United States District Court, S.D. Texas, Houston Division
WILLIAM O'KANE, SYNERGY SOURCE, LLC, and AZKARTA CREST CORPORATION., Plaintiffs,
VERLEY SEMBRITZKY, JR., a/k/a ROCKY SEMBRITZKY, et al., Defendants.
MEMORANDUM AND ORDER
ROSENTHAL, CHIEF UNITED STATES DISTRICT JUDGE
O'Kane, Synergy Source, LLC, and Azkarta Crest
Corporation have moved for partial summary judgment against
Malcolm Morris, as trustee of the Malcolm Morris Roth IRA,
and Quest IRA Inc., as trustee of the Carolyn Mene Roth IRA.
The plaintiffs seek a declaratory judgment that the
plaintiffs have a superior interest to the trustees in a
condominium at 2727 Kirby Drive in Houston. (Docket Entry No.
103). The trustees responded, and the plaintiffs replied.
(Docket Entry Nos. 106, 109).
on the motion, response, and reply; the record evidence; and
the applicable law, the court denies the plaintiffs'
motion for partial summary judgment. (Docket Entry No. 103).
The reasons for this ruling are detailed below.
plaintiffs allege that in late 2015, Verley Sembritzky gave
O'Kane, Synergy, and Azkarta each a Regulation D, Rule
506 Private Placement Letter. (Docket Entry No. 38 at
¶¶ 20- 21). The Letters stated that Sembritzky was
authorized to sell 1, 000 shares of Rasli Bahari Kenya
Limited stock for $175.5 million. (Id. at ¶
22). This common stock sold at $175, 500 per share.
(Id.). The Letters represented that Sembritzky was
Rasli Bahari's founder and managing director.
(Id.). The Letters stated the money would be used to
design, build, and operate the first of two Kenyan
desalination plants and predicted that the plants would earn
hundreds of millions of dollars starting in 2019.
(Id. at ¶¶ 23-24).
Synergy, and Azkarta invested in Rasli Bahari that year.
(Id. at ¶¶ 35, 39, 47). Sembritzky told
the plaintiffs to wire their payments to a bank account at
BBVA Compass Bank in Houston under the name “Bounty of
the Ocean, ” purportedly Rasli Bahari's American
agent. (Id. at ¶¶ 33, 42, 50). O'Kane
invested $877, 500, Synergy invested $351, 000, and Azkarta
invested $175, 500. (Id. at ¶¶ 34, 43,
plaintiffs allege that Sembritzky transferred these funds to
other Compass accounts, eventually transferring the money to
his and his ex-wife's personal accounts. Sembritzky
allegedly used that money to purchase a luxury condominium
located at 2727 Kirby Drive in Houston (the “Kirby
Condominium”). (Id. at ¶¶ 36-38,
44-46, 52-54). According to the plaintiffs, Rasli Bahari has
never attempted to build or operate any desalination plant,
harvested any minerals, produced any fresh water, or engaged
in operations or charitable donations. The plaintiffs also
alleged that they never received any financial statements or
proof of stock purchase. (Id. at ¶¶
plaintiffs assert 26 counts against Sembritzky and other
defendants, including for conversion; breach of fiduciary
duty; aiding and abetting breach of fiduciary duty;
defalcation; embezzlement; constructive trust; accounting;
fraud; fraudulent conveyance and transfer; unjust enrichment;
and federal securities violations. (Id. at
¶¶ 72-102). The plaintiffs also seek a declaratory
judgment against Morris and Quest IRA Inc. that the
plaintiffs' “right, title or interest in the Kirby
Condominium is superior to and has priority over any right,
title or interest that any [IRA] Defendant might have or
claim in the Kirby Condominium.” (Id. at 37,
¶ 9). After discovery, the plaintiffs filed this partial
summary judgment motion.
The Legal Standard
judgment is required when ‘the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.'”
Trent v. Wade, 776 F.3d 368, 376 (5th Cir. 2015)
(quoting Fed.R.Civ.P. 56(a)). “A genuine dispute of
material fact exists when the ‘evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.'” Nola Spice Designs, LLC v. Haydel
Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015)
(quoting Anderson v. Liberty Lobby, 477 U.S. 242,
248 (1986)). “The moving party ‘bears the initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a
genuine issue of material fact.'” Id.
(quoting EEOC v. LHC Grp., Inc., 773 F.3d 688, 694
(5th Cir. 2014)); see also Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986).
the non-movant bears the burden of proof at trial, the movant
may merely point to the absence of evidence and thereby shift
to the non-movant the burden of demonstrating by competent
summary judgment proof that there is an issue of material
fact warranting trial.” Id. (quotation marks
omitted); see also Celotex, 477 U.S. at 325.
Although the party moving for summary judgment must
demonstrate the absence of a genuine issue of material fact,
it does not need to negate the elements of the
nonmovant's case. Boudreaux v. Swift Transp.
Co., 402 F.3d 536, 540 (5th Cir. 2005). “A fact is
‘material' if its resolution in favor of one party
might affect the outcome of the lawsuit under governing
law.” Sossamon v. Lone Star State of Tex., 560
F.3d 316, 326 (5th Cir. 2009) (quotation omitted). “If
the moving party fails to meet [its] initial burden, the
motion [for summary judgment] must be denied, regardless of
the nonmovant's response.” United States v.
$92, 203.00 in U.S. Currency, 537 F.3d 504, 507 (5th
Cir. 2008) (quoting Little v. Liquid Air Corp., 37
F.3d 1069, 1075 (5th Cir. 1994) (en banc)).
the moving party [meets her or his initial burden], the
non-moving party must ‘go beyond the pleadings and by
her [or his] own affidavits, or by the depositions, answers
to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for
trial.'” Nola Spice, 783 F.3d at 536
(quoting LHC Grp., 773 F.3d at 694). The nonmovant
must identify specific evidence in the record and articulate
how that evidence supports that party's claim.
Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir.
2007). “This burden will not be satisfied by
‘some metaphysical doubt as to the material facts, by
conclusory allegations, by unsubstantiated assertions, or by
only a scintilla of evidence.'” Boudreaux,
402 F.3d at 540 (quoting Little, 37 F.3d at 1075).
In deciding a summary judgment motion, the court draws all
reasonable inferences in the light most favorable to the
nonmoving party. Connors v. Graves, 538 F.3d 373,
376 (5th Cir. 2008); see also Nola Spice, 783 F.3d
plaintiffs argue that they have an interest in the Kirby
Condominium because Sembritzky purchased the condominium with
the plaintiffs' subscription payments. (Docket Entry No.
103 at 4). They incorporate by reference the declarations of
O'Kane and Matthew Huffine, a member of Synergy Source,
discussing bank records showing transfers from the Bounty of
the Ocean bank account to Sembritzky's personal Compass
account and to the Compass account of Sembritzky's
ex-wife, Goldie Rose. (Id. at 5-6 (citing Docket
Entry No. 5-1; Docket Entry No. 102-1)). They argue that
these declarations and the bank accounts referenced to show
that their funds were used to purchase the Kirby Condominium.
(Id. at 6). Based on these transfers and the
purchase of the Kirby Condominium, the plaintiffs argue that
they have proven both fraud and fraudulent transfer, giving
them an interest in the Kirby Condominium. (Id. at
6-8). Because Morris and Quest have “each admitted they
have no right, title or interest in the Kirby Condominium,