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Kamel v. AdvoCare International, L.P.

Court of Appeals of Texas, Fifth District, Dallas

March 28, 2017

SHEREEF KAMEL, W.D. MASTERSON, AND KILGORE & KILGORE, PLLC, Appellants
v.
ADVOCARE INTERNATIONAL, L.P., Appellee

         On Appeal from the 429th Judicial District Court Collin County, Texas Trial Court Cause No. 429-03276-2015

          Before Justices Bridges, Lang-Miers, and Schenck

          MEMORANDUM OPINION

          ELIZABETH LANG-MIERS JUSTICE

         This is an appeal from an order granting a motion for sanctions filed by appellee AdvoCare International, Inc. against appellants Shereef Kamel, a former independent distributor of AdvoCare products; Kamel's attorney, W.D. Masterson; and Masterson's law firm, Kilgore & Kilgore, PLLC. The trial court found that appellants brought baseless claims against AdvoCare and ordered Masterson to pay AdvoCare $3500 in attorney's fees as a sanction. On appeal appellants argue that the sanctions order is defective and the evidence is insufficient to support the award. We resolve appellants' issues against them and affirm the sanctions order.

         Background

         AdvoCare sells nutrition and other health-related products exclusively through independent distributors. Kamel became a distributor with AdvoCare in March 2013. In late 2013, AdvoCare blocked Kamel's purchase of 800 boxes of gingerbread bars due to what it contended was suspicious activity. Kamel said he was going to give the bars to school teachers. Unhappy with Kamel's explanation, AdvoCare suspended Kamel's account. In December 2013, Kamel accused a distributor in his upline, Aly Gwin, of sending him a text message that made disparaging remarks about his race and national origin.[1]

         Gwin informed AdvoCare about Kamel's accusations and denied sending the text message. AdvoCare immediately hired an attorney to investigate the matter. In a December 2013 letter, the attorney asked both Gwin and Kamel to obtain and pay for a forensic examination of their phones. Gwin did; Kamel did not. The investigation revealed that Gwin's phone did not contain the text message. Kamel kept assuring AdvoCare that he was having his phone examined independently, but he never produced any reports from the examination, never provided his phone for an examination, and never produced any proof that Gwin sent the message. When AdvoCare's counsel advised Kamel by e-mail about the results of the examination of Gwin's phone, Kamel responded that the "results were fabricated" and he had "100% proof that those texts were sent from her number." He said "[t]he next correspondence between us needs to be a settlement offer." AdvoCare offered to settle with Kamel if Kamel paid AdvoCare $2500. He declined. Ultimately, Kamel said his phone was broken while on vacation. AdvoCare concluded that Kamel "spoofed" the text message (sent it to himself) and lied about it and terminated his distributorship agreement in January 2014.

         Over a year later, in June 2015, AdvoCare suspended the distributorship agreements of 55 distributors, including a man named Michael Moussa, due to concerns that the distributors had violated AdvoCare's policies and procedures by, for example, stockpiling its products and selling them on eBay. About a month after that, AdvoCare filed a petition for presuit discovery pursuant to Texas Rules of Civil Procedure 202, in which it sought to depose Moussa and to require him to produce certain documents in advance of his deposition "in anticipation of a lawsuit regarding, inter alia, Moussa's likely breach of his contract with AdvoCare."

         Shortly after AdvoCare filed the Rule 202 petition, Kamel and Moussa filed a document titled "Counter-Plaintiffs' Original Class Action Petition" in the same cause number as the petition for presuit discovery. In this class-action petition, Kamel and Moussa purported to represent "[a]ll persons or entities who are Texas citizens and from January 31, 2014 to the present had their distributorships suspended or terminated by AdvoCare for alleged excessive purchases." They asserted claims for breach of contract, quantum meruit and unjust enrichment, common law fraud, and conspiracy to commit unlawful acts. The class-action petition alleged that AdvoCare breached its contract in connection with Kamel's purchase of the gingerbread bars, "promoted racism" against "distributors with an Egyptian heritage" and "supported by inaction" the racist text message allegedly sent to Kamel by Gwin. The petition implied that AdvoCare had no basis to terminate these distributorships and did so based on racial discrimination.[2]

         AdvoCare moved for sanctions against appellants contending the allegations were verifiably groundless. According to AdvoCare, the racist text message was fabricated and appellants knew or should have known it was fabricated at the time they filed their lawsuit. As support, AdvoCare submitted evidence showing that:

(1) nine months before the petition was filed, Gwin notified AdvoCare that Kamel accused her of sending the racist text message;
(2) Gwin denied sending it, and AdvoCare immediately initiated an investigation;
(3) AdvoCare asked both parties to submit their cell phones to a forensic examiner;
(4) Gwin agreed to have her phone examined; Kamel did not;
(5) the examination of Gwin's cell phone and cell phone records showed that the racist text message was not sent from her cell phone.

         Appellants' response to the motion for sanctions was largely a laundry list of allegations against AdvoCare that did not address the arguments raised in the motion and instead related to the merits of the claims asserted in their petition. As support, appellants attached the declarations of Kamel and Masterson. Kamel's declaration traced the history of his dispute with AdvoCare concerning his distributorship agreement and the events surrounding his receipt of the "vicious racist text." Masterson's declaration stated that he interviewed Kamel and Moussa and reviewed their documents. He said he believed their claims were meritorious based on their statements, their documents, and his "prior experience with AdvoCare and familiarity with their business practices."

         The trial court held an evidentiary hearing. Four witnesses testified. Gwin testified that she did not send the racist text message from any device. Lance Stokes, the expert who performed the forensic examination of Gwin's phone, testified that he did not find the racist text message among "both deleted and active messaging" on Gwin's phone. AdvoCare also introduced several exhibits to support its motion.

         Kamel also testified. He said he was of Egyptian heritage and that he received the racist text message but did not spoof the message. During cross-examination, AdvoCare's counsel asked Kamel about the whereabouts of the phone that he was using when he received the racist text message, and Kamel responded that "[t]he phone was broke [sic] on vacation" and he had to get a new phone. AdvoCare's counsel also asked Kamel about the "100 percent [sic] proof" Kamel stated he had showing Gwin sent the ...


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