Court of Appeals of Texas, Fifth District, Dallas
H. JONATHAN COOKE, INDIVIDUALLY AND ON BEHALF OF ESCROW PARTNERS DALLAS, L.P.; ESCROW PARTNERS DALLAS, GP, INC.; ESCROW PARTNERS HOUSTON, L.P.; ESCROW PARTNERS HOUSTON, GP, INC.; ESCROW PARTNERS AUSTIN, L.P.; ESCROW PARTNERS AUSTIN, GP, INC.; ESCROW PARTNERS SAN ANTONIO, L.P.; ESCROW PARTNERS SAN ANTONIO, GP, INC.; TITLE PARTNERS, L.L.P.; NORTH AMERICAN MANAGEMENT, L.L.P.; TJ PARTNERS I, LLC; AND TJ PARTNERS II, LLC, Appellants
ROBERT C. KARLSENG; KARLSENG LAW FIRM, P.C.; ASHLEY BRIGHAM PATTEN; PATTEN & KARLSENG LAW FIRM, P.C.; JACQUES YVES LEBLANC; AND LEBLANC, PATTEN AND KARLSENG LAW FIRM, P.C., Appellees AND ROBERT C. KARLSENG; KARLSENG LAW FIRM, P.C.; ASHLEY BRIGHAM PATTEN; PATTEN & KARLSENG LAW FIRM, P.C.; JACQUES YVES LEBLANC; AND LEBLANC, PATTEN AND KARLSENG LAW FIRM, P.C., Cross-Appellants
H. JONATHAN COOKE, INDIVIDUALLY AND ON BEHALF OF ESCROW PARTNERS DALLAS, L.P.; ESCROW PARTNERS DALLAS, GP, INC.; ESCROW PARTNERS HOUSTON, L.P.; ESCROW PARTNERS HOUSTON, GP, INC.; ESCROW PARTNERS AUSTIN, L.P.; ESCROW PARTNERS AUSTIN, GP, INC.; ESCROW PARTNERS SAN ANTONIO, L.P.; ESCROW PARTNERS SAN ANTONIO, GP, INC.; TITLE PARTNERS, L.L.P.; NORTH AMERICAN MANAGEMENT, L.L.P.; TJ PARTNERS I, LLC; AND TJ PARTNERS II, LLC, Cross-Appellees
Appeal from the 193rd Judicial District Court Dallas County,
Texas Trial Court Cause No. DC-06-02783-L
Justices Brown, Schenck, and Pedersen, III
PEDERSEN, III JUSTICE
a permissive interlocutory appeal of the trial court's
February 6, 2018 Second Amended Order Granting
Defendants' Motion for Summary Judgment on
Defendants' Illegality and Business Judgment Rule
Defenses and Amended Order on Defendants' Plea to the
Jurisdiction and Traditional Motion for Partial Summary
Judgment Related to the Business Entities' Claims (the
Order). See Tex. Civ. Prac. & Rem. Code Ann.
§ 51.014(d). The trial court granted the parties'
agreed motion for this appeal, concluding that the Order
"involves controlling questions of law about which there
is a substantial ground for difference of opinion,"
id. § 51.014(d)(1), and that an immediate
interlocutory appeal "may materially advance the
ultimate termination of the litigation," id.
§ 51.014(d)(2). Those controlling questions take the
form of four issues. Appellantscontend the trial court
erroneously granted summary judgment in favor of the
cross-appellants on two affirmative defenses: illegality and
the business judgment rule. Cross-appellants argue the trial
court erroneously denied their plea to the jurisdiction and
denied their summary judgment motion on a third affirmative
defense, limitations. We reverse the trial court's Order
in part, and we dismiss appellants' claims that are
subject to this appeal.
1999, Cooke and Karlseng went into business together to
provide title closing services to lenders and real estate
companies. Cooke and Karlseng formed a partnership, Title
Partners, L.L.P, each with a fifty-percent ownership
interest, to supervise the day-to-day management of the
business. Karlseng is a licensed attorney and became a
licensed escrow agent; Cooke, who is not an attorney, handled
marketing duties. Over the next five years, Cooke and
Karlseng expanded their business operations to several Texas
cities and formed other partnerships with attorneys Ashley
Brigham Patten and Jacques Yves LeBlanc. The partners split
profits according to the terms of the partnership agreements.
and 2005, the Texas Department of Insurance (TDI) conducted
an investigation of the partnerships to determine whether a
licensed attorney was supervising the work of certain
employees who were closing real estate transactions. Although
appellants' counsel advised that the business
relationship was legal, he also suggested that switching to a
law firm structure could expedite a resolution with TDI.
Thereafter, Karlseng, Patten, and LeBlanc created the
defendant law firms and transferred partnership assets and
business to the new firms without paying Cooke or observing
the requirements of the partnership agreements when
transferring these assets. The parties disputed whether Cooke
was consulted on this change. The parties unsuccessfully
attempted to negotiate a settlement to compensate Cooke
either through a buyout or employment/consulting contract.
Cooke claimed he was then fired, but appellants asserted he
March 2006, Cooke filed a lawsuit alleging appellants
tortiously transferred partnership assets to new professional
corporations, owned solely by the individual appellants, and
falsely told Cooke that the partnerships needed to shut down
due to certain state regulations. The partnership agreements
provided for arbitration, and appellants filed a motion to
compel arbitration. The trial court granted the motion and
ordered the parties to arbitration.
contested arbitration hearing was held in December 2007. The
arbitrator ruled in Cooke's favor and awarded him more
than $22 million. The trial court affirmed the arbitration
order, but this Court vacated the award and remanded the
cases for further proceedings. Karlseng v. Cooke,
346 S.W.3d 85, 100 (Tex. App.-Dallas 2011, no pet.).
subsequent years, the case has been litigated in depth.
Claims and defenses have been added, and a number of legal
theories have been raised in response. This permissive appeal
turns on four of those theories.
Cross-appellants moved for summary judgment contending that
Cooke's claims were barred because the partnership
agreements structuring the operations of the Business
Entities called for Cooke to share in the profits of the
enterprise. According to title insurance law and regulations,
sharing profits with a party not licensed as an escrow agent
or an attorney is illegal. The trial court granted the
motion. In their first issue, appellants challenge that
Cross-appellants also moved for summary judgment arguing that
Cooke's claims were barred because the
attorney-partners' decision to move the illegal operation
to one operating legally within law firms was protected by
the Business Judgment Rule. The trial court granted this
motion as well. Appellants' second issue challenges that
Cross-appellants filed special exceptions and a plea to the
jurisdiction arguing that all claims within Cooke's
Second Amended Petition, which were pleaded as his own
individual claims, belonged to the Business Entities. Thus,
they contended, Cooke lacked standing to bring the claims.
The trial court granted the special exceptions and allowed
Cooke to replead. His Third Amended Petition added the twelve
Business Entities as plaintiffs and-for each of Cooke's
pleaded claims-stated that the claim was now being brought
individually and derivatively on behalf of the Business
Entities. Cross-appellants filed a second plea to the
jurisdiction, again arguing that Cooke lacked standing to
pursue his individual claims. The trial court denied this
second plea, and that ruling underlies cross-appellants'
Cross-appellants moved for summary judgment arguing that all
of the Business Entities' claims were barred by their
respective statutes of limitation. The trial court denied this
motion; cross-appellants' second issue challenges that
some time, the parties agreed to request this permissive
appeal, and the trial court granted their motion. Following
jurisdictional briefing, this Court concluded that it had
jurisdiction to hear the appeal.
begin with cross-appellants' issues because the plea to
the jurisdiction addresses the threshold issue of standing
and the limitations issue addresses which parties are
properly before the trial court.
the Jurisdiction on Standing
plea to the jurisdiction challenges the court's authority
to decide a case." Heckman v. Williamson
County, 369 S.W.3d 137, 149 (Tex. 2012).
Cross-appellants' specific challenge was to Cooke's
standing, which is a question of law that we review de novo.
Id. at 150. Standing is a constitutional
prerequisite to suit, and a court has no jurisdiction over a
claim made by a plaintiff who lacks standing to assert it.
Id. A party's standing to sue is not presumed;
it must be proved. Linegar v. DLA Piper LLP (US),
495 S.W.3d 276, ...