging sufficient purposeful minimum contacts, the fact that the defendant is a nonresident defeats personal jurisdiction. A defendant establishes minimum contacts with a state “when it purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Kelly, 301 S.W.3d at 657–58 (Tab 8) (quoting Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009). There are “three parts to a ‘purposeful availment’ inquiry.” Moki Mac, 221 S.W.3d at 575 (quoting Michiana Easy Livin’ Country, 35 Inc. v. Holten, 168 S.W.3d 777, 784–85 (Tex. 2005)). First, only the defendant’s contacts with the forum are relevant, “not the unilateral activity of another party or a third person.” Id. Second, the contacts relied on “must be purposeful rather than random, fortuitous, or attenuated.” Id. And third, the “defendant must seek some benefit, advantage, or profit by ‘availing’ itself of the jurisdiction.” Id. (quoting Michiana, 168 S.W.3d at 785). It is not enough, however, merely to take any purposeful action in Texas. The defendant’s actions must satisfy the requirements of either general or specific jurisdiction. All Star Enter., Inc. v. Buchanan, 298 S.W.3d 404, 412 (Tex. App.— Houston [14th Dist.] 2009, no pet.) (“There are two types of personal jurisdiction: specific and general.”); PHC-Minden, 235 S.W.3d at 166 (United States Supreme Court has “adopted the terms ‘specific’ and ‘general’ to describe the differing types of personal jurisdiction”) (Tab 10). Specific jurisdiction is “based on contacts arising from the dispute at issue,” while general jurisdiction is “predicated on a party’s ‘continuous and systematic’ contacts with the forum.” PHC-Minden, 235 S.W.3d at 165 (Tab 10). The plaintiff has the initial burden of pleading that a nonresident defendant made purposeful minimum contacts with the state. Kelly, 301 S.W.3d at 658 (Tab 8). For the minimum contacts analysis, the plaintiff must allege that its claims arose out of or are substantially related to the defendant’s contacts with Texas, or 36 that the defendant has continuous and systematic contacts with the state. Id.; Moki Mac, 221 S.W.3d at 585; PHC-Minden, 235 S.W.3d at 165 (Tab 10). Only if the plaintiffs meet the initial burden—by making specific allegations sufficient to establish general or specific jurisdiction—must the defendant respond by negating all grounds of jurisdiction. Kelly, 301 S.W.3d at 658 (Tab 8). “Because the plaintiff defines the scope and nature of the lawsuit, the defendant’s corresponding burden to negate jurisdiction is tied to the allegations in the plaintiff’s pleading.” Id. When the plaintiffs do not meet their burden of alleging purposeful minimum contacts, the defendant need only submit an affidavit stating that it is not a Texas resident to defeat personal jurisdiction. Id. at 658–59 (“If the plaintiff fails to plead facts bringing the defendant within reach of the long-arm statute (i.e., for a tort claim, that the defendant committed tortious acts in Texas), the defendant need only prove that it does not live in Texas to negate jurisdiction.”). Even where the plaintiffs do allege purposeful minimum contacts, the defendant can negate jurisdiction either factually or legally. Id. at 659. Factually, it can present evidence that it has no contacts with Texas, thus disproving the plaintiff’s allegations. Id. The plaintiff “risks dismissal of its lawsuit if it cannot present the trial court with evidence establishing personal jurisdiction.” Id. Legally, “the defendant can show that even if the plaintiff’s alleged facts are true, 37 the evidence is legally insufficient to establish jurisdiction.” Id. In other words, the defendant prevails if it shows the claims do not arise from the contacts or that its contacts with the state are not continuous and systematic. Id.; PHC-Minden, 235 S.W.3d at 165 (Tab 10). V. ARGUMENT Sole issue: The trial court erred by denying Preston’s special appearance because Appellees failed to plead sufficient allegations to establish personal jurisdiction and because Preston is not subject to specific or general jurisdiction in Texas. A. Appellees failed to meet their initial burden of pleading facts to show that Preston is subject to personal jurisdiction in Texas. Though it was not addressed in the intervenors’ petition and not clear from their briefing, Appellees have claimed that Preston is subject both to specific and general personal jurisdiction in Texas court. CR 269–70 (Tab 4). The allegations in the petition and evidence offered in Appellees’ responses to Preston’s special appearance,17 however, were insufficient to establish either. In their petition, the intervenors failed to allege that Preston committed any act in Texas, much less any act that gave rise to their claims. As discussed in detail above, while the intervenors pleaded generally that Preston misrepresented the value of TSI/NC12 to potential investors and “all Defendants conspired to commit 17 Appellees also argued that even though Preston supported his special appearance with a sworn affidavit attesting to every material fact, the special appearance was not verified. CR 264–65 (Tab 4). This argument has been explicitly rejected by this court. Washington DC Party Shuttle, LLC v. iGuide Tours, LLC, 406 S.W.3d 723, 731 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (en banc). 38 fraud,” not a single allegation connects any misrepresentation or act in furtherance of any conspiracy to Texas. See CR 132 ¶ 89 (Tab 2); section II.D, supra. None of the intervenors are even Texas residents. CR 105–08 (Tab 2). Instead, the only pleaded basis for personal jurisdiction over Preston are the generic allegations that “Preston has engaged in business in Texas” and “[p]ersonal jurisdiction over all defendants is proper in the state of Texas because NC12 is headquartered in Houston, Texas and the tortious conduct alleged herein occurred in or was directed at the State of Texas.” CR 110 ¶ 33, 114 ¶ 44 (Tab 2). This type of generalization is insufficient to meet the pleading burden. Waterman Steamship Corp. v. Ruiz, 355 S.W.3d 387, 398, 403–04 (Tex. App.—Houston [1st Dist.] 2011, pet. denied). See also Frank A. Smith Sales, Inc. v. Atl. Aero, Inc., 31 S.W.3d 742, 747 (Tex. App.—Corpus Christi 2000, no pet.) (The “third-party petition stated only that [the defendant] had committed acts of negligence, without specifying what those negligent acts were, or where they occurred. Therefore, [the] petition fell well short of pleading sufficient allegations to show jurisdiction in Texas.”). The intervenors failed to plead any facts showing that Preston in fact engaged in business, or committed any tort, in Texas. Indeed, the petition fails to allege a single action taken by Preston in Texas. See, e.g., CR 114–33 (Tab 2). Because the intervenors failed to plead facts showing that Preston made misrepresentations or conspired to make misrepresentations in Texas, or any facts 39 showing that Preston had any continuous and systematic contacts with this state, Preston needed only prove that he is not a Texas resident to defeat personal jurisdiction. See Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 658–59 (Tex. 2010) (Tab 8) (“If the plaintiff fails to plead facts bringing the defendant within reach of the long-arm statute (i.e., for a tort claim, that the defendant committed tortious acts in Texas), the defendant need only prove that it does not live in Texas to negate jurisdiction.”); Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95, 99 (Tex. App.—Houston [14th Dist.] 1995, writ denied) (citing Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 437–38 (Tex. 1982)) (When “the plaintiff does not allege that the defendant performed a specific act in Texas, the defendant's evidence that he is a nonresident is enough to carry his burden of proof.”). Preston’s unrefuted affidavit establishes he is a Massachusetts resident and not a Texas resident. CR 87 ¶ 5 (Tab 1). The intervenors affirmatively plead that Preston is a Massachusetts resident. CR 110 ¶ 33 (Tab 2). The trial court erred by denying Preston’s special appearance on this basis alone. B. Because Appellees do not allege that any of Preston’s alleged contacts with Texas give rise the surviving claims and no evidence suggests any link, there is no specific jurisdiction as a matter of law. Although nearly two years passed between the bankruptcy court’s order dismissing all other causes of action and Appellees’ two briefs in opposition to 40 Preston’s special appearance, Appellees never amended their petition to include any jurisdictional facts relating to the claims remanded by the bankruptcy court. CR 237 (Tab 3); CR 257 (Tab 4); CR 413 (Tab 5). See also Kelly, 301 S.W.3d at 659 n.6 (Tab 8) (If “the plaintiff’s evidence does not fall within the scope of the factual allegations in the pleading, then the plaintiff should amend the pleading for consistency.”). Appellees tried to overcome their failure to plead jurisdictional facts by including more detail in their response and supplemental response opposing Preston’s special appearance, but the evidence considered by trial court in addition to the petition must comply with the requirements of Rule 120a, and even then, it “merely supports or undermines the allegations in the pleadings.” Id. at 658 n.4; TEX. R. CIV. P. 120a, 45(a) (defining pleadings as petitions and answers). Regardless, there is no allegation, much less any evidence, that Preston’s alleged misrepresentations of TSI / NC12’s value to investors, or any act in furtherance of his alleged conspiracy to commit these misrepresentations, were made in Texas. The intervenors do not make any such allegation in their petition or in their response or supplemental response to Preston’s special appearance. Rather, Appellees assert that there is specific jurisdiction over Preston because: “[t]he acts and events complained of in this litigation [] arise directly from Preston’s activities as a director of and fundraiser for TSI and NC12 – both 41 Texas companies” and because “[i]n raiding funds for TSI and NC12, through fraudulent misrepresentations and then denuding the companies of their assets, Preston . . . could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury.” CR 269–70 (Tab 4). Appellees mistake the law. Preston’s mere status as a director of even a “Texas corporation” would be insufficient to support Texas jurisdiction for misrepresentation claims that were not made or relied on in Texas. The “reasonable foreseeability” analysis for personal jurisdiction has been explicitly rejected by the Texas Supreme Court. All claims relating to the “denuding” of corporate assets have been dismissed by the bankruptcy court. There is no allegation, much less any evidence, that any of Preston’s contacts with Texas give rise to the surviving claims. There is no specific jurisdiction as a matter of law. 1. Specific jurisdiction requires that the alleged jurisdictional contacts give rise to the plaintiff’s alleged injury. Specific jurisdiction exists when the defendant purposefully avails himself of conducting activities in the forum and “the cause of action arises from or is related to those contacts or activities.” Kelly, 301 S.W.3d at 658 (Tab 8). See also Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 576 (Tex. 2007) (“liability must have arisen from or related to those contacts.”). Specific jurisdiction depends on an “activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” Goodyear Dunlop Tires Operations, S.A. v. 42 Brown, 131 S. Ct. 2846, 2851, 180 L. Ed. 2d 796 (2011) (citation omitted). In a specific jurisdiction analysis, the court thus focuses on “the relationship among the defendant, the forum[,] and the litigation.” Kelly, 301 S.W.3d at 658 (Tab 8) (quoting Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)) (alteration in original). Jurisdiction for each claim must stand on its own merits. Id. at 660. (performing claim-by-claim analysis to determine whether each claim arose out of alleged forum contacts); Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274–75 (5th Cir. 2006) (specific jurisdiction is a claim-specific inquiry). This is especially significant here, as all of the original plaintiffs’ claims, and the intervenors’ shareholder oppression, fiduciary duty, and related conspiracy claims, have been dismissed. CR 237 (Tab 3). For a tort claim, the plaintiff must plead that the defendant committed a tortious act in Texas. Waterman Steamship, 355 S.W.3d at 403. For misrepresentation claims, the relevant location for jurisdiction is the place where the misrepresentation was made. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 796–97 (Tex. 2002) (Tab 9); Kelly, 301 S.W.3d at 660 (Tab 8); Glencoe Capital Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157, 167 (Tex. App.—Fort Worth 2008, no pet.). “[D]ue process will not permit the plaintiff to use insignificant acts in the forum to assert jurisdiction over all co-conspirators.” 43 Nat’l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995) (quoting Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 438 (Tex. 1982)). Nor can the acts of co-conspirators be imputed to a nonresident defendant for the purposes of personal jurisdiction. See id. 2. There are no allegations in the intervenors’ petition that could give rise to specific jurisdiction over Preston. As discussed at length above, there is no allegation in the intervenors’ petition that Preston’s alleged misrepresentations of NC12’s value to investors, or any act in furtherance of his alleged conspiracy to commit these misrepresentations, occurred in Texas. Appellees do not attempt to remedy this problem in their special appearance briefing or the evidence attached thereto. Rather, Appellees compile a list of Preston’s alleged business trips and director positions on behalf of a variety of entities over the last 25 years. See, e.g., CR 260–64, 269 (Tab 4). Appellees make no attempt to link any of Preston’s alleged forum contacts to Preston’s alleged misrepresentations of the value of TSI / NC12 to potential investors, or to any conspiracy to commit such a misrepresentation. 44  3. There are no allegations or evidence in Appellees’ special appearance briefing that could give rise to specific jurisdiction over Preston. Appellees refer to the same set of alleged forum contacts to support both specific and general jurisdiction over Preston. CR 260–64, 269 (Tab 4). See section II.F, supra. Each is examined in turn below. a) Service as a director of foreign entities. Appellees assert generally that their claims against Preston “arise directly from Preston’s activities as a director of and fundraiser for TSI and NC12 – both Texas companies.”18 CR 269–79 (Tab 4). The United States Supreme Court has held that service as a director of a corporation, by itself, does not create personal jurisdiction over that director—even when the corporation is organized in the forum state. Shaffer v. Heitner, 433 U.S. 186, 215–16, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) (in shareholder derivative suit against Delaware corporation’s directors and officers alleging that defendants “misus[ed] their power,” Delaware court did not have personal jurisdiction over defendants because plaintiffs did not allege any acts by the defendants in Delaware, and service as a director did not show that defendants purposefully availed themselves of conducting activities in Delaware). 18 Appellees also refer generally to Preston’s status as director of Nevada corporation MMT as supporting personal jurisdiction. CR 260–61, 269–70 (Tab 4). There is no allegation and no basis whatsoever to link Preston’s service as director of Nevada corporation MMT in the 1990s to any claim in this matter. See id.; CR 287–89 (Tab 4); CR 132 ¶ 89 (Tab 2). 45 There is even less of a basis to claim that Preston’s service as a director of a Nevada corporation with an office in Texas created personal jurisdiction over him. This is because the real locus of Appellees’ harm is the place where the misrepresentations were made. BMC Software, 83 S.W.3d at 796–97 (Tab 9) (“Here, Marchand alleges that his fraud and negligent misrepresentation claims arise from the alleged Watson–Ordelheide conversation in Texas. But they do not. The nature of the claims demonstrate that they can only arise from BMCB’s contact with Marchand, which all occurred outside of Texas. … BMCB made no representations to Marchand in Texas, and he did not rely to his detriment on the conversation in Texas.”) (citation omitted). See also Kelly, 301 S.W.3d at 660 (Tab 8) (in order to establish specific jurisdiction for fraud, the plaintiff must allege that the fraudulent acts occurred in Texas). BMC Software involved an alleged fraudulent misrepresentation made in Europe. 83 S.W.3d at 796–97 (Tab 9). The plaintiff claimed that jurisdiction was proper in Texas because the defendant’s officers met in Texas and, during that meeting, planned to defraud the plaintiff. Id. at 796. The Texas Supreme Court disagreed, however, noting that even if the defendant’s officers discussed the plan to defraud the plaintiff in Texas, it was the misrepresentations themselves—made in Europe—that gave rise to the cause of action. Id. at 796–97. 46  Here, Appellees have neither pleaded nor offered evidence to show that any of the alleged misrepresentations giving rise to their claims took place in Texas. See sections II.D, II.F, supra. Further, there is no allegation or evidence that Preston ever even did business out of the TSI or NC12 Texas office. Preston participated in board meetings from Massachusetts, Switzerland, or Germany, never Texas. See CR 86–87 ¶¶ 2, 7 (Tab 1); CR 325, 328 (Tab 4). Appellees do not allege that Preston made any representation or undertook any action supporting any conspiracy while participating in these board meetings. Preston is not subject to specific jurisdiction on the bare fact of his status as director for corporations with Texas offices. b) Business trips to Texas. Appellees spill much ink describing the business trips Preston took in a representative capacity over the last 25 years. CR 260–64 (Tab 4). For the most part, these trips fall well before or well after the relevant window for investment into TSI or NC12, making it impossible that they give rise to the Appellees’ remaining claims. Most significant, however, is Appellees’ conspicuous failure to allege any connection between a single one of these business trips and the alleged misrepresentations or conspiracy. Board meetings and business trips in the 1990s. Appellees never allege that Preston’s 1990s-era Texas business trips give rise to their claims. CR 87 ¶ 5 (Tab 47 1); CR 260 (Tab 4). Nor could they. Appellees themselves state that MMT’s business in Texas concerned a waste recycling project using MMT’s catalytic extraction processing (“CEP”) technology, not potential investors in TSI or NC12. CR 260–61, 408–09 (Tab 4). TSI would not be formed until 2006, or do business in Texas until 2008. CR 281 (Tab 4). Preston’s MMT business trips do not form a basis for specific jurisdiction. Business trips with Quantum in 2004. Appellees never claim that Preston’s alleged three business trips to Texas in 2004 to meet with Collins19 give rise to their claims that Preston allegedly misrepresented the value of NC12 to potential investors. CR 408–09, 261 (Tab 4). Indeed, TSI still would not exist for another two years or do business for another four. CR 281 (Tab 4). Preston’s Quantum business trips do not form a basis for specific jurisdiction. Business trips with C Change between 2008–2011. Appellees never allege that any of Preston’s business trips with C Change related in any way to misrepresentations to investors about the value of TSI / NC12. CR 262–64, 319 at 25:3–28:21, 323 at 49:13-24, 335–38, 343–48 (Tab 4); CR 672–73 ¶¶ 5–6 (Tab 6). Appellees do not claim that Preston’s 2008 meeting in Houston with Collins and Sydow related to any alleged misrepresentations to investors. CR 262, 269, 19 Collins is not an intervenor, but an original plaintiff and former TSI/NC12 director whose fiduciary duty and conversion claims against Preston were dismissed and abated by the bankruptcy court. CR 234–37 (Tab 3). 48 319 at 25:3–28:21, 339–42 (Tab 4). With respect to the meeting in 2009 or early 2010, Preston’s C Change colleague Russell Read testified that he and Preston20 travelled to Texas during that period for one meeting with Russian technology partners for the formation of a joint venture MIT was exploring with the Russian government. CR 323 at 49:13–50:4 (Tab 4). Preston gave evidence of four other approximately one-day trips for C Change between 2009–2011.21 There is no evidence, nor even any allegation, that any of these trips related in any way to the Appellees’ surviving claims. Business trip to testify regarding NC12 in divorce proceeding. Preston traveled to Texas in October 2010 to testify in Sydow’s divorce proceeding. CR 339–42 (Tab 4). Preston testified exclusively about NC12 assets and financial operation. See CR 352–70 (Tab 4). But there can be no connection between any alleged post-August 2010 contacts with Texas and misrepresentations to potential investors in NC12, including this testimony, because August 2010 is the last alleged investment giving rise to the surviving claims, and there is no allegation or 20 Preston does not recall this trip. CR 673 ¶ 6 (Tab 6). Read discusses the matter in context with his work with Preston at C Change. CR 323 at 49:13-24 (Tab 4). While it is not clear from the record whether this alleged trip occurred on behalf of MIT or C Change, either way, there is no evidence that it related in any way to Appellees’ surviving claims. 21 Preston’s flight records establish these trips occurred April 2–3, 2009 (Houston) (CR 335–38), May 3–4, 2009 (Houston) (CR 343–44), December 30–31, 2010 (Dallas) (CR 347–48), and March 16–17, 2011 (Austin) (CR 345–46) (Tab 4). See also CR 672–73 ¶¶ 5–6 (Tab 6). As the intervenors affirmatively plead, the last intervenor’s investment was in August 2010. CR 104– 08 (Tab 2). Preston thus could not have made any relevant misrepresentations nor furthered the alleged conspiracy to misrepresent NC12’s value to the intervenors on the latter two trips. 49 evidence that this or any post-August 2010 Preston contact relates in any way to any conspiracy claim. CR 104–08 (Tab 2). Indeed, Appellees never allege any link between this trip to Texas and any surviving claim. CR 269 (Tab 4). Preston’s October 6, 2010 trip to Texas to give testimony in Sydow’s divorce proceeding does not give rise to specific jurisdiction. Business trip with TEM Capital. Appellees never allege that Preston’s May 2–4, 2011 business trip to Texas to attend a foreclosure sale and cement plant inspection for TEM Capital relates in any way to their surviving claims. See CR 673 ¶ 7 (Tab 6); 263–64, 269, 349–50 (Tab 4); CR 414, 427 (Tab 5); CR 673 ¶ 7 (Tab 6). Again, the last relevant investment occurred nearly a year before, and no evidence suggests this trip was related to any conspiracy to defraud NC12’s investors regarding the value of NC12’s shares. CR 104–08 (Tab 2). In sum, not a single one of Preston’s business trips give rise to the Appellees’ surviving claims. Thus, not a single one supports specific jurisdiction. c) 2004: Phone calls and mail to Collins. As discussed above, Preston’s 2004 business trips to Texas to meet with Collins did not relate to the surviving claims. As Collin himself states, Preston’s subsequent telephone calls and shipment of records related to the same purposes as his business trips: the commercial development of the CEP technology, not plans 50 to mislead investors of TSI two years later about the value of TSI. CR 409 ¶ 9 (Tab 4). These alleged contacts do not provide a basis for specific jurisdiction. d) 2006: Metal Catalyst Ventures’ designation of address as TSI address. A 2006 Nevada state record shows someone named Linda Kulik listed Preston as a director of Nevada corporation Metal Catalyst Ventures, Inc. CR 315 (Tab 4). Kulik listed TSI’s Houston address as Preston’s address. See id.; CR 281 (Tab 4). Appellees allege no other facts regarding Metal Catalyst Ventures, not even in their briefing. See CR 262 (Tab 4). Appellees never allege any link between Metal Catalyst Ventures to the claims in the lawsuit, nor do they provide any evidence that Preston actually resided at or did business at TSI’s address. See section II.D, II.F, supra. Preston submitted an unrefuted affidavit stating that he never served as a director of Metal Catalyst Ventures and never listed the TSI address as his own. CR 673 ¶ 9. (Tab 6). Preston has never maintained an office in Texas. CR 87 ¶ 8 (Tab 1). This is not a purposeful minimum contact supporting jurisdiction over Preston because it is not a contact by Preston. See Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991) (“the contact must have resulted from the nonresident defendant's purposeful conduct and not the unilateral activity of the plaintiff or others”). See also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S. Ct. 1868, 1873 51 (1984) (the “unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.”). This alleged “contact” provides no basis for specific jurisdiction over Preston. e) 2008: Personal check. In 2008, Preston allegedly wrote a personal check to BOS, Inc., a Turks and Caicos corporation with an alleged bank account in Texas. CR 387 (Tab 4); CR 25 ¶ 2. Two years later, BOS, Inc. wired Preston back the same sum. CR 384 (Tab 4). There is no indication that Preston purposefully availed himself of any Texas- related benefits by writing a personal check to a foreign entity, or that this transaction has any relationship to the litigation. See Helicopteros, 466 U.S. at 416–17 (“Common sense and everyday experience suggest that, absent unusual circumstances, the bank on which a check is drawn is generally of little consequence to the payee and is a matter left to the discretion of the drawer.”) (footnote omitted). The BOS, Inc. payments are not a minimum contact with Texas and do not give rise to specific jurisdiction. f) 2012: Alleged alter-ego JK Claims’ purchase of litigation claims in the Kaiser Litigation. Appellees’ fantastical story of Preston secretly purchasing the claims in the Kaiser Litigation through alleged alter-ego JK Claims still does not relate in any way to any potential misrepresentation to investors of NC12—the last of which 52 invested two years prior—or give any conceivable support to a conspiracy to defraud potential investors in NC12. CR 414–24 (Tab 5). The Kaiser Litigation concerned disputes between the members of Texas Syngas LLC, not misrepresentations to potential investors in TSI or NC12 of TSI or NC12’s value. CR 432–40 (Tab 5). The first action intervenors allege relating to JK Claims, an application to reserve its name, occurred in June 2012, two years after the last investor invested in NC12. CR 527, 414–24 (Tab 5). Even if taken as true—which they should not be—the intervenors’ conspiracy theories regarding JK Claims have nothing to do with the claims at issue in this matter and do not form a basis for specific jurisdiction. In sum, none of Preston’s alleged contacts with Texas relate to the claims in this case. Appellees’ allegations and evidence do not support the exercise of specific jurisdiction. Kelly, 301 S.W.3d at 659 (Tab 8). 4. Appellees’ claim that Preston “could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury” because of his alleged misrepresentations is not a basis for specific jurisdiction as a matter of law. Appellees claim that Preston is subject to specific jurisdiction because “[i]n raiding funds for TSI and NC12, through fraudulent misrepresentations and then denuding the companies of their assets, Preston . . . could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury.” CR 269 (Tab 4). This argument echoes the intervenors’ general allegation in the 53 petition that there is personal jurisdiction because tortious conduct “was directed at the State of Texas.” CR 114 ¶ 44 (Tab 2). The Texas Supreme Court has unequivocally rejected the notion that jurisdiction can arise purely because actions caused harm to Texas residents or because a tort is “directed” at Texas residents. Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 788–92 (Tex. 2005) (surveying case law and constitutional considerations). And in this case, because there are no claims belonging to the original plaintiffs, and no intervenor is a Texas resident (including Appellees), the only conceivable Texas harm Appellees allege is harm to NC12, a Nevada corporation—but the bankruptcy court dismissed those claims. There is thus no basis in the pleadings, the evidence, or the law for specific jurisdiction over Preston. C. Because Preston’s alleged contacts with Texas are not substantial, continuous, or systematic, there is no general jurisdiction as a matter of law. 1. General jurisdiction requires the defendant to have substantial, continuous, and systematic contacts with Texas. General jurisdiction exists “when a defendant’s contacts in a forum are continuous and systematic so that the forum may exercise personal jurisdiction over the defendant even if the cause of action did not arise from or relate to activities conducted within the forum state.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 796 (Tex. 2002) (Tab 9). For general jurisdiction, the 54 plaintiff must show the nonresident defendant engaged in “substantial activities” in Texas. Guardian Royal Exch. Assur., Ltd. v. English China Clays, PLC, 815 S.W.2d 223, 230 (Tex. 1991). A general jurisdiction inquiry “involves a ‘more demanding minimum contacts analysis’” than a specific jurisdiction inquiry, with a “substantially higher threshold.” PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 168 (Tex. 2007) (Tab 10). “Usually, ‘the defendant must be engaged in longstanding business in the forum state, such as marketing or shipping products, or performing services or maintaining one or more offices there; activities that are less extensive than that will not qualify for general in personam jurisdiction.’” Id. (quoting 4 Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 1067.5). The defendant’s activities must be so extensive that it is essentially at home in the state, and therefore should be subject to suit there for any claim—regardless of where the claim occurred—as a resident would be. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853–54, 180 L. Ed. 2d 796 (2011) (“For an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.”). As general jurisdiction is “dispute- blind,” the alleged actions underlying the lawsuit “should not be the focus in assessing continuous and systematic contacts—contacts on which jurisdiction over 55 any claim,” not just the one at issue, may be based. PHC-Minden, 235 S.W.3d at 169 (Tab 10). The relevant period for consideration of forum contacts for general jurisdiction ends at the time the suit is filed. Id. Because it is so easy to let case-specific facts improperly weight a general jurisdiction analysis, the Texas Supreme Court has suggested a test that “properly frames the issue”: would the nonresident’s contacts with Texas “support jurisdiction even for a hypothetical cause of action arising from its sale of a product in Germany that injured a German citizen?” Id. (citation omitted). In other words: are Preston’s Texas activities in Texas so pervasive that he should be sued in Texas in a case where none of the operative facts relate to Texas? The answer here is no. 2. The sporadic contacts with Texas in a representative capacity that Appellees allege are nothing like the substantial, continuous, and systematic contacts required to establish general jurisdiction. Appellees refer to the same set of alleged forum contacts to support both specific and general jurisdiction over Preston. CR 260–64, 269 (Tab 4); section II.F, supra. The vast majority of alleged contacts cannot be considered contacts for purposes of establishing general jurisdiction over Preston, either because they do not demonstrate that Preston availed himself of the privilege of conducting activities in Texas (service as a director of a foreign entity) or they were made in a representative capacity (business travel). Each is examined again in turn below in 56 the context of general jurisdiction. See Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 809 (Tex. 2002) (for general jurisdiction, all alleged forum contacts in the relevant time period must be “carefully investigated, compiled, sorted, and analyzed for proof of a pattern of continuing and systematic activity.”). The quality, not quantity, of the contacts is relevant, and the relevant period ends at the date of filing of the suit—here, July 26, 2011. Id.; CR 6. a) Director of foreign entities. The mere fact of service as a director of corporations which reside in Texas, without more, is insufficient as a matter of law to create general jurisdiction over Preston in Texas. Shaffer v. Heitner, 433 U.S. 186, 215–16, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) (fact that defendants were directors and officers of Delaware corporation did not demonstrate that they had purposefully availed themselves of the privilege of conducting activities in Delaware in a way that would justify bringing them before a Delaware tribunal). Preston participated in TSI and NC12 board meetings from Massachusetts, Switzerland, or Germany, never Texas. See CR 86–87 ¶¶ 2, 7 (Tab 1); CR 325, 328 (Tab 4). Indeed, Appellees allege no acts taken by Preston in Texas in connection with his service as a director for TSI and NC12, or any other entity. Even if they had, as discussed in detail below, any such acts would not be sufficient to subject him to general jurisdiction in Texas as an individual because 57 he did not do them in his individual capacity. Wright v. Sage Eng’g, Inc., 137 S.W.3d 238, 250 (Tex. App.—Houston [1st Dist.] 2004, pet. denied).22 b) Business trips to Texas. Preston’s contacts with Texas in his representative capacity do not qualify as contacts for general jurisdiction because there is no allegation that these contacts involved tortious activities or that the entities were Preston’s alter ego. Under Texas law, corporations are presumed to be separate entities from their directors, officers, and shareholders. See Washington DC Party Shuttle, LLC v. IGuide Tours, 406 S.W.3d 723, 738–39 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). An individual's transaction of business within the state solely as a corporate officer does not create personal jurisdiction over that individual though the state may have personam jurisdiction over the corporation. Stuart v. Spademan, 772 F.2d 1185, 1197 (5th Cir. 1985). An individual’s representative contacts are not their own absent other evidence that the contact was independently tortious, or proof sufficient to pierce the corporate veil. Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 438 (Tex. 1982); Hoffmann v. Dandurand, 180 S.W.3d 340, 347 (Tex. App.—Dallas 2005, no pet.). 22 This rule is sometimes referred to as the fiduciary shield doctrine. Id. Appellees cite Wright for the proposition that Preston’s acts as a director can create personal jurisdiction if it is those acts which give rise to the lawsuit. CR 270 (Tab 4). However, that is only true in the case of specific jurisdiction, not general jurisdiction, as the Wright court explicitly noted. 137 S.W.3d at 250. As already discussed above, Appellees do not allege any acts by Preston in Texas—in his capacity as a director or otherwise—that relate to the claims in this case. 58  This Court has held that general jurisdiction over an individual may not be based on jurisdiction over an entity with which an individual is associated unless the entity is his or her alter ego. Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95, 99 (Tex. App.—Houston [14th Dist.] 1995, writ denied). See also Hoffmann, 180 S.W.3d at 347. The alter ego doctrine applies only when there is such unity between the corporation and the individual that the separateness of the corporation has ceased. Vosko, 909 S.W.2d at 99. Courts consider evidence such as (1) the payment of alleged corporate debts with personal checks or other comingling of personal and corporate funds; (2) representations that the individual will financially back the corporation; (3) diversion of company profits to the individual for personal use; (4) inadequate capitalization; (5) other failures to keep corporate and personal assets separate. Hoffmann, 180 S.W.3d at 347. Because personal jurisdiction involves due-process considerations that may not be overridden by statutes or case law, jurisdictional veil-piercing and substantive veil-piercing involve different elements of proof. All Star Enter., 298 S.W.3d at 422; PHC-Minden, 235 S.W.3d at 174 (Tab 10). For jurisdictional purposes, the factors considered must relate to the actor’s forum contacts. See PHC Minden, 235 S.W.3d at 174 (Tab 10) (observing that common veil-piercing factors such undercapitalization and common names between entities do “not 59 affect whether each has sufficient contacts with the forum for jurisdictional purposes.”). Notably, while Appellees occasionally suggest Preston “controls” certain entities, with the exception of JK Claims (discussed below), Appellees never allege nor present any evidence that the various entities Preston represented in his contacts with Texas were Preston’s alter ego. Mere status as an officer, director or majority shareholder of an entity alone is insufficient to support a finding of alter ego. Tryco Enter., Inc. v. Robinson, 390 S.W.3d 497, 525 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d). Yet nearly all of Preston’s alleged Texas contacts relate to business trips to Texas on behalf of entities for whom Preston was a director or manager: Business trips with a nonprofit and MMT in the 1990s. Appellees never allege the nonprofit or MMT were alter-egos of Preston’s, or that Preston committed any torts on his trips that would give rise to jurisdiction over Preston in his personal capacity. CR 288–89 (Tab 4); CR 87 ¶ 5 (Tab 1). Preston’s 1990s-era Texas trips or Texas-related projects on behalf of the nonprofit and MMT do not constitute contacts supporting general jurisdiction over Preston as a matter of law. 60  Business trips with C Change between 2008–2011.23 With C Change, Preston allegedly visited Texas in November 2008 with Read to attend a meeting with Collins and Sydow; in “2009 or early 2010” with Read regarding a joint venture with MIT and Russian technology partners; and four other times between 2009–2011 for one-day business trips. CR 319 at 25:3–28:21, 323 at 49:13-24, 335–48 (Tab 4); CR 672–73 ¶¶ 5–6 (Tab 6). Appellees do not dispute that Preston took these trips in his representative capacity on behalf of C Change. CR 262–64 (Tab 4). Nor do Appellees allege that C Change is an alter ego of Preston’s, or that Preston committed fraud or any other tort in the course of his contacts with Texas through C Change. Preston’s Texas trips on behalf of C Change between do not constitute contacts supporting general jurisdiction as a matter of law. Business trip in 2010 to testify regarding NC12 in divorce proceeding. It is undisputed that Preston traveled to Texas on October 6, 2010 to testify about NC12’s assets and operations in Sydow’s divorce proceeding. CR 331–70 (Tab 4). While Appellees complain that the hearing transcript does not say “corporate representative,” it is indisputable that Preston’s testimony exclusively concerned NC12 assets and NC12’s financial operation. See CR 357 (discussing purpose of Preston’s testimony as whether Sydow or NC12 owned a particular asset, or 23 Preston’s alleged 2004 contacts with Collins are discussed together in the next subsection. See section V.C.2(c), infra. 61 whether Sydow was receiving money from NC12). The transcript contains no questions whatsoever regarding Preston’s personal relationship with Sydow—or indeed, anything other than NC12 financial operations and NC12 assets. CR 331– 70 (Tab 4). Even if Preston had testified in his personal capacity, it would not be evidence of purposeful availment of the benefits of acting in Texas. Preston did not file for divorce in Texas, Sydow did. See Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991) (“the contact must have resulted from the nonresident defendant's purposeful conduct and not the unilateral activity of the plaintiff or others”). See also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417–18, 104 S. Ct. 1868, 1873 (1984) (the “unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.”); Kulko v. Cal. Super. Ct., 436 U.S. 84, 93, 98 S. Ct. 1690, 1697 (1978) (holding it arbitrary to subject one parent to suit in any state where other parent chooses to spend time while having custody of child). One isolated trip to give testimony in a divorce proceeding is no evidence of any continuous and systematic relationship with Texas. Preston’s October 6, 2010 business trip does not support general jurisdiction. 62  Business trip with TEM Capital. Again, there is no dispute that Preston made his May 2–4, 2011 trip to Texas to attend a foreclosure sale and inspect a cement plant in connection with that sale as a representative of TEM Capital. CR 673 ¶ 7 (Tab 6); CR 349–51 (Tab 4). And again, there is simply no allegation, much less any evidence, that TEM Capital is an alter ego of Preston’s or that Preston did anything tortious on his trip that would support individual jurisdiction over him. In sum, not a single one of Preston’s business trips support general jurisdiction over Preston individually. c) 2004: Business trips, phone calls, and shipment of records with Quantum. While Collins disputes whether Preston acted as a representative of Quantum during their 2004 interactions,24 there is no dispute that these 2004 contacts pertained to the development of MMT’s patented CEP technology. CR 408–09 ¶¶ 3–9 (Tab 4); CR 673 ¶¶ 6–8 (Tab 6). The intervenors affirmatively assert that Quantum, not Preston, acquired MMT’s CEP technology in 1999 and that Quantum, not Preston, licensed the CEP patents CR 115–16 ¶¶ 48, 50 (Tab 2). 24 Preston’s sworn declaration states that all his interactions with Collins during this time period were as a representative of Quantum. CR 673 ¶ 8 (Tab 6). Collins claims he believed Preston to be operating in his personal capacity, rather than as a representative of Quantum during these 2004 meetings and communications. CR 408–09 ¶¶ 3–9, 11 (Tab 4). 63  While intervenors allege Quantum is “controlled” by Preston, there are no allegations or evidence that Quantum is Preston’s alter ago. See, e.g., CR 115 ¶ 48 (Tab 2); CR 673 ¶ 10 (Tab 6) (Preston is one of 21 shareholders of Quantum). There are no allegations or evidence, for example, that Preston comingled his funds with Quantum, or personally diverted Quantum’s assets, or used Quantum’s corporate form for his personal benefit. Despite Collins’ claims about his beliefs, there is no evidence Preston was acting in anything other than his representative capacity in his dealings with Collins in 2004, and there are no allegations that Preston committed any tortious acts in the course of these 2004 dealings. Moreover, none of the alleged 2004 contacts indicate Preston purposefully availed himself of the privileges of acting within Texas. Even if Preston were acting in his individual capacity, nothing indicates that Collins’ state of residence was anything but incidental. Collins, not Preston, chose to reside in Texas. See Guardian Royal Exch., 815 S.W.2d at 227; Helicopteros, 466 U.S. at 417–18; Kulko, 436 U.S. at 93. Even if these limited 2004 contacts—three trips, some telephone calls, and one shipment of technical records—were included in a general jurisdiction analysis, they hardly support the continuous and systematic contacts necessary to give rise to general jurisdiction. See Helicopteros, 466 U.S. at 417–18. 64  d) 2006: Metal Catalyst Ventures’ designation of business address at TSI address The fact that an unrelated individual listed TSI’s Texas office address as Preston’s address on a Nevada document regarding a Nevada corporation is not minimum contact with Texas, much less one that would support general jurisdiction. CR 315, 281 (Tab 4); CR 673 ¶ 9 (Tab 6). See Guardian Royal Exch., 815 S.W.2d at 227; Helicopteros, 466 U.S. at 417–18; Kulko, 436 U.S. at 93. e) 2008: Personal check Appellees present no evidence regarding the context surrounding the personal check Preston allegedly wrote to BOS, Inc., a Turks and Caicos corporation. CR 387 (Tab 4); CR 25 ¶ 2. Certainly, they present no explanation as to why Preston would know the foreign entity had a Texas bank account, or how Preston could be said to have purposefully availed himself of benefits of doing business in Texas by writing a check to such an entity. Guardian Royal Exch., 815 S.W.2d at 227; Helicopteros, 466 U.S. at 417–18; Kulko, 436 U.S. at 93. This is not the type of purposeful, continuous, and systemic contact with Texas that gives rise to general jurisdiction. 65  f) 2012: Alleged alter-ego JK Claims’ purchase of litigation claims in the Kaiser Litigation As a matter of law, Preston’s alleged Texas contacts in connection with JK Claims occur too late to qualify for a general jurisdiction analysis in this case. PHC-Minden, 235 S.W.3d at 169 (“the relevant period ends at the time suit is filed.”) (Tab 10). Not only do Appellees fail to establish that JK Claims is an alter ego of Preston’s, most significantly, they ignore the damning fact that the earliest of JK Claims’ alleged activities, its application for name reservation with the Texas Secretary of State, dates back to June 2012. CR 417, 527 (Tab 6). This is over a year after the original plaintiffs filed suit, and nearly a year after Appellees themselves filed their suit in intervention. CR 6; CR 102 (Tab 2). Appellees’ convoluted alter-ego story amounts to nothing more than an allegation that JK Claims kept poor records. Appellees fail entirely to establish JK Claims as an alter ego of Preston’s. Preston’s declaration and Sydow’s deposition testimony are unrefuted and establish that Quantum is the sole owner of JK Claims. CR 432, 495 at 57:2–3, 498 at 66:19–67:20 (Tab 5); CR 673 ¶ 10 (Tab 6). Appellees do not allege that Quantum is an alter ego of Preston. Rather, Appellees simply assert that JK Claims is Preston’s alter ego on the bases that: half of the funds for the Kaiser claims purchase came “from Boston” and half from Sydow; certain JK Claims corporate documents are unsigned; and certain JK Claims 66 corporate documents do not reflect the ownership of shares in JK Claims (though others do). CR 415–24, 529–31 (Tab 5). There is no evidence that Preston personally supplied any funds for JK Claims. Rather, Sydow testified the funds came from Quantum. CR 495 at 57:2– 3, 498 at 66:19–67:20 (Tab 5). And failure to comply with corporate formalities is not a factor in considering whether alter ego exists. Howell v. Hilton Hotels Corp., 84 S.W.3d 708, 714 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). There is no evidence that Preston comingled his personal debts or assets with JK Claims or any of the others indicia of an alter ego entity. There is no evidence that Preston personally funded the acquisition of the Kaiser litigation and no evidence that the bankruptcy trustee would have objected if he had.25 There is no evidence that Preston (or JK Claims or Quantum) did anything improper with respect to JK Claims’ formation, or its acquisition or management of the Kaiser claims. TEX. R. CIV. P. 120a(3) (requiring the trial court to consider the pleadings and the evidence, not speculation and inference). 25 Appellees rely heavily on documents produced in the Kaiser litigation showing discussions between JK Claims’ counsel and the bankruptcy trustee’s counsel, Gretchen McCord, in connection with the sale. CR 421–24 (Tab 5) (referencing “Ex. I,” at CR 548–80). While one half of the source of the funding is unclear, the other half is explicitly from Sydow. CR 564 (Tab 5). If the trustee objected to a defendant in the Kaiser litigation funding JK Claims’ acquisition of the Kaiser claims, the trustee would have objected to Sydow, who was also a defendant in the Kaiser litigation. CR 432 (Tab 5). 67  Therefore, even if the alleged JK Claims activity were not too late to support jurisdiction of a matter of law, there would still be insufficient evidence to support any finding that JK Claims was Preston’s alter ego. Serv. Corp. Intern. v. Guerra, 348 S.W.3d 221, 228 (Tex. 2011) (evidence is legally insufficient if there is there is a complete absence of evidence of a vital fact, or the evidence offered to prove a vital fact is no more than a mere scintilla); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965) (evidence is factually insufficient if it is so weak that the finding should be set aside). 3. Preston lacks any substantial, continuous, or systematic contact that would render him at “at home” in Texas. Standing against these tenuous Texas contacts are the following facts: Preston has not lived in Texas since his infancy; has never done business in Texas in his individual capacity; has never maintained an office in Texas; has never engaged in any routine sales or other profit-making activities in Texas; does not rent, own, or possess any real or personal property in Texas; has never taken out a loan in Texas or guaranteed a debt owed to a Texas resident; does not maintain a telephone, post office box, or other address in Texas; does not employ any persons who live in or regularly travel to Texas for work; and has never incurred or paid taxes in Texas. CR 86–89 ¶¶ 2–14, 74–85 (Tab 1). An out-of-state defendant who merely does business with Texas businesses or customers will not be subject to general jurisdiction if he does not have a lasting physical presence in the state. 68 Access Telecom, Inc. v. MCI Telecom. Corp., 197 F.3d 694, 717 (5th Cir. 1999). Preston indisputably does not. The Texas and United States Supreme Courts have made clear that brief, sporadic trips to a forum state are insufficient to create general jurisdiction, particularly when they are made in a representative capacity. PHC-Minden, 235 S.W.3d at 170 (Tab 9); Ashdon, Inc. v. Gary Brown & Assocs., Inc., 260 S.W.3d 101, 113 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (Florida business owner’s 20+ sales meetings in Texas over 13-year period insufficient to establish general jurisdiction); Waterman Steamship, 355 S.W.3d at 406 (18 port calls over a seven- year period “is better characterized as sporadic rather than ‘continuous and systematic’ contacts”). In Helicopteros, the United States Supreme Court overturned the Texas Supreme Court, holding that because Helicol lacked any place of business in Texas, lacked a license to do business in Texas, took only sporadic trips to Texas through its CEO and employees, purchased products in Texas, and accepted checks drawn on Texas bank accounts, Helicol’s Texas contacts were insufficient for general personal jurisdiction. Helicopteros, 466 U.S. at 416–19. By contrast, in Perkins v. Benguet Consol. Mining Co., the nonresident defendant’s mining properties were located in the Philippines, but its operations were stopped by the Japanese occupation of the islands. 42 U.S. 437, 446–49, 72 69 S. Ct. 413, 419–20 (1952). During the occupation, the president and general manager returned to his home in Ohio and operated his business from there. See id. The United States Supreme Court determined that the company’s Ohio contacts supported a finding of general jurisdiction because the company’s president and general manager maintained an Ohio office, maintained company files in Ohio, corresponded from Ohio, drew and distributed salary checks from his Ohio office, used two Ohio bank accounts for company funds, had an Ohio bank act as transfer agent for the company’s stock, held directors’ meetings in Ohio, and supervised company Philippines property from Ohio. Id. Preston’s brief, sporadic, and representative contacts with Texas do not approach the level of forum contacts in Helicopteros, much less those in Perkins. Preston’s forum contacts are not so substantial that Preston “should have reasonably expected to be sued in Texas on any matter, however remote” from those contacts. Johnston v. Multidata Sys. Intern. Corp., 523 F.3d 602, 613 (5th Cir. 2008). There is no basis for general jurisdiction over Preston as a matter of law. VI. CONCLUSION AND PRAYER Appellees, disgruntled out-of-state investors in TSI and NC12, have not demonstrated why Texas courts should entertain their claims seeking to recover their lost investment against a Massachusetts resident who is not alleged to have 70 done anything in Texas connected to their claims. Appellees failed to meet their initial pleading burden, and there is no basis for the exercise of specific or general jurisdiction. Therefore, Preston requests that this Court reverse the trial court’s order overruling his special appearance, render a judgment granting his special appearance, and order that he be dismissed from the lawsuit. Respectfully submitted, AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING, P.C. By: /s/ Jane Langdell Robinson Jane Langdell Robinson Texas Bar No. 24062970 Monica Uddin Texas Bar No. 24075195 Jamie A. Aycock Texas Bar No. 24050241 1221 McKinney Street, Suite 3460 Houston, Texas 77010 Telephone: 713-655-1101 Fax: 713-655-0062 ATTORNEYS FOR APPELLANT JOHN T. PRESTON 71  CERTIFICATE OF COMPLIANCE I certify that this brief complies with the typeface and word-count requirements set forth in the Rules of Appellate Procedure. This brief has been prepared, using Microsoft Word, in 14-point Times New Roman font for the text and 12-point Times New Roman font for any footnotes. This brief contains 14,507 words, as determined by the word count feature of the word processing program used to prepare this document, excluding those portions exempted by TEX. R. APP. P. 9.4(i)(1). /s/ Jane Langdell Robinson Jane Langdell Robinson 72  CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of this document was served on all counsel of record in this case, identified below, on June 12, 2015, by the electronic filing manager and/or via email: Kelley M. Keller F. Eric Fryar State Bar No. 11198240 State Bar No. 07495770 kkeller@ellison-keller.com eric@fryarlawfirm.com Tracey N. Ellison Matthew Buschi State Bar No. 15054720 State Bar No. 24064982 ELLISON KELLER mbuschi@fryarlawfirm.com 5120 Woodway Dr., Suite 6019 Christina Richardson Houston, Texas 77056 FRYAR LAW FIRM, P.C. Telephone: 713-266-8200 State Bar No. 24070495 Fax: 713-266-8201 912 Prairie, Suite 100 Attorneys for Appellees Emjo Houston, Texas 77002-3145 Investments, Ltd. and Fax: 281-605-1888 H.J. von der Goltz Attorneys for all Intervenors/ Plaintiffs Asher Griffin Chris Sileo Sean Flammer SCOTT, DOUGLASS & MCCONNICO, LLP 600 Congress Ave., Ste 1500 Austin, Texas 78701-2589 Fax: 512-474-0731 Attorneys for Appellees Chalsys, MET, and Lo /s/ Jane Langdell Robinson Jane Langdell Robinson 4834-5746-0004, v. 7 73  Filed 11 September 28 P2:44 Chris Daniel - District Clerk Harris County ED101J016518693 By: jeanetta spencer CAUSE NO. 2011-44058 MICHAEL COLLINS. ELLEN COLLINS. § IN THE DISTRICT COURT OF BOS, TNC.. ENVEN, INC., § METAL CATALYST VENTURES, INC., § FALL RNER REALTY. LTD. , § M. SAMEER AHMED, AND § TSBC SOUTH TEXAS INVESTORS. L.P., ~ § Plaintiffs, § § v. § HARRIS COUNTY, TEXAS ~ MICHAEL SYDOW, JOHN T. PRESTON. § CHRISTOPH HENKEL. C. CHANGE § INVESTMENTS. LLC, SONIA LO. CHALSYS ~ CAPITAL PARTNERS, L.L.P., § BRILLIANT NOVELTY , LL.C.. § and MELIORA ENERGY § TECHNOLOGTES, S.A.R.L., § § Defendants. § 2 15™ JUDICIAL DISTRICT DEFENDANT JOHN T. PRESTO 'S AMENDED SPECIAL APPEARANCE AND, SUBJECT THERETO, ORIGINAL ANSWER Pursuant to Texas Rule of Civil Procedure 120a. Defendant John T. Preston (''Preston") files this Amended Special Appearance, and Subject Thereto, Original Answer. objecting to this Court's personal jurisdiction over him, and in support states as foll ows: PRESTON'S SPECIAL APPEARANCE 1. Plaintiffs have sued eight defendants in Texas even though there is no basis for personal jurisdiction over all of them. Specifically. Preston does not belong in this la wsuit because he has not had contact with the state of Texas in his individual capacity in the past 60 years. nor has he ever done husiness in Texas in his indi vidual capacity. Preston· s limi ted contacts with Texas have been made on behalf of companies for which he is a director. T he contacts of these companies cannot be imputed to Preston to subject him to personal jurisdiction 74 in Texas. Thus, Preston does not have the requisite minimum contacts required by Texas and fe deral law to exercise personal jurisdiction over him. Similarly, because Preston has had no contact with Texas in the past 60 years, subjecting him to the jurisdiction of a Texas court would not comport with notions of fair play and justice. There fore. Preston respectfull y requests that this Court fmd that asserting jurisdiction over him in Texas is improper and dismiss all claims againsl him. Argument and Authorities I. Texas law requires that the exercise of personal jurisdiction be consistent with t'ederaJ due process. 2. A Texas court may only exercise pet sonaljudsdiction over a defendant if it would be consistent with Cederal constitutional requirements of due process. Guardian Royal Exch. Assurance. Ltd. v. English China Clays, P.L. C. , 8 15 S.W.2d 223, 226 (Tex. 199 1). The Texas long-aJm statute authorizes the exercise of j urisdiction over nonresidents who are "doing business" in Texas, but this statute can only reach as far as the federal constitutional requirements of due process will a llow. TEX. CIV. PRAC. & REM. CODE§ 1 7.042 ~ Guardian Royal. 815 S .W.2d at 226 . Thus, Texas courts must look to due process requirements to determine if personaljul'isdiction is proper. Guardian Royal, 8 15 S. W.2d at 226. 3. Personal jurisdiction is consistent with due process if 1) the defendant has purposely established ·'minimum contacts, with Texas: and 2) the exercise of personal jurisdiction comports with " fair play and substantial justice." Nat '[Indus. SOJzd Ass 'n v. Gibson. 897 S.W.2d 769, 772 (Tex. 1995); Guardian Royal, 815 S.W.2d at 226. 48 12-3575·8602. v. I 75 II. Preston does not have the requisite minimum contact., with Texas to give rise to personal jurisdiction. 4. The essential goal of the minimum contacts test is to protect the defendant. Schlobohm v. Schapiro. 784 S.W.2d 355, 357 (Tex. 1990). Thus. the defendant's minimum contacts must constitute a "substantial connection" between lhe defendant and Texas. Guardian Royal, 8 15 S .W.2d at 23 1. A defendant is not subject to ju1·isdiction if his Texas contacts are random. fortuitous or attenuated. Am. Type Culture Collection. Inc. v. Colenum . 83 S.W.3d 801. 806 (Tex. 2002). Instead. to be subject to personal jurisdiction the defcndITERVEN l !ON ;·· nr'...~ 118 was never actually transferred to Texas Syngas. In September 2008, the property was put in the name of FaJJ River Realty, Ltd., an entity in whi ch Sydow owned an individual interest, and for which Sydow served as the managing director Defendants never disclosed to the shareholders that Texas Syngas (and later NC12) did not own the building. Title to the building remained in FaJI River Realty, Ltd., which then proceeded to charge Texas Syngas a monthly rent of $28,000 for use of the facility it should have owned. 57. ln February 2009, MPR, an independent engineering firm, concluded its review of the Texas Syngas technology. MPR confirmed the viability of the reactor' s science and theoretical basis, its design, and the gasification process chemistry. On or about May 14, 2009, Collins and Robert Bach formally assigned the patented technology to Texas Syngas in the records of the United States Patent and Trademark Office. D. Fraud on Texas Syngas and Its Shareholders 58. On infonnation and belief, Preston and Sydow had no intentjon of using shareholder money as represented to the shareholders. Preston is a classic stock promoter and has rai sed (and spent) millions upon millions of shareholder dollars, but has never actually built a commercially successful company. Sydow is a lawyer skilled at hiding assets ami corporate manipulation. During the t}me that Preston and Sydow controlled the board of directors, they made sure that the bulk of the money actually went to them or to several of their related entities, rather than to build the demonstration reactor. In addition to the fraudulent acquisition of the Fall River facility, on infom1ation and belief, C Change was apparently paid a $40,000 per month consuJtjng fee. Additionally, Sydow and Preston had the company pay tens of thousands of dollars evety month to lawyers and consultants and as well as other expenses that did not benefit the shareholders or 119 the corporation, but actually provided benefit for Sydow and his law fim1 and was apparently used by Preston to solicit investors for C Change . 59. Ow-ing 2009, Sydow moved the Texas Syngas corporate headquarters in Houston from 4900 Woodway to more luxwious accommodations on Post Oak Boulevard. Sydow never devoted his full attention to Texas Syngas as promised, but relocated his law practice to the Texas Syngas office space, spent most of his time on his own law practice, and used Texas Syngas employees to do work for hi s firm . Two of Sydow's children worked full time as lawyers in Sydow's law firm at Texas Syngas' expense. Texas Syngas was not compensated for use of its space, suppli es, resources, or personnel. Texas Syngas also paid for the maintenance, storage, and cleaning for Sydow' s airplane. When Texas Syngas was finally ready to construct the test reactor, Sydow and Preston had largely squandered the money raised for that purpose E. Investment by tbe Note Holder Intervenors 60 Despite his numerous promises and despite being compensated to do so, Preston faj led to rai se additim1al funds for Texas Syngas in 2009, and by mid-year Texas Syngas desperately needed funding. In 2009, Preston and Sydow again turned to N[r. von der Goltz for assistance. Mr. von der Goltz was able, through mid-2010, to raise a total of$6,104,000 in additional funds from friends, family, and business assodates. These investors, the Note Holder Intervenors, were issued convertible promissmy notes, which provided for automatic conversion into common shares at a 20% discount of the new investor' s valuation if Texas Syngas obtained qualified financing from a single investor of at least $5 million on or before September 30, 20 10. If no qualified financing occurred, the notes would become due and payable within five days after a demand was made on or after the September 30, 20 10, maturity date. 0Rt(il};Al. PE'l-n'fO~ TN TNiERVl:.l\'l !Oh 120 6 1. Preston and Sydow, both di rectly and through their statements to von der Goltz, represented to the Note Holder Intervenors that Texas Syngas was worth $300 million as of 2009, based on the value of the technology and the CLECO and Turkish contracts. However, Preston and Sydow fai led to di sclose that the CLECO contract had been cancelled. Preston and Sydow also represented that the money would be used prima1ily to build the test reactor; however, their later conduct and misuse of the funds demonstrate that they had no intention of using the money for that purpose. F. Formation of NC12 62. During 2009, Sydow, Henkel, and Preston became increasingly at odds with Collins, who still owned o r controll ed over 60% of the shares. By the end of 2009, Preston, Sydow, and Henkel att.empted to wrest control of the company from Colli ns through a scheme to dilute his interest C Change had received an investment of $15 million from Corinna von Schoenau, which was intended for investment in Texas Syngas; however, Preston withheld $10 million of these funds and proposed that C Change would invest $5 milli on at a pre-money valuati on of $10 million and post-money valuation of $ 15 milli on in exchange for a 33% interest in the company . Collins, as the majmity shareholder, blocked thi s effort, and tension among the board members reached a boiling poi nt- to tJ1e poi nt where moving the business forward seemed impossible. Collins and Sydow approached Mr. von der Goltz to mediate a settlement to save the company . Ultimately. Preston, Sydow, and Collins agreed that Texas Syngas would be reorganized and that a new three-person board of directors compri sed of Sydow and two new directors acceptable to Collins would govern the t1ew corporation. Collins was very hesitant to relinquish hi s position as a director, but agreed to a new board on the conditions that the new board members retained their positions for two years and that no funds would be accepted from C Change. (Preston ultimately O Rt~ TN TmP.RVl:.N 1!ON 121 took von Schoenau 's $ 15 million intended for Texas Syngas and invested it in a different Preston scheme). 63. In late 2009, as part of the reorganizati on, Sydow li quidated Texas Syngas before a new board was named. Sydow transfen-ed Texas Syngas' assets to a new Nevada corporation, NC 12, Inc. The preferred shares of the Shareholder Intervenors in Texas Syngas were convet1ed to common shares in NC12 and the convertible promissory notes held by the Note Holder Intervenors were assumed by NC 12. With Collins' agreemetlt, Sydow remajned as CEO of NC 12 and was joined on the board of directors by Mr. H.J. von der Goltz and Dr. Aydin Muderrisoglu. Von der Goltz was elected to serve as n on~executi ve chairman of the board of directors. Von der Goltz hoped the reorganization would relieve tension between Sydow and Collins, allowing Collins to focus on building the reactor at the Fall River, Massachusetts, facility that supposedly had been purchased by Texas Syngas, and allowi ng Sydow to focus on managi ng the company from the Houston headquat1ers and negotiating contracts with potential customers. 64. Sydow apparently believed that he would be able to manipul ate the new board members and assume greater control. When the new board members made clear their independence and intent to act in the best interest of the corporation and its shareholders, Sydow enl isted Preston and immediately began to undercut the authority of the new board members and to withhold infom1ation from them until they could be removed. Sydow maintained sole signatory authority over all NC 12 bank accounts and refused requests by von der Goltz that certain expenditures require two signatures. 65. Mr. von der Goltz took seriously his new role as a chairman of the board of directors. 1'-Ie met personally with all the Houston and Fall Ri ver employees in January 20 10 and sought to ORlGJNAl. Pt-7Jn'fON TN TNTI:.RVEN'Y'lON 122 clean up NC 12's finances, streamline operations based on his vast operational experience, and above all, see that the demonstration reactor wa.s built. Collins, in the meantime, had moved full- time to Massachusetts and made meaningful progress on constructing the reactor and purchasing necessary equipment with the funds rai sed by von der Goltz. Sydow retained control of the corporation's money and continued his rni sappropriation and profligate spending, which included approxi mately $46,000 that he spent during a nine-day trip to London in mid-2010, a $20,000 per month lease payment that Sydow charged NC 12 for Sydow's private aircraft. and other wasteful personal e-xpenses and benefits, whi ch w-ere never divulged to the board of directors . While Sydow saw that all of the expenses incurred for hjs benefit were paid immediately, he refused to pay for the actual expenses incurred for building the reactor in Fall River, resulting in numerous disputes with vendors, work stoppages, and delays. 66. Sydow continuall y blamed Collins for NCI2' s financial problems and shortages offunds. Sydow vehemently opposed any review or financial controls over his own handling of corporate funds and never supplied financial statements to the board of directors. With board approval, von der Goltz engaged Elder, Gaffey & Paine, P.C. (EGP), a Boston-based accounting firm, to 1 1 review both Fall RiveT S and Houston' s book s and fiscal procedures. EGP s investigation showed that adequate oversight measures were in place at Fall River and that all expenditures were supported by approved purchase orders sent to the Houston office for payment and tiling. 67. Sydow stonewalled and delayed providing EGP the accounting records and QuickBooks files relating to operations in Houston for almost eight weeks in mid-201 0. After tin ally obtaining records from the Houston office, EGP discovered numerous excessive expenditures for travel, professional fees, outside consultants, and the undisclosed lease payments for Sydow·s airplane-all expenses neither known to nor appr-oved by NC12's board of di rectors EGP ' s 0R tromissory notes into common shares. The NC12 boal'd of di rectors, consisting of Preston, Henkel, and Sydow, infom1ed the Note Holder lnterve11ors on September 28, 20'10, that they were now common shareholders with 39.4% ownership, whjle MET owned 30.3% for its $5 million investment, and the " old" shareholder group would be diluted to 30.3%-rH:.RVEN l !ON 130 ("An officer who or director who participates, ratifies, aids or approves of the breach of duty of a co-fiduciary, or fails to repudi ate the wrongdoing, may be jointly liable for the violation."). 85. Intervenors arc entitled to their actual damages for this breach of fiduciary duty and funher equitable rel ief including buy-out, disgorgement, and constructive trust. White NC12 may also have claims arising out of the same conduct, Intervenors do not seek to assert any claims owned by NC l2 or to asseit any remedy on behalf of NC12. Intervenors asseit only their individual claims for violati ons of fiduciary duties owed directl y to them as shareholders and seek only those damages for injuries suffered by lntetvenors di rectly as shareholders. Because the Controlling Shareholder Defendants acted knowingly, intentionally, mal iciously, and with reckless disregard of Intervenors' rights, Intervenors are further entitled to exemplary damages. B. Shareholder Oppression 86. The Controlling Shareholder Defendants are subject to legal duti es to Intervenors, including fiduciary duties, duties not to oppress, and duties of good faith and fair dealing. Defendants committed a continuing pattern of oppressive acts that have the purpose and effect of substantially defeating Intervenors' objectively reasonable expectations of share ownership, of systematically violating their rights and interests as shareholders, and of denying them the economic value of share ownership and return on thei r investment. 87. Examples of but a few of these oppressive acts include, but are not limited to: instituting a plan to gain unfettered control of the company with the intent of stealing its assets.. stripping the company of its most valuable assets for their own personal gain, and the secretive and questionable removal of directors von der Goltz and :rv·Iuderrisoglu, who were reputable, independent of Preston and Sydow, and trusted by the shareholders. Sydow thwarted these di reclors' investigative efforts into the company's accountjng practices. Sydow, Preston, and ORtGI'l\AL PETI1'fON TN T'l>ITI:.RVl::.N I !ON 131 Henkel illegally exerci sed dominion and control over the corporation by removing these directors in direct violation of a previous agreement among a super-majority of the shares. Sydow also misappropriated corporate assets fo r personal expenses, and engaged in numerous undi sclosed self-dealing tran saction s at the expense of NC12 shareholders. Defendants' conduct rendered Intervenors' share ownership worthl ess, meaningless, and financially punitive. Defendants' burdensome, harsh, and wrongful conduct visibly departs from standard s of fair dealing and constjtutes shareholder oppression 88. Jntervenors are e11titled to equitable relief to remedy the oppressive conduct, including but not limited to, having the Court order a buy-out at a fair price, together with actual and exemplary damages, disgorgement, restitution, and other equitable relief. Furthermore, Defendants' conduct was committed willfully and maliciously and Intervenors are entitled to punitive damages. Intervenors are without adequate remedy at law. C. Knowing Participation/Civil Conspiracy 89. As alleged herein, all Defendants conspired to commit fraud and breaches of their fid udary duties. and thus are jointly and severally liable for all actual damages and equitabl e rel ief. Furthermore, all Defendants acted knowingly, intentionall y, maliciously, and with reckless disregard of Intervenors' rights and the company' s ri ghts, and Intervenors are entitled to exemplary damages. D. Securities Fraud-Common Law Fraud and Statutory Fraud 90. Sydow and Preston committed common law and statutory fraud on each of the Interv enors in connection with the sale and purchase of the shares and conve11ible notes. As alleged herein, Sydow and Preston solicited the Intervenors' investments and directly or indirectly communi cated false representations of fact to the Intervenors- including that the ORlf: l'NAl. Pl.::'l n'ION TN T'!>ITERVENT!ON 132 company was worth $ 100 million or later $300 million, that the corporation would use the investment money primarily to build the reactor (when Sydow and Preston intended to utilize the money primarily for other purposes or to misappropriate it and to delay the construction of the reactor), and that the CLECO deal was in place when in fact it had been cancelled. Addi tionally, Sydow and Preston fajled to disclose facts that they were under a duty to disclose to new investors-including the cancellation of the CLECO deal. Sydow and Preston made the misrepresentations, false promi ses, and omissions with knowledge of the falsity, with the intent to deceive, and with the intent that the Interven ors rel y on those misrepresentations. The Intervenors did in fact reasonably rely on the fraudulent representations and non-disclosures of Preston and Sydow by investing in Texas Syngas and NC12. Intervenors suffered actual damages proximately caused by Preston and Sydow' s fraud . Furthermore, Preston and Sydow acted willfully, intentionall y, and maliciously and are liable for exempl ary damages. IX. Jury Demand 9 1. Intervenors wish to exercise their right to trial by jury . X. P1·ayer 92. For these reasons, Intervenors request that the Defendants be cited to appear and answer and that Intervenors have judgment agajnst the Defend ants for the following: a. Actual and exemplary damages as allowed by law; b. Equitable reli ef including buy-out or return of investment; c. Prejudgment and post-judgment interest as allowed by law; d. Attorney fees and expenses; e. Costs of suit; ORIGINAl. P P.TITJON I~ TNTF!.RVF.NTION 133  f All other relief, general and special, legal and equitable, to which Intervenors may be entitled. Respectfully Submitted, FRYAR LAW Fl.RNI, P.C. F. Eric Fcyar Texas Bar No. 07495770 Email: eric@fryarlawfirm.com Matthew Buschi Texas Bar No. 24064982 Email: mbuschi@fryarlawfirm.com Christina Richardson Texas Bar No. 24070495 1001 Texas Ave. , 14th Floor Houston, Texas 77002-3194 Tel. (281) 715-6396 Fax (281) 715-6397 ATTORNEYS FOR INTERVENORS 0RfGJNA.L PETITION IN lNTf.'RVl'{NTfON 134  CERTIFICATE OF SERVICE I certify that a copy of the foregoing instrument was served on all parties and counsel of record pursuant to the Texas Rules of Civil Procedure as indicated below: []Telephonic document transfer on 11 November 2011 before 5:00p.m . []Email or eservice by agreement on 11 November 201 1. [X] First Class United States Mail, CMRRR, on 11 November 2011. Randall 0 . Sorrels Brent C. Perry Clyde J. "Jay'' Jackson, ill Law Offices of Brent C. Perry Abraham Watkins, Nichols, Sorrels, Matthews 800 Commerce Street & Friend Houston, Texas 77002 800 Commerce Street Fax: 713-237-0415 Houston, Texas 77002-1776 Attorney for Original Plaintiffs Fax: 713-225-0827 Attorneys.for Original Plainti:ffs Asher Griffin Amir Alavi Chris Sileo Ashley Frankson Sean Flammer Ahmad, Zavitsanos, Anaipakos, Alavi & Scott, Douglass & McConnico, LLP Mensing P.C. 600 Congress Ave., Ste 1500 3460 One Houston Center Austin, Texas 78701-2589 1221 McKinney Street Fax: 512-474-0731 H ouston, Texas 770 lO Attorneys for Defendants Clwlsys, At/ET, and Fax: 713-658-0062 Lo Attorneys for Defendants Sydow, Preston, Henkel, C Change, and Brilliant Novelty OR!GlNALPf.TJTJON IN INTH.RVF.NTION 135  ~~-~~ ];' l ' IN THE UNITED STATES BANKRUPTCY COURT /Jf:?hfif-D h ~ FOR THE SOUTHERN DISTRICT OF TEXAS 81 ' rlct an;~/ .U HOUSTON DMSION 77,.,., 4UG J C!erlr !Jr J 20;; INRE; § !'~......, .' '·u,;~·~ .. § CASE NO: 11-38794 ~~ ... ~~ .,._,."' ".'~ ;.. .._. ()·· .... -.. ~ NC12, INC. § CHAPTER 7 ~r>'·il"- _ . - --....___ Debtor(s). § § JUDGEISGUR . -·--,------ § § MICHAEL COLLINS, et al § § Plaintiff(s), § § vs. § ADVERSARY NO. 11-3634 § SYDOW, eta/ § § Defendant(s). § MEMORANDUM OPINION The Plaintiffs and Intervenors assert claims against fonner officers and directors of NC12, the debtor in the underlying bankruptcy case. NC12 was a technology company engaged in developing catalytic gasification processes. Plaintiffs and Intervenors allege that the Defendants stripped NC 12 of assets, misappropriated corporate assets, engaged in self-dealing, and improperly removed other directors from NC12's board. The Plaintiffs sue for breach of fiduciary duty, and Plaintiff Michael Collins sues for conversion. The Intervenors sue for breach of fiduciary duty, shareholder oppression, statutory and common law securities fraud, and conspiracy. The Court grants, in part, and denies, in part, the Intervenors' motion to remand. The Court remands the Intervenors' securities fraud claims, including the aiding and abetting and conspiracy to commit fraud claims, as they are the Intervenors' property; the Court declines to 1 I 3l 206 exercise subject matter jurisdiction over the claims. The remainder of the Intervenors' claims are the estate's property, and the Court dismisses them for lack of standing. The Court denies, in part, and abates, in part, the Plaintiffs' motion to remand. Plaintiff Michael Collins' conversion claim is arguable property of the estate. lf the claim belongs to Collins, the Court may lack subject matter jurisdiction or the claim's potential effects on the estate may be so remote that the Court should discretionarily abstain. If the claim is property of the estate, Collins lacks standing to assert the claim. Until the issue is decided, the Court cannot remand the claim; Collins' pursuit of the conversion claim in state court would violate the automatic stay. The remainder of the Plaintiffs' claims are property of the estate, and the Court dismisse~ them for lack of standing. Background This proceeding involves numerous Plaintiffs, Defendants, and Intervenors. The Plaintiffs are Michael Collins, individually and on behalf of NC12, Inc. and Fall River Realty, Ltd.; Ellen Collins, on behalf of BOS, Inc., EnVen, Inc. and Metal Catalyst Ventures, Inc.; BOS, Inc., as a shareholder ofNC12; EnVen, lnc., as a shareholder ofNC12; Metal Catalyst Ventures, lnc., as a shareholder of NC12; M. Sameer Ahmed, individually and on behalf of NC12 and TSBC South Texas Investors, L. P., as a shareholder ofNCI2. The Defendants are Michael Sydow; John T. Preston; Christoph Henkel; C Change Investments, L.L.C.; Sonia Lo; Chalsys Capital Partners L.L.P.; Oscura, Inc.; Brilliant Novelty, L.L.C.; and Meliora Energy Technologies. S.A.R.L. The Plaintiffs sued the Defendants in Harris County District Court on July 26, 2011. ECF No. l-1. The Plaintiffs assert claims for breach of fiduciary duty, alleging that Sydow, Preston, and Henkel breached their fiduciary duty to the Plaintiffs as shareholders of NCl2 by 2 / 31 207 misappropriating corporate funds. They seek ''their proportionate share of economic injuries" as shareholders ofNC12. The Plaintiffs sue the other Defendants for aiding and abetting breach of fiduciary duty. The Plaintiffs sue Sydow, Preston, C Change Investments, and Brilliant Novelty for conversion of Collins' interest in Fall River Realty. The Intervenors filed a petition in intervention on November 11, 2011 . The Intervenors are Akila Finance, S.A.; Bosques del Molino, S.A.; Centrans Energy Services, Inc.; Chester Mester Holdings, Ltd.; Deltec Bank & Trust, Ltd.; Emjo Investments, Ltd.; William End; Evans and Petree 401K Plan; First Bay Intertrade; GM Partners; Marair Corporation; W.L. Nichol, IV; Panorama Investment, Ltd.; PC 01 Vermoegens Verw.; Alejandro Santo Domingo; Sinchi investment; Venturi Global Investments, Ltd.; and H.J. von der Goltz. ECF No. 1-3. The Intervenors sue Sydow, Preston, and Henkel for breach of fiduciary duty to shareholders and for shareholder oppression. They also sue all Defendants for knowing participation/civil conspiracy to commit fraud and breach of fiduc iary duties. The intervenors sue Sydow and Preston for common law fraud and statutory fraud. NC12 filed for chapter 11 bankruptcy on October 14, 201 I. On December 22, 2011, the Court granted the United States Trustee's motion to appoint an examiner in the case. ECF No. 28. Walter Bissex was appointed examiner. ECF No. 30. Bissex filed a status report on February JS, 2012. ECF No. 41. The Defendants removed this proceeding on December 15, 2011. The Intervenors filed a motion to remand or abstain on January 17, 2012, arguing that they asserted only direct claims against the Defendants. ECF No. 6. The Plaintiffs joined in the motion to remand on the same day. ECF No. 7. 3/31 208  At a hearing on February 2, 2012, the Court required parties to file briefs on whether the estate owned the claims asserted in this proceeding. The Intervenors and Defendants Sydow, Preston, Henkel, C Change Investments, LLC, and Brilliant Novelty, LLC (collectively, "Sydow Defendants") filed briefs on March 2, 2012. ECF Nos. 12 & 14. The Sydow Defendants also filed a response to the motion to remand on the same day, arguing that the claims were property of the estate. ECF No. 13. The Sydow Defendants also argue that the existence of a joint directors and officers insurance policy with a maximum coverage limit of $1 ,000,000.00 for defense costs provides another basis for "related to" jurisdiction. ECF No. 13, at 21 -22. Additionally, the Intervenors' requested relief of a forced buy-out, they argue. would affect the bankruptcy estate by affecting ownership of the debtor and rearranging bankruptcy priorities. ECF No. 13, at 23. Finally, mandatory abstention does not apply, they argue, because remand would violate tbe automatic stay. ECF No. 13, at 23. Defendants Sonia Lo; Chalsys Capital Partners, LLP, and Meliora Energy Technologies, S.A.R.L. (collectively, " Lo Defendants") filed a joinder with the Sydow Defendants' briefing on March S, 2012. ECF No. IS. The Lo Defendants filed a joinder with the Sydow Defendants' response to the motion to remand on March 7, 2012. ECF No. 17. The Intervenors filed a reply to the Sydow Defendants' brief on March 9, 2012. ECF No. 18. In NC12's main bankruptcy case, the United States Trustee filed a motion to convert tbe case to a chapter 7 case on February 28, 2012. No. 11-38794, ECF No. 43. The intervenors joined in the motion on March 22, 2012. No. 11-38794. ECF No. 51 . NC12 filed a response on March 22. 2012, opposing the conversion to chapter 7. No. 11-38794, ECF No. 52. The Court held a hearing on the motion to convert on March 26,2012 and March 27,2012. After hearing testimony from Bissex, Sameer Ahmed, Sydow, and Preston, the Court concluded that NC12 4 / 31 209 was not operating in a meaningful way and had limited assets of an unknown value. The Court granted the motion to convert, and Janet S. Casciato-Northrup was appointed chapter 7 Trustee. The Court set a hearing on the ownership of the claims in this advers1lry proceeding for May 15, 2012. Prior to the hearing, the Trustee and the Intervenors filed briefs. ECF Nos. 25 & 26. At the May 15, 2012 hearing, lhe Court heard arguments as to the ownership of the claims. The lntenrenors filed an additional brief on May 25, 2012. ECF No. 27. The Trostee filed a separate adversary proceeding against Michael Collins, Ellen Collins, and BOS, lnc. on June 5, 2012, seeking a detennination ofthe extent and validity of the estate's interest in real property in Fall River, Massachusetts and a determination that the property was subject to either a resulting or a constructive trust. The Trustee also sued Michael Collins for breach of fiduciary duty. Adv. No. 12·3266, ECF No. 1. The Trustee filed another adversary proceeding against Michael Collins on August 13, 2012. Adv. No. 12-3376, ECF No. I. In Adv. No. 12-3376, the Trustee sues for a declaratory judgment that Collins does not own any interest in U.S. Patent Application No. 12/363,398 and the underlying technology; breach of fiduciary duty; and unjust enrichment. On August 21, 2012, the Court ordered the parties to this adversary proceeding to file a copy of NC12's Philadelphia Indemnity Insurance Company policy and to stipulate whether the copy was true and correct. ECF No. 28. The Trustee filed a copy of the policy on August 27, 2012, with a stipulation signed by the Trustee, the Plaintiffs, the Intervenors, Sydow, Preston. Henkel, and the other Defendants. ECF No. 30. The Trustee, the Plaintiffs, the Intervenors, Sydow, Preston, and Henkel stipulate that the copy of the policy is a true and correct copy. ECF No. 30, at 1. The other Defendants have no basis either to dispute the authenticity of the policy or to stipulate that the copy is true and correct. ECF No. 30, at 2. 5 I 31 210  The Plaintiffs' and Intervenors' Allegations The Plaintiffs and Intervenors allege that the Defendants, who were directors and officers of NC 12, engaged in self-dealing and mismanagement with the ultimate result of stripping NC 12 of its most valuable assets. For context, the Court summarizes the allegations made by the Plaintiffs and Intervenors. By summarizing the allegations, the Court does not fmd that the allegations are meritorious. Nevertheless, the Court must assume that the allegations are true for the purpose of ruling on the pending motions. NC12 was involved in the development of catalytic gasification technology. ECF No. 1- 2, at 6. The technology was developed by Plaintiff Michael Collins for producing synthetic natural gas and other fuels from coal. ECF No. 1-3, at 14. Collins' technology involved using high temperatures and high pressures to create clean-burning synthetic fuel~ from coal, petroleum coke, and biomass. ECF No. 1-3, at 15-16. Collins. along with retired University of Maryland professor Robert Bach, patented the process in 2009. ECF No. 1-3, at 16. NC12 began as a Texas limited liability company named Texas Syngas, LLC. ECF No. 1-2, at 7-8. Texas Syngas was fonned jn October 2004 to exploit the technology portfolio of a defunct company called Molten Metal Technology, Inc., which had been founded and promoted by Defendant John Preston. ECF No. 1-2, at 7; ECF No. 1-3, at 15. Quantum Catalytic&, Inc., another entity controlled by Preston, purchased Molten Metal Technology's portfolio in l999. ECF No. 1-2, at 7; ECF No. 1-3, at 15. In May 2006, Quantum Catalytics licensed its technology to Texas Syngas in return for 10% of the available shares. ECF No. 1-2. at 8. Collins agreed to contribute his intellectual property to Texas Syngas in exchange for 754,500 shares {approximately 75%) of Texas Syngas. ECF No. 1-2, at 8; ECF No. 1-3, at 16. Collins 6 I 31 211 kept I 00,000 shares personally and transferred the other shares to EnVen, Inc. and Metal Catalyst Ventures, Inc., Nevada companies owned by his wife, Ellen Collins. ECF No. 1-2. at 8. Texas Syngas was reorganized as a new Nevada CQrporation, Texas Syngas. Inc.• in May 2006. ECF No. 1-3, at 16. Texas Syngas began raising significant capital in 2007. ECF No. l -2. at 9; ECF No. 1-3, at 16. Through Preston and his contact Johan von der Goltz, Texas Syngas raised at least $12 million from European investors. ECF No. 1-2, at 9. Von der Goltz's friends, family, and business associates invested $11.75 million in exchange for approximately 13% ofthe comp110y. ECF No. 1-3, at I 7. These investors included some of the Intervenors ("Shareholder Intervenors''). ECFNo. 1-3, at 17. Sydow and Preston represented to the Shareholder Intervenors that the value of the technology exceeded $100 million and that the funds would be used for building a demonstration reactor. ECF No. 1-3, at 17. The funds were also intended to be used to acquire a research and development facility in Fall River, Massachusetts. EFC No. 1-2, at9. The facility was formerly owned by Molten Metal Technology and was acquired by the Meissner Trust, an entity owned by Preston and Paul Lohnes. ECF No. 1-3, at 1S. Texas Syngas structured the acquisition of the facility by Fall River Realty, Ltd. ECF No. 1-2, at 9. Preston and Lohnes retained an ownership interest in Fall River Realty. ECF No. 1-2, at 9-10. Preston and Lohnes, through a complex transaction, transferred to Collins an interest in Fa11 River Realty in exchange for $3.5 million and Texas Syngas shares. ECF No. 1-2, at 10. Preston and Sydow told the shareholders that Texas Syngas had purchased the Fall River facility, but the property was never actually transferred to Texas Syngas. ECF No. 1-3, at 18-19. 7 I 31 212  Sydow became the Chief Executive Officer of Texas Syngas with an annual salary of $360,000. ECF No. 1-2, at 9. Sydow, a lawyer, agreed to stop practicing law and devote his full efforts to building Texas Syngas. ECF No. 1-2. at 9. Sydow worked from office space in Houston, paying salaries to officers and employees and pursuing execution of Texas Syngas's business plan. ECF No. 1-2, at 9. Collins began working at the Fall River facility to build a full scale gasification system prior to commercial development, retaining the necessary consultants and employees. ECF No. 1-2. at 10. Collins and Bach assigned the patented gasification technology to Texas Syngas on May 14, 2009. ECF No. 1-3, at 19. Texas Syngas negotiated a deal with the Central Louisiana Electric Company (CLECO) in early 2008, for a tO-reactor plant to begin operations in the fall of20l2. ECF No. 1·3. at 18. In the summer of 2008, Preston claimed that he had secured .$30 million in financing through C Change, but the money never materialized. ECF No. 1-3, at 18. By 2009, Texas Syngas needed additional funding. Von der Goltz raised a total of $6,104,000.00 from friends, family, and business associates. ECF No. 1-3, at 20. These investors, who included the remainder of the Intervenors ("Note Holder Intervenors"), were issued convertible promissory notes, which provided for automatic conversion into common shares at a 20% discount if the oompany obtajned qualified financing from a single investor of at least $5 million on or before September 30, 20 I 0. ECF No. 1·3, at 20. Preston and Sydow represented to the Note Holder Intervenors that the company was worth $300 million as of2009, based on the value of the technology and the CLECO contract and prospective contracts with the Turkish national coal company. ECF No. 1-3, at 21, 26. The prospective Turkish contracts were 8/31 213 to be obtained through the efforts of von der Goltz and Dr. Aydin Muderrisoglu. ECF No. 1-3, at 26. However, the CLECO contract had already been canceled. Preston and Sydow did not disclose the cancellation of the contract. ECF No. 1-3, at 21. Preston and Sydow represented that the money would be used primarily to build the test reactor. ECF No. 1-3, at 21 . The Intervenors allege that Preston and Sydow had no intention of using shareholder money as represented to the shareholders. ECF No. 1-3, at 19. While they controlled the board of directors, they "made sure that the bulk of the money actually went to them or to several of their related entities, rather than to build the demonstration reactor." ECF No. 1-3, at 19. C Change, Preston's company, was "apparently" paid a $40,000 per month consulting fee. ECF No. 1-3, at 19. Sydow and Preston had the company pay tens of thousands of dollars every month to lawyers and consultants and for other expenses that did not benefit the shareholders or the corporation, but instead benefited Sydow and Preston. ECF No. 1-3, at 19-20. Although Sydow had agreed to devote all ofhis time to Texas Syngas when he was hired as CEO, he continued practicing law, spending most of his time on his own law practice and using Texas Syngas employees to do work for his firm. ECF No. 1-3, at 20. Also in 2009, Texas Syngas became NC12. ECF No. 1-2, at 11. Sydow and Preston managed the transfer of assets and liabilities to the new entity. ECF No. 1~2. at 11. TSl was dissolved. ECF No. 1-2, at 11. Sydow remained as CEO and was joined on the board of directors by von der Goltz and Muderrisoglu. ECF No. 1-3, at 22. In March 2009, C Change Investments, Preston's investment company, acquired a small interest in NC12. Through 2009, Preston and Sydow developed the prospects for a Louisiana 9 I 31 214 production facility, and Collins oversaw research and development of the reactor in Fall River. ECF No. 1-2, at 11. Collins began having problems with contractors at the Fall River facility by late .2009. ECF No. 1-2, at 11. One contractor placed a stop on all work until NC12 paid over $1.2 million in past due invoices. Von der Goltz began investigating the funding issues, contacting an accountant to review NC J2's financial records. ECF No. 1-2, at 12. The accountant did a limited review of the Fall River accounting process and then requested a set of books for NC12. ECF No. 1-2, at 12. After obtaining the Quickbooks file, the accountant raised concerns about NC12's use of funds, including large amounts ofprofesstonal fees and expenses. ECF No. 1-2, at 12. The accountant recommended a forensic audit and noted that very linle of the money raised had been spent on developing the reactor at the Fall River facility. ECF No. l -2, at 12. Instead, much of the money had been spent on travel, offices, professional fees, outside consultants, and undisclosed lease payments for an airplane. ECF No. 1-2, at 12; ECF No. 1-3, at 23 . Collins and von der Goltz were aligned. After von der Goltz delivered the audit request to Sydow, Sydow obtained an injunction in Montgomery County against Collins. ECF No. 1-2, at 12. Sydow removed Collins from all company operations in August 2010 and closed off access to company records. ECF No. 1-2, at 12. Sydow and Preston removed Collins, von der Goltz, and Muderrisog1u as directors and named Christoph Henkel as a director. ECF No. 1-2, at 12; ECF No. 1-3, at 25. Sydow, Preston, and Henkel, as a board, voted to ftre Collins and bar him from company property. ECF No. 1-3, at 25. The board also revoked all access to company bank accounts and records for von der Goltz and Muderrisoglu. ECF No. 1-3, at 25. As a result of Preston, Sydow, and Henkel's takeover, NC121ost the Turkish contracts. 10 I 31 215  About $300,000 remained to be paid to vendors for the cost of the reactor. After Sydow. Preston, and Henkel fired Collins, all progress on the reactor halted, and the board refused to pay the outstanding bills. A vendor repossessed the reactor and sold it for scrap. ECF No. 1-3, at 29. Preston, Sydow, and Henkel, along with their companies, worked with Sonia Lo and Chalsys Capital Partners, LLP, to strip NC12 of its assets and transfer the assets to Meliora Energy Technologies, S.A.R.L., a Luxembourg limited liability company established on September 14, 2010 and controlled by Sydow, Preston, Henkel and Lo and owned by C Change, Chalsys, and Henkel. ECF No. 1-2, at 12-13; ECF No. 1·3, at 27. Sydow, Preston, and Henkel represented to shareholders that Meliora would provide a $1.5 million bridge loan to NC12, along with a commitment of an additional $5 million investment, in exchange for the license to use NCI2's technology in Europe, Asia, and Africa. ECF No. 1-3, at 27. However, Sydow, Preston, and Henkel assigned all ofNC12's technology to Oscura, Inc. , a company believed to have been created and controlled by Sydow, on September I, 2010. ECF No. 1·3, at 28. Oscura assigned the patents to Meliora via a security agreement. ECF No. 1·3, at 28. Meliora began paying Sydow a monthly fee of$15,000. ECF No. 1-3, at 28. Meliora 's supposed $5 million financing resulted in the automatic conversion of the promissory notes into common shares. The conversion diluted the "old" shareholder group's ownership from 100% to 30.3%. ECF No. 1-3, at 28. However, Meliora never made the $5 million investment. ECF No. 1·3, at 28. According to the Intervenors, it is believed that NC12 received no more than $500,000 for its patented technology. ECF No. 1-3, at 28. In December 2010, all employees of NC12 were terminated and all business operations ceased. ECF No. 1-3, at 28. 11 /31 216  In May 2011, Fall River Realty sold the Fall River facility to Brilliant Novelty, LLC for $2.6 million. Lohnes and Preston are members and managers of Brilliant Novelty, and Brilliant Novelty obtained a $2.6 million mortgage on the property. ECF No. 1-2, at 13. Sydow fi led a certificate of vote stating that the Fall River Realty shareholders had approved the transaction. However, Collins, the majority shareholder in Fall River Realty, was never consulted about the sale. ECF No. 1-2, at 13. On October 14, 201 1, Sydow caused a voluntary chapter 11 petition to be filed on behalf ofNC12. The petition states that NC12 has no assets. ECF No. 1-3, at 29. Ana lysis If a cause of action belongs to the estate, then the Trustee has exclusive standing to assert the claim. Schertz-Cibolo-Universal City, Jndep. Sch. Dist. (In re Educators Grp. Health Trust), 25 F.3d 1281, 1284 (5th Cir. 1994). If, on the other hand, a cause of action belongs to the Plaintiffs and Intervenors, the Court must consider whether it has subject matter jurisdiction over the claims. lf the Court lacks subject matter jurisdiction over claims because the claims do not relate to NC12's bankruptcy, then the Court must remand the claims. lf the Plaintiffs and lntervenors lack standing to bring claims, the Court must dismiss the claims for Jack of subject matter jurisdiction. See Highland Capital Mgmr. LP v. Chesapeoke Energy Corp. (In re Seven Seas Petroleum), 522 F.3d 575, 583 (5th Cir. 2008) ("If the claims belong to the estate, then it was not error for the bankruptcy court to deny remand (because it has jurisdiction over all property of the estate) and dismiss the claims (because the trustee has exclusive standing to assert claims belonging to the estate).")~ Cobb v. Cent. States, 461 f .3d 632, 63 5 (5th Cir. 2006) ("[T]he issue of standing is one of subject matter jurisdiction."). 12 /31 217  Whether a particular cause of action belongs to the estate depends on whether under applicable state Jaw the debtor could have raised the claim as of the commencement of the case. Educators Grp., 25 F.3d at 1284. If a cause of action alleges only indirect hann to a creditor (i.e., an injury that derives from hann to the debtor), and the debtor could have raised a claim for its direct injury under the applicable law,then the cause of action belongs to the estate. ld NC12 is incorporated under Nevada Jaw. Nevada law therefore governs the internal affairs of NCJ2. Tex. Bus. Org. Code § 1.102 ("[T]he law of the state (in which an entity is fonned] . . . governs the fonnation and internal affairs of the entity.''); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941) (holding that a federal court sining in diversity applies the conflict of laws rules of the forum state); Hollis v. Hill, 232 F.3d 460, 465 (5th Cir. 2000) (applying Texas choice of law rules and concluding that Nevada law governs internal affairs of corporation incorporated in Nevada); Reed v. Linehan (In re Soporex, Inc.), 463 B.R. 344, 396 (Bankr. N.D. Tex. 2011) (applying Texas choice of law rules, which provide that internal affairs of a foreign corporation a governed by the law of the state of incorporation). Although the Court first considers whether NC12 could have raised claims outside of bankruptcy, the Coun also looks at the underlying injury for which relief is sought. (S)ome claims that are usually brought by creditors outside of bankruptcy (and thus in a sense may be said to "belong to" the creditors and not the debtor) are nonetheless vested exclusively in the trustee in bankruptcy. This is so not merely because the claims are common to a number of creditors, but because they ultimately seek to recover assets of the estate that are not under the debtor' s control-by reason of a fraudulent transfer, for instance, or because of the existence of separate corporate entities that are a sham. Seven Seas, 522 F.3d at 589. 13/31 218  The Trustee's exclusive standing protects the Bankruptcy Code's djstribution scheme. ''Since one of the goals of the Bankruptcy Code is to preserve property of the bankruptcy estate and ensure that similarly situated creditors receive equal distributions, if a cause of action belongs to the debtor, only the trustee or debtor in possession may pursue it." In re Cabrini Med Ctr., 2012 WL 2254386., at *6 (Bankr. S.O.N .Y. June 15, 2012) (citing S.I. Acquisition, Inc. v. Eastway Delivery Serv., Inc. (In re S.I. Acquisition, Inc.), 817 F.2d 1142. 1152 (5th Cir. 1987)) (citations omitted). If claims are not owned by the bankruptcy estate, the Court must consider whether it bas subject matter jurisdiction over the claims. The Bankruptcy Court's subject matter jurisdiction is limited to bankruptcy cases and proceedings that arise under the Bankruptcy Code, arise in a bankruptcy case, or are related to a bankruptcy case. 28 U.S.C. § 1334. The Court therefore has subject matter jurisdiction only over claims that arise under the Bankruptcy Code, arises in the NCI2 bankruptcy case, or are related to NC12's bankruptcy case. A proceeding arises under the Bankruptcy Code when a plaintiff asserts a right created by the Bankruptcy Code. Wilborn v. Wells Fargo Bank (In re Wilborn), 609 F.3d 748, 752 (5th Cir. 2010). When a plaintiff asserts a claim that could not exist outside of bankruptcy, tbe proceeding arises in a bankruptcy case. Id An action is related to a bankruptcy case if the outcome could conceivably affect the bankruptcy estate. Edge Petroleum Operating Co. v. GPR Holdings, LLC (In re TXNB Internal Case), 483 f .3d 292, 298 (5th Cir. 2007). "Certainty is unnecessary; an action is 'related to' bankruptcy if the outcome could alter, positively or negatively, the debtor's rights, liabilities, options, or freedom of action or could influence the administration of the bankruptcy estate." /d. 14/31 219  If the Court has only "related-to" jurisdiction over a claim, the claim may be subject to mandatory abstention. Mandatory abstention applies when a proceeding: (i) is based upon a state law claim or state law cause of action; (ii) is related to a bankruptcy case but not arising under the Bankruptcy Code or arising in the bankruptcy case; (iii) could not have been commenced in a federal court other than through bankruptcy jurisdictjon; and (iv) was commenced and can be timely adjudicated in a state court. 28 U.S.C. § 1334(c)(2). Even if the requirements for mandatory abstention are not met, the Court may discretionarily abstain from hearing a proceeding "in the interest of justice, or in the interest of comity with State courts or respect for State law." 28 U.S.C. § l334(c)(l). "Nothing ... prevents a court from permissively abstaining under§ 1334(c)(l) where some, but not all, of the requirements for mandatory abstention are met. The decision to abstain or not to abstain is committed to the discretion of the district court[.]" Gober v. Terra + Corp. (In re Gober), 100 F.3d 1195, 1207 (5th Cir. 1996). ln exercising its "broad discretion" to decide whether to abstain under§ 1334(c)(l), a court may consider the following non-exclusive factors: (1) the effect or lack thereof on the efficient administration of the estate; (2) the extent to which state law issues predominate over bankruptcy issues; (3) the difficult or unseuled nature of applicable law; (4) the presence of related proceeding commenced m state court or other oonbankruptcy proceeding; (5) the jurisdictional basis, ifany, other than§ 1334; (6) the degree of relatedness or remoteness of proceeding to main bankruptcy case; (7) the substance rather than the fonn of an asserted core proceeding; (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court; lS I 31 220  (9) the burden of the bankruptcy docket; (10) the likelihood that commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties; ( 11) the existence of a right to a jury trial; (12) the presence in the proceeding of non-debtor parties; ( 13) comity; and (14) the possibility of prejudice to other parties in the action. Shipley Garcia Enters .. LLC v. Cureton, 2012 WL 3249544, at •12 (S.D. Telt. Aug. 7, 2012) (quoting Ramirez v. Rodriguez (In re Ramirez), 413 B.R. 621. 631·32 (Bankr. S.D. Tex. 2009)). Intervenors' Shareholder Oppression Claim To detennine whether the shareholder oppression claim is property of the estate, the Court looks at whether, under state law, the claim could have been asserted by NC12 and whether, under the test set forth in Educators Group and Seven Seas, the Intervenors assert an injury that is not merely derivative of injury to NC12. NC12 could have asserted any claims that, under Nevada state law, enforced the corporation's rights. This is true both for rights nonnally enforced directly by the corporation or nonnally enforced through a shareholder derivative action. See San Mateo Plaintiffs v. At Home Corp. (In re At Home Corp.), 154 F. App'x 666, 668 (9th Cir. 2005) ("A bankruptcy court may enjoin a derivative claim brought by shareholders because the claim is the property of the bankrupt estate."); Jn re AgriBioTech, 319 B.R. 216, 223 (D. Nev. 2004) (holding that, pre· bankruptcy, a breach of fiduciary duty claim had belonged to the corporation, because the claim was enforceable directly by the corporation or through a derivative action) (citing Pepper v. Litton, 308 U.S. 295, 306-07 (1939)); Sobchak v. Am. Nat '/ Bank & Trust Co. of Chicago (In re 16 I 31 221 Ionosphere Clubs, Inc.), 17 F. 3d 600, 604 (2d Cir. 1994) (holding that claims that were classified as derivative under Delaware law, the governing law, belonged exclusively to the bankruptcy estate). Therefore, the Court ftrst examines Nevada Jaw. Under Nevada law, allegations of generalized injury to the corporation give rise to a derivative claim, not a direct claim. See Cohen v. Mirage Resorts, Inc., 62 P.3d 720, 734 (Nev. 2003) ("This is hann to the corporation, shared by all stockholders and not related to an individual stockholder. To the ext.ent these allegations were intended to state a cause of action, the district court was correct in dismissing the allegations as derivative claims barred by lack of standing."). The Court therefore looks at the nature of the injury alleged to detennine whether the action was derivative under Nevada law-and thus, assuming it was a valid claim, could have been asserted by NC12. The parties have extensively argued the issue of whether Nevada Jaw recognizes a claim for shareholder oppression and whether such a claim would be a direct claim. Two federal cases-one from the Fifth Circuit and one from the District ofNevada-predict that the Nevada Supreme Court would recognize a claim for shareholder oppression. Hollis, 232 F.3d at 468 (holding that there was ''strong indication that the Nevada Supreme Court would find fiduciary obligations between shareholders in a corporation such as FFUSA operated by shareholder· djrectors''); Simon v. Mann, 373 F.2d 1196, 1199- 1200 (D. Nev. 2005) (holding that shareholders of a closely-held corporation could assert a direct suit against majority shareholders). In 2011, however, the Nevada Supreme Court stated in dicta that "Nevada does not recognize a cause of action for abuse of control, and in the case to which appellants cite, claims for abuse of control are essentially claims for breach of the fiduciary duty of loyalty." In re Amerco Deriv. Lirlg., 252 P.3d 681,700 n. ll (Nev. 2011). 17/31 222  It is unclear whether the "abuse of control" cause of action referred to in Amerco is the same cause of action that the courts in Hollis and Simon predicted the Nevada Supreme Court would recognize. Because this area of Nevada law is uncertain, the Court does not make an Ullllecessary pronouncement of whether there is a shareholder oppression claim under Nevada law and, if so, whether such a claim is available to shareholders of NC12. The Court merely conclude.s that under Cohen, the specific injuries pleaded by the Intervenors in this case should be classified as derivative, not direct. The EdrJcators Group and Seven Seas test produces the· same result. If the nature of the alleged injury is purely derivative of injury to NC12, the claims are property of the estate even if they could nonnally be asserted by creditors outside of bankruptcy. Seven Seas, 522 F.Jd at 589; see Schimmelpenninck v. Byrne (In re Schimme/penninck), 183 F.3d 347, 355 (Stb Cir. 1999) (holding that even though alter ego and veil-piercing claims are typically brought by a creditor, corporations can bring such claims on their own behalf and in bankruptcy, the claims may be asserted only by the estate) (ching S./. Acquisition, 817 F.2d at 1152). The Intervenors' shareholder oppression claim in this case is property of the estate. ln their statement of the shareholder oppression cause of action, the Intervenors assert that the Defendants oppressed them as shareholders by: • Taking control of the corporation, stripping it of its assets for their own personal gain, misappropriating corporate assets, and self-dealing; • Secretly and questionably removing von der Goltz and Muderrisoglu, who were reputable, independent of Preston and Sydow, and trusted by the shareholders, in direct violation of a previous agreement among a super-majority of the shares; and • Thwarting investigative efforts into the company's accounting practices. 18 I 31 223 ECF No. 1·3, at 31-32. The Intervenors seek the following remedies: • A court-ordered buy-out of their shares at a fair price; • Actual and exemplary damages; • Disgorgement; • Restitution; • Other equitable relief; and • Punitive damages. ECF No. 1-3, at 32. Even if Nevada Jaw allows a claim for shareholder oppression, any claim based on the Defendants' alleged stripping of corporate assets is property of the estate. Any injury suffered by the alleged misappropriation, asset-stripping, and self-dealing was derivative of the harm to NC 12. The Intervenors may seek damages for the violation of their shareholder rights, but only for damages not derivative of damages to the corporation; they may not seek damages for dilution of corporate value due to the alleged stripping or misappropriation of corporate assets. Any claim for damages due to stripping or misappropriation of corporate assets belongs to the estate and may be asserted only by the Trustee. The alleged violation of the shareholders' rights by the removal of von der Goltz and Mudenisoglu and the alleged thwarting of shareholders' rights to investigate accounting practices do not give rise to direct claims. Although it is possible that a loss of shareholder influence or the violation of shareholders' investigative rights could result in a direct injury to shareholders, the Intervenors have not stated such circumstances here. The Intervenors do not allege any particularized injury arising from the removal of von der Goltz and Mudenisoglu independent of the hann caused to the corporation-e.g., through the alleged loss of the Turkish 19 / 31 224 contracts. Because all injuries allegedly caused by the removal of von der Goltz and Muderrisoglu were incurred by the corporation, and any injury to the shareholders was derivative of the injury to NC12, the claim belongs to the estate. Similarly, the alleged injury from the thwarting of investigative efforts was the inability to discover and remedy banns to the corporation caused by the misappropriation of assets and self--dealing. This injury is derivative of the injury to the corporation and therefore belongs to the estate. The shareholder oppression claim is property of the estate. Therefore, it is dismissed for lack of standing. Plaintiffs' and Intervenors' Breach of Fiduciary Duty Claims The Plaintiffs and Intervenors allege that the Defendants breached their fiduciary duties to NC12 by self-dealing and mismanagement. The Plaintiffs refer to their general allegations of mismanagement and assert that the Plaintiffs are, "as shareholders of NCl2, . . . entitled to recover from [the Defendants] their proportionate share of economic injuries in an amount in excess of the jurisdictional minimum of this court." ECF No. 1-2, at 14 (emphasis added). The Intervenors refer to their general allegations of mismanagement and also allege three specific breaches of fiduciary duty: • Sydow's theft and misappropnatlon of corporate assets, including but not limited to use of corporate funds to pay for hjs private plane, use of corporate resources for his law practice without compensation to the company, the use of corporate funds for personal expenses, and bogus fees for lawyers, consultants, and services that did not benefit NCI2; • Failure to transfer title of the Fall River property to the corporation and instead transferring it to an entity in which Sydow and Preston held an individual interest, and charging tbe corporation rent for use of its own property; 20 I 3 I 225  • Transfer of the technology of the corporation-its most valuable asset, worth hundreds of millions of dollars- for grossly inadequate consideration to an entity in which Sydow, Preston, and other Defendants had individual interests. ECF No. 1-3, at 30. Neither the Plaintiffs' general allegations of mismanagement nor the Intervenors' specific alleged breaches of fiduciary duty involve any alleged injury directly to the shareholders. All of the Plaintiffs' and Intervenors' allegations pertain to injuries to NC12 . The generalized allegations of mismanagement and self-dealing, which refer back to the Plaintiffs' and Intervenors' overall narrative ofNC12's collapse, all relate to injuries to the corporation. There is no indication of any hann to shareholders other than the hann to the corporation. Similarly, the specific alleged breaches of fiduciary duty do not state any injury to shareholders other than through the corporation. The alleged then and misappropriation of corporate assets is an alleged injury to NC12, not the shareholders. Similarly, the alleged failure to transfer title of the Fall River property to NCI2 is an alleged injury directly to NC12. Finally, the alleged transfer of NCI2's technology is an alleged hann to NC12; the only hann to the shareholders is derivative of the alleged hann to NC 12. The essence of Plaintiffs' and (ntervenors' breach of fiduciary duty claims is that the Defendants stripped NC 12 of assets to the detriment of NC 12's creditors and shareholders. The claims are fundamentally derivative, predicated on injury to NC12, not on injury to individual Plaintiffs or Intervenors. The Plaintiffs' complaint states that the shareholders' injury as a result of the economic hann to NC12 is ''proportionate." Such proportionate injuries must be recovered through the estate. 21 I 31 226  The breach of fiduciary duty claim is property of the estate. Only the Trustee has standing to assert the claim, and therefore the Court dismisses the claim for lack of subject matter jurisdiction. The Plaintiffs' claim for aiding and abetting breach of fiduciary duty is dependent on the underlying breach of fiduciary duty claim. Because the breach of fiduciary duty claim is property of the estate, the aiding and abetting claim is also property of the estate. Deep Marine Holdings, Inc. v. FLI Deep Marine LLC (In re Deep Marine Holdings, Inc.), 2011 WL 2420274, at •t 0 (Bankr. S.D. Tex. June 13, 20 11) (''The aiding and abetting claims are derivative claims to the extent that the actions that were aided and abetted resulted in derivative injuries[.]"). Intervenors' Statutory and Common Law Fraud Claim The Intervenors allege that the Defendants made false representations upon which the Intervenors relied when they invested in NCI2. ECF No. 1-3, at 21, 32-33. The Intervenors allege that the Defendants solicited investments by fal sely representing that the company was worth $I 00 mill ion and, later, $300 million, that the corporations would use the investment money to build the reactor, and that the CLECO deal was in place when it had been cancelled. ECF No. 1-3. at 32-33. The Intervenors allege that they ..suffered actual damages proximately caused by Preston and Sydow's fraud ." The Trustee concedes that the securities fraud claims, as pleaded, are direct claims owned by the Intervenors. The Court agrees. The Fifth Circuit held in Seven Seas that a conspiracy to defraud claim based on allegations thnt defendants employed material misrepresentations to induce potential investors to acquire unsecured notes was "a direct injury to the bondholders that was independent of any injury to Seven Seas." 522 F.3d at 586. The Fifth Circuit further noted that it "doubt[ed] that, 22/31 227 under applicable state law, Seven Seas could have raised either claim as of the conunencement of the bankruptcy case." /d. The bondholders' fraud claims were therefore property of the bondholders, not the bankruptcy estate. The Intervenors' fraud claims are similar; the only material distinction is that the Seven Seas claims were brought by bondholders and the Intervenors are shareholders of NC12. Because the lntevenors are shareholders, their fraud claim is based on the alleged diffe.rence between the price they paid in reliance on the alleged misrepresentations and the actual value of NC12's shares at the time of their investment. The Intervenors may not recover damages for the difference between the price they paid for the shares and what the shares would have been worth if not for the atleged post-purchase misconduct in the operation of the corporation. However, they may recover damages for the amount they allegedly overpaid as a result of Sydow and Preston's alleged misrepresentations.' With these Limitations, the Intervenors' claims for harm due to fraudulently induced investment are independent of any harm directly to NC12; indeed, NC12 benefited from the Intervenors' investments by having their cash. Because the Intervenors' fraud claims allege an injury to the Intervenors that is not merely derivative of the alleged harm to NC12, the Intervenors own the claims resulting from fraud or misrepresentations that occurred at the time that they made their investment. The Court discrctionarily abstains from hearing the Intervenors' fraud claim because it is only remotely related to the NC12 bankruptcy case. The Defendants argue that the claim is related to the bankruptcy case because the Intervenors' p-otential recovery may draw from NC12's directors and officers' Liability policy. 1 The Intervenors do not state, and this Court does not decide, which jurisdiction's law govern¥ their fraud claims. The Court's ruling regarding the recoverable damages relates $Oiely to the Issue of which injuries give rise to claims belonging to the Intervenors. The Court does not rule on the ap·propriate measure of damages for the Intervenors' frilud claims. 23/31 228 NC12's insurance policy with Philadelphia Indemnity Insurance Company covers both the corporation and its directors and officers against losses due to claims against the directors and officers or against NC12 relating to alleged malfeasance by directors and officers. ECF No. 30, at 31. The policy's proceeds are capped at $1,000,000.00, with an additional $1,000,000.00 available for defense fees. ECF No. 30, at 15, 56. Because the proceeds are capped at $1,000,000.00, the Defendants argue, any recovery by the Intervenors will reduce the amount available to NCI2 for its own claims against directors and officers. Insurance proceeds that are applied to a claim against directors and officers are not property of the estate, and actions to collect such proceeds are not barred by the automatic stay. See Unsecured Creditors Disbursement Commilfee v. Antill Pipeline Con.str. Co. (In re Equinox Oil Co.), 300 F.3d 614, 618 (5th Cir. 2002) (" An insurance policy owned by the debtor is generally considered property of the estate. But, whether the proceeds of a particular insurance policy is property of the estate depends on the nature of the policy.") (citing In re Edgeworth, 993 F.2d 51, 55 n. I3 (5th Cir. 1993)). "The overriding question when determining whether proceeds are property of the estate is whether the debtor would have a right to receive and keep those proceeds when the insurer paid on a claim. When a payment by the insurer cannot inure to the debtor's pecuniary benefit, then that payment should neither enhance nor decrease the bankruptcy estate." Edgeworth, 993 F.2d at 55. The Philadelphia Indemnity policy applies to claims against the directors and officers or against NC12. ECF No. 30, at 31. The policy provides liability coverage for the directors and officers and NCl2 and indemnity coverage for NCI2 for claims against the directors and officers. Although NC12 could be the beneficiary of the indemnity coverage, any payment to the directors and officers for liability coverage would offset a potential indemnification claim. See 24 I 31 229 Louisiana World Exposition. Inc. v. Federal Ins. Co. (Ln re Louisiana World Exposition, Inc.), 832 F.2d 1391, 1400 (5th Cir. 1987) (holding that proceeds were not property of the estate, despite cap on the total of liability and indemnity coverage, where ''any payment under the liability coverage reduces the amount of the potential indemnification claim to the same extent that policy amounts available for indemnification are thus reduced. There is not the potential for increasing the estate's exposure by payment of liability proceeds due."). NCI2 would not have a right to receive and keep the proceeds of claims against the liability coverage for losses caused to third parties (such as the Intervenors) by the directors and officers. See Edgeworth, 993 F.2d at 56 (''[U]nder the typical liability policy, the debtor will not have a cognizable interest in the proceeds of the policy. Those proceeds will normally be payable only for the benefit of those harmed by the debtor under the tenns of the insurance contract.''). The estate could have a right to receive proceeds on account of its own claims against the directors and officers. However, the estate has only a contractual right to recover if certain conditions are met; the proceeds do not become property of the estate until the contractual conditions are met. MOXlve/1 v. Meglioga (Jn re mard1FIRST, Inc.), 288 B.R. 526, 530 (Ban.kr. N.D. 111. 2002) ("The Debtors had and the Trustee has contractua1 rights governed by the terms of the insurance policies. Unless and until the terms are met, which they may never be, the proceeds are not property of the estate.''). The directors and officers' liability proceeds are not the kind of proceeds that Edgeworth holds may be included as property of the estate. 993 F.2d at 56 ("E~amples of insurance policies whose proceeds are property of the estate include casualty, collision, life, and fire insurance policies in which the debtor is a beneficiary. Proceeds of such insurance policies, if made 25 I 31 230 payable to the debtor rather than a third party such as a creditor, are property of the estate and may inure to all bankruptcy creditors."). The policies listed in Edgeworth are those for which the debtor is the designated beneficiary and the party to whom proceeds would be paid. This is not the case with the NC12's directors and officers' liability coverage. 'The estate may be entitled to proceeds from the policy, but so may other parties. If the estate recovers from the directors and officers' liability coverage, its recovery will be on the same tenns as other injured parties' recovery. The estate's owners.hip of the policy does not affect the outcome. The estate does not have a greater interest in the proceeds than any other person suing on an indemnified claim, See Boles v. Turner (In re Enivid, Inc.), 364 B.R. 139, 157 (Bankr. D. Mass. 2007) (denying liquidating trustee's motion for an injunction to prevent shareholders from entering into a settlement of fraud claims against directors and officers where the settlement was payable from the directors and officers' liability policies and might affect trustee's ability to recover); Reliance Acceptance Grp.. Inc. v. Levin (In re Relianct Acceptance Grp.• lnc.), 235 B.R. 548, 561 (D. Del. 1999) ("The difficulty the Debtors have is in identifying a right to the relief: tbat is, they have been unable to identify a legal principle tbat stands for the proposition that the Estate's claims for relief should take precedence over the Sbarebol~ers• claims."). Because the estate does not own the proceeds, the Court must consider whether the potential diminution of the proceeds is sufficient to establish related-to jurisdiction. The burden is on the Defendants, as the removing pames. to establish federal jurisdiction. DaimlerChrysler Corp. v. Cuno, 541 U .S. 332, 342 n.3 (2006) ("[T]he party asserting federal jurisdiction when it is challenged bas the burden of establishing it."). Even if the Jntervenors prevrul and collect against the insurance proceeds, their claim will affect the estate only if (i) there are not sufficient funds remaining under the insurance policy to satisfy the estate's claims; 26 / 31 231 and (ii) the estate successfully asserts claims against directors and officers;1 and (ill) the directors or officers have insufficient assets to satisfy the claims. The Court recognizes the possibility that (i) the Intervenor's claim could exhaust the insurance policy; and (ii) the estate could prevail against the Defendants; and (iii) the Defendants could have inadequate other resources to pay a judgment. Should these events occur, the outcome of the shareholder oppression claim could affect the amount of proceeds available to the estate for its own claims against officers and directors. This remote effect is, at most, on the outer fringes of the Court's related-to jurisdiction. SeeFeld v. Zale Corp. (In re Zale Corp.), 62 F.3d 746, 752 (5th Cir. 1995) (noting that a bankruptcy court's related-to jurisdiction "cannot be limitless'' and stating that an action "is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options. or freedom of action (either positively or negatively) and ... in any way impacts upon the handling and administration of the bankruptcy estate.") (quoting Walker v. Cadle Co. (In re Walker), 51 F.3d 562, 569 (5th Cir. 1995)). However, a related proceeding's effect on the bankruptcy estate may be contingent. See TXNB Internal Case, 483 F.3d at 298 (holding that court had related-to jurisdjction over a dispute between two non-debtor parties when, depending on the outcome, either the defendant or the debtors owed money to the plaintiff). The Court cannot conclude that the outcome of the fraud claims could have no "conceivable effect" on the estate. See Randall & Blake. lnc. v. Evans (In re Canion), I 96 F.3d 579, 587 (5th Cir. 1999) ([nhe law is well established in this Circuit, as in others, that, when tt:sting 'related to' jurisdiction, an effect is not required to a certainty. Rather, jurisdiction will attach on a finding of any conceivable effect."). Contingent or tangential effects may be 2 The Trustee has sued Michael Collins in a separate adversary proceeding. Jt is unclear whether the claim against Collins would be covered by the Philadelphia Indemnity policy. 27 / 31 232 sufficient in the Fifth Circuit to establish related-to jurisdiction. /d. at 587 n.30 ("[E]ven a proceeding which portends a mere contingent to tangential effect on a debtor's estate meets the broad jurisdictional test[.]") (quoting National Union Fire Ins. Co. v. Titan Energy, Inc. (In re Titan Energy, inc.), 837 F.2d 325, 330 (8th Cir. 1988)). The Court does not apply mandatory abstention, because there is no evidence before the Court as to whether the fraud claims could be timely adjudicated before the state court. See Carriage Credit Corp. v. Flanagan (In re Draper), 2010 WL 4736168, at *3 (Bankr. S.D. Tex. Nov. 15, 2010) C'A party moving for mandatory abstention must provide the court with more than a 'naked assertion' that the action can be timely adjudicated in state court.") (quoting Mugica v. Helena Chern. Co. (ln re Mugica), 362 B.R. 782, 793 (Bankr. S.D. Tex. 2007)). Nevertheless, the Court discretionarily abstains from hearing the fraud claims. See Shipley Garcia Enters., 2012 WL 3249544, at *12 (listing non-exclusive factors a court may consider in exercising its "broad discretion'' to abstain under 28 U.S.C. § 1334(c)(l )). The fraud claims, at most, remotely relate to the bankruptcy proceedings, and the efficient administration of the estate will not be affected by the remand. The estate is not a party to the litigation. It is true that the depletion of the insurance proceeds may affect the estate; however, the Court does not have the authority to prevent this effect. There is no jurisdictional basis other than bankruptcy related-to jurisdiction, and the claim involves solely state law issues. Moreover, this Court's constitutional authority to enter a final judgment with respect to the fraud claim is doubtful under Stern v. Marshall, 131 S.Ct. 2594, 2620 (20 11 ). The Court therefore remands the Intervenors' fraud claims. 28 I 3J 233 Collins' Conversion Cl11im Michael Collins' conversion claim against Sydow, Preston, C Change Investments, and Brilliant Novelty may be either direct or derivative, depending on whether Collins has an interest in Fall River Realty. Collins alleges that he suffered damages from the sale of the real property as an owner of Fall River Realty. Collins seeks actual and exemplary damages. The Trustee concedes that Collins' conversion claim, as currently pleaded, is a direct claim. ECF No. 25, at 9. If Collins is an owner of Fall River Realty, this conclusion is correct. However, the Trustee contends in Adv. No. 12-3266 that lOO% of Fall River Realty is owned by the estate. In that adv.ersary proceeding, the Trustee seeks declaratory judgment against Michael Collins, Ellen Collins, and BOS, Inc. stating that no Defendant owns an interest in Fall River Realty or the Fall River property. The Trustee also seeks a judgment that the Fall River property is subject to a resulting trust in favor of the Trustee for the benefit of the bankruptcy case. Jf the estate is the owner of I 00% of Fall River Realty, any claim for conversion of an interest in Fall River Realty belongs to the estate. Property that is "arguable property" of the estate is protected by the automatic stay from unilateral action by creditors. Brown v. Chesnut (In re Chesnut), 356 F. App' x 732, 734 (5th Cir. 2009) (citing Brown v. Chesnut (In re Chesnut), 422 F.3d 298, 303-04 (Stb Cir. 2005)). Because the TnJstee's compJajnt asserts a plausible claim, as between the estate and Collins, to ownership of Fall River Realty, Fall River Relllly is arguable property of the estate. Claims for conversion of interests in Fall River Realty are therefore also arguable property of the estate. The Court will not presently remand the conversion claim, because Collins' pursuit of the conversion claim in state court would violate the automatic stay. At the same time, if the claim 29 I 31 234 is actually owned by Collins, the Court may lack subject matter jurisdiction or the claim may be so remotely related to the NC12 bankruptcy that the Court should discretionarily abstain. The Court therefore abates consideration of the conversion claim or its remand pending the resolution of Adv. No. 12-3266. Intervenors' Conspiracy Claims The Intervenors' claim for conspiracy to commit fraud and breach of fiduc iary duty is dependent on the underlying claims. Because the underlying breach of fiduciary duty claim is property of the estate, the conspiracy to commit breach of fiduciary duty claim is also property of the estate. See Deep Marine Holdings, 2011 WL 2420274, at •to (holding that aiding and abening claims were property of the estate where the underlying conduct gave rise to a claim that was property of the estate). The Court dismisses the conspiracy to commit breach of fiduciary duty claim for lack of st.anding. Because the remanded fraud claim is the Intervenors' property, the Intervenors own the claim for conspiracy to defraud. See Seven Seas, 522 F.3d at 585 (holding that conspiracy to defraud claim was owned by bondholders, not estate); Deep Marine Holdings, 2011 WL 2420274, at •t 0 (holding that aiding and abetting claims were not property the estate where underlying conduct did not give rise to a claim that was property of the estate). The Court lacks subject matter jurisdiction over the Intervenors' conspiracy to commit fraud claim. Therefore the Court remands the conspiracy to commit fraud claim. Conclusion The Court dismisses the following claims for lack of standing: • Plaintiffs' and Intervenors' claims for breach of fiduciary duty; • Intervenors' claim for shareholder oppression; and 30 / 31 235  • Intervenors' claim for conspiracy to commit breach of fiduciary duty. The Court remands the following claims: • Intervenors' claims for common law and statutory securities fraud and conspiracy to commit fraud; and • Intervenors' aiding and abetting claim related to the common law and statutory securities fraud . Plaintiff Michael Collins' conversion claim and the remand of the conversion claim are abated pending resolution of Adv. No. 12·3266. SIGNED August 28, 2012. a~--- Marvin ls;!;ic= UNITED STATES BANKRUPTCY JUDGE 31/31 236  IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION INRE: § § CASE NO: 11-38794 NC12,1NC. § CHAPTER 7 § Debtor(s). § JUDGEISGUR § § MICHAEL COLLINS, et aJ § § PlalntlfT(s), § § vs. § ADVERSARY NO. 11-3634 § SYDOW, eta/ § § Defendant(s). § ORDER The Court djsmisses the following claims: • Plaintiffs' and Intervenors' claims for breach of fiduciary duty; • Intervenors' claim for shareholder oppression; and • Intervenors' claim for conspiracy to commit breach of fiduciary duty. The dismissals are without prejudice to the Trustee's ability to assert the dismissed claims on behalf of the Estate. The Court remands the following claims to 215th Judicial District Court of Harris County, Texas: • Intervenors' claims for common law and statutory securities fraud and conspiracy to commit fraud; and • Intervenors' aiding and abetting claim related to the common law and statutory securities fraud. Michael Collins' conversion claim and the remand of the conversion claim are abated pending resolution of Adv. No. 12-3266. SIGNED August 28,2012. Marvin lsgur UNITED STATES BANKRUPTCY JUDGE Ill ~?PY 1 CERTIFY u,P~:~of~ ~Oar.. 237  7/31201 4 12:01.33 AM Chris Daniel - District Clerk Harris County Envelope No. 1717873 By· GAYLE FULLER Cause No. 2011-44058 MICHAEL COLLINS; ET AL., § IN TilE DISTRICT COURT P LAINTIFFS, § vs. § OF HARRIS COUNTY, TEXAS § MICHAEL SYDOW; ET AL., § DEFENDANTS. § 215th JUDICIAL DISTRICT AKILA FINANCE, S.A.; ET AL., § IN THE DISTRICT COURT INTERVENORS/PLAINTIFFS, § vs. § OF HARRIS COUNTY, TEXAS § MICHAEL SYDOW; ET AL., § D EFENDANTS. § 2 15th JUDICIAL DISTRICT INTERVENORS' RESPONSE TO THE SPECIAL APPEARANCES OF JOHN D. PRESTON, BRILLIANT NOVELTY, L.L.C., AND C CHANGE INVESTMENTS. LLC I. INTRODUCTION Intervenors sued John Preston ("Preston") alleging, among other things, that Preston fraudulently induced investments in Texas Syngas, Inc. ("TSl'') and NC12, Inc. ("NC12") while systematically misappropriating the invested funds and company assets for his personal gain. Preston's service as a director of and purported fund.raiser for TSI and NC12 unquestionably involved Texas and constituted doing business in this state - although incorporated in Nevada, TSI and NC12 have at all times called Houston, Texas home. The impact in Texas of Preston's fraudulent scheme, in which he was aided by his companies C Change Investments, LLC ("'C Changej and Brilliant Novelty, L.L.C. ("Brilliant Novelty"), is evident - NC12 is now the debtor in a chapter 7 bankruptcy pending in a federal bankruptcy court in Houston. Preston, C Change, and Brilliant Novelty (collectively, the " Preston Defendants") have purposefully established sufficient minimum contacts with Texas, through their contacts with TSI and/or NC12 as well as other Texas residents, sufficient to pennit the exercise of personal 257 jurisdiction over them in this Court. Moreover, the Preston Defendants• Special Appearances are unverified, and so fail to comply with TEx. R. C1v. P. 120a. Accordingly, the Preston Defendants' Special Appearance should be denied. II. BACKGROUND A. The Parties. NC12, Inc. ("NC12") was incorporated in Nevada in April 2008. Nevada Secretary of State records reflect that the original directors of NC12 were Preston, Michael D. Sydow (''Sydow") and Michael Collins ("Collins"). (See Exhibit A-l 1) . Sydow is also identified as the president ofNC12. (/d). The address given for Sydow and CoUins in the initial list of officers and directors is 4900 Woodway, Suite 900, Houston, Texas n056. (/d). Sydow, Preston, and Collins are identified as the NC12 directors again in NC12's May 2009 filing with the Nevada Secretary of State. (Id ). In 2009, NC12 acquired the assets of Texas Syngas. Inc. ("TSI''). TSJ was incorporated under the laws of the S1ate of Nevada in May 2006 and registered to do business in the State of Texas in June 2008. (See Exhibit A-2). TSI identified Preston, Sydow, Collins, and Christoph Henkel ("Henkel") as its directors in its Application for Registration filed with the Texas Secretary of State. (/d). TSI identified its principal office as 4900 Woodway. Suite 900, Houston, Texas 77056. (!d). NC12 registered to do business in Texas on August 28, 2009. (See Exhibit A-3). The company's principal office address is identified as 4400 Post Oak Parkway, Suite 2360, Houston, Texas 77027. (/d). The company directors identified in the Texas registration in 2009 were Sydow, Preston, and Collins. (/d). Both Sydow and Collins are Texas residents. The Affidavit of Kelley M. Keller, dated July 2, 2014, is attached hereto as Exhibit A and incorporated herein by reference. 2 258  NC12 filed for bankruptcy protection on October 14, 2011, under chapter 11. On February 28, 2012, the United States Trustee filed a motion to convert the case to chapter 7. On March 22, 201 2, NCI2 filed a response opposing the oonversion to chapter 7. The Bankruptcy Court granted the motion to convert on March 27, 2012. C Change and Brilliant Novelty are Preston's companies and participated in certain of the fraudulent acts of Preston.2 (See Pet. in lnterv. ~ 33). B. The Lawsuit. This action was filed in 2011 as a fraud and shareb.older oppression action by shareholders ofNC12. Intervenors joined the litigation, asserting claims based solely on their individual rights as investors in NC12. The Intervenors assert that Sydow and Preston, along with others conspiring with them, engaged in a fraudulent scheme to raise millions in investment dollars on behalf of TSI and then NC12 for the development of revolutionary new energy technology that Collins had developed for producing synthetic natural gas and other fuels from coal, while denuding the company of its assets- i1S valuable tecb.nology, research and development facility, and cash. Intervenors were left holding only their cLaims in the bankruptcy proceedings, after Sydow and Preston enjoyed years of cash rolling in to TSI and NC12 which they used to their personal benefit. C. Preston's Contacts with Texas. By Preston•s own admission, his contacts with Texas are long-standing, reaching back at least 20 years. However, Preston has misrepresented the extent and nature of his contacts with Texas in his attempt to avoid the exercise of personal jurisdiction over him by this Court. 2 Brilliant Novelty has not denied the allegation that Preston was at all relevant times a manager of Brilliant Novelty, and C Change has not denied the allegation that Preston was a manag.ing partner of C Change and controlled that company. 3 259 Whether inadvertently or intentionally, Preston has failed to disclose purposeful continuous and on-going contacts with and activity in Texas. In his affidavit filed in support of his Special Appearance, Preston identifies his "only [ ] activity in Texas" as (I) a "limited number'' of visits approximately 20 years ago; (2) a "very limited number'~ of visits to Texas in the past five years on behalf ofTEM Capital; and (3) a visit to Texas in 2010 to testify in the divorce proceedings of Michael D. Sydow ("Sydow•/. (See Preston Aff. at,, 5-63). The evidence) however, reflects much more than the "limited" activity that Preston has selectively disclosed. The following is a chronology of Preston's contacts with Texas- including those to which he admits and those which he has neglected to disclose. • Preston claims that he visited Texas ''a limited number of timesn approximately 20 years ago, allegedly in a representative capacity on behalf of a company for which he was a board member. (Preston Aff. at~ 5). o Preston does not identify that company in his Affidavit, but states, "specifically., that he made up to eight visits to Texas - five for board meetings of a nonprofit organization and ..no more than three'' for board meetings of a Delaware corporation. (Preston Aff. at ~ 5). • Preston failed to disclose meetings he attended in Texas in the late 1990s on behalf of Molten Metal Technology, Inc. (''MMT"), a Delaware corporation, registered to do business in Texas. 5 Preston was a board member of MMT, and the company's chief executive officer. (See Exhibit A-4) . o Preston visited Texas on numerous occasions to negotiate a contract between MMT and Hoescht Celanese to develop and operate a waste recycling facility for Hoescht Celanese. (See Exhibit B at, 1 2~. l Affidavit of John T. Preston, submitted as Exhibit A to Preston•s Amended Special Appearance, filed September 28. 20 I I. Affidavit of John T. Preston, submitted as Exhibit A to Preston•s Amended Special Appearance. ftled September 28. 2011. MMTs Texas existence was forfeited in 1999. (See Ex. A-4). 6 The Affidavit of Michael Collins, dated Juty 2. 2014. is attached hereto as Exhibit B and incorporated herein by reference. 4 260  o MMT had developed certain technology called Catalytic Extraction Processing (''.Qgf''). CEP is a process for breaking down hazardous and radioactive waste and recycling them into marketable products. (See Ex. B at~ 3). o MMT filed for bankruptcy protection in 1997. Preston and/or his company, Quantum cataiyti~ LLC ("Quantum,.), acquired MMT•s patents from the MMT bankruptcy estate. (See Ex. A-S at VI 15-17; ExhibitA-15 at pp. 4-5). • (n 2004, Preston flew to Houston, Texas to meet with Collins near Collins's home in The Woodlands. (Ex. B at 1 6). Owing that meeting, Preston touted the patented technology that he had acquired from MMT and encouraged Comns•s participation in the commercial development of that technology. (/d.). o Preston flew to Texas to meet with Collins again a few months after that first meeting in The Woodlands. (Ex. Bat 1{7). During that second meeting, Preston and Comns travelled to Bay City, Texas to meet with Hoescht Celanese to continue discussions regarding the development an-d operation of a CEP facility for Hoescht Celanese that had begun with MMT. (/d). o Preston returned to Texas again about two months later, when Preston and Collins met with Hoescht Celanese in Baytown, Texas. (Ex. Bat 1 7). o During these three meetings in Texas, Preston and Collins discussed the commercial opportunities possible utilizing the MMT technology and the technology that Collins had developed. (Ex. B at~ 8). o Preston continued to talk with Collins by telephone over the COW'Se of the ensuing months. Preston initiated a number of those caJls, either to Collins at his home in The Woodlands, Texas, or to Houston offices where Collins would occasionally work, including the law offices of Sydow, McDonald, Kaiser & Ahmed, on Bagby Street in Houston, Texas. Preston also shipped records to Collins at the Bagby Street office for Collins's review and use in connection with the work he was undertaking with Preston. (Jd ). o At all times during Collins's discussions and business relationship with Preston, Collins was a resident of The Woodlands, Texas. (Ex. B at ~ 12). In his discussions with Preston, Collins learned that Preston had been to Texas on multiple occasions prior to their introduction. Preston advised Collins that he had previously travelled to Texas on numerous occasions for meetings with Hoescht Celanese and with Flour Daniel in Clear Lake, Texas. Preston also told Collins that he had made numerous visits to the Houston Area Research Center, or HARC, on Research Forrest Drive in The Woodland~ Texas to study new technologies in the late 1990s. As a result, Preston was very familiar with The Woodlands. (/d.). • [n July 2004, Collins fonned Texas Syngas LLC ("Syngas LLC") for the purpose of e)(pJoiting his technology. Collins was the original sole member of Syngas LLC. (Ex. 5 261  B at ~ 2). Preston joined Syngas LLC as a member after his discussions with Collins. (Ex. B at 11 10, 11; Exhibit A-6 at ~ 3'). Although Preston ultimately executed the Syngas LLC Operating Agreement on behalf of Quantum, the investment was clearly Preston's. (See id; Ex. Bat~ 11). • On June 19, 2006, Metal Catalyst Ventures, Inc. (''Metal C-atalys~') filed Articles of Incorporation with the Nevada Secretary of State. (Exhibit A-7). The Metal Catalyst Articles of Incorporation identify only one director -Preston- and lists his address as 4900 Woodway, Suite 900, Houston, Texas 77056. • On November 10, 2008, Preston traveled to Houston, Texas to meet with Collins to discuss a financing proposal by Preston's company C Change. (See Ex. B at, 13; Exhibit A-8 at 25:8-26:4, 30:4-15; Exhibit A-9 at p. 13). • On November 10, 2008, Preston wrote a personal check in the amount of$1,100,000, payable to BOS, Inc. ("BOS"). (See Exhibit A-13 at 01158). o BOS is identified in its banldng records as officing at 4900 Woodway Dr., Suite 900, Houston, Texas 77056 - the same address as NCl2ffSI. (See Ex. A· l3 at 00448, 00501). That same banking record reflects a wire transfer from BOS's Texas bank account to Preston in the amount of$1,100,000 on January 15, 2009. (Jd at 00448, 01142). o TSI apparently _paid for the incorporation of BOS. (See Ex. A-13 at 0050 1-502). • On April2, 2009 and May 3, 2009. Preston traveled to Houston, Texas. (See Ex. A-9 at p. 13; Exhibit A-10). o Preston contends that his travel to Texas on those occasions was uas a representative on behalf of TEM Capital." (See Ex. A-9 at p. 12). However, according to Russell Read ("Read.,), Preston's former partner in C Change and TEM Capital, TEM Capital was not formed until 201 1. (See Ex. A-8 at 33 :2-12). Accordingly, Preston•s travel to Texas in April and May of2009 would not have been as a representative and on behalf ofTEM Capital. • Preston traveled to Texas with Read in "either 2009 or early 201 ou allegedly "for meetings with Russian technology partners for the fonnation of a joint venture M.J.T. was entering into with the Russian government. ~· (See Ex. A-8 at 49: 13-50:4). 7 ?reston submitted an Affidavit dated December 6, 2013, in Cause No. 2007-38533, Kaiser v. Collins, pending in the 152 Judicial District Court, Harris County, Texas, in support of Plaintiff's Opposition to Collins's Motion for Summary Judgment. In that Affidavit, Preston discusses his decision to invest in "Te:x.as Syngas and to beoome a member in the Texas Limited Liability Company into which it ultimately was formed!' 6 262  o Preston did not disclose this visit to Texas in his Affidavit filed in support of his Special Appearance or in the discovery responses he served in this action. (See Ex. A·9 at pp. 12-13).8 • In the summer of 2009, Preston' s C Change was looking at another company with operations in Texas, EMC Cement BV eEMe'). o In its Original Complaint recently filed in the United States District Court for the Western District of Texas, Waco Division, under Civil Action No. 6:14-cv-149 (the '~EMC Litigation, ), against Preston9 and others, EMC alleges that in August 2010, Preston visited a cement plant in Jewett, Texas operated by Texas EMC Products, EMC's exclusive licensee for the use of EMC's patents in the state of Texas. (See Exhibit A-11 at 1 36}. • Preston did not disclose a visit to Texas in August 2010 in his Affidavit filed in support of his Special Appearance or in the discovery responses he served in this action. (See Ex. A-9 at pp. 12-13). • On October 6, 2010, Preston appeared as a witness on behalf of Sydow in the divorce proceedings flled by Sydow in the 308mJudicial District Court. Harris County, Texas. (Exhibit A-12). o Although Preston contends that his testimony in the Sydow divorce proceedings was "as the corporate representative for NC12," 10 there is nothing in the record of those proceedings indicating that Preston appeared as a "corporate representative." Rather, it appears he simply traveled to Texas to support his colleague and co-conspirator Michael Sydow. • EMC alleges that Preston visited Texas again in January 2011 to discuss a potential investment by C ChangeffEM Capital in EMC's line of business and technology. (Ex. A-ll at~ 48). o Preston did not disclose a visit to Texas in January 2011 . (See Ex. A-9 at pp. 12- 13). • EMC alleges that Preston appeared at a foreclosure sale in Texas on May 3,.2011 , on behalf of the defendants in the EMC Litigation during which the EMC Defendants are alleged to have acquired the cement plant in Jewett, Texas, that Preston had visited a year earlier. (Ex. A-11 at 53). Preston was asked to identify ''all" travel to Texas since 2000. (Ex. A-9 at p. 14). 9 Preston asserts in his Affidavit filed in support of his Special Appearance that "[e]xcept for this lawsuit, [he has] never been a party to litigation in any state or federal court in Texas." The lawsuit filed by EMC on May 5, 2014, now changes that fact. to See Ex. A-9 at p.l3. 7 263  o Preston did not disclose tbjs visit to Texas in May 2011 in response to the Intervenors• interrogatories. (See Ex. A-9 at pp. 12-13). However, Preston produced flight records that confinn a flight to Dallas/Fort Worth on May 2, 2011, with a return flight to Boston, Massachusetts on May 4, 2011 . (Su Ex. A- 10 at Preston 000025-26). o Preston claims that his visit to Texas in May 2011 was for the purpose of testifying "as the corporate representative for NC12, Inc. regarding an asset owned by the company in Michael Sydow•s divorce proceedings." (Ex. A-9 at p. 13). However, as noted, above, Preston came to Houston (not Dallas/Fort Worth as the flight records for May 2011 reflect) to testify for Sydow in October 2010. Accordingly, Preston's travel records for May 2011 , likely reflect this visit to attend the foreclosure sale reJated to the EMC Cement property. • EMC alleges that Preston visited Jewett, Texas again within days of the May 3, 2011 , foreclosure sale to inspect the cement plant. (Ex. A-11 at, 53). • On August 22, 2012, JK Claims Investment Corporation (..JK Claims") filed a Certificate of Formation with the Texas Secretary of State as a domestic for-profit cotporation. (Exhibit A-14). Preston is identified in the Texas Secretary of State records as the sole director ofJK Claims. 11 (Id.). o JK Claims purchased from the bankruptcy estate of Jeffery Kajser ("Kaiser') the claims asserted by Kaiser in Cause No. 2007-38533. Kaiser v. Collins, pending in the 152 Judicial District Court, Harris County, Texas (the ''Kaiser Litigation"). o Preston is now pursuing relief in a Texas state court, under the guise of JK Claims and Quantum, through an amended petition in the Kaiser Litigation reframing the complaint to one complaining about alleged misrepresentations by Collins regarding his educational background and professional licensing to induce the plaintiffs' investment in Syngas LLC. Ill. ARGUMENT AND AUTHORITIES A. Tbe Preston Defendants• Special Appearances Fail to Comply with Rule 120a. A defendant desiring to challenge the exercise of personal jurisdiction over him in a Texas court must file a sworn motion challenging jurisdiction. TEX. R. Ctv. P. 120a Although 11 Note that Preston asserted in response to Interrogatories served in this matter tbat 14Texas Syngas LLC is the only company with its principal place of business in Texas or incorporated in Texas for which Preston was a director, officer, or employee.•• (Ex. A-9 at p. 12). According to the records of the Texas Secretary of State, Preston's statement is incorrect. 8 264 the Preston Defendants' have each submitted an affidavit in support of their special appearance, the special appearances themselves are not verified and so fail to comply with Rule 120a. B. State and Federal Due Process Considerations and "Minimum Contacts." Courts sitting in Texas may assert personal jurisdiction over a nonresident if the Texas Long-Ann statute authorizes jurisdiction and the exercise of jurisdiction ..is consistent with the state and federal due process standards." Am. Type Culture Co/lee/ion. Inc. v. Coleman, 83 S.W.3d 801, 806 (rex. 2002). The Texas Long-Ann statute authorizes the exercise of jurisdiction over "those who do business in Texas, which includes contracting with a Texas resident where either party is to perform the contract in whole or in part in Texas." Jones v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992) (emphasis added); see TEx. Crv. PRAC. & REM. CODE ANN. at§ 17.042. Texas courts have generally held that the "broad language of the [Texas] long-ann statute permits an expansive reach, limited only by the federal constitutional requirements of due process." Daimler-Benz Akliengesellschaft v. Olson, 21 S.W.3d 707, 714 (Tex. App.-Austin 2000, pet. dism'd w.o.j.). Accordingly, the court may consider solely ''whether it is consistent with federal due process for Texas courts to assert personal jurisdiction over'' the foreign defendant. Daimler-Benz, 21 S.W.3d at 714. Federal due process considerations ask whether the nonresident defendant bas "purposefully established minimum contacts with the forum state" such that the exercise of personal jurisdiction over the nonresident "comports with traditional notions of fair play and substantial justice." Daimler-Benz, 21 S.WJd at 714. 9 265  Jurisdiction will be proper "where the contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). "The ultimate test of minimum contacts is whether the defendant purposefully availed itself of the privilege of conducting activities in Texas, thereby invoking the benefits and protection of Texas laws:• Daimler-Benz, 2 1 S.W.3d at 714. When a defendant has deliberately engaged in "significant'' activities with a state. "or has created 'continuing obligations' between himself and residents of the forum," he has availed himself of the privilege of conducting business in that state. Burger King. 471 U.S. at 475-76 (emphasis added). " [B]ecause his activities are shielded by 'the benefits and protections' of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of Litigation in that forum as well., /d. Accordingly, a finding of "minimum contacts•• requires a "substantial connect between the nonresident defendant and the forum state, brought about "by action or conduct of the nonresident defendant purposefully directed toward the forum state:• Guardian Royal Exchange Assur., Ltd v. English China Clays, P.L.C., 815 S.W.2d 223,226 (Tex. 199l);see also Carllidge v. Hernandez, 9 S.W.3d 341, 347 (Tex. App. -Houston (14th Dist.] 1999, no pet.) ("The exercise of personal jurisdiction is proper when the contacts proximately result from actions of the nonresident defendant which create a substantial connection with the forum state."). Requiring that the non-resident's actions be (l{.l-\ YER The PTeston Defendants have established sufficient minimum contacts with Texas to support fhe exercise of Jurisdiction over tltem by this Court Accordio¥1Y) intervenors Ernjo hwestments, Ltd. and ILT. von der Goltz respectfully reqqest th<\t this Court deny the SpeCi~;tl Appearances filed by Jolm T , Pre~ton, C Change _ln.V,est~ents, LLC, and Brilfiant Novelty~ L.L.C. a~d gr:ant ltltetvenw.'s $u.ch .othet ~nd fijrther r·e liefto which they may be entitled. Respectfully su~m1tted, ELLISON •KELLER, P;C. :!' -~ ;~ . ) ..... e 1'----./) !.;~ 1 • ' ....~ . . .''At I' . ~,. ...:{'tl t . . .,,I';· !< 6r~-l,-- ..' . . .. . 1(i .. ·-i..i:vt . ,t • (~ , .. ; "" ~~fl~r ti. ~fikr. .. / St(;lte But ~\d. 1U9.$240 T~~accy N. Elli.son State Bar No.. 1.50541'720 5120 Wood~:vay Dtive.~ Su1te :6.019 f:k)tJstotlfTe.xas 770.56 :rdephon,e: 713 -:26(};.~2~0 I~acsl:mi'le: '' ·,, ,, . 713-266~?801 ' '' ' .. ' ~ •, Allonu~.y.f.for . l.nte.n•enrH•:;iPtaintiffo- Ett~io l~;tre#m~/.~.1$,. Ltd ~mc.I .PL.l von der-Goltz., 272  CERTIFICATE OF SERVICE 'l11e 1mdersigned hereby certifies that on this 2nd day of July, 2014 a true and correct ~opy of the above Response to the Special Appearances filed by John T. Preston, Brilliant Novelty, L.L.C., ru1d C Change Investments LLC was served on all interested parties) by and through their attorney of recoTd indicated below via emaiL Randall 0. Sorrels Brent C. Pen·y Clyde J. "Jay" Jackson.llJ Law Offices of Brent C. Perry Abraham W~tk.ins. Nichols~ Sorreis, 800 Commerce Street Matthews & Friend Hou~ton. Texas 770CJ2 son Commerce Street Facsimile: 713,.237-0415 Houston, Texas 77002~ 1770 Aam·neyjor Original Plain:tijfs Facsimile: 713-225-0827 Attorneysfor Original Plainrijj.;· Asher Griffin Amir Alavi Chris Sile.o Ashley Frankson Sean FJanuner Ahmad. Zavitsanos, Anaipakos, Alavi & Scott. boug1ass & McCounico, LLP Mensing P.C. 600 Congress Ave.~ St-e 1500 3460 One Houston Center Al!Stin, Texas 78701-2589 1221 M~Kinney Street Facs.imile: 512A74-073 I Houston._Texas 770tO Atrorneys for Dejendmus Facsimile: 713-658-0062 Cha/sys, AI/E.T, and Lo Attorneysji:Jr Defendants ~ydow. Preston, Henkel, C Change, and BrilliantJllovel~v F. Eric Fryar State Bru· ·No. 07495770 eric@fryarlawfi rm .com Matthew Buschl State Bar No. 24064982 mbuscht~arlawfinn.com Chrlstin~ Richardson FRYAR LA'" FJJt\1, P. c. State Bar No. 24070495 9J2 Prairie. Suite 100 Houston, Texas 77002-3 145 Fa~imile: 281-605-1888 Attorneysfor all lntervenors,Plaintfff.i:j 273  Cause No. 20 ll-44058 MICHAEL COLLINS; ET AL., § IN TilE DISTRICT COURT PLAINTIFFS, § vs. § OFHAJUUSCOUNTY,TEXAS § MICHAEL SYDOW; ET AL., § DEFENDANTS. § 215th JUDICIAL DISTRICT AKILA FINANCE, S.A.; ET AL., § IN THE DISTRICf COURT INTERVENORs!PLAINTlFFS, § vs. § OF HARRIS COUNTY, TEXAS § MICHAEL SYDOW; ET AL., § DEFENDANTS. § 215th JUDICIAL DISTRICT AFFIDAVIT OF KELLEY M. KELLER Before me, the undersigned notary, on this day personally appeared KELLEY M. KELLER, who is personally known to me, and first being duly sworn to law upon her oath deposed and said: 1. My name is Kelley M. Keller. I am over the age of 19 years old and am fully competent to make this affidavit. I am an attorney licensed to practice law in the state of Texas. I am lead counsel for Johan von der Goltz in the above referenced action. The infonnation contained herein is true and correct and is based on my personal knowledge as it relates to my representation of Mr. Von der Goltz. 2. Attached to the Intervenors' Response to the Special Appearance of John T. Preston (the ~'Response~') as Exhibit A-1 is a true and correct copy of the Initial List of Officers, Directors, and Registered Agent of NC12, Inc. \'NC12''), filed with the Nevada Secretary of State on July 29, 2008 and the Annual List of Officers, Directors and Registered Agent ofNC12, filed with the Nevada Secretary of State on May 20, 2009. 3. Attached to the Response as Exhibit A-2 is a true and correct copy of the Application 44 for Registration of a Foreign For-Profit Corporation filed by Texas Syngas, Inc. ( TSI1 with the Texas Secretary of State on June 19, 2008. 4. Attached to the Response as Exhibit A-3 is a true and correct copy of the Application for Registration of a Fo.reign For-Profit Corporation filed by NC12 with the Texas Secretary of State on August 28, 2009. 5. Attached to the Response as Exhibit A-4 is a true and correct copy of the Business Organizations Inquiry - View Entity for Molten Metal Technology, Inc. ("MMT"), EXHIBIT A 274  reflecting the '"'Filing History" and ''Management," which includes John T. Preston, Director and Chief Executive Offer, 238 Main Street, Suite 20 I, Cambridge. MA. 6. Attached to the Response as Exhibit A-5 is a true and correct copy of the First Amended Complaint filed January 9, 2009 under Case No. 1:08-cv-11456, Quantum Catalytics, LLC and Texas Syngas, Inc. v. Ze-Gen, Inc., eta/, in the United States District Court of Massachusetts, Eastern Division. 7. Attached to the Response as Exhibit A-6 is a true and correct copy of the Affidavit of John T. Preston, dated December 6, 2013, filed in Cause No. 2007-38533, Kaiser v. Collins, pending in the 152 Judicial District Court, Hanis County, Texas, (the "Kaiser Litigation") in support of Plaintiff's Opposition to CoJlins's Motion for Summary Judgment. 8. Attached to the Response as Exhibit A-7 is a true and correct copy of the Articles of Incorporation for Metal Catalyst Ventures, lnc., filed with the Nevada Sec~ of State on June 19, 2006. 9. Attached to the Response as Exhibit A-8 is a true and correct copy of excerpts from the deposition of Russell Read, taken April 21, 2014 in the Kaiser Litigation. 10. Attached to the Response as Exhibit A-9 is a true and correct copy of excerpts from the Amended Answers of John T. Preston to Intervenors' First Set of Interrogatories. 11. Attached to the Response as Exhibit A-10 are true and correct copies the documents produced by Preston in response to Intervenors' Request for Production. 12. Attached to the Response as Exhibit A-1 I is a true and correct copy of the Original Complaint filed May 5, 2014, under Case No. 6:14-cv-149, Procedo Enterprises Establishment and EMC Cement, BV v. Quadrant Management~ Inc. , e/ a/., in the United States District Court for the Western District of Texas, Waco Division. 13. Attached to the Response as Exhibit A-lZ is a true ~d correct copy of excerpts from the transcript of the proceedings held October 6. 201 o. in Cause No. 20 I 0..()271 0. Sydow v. Sydow, In the 308th Judicial District Court, Harris County, Texas. 14. Attached to the Response as Exhibit A- 13 are true and correct copies of excerpts from the document production of BBVA Compass in Cause No. 2010-02710, Sydow v. Sydow, In the 308th Judicial District Court, Harris County, Texas. 15. Attached to the Response as Exhibit A· l3 is a true and correct copy of the Business Organizations Inquiry - View Entity for JK Claims Investment Corporation, a Texas domestic for-profit corporation, reflecting the following HManagement": John T. Preston, Director, 421 Currant Rd., Fall River, MA 02720 USA. t 6. Attached to the Response as Exhibit A-15 is a true and correct copy of a Memorandum filed by Quantum Catalytics, LLC, John Preston, and Christopher Nagel in Case No. 05- 10077-RGS, in the United States District Court of Massachusetts. 2 275 Dated: Ju1y 2, 2014. STATEOFTEXAS § § COUNTY OF HARRIS § BEFORE ,ME, the undersig.tied authority, on this day personally appeared Kelley M, Keller, known to me to be the person w11ose nmne is subscr_.tbed to the foregoing instrument, and acknowledged to me that she read the Ai1idavit of Kelley tvL Keller and that the facts stated therein were wi:thi11 her personal knowiedge and were true. and correct. e BARBARAOAVIS My Commls$fon E.xplr&a No.vember 14• .2015 1OTARY PUBLIC IN AND FOR THE STATE ()p tEXAS MY COM1vHSSION EXPLRES: 3 276  . .I) lNII1AL (PROH LIST . ...... OF . . .OFRCERS, OIREC'I'ORS AND REGJSTERED AGBO' ..... OF FUMUMBIR I . . ~ I . ... l NC12.1NC. : EOZ7440m0eo0 _ -. . • ••• ••••• ,._,,.,,,,.,.,,,,,.,,,.,_,,,.,,...,, - •••-.••-••• ••-••••••••- ••• ••• .... ,,,,_..,,,_ ,,,_ ,,_,_,.- -••·-u-.o-•n .... - ••• u• _ .. , .... , .. u.,,,_,,,,,,_,,,,, - ou !.._.,,,,,_,,_,_,,,,., ,_ I'OR 'IHE FUHa PERIOD : a.i4tli008 - .............. ............- ...... ... - ···-··-; :·---··-······· ·-··· ...... ,. .... f-,oj412009 ; \ "'9 .. ..-•••• - -· · ···· -· · · ······ - · · · .... •••••••.: : -··-··- ······· - - · · - ·..· - · - ... -.: FUed in the office of ~ 20080501016-83 .. ~Af:. 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GOLTZ0773 278  (~.~9!3T.). ~~.~Y,A~. ~§T qF .Q~.f.I~ERS.•...~IAEC~QAS AND R~G!~IERED A~ENT.Q.~.... ·- NC12,1NC. FOR lHE FlUNG PER()() OF 4t.l:D09 lC ""2010 ~ cctporatlcn'l dulv 8PPOirwd riiQSetod agent in tho Stab> or Ncw.da upon wt1 om prcoass CB/1 be SIIIMid is Filed in the office of DoCI.meot.Number CSC SERVICES OF NEVADA. lNC. ~ommerdal Registered Agent} 20090446244-85 502 ~ .x>HN STREET CAASON CtlY, NV 39700 USA ~ ~--· Ros:i!Miller Filing Dale and Time 05129/2009 8~ AM S~ofState Enl.lty !'umber State ofNcvad:a E0274482008-8 l:r-;1:;·~~ :;~·~~~P.E !o !'~~-;;~CATS ~f\ ~E'!l~~l:OMS;~ It;~-~~~-;········; rr.s;I;""~"J:: ANd ;n~l~IHlnS Oe«<>HHCCHt'l~l~ Onlf ..tun~ tMt ft:>rM. CHECKONLY IE APPLICABLE ··- ····------- 0 ThiS oorpora~on I$ a publici~ tr.lded corporation. The Cenr.ll tide) t WOODWAY, SUITE 900 , USA 'HOUSTON TX I 1-."..lso. 10 lho~tef IT' I' it'X.w"f:C9"~ ~~!!ltv O! ;x>o:.v.t. 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Ill ThiS:dre ~ ninety {90) days.lrom ·the da~ OJ Stgrung. 1~ ~h\yed eftective,.lale ,i.l): C. D This dQcunlent mires i:ffeet .up~n. tbe ooourren;-of a·fu.ture c~~ritor fact•.4ilier thn,nJhe. pru;sa.ge ()f tim~- 'The wd) day·$ r tlte,date qf.:signing jg: ___________ __ ... ' . 'n1e foUGwing ev!!-nt or'fitct w!ll ~anse Uie de¢.umtmt tQ take effoot-in me m~~ d.e.w.n'hed bdo\v; J ,_ --- -­ ----~--~ f I ·~ \ltltlersi~ si_~ (b.i~ dot~~ftt subjtt~ t(> the pena!ti~s imposed by Jaw fur ·the subrot~si.on (lf ~· nuiterinlly Jnt~ gr ftuHdlll¢nt ·li.l~f$t1~t)l. Date! ;• ,. ! 283 \."=.=~· J J'araa301 (letflld lJ06) ltdlaDm c1apDak to: 8eanaay afStarD P.O. 8ox1l697 - -1X '78711-leT su~ss J'AX: Sl2/46:W'709 • • lSD 1. 11zo ._II a blip bwprofil aqcasdw. '111DIIIIU ofthe aalily is: N'Cl2,Iaa.. 2A. n. Jl8ll18 ot cu COipOIIJdan m.tt. JarldcMaD ot fimnatlcm &Ma JUJt CCIIdll&l t~~a -"' "uutpn~• -., u P4: '1wutjiGUIIII:id." ar '1imiiBif" (or 8D ~ tiMnof). 1be JIIIIICofdlc wqollliaawilhdle"tnd ar~111atit ckdi1D aadfbruo Ia Ta. is: a. 11m c:upcaidiau..,.taJJOt md1ah1e mT-. 1ha -.mod. .DIIUr wJWm t.CCIIJICftli= wJil quaJif1 ad ~tmsia1L'81 ill Taaafa: 1 ~~c:,.... n. &daat1 aplOJIIrid•"i&•t~.:m 1111111b11r ~c ....:n,.;;..;....._Oll4.. .;._.o...... M_..__ _ _ _ __ (il Jtelrn1'diiJI1oJtt fdcntlkafoza D1IIDbar infhmgtfgn u JUillmlilablo al tia 1bDa. ... :afllucaipollled11D!l«lbD t..... oe ._...,.....,.• ...,..__, _s_bdll_atH_emm ______ ad., diD ofill fbaaldfoD iD Cblt~ Ia; ....., 04fl8I2008 S. AI. ofG. diJe of fila& 0. •mdmf&nrd =tifies 11Jat111e enJp CCIIpa&Giwi rurcasd,J ai8la a1 I Yllid. cqp....tmadtrtb laws of G. Jnzltd'«Jma otilu fbm.rio~L 6. 'meJGJlOIP C.:JNIIIIU6C* ottut oa~pa•ticm 1battt Jll'GPC*I wpamum t.o ~ ~ m,... aro • 116Wow. ~ ootpa&atian a11o c.edfllll Y 1t 1a cdbndm1 to pamao l\l:h -..ar1 paiJJCIR ar plllpCIIel ill Cba ataiD or c:oaa!l:yuadcr wlddl it ia iliQQl)I.)Ut BUSINESS ORGANFZATIONS INQUIRY- VtEW ENTUY Filing Number~ 9112306 Entity Type: Foreign Fot~Protil Corporation Original Oate of Filing: April 3, 1992 Entity Status~ Forf~ited existence f'omudion nate: N!A Tax 10: •1 5216599595 FEIN: Name: MOLTEN METAL TECMNOLOGY, lNC. Adtlress: 400-2 TOTIEN POND RD Waltham. MA 02'154 USA fictitious Name: NIA Juris~iiction : DE, USA Foreign formation Date: NJA !nstructiqns; ~ To plac~ an order for additional informahon about a ffling press the 'Order' butl(Jrt. EXHI.BIT .A.-4· 287  BUSINESS OR<:W41ZATIONS IN<~UIRY • Vl'C.W ENfiTY TEXAS SECRETARY of STATE NAN01TA BERRY BUSINESS ORGANIZATIONS INQU~RY ~VIEW ENTITY Filing Number-: 9112306 Entity Type: foretgn For-Profit Corporation Origina l Oats of Filing: Aprif 3, 1992 Entity Status Forfeited existence Formation Date: NfA Tax ID: 15216599595 FEIN: Name: MOLTEN METAL TECHNOLOGY, INC. Address: 400-2 TOTIEN P OND RO \tlallhaf'1, MA 02154 USA Fictiti ous Name: NIA Jurisdi ction: DE, USA Foreign Fonnation Date: NIA , L~~~-~~.:~:S.~-::~·· · · · .:·.~·.·~·:;~..-.:.·.l~:·.~.·~ : :.:.·.· · · · · ·-. :::=··-~~~~· ~:~:~~;,_~~~,:L~--············;~·~·~·'x~~. :~:·.···········~~~;t~;;·······-.1 7 .................... ~ ;-:::::::::::::::•••••••••••••••••••••••••••••::::::::h·:.....:.::•••••••••••••··•••••••••••••••••••-••••••_::::::::::::::::::::::::::::::·..,..,.,..••·,o-oo.•••••••v•••••...,.•••••....,••••••- . . . . . . . -.......;1..._._............ _:=:::·:::·::·:·:::::!':::·:·::·:~:::::'::·:::~::·::•:::~~ ; !Last Update N.1m4\ Title Address ;l Jui'OOS B Anderson O:rectot ONETO'lllffiSQ.U..O.RE l ~ l Hanford, CT 05183 U~.l\ 11 : !,':, &Jger\:e Bet'tl'\$n VP 400-2 TOTIEN ROAD ·.:}t : Waltham, MA Ct2154 USA ~ !: f\cnj~urin T Dow riG T 400.2 TOTTEN ROAD ;:;l1. Waltham, MA 02154 USA : ; :: ~~ StJI C':A?rner VP 400-2 TOTTEN ROAD ~~ 1: W~ham. Ml\ 02154 USA ,, .. j~ 111 ·11 ·H : : : : : : : : :: B llan J ~1 Wafiham. MA: Q2154 US.>\ ~-·~. ;l 1 1 .; r F.1l I fll(;A..o c:l • n '' . e VP 100.2 TOTIEN ROAD lflalnarn. 1\~ o-2~ 54 USA ~1 .; ~tcr A Lewis tlroctcr 30 ROCKEfH.H:R r..tfi!ffi ·;1 :'1'1 'j• ~be~ ~ .ms~ A ~r~cto! :: ~~;:~ :~J~~. sunE~7.~~ San Ma.tes, CA !M-dO'l VSA l R ~ II :::::·~~::·· ::·"'" ;::~::lf~' sunt510 1 :,; Waltham M>\ 02~ S-1 USA {! ~~~ Kr.thy Sttnto~(> VP 400-2 TOTTEN ROAD r Waltham, ~ 02~54 USA ~f?tlf)(I!Je ~~~'9 tllt&,:S'pas; ufrll!w=l!a:SftU ~-~~~~= 91 f 2306&f'~doa;rrer.l._~fli{)()r= 5S ~ ~i4ll13e0':!1&.. . 11<. 7/112014 BUSINESS ORGANIZATIONS INQUIRY- VIEW ENTITY John T Preston llrector 238 MAN STRB:T, SUITE 201 carrtJridge, MA 02141 USA NAGS., OiRISTOA-IER .rsrn SRVP 40~2 TO'Tlm ROAD Waltham, MA 02154 USA NAGS., Q-iRISTO~ .rsrn llrector 40~2 TOne.! ROAD Waltham, MA 02154 USA NAGS., OfRJSTOFtffi J•srn llrector 40~2 TOTlB'II ROAD Waltham. MA. 02154 USA Bhan Jacks GENCSL 40~2 TO'Tlm ROAD Waltham, MA. 02154 USA VW!Iam M Haney Ill CEO 40~2 TOTlB'II ROAD Waltham, MA 02154 USA \Nilliam M Haney Ill Director 40~2 TOTlB'II ROAD Waltham. MA. 02154 USA GATIO, VICTOR E"EDD VP 40~2 TOTlB'II ROAD Waltham, MA. 02154 USA Benjarrin T Downs VPFIN 40~2 TOTTEN ROAD Waltham. MA. 02154 USA -·... ··- .... -···- . . -. ·- . --· - -·· -·-· . - -· •. - - . . . IOrder I I Return to Search I Instructions: iTo place an order for additional information about a filing press the 'Order' button. 289 https://direclsos.state.tx.us/corp_inquil)lcorpjnq ul~entity.asp?spage=mg mt&:Spag efTOtTF&:Siiling_number=9112306&:Ndocurrent_runber=551530130002&... 212  Case 1:08-cv-11456-JGD Document 74 Filed 01109/09 Page 1 of 20 UNITED STATES DISTRJCT COURT DISTRJCf OF MASSACHUSETTS Eastern Division - - - -- - ---·- - --- -- --·- -- -- QUANTUMCATALYTICS, LLC, and TEXAS SYNGAS, INC., C.A. No. I :08-cv-11456 Plaintiffs, V. FIRST AMENDED COMPLAINT AND JURY DEMAND ZE-GEN, INC.; WILLIAM ("BILL"} DAVIS; NEW BEDFORD WASTE SERVICES, (Leave to file granted December 18, 2008) LLC; VANTAGE POINT VENTURE PARTNERS; FLAGSHIP VENTURES 2004 FUND LLC~ and IRV MORROW. Defendants. Plaintiffs Quantum Catalytics, LLC (formerly referred to as Quantum Catalytics, Inc.), and Texas Syngas, lnc. (collectively "Plaintiffs,.) bring this complaint against Defendants Ze- Gen, Inc.: William ("Bill'') Davis; New Bedford Waste Services, LLC; Vantage Point Venture Partners, Flagship Ventures 2004 Fund LLC; and lrv Morrow (collectively "Defendants"). alleging as follows: THE PARTIES l. Quantum Catalytics, LLC (hereinafter "Quantum") is a Delaware limited liability company with its principal place of business in Fall River, Massachusetts. 2. Texas Syngas, lnc. (hereinafter ''TSI", and collectively with Quantum. "Plaintiffs"), is a Nevada corporation with its principal place of business in Houston, Texas. 3. On information and belief. Ze-Gen, Inc. (herein "Ze-Gen") is a Delaware corporation with its principal place of business in Boston, Massachuset1s and may be located for service of process through its president: EXHIBIT A-5 290 STATE Of MASSACHU$E11'S COUNTY OF MlDDLESEX AFFlD.t~ VlT Before me. the undersigned authority~ (H1 this day persnnally appeared John T. Preston who bein~ by me fitst duly swot1l upon oath did deptJSe :and say; 1. 'My mmH~ iS john Preston. t .atn over the age of2.1, am under t:IQ leg~tl . disability, and an1 wmpetent to make t1'lis :.)flfdavit. Th~! fucrs recited herein lre true based upotl rny·p.er.sonal km)wierlge. l rl his ed~l{:(IQOllal background. C~1JHnH en:pht:~tic~i!y Sf<.~t.\~~1 that he had gntdUtudent ilt Cwed no t'ecqrt~ of Mr. Collh:s being .1 gt·<.ldtl<~h'~ of C(lrn!;gi~ Mef t)f his dt~gn!~!s that iw promised. i 312 development effort. and f Wvorthy. to t:he Board nf l'.>il"ect.CJr~ of NC:\.2 on Tvl<;y 5, 2010 (Mt::tchment 1). Oircctnrs and l tcjoined th(.~ 13o~~rd. lnnnediately the new Board baf;kt;d UJ.t an computer !\)"stems and stttrted <.H: :u:.d early ~ j ~ .., ! : ~ ' ·h ~.1(-~, \ ·, 'l \ ~,3 ,, 313 :vt . Bv th~ end of Nov~mher :w 10, I \:VoS tota\ly convin-ced that CoHlns. had ~ 314  . .. "" ~ ~.~H H5ll;$~ avaro~tY ot St3'f() 2~:6 ~rttt C~f$on ~~t.e~t C.at'$Cn'OifY, N~lr~da 8910~-4~0~ tr-t~·as.rs'to~ · . . WqbsltQ;. $tlft~tary()f<...>tat~.b~ )11-;;.TTtl.tl{ti.~ln~ tit ~.~~t SUlt{.l·~·}'li.Wadtl ~~O~Sn1·200$..8 ' ___ l ..... A!'WVQ 1Sf'ACC! t!: PO!' Ol"Fl<;~ 1,1$1: ()1\\,V 1. l/.i~9!. ~· >IOIH.... , (o ~· .... :,. • •th'• "''-.iJI.-• • ;,'N,;,",','M,.J...ii("_,..-!~ ,-;..,"'1: • _,, ,. ,; ""'*' +• Uo , ..-~~· h.r.,t •YI •lhJ,ft '"'""'' i•"'Ut.,Un"l')l(:t.~ ~ --~~ ~ . . . "'"' .;:::~~4~:<:1::~;.;;.!~:. ,. ·~:·· . · ·;:·_::~::::-::_:·.:.:. ~ . . . ~. :.:.: ·. . . . : :. . :::.c.~··..:.:~:=..::~:::~.::~~~~:~~:::::~i,..:.:,~: 1 2. ~~at~ . t~~~~&.~r~~~~t~!~w 11~, 1~ ....._. . . .-........... ..i V'', 'O•f' '''•V {l(JUP'i.~~_t ~'~ ....,,.,.............,...........,, .............. . ..... ·'"'"'.. ""'"'" .,.,.•• (¥. ·•·y; ...... ~~--~·' "" ''"'\"'''"} . . ,.....,. ............., 1 ,A$ Nm . . .t :JL~~OJ1;t q~~.t~et_. Qlc:t~;:\Ci,~ . , ,.. ., .~Nava~:!?7q,~;J12l l ~~ .• qc: ? Gt~tl·;..~;; ,.y. ..,..~~ :~~:~B'""'"~ ..... , .~jl . !J~,. ·:"· ... ... ~• .._ ···~·--~~-- .. ·~~:. f\~' ~Q~ . .. . . .. . . -~ iL .J·( ...........\ ·- . ..~ Slllto· ~ Cii~i:), I tum~ ~:~b¢~etr ·" · ··. ~ ·~ , .... ~ ; ~~~~ ·~t§riii~J ' . J \~itl1Jloll(~llie; .... ~!~~~&~ .... I. . .~>ar.vn~e~.§: ·O .OPJ • •..-.u~ts~~·~\11~ • 0 · · · · "" · . '"' i'•V----.-.-oo ••.• i>••-···~···•"wuoou ·••·•·~~:o;·-;;-;--:~~~'i ·-~ l 101\n l'rt$1~n .. ·t 1.. ~lint~ . . .. 1-~~~~)'\'t.'l~~·~· 'Slij~.QQ(! ~~~)In1(111 ; ; 7-7&~ ! /.tX Sl.r~t IW<-11~~ CJIY ·a~· ·~ ·a~o~ ( • f·t .... N.\..., ,,','Qio.O•o• t -~to ' ' • . •·t• t . -o·•-.,.,.•' o( W \ i... , ·.c-·,-.,,)¥"""'f" l ' ' I• -'•'\•11 , ..... ~ tlo ,. ·~·oo _y.v,;••• ••n••••\•100 ' \ ' ~- 1 ~····~"~:':::~~=·:~,~~·~!"..... ~ :-·-·~: . . .,.---·"-=-'11'--"'·· .........• ' . L-~ .. . . ,. ·•·~ ........ '""'"'"••'""""'ll~iil!!"hl":·•lltu"~~''""""''"'" U~ro!'il~~~~*?i , . ' .. ' v City, •.,.,.,. •· ,;,,~,,,...,o,.._ ....,..... ··~~-·- Jj. _,-;._~ ~l ~!'l>Jj ~-¢V'!f ;,.,A..,-.__.....,,..,........:},,,,-u.-; ;-...,.• ~·.,.;... -;;-;:-....,::,~: ·._;•:.";..;:":,:::.::,.•7:.:~·::•_:,•;••·•'1-• ·; 'l-::.":"":"".. ;. ~.::O:~ .•••..;. . • v-..•···· -~ .: -~.• :;.,;-,·.~.((. :',;..,;1-.,.~.Jt.....o....:...-- - -- • - • · t · l_. . . . ._ . .. , -~~ !j, I . ~~~~;~ ,.,_. ............. .. • ••••_..rfl... . y··· ~ ~-·-~........ . jl:y.; I o .... ~.;. ,.,,.. ! E....;-.6"- " ' "';"",........... . $~(1\.~lt~~ · I IN mE DISTRitT s DY MR. HUNTER 6 56 -s-> Jl( C\.AIMS ~DIT' COURT OORI'ORATION, indivldllllly 111d : 6 TION PAGE TfXASSYNOAS, LLCIIIId MICIJAEI. : OFIIARR~C()UNl"Y, 12 1 l)ocument entitled "Notice of 6 A. COl..LINS, : TElCAs Dotmdl:n!J. ; Intention to Take 01111 DcJl(lsition of . . . . . . . ..... . . . .. « 13 Russel Read" VIOOOfAPF.l> DI!I'OSITION OF RUSSf.J.t. Rf.Af), Cf'A, H l'll.D.• • lriln... call«< oo.bdWI' old\~ flo.iatill't, ~ pl>mW>t ro the Fedcnll Rulto ofCivil ~ . bofo"' ).,.. M. WiUi.amoon, R(8illleftd 15 ••• • M .- -... Merit RqJcrlorund "'"lory I'UI>Ii~ in and for the 16 c;.,.,.mO«weoltb ofM~ II Ole Ollisition, which 9 Q. Thank you, Mr. Read. 9 address or whut method mould lhe co.111 n:porter 10 MR. HUNTBR: Ms. Williamsoot do you have a 10 ~nd you your l~:Stimony? 11 copy of the deposition notice? lnsk lh"t you mark 11 A. My prefem:d method of T\:10Clp4 is by emnil 12 it as Exhibit l of Ibis deposition. 1 don't have 12 1'hc second would be to mail at my work addccss in 13 lillY additionaJ exhibits. 13 Kuwait 14 (Document marked as Rc:ad 14 Q. Can you give us - 0! give the court 15 Exhibit 1 for identification) 15 reporter your email address- 16 Q. Mr. RQd, y;·ould you please stole your full 16 A. My email address is IT88.d, the No. 5, at 17 k:pl name Cot the record. 17 Yahoo.com. 18 A. RusscU Read. 18 Q. Thank you. Mr. Rct1d. 19 Q. I thank you for taking time Lodoy. Mr. 19 Wbc:n you receive the tnmscript. it will 20 Read, from your day and from your stay i.J) the United 20 eitbc:r be in a booklet or in an electronic fonnal 21 States to give the Coun 111\d the Jury )'OUr testimony 21 Ptt:aSe n:vicw your testimony and com:ct any 22 in this actioo. 22 d~ricu l crron; und return the tnmsc~ to me. 23 Have you ever been deposed before? 23 Will you do that for me, please? 24 A. 1 have been. 24 A. Yes, I will 25 Q. Jam sure that you will roo11ll from your 25 Q. Do you understand that if you mak~ uny .,... .. - . . ... - -··· - ··~ 2 {Pages 5 to 8) Confidenti a l Communications Int . Ltd . 318  "'.. ~' • '\ ~ ..:::: ,..~ - -~ ......... t-' ...- ...,.. :-- l - · - '.J >.>N --::-- - A (.) N 7~ 0 ¢ ~ -> ,r '.~ ~ '' J'i~ ... C Q c:l ._: W .N · - 0 ~ C:. .....! "''%". ~ .1.A; ~-=- ~ ~ ~ ~ ~· !&;.; .::;,.. """' ~ ..... - :....,.._ T. --· ..... - "" ~-~ ~ :5 ~ .,. ,.;. ~.>~.>'J~J N __ ,_.~, :- · "" ..:\l ~"" N N .1\J ~- •·· .... ;.....1 ,... .. ~ , . _ i-1 ~ ~~~~-~~~~~~~"~-o~~~~~aw~- ~ ~ ~~-o~~~~~~~~ c~~~~~-~~~ 319 Russell Read, CFA, Ph.D. 4777 Page 29 Page 31 1 about five minw~l 1 officer was replaood. 811d Norm t cBla!lc was rcpUtced 2 MS. KELLER: Sounds goocL Okay, thruU: you. 2 by Gina foote, F-0-0-T.£. In addition. we blld 3 MR. HilJNTSR: OfT the record. 3 anoth4!r operational per.;on who carne on, who was Joe 4 THtl VtOI!OORAPHE:R: 1ne tlmu •:s 12 fl.m•. md 4 S>'~ldMa. each of U1em were junior~ 5 we Q1\! uiTl.h.t: tcX.'OOO 5 Q. Is C Chllnge ln\~"1mcnt.<~ still in operation? 6 (Rcoess taken from 12:00 to 12:06) 6 A. C Change lnv~ents is not opc::mting now. 7 TiiE VTDEOGRAPHER: The time is l 2:06 p.m., 7 Il \\ras d Ycctivcly merged into a n-=w company . calJ~ 8 1111d we are <>;n the record. a "'Tra.osform31ive Enefgy and M~terials Capital, which 9 CROSS EXAMINATION 9 was fonnc:d as a combination or C Change and a group 10 BY MS. KalER: 10 out of New YorX City. ~lied "Quadrant Capital. M ll Q. Mr. R~. my name is Kclly Keller, arid you 11 Q. Wt:re you uffiliatt:d with Quadrant Capital? 12 understand I represent the defendant in this ca~, 12 A. l\lo, J had no relationship or affiliation 13 Michael Collins, correct? 13 with QuSldrant CapitaL 14 A. I d<>. 14 Q. Oo you know if Mr. Preston has an 15 Q, r want to go briefly - just some brief 1S uflili1 o( 20 I l and Sought 8 (Pages 29 t o 32) Confidential Communications Int . Lt d. 320  4 77 i P~gc .l~ (lW...:i op!X•rtwutics. i~~u:uing in ~Ill: st unu~ A Th.: amount reech.ed from I'Jipi' \: tQ fund C Q. l'm ...m; , \\ i;"! w:t:- ll:c n:.lsmt yuu :-~ur.pttv 2 Chaugc wa) S25 uulliuu. l(lklllg " s..~l<·~·"? J Q. Aud \\ llltl \\:tS the ntnount rt:<.~tvcd fn:nu ~k A JIO~cth•e!} , w•~ wcm ttMllk: tv rtH:O:\: 11U1 4 Kcnl-cf> tum! tt ''• 8 ,. million \\:ts warclt{)U!'cd. and tfu1t \'\~ts ulliuuttcl) 9 a u~w mtlit~, ~n~:rl • I'EM Ct)!1lll11. · - , r:m~I.Ir;;m;ll\'~ :::: m~t.t.."<1 ror TS I ~ is thut com:cl'? !.0 Eaw/l!;. ~nd ,\.iatcntds t .:upitul," in ~mhumtir.u \\!th l(l ,\ 1 million \\1tS act1tally ch rc<,1t:d to :md .. .. ': Qtt.~t;rtlt L'.3pilt!l \)Ut {)f !,..,,, Vmlo. <. i!) I '.\iJ:I rt~>l 1:0. bwestoo into Te:-.us Sy n~;JS at {ll(; re<.tuc;;t or Tripe~. .!.2 pitrl (•( tlwt t !li;l'f!\.'T. 12 Q Oka~ .. 1 (J. At tlt..: time l.;f; in tht! ~\ttltt~r ,,f ~•ll, yNt 13 A Ok.a~ . Que miUron \\~lS invested. Tile oth.cr l :. hi>\~ ml~h i~,c~ln;..:~tt funu.; bd C (...huu~ nn~~'? H ttWCSlfilCOb.. the Hl\'esllUcUl!i juto FA~~ I: Africa. &)tc A Eftc"'tivciy. <.. Chnngc ont} l"t!is.:d its 1 ~} suslaiuabk ngticulturc wvcstntent "as :ii·hiO.OOO. lnt>lll!). thnt HJO milli(~t, lor u fumJ in\ cstm.:m i:r tl 16 A1t<; tlr.! uM~sltuenl mt<> tl~ biorunss etccttlctty !';nll!C~nir- ~~~N;.'1:'1Cill \\ i!h Qtw,~:utl f~rt>~l.:ll <>l!lllf n projc(;l mlO H;\w'.lll was arc" ouUion dollars. Tlr~ New 'f'.;uk Cit;. . Sn ;rt thtll f'\lml, I \Hltt!d ·~} 1h;ll .,..,wet amount. i do not recall. :fl.:; numl>-.:r was$ f(~~ 1mlhNl itnJ tt <.~ :~~ pwdJco.tcJ 19 Q . And 11us was maser tt11: fw.l.it" Q So in rmtght~· tlu-c:c yenrs, (' (1~mgc had /\ tn\·e~m~m~ ~\trt> . \v~ tel;.,,vcd onr<::1~h Cl:flital mlc C C:htmt>.C 1ivu1 I npex C()f1~r,llt<>n -·t' raised appm.X"imatcl\ l(l 5 million· is ttral <:oi"W:t'~ /\ ln t.ltc tltre£ )•cnrs. T look. at it usC o\>t ,al ''~lhl:r!imd. P,"'intanlv. innittm With 3 0. s,, b. it ~rrc-ct tt trrun Q•ta-tihtot Cttpilili •lOl n( N\!" Y<11·}; Cit} . 4 2(/):8, lmm 1ntct'.(i~'ll UJ' until thl' f pa.~ offtct."Th ~md i.:!l'lp!oy~s or ww: ~or,_~ lt• tl~ nuJdlc oflfsl l , tl-.c JOV miUilm \:trmc ~m .-l ~ld.hw~l fWlds raised tl!!ll '''e!\.::sctu..~Hy lll,-est~o:d? the ='·'CfW in th.o1t l::"Sl) ~,-;-r !-..1it HU~'TE~ · ObJ~i!tia:t, f6nu l.l 01aJ' So of lh·.> 26 5 miJJK•Il \\~!\: tWI A. ~t• «)r thl! mvncy dt:~t w:ss iJt\'eSt<:o h\ i ti~ lwking at the lw miUitm. Uul l+f 1.b.c 26 5 <.~nll til.s<} (;hrilitol'llcnkcl, \\~ \\'l:re e~blc ln mukc •• ,.,.c minion. 1 million \\~ l lu] Sl, t.'llm.'>~.:l'? \\CC\: ab!u to bc~h Pll)' cmpluj c-:s am! i!ll.O p.ay r~lf A Cun-cc1 ~~ru~ctmg partr.l..'n> t~ h~lp us lc- ;Jcn:t!)· Q. A t\.'\•· milhon to !he hl-'ma"-q ~1..-ct m mstitut1o:ml m\.;:~·w~ . 'UtJ ulli(•, \\C dld mo.kc :tOnic I !.nvmi, cot~·> :r. im ..:slnwnl~ 1(1 '''"n:n(~Jo'\.' -· ''~ m:t~~: ,.,,nc m\ ""Sinlcr.<.i A Yt.~ •Hl tx.~lv.:lf \l!' <; <..1\iln~e f(l "1m:hou-s.c f<~r., pntcnlltll lEi 0 . ·10U,OGO lc u pw~-cl m A frica oomx:t'! fimd inw~llt\CI)t. .. 7 1\. Y~."' flfu: Of ftl(I:IU tn'\L":->1ltll"TJ[~ \\.'?!~Of J.~ (J.. And {.J' th•>!l".: - f'v~ ! USt llllt~ Om:~ ~liiiiM ...inll:u irwelilUWill imo l~~i'" Syn~a~l\t: 11 9 ltlYL":\tnlcuts. Were there 1my otik!r inv~tm.:nls tha! V/~ ;illi(t t()nde sumc ~d1tiom.1L mn:SimcniS. ''h;ch .:r. we~ mr.dc with the).[,, - willi<)ll c,r did 1h.: rcrn:r in,h:;r mciU<~•Ithc "orehou·m1g nl Ure in'·cstiJICnl Jhr ?. 1 .(Nl to rutllling dt.:: <)pcn:titmsor (. Cilt:ll~C'! hiOltl:t~}. h1 uk~lJ;-:sl~ iu l t;rw<~ir. U$ .,, d l as o 11 MU t £UN1 ER. Oh;tX:ti()n form. ' '. ."! 111\ ~l~lUill n.;crci,~: from 11 i}.t.~Y !r i:c fl•>~~~blc 1 an. nli~te~;t~ill~i'ut~ ~~ ~·ociifl~ 9 (?ages 33 to 3~> C<:;~ f i den i.: :i. ~J l Commu 11 i r;a ~ i ·:>ns Tnt , J.. t d. 321 gu,j,:.;ol.l R~v:J, ('!•'A, Ph.D. 4777 fl~ 9 ~t ~·~ ., s, ;;~N ~~ l'l hH1t."<11 tnmh' '' tlh 1~'"JI<.~t lv I .J ~) ~~~~l'V.. lxs~; 01 u til( tt N(' 12 ut lhr limo'/ 2 ~:4:Utt:l~l ~tl IO th1: 111l'. A Wh~m J rir:.t m..:l wtlh thetll, m.' rc Whu psopv:t,' l.l lhl.i IIU\1 llilllll.''.' £t A I bVIi\t\ ~Jilml (' CiHIUl\'-' lrtV~:ibtMll~' :it\11 :~ A. ( hdi11\ 1~ lfll.l lhJ\\ lhl!IH:. ,j( ITI)' 111~llii~IV l n u>;,~l:cll!t'lllh . J rhh1l llllll lhlit lh~hS '" l (. 1111\!mkd •~· I·~ '' !O!l '' whut '·'4\"lht.: ~.'i f1 I tll,l. llttlw..l. 1:J wurvll,>lll>luv.'' Th'1"11 fhr~X lhul \' v chf'\,;11t<~~~·r "! ~ (,l I !:ld \' HIJ (\'ltd bH>}!III~tht\;."S l'vl' Hllol ~·lill~)lJIII!I 1 :.t 1\ YU'1 .a. I} ptiur 1<1 Yt>III fie 'it lllt.'\' till!!.'/ l(J ~~ 'rho lSl ··<' lltc1~\ u''' !ll>lll<' ntlwr ~111111 1)1' ,z(t .,u t\ . I Ill~ 1\.'Cvll~o~ctilm unJ kll\:IIWY)' , 1\1' .;~ ~ m..:l 2) Q O~:lY. I'<.1 JU,~: t1' IJ.O luwk !ll yc llit ~~ What t!llud. ml! i,. thflltl Wtt'~ u \~1'\ ~ •I conv~r~nthm:o~ with Mr c.,Hitl:l. ,. ;! t, polclltlnll) h rlfl\lh!Yil:ll l \ \! IL'<.hllnlo~~. h\.'\:(IU~ II .c:s .. 111\:lk'-'nt•,, rt;ltll thm >•·••llud lht\~· . . ·2 ~ hupt\1\ ~d th1.: ~,l'fil!tvli~;V ~~r ~;t~;r'll'''·\ lll)ltld t'•tvl f:um \lwW.A\~,,;;. •••-~•• r.•~·........... ____•• ___ _______ --- •••••••••... . _ h • ,,, .. ,, . . . . . . . . , , . , , , , . ._ , . , ,. . . . . . . . . . . . , . _ _ . . . , , _, , P:l•; -:: 3~ !i~IUI iUIJ1 ;UIIII) JIHri\M Ui (:11111 t!\~ 11f lJH' lt'\:hunl•lit,~ 11) 1\l~l '' ilh th~o; f""llvil>trl,., ,,,.'In:\,.. •{, tJ~~ws. ,lulm JL fl> lhl/ it~·~· ~'llll(' !II. l~))\CJ f'lll?o((11), 1\ Uti \'Col y illlpl r.'iiM:Il 17 l't\"1tl lln; cr:. r; ;...') ~ r- !:: {'J;. 0 ,.-.li ~; ~ ..,... ~ - ~ "'l) ~ -~ :..D [- ~ t: ~ -: ..."~ ,~ flY ;u • ~ ~ ~ V, C .-; t"'.C. C.) ~ ~~ - t -< -: __. :- _.:: ~ ......,. N f".~ \"\( -<"".i ('-,;. ~..(. ' -, ' - r-...,; ,.. , ,.. • .., ..... -:"t.i <"< C'< ('\; ~ ~ --····---~ ---------------------------..;.----~------ I f ! I I s ~ §"~ Co.~ -- - r..: ~ ~ ~'l ~ ! ' cc c. 0 ~ ~ !""! ~ t:n ~ ~ ~ - o -c-4 --:--: :""! - -~ c.... !'!) ~ ::l ~ : - ro ""' e - :-·... =-" -....: r.;") -... --• --. .-: ~ ,.-: -1 r> - ~l N ~'-J. ~ .~: ~~ ,...c-c.....-t-...-.-~NN~~ ;.-......N  9. .Preston expressly incorporates each ofthe above objections to the extent appHcable1n each specific respvnse to the interrogatories set forth below~ as if fully set furth in the answef to each specific interrogatory. SPECIFIC RESPONSES AND OBJECTIONS INTERROGATORY NO. l State the dates of service for your service on the board of directors ofTSL Subject to and \\~thout waiving Preston's objections. Preston responds as follows: Preston served on the board of directors ofTSl between the end of 2004 and on or about May4, 2009. INTERROGATORY NO.2 Describe in detail tl1e nature ofyour service Of.l the board of directors ofTSI. ANSWER: Pre5tnn objoc.ts to. this interrogat{)ry as ~:wefly broad arl.d undllly burdensome in requestin~ that Pn!stO:n.d'Cscribe "'in detaw~ his $et:\ll(~. Preston ~so .~b.jects t9 this interr()gat~ry as va;gu~ and a.mbigu<.lU$ i~~ requ~sti,ng that Prestoo describe ~'the n.ature ·of'~ his $ervice.. P~ton ,,.,,.ill intecpret thi$ to be a request for Preston to. describe his serVice on tJ)e board ofdh:ectors . .S'Ubjeet to and ·'rvitbout wnivi~ Prcston.•s objections, Preston.respond$ ·~s follows:. The board of dire.ctor$ played· a.· roi~ :h'J. t.tle· ·~QVtmtW,'lW~ ·ot ' TSI~ ·:wh,ieh ·i:ncl.uderJ .respoQsibility fQt.tlw·~iring amLnrlilg of the 'CEO~ :'P.tes.to~·h~d provide govemance. fNTERROGATQRV NO.9 Identify each board meetingofNCll in which you participated and state (I) where such meeting was held, 2) when such meeting was held. and 3) whether your participation was in person, by telephone, or by some other electroni<: means. 9 327 ANSWER: Preston is not subject to the j urisdiction of this court. Accordingly, Preston objects to this request to the extent it does not seek infonnation that relates to or is reasonably calculated to lead to admissible evidence regarding whether thjs court has jurisdiction over Preston. Preston objects to this interrogatory as overly broad and unduly burdensome in requesting that Preston identify " each" board meeting regardless of whether it has any connection to Texas. Subject to and without waiving Preston·s objections. Preston responds as follows: Preston is not aware which meetings constituted NC12 board meetings. He participated in meetings or calls related to NC12, however, that may have constituted NC1 2 board meetings on the following dates and locations. but Preston was never in Texas for any such meetings or calls: Date .· : - Lcu::ation Means May 1, 2009 Massachusetts In Person September 14, 201 0 Massachusetts In Person October 17, 201 0 Munich, Gennany Telephone November 24,2010 Massachusetts In Person November 29, 2010 Massachusetts In Person January 4, 2011 Massachusetts In Person January 7. 2011 · Massachusetts In Person February 21 , 2011 Massachusetts Telephone February 25, 201 t Frankfurt., Gennany TeleJ:>hone INTERROGATORY NO. 10 Identify all payments you reocived of any nature from NC 12. ANS\VER: Preston is not subject to the jurisdiction of this court. Accordingly) Preston objects to thi s interrogatory on the grounds that it does not seek infonnation that relates to or is reasonably calculated to lead to admissible evidence regarding whether this court has jurisdiction over Preston. Preston further objects on the grounds that this information may be obtained directly from other entities that are subject to this court' s jurisdiction, which would be the Jeast intrusive and most efficient method for Intervenors ' to obtain the infonnation they seek. 10 328 Preston also objects to this request to the extent it seeks proprietary infoiDlation, trade secrets or other confidential information, disclosure of which would harm Preston or Quantum Catalytics or is protected fiom disclosure by confidentiality agreements. INTERROGATORY NO.ll Identify all documents which you signed as an officer or director ofNC12. ANSWER: Preston is not subject to the jurisdiction of this court. Accordingly, Preston objects to this interrogatory on the grounds that it does not seek information that relates to or is reasonably calculated to lead to admissible evidence regarding whether this cowt has jurisdiction over Preston. Preston also objects to this interrogatory on the grounds that it is overly broad and unduly burdensome is seeking "all documents" Preston signed without any limits, regardless of their connection to Texas. Preston further objects on the grolDlds that this information may be obtained directly from NC 12, which would be the least intrusive and most efficient method for InterVenors' to obtain the information they seek. Preston also objects to this request to the extent it seeks proprietary information, trade secrets or other confidentiaJ information, disclosure of which would hann Preston or is protected from disclosure by confidentiality agreements. UITERROGATORYNO.U Identify all investments that you made in NC12, whether such investment was made in money or services. Include in your :response, 1) the date of such investment; 2) the amoWlt of such investment; 3) the number of share or other interest received on such investment; and 4) the returns, if any, received on such investment. ANSWER: Preston is not subject to the jurisdiction of this court. Accordingly, Preston objects to this interrogatory on the grounds that it does not seek infonnation that relates to or is reasonably calculated to lead to admissible evidence regarding whether this court has jurisdiction over Preston. Preston further objects on the grounds that this information may be obtained directly from TSI, which would be the least in1J'USive and most efficient method for lntervenors' to obtain the information they seek. 11 329 Preston also objects to this request to the extent it seeks proprietary information, trade secrets or other confidential infonnation~ disclosure of whjcb would harm Preston Ol' is protected fi·om disclosure by «>nfidentiali ty agreements. !NTKRROGATORYNO.l3 Identify aU companies, whether public or privat€; wifu offices in Texas, for which you have served on tbe board of directors or as 1m officer or etnpJoyee. Include in your response 1) the dates of such service, 2) the location from wb.ich you worked/served; 3) the compensation received; and 4) the position in which you served and/or were ~'l'lployed. ANSWER: Preston is not subject to the jurisdiction of tlus court. Acoording1y, Preston objects to this interrogatory to the extent that it does not seek iuformation tl1at relates to or is reasonably calculated to lead to admissible evidence regarding whether this oou.rt has jurisdiction over !>reston. Subject to and vvithout waiving Prestnn~s. o'bjections.l,reston responds as foUows: Texas Syngas LLC }s the only company Vrith its principal place of business in Texas or incorporated in Texas for which 11 reston was a remnn's: objections. Preston responds as follo~'S: No company or entity wholly owned or ccmtroHcd by Prestoll directly owns or controls a.lly real property in "fe.xas or has any business operatio.ns in Tex.as. 1NTERROGATORY NO•.16 State whether any company in which you hold ~ majority interest owns or controls any real pro~rty itl Texas or ha.s f\ny business operntions in Texas. If so) indude in y()ur response; l) the identity of snch t¥lmp:,ny; Z) describe the rw11 prop(..'Tiy owned or controlJed; Md ~} de.<)cribe in detail the nature of such business. 331 ANSWER: Preston is not subject to the jurisdiction of this court. Accordingly, Preston objects to this interrogatory on the groWids that it does not seek information that relates to or is reasonably calculated to lead to admissible evidence regarding whether this court has jurisdiction over Preston. Preston further objects to this interrogatory to the extent it is duplicative of Interrogatory No. 15. Subject to and without waiving Preston's objections. Preston responds as follows: No company or entity in which Preston holds a majority interest directly owns or controls any real property in Texas or has any business operations in Texas. INTERROGATORY NO. 17 Identify each investment you have made within the last 10 years in any company incorporated in Texas or having a principal office in Texas. Includ.e in yow- response the amount ofyow- investment and the nature of such investment. ANSWER: Preston is not subject to the jurisdiction of this court. Accxmlingly, Preston objects to this interrogatory on the grounds that it does not seek information that relates to or is reasonably calculated to lead to admissible evidence regarding whether this court bas jurisdiction over Preston. Preston objects to this interrogatory as overly broad and \Dlduly burdensome in seeking detailed infonnation about events that OOCWTed so long ago that: (a) do not relate to specific jurisdiction. and (b) cannot be used as a basis to support general jmisdjction. INTERROGATORY NO. 18 Describe in detail all communications which you have had with any pmon or entities located in Texas within the last five years. Include in your response the dates of such communications, the pwpose of such communications, and the means by which such communications were made. ANSWER: Preston objects to this intem>gatory as overly broad and unduly bmdensome in seeking detailed information about "all commtmications" over a fiv~yea:r period. 14 332 Subject to and without waiving Preston~s objections~ Preston responds as follows: Preston communicated by telephone with Michael Sydow on occasion during the last five years in relation to TSI and NC12. As a representative of TEM Capital, Preston communicated regularly with various individuals in Texas on behalf ofTEM Capital over the last five years. 15 333  VERIFICATION My name is John Preston, my date of birth is March 18, 1950, and my address is 9 Martins Cove Lane, Hingham, MA 02043. I declare under penalty ofperjwy that the answers in the foregoing John Preston's First Amended Objections and Answers to Intervenor's First Set of Interrogatories are 1rue and correct to the best of my own personal knowledge and belief. Executed on the.?.oday of March, 2014 JtLr~ ohnPreston 334  -.;..w·· ci'~"- ' ~ ·~ ~~ w""·· t-,w- 1, 11o9~ 00} ~ ·~ ~ r~ ·-~~ (fA. ~ Flight Cbeel:< ..l_n R;e'tYlind,et 1~a· JOHNT PRESTON -~1 Ai.re~.m m:~Qtillctl'ltll1.<:cm hllrJ.prlcif, In)( 1)1' v •r\)hil y~Jr LIOIIN1t'I,O ~D~~~I). for your tl'\1) Ul Hous~o, 1~ (lfiU • Tot\7irmllltl<~.fl·t~fVII\g l;j~~~ ~It$,. al!MO) II OU~t~'t.¥.HM~ -. ~M~ (JIM!i; 1r.t1r®nUr~ll~l) R50ACTSO M~~lsi S,OI)(~ N!> ~u~dM r•t~:ol ¢rf~tr~, l'l<~v.rUt~.Jtl.(?llll':$dOtU . . JOli_N·r-pftf!sYt-'l~'""" >Vk.t~J ~~u~~~JW..t~,,~.,~.iurs.~~~~l~:o. <'" eoa,tmcmt1\l.r.onr, ~ailter- ~~m$'_for Uou,,e~,,, l'X .v~~~-~s~h1~~·A· " ,_,......._~.,L 1:ad~~ ..,.. . . _··. ........ . . . . . . . . _. , ... . . . . . . ,. . . . . . . . . . .,1. . . . ".-. ." ·"'"'. . . . .£t,LIL.... ... ~~~ ~\OtM~ tiL~ .._ . _ ·~~w~t.ay, ~"·~ t41wtC.l~ ~ 'IIUII\V V.At!WCitio~liy',tWiu•l IIIQIH ,;oor. 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I l 335 :· 336 .·/;"/ ~· ·. · · ·· · ...  ~ ~- ~ ~ ~ ~ ~ ~ ~' ~ Ft\ght Check..fn RemtrHier f-or JOHNT PRESTON -~Kl.l..,'l: t~ .;t ~¢Mi1Hlil1"'1.~ttl onrthi;~._t1oll R>~~ r~s.lil(_tiMl> -iltltl~!mbaHif>~ Cue fllbl\I.S ·~r!Dlnllthli! ol'l \..Qt~tfn~Mt. M t (t eoiltn·H:rltal,aiil\, If 't'Qvr' ll!AttMfS or ~fi11thilt" l}iriiM you \Vlll ne~4 to cl'to Ylt?w t~iWJ.l~.t~1IJt ~( ~ ·~1\lllny. ~§: ~la\Wk'l.""!t' ~) . l il{d H !N"t-'( l·?."t)l'I:W .~h(lWI'r'll lll(}h: 'S~I;{~.lcC)I'Iitlfl: !)(lcif- $11"<.:). 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Your tee~!l)t WIH be ~~~t onu y01.1r eTitkpt '·ilthJn tlfrM t-ours, Af'•<:•.e W.}!;;( s;.~ ~ ~ ~~ re~~d tour t~celpt. you can request ttddlt!Ollal receq,ts, ~to Ou · retlm~ oc: Q:an.qe "tO=Jr tllg'l'rt, "1e..,/d111n0¢ scots, d1ccl<•ln, or e•m.:tll or prfnt your \tJner.ify. ~Yes~ A~ Trfp Protector for ~3l.9B. ~ :w:ir.~ detej]s. - E-maillnformation 339  P:i~a£e dO Ool n!~~X ta thl:i ltl¢:$1!<*~ u$iln9 Ute "t<~i}f~" ~~~~~. ·r-~:r· ..~').$.:~~~~~ ~t-~se·::&f.i.~<:t th~ ~~~~v~:e s~~::..:it ~s~ '/:(~ {~~~rl<~ ~~ ~~~ t,l~~~ 'littl:~ !>t<'Y.~~~·,~~ C¢N~<-n-;m~¢~ :~• m;slf Adtl:t~:s;~,"!fl~~tl:.\~f.~}!-\l~ti;?1$ ~~;'It t~ {;hn~!ilel\tti):Mfin~~...YQ'ur ~~Cif)t will ts~ '~"~ '~l.l¢~: y.qqr-~fc~ts ~e !Je~ pr~~~ 1$.1.~<".,~~ u~·t9 \1~~ l'l~~r,, If '~ (fu 11Q.tf~lw:l ·~IJ.%~Tf~e.~.r~-~ltlli!\ Vt~ bo-~~ ~~~~~~ ·~~· ~~tl· hv#,Tt01tl>¥i!d Y®1 ro~e1pt, )~~ ·~m ·(aQ~t ·~a!t~n~ r~iP~.c .t!~RQ,6 ~ ~·~I; rt:~n.d ~t. ¢1&1~e, ycur n1ght Vltw/ci!E~fi,M .JS~t~, dlr:tc~~ll\, ~1'~: rt~U!f or. ·P!'~t-:yo::lr n:.i~aty,, 9"!;'- ...r-4- ~.., ..............~....,-.........•,~o·uto••""...."li'~•'•~"'-•nvn.•• •"••······~"\. ,....~:;; :: ~ ~f )res, Add "lrip Protector· far f ..... ! ~34. 25 . Se~l'e. d.e.ta.lla.. ( ;~ Additi{)rtaJ Tri;Pia nn1ng Tools --1 1' ~ ~:§: Vcfit~ I -~=:~;~~t ~~99~9~ ~=~-¥-J 341  342 ..... 'COlltinet\taJ Itinerary Il'lfffl'nlil:ti~:m ~~r !'I~ 1,)\lblMk'i, \Vlt o~ .stilt o~~ yct}r ttt.t1'v~t!Ofi, ~llcf llats ~ ·n1aarttJre-), o·m~l or ~~Jt ~ ltlner<~ry, rtQuest oddiU.Qnal re~·Pls. ~..CI)Oft it to Outloe>k, ex re~hmd or o0 dt$ Mt. rnP,.ty x~~ .t;l'i~ mws.·M~*' H~~~:dJl!- '"'r.~pl¥'' $\.s!l'n.:..~:n~ m l.hl$' .e~!'tl)'):f :$. h~~~~:;;iJ'~s<.i~)~~ ~!ft,·:~~-, · ~-,·.~nt.1')~ ~~~l' !'.:h•).rt-ttid·~~'l;,)t.lt {)es~ vfa ~::.9..\~tll N' ·~.nbJw..~. . 1\lo:r\: fU!Jht ·~~~'-''~"'-~~·r,4;:lll'lmu~~ .r; • 111ail A~$th'¢l'§~"~we~t.T.~!~~' N•tl Tl'u~. ~ Sent: Thursday, March 10, 201111:58 AM To: Katherine Frisina Subject: Travel Reservation March 16 for JOHN THOMAS PRESTON Your Travel Arranger is pleased to deliver your complete travel itinerary through Sabre® Virtually There®. Click here to access your reservation on the web or a mobile device. Itinerary JOHN THOMAS PRESTON Reservation code : HKZBLO Travel Arranger Priority comments : ETA/HRG OFFERS 24/7 IN-HOUSE EMERGENCY SERVICE Wed, Mar 16 Flights : JETBLUE AIRWAYS , 86 1265 From : BOSTON , MA (BOS) Departs : 6 : 40am Departure Terminal : TERMINAL C To : AUSTIN , TX (AUS) Arr i v es : l2 : 09pm Class : REDACTED Seat(G) :Check - In Re quired Status: Confirmed Airline Confirmation: OOKMQI Meal: Smoking : No Aircraft : EMBRAER EMB E90 JET Distance (in Miles ): 1694 Duration: 4hour(s) and 29minute{s) Frequent Flyer: JETBLUE AIRWAYS 2047935390 Please verify flight times prior to departure March 16 Other : Status: Confirmed Information:SEATS RESTRICTED TO AIRPORT CHECKIN . WE WILL CONTINUE TO MONITOR SEAT MAP REDACTED Thu , Mar 17 Flights : JETBLUE AIRWAYS , B6 1264 From: AUSTIN, TX tAUS) Departs: 4 : 55pm To: BOSTON, MA (80S ) Arrives : 9:43pm Arrival Terminal : TERMINAL C Class : REDACTED Seat(s): PRESTON/JOHN THOMAS- lSD Status : Confirmed Airline Confirmation: OOKMQI PRESTONOOOOtl 345  Meal: Smoking: No Aircraft: EMBRABR BMB B90 JET Distance (in Miles): 1694 Duration: Jbour(s) and 48minute(s) Frequent Flyer: JBTBL'0'2 AIRWAYS 2047935390 Please verify flight ti111es prior to departure May 16 Othert Status' Confi .ra\ed , Information:VISIT WWW·EXECTBAVEL.CQM ARRANGBR RBMAJU.tS: VISIT US ON THB WBB AT WWW. EXEC1'BAWL. COM • --MY DIR!CT PHONE tS 202 • 496-2791•• •--APTBR HRS EMERGENCY SVC 202-828-0090•• PLS NOTE TICKBT 18 NONREP'UNDABLB CHANGES MUST BE IQDB I ON OR BBPORE 1'1IE DBPARTORB OP EACH TICKETBD PLIGHT SBGMBHT AND ARB S'UBJBCT TO A PBNALTY PLUS ANY PARE DilTBRINCB. CHANGES RBQUBSTBD APTER DBPARTUR.E DATB 01' ORIGINAL TICKB'l'BD FLIGHT ARB NOT PERMITTED AND TICKBT WILL HOLD NO VALUE. eTicket Receipt(s); 2797962668075 • PREST/J For your convenience, a text version of your itinerary is included in this e-mail and was current as of the time the e·mail was sent Please click on the link above or contact Your Travel Arranger for the most current infonnation. Virtually There® allows you to review or print your n:servations, as well as: • Register for trip reminders and cancellation/delay notifications • View maps & driving directions • Review city guides & restaurant recommendations • Get up-to-date weather and much more! You may also access your reservation on the web or from your mobile device at www.virtuallythere.com. Simply enter your last name and the six-character reservation code provided to you by Your Travel Arranger. As a security measure, you will be prompted to enter your e-mail address or a password that Your Travel AtT&nger may have provided to you. If you have any question about which e-mail address to use, we recommend that you use the one that received this e-majJ. CLICK HERE to opt out of receiving future e-mails from Virtually There. If the above link is inactive, please paste this URL into your browser to access your reservations: https:l/www.virtuallvthere.com/new/reservationsChron.htrnJ?host=1W&pnr=2 1MG2LRH2QOA&name=PRES TQN&!anwase=Q&email;:::2 EXECUTIVE TRAVEL ASSOCIATE~/HRG VISIT US ON THE WEB AT WWW.EXECTRA VEL.COM 1 raESTONOOODl2 346 From: JUQX PALION To: Katbedne Frisina Subjec:t; Trawl Reservation December JO rOf JOHN THOMAS PRESTON Date: Tuesday, December 28, 201B JO:U:37 AM Your Travel Arranger is pleased to deliver your complete travel itinerary through Sabre® Virtually There®. Click here to access your reservation on the web or a mobjle deyjce Itinerary JOHN THOMAS PRESTON Reservation code: KPUDSE Travel Arranger Priority comments: ETA/HRG OFFERS 24/7 IN-HOUSE EMERGENCY SERVICE Thu, Dec 30 Flights: AMERICAN AIRLINES, AA 1365 From: BOSTON, MA (BOS) Departs: 8:40am Departure Terminal: TERMINAL B To : DAL NORTH, TX (OFI-1) Arrives: 12:1Spm Class: REDACTED Seat(s) TON/JOHN THOMAS - 18F Status: Confirmed Airline confirmation : KPUDSE Meal: Food for Purchase Smoking: No Aircraft: BOEING 757 JET Distance (in Miles): 1556 Duration: 4hour(s) and 35minute{s) Frequent Flyer: AMERICAN AIRLINES NR\'16022 Please verify flight times prior to departure Thu, Dec 30 - Fri, Dec 31 Flights: AMERICAN AIRL1NES, AA 2282 From: DALLAS FT \>IORTH, TX ( DFW) Departs: 7:45pm - December 30 To: BOSTON, MA {BOS) Arrives : 12:10am -December 31 Arrival al: TERMINAL B Class: REDACTED . Seat(s) TON/JOHN THOMAS - 13A Status: Confirmed Airline Confirmation: KPUDSE Meal: Food for Purchase Smoking: No Aircraft: BOEING 757 JET Dis tance (in Miles): 1556 Duration: 3hour(s) and 25minute(s) Frequent Flyer: ANERICAN At RLINES NRW6022 Please verify flight times prior to departure Ma.rch 01 Other: Status: Confirmed Infoilllation : VISIT WWN. EXECTRAVEL. COM ARRANGER REMARKS: VISIT US ON THE WEB AT WW~I. EXECTRAVEL.COM •--MY DIRECT PHONE IS 202·496-2791•• •--AFTER HRS EMERGENCY SVC 202-828-0090 .. eTicket Receipt(s): 0017943995686 - PREST/J For your convenience, a text version of your itinerary is included in this e-mail and was current as of the time the e-mail was sent. Please click on the link above or contact Your Travel Arranger for the most current information. PRESTONOIIn023 347 Virtually There® allows you to review or print your reservations, as well as: • Register for trip reminders and cancellation/delay notifications • View maps & driving directions • Review city guides & restaurant recommendations • Get up-to-date weather and much more! You may also access your reservation on the web or from your mobile device at www virtuallytbere.com. Simply enter your last name and the six-character reservation code provided to you by Your Travel Arranger. As a security measure, you will be prompted to enter your e-mail address or a password that Your Travel Arranger may have provided to you. If you have any question about which e-mail address to use, we recommend that you use the one that received this e-mail. CIJCK HERE to opt out of receiving fyh1re e-mails from Virtually There. If the above link is inactive, please paste this URL into your browser to access your reservations: bttps·Uwww yjrtua!lytbere.comlnew/reservationsCbmn.html? host= I W&:pnr=2 1Q239H9102&name=PRESTQN&Ianguage=O&email=2 EXECUTIVE TRAVEL ASSOCIATESIHR.G VISIT US ON 11m WEB AT WWW.EXECTRAVEL.COM PRESTOI'IOOOOZ4 348 From: JUQX DALTON To: l :=Ro Ci'S'So v:Jt 41. Arc these memoranda, reports, records, or data compilations, outlined in the subpoena duces tecum, penaining t•~~ - ...'~!'~~ · - NotarY Public. ~tate of Tes C miss1on EltP'18 Jc~!.~.~,\" ..... ~~.. 0 Mv J:ne 30, 20\4 '.. ·- · .., Cowi;!11 0 11182-2010 g, t;obu• S..W.a, Int. · P1ocau S.,.er'5 Toolllax V!i.r the State ofTexas, hereby certify pursuant to the Rule 206, Texas Rules of Civil Procedure, I. That this Deposition by Written Questions of Patricia D. Custard, the Custodian of Records for the above named is a true and exact duplicate of the records pertaining to See Exhibit A, given by the witDess named herein, after said witness was duly sworn by Anneetress D. Walker 2. That the U'IU\SCript is a true record of the testimony given by the witness; 3. That $1,406.15 is the charge for the preparation of the completed Deposition by Written Questions and any copies of exhibits, charged to Anomey for Respondent, Dennis B. KeUy, TBA # 11217500; 4. That the deposition transcript was submitted on the l6tb day of January, lOll , to the witness for examination, signature and return to the officer b:y a specified date; S. That chana~. it any made by the witness, in th~; transcript and otherwise are auached thereto or incorporated therein; 6. That the witness returned the transcript; 7. That the original depositio~ by Written Questions and a copy thereof, together with copies of all exhibitS was delivered to the anomey or party who Noticed the first questions for safekeeping and use at uial; 8. That pul'$uant to information made a part of the records at the time said testimony was taken. the following includes all parties of record: Asher B. Griffin Joseph lodelka.to,lr. David J . Wukosoo. Attoraey For Petitioner and 9. A copy of this Notice of Delivery was served o_n all panies shown herejn, MerriU Corporation 315 Capitol Suite 210 Houston, TX 77002 (713) 868-1919 Fax (713) 315-1158 SHEUA ANN EDWARDS Order No. 03-6170-001 MV COl.IMISSION EXPIRES OIIC8mber 2. 2011 374  P.EPOSlTION S~OENA TO TESl]fY OR Pft.ODYCE DOCUMJfNTS OR TlllNGS THE STATE OF TEXAS To any Sheriff or Constable of the State of Texas or Olhrr person aurhorized to serve subpoenas under RULE 176 OF TEXAS RULES OF CIVIL PROCEDURE. - GREETINGS - You are ~b)· commanded to subpOena and summon the following witnes.s(es): Custodian of Re<:ords for: Compass Bank, Brokerage Dept. CIO CT CorporalJoo System 350 North Sr. Paul Street Dallas, TX 75201 to be and appear before a Notary Public or my dcsignatioo for M~rrill Corporadon (713) 868-2929 315 Capitol Suite 210, Holl$ton, TX 77002 or ii.S designate€& d~~ which the subpoena L5 served, and may be punished by fine or confioemtnt, or both. ~ ••• ":'~ 0:, ~ .~-~~ •;..,.~ ~ ~ •;!'iF~ ..~... . •• •• OFFICER 'S RETURN . ····i::w .:u''' ' ,~.···~· ; ~::.:u•~ ~~:·...... "•.) ·' , 20_. Came to hand this day of • 20_ _ • and executed thts the _ _ day of in lbt rollowlng manner: By delivering 10 the witness - - -- - - - -- - - - -- - -' a true copy bereof. Returned this _ _ _ d.ay o f - - - - - -· 20_. PROCESS SERVER Orlkc 1'\o. 03-6270-001 375  COMPASS BANK - EXHIBIT A The terms udocuments,, "writings," and "records" are used in t his ex hibit in their c ustomary broad sense and incl ude without lim itation the following items, regardless of origin or location, whether printed, recorded, filmed, or rep roduced by any other mechanical process or written or produced by hand; and whether an original, master, or copyj namely: 1. All acGOunt statements. deposit records. withdrawal records, transfer records, cancelled checks, partnership agreements, funding lines of credit, financing statements, pt·omissory notes and loan documents for tbe period from April 15, 2010, to the present date. for all checking accounts, savings accounts, certificates of deposit, and all other types of financial accounts. whether personal or for businesses in which the parties, Michael D. Sydow (alk/a Michael D. Sydow. Sr., Michael David Sydow, Michael David Sydow, Sr., Michael Sydow, or Michael Sydow~ Sr.) or KelU McDonald Sydow (or either of them), have any interest and that are maintained in the name of the parries (or either of them). in the narne(s) of their business(es). including but not limited to NCJ2, Inc., Texas Syngas. Zagometa, Daedelus Air, The Michael and Kelli Sydow Irrevocable Insurance Trust, Chippendale Park, Loki Investments, Loki Services, American Inte rn atio nal Helicopters , Inc., No Peanuts. or Woden Enterprises. and any other entity on behalf of the parties (or either of them), or on which the parties (or either of them) has or has had the right to draw. includi ng but not limited to each of 'th e fallowing accounts: a. Joint (Kelli Sydow and Michae~ Sydow) Account #xxx8347 b. Amegy Bank Loan CoUateral FBO Michael D. Sydow Accou nt #xxx8347-1 c. ATM Joint (Kelli Sydow and Michael Sydow) Checking Account #xxx4380 d. Money Market Joint (Kelli Sydow and Michael Sydow) Account #xxx1016 e. Bill Payer Joint (Kellf Sydow and Michael Sydow) Checking Account #xxx7863 f. Kelli Sydow C/F Michael Wyatt Sydow UTMAITX Account #xxx3919 g. VCSP/CollegeAmerica 529 Account for Michael Wyatt Sydow h. Kelli McDonald Sydow Account #xxx6212 i. Kelli Sydow and Michael Sydow Tenants in Common Account #xxx8662 j. Michael Wyatt Sydow (Kelli McDonald Sydow Custodian} A ccount #x.xx3511 k. NC12 Account #xxx8791 I. Texas Syngas Account #xxx8791 m. Airplane Account. 2. AH cashier's checks purchased by or on behalf of Michael D. Sydow (alk/a M ichael D. Sydow, Sr., Michael Da,i d Sydow, M;cbael David Sydow, Sr., Michael Sydow. or Michael Sydow~ Sr.) or any of his businesses, including but not limited to NC 12, Inc.. Texas Syngas, Zagometa, Oaedelus Air, The Michael and Kell i Sydow Irrevocable Insurance Trost, Chippendale Park, loki Investments. l oki Services. Am erican International Helicopters. Inc., No Peanuts, or Woden Enterprises. from April 15, ... 376  2010, to the present date. 3. All financial sratements in your possession prepared by or on behalf of Michael D. Sydow (alk/a Michael D. Sydow, Sr. ~ Michael David Sydow, Michael David Sydow. Sr.• Michael Sydow. or Michael Sydow, Sr.} or any of his businesses, including but not limited to NCI2. Inc .. Texas Syngas. Zagometa. Daedelus Air, The Michael and Kelli Sydow Irrevocable Insurance Trust, Chippendale Park, Loki Investments, Loki Services, American International Helicopters, Inc., No Peanuts. or Woden Enterprises, from April 15, 2010, to the present date. 4. AJI checks and other financial instruments negotiated for cash paid by your institution to Michael D. Sydow (alk.'a Michael D. Sydow, Sr., Michael David Sydow, Michael David Sydow, Sr., Michael Sydow, or Michael Sydow, Sr.) or any of his businesses, including but not limited to NCI2, Inc., Texas Syngas, Zagometa, Daedelus Air, The Michael and Kelli Sydow Irrevocable Insurance Trust, Chippendale Park, Loki Investments, Loki Services, American International Helicopters, Inc., No Peanuts, or Woden Enterprises. from April15, 2010, to the present date. 5. All witinglrouting instructions, information and transactions for Michael D. Sydow (alk/a Michael D. Sydow, Sr., Michael David Sydow, Michael David Sydow, Sr., Michael Sydow, or Michael Sydow, Sr.) or any of his businesses, including but not limited to NC12, Jnc., Texas Syngas, Zagometa, Daedelus Air, The Michael and Kelli Sydow Irrevocable Insurance Trust, Chippendale Park, Loki Investments. Loki Services, American International Helicopters, Inc., No Peanuts, or Woden Enterprises, from April 15, 2010, to the present date, including but not limited to ABA wiring/routing #113011258. 6. All account statements, deposit records, withdrawal records, transfer records, cancelled checks, partnership agreements, funding lines of credit, financing statements, promissory notes and Joan documents for the period from April 15, 2010, to the present date, for th~ following account: a. Account #1013572 with.Compass Bank (formerly Southwest Bank of Texas) ... 377  No. 2010~2710 In the Matter of tlte Marriage of IN THE DISTRICT COURT OF Michael D. Sydow and 'Kelli McDonaJd Sydow HARRJS COUl'tTY, TEXAS and u• the interest of Michael Wyatt S~·dow, a minor ehJid 308TH JUDICIAL DISTRICT NOTICE OF INTENTION TO TAKE DEPOSITION BY WRITIE~ QUESTIONS To Petitioner by and through their anomey(s) of record: David J. Wukoson Toomer party/parties by and through their auomey(s) of record: Asher B. Griffin and Joseph Indelicato, Jr. You will please tak~ notice that awenty-fow (24) days from the servi~ of a copy bereof with attached questions, a deposition by wriuen questions will be taken of Custodian of Records for: Compass Bank, Brokerage Dept. C/0 CT Corporation System(Any & All Records) 350 North St. Paul Street Dallas, TX 75201 before a Nowy Public for Merrill Corporation (713) 868-2929 Fax (713) 315-2158 315 Capitol~ Suite 21 O, Rous ton, TX 77002 or 1lS designated agenl. which deposition with attached questions may be used in evidence upon the trial of the above·styled and numbered cause pending in the above named coun. Notice is further given that request 1S hereby made as authorit.ed under Rule 200. Texas Rules or Civil Procedure, to the o ff~eer raking this deposition to issue a subpoena duces tecum and cause it to be served on the witness to produce any and all records as described on the auached questions andfor Exhibit(S) and any other such record in the possession, custody or control of the said witness. and every such record to which the witness may have access, pertaining to: See Exhibil A and to tum all such reconhi over to the officer authori:z.ed to take this deposition so that photographic reproductions of the same may be made and anached to said deposition. Dennls 8 . Kelly Law Offices of Dennis B. Kelly 602 Sawyer, Suite 700 Houston, TX 77007-7524 (713) 868-2700 Fax (713) 86$-6054 Attorney for ~'PQndent SBA # 11217.500 1 hereby certify that a true and correct copy of the foregoing insuument has been forwarded to all Counsel of Record by band delivery. FAX. and/or certified majJ, return receipt requested. on this day. . j Da~£d: December IS. 2010 by Dg 4~.8· . 44 t:.£v .W A,_., Order No. 03-627().001 378  CERTIFICATE OF SERVICE I cenify that a true and correct copy of the foregoing Notice and written questions has been hand-delivered and/or mailed receipt requested, 10 the auorneys of record. Merrill Corporation 315 Capitol Suite 210 Houston, TX 77002 (713) 868-2929 Fax (713) 315-2158 379  (C)Full(/tufl S~I#Mt Outgoing FED Mcs~ hl~tltc!: Sf!GIJ(IlQ ,l.:OJ.:O»'M Rfi)Sl~atntny: alnO~: .\JEss.\CJt JNioR.\J.AttON >\ntlffi\1: .$1.1!/0.000.W Mtt..i1!.:tJD; Q90i161<1M5aMH:OO Saur~: Curm!C)'! Us.D Ll!tdl Vtl'$fOn; 0 rrhui~'l ,._lud)::~t~: lll.Sfl4; Auint~~Son: .unrDalc.: IMA~: 200001 15f:ZQ~fi0CQ01~'T ~ftOtflli!at Oi\Wtl 2009011SA1B7M1C000235011S156 M · fCid'lnf,: A«Oft1 001 Aett~uO~ :i! 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Name: .Jl\ Claims trl"Vestrne.nt Corporation Ad~ros...~ 35{1 N SAiNT Pl\UL ST STE 2900 DALLAS) TX75201-4234 USA fl..~-..~..,-..-.h• 'l~~~~~':.':..':..';.~':..';.;~·l,.'~':,';.';,,':.'~,'';.';.';.';.~';.';.';.';.';.\';.';.';.';.l':,';.'~,.'~;U;.:;;,~l.~UUll;.lUU.:.:.:U.:.l.lJ.Ul.U\l,.'ul;.UlUlJJ1JlU)' 112l111llmm1"nmmm~,,.,,,~,, r ,H JJJ1P ''''',,, ,.,...uh H•••,•, Jl)JJ''m'T "'''m''n D«lJJpmmmpmm·mm mm'l' }"l" " """""""··~ ~i ~1 .,. ~~" . ."~""'i ·' ,. .~..1"'1: tc'\~~~~~~~~~;;~~~..~~~~~~ H 1~ ~~ ;,~~~~,·~·~~,~~~~ .-;,~,~~'~)~')...~ ,·.:1~ :~t~~~,\i~Y:.•'':~·~··' N~"'' &'11';¢' $.;\Nl:-. ~':~:.·~5;:·.~·:·r ... "'~~·~t :~·;§'.'t'\; N~,~.~.~"'\· ~\:'§'~~~'lS:~~,, ~: l~::~::~~!;~~*;~~;m~;i1i~~~~'''"''i~~~ili~~~~~~~~ili~Et~i«::m<.:;:::m:::::;~;;i~;~~~~~'''~:::::~,,~~~~;::~~=~~~~~~~~:~~~::::::::::m:~~~~~~~:~~~~i~::!~~~~~~mmm:::i~~!~~i~iit~~~ili,,,,,,,,,,~j ~ l~st Update 1sal was simply Preston's (lttempt to cut a deal for himselfduough C Change, and not a genuine efff Michael Collin$ and .that the fact~ stated therein were w.ithhi lus. pet-soual.k11ovoilecige ;.md we.te true and.corre.ct. GIVEN UNDER MY I:! AND AND SEAL OF OFPICE this thc~duy ·of J~me:20 14. ""NOTAl~YPOB.tJC lN ANP FOR THE STATE OF TEXAS 410  8/8/2014 5 :43:24 PM Chris Daniel • District Clerk Harris County Envelope No. 2104187 By. GAYLE FULLER Cause No. 2011-44058 MICHAEL COLLINS, ET AL .• § IN THE DISTRICT COURT PLAINTIFFS, § vs. § OF HARRIS COUNTY, TEXAS § . MICHAEL SYDOW, ET AL., § DEFENDANTS. § 215th JUDICIAL DISTRICT AKILA FINANCE, S.A.; BOSQUES DEL MOLINO, § IN TilE DISTRICT COURT S .A. ~ CENTRANS ENERGY SERVICES, INC.; § CHESTERMESTERHOLDINGS. LTD.; DELTEC § BANK & TRUST, LTD.; EMJO INVESTMENTS, § LTD.; WILLIAM END; EVANS & PETREE 40 JK § PLAN; FlRST BAY INTERTRADE; GM PARTNERS; § MARAlR CORP.; W.L. NICHOL, IV; PANORAMA § INVESTMENT, LTD.; PCOI VERMOEGENS VERW.; § ALEJANDRO SANTO DOMINGO; SINCHI § INVESTMENT; VENTURI GLOBAL § INVESTMENTS., LTD., and HJ. von der GOLTZ § lNTERVENORSIPLAJNTIFFS, § vs. § OF HARRIS COUNTY, TEXAS § MICHAEL SYDOW; JOHN PRESTON; CHRISTOPH § HENKEL; C CHANGE INVESTMENTS, LLC; § CHALSYS CAPITAL PARTNERS, LLP; SONIA LO; § BRILLIANT NOVELTY, L.L.C.; OSCURA, INC.; § MELIORA ENERGY TECHNOLOGIES, S.a.r.l; and § FALL RIVER REALTY. LTD., § DEFENDANTS. § 215th JUDICIAL DISTRICT INTERVENORS' SUPPLEMENTAL RESPONSE TO THE SPECIAL APPEARANCE OF JOHN T. PRESTON l. INTRODUCTION Intervenors file this Supplemental Response to the Special Appearance filed by John T. Preston ("Preston") further addressing Preston's contacts with Texas through JK Claims Investment Corporation C'JK Claims..) and allegedly through Transformative Energy & Materials Capital, Jnc. ("TEM Capital"). The evidence confirms that: 413  • JK Claims is merely a shell corporation and the alter ego of Preston. Accordingly, JK Claims' contacts with Texas are contacts of Preston for purposes of the personal jurisdictional analysis. • TEM Capital was not yet incorporated at the time Preston travelled to Texas, allegedly on behalf of TEM CapitaL Accordingly, Preston is not entitled to the fiduciary shield as to those visits. D. BACKGROUND A. Preston Established Minimum Contacts with Texas Under the Guise of JK Oaim. The available evidence confirms that Texas corporatjon JK Claims is merely a front for and the alter ego of Preston and his co-conspirator Michael Sydow ("Sydow, ), created for the purpose of purchasing and then dismissing claims pending against them individually in the 152"d Judicial District Court in Harris County, Texas.1 1. The Kaiser Litigation. On June 26, 2007, Jeffery B. Kaiser (''Kaiser") filed a lawsuit against Texas Syngas LLC ("Syngas LLC"), Michael Collins ("Co11ins, ), M. Sameer Ahmed, Sydow, and all other similarly situated officers and directors of "Texas Syngas LLC alk/a Texas Syngas, Inc." in the 152"d District Court, Harris County, Texas. under cause number 2007-38533 (the "Kaiser Litigation,). On May 5, 2008, Kaiser filed his Second Amended Petition, adding Preston as a named defendant. (Exhibit B at ~ 10). As reflected in the Second Amended Petition, Kaiser sought to recover against Preston, Sydow, and others for what he alleged to have been fraud in the creation ofTexas Syngas, Inc. ("TSI") and the transfer of Syngas LLC' s assets to TSI in violation of his rights as a member of Syngas LLC. Kaiser asserted a number of causes of action against all of the defendants including breach of fiduciary duty. fraud, and violations of the Texas Securities Act. (/d. at ~~ 23 through 68). Attached hereto and incorporated herein by reference is the Affidavit of Kelley M. Keller. 2 414  2. Preston~s a nd Sydow's Response to the Kaiser Litigation. On August 17, 2007, Preston intervened in the Kaiser Litigation through Quantum Catalytics LLC ("Quantum"). (Exhibit C). Preston is the president of Quantum. (See Exhibit D at Ex. D). Quantum asserted that Kaiser did not represent the interests of Quantum and was not entitled to bring any action on its behalf. (Ex. C at ~ 8). Quantum also sought affumative re1ief against Kaiser for alleged breaches of fiduciary duty, negligence, and breach of contract. (ld at m!9, 10). Sydow signed Quantum's petition in intervention as counsel for Quantum. (/d.). On June 20, 2008, Sydow filed an amended answer and counterclaim against Kaiser, asserting that Kaiser brought the Kaiser Litigation for purposes of harassment, in bad faith, and without support in fact or in law. (Exhibit E) . The same day, Sydow filed an amended motion for summary judgment on the claims asserted by Kaiser, asserting: At its core, this lawsuit concerns Kai ser's anger over the fact that Collins has not offered Kaiser any stock in Texas Syngas, Inc. Of course, Collins has no legal obligation to offer his Texas Syngas, Inc. stock to Kaiser or anyone else. Consequently, Kaiser's second amended petition is a lengthy artful dodge asserting causes of action that would purport to create damages where none exist. (Ex. D at p. 4). Preston submitted an affidavit in support of Sydow' s motion, asserting that u(t]he majority of the members of Texas Syngas, L.L.C. have approved the acts taken by Michael C. Collins in the management of the company." (See Ex. D at Ex. D). 3. The Kaiser Bankruptcy and the Assignment to JK Claims. On August 8, 2008, Kaiser filed for bankruptcy under Chapter 7 of Title II of the United States Code in the Southern District of Texas, Houston Division, under Case Number 08-35261- Hl-7. Ronald J. Sommers was appointed Chapter 7 Trustee (the ...Kaiser Trustee"). Upon commencement of the Kaiser bankruptcy, the claims owned by Kaiser and asserted in the Kaiser Litigation became the property of Kaiser' s b-ankruptcy estate and the Kaiser Trustee became the real party in interest. See l l U.S.C. § 541(a). 3 415  The Kaiser Trustee attempted to find couns.el to pursue Kaiser's claims on behalf of the Kaiser bankruptcy estate or to find a purchaser for the claims. On March 14, 2012, Gretchen McCord r·~ceord.,), counsel for the Kaiser Trustee, forwarded a draft motion to sell and order 2 to Kelly Stephens ("Stephens"), of Stephens & Domnitz, PLLC, for his review. (Exhibit F at 38:6-39:7 and Ex. 11 ). Stephens represented the purchaser in connection with the purchase of Kaiser's claims from the Kaiser bankruptcy estate. (Ex. F at 40:3-7, 4 1:3-42:5 and Exs. 11-13). In an email to McCord on June 15, 20 12, Stephens refers to his "clients" without identifying the clients. (Ex. Fat Ex. 13). On June 19, 2012, the Kaiser Trustee filed a motion in the bankruptcy court seeking authority to sell Kaiser' s claims to JK Claims for $25,000. (Exhibit G). Tn the motion to sell, the Kaiser Trustee describes the assets to be sold as follows: Any and call causes of action owned by the Debtor as of the date of his Bankruptcy filing and now owned by the bankruptcy Estate against Texas Syngas, LLC, Texas Syngas, Inc. and their officers. directors, shareholders, agents, attorneys and/or against any predecessor, successor, or affiliated companies, including but not lim ited to the following individuals: Michael Sydow, Michael Collins, John T. Preston, Quantum Catalytics, Inc., and M. Sameer Ahmed. These claims would include specifically all those claims that were owned by the Debtor and that were pled, or that could have been pled, in the Lawsuit with Cause Number 2007-38533, and styled Jeffery B. Kaiser, el. a/ v. Texas Syngas. LLC alkla Texas Syngas, Inc., et a/., currently pending in the 152'1d Judicial District Court of Harris County ("Claims..). (Ex. Gat~ 15). The Trustee described the value of the Kaiser Litigation as "tentative at best' and noted that of ''utmost importance in the Trustee's analysis is that he believes that there is little chance ofrecovery if he were to pursue'' the litigation. (Ex. Gat~ 23) (emphasis added). Coli ins requested the deposition of the corporate representatjve of JK Claims in the course of the Kaiser Litigation. JK Claims designated Sydow as the corporate representative. Sydow·s deposjtion in such capacity was taken on February 25, 2014. That deposition is attached hereto and incorporated herein as ExlUbit F. 4 416  The Kaiser Trustee described the purchaser as follows: The purchaser is JK Claims Investment Corporation, or its assigns, which the Trustee has been informed is being funded by Paul Lohnes ("Purchaser"). The Trustee has been informed that the Purchaser is a business associate of the Defendants. (Jd at~ 16). As reflected below, JK Claims had not yet been incorporated at this time. (Ex. Fat Ex. 3). The bankruptcy court granted the Kaiser Trustee's motion to sell on July 13, 2012. (Exhibit H). On July 26, 2012, Stephens & Domnitz, PLLC, wired $24,970 to the Kaiser Trustee as payment for the claims purchased from the Kaiser Trustee (the ''Kaiser Claims''). (See Exhibit I at 103). 4. The Formation of JK Claims. On June 15, 2012, Sydow filed an Application for Reservation of an Entity Name with the Texas Secretary of State (the " Application"}, reserving the name JK Claims Investment Corporation for the exclusive use of Preston. (Ex. F at 27:23-28:24, 29:3-1 9 and Ex. 6). An applicant for a name reservation may be either an organized entity or an individual. (See Ex. F at Ex. 6). The Application reflects that the applicant is an individual- Preston. (/d). Sydow also prepared JK Claims' Certificate of Formation and filed same with the Texas Secretary of State on August 22, 20 12. (Ex. Fat 17: 5-9~ 21 : 17-22:13 and Ex. 3).3 Sydow signed the Application and paid the $30 fee for the name reservation. (Ex. F at 27:23-28:24, 29:20-24 and Exs. 6, 8). Michael David Sydow, Jr., Sydow' s son employed with Sydow at the time, paid the $300 filing fee for incorporating JK Claims. (Ex. F at 20:15-21 :4, 23:23-25:25 and Ex. 4). 3 Sydow contends that he is ··corporate counsel" for JK Claims and has been since the company's fonnation. (Ex. Fat 6: 18-7:8). Sydow could not say how much he charged for his services in forming JK CJaims and could not even say if he sent JK Claims an invoice for his services. (/d. at 67:2 J-68:4). 5 417  Although Sydow contends that Quantum would have paid for both the name reservation and the incorporation, he could not identify any records confirming same - the only available documentary evidence is that Sydow and his son paid to incorporate JK Claims. (See Ex. F at 20: 15-21 :4, 26: 1-6 and Exs. 4, 6, and 8)." Sydow contends that he also prepared the bylaws for JK Claims (the "Bylaws"). (Ex. F at 10:3-10, 11:1-1 2). However. JK Claims failed to produce a signed and dated copy of its Bylaws. (Ex. Fat Ex. 2). According to Sydow, there is not likely a signed and dated copy. (Ex. F at 12:24-1 3:4 , 13: 15-19, 14:10-13, 15:8-12). The Bylaws Sydow did produce appear to have been hastily prepared from bylaws previously prepared for a Nevada corporation, using a search and replace feature to include the corporation's name and to substitute the word "Texas'' iu place of the word ..Nevada.,. While the Bylaws purport to invoke Texas Jaw. they refer to the "General Corporation Law" throughout - a reference to Nevada law - and refer to specific provisions of the General Corporation Law of Nevada. (See Ex. Fat Ex. 2 at pp. 21 5, 7) The only other corporate records that Sydow produced for JK Claims are similarly lacking in marks of authenticity. Neither the Written Consent in Lieu of Meeting, by which Quantum consented to the appointment of Preston as the sole director on August 22, 2012, nor the Wrilten Consent in Lieu of Meeting. by which Quantum reelected Preston as the sole director on August 22, 2013 , are signed. (Ex. fat Ex. 9, pp. l , 2).s However, the Bylaws require that written consents in lieu of shareholder meetings be signed by I he stockholders holding at least a majority of the voting power of the company. (EJt. Fat Ex. 2 at p. 6). The Bylaws further provide that any action required or permitted to be taken by the JK Sydow testified that he docs not advance payment for the fonnation of entities. (Ex . fat 33 :4~7) . Accordingly. if the payments were not advances, they were payments made by and on behalf of Sydow and/or Preston. for whom the company name was reserved. s Sydow testified that he prepared these documents at Preston·s request. (Ex. Fat 34:11-36:1). 6 418 Claims board of directors may be taken without a meeting if. ..before or after the action. a written consent thereto is signed by all/he members of lhe Board." (Ex. Fat Ex. 2 at p. 9) (emphasis added). However, the document entitled ..JK Claims Action by Director, by which some 6 unnamed director purportedly approved the purchase of the Kaiser Claims is neither signed nor dated. (ld at p. 3). 5. Officen, Directors, and Ownership of JK Claims. The JK Claims Certificate of Formation identifies Preston as the sole director and is signed by Sydow as the organizer. (Ex. Fat 21 :17-22:3 and Ex. 3 at p. 7-9). Preston is and has always been JK Claims' sole officer (president, secretary, and treasurer) and director. (Ex. F at 7:9-25). According to Sydow, Preston was his sole point of contact on the incorporation of JK Claims. (Ex. Fat 11 : 17-24). Sydow contends that JK Claims is wholly owned by Quantum. (Ex. F at 8:1-6. 56:21- 57•3). Sydow initially testified that Quantum held 1,000 shares in JK Claims. (Ex. Fat 8:1-6). However, there are no share certificates evidencing ownership by Quantum. (Ex. F at 55:2-6, 57:14-19). Later in the deposition, Sydow testified that JK Claims does not have any shareholders. (Ex. Fat 56:21-57:3). In fact, there do not appear to be a ny documents evidencing the ownership of JK Claims. According to Sydow, because JK Claims is an "uncertificated" company under applicable Texas law, there are no records that identify JK Clajms ' shareholder(s). {See Ex. Fat 57:2-19, 58:3- 59:5). However, "uncertificated" corporations are merely relieved of the obligation to issue "certificates" to their shareholders evidencing share ownership. See Tex. Bus. Org. Code § 3.201. Ownership of corporatjons electing ·~uncertificated" status is still represented by 6 The Bylaws state that the business and affairs of the company shall be managed by the board of directors. (Ex. F at Ex. 2 at p. 7). 7 419 shareholders. In the event the corporatjon elects to issue ''uncertificated" shares, it nonetheless "issues" shares7 and must deliver to the shareholder a ''notice for uncenificated ownership interest" notifying the shareholder of the infonnation required to be stated on the share certificate, unless such information is reflected in the governing documents of the entity and the shareholder has been provided with such governing documents. Tex. Bus. Org. Code § 3.205 e•after issuing or transferring an tmc.erlijicaled ownership interest, a domestic entity shall notify the owner of the ownership interest in writing of any information required onder thi s subchapter to be stated on a certificate representing the ownership interesf') (emphasis added). Accordingly, corporations electing to be "uncertificated" must issue notice to each of their shareholders that includes, among other things. the name of the shareholder and the number and class of ownership interests held by such shareholdeTS, unless refl ected in the corporate governing documents. Tex. Bus. Org. Code§§ 3.202(c) and 3.205(a). This information- the identity of the shareholder and number and class of shares held - is not included in JK Claims' governing documents.g (See Ex. F at Ex. 2). Accordingly, JK Claims was required to provide the prescribed notice to its shareholder(s) and, apparently, has failed to do so. 6~ Preston and Sydow Purchased tbe Kaiser Claims, Not JK Claims. Although the Kaisu Trustee was led to understand that Paul Lohnes, an alleged business associate of a defendant in the Kaiser Litigation, would be funding the purchase of the Kaiser Claims, according to Sydow. Mr. Lohnes is not connected to JK Claims in any way. (Ex. F at 66: 12-18). Sydow contends instead that Quantum funded the purchase. (Ex. F at 6 1:25-62:23, , The T exas Business Organizations Code defmes a ··sbare" as ''a unit into which the ownership interest in a for-profit corporation, . . . is divided, regardless of whether the share Is cerfljicoted or uncertiflcated." Te.~ . Bus. Org . Code § l.002(80) (emphasis added). Accordingly. ownership in uncertificated corporations is still evidenced by shares. Intervenors challenge whether the documents produced by Sydow arc in fact "governing documents" as tJtey are neilher signed nor dated. (See Ex. F at Ex. 2). 8 420 63: 11-23). However, Sydow was not able to produce any records confinning that Quantum funded the purchase. (See Ex. Fat 61 :25-<>2:23, 63: 11 -23). Records subpoenaed from JK Claims~ former counsel Kelly Stephens reflect that Sydow 9 and Preston split the cost of the claims purchase - with $12,500 coming ufrom Boston" and $12,500 from Sydow. (See Ex. I at 0060). Stephens received the funds for the purchase on June 12,2012. (/d.). As counsel for JK Claims, Stephens negotialed me purchase of the Kaiser Claims with the Kaiser Trustee•s counsel Gretchen McCord. The following communications between Stephens and McCord confirm that Stephens was negotiating on behalf of Preston and Sydow- defendants in the Kaiser Litigation motivated to dismiss the Kaiser Claims - not JK Claims - a corporation not then in existence. • On September 13,201 1, Stephens emailed the Kaiser Trustee, regarding his prior offer to purchase the Kaiser Claims for $25.000. Stephens indicated that he was making another off~r to purchase, this time at $1 0,000, because he understood that Kaiser was going to attempt to acquire the claims from the bankruptcy estate. (Ex. I at 0001). o This email indicates that the purchaser wished to keep Kaiser from pursing the claims. • Later the same day, Stephens emailed the Trustee, raising the offer to purchase back up to $2Si000 and stating that the purchase price was based on a ..,cost of defense' evaluation." Moreover, Stephens' email goes on to explain the weaknesses in Kaiser's claims, concluding that they are "worthless!• (Ex. I at 0002-3). o The valuation method and conclusion that the claims are worthless reflects settlement discussions, not negotjations by a bona fide purchaser for whom "cost of defense'' would not have been an issue. • Stephens confirmed in an email to McCord on September 19, 2011 , that the offer was "based on the cost of defense of the clajms made in the prior lawsuit" and stated that the buyer had come forward "because Kaiser has filed a couple of motions to retain." Stephens stated that the purchasers had let the first offer lapse when they "thought the suit would die of natural causes.,, Stephens also confirmed that "we may be interested in 9 Preston is a resident of Boston. 9 421  maintaining the claims in the original derivative suit depending on the terms of mty settlemellf." (Ex. I at 00 12) (emphasis added). o A bona fide purchaser wouJd not be interested only because Kaiser had filed a motion to retain, as the purchaser could have filed its own motion to retain. Only a defendant would have an interest in obtaining control of the plaintiff's claims if Kaiser filed the motion to retain. Moreover, Stephens' email confirmed that the nature of the purchase is a settlement. • On December 21, 2011 , McCord emailed Stephens asking if he was around " to discuss the settlement offer." When Stephens responded that he was, he did not correct McCord' s characterization of the offer as a "settlement offer." Later that same day, Stephens emailed McCord, advising her that he clients were "discussing what vehicle to purchase through." (Ex. I at 0021-23) (emphasis added). • On December 27, 2011, Stephens emailed McCord advising her that his client bad "decided to make the offer/purchase through one of the individual s involved, Paul Lohnes." (Ex. l at 0024). • In an email to McCord on January 17, 2012, Stephens indicated that his client is a "he." (Ex. I at 0032). o We now know through Sydow' s testimony that the "he" was not Lohnes. (Ex. Fat 66:12-18). • On February 7, 2012, Stephens emaited McCord and advised her that his client was ''forming a company to purchase this asset. •• (Ex. I at 0040). o We know from Sydow that Sydow formed JK Claims at Preston' s instruction. (Ex. Fat 11 :17-24, 17:5-9. 2 1:17-22:13). • On March 14, 2012, McCord emailed Stephens stating that she had defined the "purchaser'' as ~• Paul Lohnes or his assignee . . . a business associate of the Defendants," and asked for "some explanation as to why [Lohnes] is buying these claims." She stated "I assume he is a business association of Mr. Sydow. But, l need clarification on that issue." (Ex. l at 0042). • Later that day, Stephens confirmed the purchaser definition, but did not explain why Lohnes would be purchasing the claims. (Ex. 1 at 0044). • On March 29, 2012, McCord asked for confirmation that the purchase funds were in Stephens• IOLT A account, and again asked about the purchaser. Stephens responded that he had been ')lnable to speak with Lohnes or Sydow." (Ex. I at 0047). • On June 7, 2012, McCord emailed Stephens to "take one more stab at contacting'' Stephens. McCord adv1sed Stephens that the Trustee had her engaging special counsel to 10 422  take the litigation on a contingency fee basis "so we can reach some resolution'' and asked if Stephens' client was stiiJ interested in purchasing the claims. (Ex. I at 0049). • Later that day~ Stephens emailed McCord, advising her that he had been assurod that the money would be in his trust account the following week. (Ex. I at 0051 ). • On June 12, 2012, Stephens emailed McCord advising her that he had received notice of a wire transfer of $12,500 "from Boston" and had received "a check in the amount of $12,500.00 from Mr. Sydow.'' (Ex. I at 0060). • On June 15, 2012, Stephens advised McCord that the name ofthe purchaser would be JK Claims Investment Corporation. (Ex. I at 0067). • On June 27. 2012, Stephens forwarded to McCord a copy of the June 20 12 order from the 152nd District Court dismissing the Kaiser Litigation. Stephens asked McCord how the order wouJd affect "what we are supposed to be purchasing." (Ex. I at 0069). McCord responded that she did not think it would. (Ex. I at 0070). • Later that same day, Sydow emailed Stephens the following: lf the case has been dismissed and the statute of limitations has run there is nothing left to purchase. A dismissal for want of persecution [sic] used to be subject to reinstatement within a certain time. However, if 1 recall correcely the reinstatement was discretionary with the Court. If so, either the trustee needs to have it reinstated to sell it or the buyer is purchasing yet another problem. 1 fail to understand how she thinks the dismissal has no bearing. Perhaps she can explain in just a bit more detail. (Ex. I at 0071 ). • McCord emailed Stephens on June 28, 2012. stating that she would need a written commitment from the purchaser that ..if the Trustee reinstates the lawsuit, we still have a deal" or a written statement from the buyer that they were no longer interested in going forward. She further advised that she was meeting with someone to discuss the cost to reinstate the lawsuit. (Ex. I at 0075). • Stephens confirmeorated J,K Claims. Accordingly, regardless of whclher .I K Claims is the alter ego of Prm.i.on, Preston is not afforded the protections of the fiduciary shield doctrine in purchasing tbe KaiseT Oairns. ,)'tN Cappm;t.:i/li 11. Gu!f l11dus. Prrxlr.. 1m·., 222 ~ . W. Jd 468, 485·86 (Tex: App.--Houston [ lst Dist.] 2007, n<.) pet.) C"'A promoter cannot ac-t as an agem of a corporation tlu.tt does not yet exist; the.rc.tbre~ th~ corppration c.t incorporated. during the.t~eriod C)f:Prest:on's:rr.a.vel to Texa~ IV·.. CONCLGS(ON ANO .PRA Yl~:B: Am).rn(:~Wifb.r lntt~rHinor,~~/Pk7:in:,tf!<~ Bnf;~.:; lnW:}StJm1/'JtS; Lul. ·t:md...!L.f. wm deJ· ()()/tfi. ,, ,.. ~· ~ 427  CERTIFlCATE 01" SEUVlCE The undersigned hereby certifies tlmt on this 8th day of August, 2014 a true and correct copy of 1he ~lbove Supplemental Response t<.) the Special .A.,ppearance med by John ·r. .t.>f(}StQU wM serve~ on all intere~ted panics, by and through their attorneys of record indicated below· via emaiL R~mdall 0 . Svrrels Brent C. P~rry Clyde J. ~~J.ai~ Jacks<.m. 1.1 f LHw .011-l-ce.s ofHrent C, Perry AbraJ1am \V.atkins. Mchol8, Sorrehv, 800 Commerce Street N.hnthews &.F.tie.nd Houst{)n Texas 77002 800 Commerce Strt>et Fa~imile: Tl.3-~3 7-0415: Lf ' . 'I'cx~s. F. oustQn~ . ' '77{' , 1. . '\') ·I '7'"'0 , . *-.~ Attorm;yfor ()rig:bt'd fiqinltfb racS.il,llile:· 7) 3~225~01$'27 ANO?'Ile;)rs.}r)r Original /)l~lin!df~ AsherGrit11n An1ir Ala.vi Chrh~ Si.leo Ashle.y Frankson Se~.n. Fl.amnwr Ahm.ad. Zavh.san9~~ An.' F. ·Htic Fryar ;;;:t ·,;t'<> l:~!.i,• ~j·''~:,.,, 1'''7 '~' (~. :\,.. .t;."-#.1,.\.*; j''Jj,, ,l,• , .~ I .: fl~'\','i''"'f.Q' ~'f ~1. ~·· I I ~~r).~~j~j~:}L~HiA~~~~,:~'I1::1~):~~rJ~~JJJ. ?..~h\tthe'Y· :l3q$chi .Sta.te Bar: No. 2<·;064982. Chtistina. :H. iohar(lgon '-·'··\ ,.,,,'t '\~i ·:r~-y,.,.,.... .,,~ ('' :l ~'l"· · . x · r·,;)~ ~~.~.t\. •'t .8: ',~"-h' ~ ··"- •.. ,,, &t•lte ,,., ,.,{.: ., _~::.~,~>,t' ·l»·~')· ,D<.~ ... ~l)... ').d{fi'"' - ...~f~). ., \J""it . ·""' ..,..':' 912.Prai,ri~\ .,S1,1jte :100 rr ' 17 -""o'\'} ·~ 1 ..... .n.CU~t(.)l)~ ~ ~\.~(~$ I,( ~~h.. ~.~ . 4:)i Fac~itnih:~. 23 i.~605-l'88~ A.ti(JJ<~Je}~' t, .• lm· <:'ll!:l~?f(?rvcnor,'):,Y·>talnti:!t.~· ...,. Hi 428  Cause No. 2011-44058 MICHAEL COLUNS, ET AL., § IN THE DISTRICT COURT PLAINTIFFS, § vs. § OF HARRIS COUNTY, TEXAS § MICHAEL SYDOW, ET AL.• § DEFENDANTS. § 215th JUDICIAL DISTRICT AKILA FINANCE, S.A.; BOSQUES DEL MOLINO. § IN THE DISTRICT COURT S.A.; CENTRANS ENERGY SERVICES, INC.; § CHESTER MESTER HOLDINGS, LTO.; DELTEC § BANK & TRUST, LTD.; EMJO INVESTMENTS, § LTD.; WILLIAM END; EVANS & PETREE 401 K § PLAN; FIRST BAY INTERTRADE; GM PARTNERS; § MARAIR CORP.; W.L. NICHOL. IV ~ PANORAMA § INVESTMENT. LTD.; PCOl VERMOEGENS VERW.; § ALEJANDRO SANTO DOMINGO; SINCHI § INVESTMENT; VENTURI GLOBAL § INVESTMENTS .~ LTD., and H.J. von der GOLTZ § INTER VENORSIPLA INTI f'FS, § vs. § OF HARRIS COUNTY t TEXAS § MICHAEL SYDOW; JOHN PRESTON; CHRISTOPH § HENKEL; C CHANGE INVESTMENTS, LLC; § CHALSYS CAPITAL PARTNERS. LLP; SONIA LO; § BRILLIANT NOVELTY, L.L.C.; OSCURA, INC.; § MELIORA ENERGY TECHNOLOGIES, S.a.r.l; and § FALL RIVER REALTY, LID .• § DEFENDANTS. § 215th JUDICIAL DISTRICT AFFIDAVIT OF KELLEY M. KELLER Before me, the undersigned notary, on this day personaUy appeared KELLEY M. KELLER, who is personally known to me, and first being duly sworn to law upon her oath deposed and said: 1. My name is Kelley M . Keller. I am over the age of 19 years old and am fully competent to make this affidavit. 1 am an anomey licensed to practice law in the state of Texas. I am lead counsel for Intervenors H.J. von der Goltz and EMJO Investments, Ltd. (collectively, " Intervenors") in the above referenced action. The infonnation contained herein is true and correct and is based on my personal knowledge as it relates to my representation of Intervenors. 2. Attached to the Intervenors' Supplemental Response to the Special Appearance of John T. Preston (the "Supplemental Response") as Exhibit B and incorporated therein is a 429  true and correct copy of the Plaintiffs~ Second Amended Petition filed in the Kajser Litigation (without exhibits). 3. Attached to the Supplemental Response as Exhibit C and incorporated therein is a troe and correct copy of a Petition in Intervention of Quantum Catalytics, LLC filed in the Kaiser Litigation. 4. Attached to the Supplemental Response as Exhibit D and incorporated therein is a true and correct copy of the Motion for Summary Judgment, without exhibits. filed by Sydow in the Kaiser Litigation. 5. Attached to the Supplemental Response as Exhibit E and incorporat BARBARA DAVIS My Comm!ss!on Expires NOTARY PUBLrC TN Al\TD FOR November 14, 2015 THE STATE OF TEXAS wJY COM:MJSSJDN EXPIRES:_..... .t.~~:z:.1f'~---·········-······--·-····----- l """ ... ,) 431  ! I flied I 08May&P4:M =~ Hams Dlstrfct l NO. 2007-38533 I JEFFERY B. KAISER. INDIVIDUALLY. § IN THE DISTRICT COURT OF DERJVAIELY, AND ON BEHALF OF § I! ALL SIMILARLY SIIUA TED § STOCKHOLDERS AND MEMBERS OF § ~= TEXAS SYNGAS, LLC a/kla TEXAS SYNGAS, INC , : Plaintiffs, § ~~ § HARRIS CO~, I EXAS v. § ~ § ~~~ TEXAS SYNGAS, LLC alk/a TEXAS § @a~ SYNGAS,INC.,MICHAELA. COLLINS, § Q~~ MICHAEL D. SYDOW, M. SAMEER AHMED, § ~'V ANDALLOIHERSIMILARLYSITUATED § o ~ OFFICERS AND DIRECTORS OF § ~ TEXAS SYNGAS. LLC alk/a TEXAS § ~(o/j SYNOAS, INC., § ~ Defendants. ~ 152nd JUDICIAL DISTRICT P~'SECO~NDEDPETnnON COMES NOW, Jeffery B. Kaiser, ~vidually and Derivatively on Behalf of Texas . ~ Syngas, LLC and I exas Syngas. In~~laintitfs"), and files this Second Amended Petition, complaining of Michael A. CoJlmG,chael D . Sydow, M . Samee.r Ahmed, and Texas Syngas, LLC and I exas Syngas. Inc. @\port of tbis Second Amended Petition, Plaintiffs show tbe following: ~Q 0~ ~ DISCOVERY 1. ~"\,ay is intended to be conducted under Level 3 of Rule 194 of the I exas Rules ofCivil~ure. i PARTIES I I II I i I ! J EXHIBIT B 432  2 Jetfe~y B. Kaiser, r'Kaiser''), is a membe1 of Texas Syngas, LLC, owning 7 5 percent ownership intere~ and resides in HaJJis County, Texas_ 3. Fred Sembeta is an individual member and shaJeholder in Texas Syngas. LLC & Texas Syngas Inc., and resides in Hanis County, Texas. 4. Texas Syngas, LLC is a Texas Limited Liability Company. ~se articles of organi.zation was filed on July 30, 2004, and whose Operating AgJee.m~ signed by its ~ members ou October 4, 2004, and has been served with citation and~swered herein. 5. Texas Syngas, Inc. is a Nevada co1poration, i~ted on May 22, 2006, and has been served with citation and lw answered herein. o-il 6. M"ocllael A CoUins ("CoUins"), is ~er of Texas Syogas L.L.C. and CbaiJman ofthe Board of Direcwts and Senior Vi~esident of I exas Syngas Inc., and owner of seventy-eight (78%) percent of the owne~~e1ests and stock in each of fex.as Syngas L.L.C. and Texas Syngas Inc ; and. is an in~ual resident ofMootgome~y County, Texas, has been smved with cibllion aad has ODS~ min. 7 Michael D. Sydoaydow") is the Chief Execurive Officer of I exas Syngas L.L.C. and Texas Syogas ilw@"\dividual resident of Hauls Coo111ty, Texas, bas been smved with citatioo and bas ans~ hetein. of{@ 8 M.~r Ahmed, !he Project Development Office.- of Texas Syogos L.L.C. and Texas Syng~~-. an individual resident ofFou Bend County, Texas has been setved with citation and ~d herein. 9. Quantum Catalytics, LLC, is a DelawaJe limited liability company which bas its principal office at 421 Cunant Road, Fall River. MA 02720, and bas intetvened in this lawsuit . 2 433  10. 1ohn L Preston is the manager of Quantum Catalytics L.L C. and may be seaved with citation at% Quantum Catalytics L L-C., 42 t Cwrant Road, FalJ River, MA 02720. DERIVATIVE ACJ'ION 1t. Kaiset brings this suit individually, and derivatively oo behalf of Texas Syngas, ~~~~~~ ~ VENUE r()(/j ~ 12. Venue is proper in this case pumuant to lexas ~~thereodants have their business addresses, personal residences., and principal places of~ in Hauis County. lexas and the caDSe of action occurred in Hauis County, ot all 01 apntial part of the events giving rise to this claim occwred in Hartis County, I exas. QtF' JURIS»Ip 13. The cowt has jurisdiooon ov4 lawsuit because the amount in conuoversy ex~ __,_ this cowtt s mmunwn • • • 'sd' - ~ JUll •ction ·~tements ~ ~ FACTS 14. Beginning in a~~ately 2004 and continuing through present, Collins, Sydow, and Ahmed. and oth~ and di.rectolS of I exas Syngas. LLC and I exas Syngas Inc. solicited and, upon~ation and belie£ obtained in excess of one miUion dollazs in 0~ investment fimds ~ividual residents of the State ofTexas I exas Syngas, LLC and Texas Syngas Inc., Col~ ~dow, and Ahmed. and otbez officers and directors, without full discloswe to Plaintiffs,~ oth.et members and stoclcholde~ thereafter participated in concealing the plaruting, organization, tegistration. creation and expenditure of the approximately one million dollars of the investors' monies by Collins, Sydow, and Ahmed. and o1ber'S to deceive and hide Texas Syngas, LLC and Texas Syngas, Inc.'s true financiaJ condition from Plaintiffs to further 3 434  lhe finaocial intcxests of Collins, Sydow, Ahmed, and that of the directors and officers at the expense, and in breach o~ DefeodanJ.s' statu~ry, contractual, fiduciSiy, and common law obligations and duties owed to Plaintiffs and other membel-stoc.kholders, causing damages to Plaintiffs and Texas Syngas, LLC, and I exas Syogas, Inc 15. On or about August 10, 2004, Kais:a's law fum and Sydow~ firm entered b~ch lhey agreed to i I into a retainer agreement with Michael Collins and I ex.as Syngas LLC. i ~ J provide legal services for Collins and Texas Syngas LLC inch~ as to all .aspects of f Collins/Syngas' effons to exploit the Co.lliiWSyngas proprie~logy. Kaiset received 7.5 i l pescent of the ownership interests in Texas Syngas LLC for~fessional set vices. Mr . .[(ajser I l j continued his tepJCSODlation in all aspecls of Collins~ Syngas LLC's busiJJess efforts to I I utilize tbeii' prop1ietary tecllnology Kaise1 duly ~ as Oene~aJ CounseJ fot Texas Syngas I I LLC, until the dissolution of Kaiser an.d Sydo~ fum in Febnuuy 2006. ! l 16. On or about October 4, 2oo&e Operating Agreement of I exas Syn~, L.L.C ~ was signed by its members, Michael~· Quantum Cata.lytics. LLC by .John Preston. Michael Sydow and JeffKaiser, a copy of~ is attached as Exhibit L 17. Collins devel~voluable intellectual ptoptrty to improve and enltance the technology of Molten ~Technology, Inc., whose assets were pwchased by John Preston 0~ • and othets after M~"f-telab was placed in chaplet II bankruptcy proceeditJa.s and CMatm competition with the couunon entetprise 25 . Collins breached his 6duciaty duties owed to Kaiser- as to minority sbateholdeJs, member, partner and joint venturer, through oppressive conduct and through domi:nat.ed contJol oveJ lbe business, by dissipation of all the assets of tbt: commoo enterprise s;:lr conversion of the assets to his own use and benefit, thus destroying the object for which ~int eotcJprise was ~ created and rendering it impossible for the joint entetpxise to co~ its business Collins' conduct destroyed Kaiset's reasonable expectations lhat were ~to hi.s decision to join and participate in the ventwe. Collins conduct rendered the~ enterptise incapable of the continued business for which it was es1ablisbed. Coll~bed his duty of loyalty to the joint concern, his duty of utmost good faith, fait ness ~oesty, his duty of full d.iscloswe of all mattets affecting the common entetprise. his ~to account for all pJopetty of the common eotetp!ise, and his duty to Jetiain from com~on with the common entetJ)Jise. 26. Detendants knew ~~lins' conduct constituted a wroog!UI ad qaiost Plaintiffs and with intent to assist ~ins in the wrongful acts., defendants substantiaJiy assis~ and eocouJaged Collins by ~ a<:Ca of assjslaDCe and encouragement as alleged beleio. Defendants' assistance ~cowagement was a suh!tllntial factor in causing the wrongful ofjg conduct. AJtemativ~fendonts were engaged in a joint ente!prise. Plaiotiffs aocl Defendants had an agreem~ common pwpose, a community of pecuniary interest in that common pwpose, and ~ual tight to direct and connol the enterprise. AI the time ofdefendants' acts as alleged herein they were acting within the scope of the enterprise. Aftematively, defendants wett engaged in a conspiracy, in that there was a combination among the co-coospiratoas for an r j unlawful pmpose as alleg~ herein 01 lawful pwpose by unlawful means. Defendants knew that I 7 / I I I 438  the agreed acts would result in bairn to Plaintiffs. To accomplish the object of their agreement Defendants engaged in the overt acts described herein. The agreement to engage in the above described acts proximately caused injwy to Plaintiffs. 27. Defendants' breach of fiduciary duty injured Plaintiffs by deptiving Plaintiffs of the value of their property, the loss of their reasonable expectations fm ~~ en~prise and their investment and loss of business opportunities, in damages ind~g the full market ~ value of their ownership interest in the common enterprise ~ry 28. Defendants, breach of fiducimy duty benefited ~ts in that the conversion of the assets of Texas Syng.as, LLC for use in Texas Syn~~c substantially bene..fited and ~ emiched Defendants to the dettiment of the Plaintiffs ~~ 29. PlaintiffS injwy resulted from de~~ts· gross negligence, malice. or actual fraud, which entitles Plaintiffs to exemplmy 4 under the Texas Civil Pr:actice & Remedies Code section 41.003(a). ~ ~ ~~UNT TWO F-CH OF CONTRACI' 30. Plaintiffs het~reai.lege and inco1porate herein by reference Pmagraphs t tlttough 22 ofthis Petitio~Q 0~ 31. On~~beJ 10, 2004, Plaintiffs and Defendants executed a valid and enforCeable wri~ating Agreement of Texas Syngas, LLC, attached as Exhibit "1" and incorporated ~ference herein 32. The Operating Agreement provides in Section 5.07 that "no member or Manager shall engage in 01 possess any interest, legal, equitable, or otherwi~ in any business venture that competes in any way with the Company W\Jess such participation sball be app:t'Oved by a vote of 8 439  __ - ... ... . ... ..... . . . ;~ -~~S:·SSEO ~ CAUSE NO. 2007-38533 JEFFERY 8. KAISER, INOJVIDUALLY § DERIVATIVELY, AND ON BEHALF OF § ALL SlMILARLY SITUATED § STOCKHOLDERS AND MEMBERS OF § TEXAS SYNGAS, LLC A/K/A TEXAS § SYNGAS, INC., Plaintiff, § ~ ~ ,· ~ v. § HARRIS CO" "Y) TEXA" ~ <:7 · ~ § 0 ~ ,.] ~ .I TEXAS SYNGAS, LLC A/KIA TEXAS § ~t~ ~v - SYNGAS, INC~, MICHAEL A. COLLINS, § ~ ~) ... · _:::s -:. ~~~~~L~~:~~~~~~~~~;:A~~~D, §§ Q.fi : ~ _: ~ 3 OFFICERS AND DIRECTORS OF § 1+ ·::, ~ ~·. ~." o TEXAS SYNGAS, LLC A/KJA TEXAS § SYNGAS, INC., . § ;:~ Defendants. § 'V 1901h JUDICIAL DISTRICT T~ INTERVENTION OF QUAN~-.. - CATALYTICS, L.L.C. TO THE HONORABLE JUDGE OF SAI~QURT: COMES NOW, Quantum Ca1a' a?: L.L.C., and in support of iiS Intervention under Rule 60 of the Texas Rules of Civil ~ure would respectfully show the following: o~- -- ~. FACTS ~' . l. Quantum C~cs, L.L.C. (hereinafter ''Quantum Catalytics ..). is one of four members of Texo.s S~. L.L.C. The four members are Michael C. Collins, Quantum Catalytics., Michae~~dow, and Jeffery Kaiser. jQ 2. ~ther members o fTexas Syngas, L.L.C. are parties to this sui t Jeffery Ka!ser (hereinafter ·•Kaiser.,) is a Plaintiff, and he has sued Michael C. Colli ns and Michael D. Sydow. 3. The operating agreement, signed by a\1 four members, provides that the company is to be managed by a majority of its members. All of the corporation•s members other than Kaiser, who owns a minority interest, agree that it is being managed in the best i.nterests of_the 1 EXHIBIT C 452  Flied 08 June 20 P4:20 Theresa Chang Olstrfct cterk Hams District CAUSE NO. 2007-38533 JEFFERY B. KAISER, INDIVIDUALLY, § IN THE DISTRICT COURT OF DERIVATELY,AND ON BEHALF OF § ALL SI.MILARtY SITUATED § STOCKHOLDERS AND MEMBERS OF § TEXAS SYNGAS, LLC A/KIA TEXAS § SYNGAS, INC., v. Plaintiffs, § § : _e_~. HARRIS C~rY, TEXAS ~ § ~ /[} TEXAS SYNGAS, LLC AIK/A TEXAS § ~ SYNGAS, INC., MICHAEL A. COLLINS, § o ~ MICHAEL D. SYDOW, M. SAMEER § .(~- AHMED, AND ALL OTHER SIMILARLY § ~ ,¥ SITUATED OFFICERS AND § ,flJ~ ()~'0 DIRECTORS OF TEXAS SYNGAS, LLC § ..,_~~ A/KIA TEXAS SYNGAS, INC., § ~?!) Defendants. § ~ 152Dd JUDICIAL DISTRICT .,@?'1 DEFENDANT MIC~L SYDOW'S AMENDED"MOTION ~~tJMMARY JUDGMENT Defendant Michael D. Sydow her~les his Amended Motion for Summary Judgment, in suppo~ of which he would r~w the Court as follows: - ~~ 0~ INTRoDUCI'ION \ We have been down~~ once before. In April 2008, Defendant Michael Sydow -fJ~ ("Sydow,) moved for~ judgment on all claims asserted against him by Jeffery Kaiser ~- (" Kaiser''). Sydow'~gtion was based on purely legal issues and undisputed facts (e.g., Kaiser's admissi# t Sydow did not induce him to acquire an interest in Texas Synp LLC). -'~ Rather than ~ond to Sydow's motion, Kaiser claimed that he needed a 45-day continWUlce in order to review additional documents. The Court gave Kaiser one week (until May 9) to file a response. But Kaiser's gamesmanship continued. On May 5, Kaiser attempted to side-step summary judgment by filing a second amended petition. Although the new petition asserts EXHIBIT D 456  101. l"'fU'90-r.;) p.,c : 'JDI.IIOU'B. ~JSD.IlQ)IVJDUALLY IRTD DJRI»ICY OOllll'l' OP . DDJV'ADVBLY,.AKD OlfBICIJAI.B 0'1 jLl, IIIW·'W·Y m'UADD 8'i'oaalOLDD8ANDMBMJIIR8 OlP TRJ1.8 SYm.WI,LLC; A/JC/A..Tl;j'AS ~me. ' •• 1 Defeadant's E~jt -~ 475 ··-· -- ---· ---- .. ··-··,- ·--. ·- ~ ~. ... . . .· ... Michael D. Sydow 1188 aoted as file adafBaaabvo om.- of tbo oompmy umJar 1he · cDmadou 8lld GOD!m1 ofMJcbad C.. CalliDs:Mlabael D. Sydow bas Deverbad auy aathodty cmr tbo expnndlture or dttbiuw:meat ofaJ ibuda biD Taaa ~ L.L.C. Mlob•cl D. Sydow has mm:r slped, or baa autbadzed to tdp. Gil Ifill bat or afJ&ar 'OCf'!'lnfs GfTexas ~ Ll..C.a 2 476  Ared 08 June 20 P4:04 Theresa Chang Dlstlfct Cfertc Hams Olatrfct CAUSE NO. 2007-38533 JEFFERY B. KAISER, INDIVIDUALLY, § IN THE DISTRICf COURT OF DERIVATELY, AND ON BEHALF OF § ALL SIMILARLY SITUATED § STOCKHOLDERS AND MEMBERS OF § TEXAS SYNGAS, LLC A/KIA TEXAS § SYNGAS, INC., § v. PlaiDtill's, : : HARRIS CO~, TEXAS ~ TEXAS SYNGAS, LLC AIK/A TEXAS f ~ SYNGAS, INC., MICHAEL A. COLLINS, § ~· MICHAEL D. SYDOW, M. SAMEER § o~c.?e) AHMED,ANDALLOTHERSIMILARLY § <{J~ SITUATED OFFICERS AND § ~ DIRECfORS OF TEXAS SYNGAS, LLC § o~ AIJ(JA TEXAS SYNGAS, INC., § ~ Defendants. § ralioo. I WWII you to 14 Q. lllank )'OU. 15 find those in the materials we reviewed today. 15 Corpc:~r.Ue resolutions. have you prodoood 16 A. Bates NO$. 36 throv&J! 38. 16 ~II or the eorporaw: resolutions of JK Cbims? 17 Q. Okay. And what is !he titk of thai docomeol 17 A. Yes.. 18 yo~eref~nsto7 18 Q. Otll)'. And -cain. the one$ we've seen are 19 A. Certifu:aac: ofFormillioo For-Profit 19 un1i~, conut? 20 Corporation. 2o A They doo't 113vc to be srBJW!. 21 or Q. Okay. So there'SI Certificate Formation. 21 Q. Oluly. ~lder COMents. have )'OU prodO<:Cd 22 Have you found anything idcntiftcd as Anlc:les of 22 all of lhe sh'mholdet collSalts of JK Clairru? 23 Incorporation for JK Claims? 23 A. There af'Cfl't any sflan:holders. 24 A. Thll($ wtusttbis i.s. 24 Q. Okty. So ~re's ~ sb~boldcrs.. WOO arc 25 Q. Okay . 25 the owner.~·- Page Pb(JC 57 1 A. It's the some thing. A. Jfs uncertirl.c:ated. 2 Q. Okay. S4oct ledgers. are tbcre any st 22 A. And if you cSon't quiet down and set out of my 22 is &hat correct? 23 face, I'm walking out. 2J MR. HUNTER: Objcaion> form. 2. Q. YWI. I'm noc In your faoc:. 24 A. JK Claims is incorporated as an uncer1ifi~ed 25 A. You arc. vou•re leanJng across the coblc and 25 oompany- • -:;J""- .. . 15 (Pages 54 to 57) 9438 Data scope 713-688 - 9300 495  Oral Deposition of Michael D. Sydow, Sr . Page 58 Pa ge 60 1 Q. (BY MS. KELUR) I've hcatd tha.t. 1 A. It's not filed if it's re~. 2 A. -through the BOC. 2 Q. OkAy. But It was flied and th.en rejected. 3 Q. Wh3e rm eskiJlg is. is lhcre any other way 3 corn:c:t? Jus1 filed. but not ~ted'? .. oth.cr than your testimony today 10 verify the ownership 4 A. )I WIIS wbmitted, OOt not fi)cd bcca.w'c it I 5 ofJK Claims? 5 ~properly filled out. 6 A. I'm~ awan: ofany clocumet~~tlon- well 6 Q. Do yoo bve :a copy of Ill~? 7 attualty tha'c m~t be: some documenwion thai may 7 A. No. 8 exist. 8 Q. Who prepared lhar? 9 Q. Okay. Wbal would IIIII documc:nlalion be:? 9 A. Some DCCOUnWII in Mus:\dwSdts.. 10 A. J believe the consent in lieu of mcell"£,5 1o Q. So does JK Claims have: any profJt and loss ll clc:atl)' sfl.ows who the owner is. 11 scatc:ITICfiiS? 12 MR. HUl'fTER: I think tha'c's a B:aiC$ 12 A. No. 13 No. so. 13 Q. Docs JK Ct3lms have a tJ.I~ sheer? 14 A. Q&~~twn Catalytics, l .l..C., being llle holder l4 A. No. lS of the majority or the shares of JK Claims docs ~by 15 Q. Does JK Claims have any inc:omc: Slalc:ments? 16 consent tO the ac>polntmcnl of John Preston ll$ so~ J6 A. No. 17 dii'CQO: of the company. 17 Q. Oocs JK C1aims have any oilier type of documen.l 18 Q. (BY MS. KEllER) Otay. 18 thai might rellcct the current finOVlcial ClOilditio«< or 19 A. Exhibit 9. 19 JK Claims'? 20 Q. Ok:s.y. Anythi~ eiSIC? 20 A. No. 21 A. Bate.s No. OSO, QIIIUlfUm Catalybc:s. l..l.C., 21 Q. Rc:quc~ No. 6 t\Sk:s for ;!:tly and all loan 22 be&!~ the bolder of the majoriry of the snares or Jl< 22 appiK:ations prepared by or on behalfor IK Caaims. 23 Claims dues hereby redcct John Prescot~ as the sole 23 Has JK Claims pre~ any loan apptic:atioM? 24 di~ of the company. Exhibit 9, Bates No. Sl . 24 A. No. 25 Q. Okly. J2S Q. All documc:nlS re_rlccti11g any ouiSianding Page 59 1 Page 61 l A. So, yes. lllere are dQCumc:JIIS that reOCCI the l) 2 flnanc:inl obliption held by JK Claims, inc:ludinJ but not limited lO. loorl sta1cmc:nts, credit card account 2 ownersfljp. 3 Q. Okay. Would there be: any other doa!mct1LS 3 stalc:mcnts, promissofy notes, and scc:ID'ity instrvmcnu. 4 otller than E)(hibit No. 9? 4 H&\"C you soc:n eny suc-h documeMS? 5 A. N04IIIal I'm aw1re of. 5 A. Thctt aren'\ any. 6 Q. OQ)'. Request No. 4 asks ror an 6 Q. There an: none? 1 cmployment·tclatcd agrcemenlS ccea.ted by JK Claims 1 RcqYC:St No. &. all ~rds reflccti,.,; the 8 from Jamwy 2012 10 lhe present, including but!)()( I 8 e:xiscence ofall ""oourns held by JK Claim¥ at any type 9 limited to. con.sultina qreements and employment 9 of fin:~r~Ct.llnsdMion, inc:ludine but nocllmJted to. 10 ~LS. Are there any document$? 10 ~opening docwnenlS, si!:Jtarute 11.11horizaliom, \1 A. No.. 11 and 1t1e last six moatbs ofstatements. Docs JK Claims 12 Q. Request No. 9 asks for all doMes, Preston, 8liCV« 11 before? 21 Sydow regatrry'! 6 Q. Request No. 12, all documents reO~ or 1 A. None. 7 rdatc:d to CX~mmuniCil.ions between IK Clai~m or it$ 8 Q. Okay. I ass~Umc thallhere wouid be documents 8 repn:scntativcs and the tNStee of the~ regardint 9 te.flectiB3 the sourte ofth1t funding. H1111e you made 9 the pu:d\ase. Thilf$ c:ssmtially these dwc ~rds 10 811Y effort to locate doaunents responsivc 10 Exhibit l0 you produced as Exhibit No. I I thto~tp 13? 11 No. ll - 11 A. Those ue the doQwcr11s that exi~. 12 A. Yes. 12 Q. Is t.hc:re an)'lhin& ebe, any other 13 Q. - exa.rse me- Request No. I I? \3 communications related to the discussioM betwmll.bc 1' A. Y~ 1~ t.rustee of the Ka.iser c:Sl:lll! and my per$00 on hd!o.l f 15 Q. Wbal errOrts 113ve you made? 1S ofJK a.Jms? 16 A. I have dooe an investigolion. 16 A. t..'q. No. no! lhlll I've been able eo determine:. 17 Q. Wha1 wus that i:nv.estiantion? Who did )'OU 17 Q. Were )'OU a puty to lilY of th~ 18 reque;u n:eoord$ from? 18 tornt1WI1i<:.cions? l9 A. Jobn Pn:Sioll. l9 A.. No. 20 Q. When did you make tN.t request? 20 Q. Request No. 13. all e--mails, notes. 21 A. I d 01t1't recall. 21 COrre$J)Qildcrlce, and other dC)CWQCIIts reOectillg 22 Q. And~ wns the: rc:sponlrC from Mr. P~n? 22 convnunk:.uions by and between or 8mOC'IS Lobnc:s. ~on. 23 A. JK Claims doesn't have any suc:b n:eotds. 23 andfor Sydow n:gmding lhc dailn$ znd the pwdaiiSC of 24 Q. Regarding the sour(e ofchdunds of the 24 the same: ffOm the: cswe. Art there ~ documents 25 2.S,000 purthast money for the claims? 2S I'CSJ)OrtSi\-e IO No. 13? Page 63 --------------------------------------1 1 A. Right 1 A. No. 2 Q. Do you know wha1 souroc of funding for ihe 2 Q. Ob,y. rd like to focus now on con¥erS~Ui011$ 3 p1Rhll$e - whllt w~ the funding source for the 3 becween you M~d Mr. Preston n:~arding the plli'Chase of 4 priase or JX Claims- excuse me - Kaiser claims? 4 Mr. KaiSCf's claims out of lbc K4i$Cr bankruptcy s MR. HUNTER: Objection; fonn. 5 C$tliC. 6 A. r understand it was from QIW!rum Catalytics. 6 When do you n:call you rms spoke with 7 Q. (BY MS. KEU..ER) And how did you make Chat 7 Mr. P~ regardlng some entity pun:twing those 8 Wldmu.nding? e claims? 9 A Through an internal investiption thnt I 9 A. l don't recall. 10 conducted to pn:pru-e for th.e dc:pQsition. 10 Q. How oWly times wootd you say )'OU spoke with 11 Q. And what did you lcam in cbal intef'nll ll Mr. Preston n:g~d ing that matter'? 12 investigation rqarding the payment for Mr. K<~isets 12 A. I don't rec::tll. 13 claim'? 13 Q. Whose proposal was it that some entity 14 A. QU13t1rum Ca~alytics transmitted the money to 14 pUidlose Mr. Kaiscts clAims (rom the bankl\lptcy lS pay for the claims. 15 c$latc? 16 Q. In "Ail# form? Was it a check or win: llanSfct 16 A. I don't recall. 17 rcc:ord? 17 Q. Was it your su~ion l~ somebody pllrdlase 18 A. I don't know. 18 those claimJ? 19 Q. fm S!Orr/1 19 MR. HUNTER: Objedion; foml. 2() A. I don"t know. 20 A. No. 21 Q. And wbo told you that Qu~cum Cnta!Y'ic:s 21 Q. (BY MS. K.ELI.£R) Wz it Mr. ~n'$ 22 lnnSmilkd the money? 22 susges1lon? i 23 A. John Pn:stoll. 23 A. I don't recall. 24 Q. What else djd he say abolJI the fund.ing. of the 24 Q. Could it hnvc been )'OIIr sugscstilon Olo&C the: ~ 25 plltdl&$t of Kaiser dalms? 2S claims be purcllased by somec:ruit)'? i ~.--~~- ~~-~ .-=-~-~ - ~~ - ~-~--~~-~.~-~~~--~---~-~ - ~.-~.~~ -~-~ .-~ .-~~ -~-~ - ~~-~~~~ .-~~ . .. . . 17 (Pages 62 to 65 ) 9438 Data scope 7 1 3-688-9300 497  Oral Deposition of Michael D. Sydow, Sr. Page 66 Page 68 l A. No. 1 A. f dorft know. 2 Q. Wa$ i1 Mr. t.olwles- suucstion? 2 Q. Would )'OU have a copy oftlle bill for services 3 A No. 3 if you did? ~ Q. Do you la!ow if Mr. Lohne$ provided lllc: money 4 A. Yes. ~ WI was wed to purdlo.se the claims from the Kaiser 5 Q. Okay. 6 e:sQtc:? 6 MS. KELLER: Mf make a reqUICSt for 7 A. No. 7 lhaL 8 Q. Do you blow ~Y the: bank.ruptcy trustee would 8 Q. (BY MS. KELLER} Do you know the sources of ~ 9 have 5t.alc:cl thai the money was ~ng &om Mr. Lohnes? 9 funds for the: capit:lli&~~Jjon other th311 yout testimony 10 A. I don't know tint the barlkruptcy tJuMe so 10 Lhat lr came from Quanrum C.1alytics'? 11 staled. ll A. Thllt is the JOuru. 12 Q. Oby. f f tlle bo.nkruptey uustcc st~d cr bankruptcy estate? 21 eloims it putdlased from tbe Koisa' blntrvptcy1 22 A No. 22 A. No. 23 Q. Thai's the onl)' busina-s that J K Ctaims bas 23 Q. Doc$ JK Claims have any liobilrucs? 24 ~done was to purchase those dalms ond pum~C t.hosc 24 A. No. 25 in co~ oom:et'? 2~ Q. As c:mpor.Jte eou.n:sel for JK Claims, ""'C'C >'0'1 Pa qe 67 Page 69 1 A. That's correct. l responsible for obUinifll litiptio.n counsel 10 pursue 2 Q. Okay. fs that Lhe put'p(Ule oftbe formotion or 2 the claims Olat were purchased from lhe Kaiser estate? 3 JK Clllims? J MR. HUNTER: Objection; privileged. 4 A. Yes. 4 Q. (BY MS. KELLER,) I'm going to ask you acain; ~ Q. Okay. Wh3l Other - so is it l.n.lc, lhel\ that ~ and if you rt:fusc to answer it on the basis ofadvice 6 JK Ollim$ has ftO ocher inv~c:nt:s? 6 of oounstl, ~ me know. 7 A. No. it docs not. 7 As corpoi"Dk counsel fo~ JK Claims. ~ 8 Q. Okay. Does JK Claims have g.ny lnvestotS otbc:r 8 you respDn$lble for retaining ClOIJtiSCI tO purme the 9 Lhllll its sole shareholder Quanl\lm Ca.talytics? 9 cl31ms f« bank:rupecy? 10 A. No. 10 A. J refuse 1o llll$Wtr on the advic:c of ~unscl. 11 Q. ~. Did QuMtwn CatalytiC$ provide Any 11 Q. Olc.ay. Goins ba.ck to RcqiJCSt for Production. 12 money for the c:aphafizalion or JK Cl~ims oa Its 12 lhc: ones relaJod to the funding of the P"'rehase. the lJ ronnalion? 13 ~UC:Sl specifically osk$ ror dlcdcs, witt transfer H A. Ofcourse. 14 records, en&. or any loan doeumentation. anythins 15 Q. How much did Quancum Catalytics provide for 1~ relakd to the p~rc:base for the claims. Wert: you able 16 Lhe capit.aliz::a.don ol'lhc company? 16 10 obaln any of lhaa from Mr. Pre$t0n? 17 A. Enough to buy the claims and organke the 17 A. No. 1e comJllllly. 1e Q. Did you asic fo: ttuu from Mr. f>Rs1on7 19 Q, How much was thai? 19 A. Yes. 20 A. Somewflere between 25- 0.11d $26,000. 20 Q. And what was his response? 21 Q. And how mvd! did you c~ JK Clalms as 21 A. JK Claims doesn't h;ave .,Y $UCh docwnents. 22 ~ ~~ tj, ._ ·- ,, 1.:-<.._ ~ ;~ "0' ~r .""... ~t::: . ,.. i l <8: 9'.C:., ~~..... ~ ·.J!it , "'<) ..:_g,~- ·- ~· ~ < ""' -~ -&' r ~.9 .... ...,pq ~ I f ·~ ~ 527 : ~ ., ,1•. ; ·"'· :~.· ·:;... .....- M~ ._._.. ,,. ~~~·!b.t~: •' ~{~\ ... ':·.· : :::.;~i;r¥,~~::~~~;:> i :::: i;i• .il:.: ·:::·· :!: ' :t:~: 528  f .. I; t I t JK. CLAIMS ,t J WRITIEN CONSENT IN LIEU OF MEETING i I I ; I [ Quantum Catalytics, LLC being the bolder of a majority of the shares of JK. ~ I t Claims, does hereby consent to the appointment of John Preston as the sole director of the company. John Preston, Managing Member August 22~ 2012 EXHIBIT ...... . i-4b- JK Claims 000050 529  JK. CLAIMS WRl1TEN CONSENT IN LIEU OF MEETING Quantum Catalytics LLC being the holder of a majority of the shares of JK. Claims, does hereby re-elect John Preston as the sole director of the company. John T. Preston, Managing Member August22, 2013 I I l r•f r ! JK Claims 000051 530  JK CLAIMS ACTION BY DIRECTOR The undersigned director does hereby approve the purchase ofall claims of Jeffery Kaiser from the trustee of his Chapter 7 bankruptcy. JK Claims 000052 531  From: gmcoord@natbansommers.com · · To: keOy.stepbens@hotmail.com Subject: Kaiser Date: Wed, 14 Mar2012 14:13:25 +0000 I am sending you a motion to sell today with a an order for your review. Do you have the money in your aooount? And, do you.have the name ofthe entity set up to purchase the claims? ~Oiuer McCord r Neshan Sommen Jacob! A ProfosdoceJ Corporation II 2800 Post Oak Boulevard I 6btPioor I' Hoostoa, Texas 71056 i Voice: (713) 892.-4816 Fax: (713) 892.-4800 i r pccord@oatbaD8o111111Gn.COIII www.nadumsommcrs.oom I' .. II tBIS B-MAJL MBSSAOB AHD 1HB AlTANPJDI!NTIAl•lNPORMAnoN. · niB Dl8SIIhfiNA1lON, DJSllUBUJTON, PUBLICATION, DI.Sa..OSt.IRB OR \JliB OP SAID B-NAIL Ml!SSACJB, ATl'.AaiMBNTS AND INI'ORMATlOH AND S'IR1C1LY PROHIBI1BD AND YOU ARB INS"DUJC1ED TO DdMSDJA1ELY (A) NOTIPY niB SI!NIEltBY 'IBI.l!PHONH AT 713.960.1003 a: YOUJl RBCEIPT 01' THIS &NAIL MBSSAGB AND SAID A1TAOIMI3NTS, AND (B) DI!LBlB THJ8 'S-MAIL NJ!SSAGB AND TRB ATrAawBNJS 10 rr. AND DBSTROY ALL OOPfB3 AND P.RDn'OUTS 'T'HJIRE(F. EXHIBIT II dow "' JK Claims 000013 532  ···- - ---·· . . · · · - · · · - - · · - - - - · -· . . . ..,...,. _ _ _ _ .._ . . , , , ._ _. _ -·· - -- ¥• _ .. _ - . .. . _ · ·- ·- - • • • · · · - - · · ... ·-·- INPORMAnOH AHD STJUcn.Y PltOHIBITt!D AND YOU ARIIINSTRUCTIID TO IMMEDIATI!I..Y (A) HOT1FY llfB S.BNDER BY Tl!LI!PtJONB AT 713.96Q.m03 OP YOUR JIBCiilPT OP THIS &MAIL MBSSAOB .AND SAID .ATTACHMSNTS, .AND (B) DElETE 11US S-MAIL MliSSAOE AND TJUi ATTACHMENTS TO rr,AND DllS'J"RRY ALLCOPlES AND Pflllfi'OlTI'Snn!ROOP. J'rom: Kelly Slcphens [mallto:kclly.stepheos@hotmail.com] Seol: Friday, June 15,2012 10:24 AM To: Orctchcu McConi SUbject: RE: Kai&eT- Salo Order I l Gretchen, l I my clients inform me that they would like to make some changes in the valuation language of the order. f t they are supposed to get me their suggestions today. I will forward upon receipt. Kelly D. Stephens Stephcos & DomniU. PU.C P.0. Box 79734 Hoaaton, TX 77Z79-9734 281-394-3287 832-476-5460 Fax From: gma:ord®natbaoso111mcru:om To: kclly.stephens@hotmftll.com Subject Kaiser- Sale Order Dato: Wcd,13 Juo 2012 20:2S:OS -+0000 Attached is a form of order tbat wlll be filed with tho motion. The trustco hnd a few revisioos. I hAve put a signature blank to sign as ao agreed order. but did not blow if you or somcoae else would be algnjag. Pleosc Jet me know asap. Tbanlcs. GRU:hcn Gauer McCord Nalhan Somnlm Jacobs A Prdeaslonal Corpotalloa 2800 Fbat Oak Boulevard 6Jst Roor Houston, Teus770S6 l Vok« (713) 892-4816 Fax: (713) 892.4800 EXHIBIT www.nathaMOmmoll.com JK Claims 000053 s~?w 533  Case 08-35261 Document 51 Filed in TXSB on 06/19/12 Page 1 of 11 IN THE 1JNlTED STATES BANKRUPTC'f COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISIO~ INRE: § § JEFFERY B. KAISER § CASE NO. 08-35261-Bl-7 24Zl Wordsworth § Boustoo, TX 77030 § (CBAPTER7) SS#: ux-n-7148 § § DEBTOR(S) § TRUSTEE'S MOJION FORAUTHORrtY TO SELL ESTATE'S INTEREST IN CLAIMS PUISuantto Local Rule 9013: THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE M0110N,.YOU SHOULD IMMEDIATELY CONTACfTBE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITBIN 21 DAYS OF THE DATE TBIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRAN.I'ED WITHOUT FURTBERNOTICETOYOU.IFYOUOPPOSETHEMOTIONANDBAVE NOT REACHED AN AGREEMENT,YOU MUST ATTEND THE BEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE BEARING AND MAY DECIDE THE MOHONAT~~ \ REPRESENTEDPARTIESSBOULDACTTBROUGB 'rBEIRATTORNEY. COMES NOW, Ronald J. Sommers in his capacity as the Chapter 7 Trustee ("Trusteej for the above-captioned baDlauptcy estate ("Estate") and files this his Motion for Authority to Sell Estate's Im.erest in Claims ("'Motionj and would show as follows: 1 EXHIBIT G 534  Case 08-35261 Document 52 Filed in TXSB on 07/13/12 Page 1 of 3 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTIUCT OF TEXAS HOUSTON DIVISION ENTERED 07/llllOll INRE: § § JEFFERY B. KAISER § CASE NO. 08-35261-Bl-7 2411 Wordsworth § Roustoa, TX 77030 § (CIIAPTER. 7) SS#: xu-n-7148 § § DEBTOR(S) § ORDER GRANTING TRUSTEE'S MOTION FOR AUTHORITY TO SELL . ESTATE'S INTEREST IN CLAIMS ONnDSDAYcameonforconsiderationtheTrustee'sMotionforAuthoritytoSellEstate•s Interest in Claims (the "Motion'') filed by Ronald J. Sommers, the chapter 7 trustee in the above- . ' captioned bankruptcy estate (the '"Trusteej, pursuant to 11 U.S.C. § 363. The Court, after c:onsiderini the Motion, the argument of couusel and any evidence presented, finds that I. · This is an action filed under Fedtmil Rule of Bankruptcy Procedure 6004 and the coaesponding local rules for the Southern District of Texas and under 11 U.S.C. §§ 363 to sen the estate's interest in property. 2. This Court has jurisdiction over this matter. 3. The sale approved herein is in the best interests of the creditors and the abov&- captioned bankru~ estate \Esfatej. 4. The Trustee is exercising reasonable business judgment. 5. The sale approved herein is free and clear of liens. 6. The Trustee and the bvyer nogotiated the sale at arms length and in good f8ifh. 1 EXHIBIT H 545  Case 08-35261 Document 52 Filed in TXSB on 07/13/12 Page 2 of 3 7. Adequate notice ofthe Motion and any hearing on the Motion has been given to all creditors and parties-in-interest. 8. The sale of the Claims is a sale of the Estate's interest in such Claims. 9. The Trustee has not made any n:presentations or wmanties with rospect to the sale or ownership of the Claims. ·... 10. Any and all objections have been withdmwn or are ovenulod. Acc.ordinglyt it is ORDERED that the Trustee is authorized to sell the Estate's interest, ifany~ in the following claims to JK Claims Investment Corporation, or its assigns (""Buyer"), for twenty-five thousandandno/100 dollars (S2S,OOO.OO) ('"Sale Price") in accordance with the teuns ofthis order: Any and all causes of action owned by the Debtor as of the date ofhis Bank.ruptc:y filing and now owned by the bankruptcy Estate against Teus Syngas, LLC, Texas Syngas, Inc. and their officers, directors. shareholdcm, age11ts, attomcya and/or against any predecessor, successor, or affiliated companies, including but not limited to the following individuals: Michael Sydow, Michael Collins, John T. Preston, Quan1mn Catal.ytics, Inc., and M. Sameer. Ahmed. These claims would include specifically all those claims that were owned by the Debtor and that were pled, or that could ~ve been pled, in the Lawsuit with Cause Number 2007-38533, and styled Jeffery B. Kmser, et a1 v. Texas Syngas. LLC alkla Teras Syngas, Inc. et al, currently pending in the 1S2nd Judicial District Coort ofH.anis County ('Oaimsj. Further, it i$ ORDERED that within three days ofthe entry ofthis order, Bu~rmustdelivertheenti.rety ofthe Sale Price to the Trustee in good funds. Further, it is. ORDERED fh:at, upon receive of the Sale Proceeds in good funds. the Trustee will provid~ to Buyer a receipt of such funds in writing. Further, it is 2 546  Case 08-35261 Document 52 Filed in TXSB on 07/13/12 Page 3 of 3 ORDERED that the sale ofthe Claims shall be effective immediately upon the c~ons in 1bis Order being met without further Older ofthis Court or fUrther docum~tation and~ Order shall be sufficient evidence ofthe assignment and sale ofthe Claims. Further, it is ORDERED that 1he sale ofthe Claims is free and clear ofany liens, claims or interests. It is . ORDERED that the Trustee is authorized to execute all documents and take all other actions necessary to complete the compromise and the sale ofthe Claims. It is further ORDERED that the Trustee bas made no wmanties or representations as to the sale or ownership ofthe Claims. It is further ORDERED that the sale of the Claims is a sale of the Estate's intetest therein, and tbatthe Court makes no finding that the Estate bas any actual interest in the Claims, ownmhip of.wbich is disputed. Signed: July 13, 2012 ·United States Bankruptcy Judge 547 311<4/2014 QIU~con Print au;ege II _,- . In re: Kaiser and In re: Jorden ... ·-- ·' ... . - . .- -- ··- - "* --··· --- . From KeUy Stephens (keDy.stephens@hotrnail.com) Sent: Tue 9/13/11 2:23PM To: r.;onuners@natbansormners.com Ron. I need to discuss two ~sues with you. I) Cause No. 08-35261, In Re: Jeffery B. Kaiser. On tim case, you may rem:mbcr that I made a written offi:r to p~base the Estate's interest in aD cases and/or causes ofaction whi:h JeffKa.i<;erfibe Estate had a claim against Texas Syngas, lLC, Texas Syngas, Inc., Michael Sydow etc. We oBCred you $25,000.00 cash fur those claims. You never n:~onded. Keer has recently (this year) tiled two rrotions to retain in the existing laws~ claiming to have acq d or tbat he is about to acquire from you the right to go furward in this case. I can still offer you$ J 0,000.00 fur those cJairm assuming they ha not been abandoned. Please !et me know your position on this rmtter. 2) lDlSU1'e about the cause but I believe that the case is In Re: Ro ert Jordan. I received a call from Artice Allen yesterday n:questing that I rep~nt bim in th5 matter and his deposition. Based on our conversation, ~ bas been noticed for ~day o is week. 1 am requesting a postponement of that deposition to give me a c ce to meet with him, get the doct.Dll!nts concerning the property in band and to get a grasp on your clairm. please call me asap to discuss. KeDy D. Stephens Stephens & Do~ PILC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax lit KDS 0001 EXHIB IT I 548  I Cause No. 08-35261, In Re: Jeffery B. Kaiser From: Kelly Stephens (kelly.stephcns@hotml..il.com) Sc:nC: The 9/13/1 1 6~0 PM To: Ronald SorTI't)ers (rsommcts@nathansoi'l:IIllers.com) Bee: ~haelsydow@lbesydowfirm.com; Amber Polach (amb .potach@tbesydowfitm.com) Ron, I am contacting you in reference to my offer to purchase rights/ca es ofaction of the estate ofJeftery Kaiser. ln my earlier email, l offered $10,000.00 fur those ri&hts. As we discussed this afternoon, I am renewing that ofler at S2S, 0.00. My client would hlce to purchase any a.ad aD causes ofaction held by the estate against Texas Syngas, , Texas Syngas, Inc., Michael Sydow, Michael Collins, John T. Preston, Quann.un CataJytics., lnc., and . Samecr Ahmed. These wouH include specifically aD those claims !llldc in Cause 2 !'7-38533, Jeffery B. Kaiser, et aJ v. Texas Syngas, LLC a/kla Texas Syngas, Inc. er aL, currently p iog in the I 90th Judicial District Co\D1 of Harri; CoLilty. (n that case, Mr. Ka~er bas filed a derivative action as a shareho and is allc~g loss oflm "iwe.~tn'le.m" and/or o~ irerest io Texas Syngas, ILC. Mr. K~ did t co.atribute any real rmney fur his ownership ~st, rather it was predicated on ~ contrinltion as officer and prorroter ofthe con;>an)'. A partial S\m'Dil8J}' judg,mnt was issued ~h decJared that Te Syngas, Inc., was not a contim.ration o( subsidiary ofor a substftution corporation for Texas Syngas., LLC Mr. Kaiser had no affiliaEX>n will or ownership in Texas Syngas, Inc. Therefore he has no cla.irrs or s nding to make derivative claim; regarding tim entity. My client is rmking tim otrer based on a "cost ofdefenw" cvatua · n I might point out that Mr. Kaiser filed this banknlptcyon the eve ofsumnary judgment~ being h on behalfofaDderendants io that suit. It 6 my beliefthat lOOse tiX>ti>ns woukl havclwill be granted. Mr. Kais s claims are refuted by over 75% oflhe shareholders ofthe COJ11>any. Additionally, in deposition, Mr. K · was ur.ablc to detail even a singfe instance ofmSrepresentation or omission on behalfofthe officers directors oftbe cornpany. "''e believe that Mr. Kaiser's b~tcy W8$ directly and predoroillately pred ated on 1m inability to sobstan~Dy respond to those motions or to provide any evidence to support the clemen ofhis claims. As you may be aware, both Texas Syngas, ILC and Texas Synga Inc., are now defunct non-operating j companies with no assets. tbe mibe ofTexas S}'Df}lS, LLC wasp icated on a severe lack of funding. The fit.Wre ofthe new company (with subsLantiaJ new investors and gement) Texas Syngas, Inc., was brought about by tbe inabaity ofthe COfl1)any to rmke the synthesis proces coll'lrrerCiaDy viable. KOS 0002 549 311412014 '~ l I It is my beliefthat the clairm ofMr. Ka.i5er are wortbJess. It wo . 6tate be in the best. interest ofthe ! . to take ' tlm cash offur. I i Kelly D. Stephens Stephens & Donmitz, PILC I P.O. Box 79734 Houston, TX 77279-9734 28 1-394-3287 832-476-5460 Fax 212. K.DS 0003 550  311~4 RE: Kaiser Bankruptcy From: KeUy Stephens (kclJy.stephens@hotrmil.com) Sent Moo 9/19/11 12:06 AM To: gmccord@nathansoiJllrers.com Grethen, our offi:r is the same we made a couple ofyears ago. it~ based· n the cost ofderense ofthe claims made in the prior lawsuit we came forward becal.lSe Kaiser has filed a couple of motions t retain. the one early in ttm year was made wiihout notice to myselfor my client. the last one was noticed an promted the re up of the otrer. the first offer was not responded to, so we thought the suit would die of nattn"al causes. at any rate, we rmy be interested in maintaining the c)ajms in the o 'ginal derative suit depending on the tenTlS of any settlerrent you should know that according to Sydow, he has oot been serve with the suit you furwarded. Kelly D. Stephens Stephens & Domnitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax __ ___ .. ______ _ ! __ __ __ _ __ __ _ Subject Kaiser Bankruptcy Date: Fri, 16 Sep 2011 14:05:45 -0500 From: gmccord@nathansommers.corn To: kelly.stephens@hotmail.com Kelly: htlos:lltM7l.rnlil.li~e.cxmc#rreli.IT1ICJPrir-.M as sao es?ITN=an-us KDS 0012 551  311412014 8 RE: Cause No. 08-35261, In Re: Jetfe y B. Kaiser From: Gretchen McCord (gmccord@nathansommers.com) Sent: Wed 12121/11 7:47AM To: 'KeOy Stephens' (kelly.stcphens@hotrmilcom) Kelly: Are you around this week to discuss the settlement offer? Gretchen Gauer McCord Nathan Sommers Jacobs A Professional Corporation 2800 Post Oak Boulevard 61stFioor Houston, Texas 77056 Voice: (713) 892-4816 Fax: (713) 892-4800 qmccord@nathansommers.com www.na!hansom mers.cqm THIS E-MAIL MESSAGE AND THE ATTACHMENTS HERETO, IF ANY. ARE INTE~OED ONLY FOR USE BY THE SENDER'S INTENDED RECIPIENT($). IF YOU ARE NOT THE SENDER'S INTENDED RECIPIENT OF THI~ E-MAIL MESSAGE OR YOU RECEIVED THIS E-MAIL MESSAGE OR THE ATTACHMENTS TO IT IN ERROR, OR THIS E-MAIL MES~AGE OR SAID ATTACHMENTS CONTAIN LEGALLY PRIVILEGED OR CONFIDENTIAL INFORMATION AND YOU ARE. NOT THE SE~DER'S ll'lTENDEO RECIPIEI'lT OF SUOi LEGALLY PRIVILEGED OR CONFIDENTIAL INFORMATION. THE DISSEMINATION. DISTRIBtiON, PUBLICATION, DISCLOSURE OR USE OF SAlD htiDs:llltU173.mall.ll\e.aJI'Iolfrrellm.cJPriniMessaaes ?m4:~W~ous KDS 0021 552  311412014 Oullockc:an Print M~e II I RE: Cause No. 08-35261, In Re: Jeffet B•. Kaiser_ From: KeDy Stephens (kelly.stephcns@hotmail.com) I Sent: Wed 12121/1 I 10:54 AM To: grn:cord@nathansoJTD'l'X:rs.com lam Kelly D. Stephens Stephens & Dornnitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax - ---- --·----·- ··- -- From: gmccord@nathansommers.com To: kelly.stephens@hotmailcom Subject RE: Cause No. OR-35261, In Re: Jeffery B. Kaiser Date: Wed, 21 Dec 2011 12:47:47 +0000 Kelly: Are you around this week to discuss the settlement offer? Gretchen Gauer McCord Nathan Sommers Jacobs A Professional Corporation 2800 Post Oak Boulevard hflns:/~u173.m:lil.ll\eCa~Vcf/nal.m.o9rintMessao es'?ni«=erH5 118 KDS 0022 553 311412014 OuiJocP.com Print Mesaage RE: Cause No. 08-35261, In Re: Jeffery B. Kaiser From: KeUy Stephens (kelly.stephens@hotrnail.com) Sen!: Wed 12/21111 12:57 PM To: grrocord@nathansom:rrers.com I attacmnt OrderRetaining09232011.PDF ( 135.3 KB) Gretchen, attached are the orders regarding retention ofthe case by Judge Schaffer. I talked with the coordinator a minute or so ago. no action has been taken or will be taken fur a week or so at least my clients are interested in going forward with the asset purchase as discussed and will be available for testinxmy ifneeded. I will furward more precise language on the offer shortly, my clients are discussing what vehicle to purchase through etc. Kelly D. Stephens Stephens & Doi11Ilil4 PUC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax from: gmccord@nathansommers.com To: keDy.stephens@botrnail.com Subject: RE: Cause No. 08-35261, In Re: Jeftery B. Kaiser Date: Wed, 21 Dec 2011 12:47:47 +0000 Kelly: Are you around this week to discuss the settlement offer? 118 KDS 0023 554  31t4120t4 OUUoaltcom Print Message Kaiser estate From: KeUy Stephens (kelly.stephens@hotmail.com) Sen!: Tue 12127/11 10:39 AM To: gmccord@nathansommers.com Gretchen, sony for the delay. I know we need to get th5 in. my client has decided to make the oiler/purchase through one the individuals involved, Paul Lohnes. I am renewing the offer of $25,000.00. My dient would like to purchase any and all causes of action or potential causes of action held by the estate against Texas Syngas, LLC, Texas Syngas, Inc., their officers, directors, shareholders, agents, attorneys, etc. (or any predecessor, successor, or related companies), including but not limited to the following individuals: Michael Sydow, Michael Collins, John T. Preston, Quantum Catalytics, Inc.; and M. Sameer Ahmed. These would include spedfically all those claims made or that could have been made in Cause 2007-38533, Jeffery B. Kaiser, et al v. Texas Syngas, LlC a/1n from my client he is Wllting to put the rroney in my IOLTA account pending approval He wants rre to hold. assuming that is sufficient I woukJ give you notice ofthe deposit and hold pending approval lctm: know. Kelly D. Stephens Stephens & Do~ PLLC P.O. Box 79734 Ho~ton, TX 77279-9734 281-394-3287 832-476-5460 Fax From: gm:;cord@nalhansoiJ'II'DCrs.com To: keDy.stephens@hotmail.com Subject Kaiser Date: Tue, 17 Jan 2012 15:09:55 +0000 Kelly: Any word? 112 KDS 0032 557 3/1412014 0\Alook.com Pfin\ Message RE: Kaiser From: Kelly Stephens (kefly.stephens@hobnail.com) Sent: Tue 2/07/ 12 12:01 PM To: gm:oord@nathansoouners.com Gretchen, a couple ofthings. I . My clienl5 furming a company to purchase th.5 asset. should have that infO mid day totrorrow. 2. Should have the rmney by Thursday. 3. His lawyer in Boston is asking to review the tran!ifer doclDTICnts. do you use a standard fur fur asset purchase? ifso, can I get a copy to give them so that we speed up the process. Kelly D. Stephens Stephens & Donmitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax From: gux:cord@nathansommers.com To: kelly.stephens@hotmait.com CC: rsormrers@nathansorruners.com Subject Kaiser Date: Thu, 2 Feb 2012 17:01 :45 +0000 Kelly: I wanted to file the motion to sell this week. Do you helVe the funds in your lolta account? Also, did you send the email I requested that I can attach to the motion to sell as the offer? 112 KDS 0040 558 3/1412014 Ot.Cicdtoom Print Message Kaiser Front Gretchen McCord (gm:cord@nathansommers.com) Sent Wed 3/14/12 12:08 PM Tn: Kelly Stephens (kelly.sl<.:phcn<>@hotmail.com) (kcUy.stephcns@hotmail.com) Since I never heard who the purchaser was, I defined it as follows : The purchaser is Paul Lohnes or his assignee ("Purchaser"). The Purchaser is a business associate of the Defendants. There needs to be some explanation as to why he is buying these claims . I assume he is a business associate of Mr. Sydow. But, I need clarification on that issue. Gretchen Gauer McCord Nathan Sommers Jacobs A Professional Corporation 2800 Post Oak Boulevard 61st Roor Houston, Texas 77056 Voice: (713) 892-4816 FalC (713) 892-4800 gmccord@nalhansommers .com www.nathansommers.com THIS E·MAIL MESSAGE ANO THE ATTACHMENTS HERHO. 1r ANY. ARE INTENDED ONLY FOR USE BY THE SENDER'S INTENDED 112 KDS 0042 559 31141'lUI4 Re: Kaiser Fmm: Kelly 0 Stephens (kelly.stephens@hotrnail.com) Sent: Wed 3/l4/12 1:04l,M To: Grelchen McCord (gmccord@nathansormncrs.com) I am out of the ottlc ~c unt i J Monday. The definition is acr.ually 90ad as he has not yet i nforrned me either. r-Mobile, America's .First Nat.i,,nwide o1G Network Sent by Samsung Mobile Gretchen M<:Cor:d wrot:e: >Since I never heard who the purch~H~~ was, defined i t as follows: > >The purchaser i~ Paul Lohnes or h i s assi9nee ("Purchaser"). The Purchaser is a busin~ss associate of the Defendants. > >There needs to be some explal'lation as to why he is buying these clalms. r assume hP. i~ a business associate of l'tr. Syd~. But, I lHWd c i~t" l fication on t.hat issue . > > >Grel~c h en Gauer McCord >Nathan Sommers Jacobs >A Professional Co cporaL ion >2B OO Post Oak Roulevard >6lst rloor >Houst on, Texas 77056 >Voice : (7131 892 - 48Ui >Fax: (713) 892-4800 >gmccord@oathansommers. com >www. nathansommers . com > >TIIIS E-MAlL MESSAGE hNO TH~ ATTACHMENTS HERETO, I f ANY, ARE INTENDED ONLY FOR USE BY THE SENDER'S INTENDED RECI l'IENT (S) • IF YOU A~ N0'1' THE SENOE~' S INTENDED RECIPIENT Of THIS E-MAl~ M~SSAG~ OR YOU RF.CEIVF.O THIS E-MAIL MESSAGE OR THE ATTACHMENTS TO 1'1' .TN ERROR, OR THIS E-MAIL ME:SSAGE OR SJI.IO A'1"1'ACHMENTS CONTAIN f,EGALLY PRIVILEGED OR CONFIDEN'l' IAL IN F'ORMA'l'ION AND YOU ARE NOT THE SENDER'S INTENDED RECIPIENT 01-· SUCH LI::GA.LLY PRIVILEGED OR CONFIDENTIAL INfORMATION, THE DISSEMINATION, DISTRTBUTION, PUBLICATION, DI~CLOSURE OR OSE Cr SAID !::-MAIL MESSAGE, 7\T'rACHMENTS AND I Nf'ORMA'flON AND STRl C'rL't I:'ROH1lH'l'ED J',ND YOU ARE INSTRUCTED TO IMMEDIATELY (A) NOTlfY THt:: SENDF.R BY TEI.EPHONE AT 713.960.0303 OF YOUR RECEIPT Of' l'HlS E-MAIL MESSAGf. AND SAl D ATTACHMENTS, AND (B) DBL.£'1'£ '!'hlS E-MAIL MESSME J\ND THE J\Tl'ACHMENTS TO IT, AND DES'l'I{OY AI~L COPIES J\ND PRTN'l'OU'J"S THEREOF . > 111 KDS 0044 560  311412()14 C\JI/ookcan Print Message RE: Kaiser Front Kelly Stephens (kciJy.steplx:ns@hotJnailcom) Sent: Tue 4/03/ 12 10:08 AM To: gmccord@natbansommers.com Gretchen, j l.l.'it wanted to let you know, J urn not ignoring your request I have been tmable to speak with Lohnes or Sydow. I do not have the money as ofyet KeUy D. Stephen" Stephens & Do~ PLLC P.O. Box 79734 Houston. TX 77279-9734 28 1 ~394-3287 832~476-5460 Fax > From gm:cord@nathansommers.com > To: kelly. stephe~hotimilcom > Subject RE: Kaiser > Date: Thu, 29 Mar 2012 16:01 :12 +0000 > > KeDy: > > Can you confirm that you have the rmney in your JOLTA account? That the buyer still wants to trove furward? > > Also, per my request can you give me a short explanation of the identity ofthe buyer? (per my question below) If there bas not yet been an entity set up, then J will use the definition below. > > Gretchen Gauer McCord > Nathan Sommers Jacobs > A Professional Corporation > 2800 Post Oak Boulevard hltns:/Mu173.maii.Ji~olfmail.mdf'riniMMSIIIl8.'1'?rrH=etH.IS 113 KDS 0047 561 :Y1412014 OUUookcom Pril'lt Mesuge Kaiser From: Gretcben McCord (gm:cord@nalhansommers.com) Sent: Tiw6/07/12 2:56PM To: Kelly Stephens (kclly.slcphens@hoiJm.ilcom) (kelly.stephens@hotmail.com) Kelly: I thought I would take one more stab at contacting you. Ron has me engaging special counsel to take this on an contingency fee basis so we can reach some resolution. Is your client still interested in purchasing the claims? We had reached an understanding, but your client was required to pay·the money into your t rust account. Last we spoke, they had still not done this. If 1do not hear back from you by tomorrow morning, I will assume that your client is no longer interested in purchasing the claims. Gretchen Gauer McCord Nathan Sommers Jacobs AProfessional Corporation 2800 Post Oak Boulevard 61slFioor Houston, Tellas 77056 Voice: (713)892-4816 Fax: (713)892-4800 gmCCQrd@na!hansommers .com www.nathansommers.com 112 KDS 0049 562 31141'.!014 OU!c:dtccm Pr~nt Message RE: Kaiser From: Kelly Stephens (keDy.stephen~hotmail.com) Scn1: Thu 6107/ 12 3:23 PM To: gm:cord@nathansommers.com Gretchen, I am again assured that the money wiD be in my trust accoWlt mid next week. Kelty D. Stephens Stephens & Do~ PT.l.C P.O. Box 79734 Houston, TX 77279-9734 281 -394-3287 832-476-5460 Fax From: gm:cord@nathansollllll:rs.com To: kclly.stephens@botmail.com Subject: Katier Date: Thu, 7 JlUl 20 I2 18:56:48 +0000 Kelly: I thought I would take one more stab at contacting you. Ron has me engaging special counsel to take this on an contingency fee basis so we can reach some resolution. Is your client still interested in purchasing the daims? We had reached an understanding, but your client was required to pay the money Into your trust account. last we spoke, they had still not done this. If I do not hear back from you by tomorrow morning, I will assume that your client is no longer interested in purchasing the claims. 112 KDS OOSJ 563 311412014 OUtlockcan Print Message Kaiser Estate From: Kelly Stephens (kelly.stephens@hotmail.com) Sent: Tue 6/12/12 5:53PM To: gm:cord~natbansoiJ:mErs.com Gretchen, this DX>ming. I received notice ofa wire transfer of$12,500.00 from Boston this afternoon, I received a check in the amounl of$12,500.00 from Mr. Sydow. I deposited S<~Ire around 4:15p.m tim afternoon. I guess I can say that 1 have the money in my trust account Kelly D. Stephens Stephens & Donmitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax 1/1 KDS 0060 564  Oullockc.cm Prfnt Message RE: Kaiser- Sale Order From: Kelly Stephens (kelly.stephens@hotmJ.il.com) Sent: Fri 6/15/12 11:23 AM To: gm:cord@nathansommers.com Gretchen, my clients infurm Ire that they would like to make some changes in the valuation lan!,'lUlgc ofthe order. they are supposed to get rre their suggestions today. I will forward upon receipt Kelly D. Stephens Stephens & Dorrm~ PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax From: grrecord@nathansommers.com To: keDy.stephens@hotrmil.com Subject: Kaiser- Sale Order Date: Wed, 13 Jun 2012 20:25:05 +0000 Attached is a form of order that will be filed with the motion . The trustee had a few revisions. I have put a signature blank to sign as an agreed order, but did not know if you or someone else would be signing. Please let me know asap. Thanks. Gretchen Gauer McCord Nathan Sommers Jacobs AProfessional Corporation htiDs:/it1u173.1'11!ll.lhe.am'dlrreil.m.c/PrintMessao es?rl1F~ us 1l2 KDS 0063 565  311412014 RE: Kaiser- Sale Order From: Gretchen McCord ~cord@nathanc;ommers.com) Sent Fri 6/l5/12 llJ2 AM To: Kelly Stephem (kelly.stephens@hotrmil.com) I am pretty much married to that language . I will look at what they send, but the language is already broader than I think it should be . Gretchen Gauer McCord Nathan Sommers Jacobs A Professional Corporation 2800 Post Oak Boulevard 61st Floor Houston, TeJ~as 77056 Voice: (713) 892-4816 FalC (713) 892·4600 gmcoord@nathansom mers .com www.nalhansommers.com THIS E-MAIL MESSAGE AND THE ATTACHMENTS HERETO. IF ANY, ARE INTENDED ONLY FOR USE BY THE SENDER'S INTENDED RECIPIENT(S~ IF YOU ARE NOT THE SENDER'S INTENDED RECIPIENT OF THIS E-MAIL MESSAGE OR YOU RECSIVED THIS E~\!AIL MESSAGE OR THE ATIACHMENTS TO IT IN ERROR. OR THIS E-MAIL MESSAGE OR SAID ATTACHMENTS CONTAIN LEGAlLY PHIVILEGED OR CONFIDENTIAL INFORMATION AND YOU ARE NOT THE SENDER'S INTENDED RECIPIENT OF SUCH LEGALLY PRIVILEGED OR CONFIDENTIAL INFORMATION. THE DISSEMINATION. DISTRIBUTION. PUBLICATION, DISClOSURE OR USE OF SAID E-MAIL MESSAGE. ATIACHMENTS AND INFORMATION AND STRICTLY PROHIBITED AND Y OU ARE INSTRUCTED TO IMMEOIATEL Y (A) NOTIFY THE SENOER BY TELEPHONE AT 713.960.0303 OF YOUR RECEIPT OF THIS E·MAIL MESSAGE AND SAID ATTACHMENTS. AND (B)OELETE THIS E-MAIL MESSAGE AND THE ATTACHMENTS TO IT, AND DESTROY All COPIES AND PRINTOUTS THEREOF. llttn To: Michael Sydow Sent Wednesday, June 13, 2012 3:57PM Subject: FW: Kaiser- Sale Order Mace, see the attached. we have a window to make suggestions. Kelly D. Stephens Stephens & Donmitz, PLLC P.O. Box 79734 112 KDS 0066 567 311412014 OIJUooltcom Pril'll Messago FW: Kaiser- Sale Order From: KeBy Stephens (kelly.stephens@hotmlil.com) Sent: Fri 6/15/12 4:09PM To: gmccord@nathllnsoiTIFT1:rs.com Here ~ the ilusive name. Kelly D. Stephens Stephens & Domnitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax Date: Fri, 15 1lll20 12 12:54:56 -0700 From: ~haelsydow@th:sydowfinncom Subject Re: Kaiser- Sale Order To: kclly.stephens@hotrmil.com The name ofthc purchas er will be JK Cluirrti lnvcsm.:n t C'.orporation . --··--·- - From: KeUy Stephens To: "mdsydow@yahoo.com• ; Michael Sydow Sent Friday, June 15, 2012 11:33 AM Subject: FW: Kaiser- Sale Order KeDy D. Stephens Stephe~ & Do~ PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 113 KDS 0067 568  Dismissal of State Court Action F'ronr KeUy Stepbem (kclly.stephenc;@hotmaucom) Se::nl: Wed 6!J.7112 10:08 AM To: gnx:cord@nathansoiilllErs.com Bt:c: Michael Sydow (michael.sydow@thesydowfirm.com); Amber Polach (amber.potach@thesydowfinncom) 1 attachment Order Oi.omlissing case 06-12-2012.pdf( I 8.5 KBJ Gretchen. have you seen ths order, how does this aOCct what we are supposed to be purchasing. KcDy D. Stephens Stephens & Domnitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 28 1-394-3287 832-476-5460 Fax t'Gm://hl11\ 73.nwll.fl\e.cornldhnlil.md'rlrAMesl;aoOS'?rrii:P.fl.tA 1/t KDS 0069 569  Outlod(.ocm Pr inl Message Re: Dismissal of State Court Action From: Gretcbeo McCord (gm;:cord@nathansommers.com) Sent: Wed 6fl.7/ 12 10:12 AM To: kelly.stephens@hotmailcom (kelly.stephens@hotmailcom) l don't think it does. Sent from my HTC on the Now Network from Sprint! ----- Reply message ----- From: "KeUy Stephens" Date: Wed, Jun 27, 2012 9:08am Subject D~missal ofState Court Action To: "Gretchen McCord" Gretchen, have you seen thf; order, how docs lh.is affect what we arc supposed to be purchasing. KeDy D. Stephens Stephens & Dormtitz, PLLC P.O. Box 79734 Holl~on, TX 77279-9734 28 1-394-3287 832-476-5460 Fax 11! KDS 0070 570  31141'..'014 Oullockcom Pl'inl Message FW: Dismissal of State Court Action rrom: KeUy Stephe.os (kclly.stephens@hotrnail.com) Sent: Thu 6128/12 II :16 AM To: gm:cord@nathansomrrers.com Gretchen, see the question below. Kelly D. Stephens Stephens & Oomnitz, PLLC P.O. Box 79734 Ho~ton, TX 77279-9734 281-394-3287 832-476-5460 Fax _____ _ _- -·· ·--·-·-·-··-·-------------·-·· . ---· , _ . - ------------ --·- - -- -···------------- Date: Wed, 27 Jun 2012 13:54:42 -0700 From: michaelsydow@thcsydowfirm.com Subject Re: Dismissal ofState Cowt Action To: kelly.stepbens@hotmailcom If the case has been dismissed und the s tatute of limitations has run there is no tbing left to purchase. A dismissal for want of persecution used to be subject to reinstatement within u certain time. However, ifl recall correctly the reinstatement was d iscretionary with the Court. If s o, either the trustee needs to have it re instated to :;ell it or the buyer is purchasing yet another problem. I fail to understand how s he thinks the dismissal ha:; no beuring. Perhaps she can explain in just a bit rrore detail. li!Ds:/~u173.mail.lile.cc:rM:UrrBI.rnrA'riniMessaoes?rrk=en-us 111 KDS 0071 571  Kaiser From: Gretchen McCord (gm:cord@natbaosormners.com) Sent: Thu 6/28/12 11 :56 AM To: Kelly Stepbe~ (kclly.stcphens@hotlmil.com) (keDy.stephcns@hotmail.com) C:c: Ron Sornrrers (rsommers@nathansornmers.com) I need a written commitment from the purchaser that if the Trustee reinstates the lawsu it, we still have a deal and the purchase money needs to be paid to t he t rustee to hold in trust pending approval of the motion. Or, I need a written statement from the buyer that they are no longer interested i n going forward because the case has now been dismissed . Please let me know today. I am meeting with someone to discuss the cost to reinstate the lawsuit. Gretchen Gauer McCord Nathan Sommers Jacobs A Profes sional Corporation 2800 Post Oalc Boulevard 61 st Floor Houston, Texas 77056 Voice: (71 3) 892~816 Fax: (713)892~800 gmQCOrd@nathansomm ers .com www.nalhansommers.com THIS E·MAIL MESSAGE ANO THE ATTACHMENTS IIERETO. IF ANY. ARE INTENDED ONLY FOR USE 8Y THE SENDER'S INTENDED ht!Da:J~u173.mail.lhe.c:miallmail.rrM1Prlnll\Aessanes'?n1t=rn-us 112 KDS 0075 572  FW: Kaiser From: KeOy Stephens (kcUy.stcpbcns@hotl'micom) Sent: Thu 6/28/12 2:52 PM To: gm:cord@nathansolllt1l!rs.com here is the response. KeDy 0. Stephens Stephens & Do~ PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax Date: Thu, 28 Jun 2012 J0:45:23 -0700 From: michaelsydow@thesydowfirmcom Subject Re: K~er To: ketly.stepher6@hotma.il.com I have !>flOkcn to the purchaser. He is OK with the tms lee holding Lhe ~roncy IN TRUST, ami w ill go through with the purchase it: I. The cue i11 rcin11taled retroactively so that o nly limitations defenses available al the tiu10 the s uit wat> filed arc now available; and 2. The Court approves t he sale of the cause of action in substantially the fonn agreed. -----·---·---- -· .. -· .. -.- -- -· , ____ _______ .. -·- - - ---- - - hllll&:llblu173.mlli.Hifuxrn'dhnlll~ntMesslllles?miP~us 111 KDS 0076 573  Kaiser From: Gretchen McCord (gm:cord@nathansorrurers.com) Sent: Tue 7/03/ 12 12:28 PM To: Kelly Stephens (kelly.stephens@mtmaa.com) (kelly.stcphcns@hotmailcom) C:c: R.X;k K.incheloe (rkiocheJoc@nathansonmers.com) 2 attachments mln rcin'itme.v2.pdf(68.4 KB) . mtn rcinst.ah.!.v2.wpd (2 1.5 KH) Kelly: I asked about Michael Sydow because I think that we should perhaps make this a j oint motion. See the draft attached hereto (we will have to change, as I thought Michael was counsel to some defendants, including himself). But see what I want to do and get back with me. The reason I would like to make it joint, is that I don't want to run into a problem with the court saying the trustee never intervened. There are two schools of thought· one that the trustee just steps in without the necessity that a motion for intervention is necessary and two that the trustee has to formally intervene . I just don't want it to be an issue and then have the court say the trustee had no standing to file the motion to reinstate . Gretchen Gauer Pvteord Nathan Sommers Jacobs A Professional CorporaUon 2800 Post Oak Boutewrd 61st A oor Houston, TelCBs 77056 112 KDS 0086 574  ~14.'2014 Kaiser From: Gretchen McCord (gmccord@nathansoll111l!rs.com) Sent: Tue 7/10/12 6:14PM To: KeUy Stephens (kelly.stephens@hotimilcom) (kclly.stcphcno;@hotmaitcom) Cc: lti:k KirK:heloc (rkincheloe@nathanc;ommers.com) Kelly: If they are not going to join in the motion, can I at least represent that they are unopposed. I need an answer asap. Gretchen Gauer McCord Nathan Sommers Jacobs A Professional Corporation 2800 Post Oak Boulevard 61s l Aoor Houston, Texas 77056 Voice: (713) 892-4816 Fax: (713) 892-4800 gmccord@na!hansommers.com www.na!hansommers.com THIS E-MAIL MESSAGE ANO THE ATTACHMENTS HERETO. IF ANY. ARE INTENDED ONlY FOR USE BY THE SENDER'S INTENDED RECIPIENT(S~ IF YOU J\RE NOT THE SENDER'S INTENDED RECIPIENT OF THIS E-MAIL MESSAGE OR YOU RECEIVED THIS E-MAIL MESSAGE OR THE ATTACHMENTS TO IT IN ERROR. OR THIS E-MAIL M ESSAGE OR SAID ATTACHMENTS CONTAIN LEGALLY PRIVILEGED OR CONFIDENTIAL INFORM A liON AND YOU ARE NOT THE SENDER'S INTENDED RECIPIENT OF SUCH LEGALLY PRIVILEGED OR CONFIDENTIAL INFORMATION. THE DISSEMINATION. DISTRIBUTI ON. PUBLICATION. DISCLOSURE OR USE OF SAID E-MAIL MESSAGE. ATT ACHtAENTS AND INFORMATION AND STRICTLY PROHIBITED ANO YOU ARE INSTRUCTED TO IMMEDIATELY (A) NOTIFY THE SENDER BY TELEPHONE AT 713.960.0303 OF YOUR RI:CEIPT OF THIS E-MAIL MESSAGE AND SAID ATTACHMENTS. lels:/lblu173mlll.llw,carldlrrfi,l.md'rirCMessaa es?!TH=eo-us 112 KDS 0088 575  311412014 OUIJook.am Prlnl Message RE: Kaiser From: Kelly Stephem (kelly.stephcns@hotmail.com) Sent: Wed 7/ll /12 10:17 AM To: grnccord@nathansol'l'llJI:rs.com Gretchen. we're back to please don't shoot the m:ssengec. Mike's reply to joining the Jrolion was (paraphrased): I am buying this thing to prevent further problem; with Kaiser, why would I (the defendant) join in a motion to reinstate. I have fOrwarded your request below to him, but have not heard hack yet I am about to get on the road fur Duval County fur a hearing th~ afternoon. my cen is 713-252-4945. please caU IR! around noon. my hearing is at I :30. I'll try to reach Mike while I am on !he road. Kelly D. Stephens Stephens & Domnitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax ·-- - --·--·- - - From: gmccord@nathansomrners. com To: keDy.stephenc;@hotmail.com CC: rkincheloc@natharmmmers. com Subject: Ka~er Date: Tue, tO Jul2012 22:14:53 +0000 Kelly: l-.ms:JftAut73.maii.IM.cc:rrld/mail.rnciPrintMessaoos~en-us 112 KDS 0089 576  3f1412014 RE: Kaiser From: KeDy Stephem (kelly.stephen~hotmailcom) Sent: Wed 7/11/12 11:01 AM To: gmccord@nathansonnners.com Gretchen, first, my hearing in Duval got cancellec.llale yesterday and I just fuund out. second: I looked at the court records regarding dte parties in this litigdlion: JeffKaiser represented bimscU: now your position. 1 represented John Preston, Texas Syngas, Inc. and Quanhan Calalytics, LLC Steve Da\16 (Davis & Davi<;) represented Sameer Ahmed. Teresa Schnieer (Winstead) represented Michael Cotlins, Micheal Sydow and Texas Syngas, lLC She withdrew leaving each ofthese prose. On behalfofJohn Preston, Texas Syngas,lnc. and Quantum CataJytics, U£, I have requested authority but have not received it to represent t.batlhey arc \DlOpposed. Mike Sydow's position is that he cannot rmke that representation for any of the other defendants, and will not on his own behalf. I have not been able to reach Steve Davis, but I represent Sam:er Ahmed in other tmtters (and have made him aware of~) and he wants this thing dead so I doubt if he wouki agree. I have no conmcl with Michael Collins. 1 realize this corrplicates thin~, but ils the best I can do at this poinl KeDy D. Stephem Stephens & Oomnitz, PLLC P.O. Box 79734 Houston, TX 77279-9734 281 -394-3287 832-476-5460 Fax hiiDtiJ/tJu t73.rrei1Jiw.am'dmal.~ ntM01111.10 II':?rri(:m-'15 113 KDS 0090 577  311~4 Oudoollccm Prml Message RE: Kaiser From: KeUy Stephens (kelly.stephens@hot:rmilcom) Sent: 11w 7/12/12 5:29PM To: gmccord@nathan.c;omrners.com Gretchen, I can confirm that Mike Sydow is my primary contact My Wlderstanding i.<> that the purchaser is consulting with Mike regarding the claim; (their merits etc under Texas Law), but not that he is "having" someone purchase the claim. Kelly D. Stephens Stephens & Do~ PLLC P.O. Box 79734 Houston, TX 77279-9734 281-394-3287 832-476-5460 Fax From: gnx:cord@nathansommers.com To: keDy.stephens@hotmtilcom Subject: RE: Kaiser Date:Thu, 12 Jul2012 21:07:34 +0000 Please confirm for me t hat Mike Sydow is the one who is having the purchaser buy t he claims. Gretchen Gauer McCord Nathan Sommers Jacobs A Professional Corporation 2800 Post Oak Boulevard h!UI&:IIbluf73.mlll.lhe.carrldlmaii.ITIICiPrintMessaoes'?lriFen-us 1/4 KDS 0095 578  311412014 OuUcx:KctfftJ Thc~ltlttho.'SHdw:~ bfift9ddllled~r._,,..-.mt. UwthffHinlcrlllllion~lt~twoul)ll'--1'undl'ot 11>c ~~~~Guide. Do 1101 usc SVTIWP ~gr r~ wtw:n t ht actovtll r, not 0t JGI' rt9on ~dit!oNIIfts I •AUwhlftlllc Orii(Ntcw'l I«CJ'Idfs~ l" ~'~ftllunwdtundi~m~""- "OAt / / /£JJ. c; 7{ Z~//C... 2 6.. Wtfl• Use - w.lb fa o • wftH. "When Cilaoft\tf'\ .ccoun~ ts noc ~wIMP~' o ~by. ~ 1Jl!.!rur1~q,t ~d .:tnd entitled cause. and respectfully files this Nonsuit Kaiser). Plai ntiff in the above-n ..7~,.~ \~ ,, With Prejudice. ln support o ft~P'otion f'laintiff shows as follows: .0." ·~ I• ., 'l (' ,~ Plaintiff has ~eCI•Defenaant, Midael D. Sydow, for alleged mismanagement, breach of ~ . ~~ fiduciary duty. ~lion of state or federal securities law.;. fmud. misreprcsentat:on, and ,) ··...:::-· misapprop~ . Plaintiff no longer wishes to pursue the claims against Defendant. Michael D. " Sydow. II. Plaintiff asks the Court lo sign ar. order of nonsuit with prejudice on all of Plaintiff's claims against Defendant, Michael D. Sydow. PltfNonsuit w/Prejudice EX HIBIT J 581  Plaintiff asks that all cl<:jms against Defendant, Michael D. Sydow, be dismissed with prejudice. Plaintiff asks that all costs of court be assessed against the party incurring same. III. WHEREFORE, PREMISES CONSIDERED, Plainti ff respectfully requests that this motion for Nonsuit With Prejudice be f:ranted; that the Court d ismiss wi_.~t prej:Jdice all ~(7/!'> ;'~:~~· claims against Defendant. Michael D. Syd·)W; that all costs of (:ourt be a~~'cd against the party ~ incurring same; and for such other relief, at law or in equity, to whic!'~~!ntiff is entitled. ,~)' ~: ..t.::;; ./~~- Respectfully subnjrt~a. STEPHENS ~~bMNITZ, P .. .Jt ~ kelly.stcphcns@hotmail .com . Attorneys for Plaintiff, JK Clainrs Jm,estment ~ Corporation, Defendants, Texas Syngas·, LLC and F)) !' ·0:1 ~ Texas Syngas, /11c. and Intervenor, Quantum . -=~ '!-...._.) Cata/ytics, LLC. r.,; ~,.+.-. §i;~,; Certificate of Service '~· (~ I her~~rtify that a tn:.e and correct copy of the foregoing document has been served on this l 51 d~t>f October, 2012. on the following: Via Telecopier No. (713) 781-2235 Mr. Steven Ray Davis Davis & Davis 440 Louisiana, Suite 1850 Houston, Texas 77002 Attorneys for Sameer Ahmed Pltf Nonsuit w/Prejudice 582 Via Telecopier No. (713) 552-1949 Mr. Michael D. Sydov. 1980 Po!:l1 Oak Ooulevard, Sujte 2 100 Houston. Texas 77056 Defendant Pro Sc Via Certified Mail, Return Receipt Reque5ted #70JJ 1570 0000 9065 3472 Mr. Michael A. Collins 63 Sky Terrace Place U r.*n~ The Woodlands, Texas 7738 1 1'..>, __ <·~~v 'd\, ?Afj~~i"/.::;~~=- Defendant Pro Sc ~ghens f~~ .-::::..~'.! ~; .. -:...·~ ., .....- ... -\ ~ ,r· -~ ·\..,..- CAUSE NO. 2007-38533 Pltf Nonsuit w/Prejudicc 3 583  Flied 13 Jan~ 11 P5:09 Chris Daniel - Dla1rlct Cleric Hania County ED101J017268621 By. Marcella D. HRI Cause No. 2007-3 8533 JEFFERY B. KAlSER, INDlVIDUALLY, § IN THE DISTRICT COURT OF DERIVATELY, AND ON BEHALF OF s STOCKHOLDERS AND MEMBERS OF § TEXAS SYNGAS, LLC a/k/a TEXAS ~ SYNGAS, INC., ~ Plaintiffs, § § v. § § TEXAS SYNGAS, LLC a/k/a TEXAS § SYNGAS, rNC., MICHAEL A. COLLINS, § MICHAEL D . SYDOW, M. SAMBER § AHMED, ANDALLOTHERSIMILARL Y § SITUATED OFFICERS AND DfRECTORS § -:8• ~ ·~DJ OF TEXAS SYNGAS, LLC a/k/a TEXAS § ~"'~ SYNGAS, lNC., Defendants. ~ ~(w §,. G;~2nd JUDICIAL DJSTRlCT ·'\.~'"" .~- ,J DEFEND ANT Ml~l:L D. SYDOW'S MOTION TO NONSUrf CAUSE OF ACTION TO THE HONORABLE JUDGE OF ~ COURT : _© r~ ,ir..Jf-·J; NOW C O MES Defendant ~'Chael D . Sydow, and requests this Honorable Court to j( ) ~!J nonsuit the counterclaim he fil~.against Plaintiff Kaiser in Cause Number 2007-38533 for the ~I . r),':'s ground set forth herem. ..;:-~ \.-!' T. ~ ... ,r . ., ~'} A. De~t requests nonsuit of his counterclaim in Cause Number 2007-38533 for -~ (.~ the followin~~n: " 1. Kaiser has dismissed his claims against Mr. Syuuw in exchange for tht; nonsuit ofMr. Sydow's bad faith claim against Kaiser. WHERE FORE, Defendant requests this Honorable Court to nonsuit his counlerclajm against Kaiser in Cause Number 2007-38533 and for such other and further relief that may be 584 awarded at law or in equity. RespectfuJiy submitted, Is/ Michael D. Sydow ~ Michael D. Sydow ~" Texas Bar No. 19592000 (; - 1980 Post Oak Boulevard, 5\ti.te 2100 Houston, Texas 17056 ~~-- (713) 622-9700 [Tel~p~e] (713) 552-1949 [T~~ t erJ Attorney for Oef~dadt, Michael D. Sygqw. ~ " -41- .., ~~ h~~l..~r CERTIFICATE AN ~RVICE Olf; ~·-- ·-v I certify that on January ll , 20 13 ~~ouston, Texas a true and correct copy of Defendant's Motion to Nonsuit was ~~ed on Kelley M . Keller electronically at kkcller@cllison.keller.com, and the electro t'fuansmission was reported as complete. (l>n _, ,r~\~1 ~. ~~ Is! Michael D. Sydow (--:::-.~ y Michael D. Sydow \ E-mail: michael.sydow@ thesydowfirm.com ...~\ -o-~ f\_A 2 585 01/14/2013 02:32:33 PM 713-755-1451 Page2/5 Filed 13 January 14 P2:33 Chris Daniel ·District Clerk Harris County FAX15387276 Cause No. 2007-38533 JEFFERY B. KAISER. INDIVIDUALLY. § IN THE DJSTRICf COURT OF DERIVATELY, AND ON BEHALF OF § STOCKHOLDERS AND MEMBERS OF § TEXAS SYNGAS. LLC alkJa TEXAS § SYNGAS, INC., Plaintiffs, : Jt ~ § (( ~ ~ ~- ~ 0~ 'II. § HA.RRlS CO~TEXAS ~ ,, t TEXAS SYNOAS. LLC a/kla TEXAS § .r.~ SYNGAS, INC., MICHAEL A. COLLINS, § ~~" MICHAEL D. SYDOW, M. SAMBER AHMED, AND ALL OTIIER SIMILARLY § ~~:· § ~"Y SmJATED OFFICERS AND DIRECTORS § .. ·@ ~~ OF TEXAS SYNGAS, LLC alkla TEXAS ¥ ~""' SYNGAS, INC., Defendants. § § r::J '-J· §. ..,•<... 52nd JUDJCIAL DfSTRICT ~<~ ' . JNDayENOR OUANIUM CAT4\ t1c. LLC'S MODQN FOB NONSUIT r- ~ TO nfE HONORABLE JUDGE 0~~~ COURT: t.AV> NOW COMES Intcrven~~tum Catalytic., U..C. and requests this Honorable Court ·~.// to nonsuit the counterclaim he ~ against Ptaintiff Kaiser in Cause Number 2007-38533 for the ~l' (~ ground set forth herein. P ~· ~ following~ l. JK Claims Investment Corporation has acquired the cause of action of Kaiser, and Intervenor is not adverse to JK Claims Investment Corporation. Intervenor wiU align its interests with those JK Claim Investment Corporation in an amended petition. 586 01/14/2013 02:32:33 PM 713-755-1 451 Page 3/5 WHE.REFORE. Intervenor requests this Honorable Court to nonsuit his claim against Kaiser in Cause Number 2007-38533 and for such other and further relief that may be awarded at law oc in equity. Respectfully submitted, 587 01/14/2013 02:32:33 PM 713-755-1451 Page 4/5 CERTIFICATE OF SERVICE I certify that on January 11, 2013 at Houston, Texas a true and correct copy of Defendant's Motion to Dismiss wa.~ served on Kelley M. Keller electronically at kkellec@ellison.k.ellcr.com, and the electronic transmission was reported as complete. 588  'Transcript of the Testin1ony of Russell Read_, CfA, Ph .. DI$ Vo.4ume: I Date Qf Deposition: ApriJ 21, 2014 Case: Jeffrey B. Kaiser v. Texas Syngas, LCC Contlo~ntlal Comm.un·ications Int. Ltd. Phone:.71.3.365.0177 Fax: 713.365:0808 E.maH: schedul'lng@recordsdlscovery .co.m. Internet: www.:records.distovery:. corn 47TJ EXHIBIT L 600 817/2014 Diloision of Ccrporatic:ns- Online Senices Delaware.gov I Text Only Go..ernor I General Assembly I Courts I Elected Officials I State ~enr•t' c Oepar1ment of State : Olvilion of Corporations HOME Pnvacv ::>oftcy Frequently As!..~' Oucsvoos Vjow Search Results /!bout ~ency Secretary's Letter Entity Details Newsroom Frequent Qu estions Related Links 1.•.' v , r. · 1 , Contact Us Office Location Jncs.rpgraliqn Dale 04/12/2011 Fole ~\~umber 49sns7 Formwon Qak. (mm/ddlyyyy) SERVICES Pa y!axes File UCC's E.nWt i'ame TRANSFORMATIVE ENERGY & MATERIALS CAPITAL, INC. Delaware Laws Online Name Reservabon CORPORATION Entity Typo GENERAL Entity Search Status ~es•derrv DOMESTIC Slate: DE Validate Certifi cate Customer Sel"..ice Sur..ey REGISTERED AGENT I.NFORMATION INFORMATION Corporate Forms Name: CORPORATION SERVICE COMPANY Corporate Fees UCC Forms and Fees TalCeS Address: 2711 CENTERVIUE RD SUITE 400 ~edtted ser.;ces Ser.;ce of Process City : WILMINGTON County: NEW CASTLE Regtstered ~ents Get Corporate Status Stale. DE Postal Code: 19808 Submitting a Request How to Form a New Phone: (302)636-5401 Bu ~;inP.!\!\ Entity Certifications , Apostllles & ,btJitlentication of Documents Would you like Status Status,Tax & History Information Submit Back to Entity Search cite!.. here site map I about this site I contact us I translate I delaware.gov EXHIBIT M 608 1/1  10/27/2014 9:26:29 AM Chris Daniel · District Clerk Harris County Envelope No. 2958109 By: GAYLE FULLER Filed : 10/24/2014 7:28:31 PM CAUSE NO. 2011-44058 MICHAEL COLLINS, ET AL.. § IN THE DISTRICT COURT Plaintiffs § § § vs. § OF HARRIS COUNY § sf\ MICHAEL SYDOW, ET AL. § Defendants § 215rn JUDICIAL DISTRICT AKILA FINANCE, S.A. , ET AL. , § TN THE DISTRICT COURT Intervenors/Plaintiffs § § vs. § OF HARRIS COUNTY, TEXAS § MlCHAEL SYDOW; ET AL. § Defendants . § 215TH JUDICIAL DISTRICT DEFE NDANTS JOHN T. PRESTON, BRILLIANT NOVELTY, L.L.C., AND C CHANGE I NVESTMENTS, LLC'S REPLY IN SUPPORT OF THEIR SPECIAL APPEARA NCES AND MOTION TO STRIKE HEARSAY STATEMENTS Pursuant to Texas Rule of Civil Procedure 120a. Defendants John T. Preston. Brilliant Novelty, L.L.C. ("Bdlliant Novelty"), and C Change Investments, LLC ("C Change" ) (together "Massachusetts Defendants") fi le this Reply in Support of Their Special Appearances and Motion to Strike Hearsay Statements, and in support state as follows: PRELIMINARY STATEMENT At issue here is whether claims filed by foreign corporations and individuals-none of whom are Texas residents- against a Masachusetts resident and two Massachusetts companies should be allowed to go forward even though after three years of litigation there still is no evidence for assertingjurisdiclion over any of the Massachusetts Defendanls in a Texas court. 617  The Massachu etts Defendants established in the ir Special Appearances that personal j urisdiction cannot be asserted over them. Neither the lcnglhy response or supp lcm~nt al response submiued by the Intervenors should be considered in this case because both are 1 untimely. Jn a ny event. nothing in either brief c hanges the fact that there is no specific or general jurisdiction over any of the Mas achusetts Defendants. First. there is no specific jtu·isdiction because Ute Intervenors do not even allege that the Massachusetts Defendants conunitted any act in Texas that gives rise to the claims in t11i s lawsuit. The Texas Supteme Court has explicitly rejected the theory on which the Intervenors rely for specific jurisdiction. Jt i not enough to allege that a t01t was ·'directed" at Texas. Second. there i no general j urisdiction over any of these defendants. Preston has not lived in Texas since he was an infant over sixty years ago and the handful of visits he has made to Texas since the n are not jurisdictional contacts because they were made in a t'e pt'e sentative capacity. The handful of contacts by C Change with Texas through Preston were not o ··continuou and systematic" to render C Change "essentially at home" in Texas as the U.S. Supreme Cmu1 requires. Finally. Intervenors have not cited any specifi.c contacts by Brilliant Novelty with Texas. J. THE MASSACHUSETTS DEFENDANTS COMPURD WITH RULE 120A. The Intervenors claim that d1c Massachusetts Defendants' special appearances do not comply with Rule 120a on the grounds that the special appearances themselves arc not verified. But as the Intervenors acknowledge, affidavits were attached to each of the special appearances. Resp. at 8-9. These affidavits swear to the truth of every statement of fact in the mot ions. Jt 1 Despite the fact that Defendants agreed to several extensions of the deadline for Intervenors' response briet~ Intervenors fajJed to meet the agreed July 2, 2014 deadline for flli ng tfleir Response Brief. Ex. A, Rule 1t Agreement (June 29. 2014); Intervenors' Resp. at 1 (July 3, 20l4). More significantly. Intervenors subsequently filed an additional S\ipplemental response brief on AugustS, 2014. despite being bound by the Rule 11 Agreement reqmring that any resJlonse by the Intervenors must be fi led by July 2. 2014. Intervenors' Supp. Resp. (Aug. S, 2014). 2 618 makes no sense to argue they are not sworn motions as Rule 120a requires. In any event, even if there were a technical defect- which there is not- the Texas Supreme Court has made clear that a special appearance can be veri fied after the hearing. 2 ll. INTERVENORS DID NOT MEET TH~IR BURDEN OF PLEADING S UFFICIENT JURISDICTIONAL ALLEGATIONS OVER NON-RESIDENTS. The1·e is no allegation that any acts by the Massachusetts Defendants giving rise lo the Intervenors claims took place in Texas. That means it is enough to establish that the Massachusetts Defendants m·c not residents and the Court does not need to go any further. "The plaintiff has the initial burden of pleading sufficient allegations to bring the nomesident de fendant within the provisions of the Texas long-aJ:m statute. . .. If the plaintjff docs not plead jurisdictional allegati ons, i.e .. that the defendant has committed any act in Texas, the defendant can satisfy its burden by presenting evidence that it is a nonresident. ''3 Ill. THERE IS NO SPECIILEMENTAL DF.CLARATION IN SUl}PORT OF HlS SPECIAL APPEARANCE l. My name is .loJ.m T. Pl·~s'lbrt. My date of birth is MarCJ) 18, 1950, and r.ny address is 9 Martins Cove Lane, Hingham, MA 02043. l deciate under penalty of perjury that the statements ~n tllis declaration are true ~nd con'CcL 1 1 am l.rver the age of 21. [ have neve.r been convi~ted or a felony or crime invotving nHn·al turpitude. 1 a.tll of {)OUnd mind a.u d am fully competent to make this declaration. 3. As I previously d1sdos~d in this case, l traveled to rcxas in the 1990s on a handful of occssions. None of those trips wei'e in111y personal ca}}acity. 4. l keep dct.ailed reconis of my tJ:a.v~l. i\fter reviewing my traveJ reco.rds, Tiden1.ified Bll of roy trips to Texas in the five years beforf~ this lawsuit was filed for which I could locaLe travel in1orm)Q-" ~~~ ~