ACCEPTED
05-18-00647-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
6/4/2018 10:40 AM
LISA MATZ
CLERK
No. ___________________
In the Court of Appeals FILED IN
Fifth District of Texas at Dallas 5th COURT OF APPEALS
DALLAS, TEXAS
6/4/2018 10:40:22 AM
LISA MATZ
Clerk
In re JOHN CALCE
Relator
Original Proceeding from the 44th Judicial District Court
Dallas County, Texas
Hon. Bonnie Lee Goldstein, Presiding Judge
Cause No. DC-16-07706
PETITION FOR WRIT OF MANDAMUS
James D. Shields P. Michael Jung
David A. Shields David N. Kitner
Jadd F. Masso
SHIELDS LEGAL GROUP
Chase J. Potter
16301 Quorum Drive
Suite 250B CLARK HILL STRASBURGER
Addison, Texas 75001 901 Main Street, Suite 6000
(972) 788-2040 Dallas, Texas 75202
(972) 788-4332 (facsimile) (214) 651-4300
(214) 651-4330 (facsimile)
Attorneys for Relator
Oral Argument Requested
9997597.7/SP/38371/0105/060118
Identities of Parties and Counsel
Party Counsel
John Calce P. Michael Jung
David N. Kitner
Relator Jadd F. Masso
Chase J. Potter
CLARK HILL STRASBURGER
901 Main Street, Suite 6000
Dallas, Texas 75202
James D. Shields
David A. Shields
SHIELDS LEGAL GROUP
16301 Quorum Drive
Suite 250B
Addison, Texas 75001
(972) 788-2040
(972) 788-4332 (facsimile)
Hon. Bonnie Lee Goldstein
44th Judicial District Court
600 Commerce Street
Dallas, Texas 75202
Respondent
Centurion Logistics, LLC Mark E. Torian
Darren P. Nicholson
Real Party in Interest
SAYLES WERBNER, P.C.
4400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
9997597.7/SP/38371/0105/060118 2
Table of Contents
Identities of Parties and Counsel.............................................................. 2
Table of Contents ...................................................................................... 3
Index of Authorities................................................................................... 5
Statement of the Case ............................................................................... 9
Statement of Jurisdiction ........................................................................ 10
Introduction ............................................................................................. 11
Issue Presented ....................................................................................... 12
Statement of Facts .................................................................................. 13
Summary of the Argument ..................................................................... 18
Argument ................................................................................................. 19
I. Standard for Mandamus Relief...................................................... 19
II. Calce has a clear and immediate right to reimbursement and
advancement of his defense costs. ................................................. 20
A. The right to advancement or reimbursement of
expenses and the right to indemnification are separate
and distinct legal concepts. ................................................... 21
B. Centurion Logistics cannot rely on its own allegations
to deny Calce’s right to advancement and
reimbursement of defense costs. ........................................... 26
C. Calce’s contractual right to advancement and
reimbursement is unambiguous and mandatory. ................ 29
1. The terms of the Company Agreement are
unambiguous. ............................................................... 29
9997597.7/SP/38371/0105/060118 3
2. Section 6.2 of the Agreement requires Centurion
Logistics to immediately reimburse Calce the
expenses he pays or incurs in defending himself. ....... 30
3. Calce’s reimbursable expenses include his
attorneys’ fees............................................................... 33
D. Summary judgment is the appropriate—and only
meaningful—mechanism for Calce to exercise his right
to advancement and reimbursement of defense costs. ......... 34
III. Mandamus is warranted. ............................................................... 35
Prayer ...................................................................................................... 36
Certification ............................................................................................. 37
Certificate Of Compliance ....................................................................... 37
Certificate of Service ............................................................................... 38
Declaration Regarding Evidence ............................................................ 39
Appendix
A. Plaintiff’s Original Petition
B. John Calce’s First Amended Counterclaim Against Centurion
Logistics LLC and Centurion Pecos Terminal LLC
C. John Calce’s Amended Motion for Partial Summary Judgment
Regarding Counterclaim Against Centurion Logistics LLC
D. Plaintiff’s Second Amended Petition
E. Order Denying John Calce’s Amended Motion for Partial Sum-
mary Judgment Regarding Counterclaim Againt Centurion Lo-
gistics LLC
F. Tex. Bus. Orgs. Code § 8.104
9997597.7/SP/38371/0105/060118 4
Index of Authorities
CASES
Arch Ins. Co. v. U.S. Youth Soccer Ass’n,
No. 05-12-00596-CV, 2014 WL 2941372,
2014 Tex. App. LEXIS 5068 (Tex. App.—Dallas
May 12, 2014, no pet.) (mem. op.) .................................................... 23
El Paso Field Servs., L.P. v. MasTec N. Am., Inc.,
389 S.W.3d 802 (Tex. 2012) ............................................................. 29
Evans v. Davis,
No. 14-12-01053-CV, 2013 WL 6095723,
2013 Tex. App. LEXIS 14122 (Tex. App.—Houston
[14th Dist.] Nov. 19, 2013, no pet.) (mem. op.) ................................ 23
Heine v. Bank of Oswego,
144 F. Supp. 3d 1198 (D. Or. 2015) ................................................. 33
Heritage Res., Inc. v. NationsBank,
939 S.W.2d 118 (Tex. 1996) ............................................................. 30
Homestore, Inc. v. Tafeen,
888 A.2d 204 (Del. 2005) ............................................................ 22, 25
Huie v. DeShazo,
922 S.W.2d 920 (Tex. 1996) ....................................................... 19, 35
In re Aguilar,
344 S.W.3d 41 (Tex. App.—El Paso 2011,
orig. proceeding) ....................................................................... passim
In re AIU Ins.,
148 S.W.3d 109 (Tex. 2014) ............................................................. 20
In re Coppola,
535 S.W.3d 506 (Tex. 2017) ............................................................. 20
In re Dickason,
987 S.W.2d 570 (Tex. 1998) ............................................................. 20
9997597.7/SP/38371/0105/060118 5
In re Essex Ins.,
450 S.W.3d 524 (Tex. 2014) ....................................................... 19, 20
In re McAllen Med. Ctr., Inc.,
275 S.W.3d 458 (Tex. 2008) ....................................................... 20, 35
In re Nationwide Ins.,
494 S.W.3d 708 (Tex. 2016) ....................................................... 19, 35
In re Prudential Ins. Co. of Am.,
148 S.W.3d 124 (Tex. 2004) ....................................................... 20, 35
In re State Farm Lloyds,
520 S.W.3d 595 (Tex. 2018) ............................................................. 19
Int’l Airport Ctrs., LLC v. Citrin,
455 F.3d 749 (7th Cir. 2006) ............................................................ 25
James River Mgmt. Co., Inc. v. Kehoe,
674 F. Supp. 2d 745 (E.D. Va. 2009)................................................ 27
Kamen v. Kemper Fin. Servs., Inc.,
908 F.2d 1338 (7th Cir. 1990),
rev’d on other grounds,
500 U.S. 90 (1991) ............................................................................ 25
Moayedi v. Interstate 35/Chisam Rd., L.P.,
438 S.W.3d 1 (Tex. 2014) ........................................................... 29, 30
Morgan v. Grace,
Civ. A. No. 20430, 2003 WL 22461916,
2003 Del. Ch. LEXIS 113 (Del Ch. Oct. 29, 2003) ........................... 34
Nat’l Union Fire Ins. Co. of Pittsburgh, Penn.
v. CBI Indus. Inc.,
907 S.W.2d 517 (Tex. 1995) ............................................................. 30
Neurobehaviorial Assocs., P.A. v. Cypress
Creek Hosp., Inc.,
995 S.W.2d 326 (Tex. App.—Houston
[1st Dist.] 1999, no pet.) ................................................................... 25
9997597.7/SP/38371/0105/060118 6
Peterson v. Farmers Tex. Cnty. Mut. Ins. Co.,
No. 05-15-00678-CV, 2016 WL 3448067,
2016 Tex. App. LEXIS 6586 (Tex. App.—Dallas
June 22, 2016, no pet.) (mem. op.) ............................................. 29, 30
PopCap Games, Inc. v. MumboJumbo, LLC,
350 S.W.3d 699 (Tex. App.—Dallas 2011, pet. denied) ................... 29
Reddy v. Elec. Data Sys. Corp.,
C.A. No. 19467, 2002 Del. Ch.
LEXIS 69 (Del. Ch. June 18, 2002) ............................................ 28, 35
Sacks v. Haden,
266 S.W.3d 447 (Tex. 2008) ............................................................. 30
Walker v. Packer,
827 S.W.2d 833 (Tex. 1992) ............................................................. 19
STATUTES
Tex. Bus. Corp. Act art. 2.02-1 ................................................................ 24
Tex. Bus. Orgs. Code § 8.001(3)(B) ......................................................... 34
Tex. Bus. Orgs. Code § 8.104................................................................... 24
Texas Government Code Section 22.221(a) and (b)(1) ........................... 10
OTHER AUTHORITIES
Andrew J. Morrow, Jr., Appendix: Task Force Report,
Oregon Revised Model Business Corporation Act,
30 Willamette L. Rev. 407 (1994) .................................................... 33
Richard A. Rossman, et al., A Primer of Advancement
of Defense Costs: The Rights and Duties of Officers
and Corporations,
85 U. Det. Mercy L. Rev. 29 (2007) .................................................. 22
Stephen A. Radin, “Sinners Who Find Religion”: Advancement
of Litigation Expenses to Corporate Officials
9997597.7/SP/38371/0105/060118 7
Accused of Wrongdoing,
25 Rev. Litig. 251 (2006) .................................................................. 25
9997597.7/SP/38371/0105/060118 8
Statement of the Case
Underlying Proceeding Suit by Centurion Logistics LLC against
Relator John Calce, a manager of the
LLC, and others alleging breach of fiduci-
ary duty and related claims relating to a
development project. (MR.1-23, 867-903.)
Calce sought to require Centurion Logis-
tics to reimburse his defense costs in this
case as required by its Company Agree-
ment. (MR.322-36.) The trial court denied
Calce’s motion. (MR.904-05.)
Respondent Hon. Bonnie Lee Goldstein
44th Judicial District Court
Dallas County, Texas
Respondent’s Actions Refusing to enforce contractual provision
requiring Centurion Logistics to reim-
burse Calce’s defense-related expenses in
this case as they are incurred.
9997597.7/SP/38371/0105/060118 9
Statement of Jurisdiction
This Court has jurisdiction under Texas Government Code Section
22.221(a) and (b)(1), which authorizes this Court to “issue all writs of
mandamus, agreeable to the principles of law regulating those writs,
against: (1) a judge of a district or county court in the court of appeals
district.”
9997597.7/SP/38371/0105/060118 10
Introduction
The right of a party to have defense costs advanced or reimbursed
during ongoing litigation is a right that will be lost forever if not en-
forced during the pending litigation. In re Aguilar, 344 S.W.3d 41, 55
(Tex. App.—El Paso 2011, orig. proceeding).
In this case, Relator John Calce is entitled to reimbursement of
his defense costs paid or incurred in this case—as they are paid or in-
curred. Real Party in Interest Centurion Logistics does not contest that
Calce is an “Indemnified Person” or that this suit is a “Proceeding” for
purposes of the Company Agreement, thus triggering Centurion Logis-
tics obligation to reimburse Calce’s ongoing defense expenses.
Calce’s right to advancement or reimbursement of his defense ex-
penses is separate and distinct from any right he may have to indemni-
fication from Centurion Logistics. Indemnification, like Calce’s potential
obligation to repay any funds advanced to him for his defense, will be
determined when this case is adjudicated on its merits.
Mandamus is necessary to vindicate Calce’s right to advancement
of defense costs. Appellate relief will be illusory because, by that point,
Calce will have been completely deprived of the benefit of the right.
9997597.7/SP/38371/0105/060118 11
Issue Presented
Did the trial court abuse its discretion by refusing to enforce Cen-
turion Logistics’ contractual obligation to reimburse Relator John Calce
his defense costs as paid or incurred during the course of this litigation?
9997597.7/SP/38371/0105/060118 12
Statement of Facts
The Parties
Relator John Calce is a manager of Plaintiff and Real Party in In-
terest Centurion Logistics LLC. (MR.4, 338, 353, 872.)
Centurion Logistics was formed by Calce and others to pursue a
project to purchase real property in Reeves County, Texas. (MR.4-5,
872.)
The Lawsuit
In June 2016, Centurion Logistics brought this suit against Calce
and several other defendants relating to an alleged railway-terminal
development project. (MR.1-23.) Centurion Logistics generally claims
that Calce and the other defendants caused Centurion Logistics to lose
its interest in certain property, thus depriving it of the opportunity to
construct a railway terminal for crude oil on that property. (Id.)
Against Calce, Centurion Logistics asserts claims for (1) breach of
fiduciary duty as a manager of the company, (2) unjust enrichment, and
(3) aiding and abetting fraudulent concealment. (MR.12-13, 15-17, 18-
19.) Centurion Logistics later amended its petition, adding claims
9997597.7/SP/38371/0105/060118 13
against Calce for theft liability, tortious interference with contract,
fraudulent inducement, and promissory estoppel. (MR.894-97.)
Since answering in this case, Calce has incurred, and continues to
incur, significant expenses in defending against the claims that have
been brought against him. (See MR.338.)
Calce’s Right to Immediate Reimbursement of Defense Costs
It is undisputed that Calce is a manager of Centurion Logistics.
(MR.4, 782.) Calce is, as a result, an “Indemnified Person” under Centu-
rion Logistics’ Company Agreement. (Company Agreement § 1.1,
MR.346.)
Section 6.2 of the Company Agreement requires Centurion Logis-
tics to reimburse “Indemnified Persons,” such as Calce, for expenses
paid or incurred in defending himself in any “Proceeding”:
To the fullest extent permitted by applicable law,
and subject to Section 6.3, [Centurion Logistics]
indemnifies and holds harmless each Indemnified
Person from and against any Damages arising
from any Proceeding relating to the conduct of
[Centurion Logistics’] business or to any act or
omission by such Indemnified Person within the
scope of the Indemnified Person’s authority in the
course of [Centurion Logistics’] business or for
any misconduct or negligence on the part of any
other person that is an employee or agent of
[Centurion Logistics]. An Indemnified Person’s
9997597.7/SP/38371/0105/060118 14
expenses paid or incurred in defending itself
against any Proceeding shall be reimbursed
as paid or incurred. The right to indemnifica-
tion conferred in this Article VI is not exclusive of
any other right that any person may have or
hereafter acquire under any statute, agreement,
vote of Members, or otherwise.
(Company Agreement § 6.2, MR.357 (emphasis added).) Such reim-
bursement is to be made as the expenses are paid or incurred. (Id.)
“Proceeding” is defined as “(a) any threatened, pending, or com-
pleted action or other proceeding, whether civil, criminal, administra-
tive, arbitrative, or investigative; (b) an appeal of any such proceeding,
and (c) any inquiry or investigation that could lead to any such proceed-
ing.” (Company Agreement § 1.1, MR.347.) Centurion Logistics does not
dispute that this case is a “Proceeding” as defined by the Company
Agreement. (MR.392.)
In the event an Indemnified Person is later determined not to be
entitled to any expense-reimbursement payments made, the Indemni-
fied Person is required to repay such amounts to Centurion Logistics.
(Company Agreement § 6.3(c), MR.357-58.)
9997597.7/SP/38371/0105/060118 15
Centurion Logistics’ Refusal to Reimburse Calce’s Costs
In August 2017, Calce requested that Centurion Logistics, pursu-
ant to Section 6.2 of the Agreement, (1) reimburse Calce the expenses
he had incurred as of July 31, 2017, plus an additional $50,000 to be
applied to future expenses as they are incurred, and (2) agree to reim-
burse Calce the additional expenses, in excess of such $50,000 ad-
vancement, that he pays or incurs in his defense of the suit as such ex-
penses are paid or incurred. (MR.388-89.).
Calce’s requested stated: “Pursuant to Section 6.3 of the [Compa-
ny] Agreement, Mr. Calce hereby affirms that it is his good faith belief
that he has met the standard of conduct necessary for indemnification
under Section 6.3.” (MR.389.) The request also provides that “Mr. Calce
further agrees to repay any amount that is paid or reimbursed by Cen-
turion Logistics, pursuant to Section 6.2, if it is determined by a court of
competent jurisdiction that Mr. Calce did not meet the aforementioned
standard or if indemnification is otherwise determined to be prohibited
by law.” (Id.)
Centurion Logistics denied Calce’s request for reimbursement.
(MR.391-93.) Despite denying the request, however, Centurion Logistics
9997597.7/SP/38371/0105/060118 16
conceded that Calce is an “Indemnified Person” and that this litigation
is a “Proceeding” as those terms are defined in the Company Agree-
ment. (MR.392.) To date, Centurion Logistics has not reimbursed Calce
any amount for the expenses he has paid and incurred in defending
himself against the claims brought against him in this case. (MR.338.)
Procedural Background
Calce filed a counterclaim asserting his right to immediate reim-
bursement of his defense costs. (MR.24-172, 173-321.) To compel com-
pliance with Centurion Logistics’ reimbursement obligation, Calce filed
a motion for partial summary judgment. (MR.322-405.) By that motion,
Calce sought a declaration that Centurion Logistics is required to reim-
burse his expenses, including attorney’s fees, paid or incurred in defend-
ing himself in this case. (MR.334.) The motion also sought to require
Centurion Logistics to reimburse future expenses within 10 days of Cal-
ce’s submission of such expenses to Centurion Logistics. (Id.) On
May 21, 2018, the trial court denied Calce’s motion. (MR.904-05.)
9997597.7/SP/38371/0105/060118 17
Summary of the Argument
Centurion Logistics’ Company Agreement provides that, as a
manager, Relator John Calce is entitled to reimbursement of his costs of
defense in any “Proceeding.” Centurion Logistics admits that this case
is a “Proceeding.” As a result, Calce is contractually entitled to reim-
bursement of any expenses he pays or incurs in defending himself in
this lawsuit, including attorney’s fees, as they are paid or incurred.
Calce’s right to reimbursement of defense costs is separate and
distinct from any right he may have to indemnification from Centurion
Logistics. Calce’s right to ongoing reimbursement of his expenses dur-
ing the course of this case is supported by the Company Agreement,
Texas case law, and the Texas Business & Organizations Code.
The trial court’s refusal to enforce Centurion Logistics’ obligation
to advance Calce his defense costs has the effect of permanently depriv-
ing Calce of the benefit of this substantive right. By the time this case
proceeds to trial and an appeal becomes available, the issue will be
moot. Accordingly, mandamus relief is necessary. In re Aguilar, 344
S.W.3d 41, 55 (Tex. App.—El Paso 2011, orig. proceeding).
9997597.7/SP/38371/0105/060118 18
Argument
I. Standard for Mandamus Relief
Mandamus relief is warranted to correct a clear abuse of discre-
tion when there is no adequate appellate remedy. In re State Farm
Lloyds, 520 S.W.3d 595, 604 (Tex. 2018).
When deciding legal principles, a trial court has no discretion to
misinterpret or misapply the law. Walker v. Packer, 827 S.W.2d 833,
840 (Tex. 1992). Thus a failure to correctly analyze or apply the law
constitutes an abuse of discretion. In re Nationwide Ins., 494 S.W.3d
708, 712 (Tex. 2016). A trial court’s erroneous legal conclusion is an
abuse of discretion even if the law is unsettled. Huie v. DeShazo, 922
S.W.2d 920, 927-28 (Tex. 1996).
Determining whether an appellate remedy is adequate involves
balancing “practical and prudential” considerations, such as the inevi-
tability of reversal, the impairment of important substantive and proce-
dural rights, the opportunity to give direction and guidance on the law
that would otherwise be lost, and the waste of judicial resources on the
proceeding. See In re Essex Ins., 450 S.W.3d 524, 528 (Tex. 2014); In re
Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008); In re Prudential
9997597.7/SP/38371/0105/060118 19
Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004). The adequacy of an
appeal depends on the facts of each case. In re McAllen Med. Ctr., Inc.,
275 S.W.3d 458, 469 (Tex. 2008). An appellate remedy is inadequate
when the benefits of mandamus review are outweighed by the detri-
ments. In re Coppola, 535 S.W.3d 506, 509 (Tex. 2017); In re Essex, 450
S.W.3d at 528; In re Prudential, 148 S.W.3d at 136.
If a trial court’s refusal to grant particular relief renders the sub-
ject matter of an appeal illusory, the party seeking relief has no ade-
quate remedy by appeal. See, e.g., In re AIU Ins., 148 S.W.3d 109, 115-
17 (Tex. 2014) (granting mandamus to enforce forum-selection clause; to
do otherwise would defeat the purpose of the clause); In re Dickason,
987 S.W.2d 570, 571 (Tex. 1998) (granting mandamus to prevent retrial
because appeal after second trial would be pointless). Appeal following a
trial is inadequate if the very act of proceeding to trial would defeat the
substantive right at issue. In re McAllen Med. Ctr., 275 S.W.3d at 465.
II. Calce has a clear and immediate right to advancement of
his defense costs.
Centurion Logistics’ Company Agreement requires it to reimburse
the defense expenses of “Indemnified Persons” as they are paid or in-
curred during the course of a “Proceeding.” (Company Agreement § 6.2,
9997597.7/SP/38371/0105/060118 20
MR.357.) Centurion Logistics does not dispute that Calce is an “Indem-
nified Person” and that this suit is a “Proceeding.” (MR.392.)
By his motion, Calce sought only to establish his right to ad-
vancement of defense costs, not his right to indemnification. These
rights are often conflated, but they are distinct concepts with different
standards. At this point in the litigation, Calce does not seek to estab-
lish that he is entitled to indemnification from Centurion Logistics.
However, because Calce’s right to advancement of defense costs is clear,
and because that right will be irretrievably lost if not enforced pendente
lite, the trial court was obligated to order Centurion Logistics to reim-
burse and advance those costs.
A. The right to advancement of defense costs and the
right to indemnification are separate and distinct
concepts.
To adequately demonstrate Calce’s entitlement to the relief re-
quested, it is important to contrast the difference between the right to
advancement or reimbursement of expenses, on the one hand, and the
right to indemnification for such expenses, on the other.
“Advancement” generally refers to the right of a director or officer
of a company to receive an advance for expenses that he or she incurs in
9997597.7/SP/38371/0105/060118 21
a legal proceeding before its final disposition. Richard A. Rossman, et
al., A Primer of Advancement of Defense Costs: The Rights and Duties of
Officers and Corporations, 85 U. Det. Mercy L. Rev. 29, 53 (2007). “Alt-
hough the right to indemnification and advancement are correlative,
they are separate and distinct legal actions.” In re Aguilar, 344 S.W.3d
46 (Tex. App.—El Paso 2011, orig. proceeding) (quoting Homestore, Inc.
v. Tafeen, 888 A.2d 204, 212 (Del. 2005)). For instance, an individual ul-
timately determined ineligible for indemnification may still be entitled
to advancement of defense costs before the right to indemnification is
decided. See Rossman, 85 U. Det. Mercy L. Rev. at 53.
These concepts were extensively analyzed in In re Aguilar, which
is strikingly similar to the present case. In that case, Aguilar and an-
other individual formed Perspectiva Group, Inc. Aguilar, 344 S.W.3d at
44. Aguilar was an officer and director of Perspectiva. Perspectiva sued
Aguilar alleging that he had breached his fiduciary duties to the com-
pany and engaged in a conspiracy. Perspectiva later added claims ac-
cusing Aguilar and his daughter of forming a company that competed
with Perspectiva, similar to the allegations made here by Centurion Lo-
gistics against Calce. As the lawsuit proceeded, Aguilar’s attorney—
9997597.7/SP/38371/0105/060118 22
pursuant to Perspectiva’s bylaws1—sent Perspectiva’s attorney a letter
requesting that Perspectiva advance Aguilar’s defense costs, including
attorneys’ fees. Id. Perspectiva, like Centurion Logistics, denied Agui-
lar’s advancement 2 request. See id. at 45. The trial court denied Agui-
lar’s motion to require Perspectiva to advance or reimburse his defense
costs. Id. The court of appeals conditionally granted Aguilar’s petition
for a writ of mandamus, directing the trial court to (1) vacate its order
denying Aguilar’s motion regarding advancement and (2) enter an order
granting the motion. Id. at 56.
In analyzing the issue, the Aguilar court first noted that Article
2.02-1 of the Texas Business Corporation Act expressly allowed Texas
corporations to advance litigation expenses to its directors and that the
1 The advancement provision in Aguilar was contained in the company’s bylaws, ra-
ther than a contract among the parties, but the distinction makes no difference. “In
construing the bylaws, [courts] apply the rules that govern the interpretation of
contracts.” Aguilar, 344 S.W.3d at 49; see also Arch Ins. Co. v. U.S. Youth Soccer
Ass’n, No. 05-12-00596-CV, 2014 WL 2941372, 2014 Tex. App. LEXIS 5068, at *13
(Tex. App.—Dallas May 12, 2014, no pet.) (mem. op.);
v. Davis, No. 14-12-01053-CV, 2013 WL 6095723, 2013 Tex. App. LEXIS 14122, at
*9 (Tex. App.—Houston [14th Dist.] Nov. 19, 2013, no pet.) (mem. op.).
2 The Aguilar case discusses “advancement” of expenses and the Centurion Logistics
Company Agreement uses the term “reimbursement” of expenses as paid or in-
curred, but in practice the concepts are the same. Both refer to the right of a party
to have defense costs paid or reimbursed by another as they are incurred, rather
than waiting until the conclusion of litigation.
9997597.7/SP/38371/0105/060118 23
applicable section of Perspectiva’s bylaws was nearly identical to the
statutory language. Id. at 45-46. Article 2.02-1 of the Business Corpora-
tion Act is now Section 8.104 of the Business Organizations Code. See
Tex. Bus. Orgs. Code § 8.104. 3 As in Aguilar, the language of Section 6.2
of Centurion Logistics’ Company Agreement is consistent with the lan-
guage of Section 8.104. Compare Company Agreement § 6.2 (MR.357)
with Tex. Bus. Orgs. Code § 8.104.
The Aguilar court discussed the lack of Texas case law addressing
the right to advancement or reimbursement of defense costs: “There are
no Texas cases concerning advancement under the Business Corpora-
tion Act or the Business Organizations Code. But the courts of Dela-
ware have addressed advancement on numerous occasions.” Aguilar,
3The prior and current statutes are the same in all material respects. Compare Tex.
Bus. Corp. Act art. 2.02-1 with Tex. Bus. Orgs. Code § 8.104.
9997597.7/SP/38371/0105/060118 24
344 S.W.3d at 46. It is common for Texas courts to look to Delaware law
for guidance regarding unsettled/undeveloped areas of corporate law. 4
The Delaware Supreme Court has explained that “‘[a]dvancement
is an especially important corollary to indemnification’ because it pro-
vides corporate officials with immediate interim relief from the burden
of paying for a defense.” See Aguilar, 344 S.W.3d at 46 (quoting Home-
store, Inc. v. Tafeen, 888 A.2d 204, 211 (Del. 2005)). “Although the right
to indemnification and advancement are correlative, they are separate
and distinct legal actions.” Id. (quoting Homestore, 888 A.2d at 212).
Perhaps most importantly, “[t]he right to advancement is not depend-
ent on the right to indemnification.” Id. (citing Homestore, 888 A.2d at
212) (emphasis added).
4 “Delaware has been described as ‘the Mother Court of corporate law.’” Aguilar,
344 S.W.3d at 47 (citing Kamen v. Kemper Fin. Servs., Inc., 908 F.2d 1338, 1343
(7th Cir. 1990), rev’d on other grounds, 500 U.S. 90 (1991)). “Courts throughout the
country look to Delaware for guidance on matters of corporate law.” Id. (citing Neu-
robehaviorial Assocs., P.A. v. Cypress Creek Hosp., Inc., 995 S.W.2d 326, 332 n.12
(Tex. App.—Houston [1st Dist.] 1999, no pet.) (turning to Delaware corporate law
for guidance regarding “winding-up” because there were no Texas cases addressing
the issue)). “The law of advancement, in particular, is ‘a Delaware specialty.’” Id.
(citing Int’l Airport Ctrs., LLC v. Citrin, 455 F.3d 749, 750 (7th Cir. 2006)). “To the
limited extent that there is law [regarding advancement] outside Delaware, it is the
same as the law in Delaware.” Id. (quoting Stephen A. Radin, “Sinners Who Find
Religion”: Advancement of Litigation Expenses to Corporate Officials Accused of
Wrongdoing, 25 Rev. Litig. 251, 271 (2006)).
9997597.7/SP/38371/0105/060118 25
The distinction between advancement and indemnification is vi-
tally important to the determination of Calce’s immediate right to de-
fense costs because it demonstrates that Calce’s alleged conduct, com-
plained of by Centurion Logistics in this case, is irrelevant to his right
to immediate reimbursement of defense costs.
B. Centurion Logistics cannot rely on its own allegations
to deny Calce’s right to advancement of defense costs.
In denying Calce’s request for reimbursement, Centurion Logistics
relied at least in part on its own allegations in this case—specifically
that Calce (1) was not acting “within the scope of [his] authority in
course of the Company’s business” and (2) was engaging in “intentional
misconduct” and a “knowing violation of law.” (MR.391-92.) These are
mere allegations for which Centurion Logistics bears the burden of
proof. Centurion Logistics may not simply assume the role of accuser
and fact-finder in denying Calce’s contractual rights. More importantly,
these allegations are irrelevant to the determination of whether Calce is
entitled to advancement and reimbursement of his defense costs.
In Aguilar, Perspectiva similarly denied Aguilar’s request for ad-
vancement on the basis that Aguilar purportedly had unclean hands
due to his alleged breaches of fiduciary duties. See Aguilar, 344 S.W.3d
9997597.7/SP/38371/0105/060118 26
at 46. The Aguilar court explained that “[u]nder Delaware law, ad-
vancement is allowed even when the official seeking advancement is be-
ing sued by the corporation that must advance the litigation expenses”;
“Delaware case law is replete with insider trading cases in which execu-
tives’ expenses are advanced despite allegations of defrauding the cor-
poration or its stockholders of millions of dollars.” Id. at 47 (citing
James River Mgmt. Co., Inc. v. Kehoe, 674 F. Supp. 2d 745, 750 (E.D.
Va. 2009)). The Aguilar court further noted that “[a]dvancement claims
are frequently granted when, as in this case, the corporation is suing an
official for breach of fiduciary duty.” Id.
The same situation exists here: Calce is being sued for breach of
fiduciary duty. (MR.12-13, 886-87.) As a matter of law, Centurion Logis-
tics “cannot defend against the advancement claim on the ground that it
now believes the fiduciary [Calce] to have been unfaithful because it is
in those very cases that the right to advancement attaches most
strongly.” Aguilar, 344 S.W.3d at 47 (citing Kehoe, 674 F. Supp. 2d at
750) (internal quotations omitted) (emphasis added). As the Delaware
Court of Chancery has explained, to rule otherwise would render such
protections for corporate officers largely meaningless:
9997597.7/SP/38371/0105/060118 27
It is not uncommon for corporate directors, offic-
ers, and employees to be sued for breach of the fi-
duciary duty of loyalty [i.e., exactly what Calce is
being sued for here], and to have to defend claims
that they took official action for the primary pur-
pose of diverting corporate resources to their own
pocketbooks . . . . Therefore, it is highly problem-
atic to make the advancement right of such offi-
cials dependent on the motivation ascribed to
their conduct by the suing parties. To do so would
be to largely vitiate the protections afforded by
[statutory] and contractual advancement rights.
Reddy v. Elec. Data Sys. Corp., C.A. No. 19467, 2002 Del. Ch. LEXIS 69,
at *15-16 (Del. Ch. June 18, 2002); see also Aguilar, 344 S.W.3d at 48
(rejecting proposition that “the entitlement to advancement hinges on
proof that the director did not violate his fiduciary duties”).
Calce’s alleged conduct is irrelevant for purposes of determining
whether Calce is entitled to advancement and reimbursement of his de-
fense costs. See Aguilar, 344 S.W.3d at 48 (citing Reddy, 2002 Del. Ch.
LEXIS 69, at *28-29) (providing that any other result “would turn every
advancement case into a trial on the merits of the underlying claims of
official misconduct.”)). Rather, the determinative question is whether
the terms of the Company Agreement afford Calce the right to ad-
vancement and reimbursement of his defense costs. The answer is un-
questionably “yes.”
9997597.7/SP/38371/0105/060118 28
C. Calce’s contractual right to advancement and reim-
bursement is unambiguous and mandatory.
1. The terms of the Company Agreement are unam-
biguous.
The interpretation of an unambiguous contract is a question of
law for the court. See Moayedi v. Interstate 35/Chisam Rd., L.P., 438
S.W.3d 1, 7 (Tex. 2014). Likewise, “[t]he question of whether a contract
is ambiguous is one of law for the court.” Peterson v. Farmers Tex. Cnty.
Mut. Ins. Co., No. 05-15-00678-CV, 2016 WL 3448067, 2016 Tex. App.
LEXIS 6586, at *8 (Tex. App.—Dallas June 22, 2016, no pet.) (mem. op.)
(citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983)). A contract is
not ambiguous if, like the Company Agreement, “the contract’s lan-
guage can be given a certain or definite meaning.” Id. (citing El Paso
Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 806 (Tex.
2012)). The mere fact that the “parties advance different interpretations
of a contract does not necessarily mean that the contract is ambiguous.”
PopCap Games, Inc. v. MumboJumbo, LLC, 350 S.W.3d 699, 707 (Tex.
App.—Dallas 2011, pet. denied).
“In construing a written contract, the primary concern of the court
is to ascertain the true intentions of the parties as expressed in the in-
strument.” Moayedi, 438 S.W.3d at 7 (emphasis added). “Absent a find-
9997597.7/SP/38371/0105/060118 29
ing of ambiguity, a court must interpret the meaning and intent of a
contract from the four corners of the document without the aid of ex-
trinsic evidence.” Peterson, 2016 Tex. App. LEXIS 6586, at *9; see also
Sacks v. Haden, 266 S.W.3d 447, 450-51 (Tex. 2008) (quoting Nat’l Un-
ion Fire Ins. Co. of Pittsburgh, Penn. v. CBI Indus. Inc., 907 S.W.2d 517,
520 (Tex. 1995)) (providing that “[o]nly where a contract is ambiguous
may a court consider the parties’ interpretation and ‘admit extraneous
evidence to determine the true meaning of the instrument’”). Moreover,
“[u]nless the agreement shows the parties used a term in a technical or
different sense, the terms are given their plain, ordinary, and generally
accepted meaning.” Moayedi, 438 S.W.3d at 7 (citing Heritage Res., Inc.
v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)). The relevant terms
of the Company Agreement are unambiguous and entitle Calce to ad-
vancement and reimbursement of his defense costs.
2. Section 6.2 of the Agreement requires Centurion
Logistics to immediately reimburse Calce the ex-
penses he pays or incurs in defending himself.
It is undisputed that Calce—as a manager of Centurion Logis-
tics—is an “Indemnified Person” under the Company Agreement.
9997597.7/SP/38371/0105/060118 30
(MR.4, 872.) It is further undisputed that this lawsuit constitutes a
“Proceeding” under the Company Agreement. (MR.347, 392, 404.)
Section 6.2 of the Company Agreement provides that “[a]n Indem-
nified Person’s expenses paid or incurred in defending [himself] against
any Proceeding shall be reimbursed as paid or incurred.” (MR. 357
(emphasis added).) There are no qualifications or conditions to Calce’s
express right to advancement and reimbursement of defense costs. 5
The Aguilar court—after noting that the term “shall” is generally
construed to be mandatory—held that Perspectiva had a mandatory du-
ty under the applicable section of its bylaws (which is strikingly similar
5 To the extent any preconditions exist, they have been met. Section 6.3(c) of the
Company Agreement provides that “[t]he Company [Centurion Logistics] may re-
quire, as a condition to the payment of any amounts pursuant to Section 6.2, that
the Indemnified Person provide to the Company (i) a written affirmation by the In-
demnified Person of the person’s good faith belief that the person has met the
standard of conduct necessary for indemnification under this Section 6.3; and (ii) a
written undertaking by or on behalf of the Indemnified Person to repay the amount
paid or reimbursed if the person has not met that standard or if indemnification is
otherwise prohibited by law.” (Company Agreement § 6.3(c), MR.357-58.) Calce has
already provided the prescribed written affirmation and has agreed in writing to
repay any amount that he is reimbursed by Centurion Logistics if it is ultimately
determined that he was not entitled to such payments. (MR.389.)
9997597.7/SP/38371/0105/060118 31
to the language of Section 6.2)6 to advance Aguilar’s defense costs. See
Aguilar, 344 S.W.3d at 51. Centurion Logistics is likewise required un-
der Section 6.2 of the Company Agreement to reimburse Calce the ex-
penses he pays or incurs in defending himself in this lawsuit as such
expenses are paid or incurred.
In contrast, Calce’s right to indemnification is more limited: Calce
is only entitled to indemnification for “[d]amages arising from any Pro-
ceeding relating to the conduct of [Centurion Logistics’] business or to
any act or omission by such Indemnified Person within the scope of the
Indemnified Person’s authority in the course of [Centurion Logistics’]
business.” (Company Agreement § 6.2, MR.357.) Section 6.3 of the
Company Agreement similarly allows Centurion Logistics to avoid lia-
bility and its duty of indemnification if the Indemnified Person is found
liable for certain specified wrongs. (Id. § 6.3(a).) Such determinations,
unlike Calce’s right to advancement of defense costs during litigation,
are dependent on the ultimate resolution of claims asserted against
6 The pertinent section of Perspectiva’s bylaws provided: “Reasonable expenses in-
curred by a person who was, is, or threatened to be made a named defendant or re-
spondent in a Proceeding shall be paid or reimbursed by the Corporation.” Aguilar,
344 S.W.3d at 44.
9997597.7/SP/38371/0105/060118 32
Calce. For example, at the conclusion of this case, if it is determined
that Calce’s alleged actions did not relate to Centurion Logistics’ busi-
ness, he will not be entitled to indemnity and he may be required to re-
pay the amounts advanced to him under Section 6.2. (Id. § 6.3(c).)
Requiring a company’s director or officer to prove their right to in-
demnification as a condition for the advancement of legal fees is imprac-
tical and imposes burdens that would often thwart the purpose of provi-
sions requiring the advancement of expenses. Heine v. Bank of Oswego,
144 F. Supp. 3d 1198, 1207 (D. Or. 2015) (citing Andrew J. Morrow, Jr.,
Appendix: Task Force Report, Oregon Revised Model Business Corpora-
tion Act, 30 Willamette L. Rev. 407, 464 (1994)).
3. Calce’s reimbursable expenses include his
attorneys’ fees.
The Aguilar court rejected the argument that “reasonable expens-
es” of defense should not include attorneys’ fees. Aguilar, 344 S.W.3d at
51-52. The Aguilar court explained that to exclude attorney’s fees “ren-
ders [the provision] insignificant and practically useless” because “[t]he
purpose of advancement is to relieve corporate officials from the burden
of paying the significant on-going expenses involved in litigation” and
that “[t]he burden of litigation comes from attorney’s fees, not copying
9997597.7/SP/38371/0105/060118 33
costs.” Id. at 51-52 (internal quotations and citations omitted). This rea-
soning is equally applicable here. Moreover, Section 8.001 of the Busi-
ness Organizations Code defines the term “expenses” to include “rea-
sonable attorney’s fees.” See Tex. Bus. Orgs. Code § 8.001(3)(B). Accord-
ingly, Calce’s right to advancement of “expenses” includes the attorneys’
fees he pays or incurs in his defense of this lawsuit.
D. Summary judgment was the appropriate vehicle for
Calce to establish his right to advancement of defense
costs.
The Aguilar court held that summary judgment is the appropriate
procedural vehicle to seek advancement of defense costs. See Aguilar,
344 S.W.3d at 52-53. As the court explained, “By its very nature, ad-
vancement of expenses can occur only during the course of the trial
court proceedings.” Id. at 55 (citing Morgan v. Grace, Civ. A. No. 20430,
2003 WL 22461916, 2003 Del. Ch. LEXIS 113, at *4 (Del Ch. Oct. 29,
2003) (“The value of the right to advancement is that it is granted or
denied while the underlying action is pending.”)). “It is indemnification
of expenses that occurs at the conclusion of the case.” Id. Because Calce
only seeks reimbursement of his defense costs as this case progresses,
his claim is ripe for adjudication. Indeed, the only appropriate time for
9997597.7/SP/38371/0105/060118 34
such determination is now. Calce’s advancement claim will be moot at
the conclusion of the case. See id.
III. Mandamus is necessary.
The trial court abused its discretion by refusing to require Centu-
rion Logistics to reimburse Calce’s defenses costs as he incurs them.
The determination of Calce’s right to advancement under the unambig-
uous terms of the Company Agreement is a pure question of law. As a
result, the trial court’s error in interpreting the Company Agreement is
an abuse of discretion which mandamus may be employed to remedy. In
re Nationwide Ins., 494 S.W.3d at 712; Huie, 922 S.W.2d at 927-28.
Calce will have no adequate remedy by appeal because, as the
Aguilar court recognized, his claim will be moot by then. Aguilar, 344
S.W.3d at 55 (citing Reddy, 2002 Del. Ch. LEXIS 69, 2002 WL 1358761
at *9). As the Texas Supreme Court has explained, the “most frequent
use . . . of mandamus relief involves cases in which the very act of pro-
ceeding to trial—regardless of the outcome—would defeat the substan-
tive right involved.” In re McAllen Med. Ctr., 275 S.W.3d at 465. In such
cases, mandamus is not only proper, it is necessary. In re Prudential,
148 S.W.3d at 138.
9997597.7/SP/38371/0105/060118 35
Prayer
For the reasons set forth above, Relator John Calce respectfully
prays:
(1) that the Court grant a writ of mandamus and compel the
trial court to (a) vacate its order denying Calce’s Amended
Motion for Partial Summary Judgment Regarding Counter-
claim Against Centurion Logistics LLC and (b) render an or-
der granting that motion; and
(2) for such other and further relief to which he may be entitled
at law or in equity.
Respectfully submitted,
/s/ Jadd F. Masso
P. Michael Jung
Texas Bar No. 11054600
michael.jung@clarkhillstrasburger.com
David N. Kitner
Texas Bar No. 11541500
david.kitner@clarkhillstrasburger.com
Jadd F. Masso
Texas Bar No. 24041411
jadd.masso@clarkhillstrasburger.com
Chase J. Potter
Texas Bar No. 24088245
chase.potter@clarkhillstrasburger.com
CLARK HILL STRASBURGER
901 Main Street, Suite 6000
Dallas, Texas 75202
(214) 651-4300
(214) 651-4330 (facsimile)
9997597.7/SP/38371/0105/060118 36
James D. Shields
Texas Bar No. 18260400
jshields@shieldslegal.com
David A. Shields
Texas Bar No. 24083838
dshields@shieldslegal.com
SHIELDS LEGAL GROUP
16301 Quorum Drive, Suite 250B
Addison, Texas 75001
(972) 788-2040
(972) 788-4332 (facsimile)
Attorneys for Relator
Certification
I hereby certify that I have reviewed this petition and have con-
cluded that every factual statement made in the petition is supported
by competent evidence included in the appendix or the record.
/s/ Jadd F. Masso
Jadd F. Masso
Certificate Of Compliance
In accordance with Tex. R. App. P. 9.4, I hereby certify that this
document contains 4,995 words.
/s/ Jadd F. Masso
Jadd F. Masso
9997597.7/SP/38371/0105/060118 37
Certificate of Service
I hereby certify that this document has been served on the follow-
ing via electronic service through the eFileTexas.gov electronic filing
system on June 4, 2018:
Mark E. Torian
mtorian@swtriallaw.com
Darren P. Nicholson
dnicholson@swtriallaw.com
Sayles Werbner, P.C.
4400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
/s/ Jadd F. Masso
Jadd F. Masso
9997597.7/SP/38371/0105/060118 38
Declaration Regarding Evidence
STATE OF TEXAS §
§
COUNTY OF DALLAS §
My name is Chase J. Potter. My date of birth is May 12, 1986. My
address is 901 Main Street, Suite 6000, Dallas, Texas 75202.
I hereby declare under penalty of perjury as follows:
1. I am over eighteen years of age and am fully competent to
make this declaration. I am an attorney licensed by the Supreme Court
of Texas and am counsel for Relator in this proceeding and the trial
court.
2. The factual statements contained within this declaration are
within my personal knowledge and are true and correct.
3. The trial court rendered its order at issue in this Petition for
Writ of Mandamus based on the papers on file in this case and the ar-
guments of the attorneys. No testimony was received at any hearing
that led to the entry of the orders.
Executed in Dallas County, Texas, on June 4, 2018.
/s/ Chase J. Potter
Chase J. Potter
Declarant
9997597.7/SP/38371/0105/060118 39
No. ___________________
In the Court of Appeals
Fifth District of Texas at Dallas
In re JOHN CALCE
Relator
APPENDIX TO PETITION FOR WRIT OF MANDAMUS
Date Document Record
A. 6/26/16 Plaintiff’s Original Petition 001-023
B. 11/22/17 John Calce’s First Amended Counterclaim 173-185
Against Centurion Logistics LLC and
Centurion Pecos Terminal LLC (excerpt)
C. 11/22/17 John Calce’s Amended Motion for Partial 322-393
Summary Judgment Regarding
Counterclaim Against Centurion Logistics
LLC
D. 5/2/18 Plaintiff’s Second Amended Petition 867-903
E. 5/21/18 Order Denying John Calce’s Amended 904-905
Motion for Partial Summary Judgment
Regarding Counterclaim Against Centurion
Logistics LLC
F. Tex. Bus. Orgs. Code § 8.104
10000281.1/SP/38371/0105/060218
Declaration of Chase J. Potter
STATE OF TEXAS §
§
COUNTY OF DALLAS §
My name is Chase J. Potter. My date of birth is May 12, 1986. My
address is 901 Main Street, Suite 6000, Dallas, Texas 75202.
I hereby declare under penalty of perjury as follows:
1. I am over eighteen years of age and am fully competent to
make this declaration. I am an attorney licensed by the Supreme Court
of Texas and am counsel for Relator John Calce in this case.
2. The factual statements contained within this instrument are
within my personal knowledge and are true and correct.
3. The copies of the pleadings, motions, and other documents
included in this Appendix to Petition for Writ of Mandamus are true
and correct copies of these documents as filed in the trial court.
Executed in Dallas County, Texas, on June 4, 2018.
/s/ Chase J. Potter
Chase J. Potter
Declarant
10000281.1/SP/38371/0105/060118
FILED
DALLAS COUNTY
7 CT-ATTY 6/27/2016 11:01:53 AM
FELICIA PITRE
DISTRICT CLERK
DC-16-07706 Freeney Anita
CAUSE NO. -
CENTURION LOGISTICS LLC, § IN THE DISTRICT COURT OF
individually and derivatively on behalf of §
CENTURION PECOS TERMINAL LLC, §
a Texas Limited Liability Company, § DALLAS COUNTY, TEXAS
§
Plaintiffs §
§
vs. §
§
JAMES BALLENGEE, BALLENGEE §
INTERESTS, LLC, JOHN CALCE, §
STAMPEDE TX ENERGY, LLC, §
CENTURION MIDSTREAM GROUP, LLC, §
CENTURION TERMINALS, LLC §
§
Defendants, § B-44TH
§ JUDICIAL DISTRICT
and CENTURION PECOS TERMINAL §
LLC, a Texas Limited Liability Company §
§
Nominal Defendant. §
PLAINTIFF’S ORIGINAL PETITION
Plaintiff Centurion Logistics LLC (“Centurion Logistics”) files this Original Petition
individually and derivatively on behalf of Centurion Pecos Terminals LLC (“Centurion Pecos”)
against James Ballengee (“Ballengee”), Ballengee Interests, LLC (“Ballengee Interests”), John
Calce (“Calce”), Stampede TX Energy, LLC (“Stampede”), Centurion Midstream Group, LLC
(“Centurion Midstream”), and Centurion Terminals, LLC (“Centurion Terminals”), bringing
claims directly and derivatively on behalf of Centurion Pecos LLC for: breach of fiduciary duty,
aiding and abetting breaches of fiduciary duty, money had and received (unjust enrichment),
fraudulent concealment, aiding and abetting fraudulent concealment, and declaratory judgment.
Accordingly, Plaintiff would respectfully show the Court as follows:
PLAINTIFF’S ORIGINAL PETITION Page 1 of 23
307338_1
MR.001
I.
DISCOVERY CONTROL PLAN
1. Pursuant to Texas Rules of Civil Procedure 190.1-190.6, Plaintiff hereby
designates that discovery will be conducted under Level 3. Pursuant to Rule 47 of the Texas
Rules of Civil Procedure, at this time, Plaintiffs seek monetary relief, exclusively in the form of
interest, costs, and attorneys’ incurred or to be incurred in excess of $1,000,000.
II.
PARTIES
2. Plaintiff Centurion Logistics is a Texas limited liability company, with its
principal office in Dallas, Texas. Centurion Logistics is a member and manager of Centurion
Pecos. The members of Centurion Logistics are: Marc Marrocco (“Marrocco”), Antonio
Albanese (“Albanese”), and TXC Energy LLC, an affiliate of Calce.
3. Nominal Defendant Centurion Pecos is a Texas limited liability company, with its
principal office in Dallas, Texas. The current member and manager of Centurion Pecos is
Centurion Logistics. Stampede was a member and manager of Centurion Pecos until June 13,
2016. Centurion Pecos may be served through service on its registered agent, John Calce, at
15851 Dallas North Parkway, Suite 650, Addison, TX 75001.
4. Defendant Ballengee is an individual residing in Dallas County, Texas. He may
be personally served at 3838 Oak Lawn Avenue, Suite 1150, Dallas, Texas 75219 or wherever he
may be found. Ballengee is a member and manager of Defendant Ballengee Interests.
5. Defendant Ballengee Interests is a Louisiana limited liability company. Ballengee
is a managing member of Ballengee Interests. Ballengee Interests may be served by serving its
PLAINTIFF’S ORIGINAL PETITION Page 2 of 23
307338_1
MR.002
Texas registered agent, National Registered Agents, Inc., at 1999 Bryan St., Suite 900, Dallas,
Texas 75201.
6. Defendant Calce is an individual residing at 5601 Preakness Lane, Plano, TX
75093. He may be served at this residence or wherever he may be found. .
7. Defendant Stampede is a Texas limited liability company, with its principal place
of business in Dallas, Texas. Stampede was a manager and member of Centurion Pecos, but was
removed as a manager and member on June 13, 2016. Stampede may be served, by serving its
registered agent, Blumberg Excelsior Corporate Services, Inc., at 814 San Jacinto Boulevard,
Suite 303, Austin, TX 78701.
8. Defendant Centurion Midstream is a Texas limited liability company, formed on
October 20, 2015, with its principal place of business in Dallas County, Texas. Calce is the
manager of Centurion Midstream. Centurion Midstream may be served, by serving its registered
agent, John Calce, at 15851 Dallas North Parkway, Suite 650, Addison, TX 75001.
9. Defendant Centurion Terminals is a Texas limited liability company, with a
principal place of business in Dallas County, Texas. By information and belief, Centurion
Terminals is an entity controlled by Defendant Calce. The manager of Centurion Terminals is
58C, LLC, a Texas limited liability company, whose manager is LV III, LLC, whose manager is
Calce. 1 Centurion Terminals may be served, by serving its registered agent, John Calce, at
15851 Dallas North Parkway, Suite 650, Addison, TX 75001.
1
The repeated use of the number 58 in these entities is evidence that they are the creation of Calce: Calce is very
proud of having lettered as an offensive lineman on a Football Championship Subdivision team, where his jersey
number was 58.
PLAINTIFF’S ORIGINAL PETITION Page 3 of 23
307338_1
MR.003
III.
JURISDICTION AND VENUE
10. This Court has jurisdiction over this case because the amount in controversy is in
excess of the Court’s minimum jurisdictional limits. Moreover, Defendants have engaged in
sufficient conduct in the State of Texas to confer jurisdiction over them. The Court has
jurisdiction over the subject matter of the action because a substantial portion of the events
giving rise to Plaintiffs’ claims occurred in Dallas County, Texas.
11. Venue is proper in Dallas County, Texas, pursuant to Texas Civil Practice and
Remedies Code Sections 15.002-15.007, because it is the county where all or a substantial part of
the events or omissions giving rise to the claims occurred as detailed in the following paragraphs.
IV.
BACKGROUND FACTS
A. Creation of Centurion Logistics and Centurion Pecos
12. Several years ago, Marrocco and Albanese were looking for ways to use their
expertise in real estate to invest in projects related to the booming oil and gas industry. During
their investigations, Marrocco became better acquainted with Calce, who worked in the oil and
gas industry, and whom Albanese happened to know from outside his business dealings. After
some investigation, Marrocco, Albanese and Calce decided to pursue a project to purchase real
estate and to develop a railway terminal for the shipping of crude oil. In order to pursue that
project, Marrocco, Albanese and Calce formed Centurion Logistics on September 16, 2013.
Centurion Logistics is manager-managed and its managers are Marrocco, Albanese and Calce.
Under the company agreement of Centurion Logistics, a majority of the managers are required to
take any action.
PLAINTIFF’S ORIGINAL PETITION Page 4 of 23
307338_1
MR.004
13 Calce concluded that the geology in the area surrounding Pecos, Texas made it
likely that there would be significant demand for a crude shipping terminal there. Albanese used
his connections to obtain the interest of a possible anchor tenant who might want to ship
hydraulic-fracturing sand through a terminal in that area, as a way to build Centurion Logistics’
credibility with oil companies and the railroad. Marrocco identified, and placed under contract,
an approximately 177-acre parcel in Reeves County, Texas (the “First Parcel”) to use for the
terminal, and obtained a contract for Centurion Logistics to purchase it.
14. In order to obtain funds to purchase the First Parcel, Calce, Marrocco and
Albanese discussed bringing an equity partner into the Pecos project to contribute cash. Calce
offered two potential investors from the oil and gas industry with whom he was acquainted.
Because Marrocco had already begun to hear rumors that Calce had a reputation for self-dealing,
Marrocco proposed that Centurion Logistics work with the investor to whom he believed Calce
had fewer ties, namely Ballengee. Additionally, Ballengee’s company was already trucking
crude oil in the vicinity. Centurion Logistics and a predecessor of Stampede (which was an
ostensibly unrelated entity Ballengee used as a conduit for his investment, in order to conceal
any activities that might appear to compete with his current business) formed Centurion Pecos,
on September 11, 2014, and Centurion Logistics assigned to Centurion Pecos the contract to
purchase the First Parcel.
15. Ballengee agreed to contribute cash to Centurion Pecos, in order to purchase the
First Parcel without any liens or encumbrances. Shortly before the closing of the sale of the First
Parcel, however, Ballengee announced to Centurion Logistics that he would not simply
contribute cash, as he had represented, but would require that Centurion Pecos grant a deed of
trust to Texas Capital Bank (“TCB”), to secure payment of the loan that Ballengee would use to
PLAINTIFF’S ORIGINAL PETITION Page 5 of 23
307338_1
MR.005
fund his contribution. Because Centurion Logistics had no other way to fund the purchase of the
First Parcel before the required closing date, and because the seller was already threatening to
sell to another purchaser, Centurion Logistics had no choice but to grant the deed of trust
Ballengee demanded, and the proceeds of the loan by TCB to Ballengee Interests were
contributed by Ballengee, through Stampede’s predecessor, and used to purchase the First Parcel
on September 19, 2014.
16. Centurion Logistics has since learned that Ballengee’s purpose in having
Centurion Pecos grant a deed of trust to TCB, was to create a mechanism by which Ballengee
could cause the property to be removed from Centurion Pecos through foreclosure; Ballengee
had more than adequate cash to fund the purchase of the First Parcel without taking a loan from
TCB.
17. Centurion Logistics determined that the terminal project could be expanded by
acquiring an approximately 300-acre parcel adjacent to the First Parcel (the “Second Parcel”).
Marrocco obtained a contract for an entity he controlled, in order to purchase the Second Parcel.
Marrocco was increasingly concerned about Calce’s reputation for underhandedness, and, as a
condition to assigning the purchase agreement to Centurion Pecos, insisted that Centurion
Logistics and Stampede amend and restate the company agreement of Centurion Pecos, in order
to remove Calce as the sole manager of Centurion Pecos, as of November, 2014.
18. Under the amended and restated company agreement of Centurion Pecos,
Centurion Logistics and Stampede were the members and managers of Centurion Pecos.
Centurion Pecos is manager-managed, and, under the amended and restated company agreement,
any action requires the consent of all managers.
PLAINTIFF’S ORIGINAL PETITION Page 6 of 23
307338_1
MR.006
19. Again, at the closing of the Second Parcel, Ballengee insisted that Centurion
Pecos grant a deed of trust to the Second Parcel to TCB to secure a loan to Ballengee, rather than
fulfilling his representation to make a contribution of cash to purchase the Second Parcel without
liens or encumbrances. Again, Ballengee’s purpose, in causing Centurion Pecos to grant a deed
of trust, was to create a mechanism to remove the Second Parcel from Centurion Pecos. The
purchase of the Second Parcel closed on August 21, 2015. The First Parcel and the Second Parcel
are collectively referred to as the “Reeves County Property”.
20. Again, Ballengee did not provide the funds for the Second Parcel directly to
Centurion Pecos. Rather, he funneled the funds through Stampede because his participation in
the Centurion Pecos venture was circumscribed by a non-compete agreement related to one of
his previous businesses.
21. Both deeds of trust, granted at the closings of the Reeves County Property,
contain a cross-collateralization clause pledging the Reeves County Property as collateral for all
obligations of Ballengee Interests to TCB, even obligations not involving Centurion Pecos.
Purportedly, Calce signed both deeds of trust in his capacity as manager of Centurion Pecos,
although he was not a manager of Centurion Pecos at the time he signed the deed of trust to the
Second Parcel, and had no other authority to sign the second deed of trust for Centurion Pecos.
B. Defendants’ Fraudulent Scheme Unfolds
22. In late 2015, Calce began communicating to Marrocco that Calce and Ballengee
wanted to bring other participants into the project, and wanted Marrocco and Albanese to take a
more passive role and a reduced share of the profits. In particular, Calce expressed a desire to
force Albanese out as a manager of Centurion Logistics, and to require Albanese to sell his
membership interest in Centurion Logistics for less than its fair value. Calce threatened that if
PLAINTIFF’S ORIGINAL PETITION Page 7 of 23
307338_1
MR.007
Marrocco did not cooperate in removing Albanese from Centurion Logistics, Calce and
Ballengee would conspire to exclude Marrocco from participation in the terminal project, as
well; namely by removing the Reeves County Property from Centurion Pecos through
foreclosure. Marrocco refused to participate in removing Albanese from Centurion Logistics.
Calce and Ballengee subsequently asked for a meeting with Marrocco to negotiate a fair price for
Marrocco’s interest in Centurion Logistics, but the proposal proved to be a ruse to trick
Marrocco into attending an uncalled meeting of the managers of Centurion Pecos to approve an
“assignment and assumption agreement” with Ballengee Interests. Marrocco refused to attend
the meeting.
23. The actions of Ballengee and Calce demonstrate a scheme to move the Reeves
County Property out of Centurion Pecos and into an entity in which Marrocco and Albanese have
no interest, in order to deprive Marrocco and Albanese of their interests in the terminal project.
In addition to his affiliation with Centurion Logistics, Calce is President of Centurion
Midstream, an entity unrelated to either Centurion Logistics or Centurion Pecos. Centurion
Midstream, or another entity affiliated with Calce, has attempted to negotiate directly with Union
Pacific Railroad (“Union Pacific”) for the establishment of rail service to the Reeves County
Property, initially holding itself out as owning or representing the owner of the property and,
after Centurion Logistics notified Union Pacific that Centurion Midstream had no affiliation with
Centurion Pecos, by telling Union Pacific that Marrocco and Centurion Logistics were no longer
involved in the project, and that Centurion Midstream would own the Reeves County Property
“within a few weeks.” On its website, Centurion Midstream claims to own the property
purchased by Centurion Pecos and purports to be creating a terminal at Pecos, Texas. Calce, as
President of Centurion Midstream, receives a salary and other benefits.
PLAINTIFF’S ORIGINAL PETITION Page 8 of 23
307338_1
MR.008
24. In furtherance of this scheme, Calce, Ballengee and/or Stampede have, in addition
to the deeds of trust executed at the closings of the Reeves County Property, created a number of
unauthorized and/or fraudulent documents purporting to pledge the Reeves County Property or
create obligations of Centurion Pecos. These unauthorized transactions and documents were not
only concealed from Plaintiff, but, on information and belief have been created recently and
backdated.
25. In a transaction unrelated to the purchase of the Reeves County Property,
Ballengee Interests granted a promissory note to TCB dated January 6, 2015 for a line of credit
in the amount of $750,000. In order to secure the note, Calce executed a deed of trust to the First
Parcel, purportedly on behalf of Centurion Pecos as its manager. The January 6, 2015 deed of
trust also contained a cross-collateralization clause pledging the First Parcel as collateral for all
obligations of Ballengee Interests to TCB, even obligations not involving Centurion Pecos.
Calce was not a manager of Centurion Pecos in January, 2015, and had no other authority to sign
the January 6, 2015 deed of trust. The proceeds of the line of credit were not used for any
purpose related to the business of Centurion Pecos. Upon information and belief, they were
largely used to fund a different terminal project in Brownsville, Texas, owned by Calce.
Centurion Logistics was unaware of the January 6, 2015 deed of trust, and only discovered it
during a record search of Reeves County conducted in May 2016.
26. In October, 2015, around the time Calce began expressing a desire to remove
Albanese from Centurion Logistics, and shortly after Centurion Midstream was formed,
Ballengee Interests extended the term of the note to TCB, and filed an extension of the deed of
trust on the First Parcel to secure the note. Again, that extension was signed by Calce, as
manager of Centurion Pecos, although he was not a manager of Centurion Pecos at the time, and
PLAINTIFF’S ORIGINAL PETITION Page 9 of 23
307338_1
MR.009
had no other authority to act on behalf of Centurion Pecos. Centurion Logistics and Centurion
Pecos were not aware of the extension of the deed of trust on the First Parcel, and only
discovered it during a record search of Reeves County conducted in May 2016. Ballengee’s and
Calce’s purpose in extending the deed of trust was to preserve the Ballengee Interests note as a
means to remove the First Parcel from Centurion Pecos.
27. In April 2016, without authority to act for Centurion Pecos, Stampede and Calce
created documents that purported to obligate Centurion Pecos to assume Ballengee Interests’
obligations under the notes from Ballengee Interests to TCB used to obtain the funds contributed
to purchase the Reeves County Property, and to grant Ballengee Interests a deed of trust to
secure the assumption. Centurion Pecos was unaware of these documents or the purported
unauthorized assumption until it received a “notice of default” dated April 28, 2016 from
Ballengee Interests for its purported failure to make interest payments under the assumption
agreement. Neither Centurion Pecos nor Centurion Logistics has ever been provided with copies
of the purported assumption agreement and deed of trust.
28. In addition, Calce created a note, dated on or about November 15, 2015,
purporting to obligate Centurion Pecos to make payments to Centurion Terminals, another entity
controlled by Calce. Centurion Pecos first learned of this note in a demand letter dated May 27,
2016. No note of this description was ever authorized by Centurion Pecos, and neither Centurion
Logistics nor Centurion Pecos has ever seen this purported note.
29. Ballengee Interests and Calce also created fraudulent notes by Centurion Pecos to
Ballengee Interests, dated September 16, 2014 and August 17, 2015. Centurion Pecos first
learned of these notes in demand letters dated May 25, 2016. Neither Centurion Logistics nor
Centurion Pecos has ever seen these purported notes.
PLAINTIFF’S ORIGINAL PETITION Page 10 of 23
307338_1
MR.010
30. In furtherance of their scheme, Defendants are now threatening to use the
unauthorized and fraudulent documents to foreclose on the Reeves County Property. Centurion
Pecos has received letters from Ballengee Interests and Centurion Terminals demanding payment
of purported obligations that Centurion Pecos never, in fact, agreed to assume.
C. Stampede’s Violations of the Company Agreement
31. Section 10 of the First Amended and Restated Company Agreement of Centurion
Pecos Terminal LLC (“Company Agreement”) sets forth the conditions under which a member
may transfer its membership interest. Section 10.4 states that a transfer shall not be permitted
unless:
[t]he transferor and transferee have delivered to the Company any
documents that the Board of Managers request to confirm that the
transfer satisfies the requirements of this Agreement to give effect
to the transfer, and to confirm the transferee’s agreement to be
bound by this Agreement as Assignee.
32. Pursuant to Section 10.1(a) of the Company Agreement, “transfer” includes “a
transfer by merger or other business combination.” Stampede’s predecessor, Stampede Energy,
LLC, a Louisiana limited liability company (“Stampede Louisiana”) was a member of Centurion
Pecos at the time that the Company Agreement was adopted. On January 20, 2016, Stampede
Louisiana was converted to Stampede. Stampede then engaged in mergers with Stampede
Energy, LLC, a Delaware limited liability company on March 2, 2016, and with Centurion
Brownsville Terminal, LLC, a Texas limited liability company, on February 4, 2016.
33. On April 30, 2016 and again on May 4, 2016, Centurion Logistics expressly
requested that Stampede and Centurion Brownsville Terminal, LLC provide the information
required by Section 10.4 of the Company Agreement. Stampede and Centurion Brownsville
Terminal, LLC failed and refused to provide the information required by the Company
Agreement.
PLAINTIFF’S ORIGINAL PETITION Page 11 of 23
307338_1
MR.011
D. Centurion Pecos Votes to Expel Stampede as Member and Manager
34. In order to address Stampede’s violations of the Company Agreement, Centurion
Logistics, on behalf of Centurion Pecos, on May 31, 2016, called a meeting of managers and
members of Centurion Pecos, which was held on June 13, 2016. At the meeting, Centurion
Logistics moved to remove Stampede as a member of Centurion Pecos based on Stampede’s
prohibited transfer of its membership interest. Because the motion involved removing Stampede
as a member, Stampede was an interested manager and not eligible to vote. Centurion Logistics,
the only manager eligible to vote on the motion, voted to remove Stampede as a member.
35. Subsequently, a meeting of the members of Centurion Pecos met to determine
whether Stampede should be removed as a manager because it had transferred its membership
interest in a prohibited transfer and engaged in other wrongful conduct that materially affected
the business of Centurion Pecos and its members, and had also engaged in conduct that had made
it not reasonably practicable to carry on the company business with Stampede. Centurion
Logistics, the only remaining member, voted to remove Stampede as a manager of Centurion
Pecos.
V.
CAUSES OF ACTION
A. First Cause of Action: Breach of Fiduciary Duty as to Calce
36. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
PLAINTIFF’S ORIGINAL PETITION Page 12 of 23
307338_1
MR.012
37. As a manager of Centurion Logistics, Calce had a duty of loyalty to the company.
The duty of loyalty requires Calce to act in good faith and not allow personal interests to take
precedence over the interests of Centurion Logistics.
38. Calce also had a duty to disclose all important information concerning any
transaction, including any matters that might influence them to act in a manner prejudicial to
Centurion Logistics.
39. In violation of his fiduciary duties, Calce colluded with Stampede, Ballengee and
Ballengee Interests to engage in a series of fraudulent transactions which were contrary to the
interests of Centurion Pecos and Centurion Logistics. This pattern of misconduct is intended to
further Defendants’ plan, namely, to remove the Reeves County Property from Centurion Pecos
for use in their competing development, and to deprive Centurion Logistics of its share of any
profits from the terminal project. The entire scheme is an egregious breach of Calce’s duty of
loyalty and full disclosure.
40. By secretly encumbering Centurion Pecos’ assets, Calce has damaged the ability
of Centurion Logistics to conduct business and impaired the value of those assets.
41. Calce’s breaches of fiduciary duty proximately caused Centurion Logistics to
suffered damage and Calce has obtained benefits, which Calce should be required to forfeit. The
benefits Calce should be required to forfeit also include any remuneration he has received from
Centurion Midstream.
42. Calce’s breaches of fiduciary duty were intentional and, accordingly, Centurion
Logistics seeks, and should recover, exemplary damages against Calce.
PLAINTIFF’S ORIGINAL PETITION Page 13 of 23
307338_1
MR.013
B. Second Cause of Action: Breach of Fiduciary Duty as to Stampede
43. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
44, As a manager of Centurion Pecos, Stampede owed Centurion Pecos a duty of
loyalty. Further, Stampede owed Centurion Pecos a duty of candor, including a duty to disclose
information concerning its role in any transaction that would prejudice the interests of Centurion
Pecos.
45. Stampede violated its fiduciary duty by covertly engaging in a pattern of
transactions designed to deprive Centurion Pecos of the Reeves County Property, as well as
Centurion Pecos’ interest in the terminal project.
46. By secretly encumbering Centurion Pecos’ assets, Stampede has damaged the
ability of Centurion Pecos to conduct business and has impaired the value of those assets.
47. Stampede’s breaches of fiduciary duty have proximately caused Centurion Pecos
to suffer damage and Stampede has obtained benefits which Stampede should be required to
forfeit.
48. Stampede’s breaches of fiduciary duty were intentional and, accordingly,
Centurion Pecos seeks, and should recover, exemplary damages against Stampede.
C. Third Cause of Action: Aiding and Abetting Breach of Fiduciary Duty
49. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
50. Centurion Midstream and Centurion Terminals assisted with, encouraged and
participated in breaches of fiduciary duty by Calce and Stampede. As set forth above, Calce and
Stampede had fiduciary duties of loyalty to Centurion Logistics and to Centurion Pecos and
PLAINTIFF’S ORIGINAL PETITION Page 14 of 23
307338_1
MR.014
fiduciary duties to disclose any transactions that would be prejudicial to the chief objectives of
Centurion Logistics and Centurion Pecos.
51. Centurion Logistics and Centurion Pecos were created chiefly to purchase the
Reeves County Property and to develop a railway terminal in order to transport petroleum and
petroleum products. Rather than pursue these objectives with loyalty fiduciaries owe, Calce
assisted in the creation of Centurion Midstream to thwart the efforts of Centurion Logistics and
Centurion Pecos and to compete with these companies. Based on the content of the Centurion
Midstream website, Centurion Midstream is covertly assisting Calce in his plan to take over the
Reeves County Property, and to build the railway terminal for his own benefit and for the benefit
of Centurion Midstream.
52. Based on its affiliation with Calce, Centurion Terminals was aware that Calce was
not authorized to undertake any obligation to Centurion Terminals on behalf of Centurion Pecos.
Nonetheless, Centurion Terminals entered into the note and has threatened to enforce it.
53. The breaches of fiduciary duty of Calce and Stampede, committed with the
assistance of Centurion Midstream and Centurion Terminals, proximately caused Plaintiff to
suffer actual damages in an amount exceeding the minimum jurisdiction of the Court.
54. As Centurion Midstream’s and Centurion Terminals’ participation in the breaches
of fiduciary duty were intentional and exemplary damages are recoverable for the breaches of
fiduciary duty, Plaintiff prays for exemplary damages against Centurion Midstream and
Centurion Terminals.
D. Fourth Cause of Action: Money Had and Received (Unjust Enrichment)
55. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
PLAINTIFF’S ORIGINAL PETITION Page 15 of 23
307338_1
MR.015
56. A claim for money had and received arises when the defendant obtains money or
a benefit that in equity and good conscience belongs to the plaintiff. It is an equitable doctrine
applied to prevent unjust enrichment. A cause of action for money had and received is not based
on wrongdoing but, instead, looks only to the justice of the case and inquires whether the
defendant has received money that rightfully belongs to another. A claim for money had and
received is based upon the doctrine of unjust enrichment.
57. Further, where a defendant obtains a benefit from the plaintiff by fraud, duress, or
taking undue advantage, the plaintiff may recover money or property under the theory of unjust
enrichment.
58. Ballengee and Ballengee Interests colluded with Calce to encumber property of
Centurion Pecos to secure debts of Ballengee Interests, including the notes to purchase the
Reeves County Property and the $750,000 line of credit.
59. Ballengee and Ballengee Interests have, therefore, been unjustly enriched by
pledges of property to secure Ballengee Interests’ debt, including the $750,000 line of credit, and
unauthorized assumption of the Ballengee Interests’ obligations to TCB. Indeed, pursuant to the
cross-collateralization clauses, the deeds of trust pledged the Reeves County Property to secure
all Ballengee Interests’ debts to TCB, not merely those related to Centurion Pecos. Defendants
Ballengee and Ballengee Interests should be required to disgorge and to turn over to Centurion
Pecos any benefits obtained through these transactions.
60. By information and belief, Calce has received a salary and other benefits from
Centurion Midstream, in exchange for effectuating his and Ballengee’s plan, namely, to
fraudulently obtain ownership of the Reeves County Property. This remuneration constitutes
unjust enrichment.
PLAINTIFF’S ORIGINAL PETITION Page 16 of 23
307338_1
MR.016
61. Centurion Midstream has developed, or plans to develop, a railway terminal in
competition with the terminal planned by Centurion Pecos. In so doing, Centurion Midstream,
through its aiding and abetting of breaches of fiduciary duty, has obtained, or will obtain in the
future, money that rightfully belongs to Centurion Pecos. These funds should be disgorged and
transferred to Centurion Pecos.
62. Centurion Midstream has been—and will be—unjustly enriched by its
interference with Plaintiff’s efforts to secure the Reeves County Property and develop the Pecos
terminal.
63. In obtaining these benefits, Defendants have acted with fraud and malice.
Accordingly, Plaintiff prays that these Defendants be found liable for exemplary damages.
E. Fourth Cause of Action: Fraudulent Concealment
64. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
65. Ballengee and Ballengee Interests represented to Centurion Pecos that it would
make a capital contribution by purchasing the Reeves County Property on behalf of Centurion
Pecos. At the 11th hour, Ballengee and Ballengee Interests demanded that Centurion Pecos agree
to deeds of trust on the Reeves County Property. Ballengee and Ballengee Interests did not
disclose that the purpose of this demand was to eventually force a foreclosure on the Reeves
County Property in order to cut off Centurion Pecos’ interest in the terminal project.
66. Centurion Pecos justifiably relied on Ballengee’s and Ballengee Interests’
professions that their purpose was to invest in, and to promote, the Centurion Pecos terminal
project.
PLAINTIFF’S ORIGINAL PETITION Page 17 of 23
307338_1
MR.017
67. Ballengee’s and Ballengee Interests’ failure to disclose their true intentions has
injured Centurion Logistics and Centurion Pecos, in that Defendants are now attempting to use
the TCB deeds of trust, as well as false and unauthorized documents, to complete their scheme to
obtain the Reeves County Property for the competing entity, Centurion Midstream.
68. The wrongful fraudulent acts and omissions have proximately caused Centurion
Logistics and Centurion Pecos to suffer damages. Because Defendants’ wrongful fraudulent acts
and omissions were conducted with intent, Plaintiff seeks both actual and exemplary damages.
F. Fifth Cause of Action: Aiding and Abetting Fraudulent Concealment
69. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
70. Defendants Calce and Stampede provided knowing and intentional assistance to
the fraud committed by Ballengee and Ballengee Interests. Calce and Stampede were aware of
the fraudulent scheme and Stampede allowed itself to be used as a conduit through which
Ballengee Interests made its payments for the Reeves County Property. As fiduciaries, Calce
and Stampede had a heightened duty to disclose Ballengee’s true intent, but they remained silent.
Indeed, they actively furthered the scheme through their participation in the creation of false and
unauthorized transactions and the creation of fraudulent documents.
71. Calce’s and Stampede’s assistance and encouragement constituted a substantial
factor in causing the fraud. Without their participation, it is unlikely that Ballengee and
Ballengee Interests could have attempted the scheme, given the limitations imposed on
Ballengee by the non-compete agreement. Moreover, these Defendants, through a series of
threatening communications, continue to push the fraudulent plan.
PLAINTIFF’S ORIGINAL PETITION Page 18 of 23
307338_1
MR.018
72. Calce’s and Stampede’s participation in the fraudulent scheme has proximately
caused Centurion Logistics and Centurion Pecos to suffer damages. Because these Defendants’
participation in the wrongful fraudulent scheme was conducted with knowledge and intent,
Plaintiff seeks both actual and exemplary damages.
G. Sixth Cause of Action: Declaratory Judgment
73. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
74. A justiciable controversy exists between Centurion Pecos and Stampede regarding
the status, rights, obligations and legal relations between Centurion Pecos and Stampede in
connection with the Company Agreement. The justiciable controversy concerns the right of
members and managers of Centurion Pecos to expel Stampede as a member and manager.
75. Pursuant to the terms of the Company Agreement, transfer of membership
interests is prohibited unless certain conditions were met. Among the conditions is the
obligation of the transferor and transferee to provide information to assure that the transfer
comported with the Company Agreement and the transferee agreed to be bound by the Company
Agreement. Transfer of a membership interest includes any transfer by merger or business
combination.
76. Stampede or its predecessor transferred of its membership interest within the
definitions of the Company Agreement through one or more of three business transactions. First,
Stampede Energy, LLC, a Louisiana limited liability company, converted to Stampede. Second,
Stampede merged with Stampede Energy, LLC, a Delaware limited liability company. Third,
Stampede divided into two entities, Stampede and Centurion Brownsville Terminal, LLC, a
Texas limited liability company.
PLAINTIFF’S ORIGINAL PETITION Page 19 of 23
307338_1
MR.019
77. Subsequently, both the transferor and transferee companies expressly refused to
provide information about the transactions, as required by the Company Agreement, for any
transfer of a membership interest to be permitted. Centurion Pecos duly called a meeting of the
managers and members of Centurion Pecos in order to discuss Stampede’s violations and its
removal as a member and manager.
78. At the June 13, 2016 meeting, Centurion Logistics, as manager of Centurion
Pecos, voted to remove Stampede as a member of Centurion Pecos. As the party whose removal
was at issue, Stampede was an interested manager excluded from voting. Accordingly,
Stampede was removed as a member of Centurion Pecos.
79. Following the June 13, 2016 managers meeting, a meeting of members was held
to determine whether Stampede should be removed as a manager of Centurion Pecos for cause.
Centurion Logistics, the only remaining member, voted to expel Stampede, based on its
prohibited transfer of membership interest, as well as its other misconduct, as set forth in this
Petition.
80. In accordance with Tex. Civ. Prac. & Rem. Code § 37.001, et seq., Plaintiff seeks
a declaratory judgment against Defendant Stampede, wherein the Court declares that following:
(a) The June 13, 2016 meeting was a valid meeting under the Company
Agreement;
(b) The removal of Stampede as a member of Centurion Pecos was a valid,
binding and enforceable action of the managers of Centurion Pecos;
(c) The removal of Stampede as a manager of Centurion Pecos was a valid,
binding and enforceable action of the members of Centurion Pecos.
81. In addition, there is a real and justiciable controversy between Centurion Pecos,
on the one hand, and Ballengee, Ballengee Interests, and Centurion Terminals, on the other hand,
concerning the enforceability of certain financial obligations that Defendants purport were
PLAINTIFF’S ORIGINAL PETITION Page 20 of 23
307338_1
MR.020
entered into on behalf of Centurion Pecos. As set forth above, Calce, without authority to act for
Centurion Pecos, and in violation of his fiduciary duties, created documents purporting to
obligate Centurion Pecos to pay the notes that Ballengee Interests entered into with TCB and to
make other payments to Ballengee Interests. Similarly, Calce, again without the authority to act
for Centurion Pecos, and in violation of his fiduciary duties, apparently created a promissory
note in favor of Centurion Terminals, purportedly obligating Centurion Pecos to make certain
payments to Centurion Terminals.
82. In accordance with Tex. Civ. Prac. & Rem. Code § 37.001, et seq., Plaintiff seeks
a declaratory judgment against Defendants Ballengee, Ballengee Interests, and Centurion
Terminals, wherein the Court declares the following:
(a) Any assumption agreement purported to exist between Ballengee
Interests and Centurion Pecos is invalid, void and unenforceable;
(b) Any agreement that purports to create an obligation of Centurion Pecos to
Ballengee Interests is invalid, void and unenforceable;
(c) Any promissory note or other documents purported to create obligations
between Centurion Pecos to Centurion Terminals is invalid, void and
unenforceable.
83. In addition and cumulative of other relief sought herein, Plaintiff is entitled to
declaratory judgment concerning the status of Stampede under the Company Agreement and the
enforceability of certain financial obligations that Calce, without authority, and in violation of
his fiduciary duties, purported to create on behalf of Centurion Pecos.
VI.
ATTORNEYS’ FEES AND COSTS
84. Plaintiff hereby restates and incorporates by reference the allegations contained in
the foregoing paragraphs as if fully set forth herein.
PLAINTIFF’S ORIGINAL PETITION Page 21 of 23
307338_1
MR.021
85. As a result of Defendants’ actions, Plaintiff was forced to retain the legal counsel
of Shamoun & Norman, LLP (“S&N”) to bring this lawsuit. Plaintiff retained the services of
S&N to prosecute these claims and agreed to pay S&N its usual, customary and reasonable
attorneys’ fees. Such action and payment is necessary for the enforcement of Plaintiff’s rights.
86. Plaintiff seeks the recovery of attorneys’ fees and costs that it incurs in
prosecuting the above-stated claims pursuant to Chapter 37 of the Texas Civil Practice and
Remedies Code, or any other applicable law.
VII.
CONDITIONS PRECEDENT
87. All conditions precedent to Plaintiff’s right to obtain the relief requested herein
have been performed or have occurred.
VIII.
PRAYER
WHEREFORE, Plaintiff Centurion Logistics LLC, individually and on behalf of
Centurion Pecos Terminal LLC, respectfully requests that upon final trial of this cause the Court
enter judgment against James Ballengee, Ballengee Interests, LLC, John Calce, Stampede TX
Energy, LLC, Centurion Midstream Group, LLC and Centurion Terminals, LLC as follows:
A. Against all Defendants and in favor of Plaintiff for the amount of actual damages
sustained by Plaintiff;
B. Against all Defendants and in favor of Plaintiff for the disgorgement of unjust
enrichment and money had and received;
C. Entering a declaratory judgment concerning the status of Stampede under the
Company Agreement and the enforceability of certain financial obligations that Calce, without
PLAINTIFF’S ORIGINAL PETITION Page 22 of 23
307338_1
MR.022
authority, and in violation of his fiduciary duties, purported to enter into on behalf of Centurion
Pecos;
D. Awarding to Plaintiff the costs and disbursements of the action, including
reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses; and
E. Granting such other and further relief as the Court deems just and proper, at law
or in equity.
Respectfully Submitted,
/s/ C. Gregory Shamoun
C. GREGORY SHAMOUN
State Bar No. 18089650
J. BLAIR NORRIS
State Bar No. 24014515
SHAMOUN & NORMAN, LLP
1755 Wittington Place, Suite 200
Dallas, Texas 75234
Phone: (214) 987-1745
Fax: (214) 521-9033
Email: g@snlegal.com
Email: bn@snlegal.com
ATTORNEYS FOR PLAINTIFF
PLAINTIFF’S ORIGINAL PETITION Page 23 of 23
307338_1
MR.023
FILED
DALLAS COUNTY
11/22/2017 1:55 PM
FELICIA PITRE
DISTRICT CLERK
Marissa Pittman
CAUSE NO. DC-16-07706
CENTURION LOGISTICS LLC, § IN THE DISTRICT COURT OF
individually and derivatively on behalf of §
CENTURION PECOS TERMINAL LLC, §
a Texas Limited Liability Company, §
§
Plaintiffs, §
§
v. §
§
JAMES BALLENGEE, BALLENGEE §
INTERESTS, LLC, JOHN CALCE, § DALLAS COUNTY, TEXAS
STAMPEDE TX ENERGY, LLC, §
CENTURION MIDSTREAM GROUP, §
LLC, CENTURION TERMINALS, LLC §
§
Defendants, §
§
and CENTURION PECOS TERMINAL §
LLC, a Texas Limited Liability Company §
§
Nominal Defendant. § 44th JUDICIAL DISTRICT
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC AND
CENTURION PECOS TERMINAL LLC
John Calce (“Counter-Plaintiff” or “Calce”) files his First Amended Counterclaim
complaining of Centurion Logistics LLC (“Centurion Logistics”) and Centurion Pecos Terminal
LLC (“Centurion Pecos”) (collectively, “Counter-Defendants”) and, in support thereof, would
respectfully show the Court as follows:
I.
DISCOVERY LEVEL
1. Discovery in this matter is to be conducted under Texas Rule of Civil Procedure
190.4 (Level 3).
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 1
9513752.1/SP/38371/0105/112217
MR.173
II.
MONETARY RELIEF
2. Calce seeks both monetary and non-monetary relief. The monetary relief sought
by Calce is, at this time, over $100,000 but not more than $200,000. But the monetary relief
sought by Calce continues to increase as he is required to incur additional expenses in defending
himself against the claims brought against him in this lawsuit.
III.
PARTIES
3. Plaintiff Calce is an individual residing in Collin County, Texas.
4. Counter-Defendant Centurion Logistics is a limited liability company organized
under the laws of the State of Texas with its principal place of business in Dallas, Dallas County,
Texas. Centurion Logistics has made an appearance in this matter.
5. Counter-Defendant Centurion Pecos is a limited liability company organized
under the laws of the State of Texas with its principal place of business in Dallas, Dallas County,
Texas. Centurion Pecos has made an appearance in this matter through Centurion Logistics
bringing claims against Calce and the other Defendants derivatively on behalf of Centurion
Pecos.
IV.
JURISDICTION AND VENUE
6. This Court has jurisdiction over this matter because the amount in controversy
exceeds the minimum jurisdictional limits of this Court.
7. Calce asserts that Dallas County is not a proper venue for this lawsuit pursuant to
Section 15.011 of the Texas Civil Practice and Remedies Code. The bases for such assertion are
set forth in Calce’s Motion to Transfer Venue. The Motion to Transfer Venue has been denied
and is an interlocutory order.
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 2
9513752.1/SP/38371/0105/112217
MR.174
V.
FACTUAL BACKGROUND
8. On June 27, 2016, Centurion Logistics, individually and derivatively on behalf of
Centurion Pecos, filed its Original Petition complaining of Calce and the other Defendants.
Centurion Logistics has brought claims against Calce for (1) breach of fiduciary duty; (2) unjust
enrichment; and (3) aiding and abetting fraudulent concealment.
9. Plaintiff generally claims that Calce and the other Defendants carried out a
scheme that resulted in Centurion Pecos and Centurion Logistics losing their interest in the
Reeves County Property, thereby allegedly depriving such entities of the opportunity to construct
a railway terminal for the shipping of crude oil on the Reeves County Property. 1 Among other
things, Plaintiff alleges that Calce breached the fiduciary duties that he allegedly owed Centurion
Logistics as a manager of the company. See Pl.’s Orig. Pet. ¶¶ 36 – 42. Plaintiff further claims
that Calce took various allegedly unauthorized acts on behalf of Centurion Pecos. See id. ¶ 24.
10. On September 20, 2016, Calce filed his Motion to Transfer Venue and Brief in
Support Thereof and, Subject Thereto, Original Answer (the “Original Answer”). Since the time
of filing his Original Answer, Calce has incurred significant expenses in defending against the
claims that have been brought against him in the lawsuit.
CALCE’S RIGHT TO INDEMNIFICATION/IMMEDIATE REIMBURSEMENT OF EXPENSES FROM
CENTURION LOGISTICS
11. Calce is a manager of Centurion Logistics. Section 1.1 of the Company
Agreement of Centurion Logistics (the “Logistics Agreement”) defines an “Indemnified Person”
as follows:
1
The term “Reeves County Property,” when used herein, should be understood to have the same meaning
as the term is used and defined in Plaintiff’s Original Petition.
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 3
9513752.1/SP/38371/0105/112217
MR.175
“Indemnified Person” means (a) a Member or Assignee; (b) a Manager; (c) a
Liquidator (if any); (d) any Affiliate of the Company, a Member or Assignee, a
Manager, or a Liquidator; and (e) any governing person, officer, employee, agent,
or owner of the Company, a Member or Assignee, a Manager, a Liquidator, or
any Affiliate of any of the foregoing. A person is an Indemnified Person whether
or not such person has the status required to be an Indemnified Person at the time
any Proceeding is made or maintained as described in Article VI or at the time
any amendment to this Agreement is proposed under Section 15.1.
See Section 1.1 of the Logistics Agreement (emphasis added). A true and correct copy of the
Logistics Agreement is attached hereto as Exhibit A. Calce, as a manager of the company, is
therefore an “Indemnified Person” under the Agreement. See id.
12. Section 6.2 of the Logistics Agreement is entitled “Indemnification by Company”
and provides as follows:
To the fullest extent permitted by applicable law, and subject to Section 6.3,
[Centurion Logistics] indemnifies and holds harmless each Indemnified Person
from and against any Damages arising from any Proceeding relating to the
conduct of [Centurion Logistics’] business or to any act or omission by such
Indemnified Person within the scope of the Indemnified Person’s authority in the
course of [Centurion Logistics’] business or for any misconduct or negligence on
the part of any other person that is an employee or agent of [Centurion Logistics].
An Indemnified Person’s expenses paid or incurred in defending itself against
any Proceeding shall be reimbursed as paid or incurred. The right to
indemnification conferred in this Article VI is not exclusive of any other right that
any person may have or hereafter acquire under any statute, agreement, vote of
Members, or otherwise.
See Ex. A § 6.2 (emphasis added). Accordingly, pursuant to Section 6.2, Calce—as an
Indemnified Person—is entitled to immediate reimbursement of “expenses paid or incurred in
defending [himself] against any Proceeding.” See id.
13. Section 1.1 of the Agreement defines “Proceeding” as follows: “(a) any
threatened, pending, or completed action or other proceeding, whether civil, criminal,
administrative, arbitrative, or investigative; (b) an appeal of any such proceeding, and (c) any
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 4
9513752.1/SP/38371/0105/112217
MR.176
inquiry or investigation that could lead to any such proceeding.” See Ex. A § 1.1. This Lawsuit
clearly constitutes a “Proceeding” under the Logistics Agreement.
14. Under the terms of the Logistics Agreement, Centurion Logistics is required to
reimburse Calce for any and all expenses paid or incurred by Calce in defending himself in this
lawsuit—as such expenses are paid or incurred. If it is ultimately determined that Calce is not
entitled to such payments, the Logistics Agreement expressly provides Centurion Logistics with
an appropriate remedy. See Ex. A § 6.3(c) (providing that “[a]ny payments made to or on behalf
of a person who is later determined not to be entitled to such payments shall be repaid by the
person to [Centurion Logistics].”).
CENTURION LOGISTICS’ REFUSAL TO REIMBURSE CALCE’S DEFENSE COSTS
15. On August 22, 2017, Calce—through his counsel—requested that Centurion
Logistics, pursuant to Section 6.2 of the Agreement, (1) reimburse Calce the full amount of
expenses that he had been invoiced as of July 31, 2017, plus an additional $50,000 to be applied
to future expenses as they are incurred; and (2) agree to reimburse Calce the additional expenses,
in excess of such $50,000 advancement, that he pays or incurs in his defense of the Lawsuit as
such expenses are paid or incurred (referred to hereinafter as the “Reimbursement Request”).
16. The Reimbursement Request provides that, “[p]ursuant to Section 6.3 of the
Agreement, Mr. Calce hereby affirms that it is his good faith belief that he has met the standard
of conduct necessary for indemnification under Section 6.3.” The Reimbursement Request also
provides that “Mr. Calce further agrees to repay any amount that is paid or reimbursed by
Centurion Logistics, pursuant to Section 6.2, if it is determined by a court of competent
jurisdiction that Mr. Calce did not meet the aforementioned standard or if indemnification is
otherwise determined to be prohibited by law.”
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 5
9513752.1/SP/38371/0105/112217
MR.177
17. Centurion Logistics denied Calce’s request for reimbursement. To date,
Centurion Logistics has not reimbursed Calce any amount for the expenses he has paid and
incurred in defending himself against the claims brought against him in the Lawsuit.
CALCE’S RIGHT TO INDEMNIFICATION/IMMEDIATE REIMBURSEMENT OF EXPENSES FROM
CENTURION PECOS
18. When Centurion Pecos was initially formed, Calce was the sole manager of the
company. See the Company Agreement of Centurion Pecos (the “Pecos Original Agreement”),
which is dated effective September 12, 2014, a true and correct copy of which is attached hereto
as Exhibit B. Calce was also appointed as the president of Centurion Pecos. Such appointment
was effective as of September 11, 2014.
19. In November 2014, the First Amended and Restated Company Agreement of
Centurion Pecos (the “Pecos Amended Agreement”) was executed. A true and correct copy of
the Pecos Amended Agreement is attached hereto as Exhibit C. The First Amended and Restated
Company Agreement removed Calce as a manager of Centurion Pecos, but Calce remained the
duly appointed president of the company.
20. Section 1.1 of both the Pecos Original Agreement and the Pecos Amended
Agreement defines an “Indemnified Person” as follows:
“Indemnified Person” means (a) a Member or Assignee; (b) a Manager; (c) a
Liquidator (if any); (d) any Affiliate of the Company, a Member or Assignee, a
Manager, or a Liquidator; and (e) any governing person, officer, employee,
agent, or owner of the [Centurion Pecos], a Member or Assignee, a Manager, a
Liquidator, or any Affiliate of any of the foregoing. A person is an Indemnified
Person whether or not such person has the status required to be an Indemnified
Person at the time any Proceeding is made or maintained as described in Article
VI or at the time any amendment to this Agreement is proposed under Section
15.1, provided such person had the status required to be an Indemnified Person at
the time of the relevant actions referenced in the Proceeding.
See Ex. B § 1.1 (emphasis added); see also Ex. C § 1.1 (emphasis added).
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 6
9513752.1/SP/38371/0105/112217
MR.178
21. Moreover, Section 6.2 of both the Pecos Original Agreement and the Pecos
Amended Agreement is entitled “Indemnification by Company” and provides as follows:
To the fullest extent permitted by applicable law and subject to Section 6.3,
[Centurion Pecos] indemnifies and holds harmless each Indemnified Person from
and against any Damages arising from any Proceeding relating to the conduct of
[Centurion Pecos’] business or to any act or omission by such Indemnified
Person, including any act or omission constituting negligence, within the scope of
the Indemnified Person’s authority in the course of [Centurion Pecos’] business or
for any misconduct or negligence on the part of any other person that is an
employee or agent of [Centurion Pecos]. An Indemnified Person’s expenses
paid or incurred in defending itself against any Proceeding shall be reimbursed
as paid or incurred. The right to indemnification conferred in this Article VI is
not exclusive of any other right that any person may have or hereafter acquire
under any statute, vote of Members, or otherwise.
See Ex. B § 6.2 (emphasis added); see also Ex. C § 6.2 (emphasis added).
22. Like the Logistics Agreement, the terms of the Pecos Original Agreement and the
Pecos Amended Agreement require Centurion Pecos to reimburse Calce for any and all expenses
paid or incurred by Calce in defending himself in this lawsuit, as such expenses are paid or
incurred. Furthermore, also like the Logistics Agreement, both the Pecos Original Agreement
and the Pecos Amended Agreement provide Centurion Pecos with an adequate remedy if it is
ultimately determined that Calce is not entitled to such payments. See Exs. B and C § 6.3(c)
(providing that “[a]ny payments made to or on behalf of a person who is later determined not to
be entitled to such payments shall be repaid by the person to [Centurion Pecos].”).
23. To date, Centurion Pecos has not reimbursed Calce any amount for the expenses
that he has paid and incurred in defending himself against the claims brought against him in this
lawsuit.
24. The Pecos Amended Agreement identifies Centurion Logistics and Defendant
Stampede TX Energy, LLC (“Stampede”) as the only members of Centurion Pecos. Pursuant to
the Pecos Amended Agreement, Stampede is the majority-in-interest member holding a 60%
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 7
9513752.1/SP/38371/0105/112217
MR.179
membership interest in Centurion Pecos, and Centurion Logistics holds the remaining 40%
membership interest.
25. Stampede—on behalf of Centurion Pecos—has already agreed that Centurion
Pecos will reimburse Calce for the amount of expenses that he has paid or incurred (or will pay
and incur) in defending himself against the claims brought against him in this lawsuit. But
Centurion Logistics claims that Stampede was removed as a manager of Centurion Pecos on June
13, 2016. Stampede disputes the propriety of the alleged removal and does not recognize same.
Accordingly, Calce’s claim for contractual indemnification and reimbursement/advancement of
defense costs against Centurion Pecos is significantly intertwined with and dependent upon the
outcome of the competing declaratory judgment claims of Stampede and Centurion Logistics
regarding which entity has control of Centurion Pecos.
VI.
CAUSES OF ACTION
COUNT 1: DECLARATORY JUDGMENT
26. Calce restates and incorporates the allegations contained in the preceding
paragraphs.
27. As shown by the facts set forth above, Calce is entitled to indemnification from
Centurion Logistics and Centurion Pecos pursuant to the terms of such entities’ own company
agreements. Calce is further entitled to reimbursement of the expenses he has paid and incurred
(and those that he will pay and incur in the future), as such expenses are paid and incurred, in
defending himself against the claims brought against him in this lawsuit.
28. Calce therefore seeks a judicial determination that:
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 8
9513752.1/SP/38371/0105/112217
MR.180
(a) Centurion Logistics is required to reimburse Calce the expenses, including but not
limited to attorneys’ fees, that he has paid or incurred to date in defending himself
against the claims brought against him in this lawsuit;
(b) Centurion Logistics is required to reimburse Calce the expenses, including but not
limited to attorneys’ fees, that he pays or incurs in the future in defending himself
against the claims brought against him in this lawsuit;
(c) In the unlikely event that any liability be found on the part of Calce, Centurion
Logistics is required to indemnify Calce and hold him harmless from any
damages that relate to either (i) the business of Centurion Logistics and/or (ii) any
alleged acts or omissions that were purportedly taken or made by Calce in his
capacity as a manager of Centurion Logistics (not including any damages arising
from any conduct set forth in Section 6.3(a)(i)-(iv) of the Logistics Agreement);
(d) Centurion Pecos is required to reimburse Calce the expenses, including but not
limited to attorneys’ fees, that he has paid or incurred to date in defending himself
against the claims brought against him in this lawsuit;
(e) Centurion Pecos is required to reimburse Calce the expenses, including but not
limited to attorneys’ fees, that he pays or incurs in the future in defending himself
against the claims brought against him in this lawsuit; and
(f) In the unlikely event that any liability be found on the part of Calce, Centurion
Pecos is required to indemnify Calce and hold him harmless from any damages
that relate to either (i) the business of Centurion Pecos and/or (ii) any alleged acts
or omissions that were purportedly taken or made by Calce in his capacity as a
manager of Centurion Pecos (not including any damages arising from any conduct
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 9
9513752.1/SP/38371/0105/112217
MR.181
set forth in Section 6.3(a)(i)-(iv) of the Pecos Original Agreement and Pecos
Amended Agreement).
COUNT 2: BREACH OF CONTRACT (CENTURION LOGISTICS)
29. Calce restates and incorporates the allegations contained in the preceding
paragraphs.
30. The Logistics Agreement constitutes a valid and enforceable contract. Centurion
Logistics breached the Logistics Agreement by failing to reimburse Calce the amount of
expenses he has paid and incurred in defending himself against the claims brought against him in
this lawsuit. Calce performed, tendered performance of, or was excused from performing any of
his obligations under the Logistics Agreement.
31. As a result of Centurion Logistics’ breach, Calce has suffered actual damages.
Calce is entitled to recover such damages from Centurion Logistics.
COUNT 3: BREACH OF CONTRACT (CENTURION PECOS)
32. Calce restates and incorporates the allegations contained in the preceding
paragraphs.
33. The Pecos Original Agreement and the Pecos Amended Agreement constitute
valid and enforceable contracts. Centurion Pecos breached the Pecos Original Agreement and
the Pecos Amended Agreement by failing to reimburse Calce the amount of expenses he has paid
and incurred in defending himself against the claims brought against him in this lawsuit. Calce
performed, tendered performance of, or was excused from performing any of his obligations
under the Pecos Original Agreement and the Pecos Amended Agreement.
34. As a result of Centurion Pecos’ breach, Calce has suffered actual damages. Calce
is entitled to recover such damages from Centurion Pecos.
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 10
9513752.1/SP/38371/0105/112217
MR.182
VII.
ATTORNEYS’ FEES
35. Calce restates and incorporates the allegations contained in the preceding
paragraphs.
36. Pursuant to Section 37.009 of the Texas Civil Practice and Remedies Code, Calce
seeks an award of his reasonable and necessary attorneys’ fees and costs incurred in prosecuting
his declaratory judgment claim and for any appeal.
37. Calce is further entitled to and hereby requests judgment for his reasonable and
necessary attorneys’ fees incurred in bringing this counterclaim and for any appeal pursuant to
Section 38.001 of the Texas Civil Practice and Remedies Code. Calce either has or will present
his claim to Plaintiff or to a duly authorized agent of Plaintiff in accordance with Section 38.002
of the Texas Civil Practice and Remedies Code.
VIII.
CONDITIONS PRECEDENT
38. All conditions precedent to maintaining this action have occurred and been
satisfied or have been excused or waived.
IX.
PRAYER
Counter-Plaintiff John Calce requests that, upon final hearing, Calce have judgment
against Counter-Defendants Centurion Logistics LLC and Centurion Pecos Terminal LLC as
follows:
1. A declaration that Centurion Logistics is required to reimburse Calce the
expenses, including but not limited to attorneys’ fees, that he has paid or incurred
to date in defending himself against the claims brought against him in this
lawsuit;
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 11
9513752.1/SP/38371/0105/112217
MR.183
2. A declaration that Centurion Logistics is required to reimburse Calce the
expenses, including but not limited to attorneys’ fees, that he pays or incurs in the
future in defending himself against the claims brought against him in this lawsuit;
3. A declaration that, in the unlikely event that any liability be found on the part of
Calce, Centurion Logistics is required to indemnify Calce and hold him harmless
from any damages that relate to either (i) the business of Centurion Logistics
and/or (ii) any alleged acts or omissions that were purportedly taken or made by
Calce in his capacity as a manager of Centurion Logistics (not including any
damages arising from any conduct set forth in Section 6.3(a)(i)-(iv) of the
Logistics Agreement);
4. A declaration that Centurion Pecos is required to reimburse Calce the expenses,
including but not limited to attorneys’ fees, that he has paid or incurred to date in
defending himself against the claims brought against him in this lawsuit;
5. A declaration that Centurion Pecos is required to reimburse Calce the expenses,
including but not limited to attorneys’ fees, that he pays or incurs in the future in
defending himself against the claims brought against him in this lawsuit;
6. A declaration that, in the unlikely event that any liability be found on the part of
Calce, Centurion Pecos is required to indemnify Calce and hold him harmless
from any damages that relate to either (i) the business of Centurion Pecos and/or
(ii) any alleged acts or omissions that were purportedly taken or made by Calce in
his capacity as a manager of Centurion Pecos (not including any damages arising
from any conduct set forth in Section 6.3(a)(i)-(iv) of the Pecos Original
Agreement and Pecos Amended Agreement);
7. Judgment against Centurion Logistics for the amount of expenses, including
attorneys’ fees, paid or incurred by Calce in defending himself against the claims
brought against him in this lawsuit;
8. Judgment against Centurion Pecos for the amount of expenses, including
attorneys’ fees, paid or incurred by Calce in defending himself against the claims
brought against him in this lawsuit;
9. Judgment against Counter-Defendants for Calce’s reasonable and necessary
attorneys’ fees incurred in pursuing this counterclaim;
10. Judgment against Counter-Defendants for pre- and post-judgment interest as
provided by law;
11. Judgment against Counter-Defendants for Calce’s costs of suit; and
12. Such other and further relief to which Calce may be justly entitled.
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 12
9513752.1/SP/38371/0105/112217
MR.184
Respectfully submitted,
/s/ David N. Kitner
DAVID N. KITNER
State Bar No. 11541500
david.kitner@strasburger.com
CHASE J. POTTER
State Bar No. 24088245
chase.potter@strasburger.com
STRASBURGER & PRICE, LLP
901 Main Street, Suite 6000
Dallas, TX 75202-3794
(214) 651-4300
(214) 651-4330 Fax
ATTORNEYS FOR DEFENDANTS
JOHN CALCE, CENTURION MIDSTREAM
GROUP, LLC, CENTURION TERMINALS,
LLC, AND STAMPEDE TX ENERGY, LLC
CERTIFICATE OF SERVICE
The undersigned counsel certifies that on the 22nd day of November, 2017, a true and
correct copy of the foregoing was forwarded to all known counsel in compliance with the Texas
Rules of Civil Procedure.
/s/ Chase J. Potter
Chase J. Potter
DEFENDANT/COUNTER-PLAINTIFF JOHN CALCE’S FIRST AMENDED COUNTERCLAIM
AGAINST CENTURION LOGISTICS LLC AND CENTURION PECOS TERMINAL LLC PAGE 13
9513752.1/SP/38371/0105/112217
MR.185
FILED
DALLAS COUNTY
11/22/2017 2:31 PM
FELICIA PITRE
DISTRICT CLERK
CAUSE NO. DC-16-07706
CENTURION LOGISTICS LLC, § IN THE DISTRICT COURT OF
individually and derivatively on behalf of §
CENTURION PECOS TERMINAL LLC, §
a Texas Limited Liability Company, §
§
Plaintiffs, §
§
v. §
§
JAMES BALLENGEE, BALLENGEE §
INTERESTS, LLC, JOHN CALCE, § DALLAS COUNTY, TEXAS
STAMPEDE TX ENERGY, LLC, §
CENTURION MIDSTREAM GROUP, §
LLC, CENTURION TERMINALS, LLC §
§
Defendants, §
§
and CENTURION PECOS TERMINAL §
LLC, a Texas Limited Liability Company §
§
Nominal Defendant. § 44th JUDICIAL DISTRICT
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT
REGARDING COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC
TO THE HONORABLE COURT:
Defendant/Counter-Plaintiff John Calce (“Calce”) files this Amended Motion for
Summary Judgment regarding his Counterclaim against Plaintiff/Counter-Defendant Centurion
Logistics LLC (“Centurion Logistics”) and, in support thereof, would respectfully show the
Court as follows: 1
BASIS FOR MOTION
Calce is a manager of Centurion Logistics. Calce is therefore contractually entitled—
pursuant to Section 6.2 of the Company Agreement of Centurion Logistics (the “Agreement”)—
1
This Motion amends and replaces Calce’s previously filed motion for partial summary judgment entitled
“John Calce’s Motion for Partial Summary Judgment Regarding Indemnification Claim Against
Centurion Logistics LLC,” which was filed on October 6, 2017.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 1
9516179.1/SP/38371/0105/112217
MR.322
to advancement/reimbursement from the company of any expenses he pays or incurs in
defending himself in this lawsuit (as such expenses are paid or incurred). 2 Importantly, Calce’s
right to advancement/reimbursement of defense costs, which is the sole issue addressed by this
Motion, is separate and distinct from any right to indemnification. Calce’s right to
reimbursement is supported by the Agreement, Texas case law, and the Texas Business &
Organizations Code (the “TBOC”). For these reasons, and as more fully set forth below, Calce
is entitled—as a matter of law—to the relief requested herein. 3
STATEMENT OF FACTS
The Lawsuit
1. On June 27, 2016, Centurion Logistics, individually and derivatively on behalf of
Centurion Pecos Terminal LLC (“Centurion Pecos”), filed its Original Petition complaining of
Calce and the other Defendants (the “Lawsuit”). See generally Pl.’s Orig. Pet. Centurion
Logistics brought claims against Calce for (1) breach of fiduciary duty; (2) unjust enrichment;
and (3) aiding and abetting fraudulent concealment. See id. ¶¶ 36 – 42, 60, 69 – 72. 4
2. Centurion Logistics claims that Calce and the other Defendants carried out a
scheme that resulted in Centurion Pecos and Centurion Logistics losing their interest in the
2
A true and correct copy of the Agreement is attached hereto as Exhibit A-1.
3
In this Motion, Calce only seeks a declaration that he is entitled to advancement/reimbursement from
Centurion Logistics for his past and future defense costs and a judgment that Centurion Logistics
breached the Agreement. Calce will move for a judgment for his actual defense costs at a later date.
4
Centurion Logistics has sought leave to file its First Amended Petition. As of the date of this filing,
leave has not been granted. Centurion Logistics’ First Amended Petition includes the following causes of
action against Calce: (1) breach of fiduciary duty; (2) unjust enrichment; (3) aiding and abetting
fraud/fraudulent inducement; (4) violation of the Texas Theft Liability Act; (5) tortious interference with
contract; (6) fraudulent inducement; and (7) promissory estoppel. See Plaintiff’s Motion for Leave to File
Amended Petition.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 2
9516179.1/SP/38371/0105/112217
MR.323
Reeves County Property 5, thereby allegedly depriving such entities of the opportunity to
construct a railway terminal for the shipping of crude oil from such property. See generally Pl.’s
Orig. Pet. Among other things, Plaintiff alleges that Calce breached the fiduciary duties that he
owed Centurion Logistics as a manager of the company. See id. ¶¶ 36 – 42. 6
3. On September 20, 2016, Calce filed his Motion to Transfer Venue and Brief in
Support Thereof and, Subject Thereto, Original Answer (the “Original Answer”). Since the
filing of his Original Answer, Calce has incurred, and continues to incur, significant expenses in
defending against the claims that have been brought against him in the Lawsuit.
Calce’s Contractual Right to Immediate Reimbursement of Defense Costs
4. Calce is a manager of Centurion Logistics. See Pl.’s Orig. Pet. ¶ 12. Section 1.1
of the Company Agreement of Centurion Logistics (the “Agreement”) defines an “Indemnified
Person” as follows:
“Indemnified Person” means (a) a Member or Assignee; (b) a Manager; (c) a
Liquidator (if any); (d) any Affiliate of the Company, a Member or Assignee, a
Manager, or a Liquidator; and (e) any governing person, officer, employee, agent,
or owner of the Company, a Member or Assignee, a Manager, a Liquidator, or
any Affiliate of any of the foregoing. A person is an Indemnified Person whether
or not such person has the status required to be an Indemnified Person at the time
any Proceeding is made or maintained as described in Article VI or at the time
any amendment to this Agreement is proposed under Section 15.1.
See Ex. A-1 § 1.1 (emphasis added). Calce, as a manager of the company, is therefore an
“Indemnified Person” under the Agreement. See id.
5. Section 6.2 of the Agreement provides as follows:
5
The term “Reeves County Property,” when used herein, should be understood to have the same meaning
as the term is used and defined in Plaintiff’s Original Petition.
6
Centurion Logistics makes the same allegations in the First Amended Petition that it has sought leave to
file. See Plaintiff’s Motion for Leave to File Amended Petition, Ex. A, ¶¶ 52 – 58.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 3
9516179.1/SP/38371/0105/112217
MR.324
To the fullest extent permitted by applicable law, and subject to Section 6.3,
[Centurion Logistics] indemnifies and holds harmless each Indemnified Person
from and against any Damages arising from any Proceeding relating to the
conduct of [Centurion Logistics’] business or to any act or omission by such
Indemnified Person within the scope of the Indemnified Person’s authority in the
course of [Centurion Logistics’] business or for any misconduct or negligence on
the part of any other person that is an employee or agent of [Centurion Logistics].
An Indemnified Person’s expenses paid or incurred in defending itself against
any Proceeding shall be reimbursed as paid or incurred. The right to
indemnification conferred in this Article VI is not exclusive of any other right that
any person may have or hereafter acquire under any statute, agreement, vote of
Members, or otherwise.
See Ex. A-1 § 6.2 (emphasis added). Accordingly, pursuant to Section 6.2, Calce—as an
Indemnified Person—is entitled to immediate reimbursement of “expenses paid or incurred in
defending [himself] against any Proceeding.” See id.
6. Section 1.1 of the Agreement defines “Proceeding” as follows: “(a) any
threatened, pending, or completed action or other proceeding, whether civil, criminal,
administrative, arbitrative, or investigative; (b) an appeal of any such proceeding, and (c) any
inquiry or investigation that could lead to any such proceeding.” See Ex. A-1 § 1.1. This
Lawsuit clearly constitutes a “Proceeding” under the Agreement, which Plaintiff does not
dispute. See infra.
7. Section 6.3(c) of the Agreement provides the following remedy for Centurion
Logistics if it is ultimately determined—pursuant to a final judgment of a court of competent
jurisdiction—that Calce is not entitled to advancement/reimbursement under Section 6.2:
Any payments made to or on behalf of a person who is later determined not to be
entitled to such payments shall be repaid by the person to the Company. The
Company may require as a condition to the payment of any amounts pursuant to
Section 6.2, that the Indemnified Person provide to the Company (i) a written
affirmation by the Indemnified Person of the person’s good faith belief that the
person has met the standard of conduct necessary for indemnification under this
Section 6.3; and (ii) a written undertaking by or on behalf of the Indemnified
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 4
9516179.1/SP/38371/0105/112217
MR.325
Person to repay the amount paid or reimbursed if the person has not met that
standard or if indemnification is otherwise prohibited by law.
See Ex. A-1 § 6.3(c) (emphasis added).
Centurion Logistics’ Refusal to Reimburse Calce’s Defense Costs
8. On August 22, 2017, Calce—through his counsel—requested that Centurion
Logistics, pursuant to Section 6.2 of the Agreement, (1) reimburse Calce the full amount of
expenses that he had been invoiced as of July 31, 2017, plus an additional $50,000 to be applied
to future expenses as they are incurred; and (2) agree to reimburse Calce the additional expenses,
in excess of such $50,000 advancement, that he pays or incurs in his defense of the Lawsuit as
such expenses are paid or incurred. See the August 22, 2017, letter, a true and correct copy of
which is attached hereto as Exhibit B (referred to hereinafter as the “Reimbursement Request”). 7
9. The Reimbursement Request provides that, “[p]ursuant to Section 6.3 of the
Agreement, Mr. Calce hereby affirms that it is his good faith belief that he has met the standard
of conduct necessary for indemnification under Section 6.3.” See Ex. B at 2. The
Reimbursement Request also provides that “Mr. Calce further agrees to repay any amount that is
paid or reimbursed by Centurion Logistics, pursuant to Section 6.2, if it is determined by a court
of competent jurisdiction that Mr. Calce did not meet the aforementioned standard or if
indemnification is otherwise determined to be prohibited by law.” See id.
10. Centurion Logistics denied Calce’s request for reimbursement. See letter of
September 5, 2017, a true and correct copy of which is attached hereto as Exhibit C (referred to
hereinafter as the “Reimbursement Denial”). Despite denying the request, Centurion Logistics
conceded that Calce is an “Indemnified Person” and that this litigation is a “Proceeding” as those
7
The Agreement was attached as Exhibit A to the Reimbursement Request. The Agreement has been
omitted as an attachment to the Reimbursement Request since it is attached as Exhibit A-1 to this Motion.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 5
9516179.1/SP/38371/0105/112217
MR.326
terms are defined in the Agreement. See Ex. C at 2. To date, Centurion Logistics has not
reimbursed Calce any amount for the expenses he has paid and incurred in defending himself
against the claims brought against him in the Lawsuit. See the Declaration of John Calce, a true
and correct copy of which is attached hereto as Exhibit A, ¶ 4.
ARGUMENT AND AUTHORITIES
This Motion only addresses Calce’s right to advancement/reimbursement of defense
costs—not his right to indemnification. These rights are often improperly conflated, but they are
distinct concepts with completely different standards. Calce does not contend that he is entitled
to indemnification—as a matter of law—from Centurion Logistics at this point in the litigation.
However, his right to advancement/reimbursement of defense costs is clear and appropriate for
determination at the summary judgment stage. In order to adequately demonstrate Calce’s
entitlement to the relief requested herein, it is important to first contrast the difference between
the right to advancement/reimbursement and the right to indemnification. These concepts are
extensively analyzed in In re Aguilar, 344 S.W.3d 41 (Tex. App.—El Paso 2011, orig.
proceeding) (referred to herein as “Aguilar”).
A. The right to advancement/reimbursement of expenses and the right to
indemnification are separate and distinct legal concepts.
Aguilar is strikingly similar to the present case. Aguilar and another individual formed
Perspectiva Group, Inc. (“Perspectiva”). See Aguilar, 344 S.W.3d at 44. Aguilar was an officer
and director of Perspectiva. See id. Perspectiva filed suit against Aguilar and certain Perspectiva
employees alleging that Aguilar had breached his fiduciary duties to the company and engaged in
a conspiracy. See id. Perspectiva later filed a second suit against Aguilar and others, which was
eventually consolidated with the first suit into one cause, accusing Aguilar and his daughter of
forming a company that competed with Perspectiva (similar to the allegations in the current
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 6
9516179.1/SP/38371/0105/112217
MR.327
case). See id. During the pendency of the consolidated lawsuit, Aguilar’s attorney—pursuant to
Perspectiva’s bylaws—sent Perspectiva’s attorney a letter requesting that Perspectiva advance
Aguilar’s defense costs, including attorneys’ fees (which is exactly what Calce has requested
here). See id. Perspectiva—like Centurion Logistics—denied Aguilar’s
advancement/reimbursement request. See id. at 45. The trial court denied Aguilar’s motion
requesting advancement/reimbursement of defense costs. See id. The appellate court
conditionally granted Aguilar’s petition for a writ of mandamus and provided that the writ would
issue if the trial court refused to (1) vacate its order denying Aguilar’s motion regarding
advancement; and (2) enter an order granting the motion. See id. at 56.
In analyzing the issue, the Aguilar appellate court first stated that Article 2.02-1 of the
Texas Business Corporation Act expressly allowed Texas corporations to advance litigation
expenses to its directors. See id. at 45. The Aguilar court further noted that the applicable
section of Perspectiva’s bylaws was nearly identical to the statutory language regarding
advancement/reimbursement of expenses. See id. at 45 – 46. Article 2.02-1 of the Texas
Business Corporation Act is the predecessor to Section 8.104 of the TBOC. See TEX. BUS.
ORGS. CODE § 8.104. 8 Similarly, here, Section 6.2 is consistent with the statutory language set
forth in Section 8.104 of the TBOC. See Ex. A-1 § 6.2; see also TEX. BUS. ORGS. CODE § 8.104.
The Aguilar court next turned to the lack of Texas case law addressing the right to
advancement/reimbursement of defense costs: “There are no Texas cases concerning
advancement under the Business Corporation Act or the Business Organizations Code. But the
courts of Delaware have addressed advancement on numerous occasions.” Aguilar, 344 S.W.3d
at 46. It is common for Texas courts to look to Delaware law for guidance regarding
8
The prior and current statutes are essentially the same in all material respects. Compare TEX. BUS.
CORP. ACT ART. 2.02-1 with TEX. BUS. ORGS. CODE § 8.104.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 7
9516179.1/SP/38371/0105/112217
MR.328
unsettled/undeveloped areas of corporate law. 9 The Delaware Supreme Court has explained that
“‘[a]dvancement is an especially important corollary to indemnification’ because it provides
corporate officials with immediate interim relief from the burden of paying for a defense.” See
Aguilar, 344 S.W.3d at 46 (quoting Homestore, Inc. v. Tafeen, 888 A.2d 204, 211 (Del. Supr.
2005)). “Although the right to indemnification and advancement are correlative, they are
separate and distinct legal actions.” Id. (quoting Homestore, 888 A.2d at 212). Perhaps most
importantly, “[t]he right to advancement is not dependent on the right to indemnification.” Id.
(citing Homestore, 888 A.2d at 212) (emphasis added). This concept is vitally important to the
determination of this Motion, because it demonstrates that Calce’s alleged conduct is completely
irrelevant to his right to immediate advancement/reimbursement of his defense costs.
B. Centurion Logistics cannot rely on its own allegations to deny Calce’s right to
advancement/reimbursement of defense costs.
The Reimbursement Denial states that Centurion Logistics denied Calce’s request for
reimbursement/advancement, at least in part, on the basis of Centurion Logistics’ allegations in
the Lawsuit—specifically that Calce (1) was not acting “within the scope of [his] authority in
course of the Company’s business”; and (2) was engaging in “intentional misconduct” and a
“knowing violation of law.” See Ex. C. These are mere allegations for which Centurion
Logistics has the burden of proof. Centurion Logistics does not get to assume the role of accuser
9
“Delaware has been described as ‘the Mother Court of corporate law.’” Aguilar, 344 S.W.3d at 47
(citing Kamen v. Kemper Fin. Servs., Inc., 908 F.2d 1338, 1343 (7th Cir. 1990), rev’d on other grounds,
500 U.S. 90 (1991)). “Courts throughout the country look to Delaware for guidance on matters of
corporate law.” Id. (citing Neurobehaviorial Assocs., P.A. v. Cypress Creek Hosp., Inc., 995 S.W.2d 326,
332 n. 12 (Tex. App.—Houston [1st Dist.] 1999, no pet.) (turning to Delaware corporate law for guidance
regarding “winding-up” because there was no Texas cases addressing the issue)). “The law of
advancement, in particular, is ‘a Delaware specialty.’” Id. (citing Int’l Airport Ctrs., LLC v. Citrin, 455
F.3d 749, 750 (7th Cir. 2006)). “To the limited extent that there is law [regarding advancement] outside
Delaware, it is the same as the law in Delaware.” Id. (quoting Stephen A. Radin, “Sinners Who Find
Religion”: Advancement of Litigation Expenses to Corporate Officials Accused of Wrongdoing, 25 Rev.
Litig. 251, 271 (2006)).
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 8
9516179.1/SP/38371/0105/112217
MR.329
and fact-finder. More importantly, these allegations are irrelevant to the determination of
whether Calce is entitled to advancement/reimbursement of his defense costs.
In Aguilar, Perspectiva similarly denied Aguilar’s request for advancement on the basis
that Aguilar purportedly had unclean hands due to the alleged breaches of his fiduciary duties.
See Aguilar, 344 S.W.3d at 46. The Aguilar court stated that “[u]nder Delaware law,
advancement is allowed even when the official seeking advancement is being sued by the
corporation that must advance the litigation expenses” as “Delaware case law is replete with
insider trading cases in which executives’ expenses are advanced despite allegations of
defrauding the corporation or its stockholders of millions of dollars.” Id. at 47 (citing James
River Mgmt. Co., Inc. v. Kehoe, 674 F. Supp. 2d 745, 750 (E.D. Va. 2009)). The Aguilar court
further provided that “[a]dvancement claims are frequently granted when, as in this case, the
corporation is suing an official for breach of fiduciary duty.” Id. That is the exact situation
here—i.e., Calce is being sued for breach of fiduciary duty. See Pl.’s Orig. Pet. ¶¶ 36 – 42. “The
corporation [Centurion Logistics] cannot defend against the advancement claim on the ground
that it now believes the fiduciary [Calce] to have been unfaithful because it is in those very cases
that the right to advancement attaches most strongly.” Id. (citing Kehoe, 674 F. Supp. 2d at
750) (internal quotations omitted) (emphasis added). The Delaware Court of Chancery perhaps
put it best stating:
It is not uncommon for corporate directors, officers, and employees to be sued for
breach of the fiduciary duty of loyalty [exactly what Calce is being sued for here],
and to have to defend claims that they took official action for the primary purpose
of diverting corporate resources to their own pocketbooks . . . . Therefore, it is
highly problematic to make the advancement right of such officials dependent on
the motivation ascribed to their conduct by the suing parties. To do so would be
to largely vitiate the protections afforded by [statutory] and contractual
advancement rights.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 9
9516179.1/SP/38371/0105/112217
MR.330
Reddy v. Elec. Data Sys. Corp., No. CIV.A.19467, 2002 Del. Ch. LEXIS 69, at *15 – 16 (Del.
Ch. June 18, 2002); see also Aguilar, 344 S.W.3d at 48 (expressly rejecting proposition that “the
entitlement to advancement hinges on proof that the director did not violate his fiduciary
duties.”).
Calce’s alleged conduct is completely irrelevant for purposes of this Motion and the
determination of whether Calce is entitled to advancement/reimbursement of his defense costs.
See Aguilar, 344 S.W.3d at 48 (citing Reddy, 2002 Del. Ch. LEXIS 69, at *28 – 29) (providing
that any other result “would turn every advancement case into a trial on the merits of the
underlying claims of official misconduct.”)). Rather, the determinative question is whether the
terms of the Agreement afford Calce the right to advancement/reimbursement of his defense
costs. The answer is unquestionably yes.
C. Calce’s contractual right to advancement/reimbursement is unambiguous and
mandatory.
1. The terms of the Agreement are unambiguous and its interpretation is a
question of law for the Court.
The interpretation of an unambiguous contract is a question of law for the court. See
Moayedi v. Interstate 35/Chisam Rd., L.P., 438 S.W.3d 1, 7 (Tex. 2014) (citing MCI Telecomms.
Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999)). Likewise, “[t]he question of
whether a contract is ambiguous is one of law for the court.” Peterson v. Farmers Tex. Cnty.
Mut. Ins. Co., No. 05-15-00678-CV, 2016 Tex. App. LEXIS 6586, at *8 (Tex. App.—Dallas
June 22, 2016, no pet.) (mem. op.) (citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983)). A
contract is not ambiguous if, like the Agreement here, “the contract’s language can be given a
certain or definite meaning.” Id. (citing El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389
S.W.3d 802, 806 (Tex. 2012)). The mere fact that the “parties advance different interpretations
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 10
9516179.1/SP/38371/0105/112217
MR.331
of a contract does not necessarily mean that the contract is ambiguous.” PopCap Games, Inc. v.
MumboJumbo, LLC, 350 S.W.3d 699, 707 (Tex. App.—Dallas 2011, pet. denied).
“In construing a written contract, the primary concern of the court is to ascertain the true
intentions of the parties as expressed in the instrument.” Moayedi, 438 S.W.3d at 7 (emphasis
added). “Absent a finding of ambiguity, a court must interpret the meaning and intent of a
contract from the four corners of the document without the aid of extrinsic evidence.” Peterson,
2016 Tex. App. LEXIS 6586, at *9; see also Sacks v. Haden, 266 S.W.3d 447, 450-51 (Tex.
2008) (quoting Nat’l Union Fire Ins. Co. of Pittsburgh, Penn. v. CBI Indus. Inc., 907 S.W.2d
517, 520 (Tex. 1995)) (providing that “[o]nly where a contract is ambiguous may a court
consider the parties’ interpretation and ‘admit extraneous evidence to determine the true meaning
of the instrument’”). Moreover, “[u]nless the agreement shows the parties used a term in a
technical or different sense, the terms are given their plain, ordinary, and generally accepted
meaning.” Moayedi, 438 S.W.3d at 7 (citing Heritage Res., Inc. v. NationsBank, 939 S.W.2d
118, 121 (Tex. 1996)). The relevant terms of the Agreement are unambiguous and entitle Calce
to indemnification.
2. Section 6.2 of the Agreement clearly requires Centurion Logistics to
immediately reimburse Calce the expenses he pays or incurs in defending
himself in the Lawsuit.
It is undisputed that Calce—as a manager of Centurion Logistics—is an “Indemnified
Person” under the Agreement. See Pl.’s Orig. Pet. ¶ 12; see also Ex. A-1 § 1.1; Ex. C at 2. It is
further undisputed that the Lawsuit constitutes a “Proceeding” as defined in Section 1.1 of the
Agreement. See Ex. A-1 § 1.1; see also Ex. C at 2. Section 6.2 of the Agreement provides that
“[a]n Indemnified Person’s [e.g., Calce] expenses paid or incurred in defending [himself] against
any Proceeding [e.g., this Lawsuit] shall be reimbursed as paid or incurred.” See Ex. A-1 § 6.2
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 11
9516179.1/SP/38371/0105/112217
MR.332
(emphasis added). There are no qualifications and/or conditions to Calce’s express right to
advancement/reimbursement of defense costs. 10
The Aguilar court—after noting that the term “shall” is generally construed to be
mandatory—held that Perspectiva had a mandatory duty, under the applicable section of its
bylaws (which is strikingly similar to the language of Section 6.2), to advance Aguilar’s defense
costs. See Aguilar, 344 S.W.3d at 51. 11 Similarly, Centurion Logistics is required, pursuant to
Section 6.2 of the Agreement, to reimburse Calce the expenses he pays or incurs in defending
himself in the Lawsuit—as such expenses are paid or incurred.
3. Calce’s reimbursable expenses include his attorneys’ fees.
The Aguilar court expressly rejected Perspectiva’s argument that the undefined term
“reasonable expenses” does not include attorneys’ fees. See Aguilar, 344 S.W.3d at 51 – 52. In
support of its holding, the Aguilar court stated that “Perspectiva’s interpretation renders [the
relevant section of Perspectiva’s bylaws] insignificant and practically useless.” Id. at 51. The
Aguilar court further provided that “[t]he purpose of advancement is to relieve corporate officials
from the burden of paying the significant on-going expenses involved in litigation” and that
“[t]he burden of litigation comes from attorney’s fees, not copying costs.” Id. at 51 – 52
(internal quotations and citations omitted). This reasoning is equally applicable here. Moreover,
10
Section 6.3(c) of the Agreement does provide that “[t]he Company [Centurion Logistics] may require,
as a condition to the payment of any amounts pursuant to Section 6.2, that the Indemnified Person provide
to the Company (i) a written affirmation by the Indemnified Person of the person’s good faith belief that
the person has met the standard of conduct necessary for indemnification under this Section 6.3; and (ii) a
written undertaking by or on behalf of the Indemnified Person to repay the amount paid or reimbursed if
the person has not met that standard or if indemnification is otherwise prohibited by law.” See Ex. A-1 §
6.3. Calce has already agreed in writing to repay any amount that he is reimbursed by Centurion
Logistics if it is ultimately determined that he was not entitled to such payments. See Ex. B at 2.
11
The pertinent section of Perspectiva’s bylaws provided as follows: “[r]easonable expenses incurred by a
person who was, is, or threatened to be made a named defendant or respondent in a Proceeding shall be
paid or reimbursed by the Corporation . . . .” See Aguilar, 344 S.W.3d at 44.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 12
9516179.1/SP/38371/0105/112217
MR.333
Section 8.001 of the TBOC defines the term “expenses” to include “reasonable attorney’s fees.”
See TEX. BUS. ORGS. CODE § 8.001(3)(B). It is therefore clear that Calce’s right to
advancement/reimbursement of “expenses” includes the attorneys’ fees he pays or incurs in his
defense of this Lawsuit.
D. Summary Judgment is the appropriate—and only meaningful—mechanism for
Calce to exercise his right to advancement/reimbursement of defense costs.
The Aguilar court made clear that a summary judgment motion is an appropriate
procedural vehicle for seeking advancement/reimbursement of defense costs. See Aguilar, 344
S.W.3d at 52 – 53. More importantly, the Aguilar court stated that “[b]y its very nature,
advancement of expenses can occur only during the course of the trial court proceedings.” Id. at
55 (citing Morgan v. Grace, No. Civ.A. 20430, 2003 Del. Ch. LEXIS 113, at *4 (Del Ch. Oct.
29, 2003) (providing that “[t]he value of the right to advancement is that it is granted or denied
while the underlying action is pending.”)). “It is indemnification of expenses that occurs at the
conclusion of the case.” Id. Therefore, Calce’s right to advancement/reimbursement of defense
costs is ripe. The only appropriate time for such determination is now. Calce’s
advancement/reimbursement claim will be effectively moot at the conclusion of the case. See id.
CONCLUSION
For these reasons, Calce requests that the Court grant his Motion for Partial Summary
Judgment against Centurion Logistics and enter the following judgment:
a) A declaration that Centurion Logistics is required to reimburse Calce the
expenses, including but not limited to attorneys’ fees, that he has paid or incurred
to date in defending himself against the claims brought against him in the
Lawsuit;
b) A declaration that Centurion Logistics is required to reimburse Calce the
expenses, including but not limited to attorneys’ fees, that he pays or incurs in the
future in defending himself against the claims brought against him in the Lawsuit
within ten (10) days of Calce submitting such expenses to Centurion Logistics;
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 13
9516179.1/SP/38371/0105/112217
MR.334
c) Judgment that Centurion Logistics breached the Agreement by failing to
reimburse Calce the amount of expenses, including but not limited to attorneys’
fees, that he has paid or incurred to date in defending himself against the claims
brought against him in the Lawsuit; 12 and
d) Such other and further relief to which Calce may be justly entitled.
Respectfully submitted,
/s/ David N. Kitner
DAVID N. KITNER
State Bar No. 11541500
david.kitner@strasburger.com
CHASE J. POTTER
State Bar No. 24088245
chase.potter@strasburger.com
STRASBURGER & PRICE, LLP
901 Main Street, Suite 6000
Dallas, TX 75202-3794
(214) 651-4300
(214) 651-4330 Fax
ATTORNEYS FOR JOHN CALCE,
CENTURION MIDSTREAM GROUP, LLC,
CENTURION TERMINALS, LLC, AND
STAMPEDE TX ENERGY, LLC
12
Calce’s First Amended Counterclaim against Centurion Logistics—like his Original Counterclaim—
includes claims for declaratory relief and breach of contract. See Calce’s First Am. Counterclaim. For
the reasons set forth herein, Calce is entitled to summary judgment on his breach of contract claim, in
addition to his claim for declaratory relief. To succeed on a breach of contract claim, a plaintiff must
show: “(1) a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the
contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.” Marquis
Acquisitions, Inc. v. Steadfast Ins. Co., 409 S.W.3d 808, 813 – 814 (Tex. App.—Dallas 2013, no pet.).
The arguments set forth above and summary judgment evidence conclusively establish all such elements
as a matter of law: (1) the Agreement is a valid contract; (2) Calce submitted his written undertaking
(without even being requested to do so by Centurion Logistics); (3) Centurion Logistics breached Section
6.2 of the Agreement by denying Calce’s request for advancement/reimbursement of defense costs; and
(4) Calce has suffered and continues to suffer the harm of significant, unreimbursed defense costs.
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 14
9516179.1/SP/38371/0105/112217
MR.335
CERTIFICATE OF SERVICE
The undersigned counsel certifies that on the 22nd day of November, 2017, a true and
correct copy of the foregoing was forwarded to all known counsel in compliance with the Texas
Rules of Civil Procedure.
/s/ Chase J. Potter
Chase J. Potter
JOHN CALCE’S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING
COUNTERCLAIM AGAINST CENTURION LOGISTICS LLC PAGE 15
9516179.1/SP/38371/0105/112217
MR.336
EXHIBIT A
MR.337
CAUSE NO. DC-16-07706
CENTURION LOGISTICS LLC, § IN THE DISTRICT COURT OF
individually and derivatively on behalf of §
CENTURION PECOS TERMINAL LLC, §
a Texas Limited Liability Company, §
§
Plaintiffs, §
§
v. §
§
JAMES BALLENGEE, BALLENGEE §
INTERESTS, LLC, JOHN CALCE, § DALLAS COUNTY, TEXAS
STAMPEDE TX ENERGY, LLC, §
CENTURION MIDSTREAM GROUP, §
LLC, CENTURION TERMINALS, LLC §
§
Defendants, §
§
and CENTURION PECOS TERMINAL §
LLC, a Texas Limited Liability Company §
§
Nominal Defendant. § 44th JUDICIAL DISTRICT
DECLARATION OF JOHN CALCE
1. My name is John Calce. I have personal knowledge of every statement made
herein, and they are all true and correct.
2. I am a manager of Centurion Logistics LLC (“Centurion Logistics”). I have been
a manager of Centurion Logistics since the date the company was formed.
3. Attached hereto as Exhibit A-1 is a true and correct copy of the Company
Agreement of Centurion Logistics.
4. To date, Centurion Logistics has not reimbursed me any amount for the expenses
that I have paid or incurred in defending myself against the claims that have been brought against
me in the above-entitled lawsuit.
DECLARATION OF JOHN CALCE PAGE 1
9389432.1/SP/38371/0105/100517
MR.338
Dallas
MR.339
EXHIBIT A-1
MR.340
COMPANY AGREEMENT
OF
Centurion Logistics LLC
a Texas Limited Liability Company
Effective September 16, 20 B
THE MEMBEnSlllP INTERESTS REPRESENTED BY THIS AGREEMENT HAVE
NOT BEEN REGISTERED lJNDF,R ANY SECURITU:s LAWS AND MAY NOT BE
SOLD, PLEDGED OR OTHRIHVISE TRANSEi'muu;:o ABSENT SlJCH
IU:GISTRATION OR AN EXEMPTION THEREFROM. THE TRANSFER OF
MF.MBF:RSHIP INTERESTS IS FURTHER RESTRICTED BY ARTICLI( X OF THIS
AGREF:MENT.
I 1508~~'2 2/1 2120 14
MR.341
TABLE OF CONTENTS
Page
1\llTICljl·~ 1 DEFl'N l'flONS .................................................................,......................................... t
1.1. J)etined Tcrn1s ......................................................................................................... I
1.1. LJsage ....................................................................................................................... 4
ARTICLE JI ORGANlZATIONAL MATTERS ...................................................................... 5
2.1. Forn1ation .. .............................................................................................................. 5
2.2. Na1ne ....................................................................................................................... 5
2.3. Registered Office and Agent; Principal Office ....................................................... 5
2.4. ·1·crn1 ....................................................... ... ,............................................................. 5
2.5. Purposes ............................................................................................... .................... 5
2.6. Po\vcrs ..................................................................................................................... 5
2. 7. Co1npany Property ................................................................................................... 5
2.8. lnitial IV1cn1bers ....................................................................................................... 6
2.9 Options to Acquire Additional Units ....................................................................... 6
2.10 Consent of lvf anagers ............................................................................................... 6
2.1 l. Status of Managers and Members ....... .................................................................... 6
2.12. Unit C:crtificatcs ...................................................................................................... 6
2.13. No State Law Partnership .............................. .......................................................... 6
ARTICLE III CAPITAL CONTRIBUTIONS; CAt•tTAL ACCOUNTS .............................. 6
3.1 . Initial Capital Contributions .................................................................................... 6
3.2. Additional Capital Contributions ............................................................................ 6
3.3. Capital Accounts ........... .............. ................................................................... ..... .... 7
3.4. No Right to Return of or Interest on Capital Account ............................................ 7
3.5. Ivlen1bcr Loans ........................................... .............................................................. 7
3.6. I\1etnber Notes ......................................................................................................... 7
ARTICLE IV ALJ,OCATIONS AND DISTRIBUTIONS ....................................................... 8
4. 1. A!location of Profit or Loss ..................................................................................... 8
4.2. Distributions of Distributable Cash ......................................................................... 8
4.3. \Vithholding ............................................................................................................. 8
4.4. Limitation on Distributions ..................................................................................... 8
4.5. No Right to Partition or Distribtttions in Kind ........................................................ 9
ARTICLE V 1'i·l1\NAG 1~1\lf EN,.r .................................................................................................... 9
5. I. Management and Control of Company Business ................................... ................. 9
5.2. Delegation of Authority ........................................................................................ . l 0
5.3. Limitations on Manager Authority ........................................................................ l 0
5.4. Reliance ................................................................................................................. 10
5.5. Compens,\tion and Expenses of Members and Managers ..................................... I0
5.6. Standards of Manager and Member Conduct ........................................................ I0
CO\IP.\'\\ Allowing
paragraphs of this Section:
(i) the transfer is approved by all of the Managers:
(ii) if the Member is a corporation, the transfer is to a member of the
Member's affiliated group (as defined in l.R.C. Section I S04(a)) ~
{iii) if the Member is a trustee of one or more employee benefit plans. the
transfer is to a co-trustee or a successor trustee to such plans; or
(iv) if the Member is an individual, the transfer is to the Member's estate,
testamentary trust. or legal representative as a result of the Member's death or
adjudication of incapacity in managing its person or affairs, or the transfer is to a member
of the Member's family, directly or in trust.
(b) Upon a Permitted Transfer by a Member of all of its Membership Interest. the
Member ceases to be a Member as of the effective date of the transfer determined accqrding to
Section 10.4.
(c) For purposes of Section 10.2(a)(iv), a Member's family means the iV[ember"s
spouse (excluding a former spouse), children, grandchildren, parents. and grnndparents. A
person's legally adopted child is treated as his child.
CmlP,\ :\ \' AGREDlt:'.'11' Of C.::'in RIO:-; LOGISTICS LLC E::XlllUll' A
l J':'OS48v2 ~i l 2/20l~
MR.362
l0.3. Conditions to Permitted Transfers of Membership Interests. Without limiting the
Managers ' authority to withhold approval for the transfer of a Membership Interest. a transfer
shall not be a Permitted Transfer unless the Managers determine that all of the following
condit.ions are satisfied:
(a) The transfer complies with all applicable laws, including any applicable secmities
laws.
(b) The transfer will not cause the Company to be treated as other than a partt1ershlp
for United States federal income tax purposes.
(c) The transfor will not cause the Company to be subject to regulation under the
Investment Company Act of 1940, as amended.
(d) The transfer will not cause any assets of the Company to be deemed "plan assets"
undel' the employee Retirement Income Security Act of 1974.
(e) The transfer will not result in a termination of the Company ander I.R.C , Section
708, unless the Managers determine that such termination will not have an adverse impact on the
Members.
(t) The transfer will not cause the application of the tax-exempt use property rules of
l.R.C. Sections l68(g)(l )(B) and l68(h) to the Company ot its Members. unless the Managers
determine that such rules will not have an adverse impact on the Membe1·s.
(g) The transferor and transferee have delivered to the Company any documents that
the Managers request to confirm that the transfer satisfies the requirements of this Agreement, to
give effect to the transfer, and to confirm the transferee's agreement to be bound by this
Agreement as an Assignee.
(h) It requested by the Managers, the Company has received a transfer fee in an
amount determined by the Managers to be sufficient to reimburse the Company for the estimated
expenses likely to be incurred by the Company in connection with such transfer.
10.4. Effective Date; Distributions.
(a) A Permitted Transfer of a Membership Interest is effective as of the first day of
the calendar month following the calendar month during ' vhich the Managers receive notice of
such transfer (in such form and manner as the Managers tnay require) unless the Managers
determine that the transfer should be effective as of an earlier or later date (for example, on any
date the transfer is etlective as a matter of state law. or where the notice of transte1· specifies that
the transfer is to be effective on a future date).
'E:rnmrr A
I t5Q848\'1 211 2!2014
MR.363
(b) Distributions with respect to a transferred Membership Interest that are made
before the effective date of the transfer shall be paid to the transferor, and distributions made
after such date shaH be paid to the Assignee.
(c) Effective as of the effective date of a transfer of a Membership Interest. the
lvlanagers shall amend Exhibit A to reflect the reduction in the transferor's Percentage Interest
and to reflect the Assignee·s Percentage Interest.
(d) Neither the Company nor the Managers have any liability for making allocations
and distributions to the Members determined in accordance with this Section l 0.4, whether ol'
not the Company or the Managers have knowledge of any transfer of any Membership Interest.
10.5. Transfcror·s Obligations. The transferor of a Membership Interest who ceases to
be a Member continues to be obligated with respect to its Membership Interest or its status as a
former Member as provided In the Code and applicable law.
10.6. Assignee·s Rights and Obligations.
Unless an Assignee becomes a Member pursuant to Article Xl, such Assignee shall not
be entitled to any of the rights granted to a Member, other tha11 the rights to receive allocations of
profits and losses and distributions as if such Assignee were a Member, to transfer the
Assignee's Membership Interest (subject to the conditions of this Article X), and to receive
reports and information as specified in Aiticle VII. An Assignee of a Membership Interest shall
succeed to the Capital Contribution of the transferor to the extent of the Membership Interest
transferred. An Assignee is bound by this Agreement ii:respcctive of whether the Assignee has
signed or otherwise adopted this Agreement. An Assignee's Membership Interest may be
redeemed at the option of the Managers as provided in Sectio1112.J..
10.7. Effect and Consequences of Prohibited Transfer.
(a) Except as otherwise required by law. the Company and the Managers shall treat a
Prohibited Transfer as void and shall recognize the transferor as continuing to be the owner of
the Membership Interest purported to be transferred. If the Company ·is required by law to
recognize a Prohibited Transfer. the transferee shall be treated as an Assignee with respect to the
Membership 1nterest transferred and may not be treated as a Member with respect to the
Membership Interest transforred unless admitted as a Me1nber iu accordance with Article XI.
(b) The Company may remove the transferor and Assignee with respect to a
Prohibited Transfer as provided in Article XII.
(c) The transferor and transferee with respect to a Prohibited Transfer shall be jointly
and severally liable to the Company for. and shall indemnify and hold the Company harmless
against, any expense. liability, or loss incurred by the Company (including reasonable legal fees
and expenses) as a result of such 1ransfer. their removal and liquidation of their Membership
lntei-ests (if applicable). and the efforts to enforce the indemnity granted in this Section lO. 7(c}.
CmlPA ~ \' AGltEl:: '.\n; ~T o.· CE'."TrJUO'\ LOGISTICS LLC EXlllBl'I' A
1150848\·2 2/12120 \4
MR.364
I 0.8. Agreements of Spouse; Sole Management Community Property.
(a) Execution of Spousal .loinder and Consent. The spouse of each Member shall
execute and deltver to the Comp1my a Spo~usal Joinder and Consent in the form of Exhibit B.
( b) Agreements of Spouse. The spouse of each Member agrees that:
(i) this Agreement is entirely fair, just and equitable and in his or her best
interest;
(ii) the covenants made in this Agreement are binding on such spouse
individually and that such spouse is bound by this Agreement. including insofar as any
interest such spouse may have now or hereafter in any Membership Interest by reason of
the community property laws of the State of Texas or any other state, or otherwise;
(iii) whenever. pui'stmnt to the terms of this Agreement, such Member does, or
is required to, in any manner transfer, pledge, or encumber his or her Membership
Interest, or any interest in such Membership Interest, to the Company 01· any other person,
such transfer, pledge, or encumbrance shall include the community property interest. if
any, of such spouse in such Membership Interest so transferred, pledged, or encmnbercd:
and
(iv) in the event of the death of such spouse, any interest such spouse may
have now or hereafter in any Membership Interest which constitutes community property
should pass to such Member and, accordingly, such spouse shall will and bequeath such
spouse's entire community property interest, if any, in such Membership Interest to such
Member.
(c) Sole Management Community Property. Each Member who is a natural person
and his or her spouse agree that such Member's Membership Interest, whether presently mvned
or hereafter acquired. is, if such Membership Interest is community property. community
property subject to the sole management. control, and disposition of such Member.
ARTICLE XI
ADMISSION OF NEW MEMBERS
11.1. Substituted Members. An Assignee of a Membership Interest shall be admitted as
a Substituted Member with respect to such Membership Intel'est on the date on which all of the
following conditions are satisfied:
(a) The Managers have approved in \\>Titing the admission of the Substituted Member.
{b) The Assignee has delivered to the Company any agreements and other docutnents
that the Managers request to confinn such Assignee as a Member in the Company and such
Assignee·s agreement to be bound by this Agreement as a Member.
E:XllllJIT A
I 1:'()8+8v2 2i l 2/20 I~
MR.365
\C) lf requested by the Managers. the Company has received an admission kc in an
amount determined by the Managers to be sufficient to reimburse the Company for the estimated
expenses likely to be incmrcther than in liquidation of a Member's Membership interest.
the amount of such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the basis of1he asset)
frum the disposition of the asset and shall he taken into account for purposes or
computing r-..;et Profit or Net Loss.
"'Nonrecourse Deductions'' has the mea11ing set forth in Tr~usury Regulations Section
I. 704-?(b)( l) and shall be determined according to the provisions of lre(lsttry Regulations
Section 1. 704-2( c ).
'"Nonrecourse Liabilitv·· has the meaning set forlh in Treasury Regulations Section I .704-
2(b)(3).
C0'.\11' ..\:\Y AGIH:E:m :\ T OF Cl·:\ n 'RI(>:'• UHi ISTI( ·s LLC
P.\GI: A·3
MR.380
'"Partner i'KLV@ DXWKRULW\ LQ WKH FRXUVH RI WKH &RPSDQ\¶V EXVLQHVV ´ WKH
&RPSDQ\GRHVQRWLQGHPQLI\&DOFHIURPDQ\DFWRURPLVVLRQWKDWLVQRWZLWKLQWKHVFRSHRIKLV
DXWKRULW\ RU LQ WKH FRXUVH RI WKH &RPSDQ\¶V EXVLQHVV 0RUHRYHU WKH &RPSDQ\ $JUHHPHQW
VSHFLILFDOO\H[FOXGHV³LQWHQWLRQDOPLVFRQGXFWRUDNQRZLQJYLRODWLRQRIODZ´IURPWKHVFRSHRI
&HQWXULRQ/RJLVWLFV¶LQGHPQLILFDWLRQREOLJDWLRQV
,QWKHSUHVHQW FDVHDVVWDWHGLQ 3ODLQWLII¶V2ULJLQDO 3HWLWLRQ WKH³3HWLWLRQ´ WKHDFWLYH
SOHDGLQJRQILOHLQWKH/LWLJDWLRQ&HQWXULRQ/RJLVWLFVDOOHJHVWKDW&DOFHVLJQHGDGHHGRIWUXVWLQ
KLVFDSDFLW\DVPDQDJHURI&HQWXULRQ3HFRVWRVHFXUHDSURPLVVRU\QRWHIRU%DOOHQJH,QWHUHVWV
//& DQG ODWHU VLJQHG DQ H[WHQVLRQ RI WKDW VDPH QRWH DV D PDQDJHU RI &HQWXULRQ 3HFRV
2EYLRXVO\&DOFHZDVQHLWKHUDFWLQJQRUSXUSRUWLQJWRDFW³ZLWKLQWKHVFRSHRI>KLV@DXWKRULW\LQ
FRXUVHRIWKH&RPSDQ\¶VEXVLQHVV´DQGZDVHQJDJLQJLQ³LQWHQWLRQDOPLVFRQGXFW´DQG³NQRZLQJ
&RPSDQ\$JUHHPHQW6HFWLRQ
&RPSDQ\$JUHHPHQW6HFWLRQ D
3HWLWLRQ
MR.391
0U.LWQHU
6HSWHPEHU
3DJHRI
YLRODWLRQRIODZ´$FFRUGLQJO\&HQWXULRQ/RJLVWLFVPXVWGHQ\&DOFH¶VLQGHPQLILFDWLRQUHTXHVW
DVWROLDELOLW\DULVLQJIURPWKLVFRQGXFW
7KH 3HWLWLRQ DOVR DOOHJHV WKDW &DOFH DORQJ ZLWK 6WDPSHGH ³SXUSRUWHG WR REOLJDWH
&HQWXULRQ 3HFRV WR DVVXPH %DOOHQJHH ,QWHUHVWV¶ REOLJDWLRQV XQGHU WKH QRWHV IURP %DOOHQJHH
,QWHUHVVWVWR7&%´&DOFHZDVQHLWKHUDFWLQJQRUSXUSRUWLQJWRDFW³ZLWKLQWKHVFRSHRI>KLV@
DXWKRULW\LQFRXUVHRIWKH&RPSDQ\¶VEXVLQHVV´DQGZDVHQJDJLQJLQ³LQWHQWLRQDOPLVFRQGXFW´
DQG ³NQRZLQJ YLRODWLRQ RI ODZ´ $FFRUGLQJO\ &HQWXULRQ /RJLVWLFV PXVW GHQ\ &DOFH¶V
LQGHPQLILFDWLRQUHTXHVWDVWROLDELOLW\DULVLQJIURPWKLVFRQGXFW
)XUWKHU WKH 3HWLWLRQ DOOHJHV WKDW ³&DOFH FUHDWHG D QRWH SXUSRUWLQJ WR REOLJDWH
&HQWXULRQ3HFRVWRPDNHSD\PHQWVWR&HQWULRQ7HUPLQDOV´$VEHIRUH&DOFHZDVQHLWKHUDFWLQJ
QRUSXUSRUWLQJWRDFW³ZLWKLQWKHVFRSHRI>KLV@DXWKRULW\LQFRXUVHRIWKH&RPSDQ\¶VEXVLQHVV´
DQGZDVHQJDJHGLQ³LQWHQWLRQDOPLVFRQGXFW´DQGD³NQRZLQJYLRODWLRQRIODZ´$FFRUGLQJO\
&HQWXULRQ /RJLVWLFV PXVW GHQ\ &DOFH¶V LQGHPQLILFDWLRQ UHTXHVW DV WR OLDELOLW\ DULVLQJ IURP WKLV
FRQGXFW
)LQDOO\ WKH 3HWLWLRQ DOOHJHV WKDW &DOFH DORQJ ZLWK %DOOHQJHH ,QWHUHVWV ³FUHDWHG
IUDXGXOHQWQRWHVE\&HQWXUULRQ3HFRVWR%DOOHQJHH,QWHUHVWV´ $VEHIRUH&DOFHZDVQHLWKHU
DFWLQJ QRU SXUSRUWLQJ WR DFW ³ZLWKLQ WKH VFRSH RI >KLV@ DXWKRULW\ LQ FRXUVH RI WKH &RPSDQ\¶V
EXVLQHVV´ DQG ZDV HQJDJLQJ LQ ³LQWHQWLRQDO PLVFRQGXFW´ DQG ³NQRZLQJ YLRODWLRQ RI ODZ´
$FFRUGLQJO\ &HQWXULRQ /RJLVWLFV PXVW GHQ\ &DOFH¶V LQGHPQLILFDWLRQ UHTXHVW DV WR OLDELOLW\
DULVLQJIURPWKLVFRQGXFW
Business Organizations Code > Title 1 General
Provisions (Chs. 1 — 12) > Chapter 8 Indemnification and Insurance (Subchs. A — D) > Subchapter C
Permissive Indemnification and Advancement of Expenses (§§ 8.101 — 8.150)
Sec. 8.104. Advancement of Expenses to Present Governing Persons or Delegates.
(a) An enterprise may pay or reimburse reasonable expenses incurred by a present governing person or
delegate who was, is, or is threatened to be made a respondent in a proceeding in advance of the final
disposition of the proceeding without making the determinations required under Section 8.101(a) after the
enterprise receives:
(1) a written affirmation by the person of the person’s good faith belief that the person has met
the standard of conduct necessary for indemnification under this chapter; and
(2) a written undertaking by or on behalf of the person to repay the amount paid or reimbursed if
the final determination is that the person has not met that standard or that indemnification is
prohibited by Section 8.102.
(b) A provision in the governing documents of the enterprise, a resolution of the owners, members, or
governing authority, or an agreement that requires the payment or reimbursement permitted under this
section authorizes that payment or reimbursement after the enterprise receives an affirmation and
undertaking described by Subsection (a).
(c) The written undertaking required by Subsection (a)(2) must be an unlimited general obligation of the
person but need not be secured and may be accepted by the enterprise without regard to the person’s
ability to make repayment.
(d) With respect to a limited partnership, a vote of a majority-in-interest of the limited partners in a vote
that excludes the interest held by each general partner who is not disinterested and independent
constitutes an authorization under Subsection (b). For purposes of this subsection, “majority-in-interest”
means, with respect to limited partners, limited partners who own more than 50 percent of the current
percentage or other interest in the profits of the partnership that is owned by all of the limited partners.
History
Enacted by Acts 2003, 78th Leg., ch. 182 (H.B. 1156), § 1, effective January 1, 2006; am. Acts 2005, 79th
Leg., ch. 64 (H.B. 1319), §§ 23, 24, effective January 1, 2006; am. Acts 2007, 80th Leg., ch. 688 (H.B. 1737), §
42, effective September 1, 2007; am. Acts 2011, 82nd Leg., ch. 139 (S.B. 748), § 6, effective September 1,
2011.
Tex. Business Organizations Code § 8.104
Texas Statutes & Codes Annotated by LexisNexis®
Copyright © 2018 Matthew Bender & Company, Inc.
a member of the LexisNexis Group. All rights reserved.
End of Document
Page 2 of 2
in Re: John Calce
Combined Opinion