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CAUSE NO. 2016 54111
WASSER LOGISTICS HOLDINGS, IN THE DISTRICT COURT OF
§
Plaintiff, §
§
MARTIN KROESCHE, §
INDIVIDUALLY AND §
DERIVATIVELY ON BEHALF OF §
WASSAR LOGISTICS HOLDINGS, §
LLC, § HARRIS COUNTY, TEXAS
Defendant/Third Party Plaintiff §
§
And §
§
STEVE SCHONEFELD, §
INDIVIDUALLY AND §
DERIVATIVELY ON BEHALF OF §
WASSAR LOGISTICSHOLDINGS, §
§
Intervenor/Third Party Plaintiff §
§
§
§ JUDICIAL DISTRICT
PETER SHAPER, COURTLAND §
LOEFFLER, GLENN MASSEY,
GEORGE DEMPSEY, GENESID
PARK, JRBS ENTERPRISES, LTD.,
and GRISHAM CAPITAL, LLC
Third Party Defendants
RESPONSE TO KROESCHE’S, SCHONEFELD’S, AND WASSAR LOGISTICS,
INC.’SMOTION TO REFORM, CORRECT, OR MODIFY
THE AMENDED FINAL DECLARATORY JUDGMENT
COMES NOW, Wassar Logistics Holdings, LLC (Wassar Holdings), Plaintiff, and files
this, its Response to Martin Kroesche, Steve Schonefeld and Wassar Logistics Inc.’s
(collectively, Kroesche et al’s) Motion to Reform, Correct, or Modify the Amended Final
Declaratory Judgment, and in support of same would show this Court the following:
OVERVIEW
Despite years of protracted litigation centered on Kroesche et al s claim they were (1)
udulently induced into business with Wassar Holdings ird Party Defendants and 2) Wassar
Holdings was attempting to underpay them for the value of their class B shares, Kroesche et al
presented an entirely new theory of recovery at trial. For the first time, they claimed to be suing
to enforce a promissory note tendered to them pre litigation in exchange for execution of an
assignment of their interest in Wassar Holdings back to Wassar Holdings. This Court rightfully
rejected the assertion that Kroesche et al ever xecuted the assignment or accepted the
promissory note as such claim was completely different from what Kroesche et al had previously
argued and pledFor the same reasons, t Court should deny the pending Motion to Reform,
Correct, or Modify the Amended Final Declaratory Judgment (Motion to Reform) that is
predicated on the same unsupported, unpled theory. This Court should also deny Kroesche et
request to lower the post judgment interest rate stated in the Amended F nal Declaratory
Judgment because the correct contract rate is 18%
ARGUMENT & AUTHORITIE
Neither pleadings nor facts support the request for recovery on the Kroesche
Note.
The numerous documents that formed the business relationship made the basis of this
lawsuit were all signed and dated in early February 2016. These documents are collectively
referred to by the parties as the “Wassar contracts.” Among other things, the Wassar contracts
formed Wassar Holdings where Martin Kroesche once served as the President, Secretary and
Treasurer
Kroesche’s employment did not last long on his termination from Wassar Holdings
July 19, 2016, Wassar Holdings attempted to exercise its right to repurchase Kroesche’s Class
B Shares under Section 12.4 of the Company Agreement.Kroesche was offered
which was recorded promissory note signed by Peter Shaper on August 23, 2016, as Vice
President of Wassar Holdings. Kroesche disputed the proposed valuation of his shares and, as a
result, did not accept or return a signed copy of the proposed note, instead filing this lawsuit
ing in excess of 1 mill ion in damag In fact, more than a year after filing the instant
lawsuit and well after Kroesche s alleged signing of the Kroesche Note in response to
interrogatories, Martin Kroesche alleged his Class B shares were worth 5 million. Exhibit C
At the time of trial, Kroesche’s Twelfth Amended Petition (filed July 17, 2018) provided
in relevant partabout the initial formation of the parties’ business relationship
19. Shaper, Dempsey, Massey, Loeffler, Genesis, JRBS, Grisham, and Wassar
Holdings (“Plaintiff and Third Party Defendants”) presented Kroesche,
Schonefeld, and Wassar Inc. with documents and proposed instruments which
purported to effect (1) the acquisition of Flo Trend assets, (2) the organization of
Wassar Holdings, and (3) related matters, including but not limited to all company
agreements, leases, promissory notes, and amendments thereto (“Wassar
Contracts”), all of which constituted a single transaction. Plaintiff and Third
Party Defendants then changed material terms in the Wassar Contracts without
showing the changes to Kroesche, Schonefeld, or Wassar Inc., and then they
induced Kroesche, Schonefeld, and Wassar Inc. to sign signature pages to the
Wassar Contracts without knowledge of the material changes.
20. Kroesche, Schonefeld, and Wassar Inc. would not have signed any of the
Wassar Contracts or paid any money or contributed any property to Plaintiff or
Third Party Defendants if they had known about the undisclosed material changes
that Plaintiff and Third Party Defendants had made to the Wassar Contracts.
n the portion of the Twelfth Amended Petition entitled “Causes of action,” Kroesche detailed
his numerous claims for fraud and fraudulent inducement by misrepresentation, fraud and
fraudulent inducement by non disclosure, declaratory judgment, breach of fiduciary duty,
Kroesche et al refer to the August 2016 promissory note as the Kroesche Note in their Motion to Reform.
Kroesche says he signed the Kroesche Note on November 17, 2016, Exhibit D, but the interrogatory
response in which he alleged his shares were worth $5 million was served on or about November 10, 2017
most a year later.Exhibit C.
knowing participation in another’s breach of fiduciary duty, breach of contract, mistake,
quantum meruit, defamation, theft/unjust enrichment, suit to enforce 11.402 11.404, and .502
of the Texas Business Organizations Code and contribution and indemnity against Glenn
Massey. None of these causes of action “seek[s] to recover on a promissory note” as Kroesche
claimed at trial and in his Motion to Reform
In support of their pending Motion to Reform Kroesche et al disingenuously truncate
of their Twelfth Amended Petition to make it appear they gave fair notice of suit on a
promissory noteSpecifically, they claim in the Motion to Reform
Kroesche filed suit seeking to recover on a promissory note from Wassar
Logistics Holdings, LLC (the “Kroesche Note”). He pled this claim in his July
17, 2018 Twelfth Amended Petition as follows:
19. …Wassar Holdings…presented Kroesche…with
documents…including but not limited to all company agreements, leases,
promissory notes, and amendments thereto (“Wassar Contracts”).
54. …Plaintiff and Third Party Defendants materially breached [the
Company Agreement] and all the Wassar Contracts
(Mo. Reform at 2). The full text of ¶ is quoted abo and clearly reveals the promissory
notes referenced therein were those ecuted in February 2016 in connection with the formation
of the parties business relationship, not the promissory note (the Kroesche Note offered in
August 2016 back Kroesche et al s shares.
Both during trial and after trial concluded, Wassar Holding objected to Kroesche et al
efforts to collect on the August 2016 promissory note because (1) it was neve accepted by
Kroesche et al, and (2) Wassar Holdings ever pled suit on a promissory note. For examp le,
counsel for Wassar Holdings explained to the Court at trial
The decision was made by Wassar Holdings to return to Mr. Kroesche in
e form of a promissory note, his original investment of $166,000. That's the
promissory note that's now being sued on today.By the way, there's nothing in
the petition suing on that note. That first came up with the amended findings of
fact or the findings of fact and conclusions of law. There's nothing in the
lawsuit, the 12th amended petition filed who knows h many months ago,
making a claim for breach of a promissory note But what happened was the note
was tendered to Mr. Kroesche along with a e usual documentation to return
his membership interest, and Mr. Kroesche, instead of accepting the note and
turning his interest, essentially used that offer as birdcage liner, and instead
hired a lawyer and made a counterdemand for a million five. And then we got into
this lawsuit and as you may remember from some of th motions
THE COURT: I have a question and I'm going to interrupt. So is the
assertion going to be from your side that you gave him a $166,000 promissory
note in exchange for him tendering his membership interest in the entity and he
did not accept it?
MR. MCKINNEY: Correct. He rejected it. was offered. There was no
acceptance. There was a rejection. And the rejection can be is embodied in the
letter that we're going to put into evidence from Mr. the lawyer up in Paul
Anderson. It'sembodied in the interrogatory answer that Mr. Kroesche and Mr.
Schonefeld both said, both gave in which they said that the value of their member
of theirmembership was $5 million or something of that nature. It's it's
know, up until the last couple o days, actually since the summary judgmen
ruling, these gentleman have been looking for hundreds of thousands of dollars,
millions of dollars.Now, they want to be paid on the note that they were given
two years ago, and like I said, they used i to house train a puppy. So, you know,
it's okay to reject an offer, which they did, but you can't reject an offer and then
come back and sue and say you had a completed contract. So we think that case is
meritless, withoutmerit, top, side, and bottom.
(See Ex. A at 26 28). Wassar Holdings argued similarly in its Post Trial Brief Re: Martin
Kroesche’s Promissory Note Claim
Of course, it is notoriously known that Kroesche never, ever, in any way, shape or
form, accepted the note as a resolution of his separation from Holdings, and in
fact, he sued Holdings claiming to be the rightful owner. Every pleading,
declaration or other representation by Kroesche or on his behalf by Mr. Kirklin
has been completely inconsistent with this position. Leaving all of that aside
Kroesche’s own pleadings belie his 11th hour change in positionEverything in
the world appears in his 12 Amended Petition but not the only claim he actually
asserted at trial. This Court is the trier of fact and is in no way obliged to accept
any part o this last minute, facially absurd and co ntrived change of position.
Post Trial Briefat 1 3).
Failure to accept Wassar Holdings proposed buy back and failure to plead suit on a
promissory note are fatal to Kroesche et al s suit on the August 2016 romissory note (the
Kroesche Note Kroesche et al s request to reform, correct, and/or modify the Amended Final
Declaratory Judgment o award Kroesche all amounts due and owing to him under the Kroesche
Note should therefore be denied.
The law requires fair notice.
ccording to Texas Rule of Civil Procedure 47 “An original pleading which sets forth a
claim for relief … shall contain: (a) a short statement of the cause of action sufficient to give fair
notice of the claim involved. Tex. R . Civ. Proc. 47. According to the Supreme Court,
petition is sufficient if it gives fair and adequate notice of the facts upon which the pleader bases
his claim. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex.2000) The
purpose of this rule is to provide the defendant with sufficient information to allow him to
prepare a defense. . A reviewing court should liberally construe the plaintiff's petition to assert
any claim that could reasonably be inferred from the specific language in the petition.
Maswoswe v. Nelson7 S.W.3d 889, 89394 (Tex. App.Beaumont 2010, no pet.) (citing
Moneyhon v. Moneyhon, 278 S.W.3d 874, 878 (Tex.App. Houston [14th Dist.] 2009, no pet.)).
However, “a reviewing court cannot use a liberal construction of the petition as a license to read
to the petition aclaim that it does not contain.” .; see also TEX.R. CIV. P. 47.
Texas Rule of Civil Procedure 301 is in accord: “The judgment of the court shall
conform to the pleadings...”TEX.R. CIV. P. 301. Because [a] court's jurisdiction to render
judgment is invoked by the pleadings, [] a judgment unsupported by pleadings is void.” In re
S.A.A., 279 S.W.3d 853, 856 (Tex. App. Dallas 2009, no pet.). Stated differently “A plaintiff
may not be granted a favorable judgment on an unpled cause of action, absent trial by consent.”
Marrs & Smith P'ship v. D.K. Boyd Oil & Gas Co., 223 S.W.3d 1, 18 (Tex.App. El Paso 2005,
pet. denied)See also Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 779 (Tex.
App. Houston [1st Dist.] 2009, pet. denied) (“A trial court cannot enter judgment on a theory of
recovery not sufficiently set forth in the pleadings or otherwise tried by consent.”); Huddleston v.
Pace, 790 S.W.2d 47, 50 (Tex. App. San Antonio 1990, writ denied) (“A party must recover on
the right in which he sues and upon proof of the facts stated in his pleadings, and he cannot
recover through a right not asserted.”)“Absent trial by consent, judgment on an unple d action is
void. In re S.A.A.9 S.W.3d 853, 856 (Tex. App.Dallas 2009, no pet.)
Whether an issue is tried by consent is a legal conclusion by the trial courtCompass
Bank v. MFP Fin. Services, Inc., 152 S.W.3d 844, 854 (Tex. App.Dallas 2005, pet. denied)
lthough a court discretion in determining whether an unpleaded issue was tried by consent is
to be exercised liberally, trial by implied consent is the exception, not the rule, and should not be
allowed in doubtful cases. at 855.To determine whether an unpleaded issue w as tried by
consent, the trial court examines the record not for evidence of the issue, but rather for evidence
of trial of the issue. . at 854 When evidence relevant to both a pleaded and an unpleaded
issue has been admitted without objection, the doctrine of trial by consent should not be applied
unless clearly warranted at 854, because [t]he doctrine of trial by consent does not apply
when the evidence of an unpleaded matter is relevant to the pleaded issues because it would not
be calculated to elicit an objection.” Bos v. Smith, 556 S.W.3d 293, 307 (Tex. 2018)
As stated above, counsel for Wassar Holdings’ objected to Kroesche’s last minute change
of position n an unpled c ause of action. His objections were timely, clear and consistent.
Kroesche et al s suit on the August 2016 promissory note was therefore not tried by consent, and
their request to reform, correct, and/or modify the Amended Final Declaratory Judgment
award Kroesche all amounts due and owing to him under the Kroesche Note should be denied.
. The stated post judgment interest rate is correct.
Kroesche et al do not contest in their Motion to Reform that they breached he parties
vancing Promissory Note. Rather, they complain that the post judgment interest rate on the
amounts found due and owing should be 4.75% rather than 18% because (1) the amounts they
failed to pay should be offset against what Wassar Holdings owed under the parties Lea
Agreement, and (2) the 18% Default Rate under the Advancing Promissory Note is inapplicable
since there was no event ofdefault Kroesche et al are wrong on both accounts.
First, the Advancing Promissory Note specifically provides, ll amounts due under this
Note shall be payable without set off, counterclaim, or any other deduction whatsoever.
hibit A. Second, Kroesche et al never explain the basis of their request for a 4.75%
Revolving Loan Rate (whatever that is).Texas Finance Code Section sets the post
judgmentinterest rate for a judgment based on breach of contract. It provides:
§ 304.002. Judgment Interest Rate: Interest Rate or Time Price Differential
in Contract
A money judgment of a court of this state on a contract that provides for interest
or time price differential earns postjudgment interest at a rate equal to the lesser
of:
(1) the rate specified in the contract, which may be a variable rate; or
(2) 18 percent a year.
Tex. Fin. Code Ann. § 304.002
The Advancing Promissory Note contains two interest rates. An 18% rate for an Event of
Default, which Kroesche et al claim is inapplicable, and the “Maximum Rate” which is to be
“determined by reference to the indicated (weekly) rate ceiling (as defined and described in
Chapter 303 of the Finance Code, as amended) at the applicable time in effect. roesche et al
breached the Advancing Promissory Nte in November of 2017. According to the Texas Office
of Consumer Credit Commissioner, t weekly ceiling rate since November 2017 has been 18%.
Exhibit B. Therefore, regardless of whether the interest rate for an Event of Default or the
Maximum Rate prescribed by the Advancing Promissory Note is applied, the rate is 18%.
Further, if no rate was stated in the vancing Promissory Nte, Section 304.002(b) of the
Finance Code still prescribes an 18% rate. As a result, the 18% per annum rate prescribed by the
AmendedFinal Declaratory Judgment is correct.
Kroesche et al s catch all incorporation by reference argument is ineffective.
In closing their Motion to Reform, Kroesche et al stat
KS&W hereby incorporates by reference, restates, and reasserts all evidence and
arguments that they have offered, made, or asserted in trial or in post trial briefs
relevant section of the Finance Code hat explains computation of the weekly rate ceiling provides as follows:
§ 303.003. Computation of Weekly Ceiling
(a) The weekly ceiling is computed by:
(1) multiplying the auction rate by two; and
(2) rounding the result obtained under Subdivision (1) to the nearest one quarter of one percent.
(b) The weekly rate ceiling becomes effective on Monday of each week and remains in effect through the
following Sunday.
(c) In this subchapter, “auction rate” means the auction average rate quoted on a bank discount basis for 26
week treasury bills issued by the United States government, as published by the Federal Reserve Board,
for the week preceding the week in which the weekly rate ceiling is to take effect.
Tex. Fin. Code Ann. § 303.003
The Texas Credit Letter is published each Tuesday by the Office of Consumer Credit Commissioner and reports
rate ceilings for future weeks.On a quarterly basis (Feb, May, Aug, Nov), the rates are calculated by the Consumer
Credit Commissioner using the formulas found in the Texas Finance Code, and reported in the month end issue of
the Texas Credit Letter.See www.occc.tex.gov/publications/interest rates The maximum rate ceilings are filed
with the Texas Register in accordance with Texas Finance Code §303.011 and published in the Texas Credit Letter.
https://occc.texas.gov/publications/interest rates/historical interest rate summariesA court may take judicial notice
of interpretations issued by the consumer credit commissioner or information published in the Texas Register
regarding publication of rate ce lings.See Tex. Fin. Code Ann. § 303.012
or filings, and respectfully requests for the Court to reform, correct, and modify
the Amended Judgment accordingly.
It is unclear to what Kroesche et al re er, but this catch all is ineffective to preserve error because it
does not articulate clearly and plainly the relief requested from this court. See TEX. R. APP. P.
33.1(a) As a prerequisite to presenting a complaint for appellate review, the record must show
that:(1) the complaint was made to the trial court by a timely request, objection, or motion that: (A)
stated the grounds for the ruling that the complaining party sought from the trial court with
sufficient specificity to make the trial court aware of the complaint, unless the specific grounds were
apparent from the context;
PRAYER
For the reasons stated herein Wassar Logistics Holdings, LLC asks the Court to deny
Kroesche et al Motion to Reform, Correct, or Modify the Amended Final Declaratory
udgment
Respectfully submitted,
MCKINNEY TAYLOR P.C.
/s/ Andrew T. McKinney IV
Andrew T. McKinney
State Bar No. 13716800
mckinney@litchfieldcavo.com
Three Riverway, Suite
Houston, Texas 77056
Telephone: 713/487 1487
Facsimile: 713/487 1488
ATTORNEY FOR DEFENDANT,
WASSAR LOGISTICS HOLDINGS, LLC, ET
CERTIFICATE OF SERVICE
In accordance with Rules 21 and 21a the Texas Rules of Civil Procedure, a true
and correct copy of the above and foregoing instrument was served on all counsel of record
via the Court’s electronic filing/service system on this 3rd day of June
Paul S. Kirklin
The Kirklin Law Firm, P.C.
12600 N. Featherwood Dr., Suite 225
Houston, Texas 77034
/s/ Andrew T. McKinney IV
Andrew T. McKinney
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CAUSE NO. 2016 54111 WASSER LOGISTICS HOLDINGS, IN THE DISTRICT COURT OF § Plaintiff, § § MARTIN KROESCHE, § INDIVIDUALLY AND § DERIVATIVELY ON BEHALF OF § WASSAR LOGISTICS HOLDINGS, § LLC, § HARRIS COUNTY, TEXAS Defendant/Third Party Plaintiff § § And § § STEVE SCHONEFELD, § INDIVIDUALLY AND § DERIVATIVELY ON BEHALF OF § WASSAR LOGISTICSHOLDINGS, § § Intervenor/Third Party Plaintiff § § § § JUDICIAL DISTRICT PETER SHAPER, COURTLAND § LOEFFLER, GLENN MASSEY, GEORGE DEMPSEY, GENESID PARK, JRBS ENTERPRISES, LTD., and GRISHAM CAPITAL, LLC Third Party Defendants RESPONSE TO KROESCHE’S, SCHONEFELD’S, AND WASSAR LOGISTICS, INC.’SMOTION TO REFORM, CORRECT, OR MODIFY THE AMENDED FINAL DECLARATORY JUDGMENT COMES NOW, Wassar Logistics Holdings, LLC (Wassar Holdings), Plaintiff, and files this, its Response to Martin Kroesche, Steve Schonefeld and Wassar Logistics Inc.’s (collectively, Kroesche et al’s) Motion to Reform, Correct, or Modify the Amended Final Declaratory Judgment, and in support of same would show this Court the following: OVERVIEW Despite years of protracted litigation centered on Kroesche et al s claim they were (1) udulently induced into business with Wassar Holdings ird Party Defendants and 2) Wassar Holdings was attempting to underpay them for the value of their class B shares, Kroesche et al presented an entirely new theory of recovery at trial. For the first time, they claimed to be suing to enforce a promissory note tendered to them pre litigation in exchange for execution of an assignment of their interest in Wassar Holdings back to Wassar Holdings. This Court rightfully rejected the assertion that Kroesche et al ever xecuted the assignment or accepted the promissory note as such claim was completely different from what Kroesche et al had previously argued and pledFor the same reasons, t Court should deny the pending Motion to Reform, Correct, or Modify the Amended Final Declaratory Judgment (Motion to Reform) that is predicated on the same unsupported, unpled theory. This Court should also deny Kroesche et request to lower the post judgment interest rate stated in the Amended F nal Declaratory Judgment because the correct contract rate is 18% ARGUMENT & AUTHORITIE Neither pleadings nor facts support the request for recovery on the Kroesche Note. The numerous documents that formed the business relationship made the basis of this lawsuit were all signed and dated in early February 2016. These documents are collectively referred to by the parties as the “Wassar contracts.” Among other things, the Wassar contracts formed Wassar Holdings where Martin Kroesche once served as the President, Secretary and Treasurer Kroesche’s employment did not last long on his termination from Wassar Holdings July 19, 2016, Wassar Holdings attempted to exercise its right to repurchase Kroesche’s Class B Shares under Section 12.4 of the Company Agreement.Kroesche was offered which was recorded promissory note signed by Peter Shaper on August 23, 2016, as Vice President of Wassar Holdings. Kroesche disputed the proposed valuation of his shares and, as a result, did not accept or return a signed copy of the proposed note, instead filing this lawsuit ing in excess of 1 mill ion in damag In fact, more than a year after filing the instant lawsuit and well after Kroesche s alleged signing of the Kroesche Note in response to interrogatories, Martin Kroesche alleged his Class B shares were worth 5 million. Exhibit C At the time of trial, Kroesche’s Twelfth Amended Petition (filed July 17, 2018) provided in relevant partabout the initial formation of the parties’ business relationship 19. Shaper, Dempsey, Massey, Loeffler, Genesis, JRBS, Grisham, and Wassar Holdings (“Plaintiff and Third Party Defendants”) presented Kroesche, Schonefeld, and Wassar Inc. with documents and proposed instruments which purported to effect (1) the acquisition of Flo Trend assets, (2) the organization of Wassar Holdings, and (3) related matters, including but not limited to all company agreements, leases, promissory notes, and amendments thereto (“Wassar Contracts”), all of which constituted a single transaction. Plaintiff and Third Party Defendants then changed material terms in the Wassar Contracts without showing the changes to Kroesche, Schonefeld, or Wassar Inc., and then they induced Kroesche, Schonefeld, and Wassar Inc. to sign signature pages to the Wassar Contracts without knowledge of the material changes. 20. Kroesche, Schonefeld, and Wassar Inc. would not have signed any of the Wassar Contracts or paid any money or contributed any property to Plaintiff or Third Party Defendants if they had known about the undisclosed material changes that Plaintiff and Third Party Defendants had made to the Wassar Contracts. n the portion of the Twelfth Amended Petition entitled “Causes of action,” Kroesche detailed his numerous claims for fraud and fraudulent inducement by misrepresentation, fraud and fraudulent inducement by non disclosure, declaratory judgment, breach of fiduciary duty, Kroesche et al refer to the August 2016 promissory note as the Kroesche Note in their Motion to Reform. Kroesche says he signed the Kroesche Note on November 17, 2016, Exhibit D, but the interrogatory response in which he alleged his shares were worth $5 million was served on or about November 10, 2017 most a year later.Exhibit C. knowing participation in another’s breach of fiduciary duty, breach of contract, mistake, quantum meruit, defamation, theft/unjust enrichment, suit to enforce 11.402 11.404, and .502 of the Texas Business Organizations Code and contribution and indemnity against Glenn Massey. None of these causes of action “seek[s] to recover on a promissory note” as Kroesche claimed at trial and in his Motion to Reform In support of their pending Motion to Reform Kroesche et al disingenuously truncate of their Twelfth Amended Petition to make it appear they gave fair notice of suit on a promissory noteSpecifically, they claim in the Motion to Reform Kroesche filed suit seeking to recover on a promissory note from Wassar Logistics Holdings, LLC (the “Kroesche Note”). He pled this claim in his July 17, 2018 Twelfth Amended Petition as follows: 19. …Wassar Holdings…presented Kroesche…with documents…including but not limited to all company agreements, leases, promissory notes, and amendments thereto (“Wassar Contracts”). 54. …Plaintiff and Third Party Defendants materially breached [the Company Agreement] and all the Wassar Contracts (Mo. Reform at 2). The full text of ¶ is quoted abo and clearly reveals the promissory notes referenced therein were those ecuted in February 2016 in connection with the formation of the parties business relationship, not the promissory note (the Kroesche Note offered in August 2016 back Kroesche et al s shares. Both during trial and after trial concluded, Wassar Holding objected to Kroesche et al efforts to collect on the August 2016 promissory note because (1) it was neve accepted by Kroesche et al, and (2) Wassar Holdings ever pled suit on a promissory note. For examp le, counsel for Wassar Holdings explained to the Court at trial The decision was made by Wassar Holdings to return to Mr. Kroesche in e form of a promissory note, his original investment of $166,000. That's the promissory note that's now being sued on today.By the way, there's nothing in the petition suing on that note. That first came up with the amended findings of fact or the findings of fact and conclusions of law. There's nothing in the lawsuit, the 12th amended petition filed who knows h many months ago, making a claim for breach of a promissory note But what happened was the note was tendered to Mr. Kroesche along with a e usual documentation to return his membership interest, and Mr. Kroesche, instead of accepting the note and turning his interest, essentially used that offer as birdcage liner, and instead hired a lawyer and made a counterdemand for a million five. And then we got into this lawsuit and as you may remember from some of th motions THE COURT: I have a question and I'm going to interrupt. So is the assertion going to be from your side that you gave him a $166,000 promissory note in exchange for him tendering his membership interest in the entity and he did not accept it? MR. MCKINNEY: Correct. He rejected it. was offered. There was no acceptance. There was a rejection. And the rejection can be is embodied in the letter that we're going to put into evidence from Mr. the lawyer up in Paul Anderson. It'sembodied in the interrogatory answer that Mr. Kroesche and Mr. Schonefeld both said, both gave in which they said that the value of their member of theirmembership was $5 million or something of that nature. It's it's know, up until the last couple o days, actually since the summary judgmen ruling, these gentleman have been looking for hundreds of thousands of dollars, millions of dollars.Now, they want to be paid on the note that they were given two years ago, and like I said, they used i to house train a puppy. So, you know, it's okay to reject an offer, which they did, but you can't reject an offer and then come back and sue and say you had a completed contract. So we think that case is meritless, withoutmerit, top, side, and bottom. (See Ex. A at 26 28). Wassar Holdings argued similarly in its Post Trial Brief Re: Martin Kroesche’s Promissory Note Claim Of course, it is notoriously known that Kroesche never, ever, in any way, shape or form, accepted the note as a resolution of his separation from Holdings, and in fact, he sued Holdings claiming to be the rightful owner. Every pleading, declaration or other representation by Kroesche or on his behalf by Mr. Kirklin has been completely inconsistent with this position. Leaving all of that aside Kroesche’s own pleadings belie his 11th hour change in positionEverything in the world appears in his 12 Amended Petition but not the only claim he actually asserted at trial. This Court is the trier of fact and is in no way obliged to accept any part o this last minute, facially absurd and co ntrived change of position. Post Trial Briefat 1 3). Failure to accept Wassar Holdings proposed buy back and failure to plead suit on a promissory note are fatal to Kroesche et al s suit on the August 2016 romissory note (the Kroesche Note Kroesche et al s request to reform, correct, and/or modify the Amended Final Declaratory Judgment o award Kroesche all amounts due and owing to him under the Kroesche Note should therefore be denied. The law requires fair notice. ccording to Texas Rule of Civil Procedure 47 “An original pleading which sets forth a claim for relief … shall contain: (a) a short statement of the cause of action sufficient to give fair notice of the claim involved. Tex. R . Civ. Proc. 47. According to the Supreme Court, petition is sufficient if it gives fair and adequate notice of the facts upon which the pleader bases his claim. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex.2000) The purpose of this rule is to provide the defendant with sufficient information to allow him to prepare a defense. . A reviewing court should liberally construe the plaintiff's petition to assert any claim that could reasonably be inferred from the specific language in the petition. Maswoswe v. Nelson7 S.W.3d 889, 89394 (Tex. App.Beaumont 2010, no pet.) (citing Moneyhon v. Moneyhon, 278 S.W.3d 874, 878 (Tex.App. Houston [14th Dist.] 2009, no pet.)). However, “a reviewing court cannot use a liberal construction of the petition as a license to read to the petition aclaim that it does not contain.” .; see also TEX.R. CIV. P. 47. Texas Rule of Civil Procedure 301 is in accord: “The judgment of the court shall conform to the pleadings...”TEX.R. CIV. P. 301. Because [a] court's jurisdiction to render judgment is invoked by the pleadings, [] a judgment unsupported by pleadings is void.” In re S.A.A., 279 S.W.3d 853, 856 (Tex. App. Dallas 2009, no pet.). Stated differently “A plaintiff may not be granted a favorable judgment on an unpled cause of action, absent trial by consent.” Marrs & Smith P'ship v. D.K. Boyd Oil & Gas Co., 223 S.W.3d 1, 18 (Tex.App. El Paso 2005, pet. denied)See also Hartford Fire Ins. Co. v. C. Springs 300, Ltd., 287 S.W.3d 771, 779 (Tex. App. Houston [1st Dist.] 2009, pet. denied) (“A trial court cannot enter judgment on a theory of recovery not sufficiently set forth in the pleadings or otherwise tried by consent.”); Huddleston v. Pace, 790 S.W.2d 47, 50 (Tex. App. San Antonio 1990, writ denied) (“A party must recover on the right in which he sues and upon proof of the facts stated in his pleadings, and he cannot recover through a right not asserted.”)“Absent trial by consent, judgment on an unple d action is void. In re S.A.A.9 S.W.3d 853, 856 (Tex. App.Dallas 2009, no pet.) Whether an issue is tried by consent is a legal conclusion by the trial courtCompass Bank v. MFP Fin. Services, Inc., 152 S.W.3d 844, 854 (Tex. App.Dallas 2005, pet. denied) lthough a court discretion in determining whether an unpleaded issue was tried by consent is to be exercised liberally, trial by implied consent is the exception, not the rule, and should not be allowed in doubtful cases. at 855.To determine whether an unpleaded issue w as tried by consent, the trial court examines the record not for evidence of the issue, but rather for evidence of trial of the issue. . at 854 When evidence relevant to both a pleaded and an unpleaded issue has been admitted without objection, the doctrine of trial by consent should not be applied unless clearly warranted at 854, because [t]he doctrine of trial by consent does not apply when the evidence of an unpleaded matter is relevant to the pleaded issues because it would not be calculated to elicit an objection.” Bos v. Smith, 556 S.W.3d 293, 307 (Tex. 2018) As stated above, counsel for Wassar Holdings’ objected to Kroesche’s last minute change of position n an unpled c ause of action. His objections were timely, clear and consistent. Kroesche et al s suit on the August 2016 promissory note was therefore not tried by consent, and their request to reform, correct, and/or modify the Amended Final Declaratory Judgment award Kroesche all amounts due and owing to him under the Kroesche Note should be denied. . The stated post judgment interest rate is correct. Kroesche et al do not contest in their Motion to Reform that they breached he parties vancing Promissory Note. Rather, they complain that the post judgment interest rate on the amounts found due and owing should be 4.75% rather than 18% because (1) the amounts they failed to pay should be offset against what Wassar Holdings owed under the parties Lea Agreement, and (2) the 18% Default Rate under the Advancing Promissory Note is inapplicable since there was no event ofdefault Kroesche et al are wrong on both accounts. First, the Advancing Promissory Note specifically provides, ll amounts due under this Note shall be payable without set off, counterclaim, or any other deduction whatsoever. hibit A. Second, Kroesche et al never explain the basis of their request for a 4.75% Revolving Loan Rate (whatever that is).Texas Finance Code Section sets the post judgmentinterest rate for a judgment based on breach of contract. It provides: § 304.002. Judgment Interest Rate: Interest Rate or Time Price Differential in Contract A money judgment of a court of this state on a contract that provides for interest or time price differential earns postjudgment interest at a rate equal to the lesser of: (1) the rate specified in the contract, which may be a variable rate; or (2) 18 percent a year. Tex. Fin. Code Ann. § 304.002 The Advancing Promissory Note contains two interest rates. An 18% rate for an Event of Default, which Kroesche et al claim is inapplicable, and the “Maximum Rate” which is to be “determined by reference to the indicated (weekly) rate ceiling (as defined and described in Chapter 303 of the Finance Code, as amended) at the applicable time in effect. roesche et al breached the Advancing Promissory Nte in November of 2017. According to the Texas Office of Consumer Credit Commissioner, t weekly ceiling rate since November 2017 has been 18%. Exhibit B. Therefore, regardless of whether the interest rate for an Event of Default or the Maximum Rate prescribed by the Advancing Promissory Note is applied, the rate is 18%. Further, if no rate was stated in the vancing Promissory Nte, Section 304.002(b) of the Finance Code still prescribes an 18% rate. As a result, the 18% per annum rate prescribed by the AmendedFinal Declaratory Judgment is correct. Kroesche et al s catch all incorporation by reference argument is ineffective. In closing their Motion to Reform, Kroesche et al stat KS&W hereby incorporates by reference, restates, and reasserts all evidence and arguments that they have offered, made, or asserted in trial or in post trial briefs relevant section of the Finance Code hat explains computation of the weekly rate ceiling provides as follows: § 303.003. Computation of Weekly Ceiling (a) The weekly ceiling is computed by: (1) multiplying the auction rate by two; and (2) rounding the result obtained under Subdivision (1) to the nearest one quarter of one percent. (b) The weekly rate ceiling becomes effective on Monday of each week and remains in effect through the following Sunday. (c) In this subchapter, “auction rate” means the auction average rate quoted on a bank discount basis for 26 week treasury bills issued by the United States government, as published by the Federal Reserve Board, for the week preceding the week in which the weekly rate ceiling is to take effect. Tex. Fin. Code Ann. § 303.003 The Texas Credit Letter is published each Tuesday by the Office of Consumer Credit Commissioner and reports rate ceilings for future weeks.On a quarterly basis (Feb, May, Aug, Nov), the rates are calculated by the Consumer Credit Commissioner using the formulas found in the Texas Finance Code, and reported in the month end issue of the Texas Credit Letter.See www.occc.tex.gov/publications/interest rates The maximum rate ceilings are filed with the Texas Register in accordance with Texas Finance Code §303.011 and published in the Texas Credit Letter. https://occc.texas.gov/publications/interest rates/historical interest rate summariesA court may take judicial notice of interpretations issued by the consumer credit commissioner or information published in the Texas Register regarding publication of rate ce lings.See Tex. Fin. Code Ann. § 303.012 or filings, and respectfully requests for the Court to reform, correct, and modify the Amended Judgment accordingly. It is unclear to what Kroesche et al re er, but this catch all is ineffective to preserve error because it does not articulate clearly and plainly the relief requested from this court. See TEX. R. APP. P. 33.1(a) As a prerequisite to presenting a complaint for appellate review, the record must show that:(1) the complaint was made to the trial court by a timely request, objection, or motion that: (A) stated the grounds for the ruling that the complaining party sought from the trial court with sufficient specificity to make the trial court aware of the complaint, unless the specific grounds were apparent from the context; PRAYER For the reasons stated herein Wassar Logistics Holdings, LLC asks the Court to deny Kroesche et al Motion to Reform, Correct, or Modify the Amended Final Declaratory udgment Respectfully submitted, MCKINNEY TAYLOR P.C. /s/ Andrew T. McKinney IV Andrew T. McKinney State Bar No. 13716800 mckinney@litchfieldcavo.com Three Riverway, Suite Houston, Texas 77056 Telephone: 713/487 1487 Facsimile: 713/487 1488 ATTORNEY FOR DEFENDANT, WASSAR LOGISTICS HOLDINGS, LLC, ET CERTIFICATE OF SERVICE In accordance with Rules 21 and 21a the Texas Rules of Civil Procedure, a true and correct copy of the above and foregoing instrument was served on all counsel of record via the Court’s electronic filing/service system on this 3rd day of June Paul S. Kirklin The Kirklin Law Firm, P.C. 12600 N. Featherwood Dr., Suite 225 Houston, Texas 77034 /s/ Andrew T. McKinney IV Andrew T. McKinney