Motion to Dismiss in ROBERT SHIELDS, et al vs. GROVER SHIELDS, et al| Trellis.Law

On June 29, 2018 a Hearing was filed involving a dispute between Mri Centers Of Texas, Llc, Shields, Robert, and Dfw Open Mri Lp, Shields, Grover, Shields Management Group, Llc, Virtual Chart Solutions I Inc., for CNTR CNSMR COM DEBT in the District Court of Dallas County.

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FILED
6/5/2020 3:42 PM
FELICIA PITRE
DISTRICT CLERK
DALLAS CO., TEXAS
Miranda Lynch DEPUTY

CAUSE NO. DC-18-08556

MRI CENTERS 0F TEXAS LLC, IN THE DISTRICT COURT

Plaintiff,

134th JUDICIAL DISTRICT
GROVER SHIELDS, SHIELDS mommmommmommmommmom

MANAGEMENT GROUP, L.L.C.,
DFW OPEN MRI, L.P. and
VIRTUAL CHART SOLUTSIONS
1, INC., DALLAS COUNTY, TEXAS

Defendants.

DEFENDANTS’ MOTION TO DISMISS THE THIRD AMENDED PETITION
UNDER THE TEXAS CITIZENS PARTICIPATION ACT

SBAITI & COMPANY PLLC
Mazin A. Sbaiti
Texas Bar N0. 24058096
J. Michal Zapendowski
Texas Bar No. 24075328
J.P. Morgan Chase Tower

2200 Ross Avenue, Suite 4900W
Dallas, Texas 75201
T: (214) 432-2899
F: (214) 853-4367
E: mas@sbaitilaw.com
jmz@sbaitilaw.com

COUNSEL FOR DEFENDANTS
TABLE OF CONTENTS
TABLE OF AUTHORITIES ...................................................................................................... iii
I. INTRODUCTION ............................................................................................................1
II. FACTUAL BACKGROUND ...........................................................................................2
A. Procedural Background ............................................................................................2
B. The 2013 Settlement ................................................................................................3
C. VCSI, an Entity Formed After the Settlement,
Brings a Federal Lawsuit Related to the Same Events
as This Lawsuit—Leading to a Final Judgment ......................................................3

D. Plaintiff’s New Claims Against Defendants in this Lawsuit ...................................5

III. ARGUMENT ....................................................................................................................6

A. This TCPA Motion is Timely ..................................................................................6

1. The Claims Against Defendant VCSI Were
First Served on April 22, 2020...........................................................................6

2. The Alter Ego Claim is New, and Was First
Served on April 22, 2020 ...................................................................................7

3. All of Plaintiff’s Remaining Claims Are Subject to
a TCPA Motion, Because the Third Amended Petition
is Substantially Different from the Previous Petition ........................................7

B. PLAINTIFF’S CLAIMS TRIGGER THE TCPA....................................................8

1. The Breach of Contract Claim, and the Attorneys’
Fees Claim Based on it, are Expressly Based Upon
VCSI’s Exercise of the Right to Petition and the
Remaining Defendants’ Exercise of their Right
to Petition and Right of Association ..................................................................8

2. The Alter-Ego/Veil-Piercing Claims Are Likewise
Expressly Based Upon VCSI’s Exercise of the Right
to Petition and the Remaining Defendants’ Exercise
of the Right to Petition and Right of Association ............................................10

C. PLAINTIFF’S CLAIMS ARE BARRED BY RES JUDICATA ...........................12

i
1. Res Judicata Applies to Bar This State-Court Litigation,
Which Arises from the Same Set of Operative Facts
as the Federal Lawsuit .....................................................................................12

2. Res Judicata Applies Not Only to the Parties to the
Federal Lawsuit, But Also Those in Privity With
Them (Which Includes All Parties to the Present Suit) ...................................15

D. PLAINTIFF’S CLAIMS FAIL AS A MATTER OF LAW ..................................18

1. The Breach of Contract and Derivative Attorneys’
Fees Claim Both Fail .......................................................................................18

a. VCSI Was Not a Party to the Settlement
Agreement, and Did Not Even Exist at
the Time of the Settlement .........................................................................18

b. VCSI’s Claims Did Not Exist at the Time
of the Settlement And Were Not Released
by the Settlement........................................................................................19

c. VCSI’s Filing of Lawsuits is Not a Breach
by the Remaining Defendants ....................................................................20

d. Plaintiff Has No Damages Beyond What it
Already Obtained in the Federal Lawsuit ..................................................20

2. The Separate Alter-Ego, Veil-Piercing Claims Likewise Fail .........................21

a. The filing of a lawsuit is not a valid basis
for veil-piercing .........................................................................................21

b. The standard for veil-piercing and alter ego
in Texas is very high ..................................................................................21

c. Plaintiff has the Evidence Proving that VCSI is a
Legitimate Entity Formed for a Legitimate Business Purpose ..................24

IV. SUMMARY CHART .....................................................................................................27

V. CONCLUSION ...............................................................................................................29

ii
TABLE OF AUTHORITIES
Cases
Absolute Energy Sols., LLC v. Trosclair, No. H-13-3358,
2015 U.S. Dist. LEXIS 38088 (S.D. Tex. 2015) .....................................................................17

Accord Drier v. Tarpon Oil Co., 522 F.2d 199 (5th Cir. 1975)..................................................16

Amstadt v. United States Brass Corp., 919 S.W.2d 644 (Tex. 1996) ...................................12, 15

Angus v. Air Coils, Inc., 567 S.W.2d 931 (Tex. Civ. App.—Dallas 1978, no writ) ...................21

In re Ark-La-Tex Timber Co., Inc., 482 F.3d 319 (5th Cir. 2007) ..............................................13

Astron Indus. Assocs., Inc. v. Chrysler Motors Corp., 405 F.2d 958 (5th Cir. 1968) ................16

Baker v. Gold Seal Liquors, Inc.,
417 U.S. 467, 94 S. Ct. 2504, 41 L. Ed. 2d 243 (1974) ...........................................................14

Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816 (Tex. 1984) ..............................................12

Cont’l Motors, Inc. v. Stoller, No. 5:17-623,
2019 U.S. Dist. LEXIS 144239 (W.D. Tex. 2019) ............................................................ 15-16

In re Estate of Check, 438 S.W.3d 829 (Tex. App.—San Antonio 2014, no pet.) .......................7

Davis v. Dallas Area Rapid Transit, 383 F.3d 309 (5th Cir. 2004) ............................................13

Dean v. Miss. Bd. of Bar Admissions, 394 F. App’x 172 (5th Cir. 2010) ..................................17

Durham v. Accardi, 587 S.W.3d 179 (Tex. App.—Houston [14th Dist.] 2019, no pet.) ...........22

Eubanks v. FDIC, 977 F.2d 166 (5th Cir. 1992).........................................................................13

Evans v. General Insurance Co. of America,
390 S.W.2d 818 (Tex. Civ. App.—Dallas 1965, no writ) .......................................................22

Gracia v. RC Cola-7-Up Bottling Co., 667 S.W.2d 517 (Tex. 1984).........................................12

Getty Oil Co. v. Insurance Co. of N. Am., 845 S.W.2d 794 (Tex. 1992) ....................................16

Hanson Southwest Corp. v. Dal-Mac Construction Co.,
554 S.W.2d 712 (Tex. Civ. App.—Dallas 1977, writ ref’d n.r.e.) .................................... 21-22

In re Hernandez, No. 10-70844, 2013 Bankr. LEXIS 2340 (Bankr. S.D. Tex. 2013) ...............17

iii
Higgins v. NMI Enters., N0. 09-6594,
2012 U.S. Dist. LEXIS 170412 (ED. La., NOV. 30, 2012) ..................................................... 17

Howell Hydrocarbons, Inc. v. Adams, 897 F.2d 183 (5th Cir. 1990) ......................................... 16

In re JNS Aviation, LLC, 376 B.R. 500, 522 (Bankr. N.D. TeX. 2007) ...................................... 17

James v. Calkins, 446 S.W.3d 135 (Tex. App.—Houston [lst Dist] 2014, pet. denied) ............. 7

Jannise v. LLC, N0. 14-18-00516-CV,
Enter. Prods. Operating
2019 Tex. App. LEXIS 6468 (Tex. App.—Houston [14th Dist] July 30, 2019, n0 pet.) ....... 19

Jeanes v. Henderson, 688 S.W.2d 100 (TeX. 1985) ............................................................. 12-13

Jordan v. Hall, 510 S.W.3d 194 (Tex. App.—Houston [lst Dist] 2016, n0 pet.) ................... 7-8

Mancilla v. Taxfree Shopping, Ltd, N0. 05-18-00136-CV, 2018 Tex. App. LEXIS 9371
2018 WL 6850951 (Tex. App.—Da11as NOV. 16, 2018, n0 pet.) ............................................... 7

Massachusetts v. Davis, 140 Tex. 398, 168 S.W.2d 216 (TeX. 1943) ........................................ 22

McDaniel v. Anheuser—Busch, Ina, 987 F.2d 298 (5th Cir. 1993) ............................................. 14

Meza v. General Battery Corp, 908 F.2d 1262 (5th Cir. 1990) ........................................... 13, 16

Miller Weisbrod, L.L.P. v. Llamas-Soforo
511 S.W.3d 181 (Tex. App.—El Paso 2014, n0 pet.) ................................................................ 7

Oreck Direct, LLC v. Dyson, Ina, 560 F.3d 398 (5th Cir. 2009) ............................................... 13

Pace Corporation v. Jackson, 155 TeX. 179, 284 S.W.2d 340 (TeX. 1955) .............................. 21

Pinebrook Props., Ltd. v. Brookhaven Lake Prop. Owners Ass ’n,
77 S.W.3d 487 (Tex. App.—Texarkana 2002, pet. denied) .................................................... 20

RPV, Ltd. v. Netsphere, Ina, 771 Fed. App’x 532 (5th Cir. 2019) ............................................. 14

Radio KBUY, Inc. v. Lieurance,
390 S.W.2d 16 (Tex. CiV. App.—Amarillo 1965, n0 writ) ..................................................... 22

Robinson v. National Cash Register C0., 808 F.2d 1119 (5th Cir. 1987) .................................. 13

Rushing v. Bd. ofSup. offhe U. ofLa Sys., N0. 06-CV-623,
2008 U.S. Dist. LEXIS 68984, 2008 WL 4200292 (M.D. La. Sept. 11, 2008) ....................... 17

SSP Partners v. Gladstrong Invs. Corp, 275 S.W.3d 444 (TeX. 2008) ..................................... 22

iV
Slaughter v. Atkins, 305 F. Supp. 3d 697 (M.D. La. 2018) ........................................................ 17

Scurlock Oil C0. v. Smithwick, 724 S.W.2d 1 (Tex. 1986) ......................................................... 12

Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559 (5th Cir. 2005) ..................................... 13

Tex. Water Rights Com. v. Crow Iron Works, 582 S.W.2d 768 (TeX. 1979) .............................. 16

Trodale Holdings LLC v. Bristol Healthcare Inv ’rs, LP. ,

2017 U.S. Dist. LEXIS 196150 (S.D.N.Y. 2017) .................................................................... 22

Tryco Enters. v. Robinson,
390 S.W.3d 497 (Tex. App.—Houston [lst Dist] 2012) ............................................ 21, 23, 27

Virtual Chart Solutions I, Inc. v. Brian Meredith, Cause N0. DC-15-03468
(Dallas County Dist. Ct. Jan. 28, 2016) ................................................................................. 4, 8

Virtual Chart Solutions I, Inc. v. Brian Meredith, N0. 4:17-CV-00546-ALM
(E.D. TeX. Aug. 4, 2017) ....................................................................................................... 4, 9

Rules

Fed. R. CiV. P. 13(a)(1) ................................................................................................................. 2

Statutes

Texas Citizens Participation Act (TCPA) ......................................................................... 1 passim

Tex. CiV. Prac. & Rem. Code § 27.001(2) .................................................................................. 10

Tex. Civ. Prac. & Rem. Code § 27.001(4) .............................................................................. 9-10

Tex. CiV. Prac. & Rem. Code § 27.001(4)(A)(1) ......................................................................... 9

Tex. Civ. Prac. & Rem. Code § 27.005(b) .................................................................................... 8

Tex. CiV. Prac. & Rem. Code § 27.005(0) ............................................................................ 24, 27

Tex. CiV. Prac. & Rem. Code § 27.009(a)(1) ............................................................................. 29

Tex. Civ. Prac. & Rem. Code § 27.009(a)(2) ............................................................................. 29

Tex. CiV. Prac. & Rem. Code § 37.006(a) .................................................................................. 15

Other Authorities

Restatement (Second) 0f Judgments § 87 ................................................................................... 13
I.

INTRODUCTION

This is a lawsuit over a lawsuit: Plaintiff is suing Defendants for having sued Plaintiff.

Defendants bring this Texas Citizens Participation Act (“TCPA”) motion to dismiss Plaintiff’s

breach of contract, attorneys’ fees, and a1ter-eg0/veil-piercing claims.

The breach of contract claims and related claim for attorneys’ fees clearly implicate

Defendants’ exercise of the right to petition. Plaintiff s alleges that VCSI ﬁled a Federal Lawsuit,

thus breaching its alter egos’ settlement agreement With Plaintiff. This is the quintessential exercise

of the right t0 petition and right 0f association—thus, doubly triggering the TCPA. But Plaintiff

will not be able t0 establish a primafacie case for breach as to any Defendant because:

o VCSI was not even a party to the settlement agreement;

o The claims alleged in the federal lawsuit did not exist when the settlement agreement
was signed, nor did the intellectual property on Which those claims were based belong
t0 VCSI until months after the settlement agreement was signed;

o Plaintiff sued several entities for “breaching the settlement agreement” even though
they did not ﬁle a lawsuit;

o Plaintiff has n0 damages other than the costs of the Federal Lawsuit.

Plaintiff’s alter-ego and veil-piercing claims implicate Defendants’ right to petition and

right of association for the exact same reasons: Plaintiffbases these claims on the Federal Lawsuit

being a breach 0f the settlement agreement. But Texas has never recognized the ﬁling 0f a lawsuit

as a grounds for veil-piercing (indeed, ﬁling a lawsuit is not “wrongdoing” at all).

Finally, Plaintiff’s claims are barred by res judicata. They could and should have been

brought as compulsory counterclaims in the federal lawsuit. They were not; therefore, they are

barred not just as t0 VCSI, but as t0 those Parties in priVity With VCSI—its shareholders, ofﬁcers,

and its alleged alter egos included.

The Court should therefore GRANT this motion in its entirety and dismiss these claims.

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 1
II.

FACTUAL BACKGROUND
A. PROCEDURAL BACKGROUND

This is Plaintiff” s third attempt to try to come up with something to assert against his father

in this state-court lawsuit. The parties are also involved in Federal Litigation. The existence of that

federal litigation itself calls into question the purpose 0f this separate state-court suit. Plaintiff’s

core claim in this lawsuit is that the father’s entity, Virtual Chart Solutions I, Inc. (“VCSI”), sued

Plaintiff in federal court which violated a settlement agreement that father and son signed in 2013.

See Third Amend. Pet. W 2, 18, 24, 25. Ifthat is the case, Plaintiffwas required t0 assert settlement

and release as an afﬁrmative defense in the federal lawsuit, and counter-sue for breach of the

settlement agreement as a compulsory counterclaim under Fed. R. CiV. P. 13(a)(1).

Instead, it chose to bring this separate suit in state court. That implicates resjudicata issues

addressed below, because the federal litigation has already resulted in a ﬁnal judgment fully

adjudicating the dispute between these parties.

Plaintiff is also seeking completely duplicative relief in the two lawsuits (federal and state).

In federal court, it asked for and obtained an award 0f its attorneys’ fees. See G. Shields Decl. EX.

C, at 1. Here, it claims those same attorneys” fees as damages. See Third Amend. Pet. 1]
29.

Plaintiff’s Third Amended Petition also includes a judgment—enforcement action against VCSI,

while it is simultaneously pursuing identical judgment—enforcement proceedings in federal court.

That completely identical claims in federal and state court have been ﬁled is not an accident. It is

part 0f a coordinated attempt to bully and harass Defendants by vexatiously multiplying the legal

actions and driving up costs.

This Court should not allow itself to be drawn into the bully pulpit being erected by

Plaintiff.

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 2
B. THE 2013 SETTLEMENT

This story really begins in February 2013, when son Robert Shields and his father Grover,

Who were in business in the medical industry together, ﬁled competing lawsuits against one

another: Shields v. Shields, Cause N0. DC-13-01347 and DFW Open MRI, LP v. Robert Shields,

Cause No. DC-13-01403. The son stole business. Used common resources to take clients away

from the father’s business (which he ran with his Wife Karen and other son, John). The actions

were consolidated in this Court and eventually resolved through an April 22, 2013 Settlement

Agreement (the “Settlement” 0r “Settlement Agreement”).

A true and correct copy 0f the Settlement Agreement is attached as Exhibit A to the

accompanying Grover Shields Declaration (the “G. Shields Decl.”).

T0 resolve some technicalities: the parties t0 the Settlement Agreement included the two

predecessors in interest 0f the Plaintiff here, MRI Centers 0f Texas, LLC,1 as well as three 0f the

four Defendants: Grover Shields, Shields Management Group, L.L.C. and DFW Open MRI, L.P.
See G. Shields Decl. Exhibit A. VCSI never a party t0 the Settlement.

In summary, all of the parties to this proceeding, except Defendant VCSI, entered into a

Settlement Agreement in April 2013 to resolve their previous disputes. The Settlement Agreement

released all claims then existing between the two sides. It did not release future claims.

C. VCSI, AN ENTITY FORMED AFTER THE SETTLEMENT, BRINGS A FEDERAL LAWSUIT
RELATED T0 THE SAME EVENTS As THIS LAWSUIT—LEADING T0 A FINAL JUDGMENT

After putting his acrimonious relationship With his son behind him through the Settlement,

Grover Shields looked to do new business. So, he decided t0 join forces with a programmer—

Brian Meredith—whom he thought could create a technology t0 license to the industry. G. Shields

agreed t0 arrange for funding and Meredith would d0 the programming and run the business. They

1
Mid Cities Imaging De Soto, LP and Mid Cities Imaging, LP. See Third Amend. Pet. 1]
3.

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 3
formed a new entity called Virtual Chart Solutions I, Inc. (“ﬂ”) in or about May 2013. The

fact that this entity was formed after the Settlement is admitted in Third Amend. Pet. 1]
16.

Although he had hoped his disputes With his son were behind him, Grover later discovered

that his son had been using his relationship with Meredith to get the beneﬁt 0f the technology

VCSI was developing. G. Shields Decl. 1H]
4-5. Grover later consulted With counsel, 0n his own

behalf and on behalf 0f Shields Management Group, LLC, DFW Open MRI, LP and VCSI, to

discuss the possible misappropriation of trade secrets by his son’s company, MRI Centers 0f

Texas—all of Which related to actions Plaintiff was t0 have undertaken after the Settlement

Agreement. See G. Shields Decl. W 2-3.
VCSI later instituted suit against Plaintiff MRI Centers, based 0n misappropriation oftrade

secrets and federal copyright infringement: Virtual Chart Solutions I, Inc. v. Meredith, Cause No.

DC-15-03468 (116th Judicial District Court, Dallas Cty.) and Virtual Chart Solutions I, Inc. v.

Meredith, Cause N0. 4: 17-cv-00546-ALM (E.D. Texas) (the latter, the “Federal Lawsuit”). A true
and correct copy of the Second Amended Complaint (“Complaint”) in VCSI’S Federal Lawsuit is

attached as Exhibit B to the G. Shields Declaration.

In its Federal Lawsuit, VCSI alleged that an individual named Brian Meredith served as its

president from May 20 1 3 through February 20 1 5 (in other words, during a time-period that entirely

post-dates the April 2013 Settlement Agreement). Shields Decl. Exhibit B at 5, ﬂ 23. The Federal

Complaint went 0n to allege that “Meredith—during his employment with VCSI—improperly

provided Defendant [MRI Centers (Plaintiff here)] access t0 and use 0f VCSI’S proprietary

information and VCSI Copyrighted Materials.” Id. at 12, 11
61 (emphasis added).

In other words, the allegations against Plaintiff entirely related to events that post—date

Defendants’ April 20 1 3 Settlement. They centered 0n the allegation that Meredith, While employed

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 4
by VCSI, and after the Settlement between Robert and Grover Shields, improperly passed Grover’s

trade secrets t0 Robert Shields.

The Federal Lawsuit has resulted in a Final Judgment and is currently 0n appeal? A copy
0f the U.S. District Court’s Final Judgment is attached hereto as Exhibit C. The Order Granted

MRI Centers, the Plaintiff here, costs and attorneys’ fees incurred in the Federal Lawsuit. Id. at 1.

D. PLAINTIFF’S NEW CLAIMS AGAINST DEFENDANTS IN THIS LAWSUIT

As noted above, Plaintiff responded to the two VCSI lawsuits by bringing a First Petition

in this Court (Which was withdrawn), a Second Petition (also Withdrawn in response t0 a motion

for summary judgment), and now a Third Petition against Defendants here in this Court.

In its Third Amended Petition, Plaintiff brings a host 0f entirely new claims against

Defendants, completely revised from What it alleged before. A true and correct copy 0f a redline
of the Third Amended Petition (against the previous Second Amended Petition) is attached as

Exhibit D to the G. Shields Declaration.

The current claims, relevant to this motion to dismiss, are as follows:

o Plaintiff’s claim for breach 0f contract based 0n the VCSI lawsuits

The Third Amended Petition’s claim for breach of contract alleges that “one month after

entering this settlement agreement where [the other] Defendants agreed t0 release their claims

against Plaintiff. . . VCSI then sued Plaintiff in Texas state court. .
.” Third Amend. Pet. ﬂ 24.

“Defendant VCSI then ﬁled a new lawsuit against Plaintiff in the United States District Court for

the Eastern District of Texas . .
.” Id. 25.
1]

2
A prior suit VCSI brought involved allegations 0f state-law trade-secret theft not relevant but was dismissed. See
Third Amend. Pet. 11
25.

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 5
Plaintiff alleges that VCSI’s lawsuits against Plaintiff constituted a breach of the

Settlement Agreement. Id. Plaintiff brings its breach of contract claim against all Defendants, not

just VCSI, the party that brought the lawsuits. Id.

o Plaintiff’s Alter-Ego Claims Based 0n The VCSI Lawsuits

Plaintiff also brings an alter ego claim t0 pierce the veil of VCSI and extend its contract

liability t0 the remaining Defendants. Plaintiff states that Defendant Grover Shields was VCSI’S

“sole shareholder and ofﬁcer.” Third Amend. Pet. 1]
54. While this is true today, for the ﬁrst six

years of VCSI’S existence, Brian Meredith held 49% of the company.

The alter-ego claim is based entirely 0n the allegation that “VCSI was incorporated three

weeks after Defendant Grover Shields entered into a settlement agreement, agreeing t0 release all

claims against Plaintiff and dismiss litigation against Plaintiff with prejudice. But then VCSI

asserted the same claims against Plaintiff . .
.” Id. 55. See also id. at 1] 56. Plaintiffbases its alter-
1]

ego claims 0n the fact that “Grover Shields agreed to release all claims against Plaintiff but then

formed VCSI and caused it to assert the same allegedly released claims against Plaintif .”

o Plaintiff’s Claim For Attornevs’ Fees Under Its Claim For Breach Of Contract

Plaintiff also seeks attorneys” fees under the Settlement Agreement, as an ancillary to its

breach 0f contract claim under the Settlement Agreement. Id. W 59-61.
III.

ARGUMENT
A. THIS TCPA MOTION IS TIMELY

1. The Claims Against Defendant VCSI Were First Served 0n April 22, 2020

This TCPA motion—ﬁled 0n June 5, 2020, and targeting new claims that were ﬁrst ﬁled

and served in this proceeding 0n April 22, 2020—is clearly timely. If a party is ﬁrst “named as a

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 6
defendant upon the ﬁling 0f [an] Amended Petition,” that party has sixty days from when it is sued

t0 ﬁle a TCPA motion. Miller Weisbrod, L.L.P. v. Llamas-Soforo, 511 S.W.3d 181, 193-94 (Tex.

App.—E1 Paso 2014, n0 pet). That is What VCSI has done here, and its TCPA motion is therefore

clearly timely. Id.

2. The Alter Ego Claim is New, and Was First Served 0n April 22, 2020

When a new cause of action is added, the deadline for moving t0 dismiss that cause 0f

action is sixty (60) days after that new cause of action was ﬁrst served on the Defendants. See In

re Estate ofCheck, 438 S.W.3d 829, 837 (TeX. App.—San Antonio 2014, n0 pet).

The general rule is that an amended petition asserting new claims based on new factual

allegations resets the TCPA deadline “as to the newly added substance.” See Jordan v. Hall, 5 10

S.W.3d 194, 198 (Tex. App.—Houston [lst Dist] 2016, n0 pet.) (citing James v. Calkins, 446

S.W.3d 135, 142 (TeX. App.—Houston [lst Dist] 2014, pet. denied»; see also Mancilla v. Taxfree

Shopping, Ltd, No. 05-18-00136-CV, 2018 Tex. App. LEXIS 9371, 2018 WL 6850951, at *3

(Tex. App.—Dallas Nov. 16, 2018, n0 pet).

Here, Plaintiff ﬁrst asserted its alter—ego and veil-piercing theories against Defendants in

its Third Amended Petition on April 22, 2020. Therefore, Defendants had sixty days from the date

0f the Third Amended Petition to move t0 dismiss this new claim and these new theories under the

TCPA. Id.

3. All 0f Plaintiff’s Remaining Claims Are Subject t0 a TCPA Motion, Because the
Third Amended Petition is Substantially Different from the Previous Petition

A redline of the Third Amended Petition (compared to the previous Petition) is attached as
Exhibit D t0 the G. Shields Declaration. In the transition from the Second Amended Petition t0 the

Third Amended Petition, eighty-three (83) paragraphs were either completely deleted, added

completely, 0r rewritten Wholesale. See id. Twelve (12) paragraphs appear to have been entirely

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 7
0r substantially left alone. Id. Roughly speaking, then, the Third Amended Petition is 87%

new. As noted above, the general rule is that an amended petition resets the TCPA deadline “as t0

the newly added substance.” Jordan, 510 S.W.3d at 198. Applying this standard, this entire TCPA

motion is therefore timely as to all the claims it targets.

B. PLAINTIFF’S CLAIMS TRIGGER THE TCPA

1. The Breach 0f Contract Claim is Expressly Based Upon VCSI’s Exercise 0f the
Right t0 Petition and the Remaining Defendants’ Exercise 0f Their Right t0
Petition and Right 0f Association

Under the ﬁrst prong 0f the TCPA, it is Defendants’ burden is to “demonstrat[e] that the

legal action is based 0n, relates to, 0r is in response to the party’s exercise of: (1) the right of free

speech; (2) the right t0 petition; or (3) the right 0f association.” Notably, the moving party need

only “demonstrate” that its exercise of one 0r more protected rights is implicated by the pending

lawsuit. See id. This relaxed the previous standard, under Which a party had to establish that its

rights were implicated by a preponderance of the evidence.

Here, Plaintiff’ s breach of contract claim and the related request for attorneys” fees (under

the contract) are expressly based entirely 0n VCSI’s ﬁling 0f two lawsuits. Third Amend. Pet.

W 24-25. The Third Amended Petition alleges that
less than one month after entering this settlement agreement Where
Defendants agreed t0 release their claims against Plaintiff, [the remaining
Defendants] formed Defendant VCSI. . . VCSI then sued Plaintiff in Texas
state court alleging, inter alia, misappropriation of trade secrets. . . See
generally Virtual Chart Solutions I, Inc. v. Brian Meredith, Cause N0. DC-
15-03468 (Dallas County Dist. Ct. Jan. 28, 2016). The failure to release

claims and ﬁling suit against Plaintiff constitutes a breach of contract.

See Third Amend Pet. ﬂ 24 (emphasis added).

3
Tex. CiV. Prac. & Rem. Code § 27.005(b).

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 8
Next, “[i]n mid-2017, Defendant VCSI dismissed the Texas state lawsuit against Plaintiff

without prejudice. Defendant VCSI then ﬁled a new lawsuit against Plaintiff in the United

States District Court for the Eastern District of Texas alleging, inter alia, misappropriation 0ftrade

secrets upon facts substantially similar t0 the earlier lawsuits. See generally Virtual Chart

Solutions I, Inc. v. Brian Meredith, N0. 4:17-CV-00546-ALM (E.D. TeX. Aug. 4, 2017).

Defendants’ failure t0 release the claims asserted and ﬁling suit against Plaintiff constitutes a

second breach of contract.” Id. ﬂ 25 (emphasis added).

In other words, the two alleged breaches are VCSI ﬁling its ﬁrst lawsuit, and VCSI ﬁling

its second lawsuit. Id. W 24-25. Defendants are being sued for the act of petitioning a Court. See
Tex. CiV. Prac. & Rem. Code § 27.001(4) (the exercise of the right t0 petition includes making

any communication “in 0r related t0 a judicial proceeding”). Plaintiff’s claims therefore clearly

fall under TeX. CiV. Prac. & Rem. Code § 27.001(4)(A)(1).
The Remaining Defendants

As t0 the remaining Defendants, their exercise of multiple protected rights is likewise being

infringed upon by these new claims. As explained in the G. Shields Declaration that accompanies

this motion:

2. As an ofﬁcer of Virtual Chart Solutions I, Inc. (“VCSI”), I was involved in
discussions related t0 two legal proceedings VCSI instituted against MRI Centers
of Texas LLC, one in state court and one in federal court. Both before and during
each of these proceedings, I engaged in extensive communications with litigation
counsel about the rights VCSI was suing to protect, how they should be protected,
among other discussions related t0 moving those I had these
lawsuits forward.
communications both in my individual capacity, as a principal, as well as 0n behalf
0f my companies Shields Management Group, LLC, DFW Open MRI, LP and
VCSI. Although each 0f these entities is separate and distinct, they each have an
(VCSI) succeeding in protecting its intellectual
interest in their afﬁliated entity
property. As d0 I owned VCSI. DFW Open MRI was a licensee
because I partly
of VCSI’S software that had an interest in seeing it not used by an unlicensed
competitor, and Shields Management holds an interest in DFW Open MRI.
Without waiving attorney-client privilege, the general purpose of these

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 9
communications was t0 pursue my and all these entities’ common interest in seeing
VCSI succeed in its lawsuit and in defending its intellectual property, and to
strategize concerning the lawsuits, discuss relevant legal issues, and other matters
pertinent t0 the two judicial proceedings. These communications both pre-dated
and post-dated the ﬁling 0f the two suits by VCSI and continued throughout the
proceedings, one 0f Which (the federal lawsuit) remains pending 0n appeal.

3. Ibelieved at the time I was having these communications with counsel that
I, and all the afore-mentioned entities, were exercising our right t0 petition because
we were communicating with counsel regarding actual, pending judicial
proceedings. I also believed that I, and all the afore-mentioned entities, were
exercising our right 0f association because we were communicating With our
counsel t0 express, promote, pursue, and defend our interests relating to two
governmental proceedings (namely, the VCSI lawsuits, Which are judicial
proceedings and therefore governmental proceedings).

G. Shields Decl. 1W 2-3.

As noted above, the TCPA deﬁnes the exercise of the right t0 petition as making any

communication “in 0r related t0 a judicial proceeding.” Tex. CiV. Prac. & Rem. Code § 27.001(4).
The two VCSI lawsuits are judicial proceedings. Meanwhile, the exercise of the right of

association is deﬁned as, inter alia, t0 “join together t0 collectively express, promote, pursue, 0r

defend common interests relating to a governmental proceeding.” Tex. CiV. Prac. & Rem. Code §

27.001(2). Therefore, Plaintiff s breach of contract claim implicates the exercise of both rights.

2. The Alter-Ego/Veil—Piercing Claims Are Likewise Expressly Based Upon
VCSI’s Exercise 0f the Right t0 Petition and the Remaining Defendants’
Exercise 0f the Right t0 Petition and Right 0f Association

Without re-hashing all of the above arguments, these infringements on Defendants’ TCPA

rights is equally applicable to Plaintiff” s new claims for a1ter-ego/veil-piercing. Just like the breach

0f contract claim, Plaintiff’ s alter ego claims are also expressly based on VCSI’s ﬁling of the two

lawsuits and target all Defendants for their role in bringing these suits about.

Defendants alleged to be the alter egos of VCSI because “VCSI was incorporated three

weeks after Defendant Grover Shields entered into a settlement agreement, agreeing to release all

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT PAGE 10
claims against Plaintiff and dismiss litigation against Plaintiff with prejudice. But then VCSI

asserted the same claims against Plaintiff.” Third Amend. Pet. 1]
55.

In the next paragraph, Plaintiff adds as a basis for its alter ego claim that “Grover Shields

agreed t0 release all claims against Plaintiff but then formed VCSI and caused it t0 assert the

same allegedly released claims against Plaintiff.” Id. 1]
56. It goes on to claim that “honoring the

corporate structure and nominal independence 0f VCSI would result in an injustice in allowing

Defendants . . . to make an agreement and release all claims against Plaintiff . . . while being able

t0 simply transfer the claims that should have been released t0 a new entity that could then sue

Plaintiff.” 1d.

In other words, it could not be clearer—the a1ter-ego/veil-piercing claims are being brought

against Defendants because VCSI ﬁled its two lawsuits. Defendants are being targeted for their

role in bringing about those suits. This implicates Defendants’ exercise 0f the right t0 petition and

their exercise 0f the right 0f association for the exact same reasons elaborated supra in relation t0

the breach 0f contract claim. VCSI’s ﬁling 0f the two suits is an exercise of the right t0 petition;

the very deﬁnition 0f it. Meanwhile, the remaining Defendants’ role in bringing about those suits

is an exercise of the right of association.

All 0f the causes 0f action targeted by this motion therefore trigger the TCPA, because

they are based upon and in response t0 Defendants’ exercise of the right to petition and right of

association. (Notably, however, it is incorrect that Defendants “assigned” their claims against

Plaintiff t0 VCSI, and Plaintiff will not be able to come forward With any evidence of this—there

was never any assignment 0f claims from the remaining Defendants to VCSI).

DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S THIRD AMENDED
PETITION UNDER THE TEXAS CITIZENS PARTICIPATION ACT

Case Info

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TILLERY, DALE Track Judge’s New Case

Case No.

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Document Filed Date

June 29, 2020

Case Filing Date

June 29, 2018

County

Parties

AYRES, CHRISTOPHER S Attorney for the Plaintiff
DFW OPEN MRI LP Defendant
MRI CENTERS OF TEXAS, LLC Plaintiff
SBAITI, MAZIN A Attorney for the Defendant
SHIELDS, GROVER Defendant
SHIELDS MANAGEMENT GROUP, LLC Defendant
SHIELDS, ROBERT Plaintiff
STANTON, JAMES M Attorney for the Plaintiff
VIRTUAL CHART SOLUTIONS I INC. Defendant
Jennifer Richards Attorney
Brandon Fuqua Attorney
Marc Taubenfeld Attorney
Jan Zapendowski Attorneys for Defendants
Jose Portela Attorney
Ronald Burns Attorneys for Plaintiffs
Rowe Ayres Attorneys for Plaintiffs
Robert Feiger Attorney

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Hearing: ROBERT SHIELDS, et al vs. GROVER SHIELDS, et al

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