Preview
FILED
DALLAS COUNTY
2/19/2015 5:16:10 PM
FELICIA PITRE
DISTRICT CLERK
CAUSE NO. DC-13-13980
CHARLES O’HEARN, § IN THE DISTRICT COURT OF
§
Plaintiff, §
§
V. §
§ DALLAS COUNTY, TEXAS
JACOB NOVAK, RICK COVERT AND §
HEATHER WEIMER §
§
Defendants. § 44th JUDICIAL DISTRICT
PLAINTIFF’S REPLY TO DEFENDANTS’ BRIEF
ADDRESSING ISSUES RAISED AT FEBRUARY 5th HEARING
Plaintiff Charles O’Hearn (“Plaintiff”) files this Response to Defendants Brief
Addressing Issues Raised at February 5th Hearing and would respectfully show the Court as
follows:
I.
INTRODUCTION
At the February 5th, 2015 hearing on Defendants’ Motion to Compel (“February 5th
Hearing”), the Court considered the issue raised by Defendants, through counsel, that Plaintiff is
offensively using privileged communications. Specifically, Defendants argued that by asserting
fraudulent concealment and the discovery rule to attack Defendants’ statute of limitations
defense, Plaintiff has waived the attorney client privilege as to the documents that would show,
as Defendants alleged, Plaintiff knew or should of known of his claims against the Defendants as
early as 2005. As such, Defendants’ argued that it was necessary for the Court to conduct an in
camera review of these privileged documents to determine if there exists any that could be
“outcome determinative” to these issues Plaintiff has raised.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 1
At the conclusion of the hearing, the Court noted that the issue turned on whether
privileged documents existed that would show Plaintiff had knowledge that the competing ER
clinics, namely, Sterling Ridge, Kuykendahl, Cypressville and Frisco Lebanon, (“The
Partnerships”) were not merely “forward looking.” 1 On this point, Defendants argued there are
in fact privileged documents that would show Plaintiff knew that The Partnerships were not
dormant or “forward looking” partnerships, as alleged in Plaintiff’s petition, but that they were
instead viewed by Plaintiff as competing partnerships that were not just “forward looking.” The
Court then asked the following question: does this matter? 2 Specifically, if there are privileged
documents that evidence O’Hearn knew these entities were not just forward looking entities,
would these documents be material or “outcome determinative” as to satisfy a necessary prong to
the “Offensive Use Doctrine? 3
To answer this question, both parties were asked to submit a brief educating the Court on
this issue. Specifically, counsel for both parties were asked: would Plaintiff have a duty to
conduct a diligent inquiry into the facts surrounding these partnerships, thus possibly discovering
Defendants fraudulent misconduct, if he (or his attorney) gained knowledge that these entities
were not merely “forward looking.” 4 The importance of this finding is critical to Defendants’
motion to compel. If Plaintiff had a duty to diligently inquire into The Partnerships and
Defendants ongoing misconduct upon gaining knowledge that The Partnerships were not merely
“forward looking,” then any privileged documents evidencing this knowledge would be material.
Conversely, ifplaintiff did not have this duty, then these documents would be immaterial and
thus not “outcome determinative” for purposes of the “Offensive Use Doctrine.” In other words,
1
See Transcript from the February 5th hearing on Defendant’s Motion to Compel attached as Exhibit “A” at 132-
137.
2
Id.
3
Id.
4
Id.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 2
even if Plaintiff had learned that these Partnerships were not just “forward looking,” he would
not have been required to look into Defendants misconduct in forming The Partnerships. Thus,
these privileged documents would not be “outcome determinative” and the three prong test in
order to apply the “Offensive Use Doctrine” would not be satisfied.
In sum, if Plaintiff carried this duty to inquire into Defendants’ misconduct upon gaining
knowledge that The Partnerships were not just “forward looking,” then the Court would likely
conduct an in camera review to identify if there are privileged documents that evidence such
knowledge. If Plaintiff did not carry this duty, then the existence of these documents would be
immaterial or not “outcome determinative”, as to require an in camera inspection by the Court.
Counsel for Plaintiff instructed the Court that the case law supported Plaintiff’s contention that a
business partner would not be required to diligently inquire into the other business partner’s
conduct even with this knowledge. As this brief will point out, this is exactly the law.
Despite the fact that the February 5th Hearing only concerned Defendants Motion to
Compel privileged documents in the possession of Plaintiff, Defendants used the hearing as a
stage to present the Court with misleading facts that Plaintiff has changed his argument (and he
has not) since the Court last heard Defendant’s Motion for Summary Judgment. However,
Defendants’ support this theory by grossly mischaracterizing Plaintiff’s allegations and by
repeating arguments they already made at the August 29th Motion for Summary Judgment
Hearing (“MSJ Hearing”). It’s clear this is merely an attempt to prepare the Court for
Defendants’ inevitable request to reconsider Defendants Motion for Summary Judgment.
Therefore, this brief will also address and make clear these false and misleading indications
made by Defendants.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 3
II.
ARGUMENTS AND AUTHORITIES
A) Plaintiff’s Arguments Remains the Same
At the MSJ Hearing, Defendants’ presented the Court with evidence that Plaintiff knew
about The Partnerships as well as ECC Management. 5 Specifically, Defendants directed the
Court’s attention to an email communication between James Pranske (“Pranske”), the attorney
for Plaintiff in 2005, and Ronald Reneker (“Reneker”), the then and current attorney for
Defendant Novak. 6 In this email, Pranske requested to Reneker that his client, Novak, not use
Plaintiff’s slogan for The Partnerships. Defendants’ argued then, and still argue now, that this
evidenced Plaintiff knowledge of The Partnerships in 2005 and thus he could not argue
fraudulent concealment. 7 Specifically, Defendants argued that by acknowledging the names of
The Partnerships and that they would be competing with Plaintiff, he cannot claim he did not
“discover” his harm for statute of limitations purposes. As Plaintiff has been asked to do again
presently, Plaintiff then answered Defendants contention with a crucial clarification. Plaintiff
explained to the Court that simply knowing the names of the entities in May of 2005 did not give
Plaintiff notice of Defendants fraudulent misconduct that dated back to as early as February
2004. 8 Plaintiff also explained that he saw these partnerships as new entities that would facilitate
the carrying out of Defendants new partnership moving forward. 9 In other words, Plaintiff’s
counsel made clear, although Plaintiff may have had some knowledge as to the existence of these
5
See Transcript from the August 29th, 2014 Motion for Summary Judgment Hearing attached as Exhibit “B” pp. 82-
84.
6
Id.
7
Id.
8
Id.
9
Id. at 82
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 4
entities, he did not know Defendants had been setting up these entities up as early as February
2004. 10
However, Defendants now argue that Plaintiff has made a “startling admission” by
conceding he (or his attorney) knew the existence of The Partnerships. However, it’s clear
Defendants have already presented the issue of Plaintiff’s knowledge in May of 2005 to the
Court of which Plaintiff addressed in open court. 11 There, Plaintiff acknowledged he knew the
names of the entities. 12 Thus, what Plaintiff has conceded to, both in his Third Amended petition
and at the February 5th Hearing, is the same thing he conceded at the August 29th hearing. As
such, Plaintiff’s argument is not a “new spin” as Defendants’ have chosen to mischaracterize it.
Defendants have also tried to underhandedly convince the Court that Plaintiff has
weaknesses in his arguments by simply mischaracterizing them. For example, Defendants
highlight from Plaintiff’s Motion for Summary Judgment Response (“Plaintiff’s MSJ Response”)
that “Plaintiff would never have signed the 2005 agreement, which purports to be a business
separation agreement allocating assets owned jointly by Plaintiff and Defendant Novak, if he had
known the true facts that Defendants were required to disclose, namely, that Defendants Novak
and Covert had created additional partnerships behind his back and without his inclusion.”
However, this is still Plaintiff’s argument. What Defendants have done however, is to
mischaracterize Plaintiff’s fraudulent concealment claim by narrowing its scope. In other words,
Defendants erroneously assume Plaintiff’s fraudulent concealment claim to be Plaintiff would
not have signed the separation agreement but for Defendants concealment of The Partnerships
10
As this brief will show, nor did Plaintiff have a duty to investigate into Defendants’ misconduct in forming of
these partnerships.
11
Id. at 82-85.
12
Id.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 5
existence. Following this logic, if Plaintiff is claiming he did have knowledge of these entities
when he signed the Separation Agreement, Plaintiff is now admitting this testimony to be false.
However, that is not Plaintiff’s claim. What he argued both in Plaintiff’s MSJ Response
and at the Hearing on Summary Judgment, and stillargues now, is that Plaintiff did not know
Defendants had created these partnerships and that they had been doing so behind his back since
early 2004. 13 Because the parties were already in the business of developing ER Clinics across
the country, Defendants had a duty to fully disclose their misconduct in forming The
Partnerships. They did not. Thus, even if Plaintiff gained knowledge of the existence of these
entities after they had begun winding up their partnership, it would not have occurred to him, nor
should it have, that the formation of these entities had been in the works as late as February
2004. So, Plaintiff’s argument remains the same: “Plaintiff would not have signed the
Separation Agreement . . . if he had known the true facts that Defendants were required to
disclose, namely, that Defendants Novak and Covert had created additional partnerships behind
his back and without his inclusion”. 14
What Defendants fail to recognize, or choose to ignore, is that Plaintiff argues, and has
argued from the outset, that Defendants did not disclose the names of The Partnerships and
Defendants misconduct surrounding the formation of The Partnerships. Maybe Defendants
attack Plaintiff’s argument because they fail to recognize the importance of this distinction.15
Defendants at all times owed Plaintiff the duty of full disclosure. Had he known they had
concealed their misconduct, which had been ongoing as late as February 2004, Plaintiff would
never have signed the Separation Agreement.
13
Id. at 70, 80-82.
14
See Plaintiff’s Motion for Summary Judgment Response attached as Exhibit “C” at 1.
15
See Exhibit “A” at 59, 103.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 6
Thus, Plaintiff has not and is not contending that the only critical fact that fraudulently
induced him into signing the Separation Agreement was his lack of knowledge of the existence
of competing entities in May 2005. Instead, Plaintiff contends that by not disclosing Defendants
misconduct in forming these The Partnerships from the outset, which pre-dates the parties failed
mediation by over a year, Plaintiff was fraudulently induced to signing the Separation
Agreement. Following this logic, if Plaintiff gains some knowledge of The Partnerships after the
parties have made begun winding up their partnership, Plaintiff wouldn’t have the requisite
knowledge that these Partnerships were created behind his back. 16 This same argument was
raised and clarified at the Summary Judgment Hearing. It was then further clarified in
Plaintiff’s Third Amended Petition. Thus, Defendants’ argument that Plaintiff is presenting the
Court with a “new spin” is both false and misleading.
B. Statute of Limitations in the Context of Investments and Fiduciaries: Courts
determine that due diligence is not required because the injury is often inherently
undiscoverable. Thus, Plaintiff’s knowledge of these competing entities is not
material
The discovery rule exception defers accrual of a cause of action until the plaintiff knew
or, exercising reasonable diligence, should have known of the facts giving rise to the cause of
action. Trinity River Auth. v. URS Consultants, 889 S.W.2d 259, 262 (Tex.1994). What
constitutes reasonable diligence to discover fraud in a particular case is a question of fact, and
must be determined from all the facts and circumstances in evidence. Ruebeck v. Hunt, 142 Tex.
167, 171, 176 S.W.2d 738, 740 (1943). See also, Cadle Co. v. Wilson, 136 S.W.3d 345, 352
(Tex. App. -- Austin 2004, no pet.) (“when a plaintiff knew or should have known of an injury is
generally a question of fact”). The beginning of the limitations period can only be determined as
a matter of law when the record is such that reasonable minds could not differ on the conclusion
16
(Again, as you will see, the law is clear Plaintiff had no duty to inquire into Defendants actions once gaining this
knowledge whether he viewed The Partnerships as “forward looking” or not).
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 7
to be drawn from the facts. Id., citing Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex.1998). See
also, Ruebeck, supra (“[u]nless the evidence is such that reasonable minds may not differ as to
its effect, the question as to whether a party has exercised diligence in discovering fraud is for
the jury”).
The Texas Supreme Court has held that the discovery rule applies when the nature of the
plaintiff's injury is “inherently undiscoverable” and “objectively verifiable.” Wagner & Brown,
Ltd., 58 S.W.3d 732, 734 (Tex. 2001). An injury is inherently undiscoverable if it is “unlikely to
be discovered within the prescribed limitations period despite due diligence.” S.V. v. R.V., 933
S.W.2d 1, 7 (Tex. 1996). The Texas Supreme Court has determined that a fiduciary's
misconduct is often, by its very nature, inherently undiscoverable. See Willis v. Maverick, 760
S.W.2d 642, 645 (Tex.1988); Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d 377, 394 (1945).
In S.V., the Court held that “a person to whom a fiduciary duty is owed is relieved of the
responsibility of diligent inquiry into the fiduciary's conduct, so long as the relationship exists.”
S.V., 933 S.W.2d at 8. His only responsibility is not to ignore misconduct if the misconduct is
apparent, not to diligently inquire into the fiduciary’s conduct. Id. See West v. Proctor, 353
S.W.3d 558, 566-67 (Tex. App. -- Amarillo 2011, pet. denied) (same) See also e.g. Friddle v.
Fisher, 378 S.W.3d 475, 484-485 (Tex. App.–Texarkana 2012, pet. denied) (fiduciary
relationship relieves plaintiff of diligent inquiry into defendant’s conduct). The Court in S.V.
explained the principle behind these decisions is that a person to whom a fiduciary duty is owed
is either unable to inquire into the fiduciary's actions or unaware of the need to do so. Id.; See
also Willis, 760 S.W.2d at 645 (“facts which might ordinarily require investigation likely may
not excite suspicion where a fiduciary relationship is involved.”); Slay, 187 S.W.2d at 394
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 8
(knowledge of facts did not cause trust beneficiaries or co-trustees to suspect wrongdoing by
other co-trustees).
This fundamental rule of law applies specifically to the issues in this case. At the
February 5th Hearing, the Court asked counsel for Plaintiff: if Plaintiff knew about these entities
in May of 2005, why didn’t Plaintiff ask whether they were partnership assets if [he] knew of
their existence? 17 The answer is simple. Defendants fraudulently concealed from Plaintiff their
misconduct that dated back to no later February 2004. Given the fiduciary relationship between
the parties, Texas law provides that Plaintiff has no duty to mistrust his partner and is relieved of
the duty to inquire in his or her conduct.
As Defendants correctly state, it would be immaterial whether or not Plaintiff was aware
that The Partnerships were “competing entities.” However, their reasoning to support this
contention is ill-guided. Defendants brief essentially backs the Court into two alternatives: 1) if
privileged documents that show Plaintiff was aware The Partnerships were not just “forward
looking” are material, then an in camera review is necessary; or 2 ) if privileged documents that
show Plaintiff was aware The Partnerships were not just “forward looking” are immaterial, then
Plaintiff cannot assert fraudulent concealment. This grossly misstates the issue.
As Defendants point out, fraudulent non-disclosure requires the misrepresented facts to
be material. 18 To clarify, Plaintiff explicitly asserts that the facts concealed from him are
material. In other words, had plaintiff known of Defendants fraudulent misconduct, i.e. had he
known Defendants had been working to create competing partnerships as early as February of
2004 in direct contravention of Plaintiff and Defendant Novak’s partnership, he never would
have signed the Separation Agreement. However, in regards to the materiality or “outcome
17
See Exhibit “A” at 27-28.
18
Horizon Shipbuilding v. Blyn II Holding, 324 S.W.3d 840, 850 (Tex.App. ‒ Houston [14th Dist.] 2010, no pet.).
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 9
determinative” requirement of the “Offensive Use Doctrine,” Plaintiff asserts that privilege
documents evidencing his knowledge that The Partnerships were not “forward looking” are
immaterial. Why is this distinction important? Because even if these privileged documents exist,
this knowledge, as the law provides, would not have imputed a duty to Plaintiff to further inquire
into the material facts, i.e. that Defendants had created these partnerships and were breaching
their fiduciary duties owed to him no later than February 2004. Although Defendants have used
the term “material” in the context of fraudulent concealment interchangeably with “material” or
“outcome determinative” in the context of the “Offensive Use Doctrine”, they are not one in the
same.
1. Defendant Novak is a fiduciary to Plaintiff
The Texas Supreme Court has long recognized “as a matter of common law that ‘[t]he
relationship between . . . partners . . . is fiduciary in character, and imposes upon all the
participants the obligation of loyalty to the joint concern and of the utmost good faith, fairness,
and honesty in their dealings with each other with respect to matters pertaining to the
enterprise.’” Lifshutz v. Lifshutz, 199 S.W.3d 9, 22 (Tex.App.-San Antonio 2006, pets. denied)
(quoting Bohatch v. Butler & Binion, 977 S.W.2d 543, 545 (Tex.1998); See also Fitz–Gerald v.
Hull, 150 Tex. 39, 237 S.W.2d 256, 264 (1951)). As a fiduciary, a partner is under the same
obligation as a corporate fiduciary not to usurp corporate opportunities. Id.
As if this is an issue yet to be decided, Defendant’s repeatedly state, without colorable
support, that there was no fiduciary duty owed to Plaintiff. However, the only argument they
make in support if this fallacy is the same argument they made at the August 29th Hearing,
namely, that the ON LLC regulations negate this duty. 19 However, ON LLC, like ECC
19
See Exhibit “B” 56, 68-69.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 10
20
Management (“ECC”), was created for the limited purpose to act as an MSO. Moreover it was
never intended that the parties could directly compete with each other in building ER Care
21
facilities.
It’s clear the law recognizes that partners owe each other fiduciary duties. Moreover,
despite repeatedly calling it an alleged partnership in Defendant’s Brief, Defendant Novak has
already admitted, nor did he deny, that he and Plaintiff were partners. 22 What’s more, as is the
common theme, this was already addressed at the August 29th Hearing. 23 Thus, there is no
denying that Plaintiff and Defendant Novak were partners and that a fiduciary relationship
existed between them.
2. Defendants Misconduct was not Apparent
Nor was Defendants misconduct apparent. See S.V., 933 S.W.2d at 8; Cluck v. Mecom,
401 S.W.3d 110, 116 (Tex.App.-Houston [14th Dist.] 2011, pet. denied) (holding the trial court
erred by granting traditional summary judgment based on statute of limitations relative to claim
for breach of fiduciary duty because facts that plaintiff’s were suspicious of fiduciaries
misconduct did not conclusively demonstrate the misconduct was apparent). However, as
Plaintiff made clear at the August 29th Hearing, knowledge of the existence of these competing
entities in May of 2005, two months after the parties had conducted a failed mediation, would
not provide Plaintiff a reason, nor the duty, to suspect Defendants misconduct. In other words, if
20
The crux of Plaintiff and Defendant Novak’s joint venture was to own, operate, manage and staff emergency care
facilitiesacross the country. Thus, it was Defendants’ creation of the ER clinics, namely, Sterling Ridge,
Kuykendahl, Frisco Lebanon and Cypressville, and concealment of the same, during Plaintiff and Defendant
Novaks’ partnership that Plaintiff alleges was a breach of fiduciary duty. A necessary component of their business
model was creating a Management Services Organization or “MSO”, the purpose of which was to provide
management and administrative support for their clinics. However, given the structure and limited scope of an
MSO’s purpose, it is necessary that the MSO and its affiliates, namely, agents or employees of the MSO, be allowed
to compete with one another.
21
See Exhibit “B” at 68-69.
22
See excerpt from Novak’s Deposition Exhibit attached as Exhibit “D”.
23
See Exhibit “B” at 67.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 11
Plaintiff is discovering the names and existence of The Partnerships that Defendant’s had created
and that they were “competing entities” two months after they began winding up their
partnership, Plaintiff would have no reason to suppose, nor duty to inquire, that Defendants had
created these entities as early as 2004. Instead, itwas Defendants duty to inform him of these
facts. But just as they stated in their depositions, neither Defendant Novak or Covert ever
disclosed to Plaintiff these entities prior to the signing of the Separation Agreement nor were the
clinics, Sterling Ridge, Kuykendahl, Cypressville and Frisco Lebanon, included in the Separation
Agreement. 24
III.
CONCLUSION
As counsel for Defendants stated at both the hearing for Motion for Summary Judgment
and at the hearing on the Motion to Compel, these entities were a matter of public record.
Assuming this was the means by which one gathered this type of information in 2005, why
didn’t Plaintiff log on to the Secretary of State’s website and figure out when these entities were
created? The answer is simple. He did not have this duty. The duty of full disclosure was on
Defendants. As such, Texas law provides that Plaintiff is relieved of the duty to diligently
inquire into his partners conduct. Therefore, even if privileged documents show Plaintiff (or his
attorney) had knowledge that The Partnerships were not just “forward looking,” these
documents are clearly immaterial.
24
See Exhibit “D”; See also Excerpts from Covert’s Deposition attached as Exhibit “E”.
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 12
Respectfully submitted,
FEE, SMITH, SHARP & VITULLO
________________________________
Anthony L. Vitullo
State Bar No. 20595500
Lance L. Livingston
State Bar No. 24068269
Three Galleria Tower
13155 Noel Road, Suite 1000
Dallas, Texas 75240
(972) 934-9100
(972) 934-9200 [Fax]
and
John L. Malesovas
The Malesovas Law Firm
Texas State Bar No. 12857300
816 Congress Ave.
Suite 1265
Austin, TX 78701
Telephone: (512) 708-1777
Telecopier: (512) 708-1779
john@malesovas.com
ATTORNEYS FOR PLAINTIFF
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing was forwarded by certified
mail, return receipt requested, facsimile transmission, or email transmission to the following on
February 19, 2015:
D. Ronald Reneker
Michael C. Lee
Munsch Hardt Kopf & Harr, P.C.
500 North Akard Street, Suite 3800
Dallas, TX 75201-6659
214-855-7584 Facsimile
mlee@munsch.com
rreneker@munsch.com
Attorneys for Defendant, Jacob Novak
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 13
Richard A. Sayles
William S. Snyder
Sayles Werbner, PC
4400 Renaissance Tower
1201 Elm Street
Dallas, TX 75270
214-939-8787 Facsimile
dsayles@swtriallaw.com
wsnyder@swtriallaw.com
Attorneys for Defendant, Jacob Novak
K. Todd Phillips
Joseph R. Callister
Wick Phillips Gould & Martin, LLP
3131 McKinney Avenue, Suite 100
Dallas, TX 75204
214-692-6255 Facsimile
todd.phillips@wickphillips.com
joseph.callister@wickphillips.com
Attorneys for Defendant, Rick Covert
Seymour Roberts, Jr.
Douglas J. Buncher
Neligan Foley LLP
325 North St. Paul Street, S uite 3600
Dallas, TX 75201
214-840-5301 Facsimile
dbuncher@neliganlaw.com
sroberts@neliganlaw.com
Attorneys for Defendant, Heather Weimer
/s/ Lance L. Livingston
Lance L. Livingston
PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 14
Page 1
1
REPORTER'S RECORD
2
VOLUME 3 OF 4
3
TRIAL COURT CAUSE NO. DC-13-13980-B
4
5 CHARLES O'HEARN, ) IN THE DISTRICT COURT
Plaintiff, )
6 )
VS. ) OF DALLAS COUNTY, TEXAS
7 )
JACOB NOVAK, RICK COVERT, )
8 and HEATHER WEIMER, )
Defendants. ) 44TH JUDICIAL DISTRICT
9
10
11
12 DEFENDANT NOVAK'S MOTION TO COMPEL
13 and
14 PLAINTIFF O'HEARN'S MOTION TO QUASH
15 which were heard on
16 Thursday, February 5, 2015
17
18
19 On the 5th day of February 2015, the following
20 proceedings came on to be heard in the above-entitled
21 and numbered cause before the Honorable Bonnie Lee
22 Goldstein, Judge Presiding, held in Dallas, Dallas
23 County, Texas.
24 Proceedings reported by machine shorthand
25 utilizing computer-assisted realtime transcription.
David W. Langford, CSR Hon. Bonnie L. Goldstein
(214) 653-7395 Judge, 44th District Court
EXHIBIT A
Page 2
1
2
3 APPEARANCES:
4
5
6 MR. ANTHONY L. VITULLO ATTORNEY FOR PLAINTIFF
Texas State Bar No. 20595500 Charles O'Hearn, M.D.
7 Email: LVitullo@FeeSmith.com
MR. RYAN THOMAS STEINBRUNNER
8 Texas State Bar No. 24093201
Email: RSteinbrunner@FeeSmith.com
9 FEE, SMITH, SHARP & VITULLO, LLP
Three Galleria Tower
10 13155 Noel Road, Suite 1000
Dallas, Texas 75240
11 Telephone: (972) 934-9100
Facsimile: (972) 934-9200
12
13
14
15 MR. WILLIAM S. SNYDER ATTORNEY FOR DEFENDANT
Texas State Bar No. 00786250 Jacob Novak, M.D.
16 Email: WSnyder@SWTrialLaw.com
SAYLES WERBNER, P.C.
17 4400 Renaissance Tower
1201 Elm Street
18 Dallas, Texas 75270
Telephone: (214) 939-8700
19 Facsimile: (214) 939-8787
20
21 MR. JOSEPH R. CALLISTER ATTORNEY FOR DEFENDANT
Texas State Bar No. 24059054 Rick Covert
22 Email: Joseph.Callister@WickPhillips.com
WICK PHILLIPS GOULD & MARTIN, LLP
23 3131 McKinney Avenue, Suite 100
Dallas, Texas 75204
24 Telephone: (214) 692-6200
Facsimile: (214) 692-6255
25
David W. Langford, CSR Hon. Bonnie L. Goldstein
(214) 653-7395 Judge, 44th District Court
EXHIBIT A
Page 3
1
2
3 APPEARANCES continued:
4
5
6 MR. SEYMOUR ROBERTS, JR. ATTORNEY FOR DEFENDANT
Texas State Bar No. 17019150 Heather Weimer
7 Email: SRoberts@NeliganLaw.com
NELIGAN FOLEY, LLP
8 325 N. St. Paul Street, Suite 3600
Dallas, Texas 75201
9 Telephone: (214) 840-5349
Facsimile: (214) 840-5301
10
11
12
13
14
15
16 * * *
17
18
19
20
21
22
23
24
25
David W. Langford, CSR Hon. Bonnie L. Goldstein
(214) 653-7395 Judge, 44th District Court
EXHIBIT A
Page 4
1
2 VOLUME 3 INDEX
3 of the
4 DEFENDANT NOVAK'S MOTION TO COMPEL
5 and
6 PLAINTIFF O'HEARN'S MOTION TO QUASH
7 which were heard on
8 Thursday, February 5, 2015
9
10 PROCEEDINGS Page Vol
11 Proceedings on the record.................... 6 3
12 Argument presented by Mr. Lenny Vitullo...... 7 3
13 Response presented by Mr. Will Snyder........ 56 3
14 Rebuttal response by Mr. Lenny Vitullo....... 86 3
15 Arguments back and forth between counsel..... 99
Preview
FILED DALLAS COUNTY 2/19/2015 5:16:10 PM FELICIA PITRE DISTRICT CLERK CAUSE NO. DC-13-13980 CHARLES O’HEARN, § IN THE DISTRICT COURT OF § Plaintiff, § § V. § § DALLAS COUNTY, TEXAS JACOB NOVAK, RICK COVERT AND § HEATHER WEIMER § § Defendants. § 44th JUDICIAL DISTRICT PLAINTIFF’S REPLY TO DEFENDANTS’ BRIEF ADDRESSING ISSUES RAISED AT FEBRUARY 5th HEARING Plaintiff Charles O’Hearn (“Plaintiff”) files this Response to Defendants Brief Addressing Issues Raised at February 5th Hearing and would respectfully show the Court as follows: I. INTRODUCTION At the February 5th, 2015 hearing on Defendants’ Motion to Compel (“February 5th Hearing”), the Court considered the issue raised by Defendants, through counsel, that Plaintiff is offensively using privileged communications. Specifically, Defendants argued that by asserting fraudulent concealment and the discovery rule to attack Defendants’ statute of limitations defense, Plaintiff has waived the attorney client privilege as to the documents that would show, as Defendants alleged, Plaintiff knew or should of known of his claims against the Defendants as early as 2005. As such, Defendants’ argued that it was necessary for the Court to conduct an in camera review of these privileged documents to determine if there exists any that could be “outcome determinative” to these issues Plaintiff has raised. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 1 At the conclusion of the hearing, the Court noted that the issue turned on whether privileged documents existed that would show Plaintiff had knowledge that the competing ER clinics, namely, Sterling Ridge, Kuykendahl, Cypressville and Frisco Lebanon, (“The Partnerships”) were not merely “forward looking.” 1 On this point, Defendants argued there are in fact privileged documents that would show Plaintiff knew that The Partnerships were not dormant or “forward looking” partnerships, as alleged in Plaintiff’s petition, but that they were instead viewed by Plaintiff as competing partnerships that were not just “forward looking.” The Court then asked the following question: does this matter? 2 Specifically, if there are privileged documents that evidence O’Hearn knew these entities were not just forward looking entities, would these documents be material or “outcome determinative” as to satisfy a necessary prong to the “Offensive Use Doctrine? 3 To answer this question, both parties were asked to submit a brief educating the Court on this issue. Specifically, counsel for both parties were asked: would Plaintiff have a duty to conduct a diligent inquiry into the facts surrounding these partnerships, thus possibly discovering Defendants fraudulent misconduct, if he (or his attorney) gained knowledge that these entities were not merely “forward looking.” 4 The importance of this finding is critical to Defendants’ motion to compel. If Plaintiff had a duty to diligently inquire into The Partnerships and Defendants ongoing misconduct upon gaining knowledge that The Partnerships were not merely “forward looking,” then any privileged documents evidencing this knowledge would be material. Conversely, ifplaintiff did not have this duty, then these documents would be immaterial and thus not “outcome determinative” for purposes of the “Offensive Use Doctrine.” In other words, 1 See Transcript from the February 5th hearing on Defendant’s Motion to Compel attached as Exhibit “A” at 132- 137. 2 Id. 3 Id. 4 Id. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 2 even if Plaintiff had learned that these Partnerships were not just “forward looking,” he would not have been required to look into Defendants misconduct in forming The Partnerships. Thus, these privileged documents would not be “outcome determinative” and the three prong test in order to apply the “Offensive Use Doctrine” would not be satisfied. In sum, if Plaintiff carried this duty to inquire into Defendants’ misconduct upon gaining knowledge that The Partnerships were not just “forward looking,” then the Court would likely conduct an in camera review to identify if there are privileged documents that evidence such knowledge. If Plaintiff did not carry this duty, then the existence of these documents would be immaterial or not “outcome determinative”, as to require an in camera inspection by the Court. Counsel for Plaintiff instructed the Court that the case law supported Plaintiff’s contention that a business partner would not be required to diligently inquire into the other business partner’s conduct even with this knowledge. As this brief will point out, this is exactly the law. Despite the fact that the February 5th Hearing only concerned Defendants Motion to Compel privileged documents in the possession of Plaintiff, Defendants used the hearing as a stage to present the Court with misleading facts that Plaintiff has changed his argument (and he has not) since the Court last heard Defendant’s Motion for Summary Judgment. However, Defendants’ support this theory by grossly mischaracterizing Plaintiff’s allegations and by repeating arguments they already made at the August 29th Motion for Summary Judgment Hearing (“MSJ Hearing”). It’s clear this is merely an attempt to prepare the Court for Defendants’ inevitable request to reconsider Defendants Motion for Summary Judgment. Therefore, this brief will also address and make clear these false and misleading indications made by Defendants. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 3 II. ARGUMENTS AND AUTHORITIES A) Plaintiff’s Arguments Remains the Same At the MSJ Hearing, Defendants’ presented the Court with evidence that Plaintiff knew about The Partnerships as well as ECC Management. 5 Specifically, Defendants directed the Court’s attention to an email communication between James Pranske (“Pranske”), the attorney for Plaintiff in 2005, and Ronald Reneker (“Reneker”), the then and current attorney for Defendant Novak. 6 In this email, Pranske requested to Reneker that his client, Novak, not use Plaintiff’s slogan for The Partnerships. Defendants’ argued then, and still argue now, that this evidenced Plaintiff knowledge of The Partnerships in 2005 and thus he could not argue fraudulent concealment. 7 Specifically, Defendants argued that by acknowledging the names of The Partnerships and that they would be competing with Plaintiff, he cannot claim he did not “discover” his harm for statute of limitations purposes. As Plaintiff has been asked to do again presently, Plaintiff then answered Defendants contention with a crucial clarification. Plaintiff explained to the Court that simply knowing the names of the entities in May of 2005 did not give Plaintiff notice of Defendants fraudulent misconduct that dated back to as early as February 2004. 8 Plaintiff also explained that he saw these partnerships as new entities that would facilitate the carrying out of Defendants new partnership moving forward. 9 In other words, Plaintiff’s counsel made clear, although Plaintiff may have had some knowledge as to the existence of these 5 See Transcript from the August 29th, 2014 Motion for Summary Judgment Hearing attached as Exhibit “B” pp. 82- 84. 6 Id. 7 Id. 8 Id. 9 Id. at 82 PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 4 entities, he did not know Defendants had been setting up these entities up as early as February 2004. 10 However, Defendants now argue that Plaintiff has made a “startling admission” by conceding he (or his attorney) knew the existence of The Partnerships. However, it’s clear Defendants have already presented the issue of Plaintiff’s knowledge in May of 2005 to the Court of which Plaintiff addressed in open court. 11 There, Plaintiff acknowledged he knew the names of the entities. 12 Thus, what Plaintiff has conceded to, both in his Third Amended petition and at the February 5th Hearing, is the same thing he conceded at the August 29th hearing. As such, Plaintiff’s argument is not a “new spin” as Defendants’ have chosen to mischaracterize it. Defendants have also tried to underhandedly convince the Court that Plaintiff has weaknesses in his arguments by simply mischaracterizing them. For example, Defendants highlight from Plaintiff’s Motion for Summary Judgment Response (“Plaintiff’s MSJ Response”) that “Plaintiff would never have signed the 2005 agreement, which purports to be a business separation agreement allocating assets owned jointly by Plaintiff and Defendant Novak, if he had known the true facts that Defendants were required to disclose, namely, that Defendants Novak and Covert had created additional partnerships behind his back and without his inclusion.” However, this is still Plaintiff’s argument. What Defendants have done however, is to mischaracterize Plaintiff’s fraudulent concealment claim by narrowing its scope. In other words, Defendants erroneously assume Plaintiff’s fraudulent concealment claim to be Plaintiff would not have signed the separation agreement but for Defendants concealment of The Partnerships 10 As this brief will show, nor did Plaintiff have a duty to investigate into Defendants’ misconduct in forming of these partnerships. 11 Id. at 82-85. 12 Id. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 5 existence. Following this logic, if Plaintiff is claiming he did have knowledge of these entities when he signed the Separation Agreement, Plaintiff is now admitting this testimony to be false. However, that is not Plaintiff’s claim. What he argued both in Plaintiff’s MSJ Response and at the Hearing on Summary Judgment, and stillargues now, is that Plaintiff did not know Defendants had created these partnerships and that they had been doing so behind his back since early 2004. 13 Because the parties were already in the business of developing ER Clinics across the country, Defendants had a duty to fully disclose their misconduct in forming The Partnerships. They did not. Thus, even if Plaintiff gained knowledge of the existence of these entities after they had begun winding up their partnership, it would not have occurred to him, nor should it have, that the formation of these entities had been in the works as late as February 2004. So, Plaintiff’s argument remains the same: “Plaintiff would not have signed the Separation Agreement . . . if he had known the true facts that Defendants were required to disclose, namely, that Defendants Novak and Covert had created additional partnerships behind his back and without his inclusion”. 14 What Defendants fail to recognize, or choose to ignore, is that Plaintiff argues, and has argued from the outset, that Defendants did not disclose the names of The Partnerships and Defendants misconduct surrounding the formation of The Partnerships. Maybe Defendants attack Plaintiff’s argument because they fail to recognize the importance of this distinction.15 Defendants at all times owed Plaintiff the duty of full disclosure. Had he known they had concealed their misconduct, which had been ongoing as late as February 2004, Plaintiff would never have signed the Separation Agreement. 13 Id. at 70, 80-82. 14 See Plaintiff’s Motion for Summary Judgment Response attached as Exhibit “C” at 1. 15 See Exhibit “A” at 59, 103. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 6 Thus, Plaintiff has not and is not contending that the only critical fact that fraudulently induced him into signing the Separation Agreement was his lack of knowledge of the existence of competing entities in May 2005. Instead, Plaintiff contends that by not disclosing Defendants misconduct in forming these The Partnerships from the outset, which pre-dates the parties failed mediation by over a year, Plaintiff was fraudulently induced to signing the Separation Agreement. Following this logic, if Plaintiff gains some knowledge of The Partnerships after the parties have made begun winding up their partnership, Plaintiff wouldn’t have the requisite knowledge that these Partnerships were created behind his back. 16 This same argument was raised and clarified at the Summary Judgment Hearing. It was then further clarified in Plaintiff’s Third Amended Petition. Thus, Defendants’ argument that Plaintiff is presenting the Court with a “new spin” is both false and misleading. B. Statute of Limitations in the Context of Investments and Fiduciaries: Courts determine that due diligence is not required because the injury is often inherently undiscoverable. Thus, Plaintiff’s knowledge of these competing entities is not material The discovery rule exception defers accrual of a cause of action until the plaintiff knew or, exercising reasonable diligence, should have known of the facts giving rise to the cause of action. Trinity River Auth. v. URS Consultants, 889 S.W.2d 259, 262 (Tex.1994). What constitutes reasonable diligence to discover fraud in a particular case is a question of fact, and must be determined from all the facts and circumstances in evidence. Ruebeck v. Hunt, 142 Tex. 167, 171, 176 S.W.2d 738, 740 (1943). See also, Cadle Co. v. Wilson, 136 S.W.3d 345, 352 (Tex. App. -- Austin 2004, no pet.) (“when a plaintiff knew or should have known of an injury is generally a question of fact”). The beginning of the limitations period can only be determined as a matter of law when the record is such that reasonable minds could not differ on the conclusion 16 (Again, as you will see, the law is clear Plaintiff had no duty to inquire into Defendants actions once gaining this knowledge whether he viewed The Partnerships as “forward looking” or not). PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 7 to be drawn from the facts. Id., citing Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex.1998). See also, Ruebeck, supra (“[u]nless the evidence is such that reasonable minds may not differ as to its effect, the question as to whether a party has exercised diligence in discovering fraud is for the jury”). The Texas Supreme Court has held that the discovery rule applies when the nature of the plaintiff's injury is “inherently undiscoverable” and “objectively verifiable.” Wagner & Brown, Ltd., 58 S.W.3d 732, 734 (Tex. 2001). An injury is inherently undiscoverable if it is “unlikely to be discovered within the prescribed limitations period despite due diligence.” S.V. v. R.V., 933 S.W.2d 1, 7 (Tex. 1996). The Texas Supreme Court has determined that a fiduciary's misconduct is often, by its very nature, inherently undiscoverable. See Willis v. Maverick, 760 S.W.2d 642, 645 (Tex.1988); Slay v. Burnett Trust, 143 Tex. 621, 187 S.W.2d 377, 394 (1945). In S.V., the Court held that “a person to whom a fiduciary duty is owed is relieved of the responsibility of diligent inquiry into the fiduciary's conduct, so long as the relationship exists.” S.V., 933 S.W.2d at 8. His only responsibility is not to ignore misconduct if the misconduct is apparent, not to diligently inquire into the fiduciary’s conduct. Id. See West v. Proctor, 353 S.W.3d 558, 566-67 (Tex. App. -- Amarillo 2011, pet. denied) (same) See also e.g. Friddle v. Fisher, 378 S.W.3d 475, 484-485 (Tex. App.–Texarkana 2012, pet. denied) (fiduciary relationship relieves plaintiff of diligent inquiry into defendant’s conduct). The Court in S.V. explained the principle behind these decisions is that a person to whom a fiduciary duty is owed is either unable to inquire into the fiduciary's actions or unaware of the need to do so. Id.; See also Willis, 760 S.W.2d at 645 (“facts which might ordinarily require investigation likely may not excite suspicion where a fiduciary relationship is involved.”); Slay, 187 S.W.2d at 394 PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 8 (knowledge of facts did not cause trust beneficiaries or co-trustees to suspect wrongdoing by other co-trustees). This fundamental rule of law applies specifically to the issues in this case. At the February 5th Hearing, the Court asked counsel for Plaintiff: if Plaintiff knew about these entities in May of 2005, why didn’t Plaintiff ask whether they were partnership assets if [he] knew of their existence? 17 The answer is simple. Defendants fraudulently concealed from Plaintiff their misconduct that dated back to no later February 2004. Given the fiduciary relationship between the parties, Texas law provides that Plaintiff has no duty to mistrust his partner and is relieved of the duty to inquire in his or her conduct. As Defendants correctly state, it would be immaterial whether or not Plaintiff was aware that The Partnerships were “competing entities.” However, their reasoning to support this contention is ill-guided. Defendants brief essentially backs the Court into two alternatives: 1) if privileged documents that show Plaintiff was aware The Partnerships were not just “forward looking” are material, then an in camera review is necessary; or 2 ) if privileged documents that show Plaintiff was aware The Partnerships were not just “forward looking” are immaterial, then Plaintiff cannot assert fraudulent concealment. This grossly misstates the issue. As Defendants point out, fraudulent non-disclosure requires the misrepresented facts to be material. 18 To clarify, Plaintiff explicitly asserts that the facts concealed from him are material. In other words, had plaintiff known of Defendants fraudulent misconduct, i.e. had he known Defendants had been working to create competing partnerships as early as February of 2004 in direct contravention of Plaintiff and Defendant Novak’s partnership, he never would have signed the Separation Agreement. However, in regards to the materiality or “outcome 17 See Exhibit “A” at 27-28. 18 Horizon Shipbuilding v. Blyn II Holding, 324 S.W.3d 840, 850 (Tex.App. ‒ Houston [14th Dist.] 2010, no pet.). PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 9 determinative” requirement of the “Offensive Use Doctrine,” Plaintiff asserts that privilege documents evidencing his knowledge that The Partnerships were not “forward looking” are immaterial. Why is this distinction important? Because even if these privileged documents exist, this knowledge, as the law provides, would not have imputed a duty to Plaintiff to further inquire into the material facts, i.e. that Defendants had created these partnerships and were breaching their fiduciary duties owed to him no later than February 2004. Although Defendants have used the term “material” in the context of fraudulent concealment interchangeably with “material” or “outcome determinative” in the context of the “Offensive Use Doctrine”, they are not one in the same. 1. Defendant Novak is a fiduciary to Plaintiff The Texas Supreme Court has long recognized “as a matter of common law that ‘[t]he relationship between . . . partners . . . is fiduciary in character, and imposes upon all the participants the obligation of loyalty to the joint concern and of the utmost good faith, fairness, and honesty in their dealings with each other with respect to matters pertaining to the enterprise.’” Lifshutz v. Lifshutz, 199 S.W.3d 9, 22 (Tex.App.-San Antonio 2006, pets. denied) (quoting Bohatch v. Butler & Binion, 977 S.W.2d 543, 545 (Tex.1998); See also Fitz–Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 264 (1951)). As a fiduciary, a partner is under the same obligation as a corporate fiduciary not to usurp corporate opportunities. Id. As if this is an issue yet to be decided, Defendant’s repeatedly state, without colorable support, that there was no fiduciary duty owed to Plaintiff. However, the only argument they make in support if this fallacy is the same argument they made at the August 29th Hearing, namely, that the ON LLC regulations negate this duty. 19 However, ON LLC, like ECC 19 See Exhibit “B” 56, 68-69. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 10 20 Management (“ECC”), was created for the limited purpose to act as an MSO. Moreover it was never intended that the parties could directly compete with each other in building ER Care 21 facilities. It’s clear the law recognizes that partners owe each other fiduciary duties. Moreover, despite repeatedly calling it an alleged partnership in Defendant’s Brief, Defendant Novak has already admitted, nor did he deny, that he and Plaintiff were partners. 22 What’s more, as is the common theme, this was already addressed at the August 29th Hearing. 23 Thus, there is no denying that Plaintiff and Defendant Novak were partners and that a fiduciary relationship existed between them. 2. Defendants Misconduct was not Apparent Nor was Defendants misconduct apparent. See S.V., 933 S.W.2d at 8; Cluck v. Mecom, 401 S.W.3d 110, 116 (Tex.App.-Houston [14th Dist.] 2011, pet. denied) (holding the trial court erred by granting traditional summary judgment based on statute of limitations relative to claim for breach of fiduciary duty because facts that plaintiff’s were suspicious of fiduciaries misconduct did not conclusively demonstrate the misconduct was apparent). However, as Plaintiff made clear at the August 29th Hearing, knowledge of the existence of these competing entities in May of 2005, two months after the parties had conducted a failed mediation, would not provide Plaintiff a reason, nor the duty, to suspect Defendants misconduct. In other words, if 20 The crux of Plaintiff and Defendant Novak’s joint venture was to own, operate, manage and staff emergency care facilitiesacross the country. Thus, it was Defendants’ creation of the ER clinics, namely, Sterling Ridge, Kuykendahl, Frisco Lebanon and Cypressville, and concealment of the same, during Plaintiff and Defendant Novaks’ partnership that Plaintiff alleges was a breach of fiduciary duty. A necessary component of their business model was creating a Management Services Organization or “MSO”, the purpose of which was to provide management and administrative support for their clinics. However, given the structure and limited scope of an MSO’s purpose, it is necessary that the MSO and its affiliates, namely, agents or employees of the MSO, be allowed to compete with one another. 21 See Exhibit “B” at 68-69. 22 See excerpt from Novak’s Deposition Exhibit attached as Exhibit “D”. 23 See Exhibit “B” at 67. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 11 Plaintiff is discovering the names and existence of The Partnerships that Defendant’s had created and that they were “competing entities” two months after they began winding up their partnership, Plaintiff would have no reason to suppose, nor duty to inquire, that Defendants had created these entities as early as 2004. Instead, itwas Defendants duty to inform him of these facts. But just as they stated in their depositions, neither Defendant Novak or Covert ever disclosed to Plaintiff these entities prior to the signing of the Separation Agreement nor were the clinics, Sterling Ridge, Kuykendahl, Cypressville and Frisco Lebanon, included in the Separation Agreement. 24 III. CONCLUSION As counsel for Defendants stated at both the hearing for Motion for Summary Judgment and at the hearing on the Motion to Compel, these entities were a matter of public record. Assuming this was the means by which one gathered this type of information in 2005, why didn’t Plaintiff log on to the Secretary of State’s website and figure out when these entities were created? The answer is simple. He did not have this duty. The duty of full disclosure was on Defendants. As such, Texas law provides that Plaintiff is relieved of the duty to diligently inquire into his partners conduct. Therefore, even if privileged documents show Plaintiff (or his attorney) had knowledge that The Partnerships were not just “forward looking,” these documents are clearly immaterial. 24 See Exhibit “D”; See also Excerpts from Covert’s Deposition attached as Exhibit “E”. PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 12 Respectfully submitted, FEE, SMITH, SHARP & VITULLO ________________________________ Anthony L. Vitullo State Bar No. 20595500 Lance L. Livingston State Bar No. 24068269 Three Galleria Tower 13155 Noel Road, Suite 1000 Dallas, Texas 75240 (972) 934-9100 (972) 934-9200 [Fax] and John L. Malesovas The Malesovas Law Firm Texas State Bar No. 12857300 816 Congress Ave. Suite 1265 Austin, TX 78701 Telephone: (512) 708-1777 Telecopier: (512) 708-1779 john@malesovas.com ATTORNEYS FOR PLAINTIFF CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing was forwarded by certified mail, return receipt requested, facsimile transmission, or email transmission to the following on February 19, 2015: D. Ronald Reneker Michael C. Lee Munsch Hardt Kopf & Harr, P.C. 500 North Akard Street, Suite 3800 Dallas, TX 75201-6659 214-855-7584 Facsimile mlee@munsch.com rreneker@munsch.com Attorneys for Defendant, Jacob Novak PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 13 Richard A. Sayles William S. Snyder Sayles Werbner, PC 4400 Renaissance Tower 1201 Elm Street Dallas, TX 75270 214-939-8787 Facsimile dsayles@swtriallaw.com wsnyder@swtriallaw.com Attorneys for Defendant, Jacob Novak K. Todd Phillips Joseph R. Callister Wick Phillips Gould & Martin, LLP 3131 McKinney Avenue, Suite 100 Dallas, TX 75204 214-692-6255 Facsimile todd.phillips@wickphillips.com joseph.callister@wickphillips.com Attorneys for Defendant, Rick Covert Seymour Roberts, Jr. Douglas J. Buncher Neligan Foley LLP 325 North St. Paul Street, S uite 3600 Dallas, TX 75201 214-840-5301 Facsimile dbuncher@neliganlaw.com sroberts@neliganlaw.com Attorneys for Defendant, Heather Weimer /s/ Lance L. Livingston Lance L. Livingston PLAINTIFFS’ REPLY TO DEFENDANT’S BRIEF Page 14 Page 1 1 REPORTER'S RECORD 2 VOLUME 3 OF 4 3 TRIAL COURT CAUSE NO. DC-13-13980-B 4 5 CHARLES O'HEARN, ) IN THE DISTRICT COURT Plaintiff, ) 6 ) VS. ) OF DALLAS COUNTY, TEXAS 7 ) JACOB NOVAK, RICK COVERT, ) 8 and HEATHER WEIMER, ) Defendants. ) 44TH JUDICIAL DISTRICT 9 10 11 12 DEFENDANT NOVAK'S MOTION TO COMPEL 13 and 14 PLAINTIFF O'HEARN'S MOTION TO QUASH 15 which were heard on 16 Thursday, February 5, 2015 17 18 19 On the 5th day of February 2015, the following 20 proceedings came on to be heard in the above-entitled 21 and numbered cause before the Honorable Bonnie Lee 22 Goldstein, Judge Presiding, held in Dallas, Dallas 23 County, Texas. 24 Proceedings reported by machine shorthand 25 utilizing computer-assisted realtime transcription. David W. Langford, CSR Hon. Bonnie L. Goldstein (214) 653-7395 Judge, 44th District Court EXHIBIT A Page 2 1 2 3 APPEARANCES: 4 5 6 MR. ANTHONY L. VITULLO ATTORNEY FOR PLAINTIFF Texas State Bar No. 20595500 Charles O'Hearn, M.D. 7 Email: LVitullo@FeeSmith.com MR. RYAN THOMAS STEINBRUNNER 8 Texas State Bar No. 24093201 Email: RSteinbrunner@FeeSmith.com 9 FEE, SMITH, SHARP & VITULLO, LLP Three Galleria Tower 10 13155 Noel Road, Suite 1000 Dallas, Texas 75240 11 Telephone: (972) 934-9100 Facsimile: (972) 934-9200 12 13 14 15 MR. WILLIAM S. SNYDER ATTORNEY FOR DEFENDANT Texas State Bar No. 00786250 Jacob Novak, M.D. 16 Email: WSnyder@SWTrialLaw.com SAYLES WERBNER, P.C. 17 4400 Renaissance Tower 1201 Elm Street 18 Dallas, Texas 75270 Telephone: (214) 939-8700 19 Facsimile: (214) 939-8787 20 21 MR. JOSEPH R. CALLISTER ATTORNEY FOR DEFENDANT Texas State Bar No. 24059054 Rick Covert 22 Email: Joseph.Callister@WickPhillips.com WICK PHILLIPS GOULD & MARTIN, LLP 23 3131 McKinney Avenue, Suite 100 Dallas, Texas 75204 24 Telephone: (214) 692-6200 Facsimile: (214) 692-6255 25 David W. Langford, CSR Hon. Bonnie L. Goldstein (214) 653-7395 Judge, 44th District Court EXHIBIT A Page 3 1 2 3 APPEARANCES continued: 4 5 6 MR. SEYMOUR ROBERTS, JR. ATTORNEY FOR DEFENDANT Texas State Bar No. 17019150 Heather Weimer 7 Email: SRoberts@NeliganLaw.com NELIGAN FOLEY, LLP 8 325 N. St. Paul Street, Suite 3600 Dallas, Texas 75201 9 Telephone: (214) 840-5349 Facsimile: (214) 840-5301 10 11 12 13 14 15 16 * * * 17 18 19 20 21 22 23 24 25 David W. Langford, CSR Hon. Bonnie L. Goldstein (214) 653-7395 Judge, 44th District Court EXHIBIT A Page 4 1 2 VOLUME 3 INDEX 3 of the 4 DEFENDANT NOVAK'S MOTION TO COMPEL 5 and 6 PLAINTIFF O'HEARN'S MOTION TO QUASH 7 which were heard on 8 Thursday, February 5, 2015 9 10 PROCEEDINGS Page Vol 11 Proceedings on the record.................... 6 3 12 Argument presented by Mr. Lenny Vitullo...... 7 3 13 Response presented by Mr. Will Snyder........ 56 3 14 Rebuttal response by Mr. Lenny Vitullo....... 86 3 15 Arguments back and forth between counsel..... 99