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Cook v. Simmons

Court of Appeals of Texas, Fifth District, Dallas

November 12, 2019


          On Appeal from the 417th Judicial District Court Collin County, Texas Trial Court Cause No. 417-02850-2018

          Before Justices Myers, Osborne, and Nowell



         Appellee Ronald Simmons sued appellant Byron Curtis Cook alleging securities fraud. The trial court denied Cook's motion to dismiss under the Texas Citizens Participation Act. Tex. Civ. Prac. & Rem. Code §§ 27.001-27.011 ("TCPA").[1] Because Simmons's legal action is not factually predicated on Cook's protected activity, we affirm the trial court's order.


         In 2013, Simmons invested $74, 000 in Cypress Income Fund, L.L.C. ("CIF"). In 2018, he brought suit against Cook, CIF, and Legacy Income Properties, L.L.C. ("Legacy"), alleging claims for fraud, breach of fiduciary duty, and violations of the Texas Securities Act in connection with his investment. He alleged that Cook was jointly and severally liable with Legacy and CIF "because of his direct control of Legacy or CIF as the issuer or offeror or because of his material aid to Defendants Legacy or CIF with intent to deceive or defraud or with reckless disregard for the truth or the law." Simmons's operative petition added allegations that Cook was the alter ego of Legacy and CIF.

         Cook filed a TCPA motion to dismiss Simmons's claims. He argued that Simmons filed suit "in bad faith at the behest of his friend Ken Paxton as part of an intimidation and disparagement campaign" against Cook, in "retaliation for Cook's cooperation and participation in the criminal investigation and prosecution of Paxton for securities fraud." Texas Attorney General Paxton had solicited Cook's investment in Servergy, Inc. (an entity that is not a party to this case), and the Texas Rangers interviewed Cook in connection with an investigation of Paxton and Servergy. Paxton was subsequently indicted on charges including securities fraud in connection with the solicitation, and the Securities and Exchange Commission filed a civil action against him. Cook argued that in cooperating with law enforcement's investigation, he was exercising protected speech rights, so that Simmons's suit "relates to or is in response to" Cook's exercise of the right of free speech. He also contended that his statements to law enforcement "regarding possible criminal activity" were an exercise of his right to petition. Cook also argued that Simmons could not show clear and specific evidence to support his prima facie case, and that in any event Simmons's claims were barred by limitations.

         The trial court permitted limited discovery at the parties' request. After a hearing, the trial court denied Cook's motion to dismiss. This appeal followed. In three issues, Cook argues that the TCPA applies, Simmons failed to establish a prima facie case on each element of his claims by clear and specific evidence, and Simmons's claim for securities fraud was barred by limitations.

         Standards of Review

         We review de novo the trial court's ruling on a motion to dismiss under the TCPA. Dyer v. Medoc Health Servs., 573 S.W.3d 418, 424 (Tex. App.-Dallas 2019, pet. denied). "In conducting this review, we consider, in the light most favorable to the non-movant, the pleadings and any supporting and opposing affidavits stating the facts on which the claim or defense is based." Fishman v. C.O.D. Capital Corp., No. 05-16-00581-CV, 2017 WL 3033314, at *5 (Tex. App.-Dallas July 18, 2017, no pet.) (mem. op.); see also TCPA § 27.006(a). Whether the TCPA applies to Simmons's claims is an issue of statutory interpretation that we also review de novo. Dyer, 573 S.W.3d at 424.


         In Riggs & Ray, P.C. v. State Fair of Texas, this Court explained:

In order to trigger the TCPA's protection, the legal action must be factually predicated on the alleged conduct that falls within the scope of the TCPA's definition of the right of free speech, petition, or association. If this nexus is missing, then the statute does not apply.

No. 05-17-00973-CV, 2019 WL 4200009, at *4 (Tex. App.-Dallas Sept. 5, 2019, no pet. h.) (mem. op.) (internal quotations and emphasis omitted). In his first issue ("Does the [TCPA] apply to bar a meritless lawsuit brought in retaliation for a defendant's cooperation in a criminal investigation and prosecution, even when the plaintiff's pleadings do not specifically reference the defendant's participation in the criminal proceedings?"), Cook acknowledges that Simmons's petition says nothing about the criminal investigation. But Cook explained in his motion to dismiss that "this suit seeks ...

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