Legal Document: East Lake Capital Management LLC, et al vs. National Health Investors, Inc., et al

On June 15, 2018 a Counter-Defs and Third-Party Defs' TCPA Motion to Dismiss - Motion - Dismiss was filed involving a dispute between East Lake Capital Management Llc, El Fw Intermediary I Llc, Sh Regency Leasing Llc, and National Health Investors, Inc., Nhi-Reit Of Axel, Llc, for OTHER (CIVIL) in the District Court of Dallas County.

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FILED
DALLAS COUNTY
1/11/2019 4:05PM
FELICIA PITRE
DISTRICT CLERK

Margaret Thomas
CAUSE NO. DC-18-07841

EAST LAKE CAPITAL MANAGEMENT IN THE DISTRICT COURT OF
LLC, SH REGENCY LEASING LLC, and
EL FW INTERMEDIARY I LLC

Plaintiffs and Counter-Defendants,

NATIONAL HEALTH INVESTORS, INC.
and NHI-REIT OF AXEL LLC

Defendants, Counter-Claimant, and
Third-Party Plaintiff.
DALLAS
WWWWWWWWWWWWWWWWWWWWWWWWWWW
COUNTY, TEXAS
V.

ANDREW WHITE, Individually,
BENJAMIN LORD, Individually,
WESLEY MURRAY, Individually,
DAVID GAWLAS, Individually,
CHELSEA BALESTRA, Individually,
SH REGENCY CHARLOTTE LEASING,
LLC, SH REGENCY INDIANAPOLIS
LEASING, LLC, and SH REGENCY
MADISON LEASING, LLC.

Third-Party Defendants 95TH JUDICIAL DISTRICT

COUNTER—DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION TO
DISMISS PURSUANT TO THE TEXAS CITIZENS’ PARTICIPATION ACT

Counter-Defendants East Lake Capital Management LLC (“East Lake”) and SH Regency

Leasing LLC (“Regency”) and Third-Party Defendants Andrew White (“White”), Benj amin Lord

(“Lord”), Wesley Murray (“Murray”), David Gawlas (“Gawlas”), Chelsea Balestra (“Balestra”),

SH Regency Charlotte Leasing, LLC, SH Regency Indianapolis Leasing, LLC, and SH Regency

Madison Leasing, LLC (collectively, “Counter-Defendants”) ﬁle this Motion t0 Dismiss

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 1
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
Pursuant t0 the Texas Citizens’ Participation Act (“Motion”) against Defendant NHI-REIT

of Axel, LLC (“NHI-REIT” or “Landlord”)1 and respectfully show as follows.

I. INTRODUCTION

This case involves NHI’S wrongful efforts t0 conceal itspoor ﬁnancial performance at the

expense 0f Counter-Defendants, among others, and, in furtherance 0f this obj ective, t0 egregiously

interfere with Counter-Defendants’ contracts and business. NHI began this effort by ﬁrst

attempting t0 re-trade its contracts with Counter-Defendants t0 shore up NHI’S increasingly poor

ﬁnancial performance and mask the gross mismanagement 0f NHI’S executives. As part 0f its

strong-arm tactics t0 renegotiate the leases 0n better terms, NHI began making false claims of

“default” under the lease, an unfortunately common stratagem among unscrupulous landlords. At

the same time, NHI embarked 0n a campaign t0 disrupt Counter-Defendants’ business and frustrate

performance 0f the very contracts NHI ischarged t0 fulﬁll, including by “vexatious and harassing”

litigation (as ruled by this Court) and trespassing onto Counter-Defendants’ leased premises t0

steal conﬁdential documents and induce Counter-Defendants’ employees t0 sign afﬁdavits

containing false information under false pretenses, which Counter-Defendants then used for

litigation advantage (allwhile during a statutorily-required stay in discovery)?

NHI-REIT has now ﬁled its Second Supplemental Counterclaims and Third-Party Claims

(“Second Supplemental Counterclaims”) t0 further disrupt Counter-Defendants’ business, drive

up litigation costs, and harass Counter-Defendants. NHI’S misguided tactics fail once again.

Indeed, NHI-REIT’S Second Supplemental Counterclaims epitomizes a strategic lawsuit against

1
“NHI” NHI-REIT and Defendant National Health Investors,
refers collectively to Inc.

2
NHI’s and itsexecutives Eric Mendelsohn, Kristi Gaines, Kevin Pascoe, Roger Hopkins, Cameron Bell’s extreme
malfeasance is and Motion for Show Cause Order,
detailed at length in Plaintiffs’ Original and Supplemental Petitions
Contempt, and Sanctions, Which Counter—Defendants incorporate herein by reference.

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 2
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
public participation prohibited by the Texas Citizens’ Participation Act (“TCPA” 0r the “Act”).

TEX. CIV. PRAC. & REM. CODE § 27.001, et seq.

The Second Supplemental Counterclaims adds new allegations and includes for the ﬁrst

time claims for breach 0f a security agreement, fraudulent transfer, tortious interference with

existing contracts, conspiracy, aiding and abetting/assisting 0r encouraging, aiding and

abetting/assisting and participating, and Vicarious and personal liability. These new claims are

“based 0n, relate[ ] t0, [and] in response t0” communications by Counter-Defendants concerning

payments from residents at Regency’s senior care facilities, including speciﬁcally:

1. Counter-Defendants allegedly “depositing” the residents’ checks in, 0r “transferring”
the funds after depositing the checks t0, “bank accounts held in the name 0f East Lake
0r another entity associated with White[;]”

2. White allegedly “instruct[ing] employees at the Facilities not t0 deposit checks received
from residents[;]”

3. Counter-Defendants allegedly sending invoices t0 residents demanding additional
payments; and

4. Counter-Defendants allegedly conspiring with one another in performing the above
acts in the course 0f operating their facilities.

These communications trigger the TCPA because they (i) concern a good, product, 0r service in

the marketplace, health 0r safety, and economic 0r community well-being; and (ii) were made in

furtherance 0f Counter-Defendants’ business enterprise and purported joint effort t0 the detriment

of Counter-Plaintiffs. Id. at §§ 27.001, 27.003. In fact, NHI-REIT has judicially admitted the

applicability 0fthe TCPA here. In advance 0f its own prior TCPA motion to dismiss, NHI-REIT

argued that the TCPA applied t0 communications relating t0 the operations and services involving

Counter-Defendants’ senior care facilities because they “quite obviously have a connection t0

health 0r safety, economic well-being, and a good, produce, 0r service in the marketplace.”

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 3
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
Accordingly, absent “clear and speciﬁc evidence” 0f each element 0f its claims, the TCPA

requires that this Court dismiss NHI-REIT’S entire Second Supplemental Counterclaims with

prejudice, award Counter-Defendants their attorneys’ fees, and sanction NHI-REIT. NHI-REIT

cannot meet this burden because itsclaims are meritless. And even ifit somehow did, the Court

must still dismiss the Second Supplemental Counterclaims because 0f Counter-Defendants’

defenses.3

II. NHI-REIT’S ALLEGATIONS

NHI-REIT’S own allegations, without more, establish that the TCPA applies t0 all 0f the

claims in itsSecond Supplemental Counterclaims. See Hersh v. Tatum, 526 S.W.3d 462, 468 (Tex.

2017) (“When it is clear from the plaintiff’s pleadings that the action iscovered by the Act, the

defendant need show n0 m0re.”). Counter-Defendants therefore only summarize here the relevant

allegations. Because the TCPA shifts the burden 0f proof t0 NHI-REIT (see Section IH(A)(1)

infra), Counter-Defendants d0 not, at this stage, submit evidence dispositive 0f NHI-REIT’S

claims.

The parties. East Lake is a private equity ﬁrm based in Dallas, Texas specializing in real

estate and healthcare-related investments. Regency is a tenant who leases and operates healthcare

real estate. Speciﬁcally, Regency leases and operates, through various contractual relationships

with subtenants SH Regency Charlotte Leasing, LLC, SH Regency Indianapolis Leasing, LLC,

and SH Regency Madison Leasing, LLC (the “Subtenants”), other entities, afﬁliate companies,

3
As explained below, Counter-Defendants reserve the right to address any deﬁciencies or issues in a Reply brief after
reviewing NHI-REIT’S response and any purported evidence. Counter—Defendants further reserve their right to submit
their defenses, if NHI-REIT is able to shift the burden of proof.

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 4
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
and third-parties, three healthcare facilities pursuant t0 a Master Lease by and between Regency

and Landlord dated June 30, 2015 (the “Regency Lease”).4

NHI-REIT’s allegations. On December 17, 201 8, NHI ﬁled its Second Supplemental

Counterclaims. It centers 0n the July 1, 2015 Security Agreement between NHI-REIT (the

Landlord), Regency, and the Subtenants (“Security Agreement”). NHI-REIT alleges that the

Security Agreement was meant t0 provide NHI-REIT with additional protection in the event

Regency defaulted under the Regency Lease by granting NHI-REIT a security interest in the assets

0f Regency and its Subtenants (the “Collateral”). Sec. Supp. Countercl. 1]
29. The Collateral, NHI-

REIT says, “includes checks written by residents 0f the Facilities t0 Regency Tenant.” Id. Regency

and its Subtenants were permitted t0 use the Collateral in the ordinary course 0f business, but that

right ceased upon the occurrence and during the continuation 0f an Event 0f Default under the

Regency Lease. Id. at 1]
32.

NHI-REIT alleges that Regency has been in default 0f the Regency Lease since early 201 8

and thus Regency and Subtenants’ right t0 use the Collateral “terminated until further notice from

Landlord.” Id. (brackets omitted). Id. atW 32, 34. On November 29, 201 8, NHI-REIT demanded

Via letter (the “Security Notice”) that Regency and the Subtenants “(1) notify its Receivable

Debtors t0 make payment 0f any 0r all Receivable 0r Receivables directly t0 Landlord; and (2)

segregate all checks and other forms ofremittances received by Debtor 0n Receivables and deliver

them to Landlord in the identical form as that in which received with proper endorsements.” Id. at

‘n35.

4
These three Maybelle Carter
facilities are: the Tennessee (“Maybelle Carter”), the MorningSide
facility in Nashville,
of College Park Indiana (“MorningSide”), and the Regency at Pineville facility in Charlotte,
facility in Indianapolis,
North Carolina (“Regency “Regency
at Pineville”) (collectively, the Facilities”).

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 5
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
NHI-REIT contends that Regency and the Subtenants did not abide by the Security

Agreement and instead Counter-Defendants misused, commingled, and fraudulently transferred

the checks from residents. NHI-REIT speciﬁcally alleges in relevant part as follows:

o In early 201 8, White 0r others “instructed employees at the [Regency] Facilities not
t0 deposit checks received from residents.” Sec. Supp. Countercl. 1] 36. Due t0 these
instructions, more than $2 million in resident checks accumulated at the [Regency]
Facilities and were held by the executive directors and/or other employees at the

[Regency] Facilities.” Id.

o Because 0f the uncashed checks, NHI-REIT asserts, “the bank accounts 0f the
elderly residents who provided these checks remained unchanged” and “[u]p0n
information and belief, several residents lost their insurance beneﬁts 0r government
beneﬁts after their outstanding balances...exceeded the applicable income/asset
thresholds.” Id. at 1]
37.

o NHI-REIT alleges that, after receiving the Security Notice, Regency and its

Subtenants did not instruct the residents t0 pay Landlord and instead Counter-
Defendants “sent invoices t0 residents demanding additional payments” and “began
collecting additional checks from the residents for November and December 201 8
payments.” Id. at W 6, 38.

o NHI-REIT claims that Counter-Defendants then “began cashing these checks and
the checks that had been previously provided, but uncashed, since February 201 8.”
Id. at 1]
39. Counter-Defendants allegedly “deposited” resident checks in, 0r
“transferred” the funds after depositing the checks t0, “bank accounts held 0r
controlled by East Lake and/or White rather than those for the use and beneﬁt 0f
Regency [ ] and the Subtenants.” Id. at 41.

o NHI-REIT alleges that Counter-Defendants and Third-Party Defendants conspired
and aided and abetted in the purported misuse 0f the checks. Id. at 1] 43.

NHI-REIT thus assert claims for breach 0f the Security Agreement, fraudulent transfer,

tortious interference with existing contracts, conspiracy, aiding and abetting/assisting 0r

encouraging, aiding and abetting/assisting and participating, and Vicarious and personal liability.

See generally Sec. Supp. Countercl.

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 6
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
III. LE GAL STANDARD

A. The TCPA’s Framework.

The TCPA, commonly called Texas’ “anti-SLAPP” statute, “encourage[s] and

safeguard[s] the constitutional rights 0f persons t0 petition, speak freely, associate freely, and

otherwise participate in government t0 the maximum extent permitted by law” while

simultaneously “pr0tect[ing] the rights 0f a person t0 ﬁle meritorious lawsuits for demonstrable

injury.” Id. § 27.002. The Act’s expedited procedures, which include an automatic discovery stay

and the availability 0f interlocutory appeal, allow courts t0 dismiss claims before judicial resources

g0 t0 waste and unnecessary attorney’s fees mount. Id. §§ 27.003(c) (automatic discovery stay),

27.008 (interlocutory appeal).

Motions t0 dismiss under the TCPA’S burden-shifting analysis involve three inquiries.

Youngkin v. Hines, 546 S.W.3d 675, 681 (Tex. 2018). First, Counter-Defendants have the initial

burden 0f showing that the claims fall within the scope 0f the TCPA. That, in turn, requires a

showing that NHI-REIT instituted (i) a “legal action” (ii)“based 0n, related t0,0r [ ]
in response

to” (iii)the “exercise 0f the right 0f free speech” 0r the “right t0 association.” Id. at § 27.005(b);

Cavin v.Abbott, 545 S.W.3d 47, 69 (Tex. App.—Austin 2017, n0 pet.) (ruling “based 0n,” “relates

t0” and “in response t0” are not t0 be “limited according t0, e.g., the nature, directness, 0r strength”

0f the connections). The TCPA deﬁnes the term “exercise 0fthe right 0f free speech” and “exercise

of the right 0f association” broadly:

“Exercise 0f the right 0f free speech” means “a communication made in connection
with a matter 0f public concern.”

“Exercise 0f the right 0f association” means “a communication between individuals
who join together t0 collectively express, promote, pursue, 0r defend common
interests.”

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 7
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
TEX. CIV. PRAC. & REM. CODE § 27.001. “Communication” in turn “includes the making or

submitting 0f a statement 0r document in any form 0r medium, including oral, Visual, written,

audiovisual, 0r electronic.” Id. at 27.0010); Adams v. Starside Custom Builders, LLC, 547 S.W.3d

890, 894 (Tex. 2018) (“Almost every imaginable form 0f communication, in any medium, is

covered”).

The protections the TCPA affords extend beyond those granted by the First Amendment t0

the U.S. Constitution. Youngkin, 546 S.W.3d at 681 (“It does not follow from the fact that the

TCPA professes t0 safeguard the exercise 0f certain First Amendment rights that it should only

apply t0 constitutionally guaranteed activities”); see also Elite Auto Body LLC v. Autocraft

Bodywerks, Ina, 520 S.W.3d 191, 204 (TeX. App.—Austin 2017, pet. dism’d); Cavin, 2017 WL
3044583, at *1 1.

Second, once Counter-Defendants demonstrate that the TCPA applies to NHI-REIT’S

claims, the burden shifts t0 NHI-REIT t0 “establish[] by clear and speciﬁc evidence a primafacie

case for each essential element” 0f each 0ftheir claims. TEX. CIV. PRAC. & REM. CODE § 27.005(c);
MVS Int'l Corp. v. Int'l Advert. 5015., LLC, 545 S.W.3d 180 (Tex. App.—El Paso 2017, n0 pet.)

(prima facie case requirement applies separately t0 each element 0f each claim subject t0 the

TCPA). “The words ‘clear’ and ‘speciﬁc’ in the context 0f this statute have been interpreted

respectively t0 mean, for the former, “‘unambiguous,’ ‘sure,’ 0r ‘free from doubt’” and, for the

latter, “‘explicit’ 0r ‘relating t0 a particular named thing.”’ In re Lipsky, 460 S.W.3d 579, 590

(Tex. 2015). “[S]uch evidence must be provided with some degree 0f detail.” Van Der Linden v.

Khan, 535 S.W.3d 179, 188 (Tex. App.—F0rt Worth 2017, pet. denied). “[C]0nclusory statements

and bare, baseless opinions .. .are not probative 0f and accordingly d0 not establish a prima facie

case.” Peterson v. Overlook at Lake Austin, L.P., N0. 03-16-00557-CV, 2018 WL 1321532, at *3

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 8
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
(Tex. App. Mar. 15, 2018, n0 pet). Failure t0 meet this burden mandates dismissal. TEX. CIV.

PRAC. & REM. CODE § 27.005(c).

Third, even if NHI-REIT musters clear and speciﬁc evidence 0f each element 0f each

claim, the Court must dismiss the case anyway “if [Counter-Defendants] establish[ by a
]

preponderance 0f the evidence each essential element 0f a valid defense t0 the nonmovant’s

claims.” TEX. CIV. PRAC. & REM. CODE § 27.005(d).

If the Court dismisses NHI-REIT’S claims, then the Court must award t0 Counter-

Defendants: “(1) court costs, reasonable attorney’s fees, and other expenses incurred in defending

against the legal action as justice and equity may require; and (2) sanctions against the party who

brought the legal action as the court determines sufﬁcient t0 deter the party who brought the legal

action from bringing similar actions described in this chapter.” Id. at § 27.009(a).

B. TCPA Deadlines.

A motion t0 dismiss under the TCPA must be brought within 60 days 0f service 0f a legal
action. TEX. CIV. PRAC. & REM. CODE § 27.003. Even if outside 0f the 60-day period, the Court

may extend the time t0 ﬁle “for good cause.” Id. Texas courts have construed the term “legal

action” in the TCPA t0 include amended petitions when those amendments assert new factual

allegations 0r new causes 0f action. See Hicks v. Group & Pension Administrators, Ina, 473

S.W.3d 518 (Tex. App.—Corpus Christi-Edinburg 2015, n0 pet.) (reviving period for TCPA

motion t0 dismiss t0 address newly-ﬁled causes 0f action); James v. Calkz'ns, 446 S.W.3d 135

(Tex. App.—H0uston [lst Dist] 2014, pet. denied) (acknowledging that the deadline for ﬁling a

TCPA motion may be revived when the amended petition asserts new causes 0f action 0r alleged

new factual allegations).

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 9
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
Counter-Defendants’ Motion istimely. NHI-REIT ﬁled and served East Lake and Regency

with the Second Supplemental Counterclaims 0n December 17, 2018, making February 15, 2019

their 60-day deadline. Although East Lake and Regency had already been a party t0 the suit, the

Second Supplemental Counterclaims signiﬁcantly changes the factual bases and causes 0f action

against them. In it,NHI-REIT—for the ﬁrst time—claims for breach 0f the security agreement,

fraudulent transfer, tortious interference with existing contracts, conspiracy, aiding and

abetting/assisting 0r encouraging, aiding and abetting/assisting and participating, and Vicarious

and personal liability, each 0f which concerns new allegations based 0n the Security Agreement

and Counter-Defendants’ purported misuse 0f resident checks. See Sec. Supp. Countercl. at W 44-
82. Thus, East Lake’s and Regency’s Motion is timely.

As t0 the Third-Party Defendants, Lord was served with the Second Supplemental

Counterclaims 0n December 21, 2018, making February 20, 2019 his 60-day deadline, and White,

Murray, Gawlas, Balestra, and Subtenants either have not been served with the Second

Supplemental Counterclaims 0r were served with it in early January 2019. The Motion is thus

timely for them too.

IV. ARGUMENTS & AUTHORITIES

A. The TCPA Applies t0 NHI-REIT’s Claims.

1. The Second Supplemental Counterclaims isa “legal action ” under the TCPA.

A counterclaim falls expressly within the deﬁnition 0f “legal action.” TEX. CIV. PRAC. &
REM. CODE § 27.001(6) (“legal action” deﬁnition includes “a . .. counterclaim”); see also Seraﬁne

v. Blunt, 466 S.W.3d 352, 360 (Tex. App.—Austin 2015, n0 pet.) (holding counterclaims were a

“legal action” subject t0 Act). Thus, Counter-Defendants have met the ﬁrst element of their initial

burden because the Second Supplemental Counterclaims is a “legal action.”

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 10
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
2. The Second Supplemental Counterclaims is “based 0n, relates t0, 0r is in response
t0” Counter—Defendants’ exercise 0ftheir right affree speech.

Under the TCPA, “an exercise 0f the right 0f free speech” is a communication made in

connection with a “matter 0f public concern.” TEX. CIV. PRAC. & REM. CODE § 27.001(3). A
“matter ofpublic concern” includes an issue related t0 “health 0r safety; environmental, economic,

or community well-being; the government; a public ofﬁcial 0r public ﬁgure; 0r a good, product,

0r service in the marketplace.” Id. at § 27.00 1 (7). “The TCPA does not require that the statements

speciﬁcally ‘mention’ health, safety, environmental, 0r economic concerns, nor does itrequire

more than a ‘tangential relationship’ t0 the same[.]” ExxonMobil Pipeline C0. v. Coleman, 512

S.W.3d 895, 900 (Tex. 2017). “[R]ather, TCPA applicability requires only that the defendant's

statements are ‘in connection with’ ‘issue[s] related to’ health, safety, environmental, economic,

and other identiﬁed matters 0f public concern chosen by the Legislature.” Id.

The communications NHI-REIT complains 0f here include: (1) Counter-Defendants

allegedly depositing the checks in, 0r transferring the funds after depositing the checks t0, “bank

accounts held in the name 0f East Lake 0r another entity associated with White,” (2) White

“instruct[ing] employees at the [Regency] Facilities not t0 deposit checks received from residents,”

(3) Counter-Defendants allegedly sending invoices t0 residents demanding additional payments,

and (4) communications between Counter-Defendants in the course 0f operating the Regency

Facilities and in allegedly perpetrating their purported conspiracy against Counter-Plaintiffs. See,

e.g., Sec. Supp. Countercl. at W 6, 7, 36, 38, 39, 41; see also TEX. CIV. PRAC. & REM. CODE §

27.001(1) (deﬁning “Communication” t0 include “the making 0r submitting 0f a statement 0r

document in any form 0r medium. ...”).

These alleged communications implicate matters 0f public concern. NHI—REIT has

judicially admitted this. In an earlier ﬁling, NHI-REIT made a nearly identical argument to the

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 11
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
Court in support 0f its own anti-SLAPP motion. In it, NHI-REIT argued that this prong of the

TCPA applied because the communications at issue involved “NHI, itsafﬁliates, and its tenants

(including East Lake and itsafﬁliates) [who] are in the business 0f investing in, owning, and/or

operating senior housing and assisted living facilities, which provide medical care and assistance

t0 their residents.” See Counter-Pls’ Amended Motion t0 Dismiss at 1]
23. It thus argued that

communications relating t0 NHI’S operations and services concerning the Regency Facilities

“quite obviously have a connection t0 health 0r safety, economic well-being, and a good, produce,

0r service in the marketplace.” Id. So too here with respect t0 Counter-Defendants’

communications concerning the operations and services 0f the same Regency Facilities.

Indeed, the communications were made in the context 0f the operations 0f and services

provided by Counter-Defendants at the Regency Facilities, and the receivables resulting from those

“in ”
services, and thus were made connection wit a “good, product, 0r service in the

marketplace.” These same communications also concern “health 0r safety” and “economic and

community well-being” because they relate t0 care and assistance provided t0 residents 0f the

Regency Facilities, and payments by those residents, some 0f whom NHI-REIT alleges “lost their

insurance beneﬁts 0r government beneﬁts” due t0 Counter-Defendants alleged failure t0 deposit

the checks. See Sec. Supp. Countercl. at 1]
37. Moreover, Counter-Plaintiffs contend these

communications give rise t0 the tortious conduct alleged in the Second Supplemental Petition,

including for fraudulent transfer and conspiracy. E.g. ,
Deaver v. Desai, 483 S.W.3d 668, 673 (Tex.

App.—H0uston [14th Dist] 2015, n0 pet.) (communication relating t0 identify theft “relates t0

both economic and community well-being.”); AOL, Inc. v. Malouf, Nos. 05-13-01637-CV & 05-

14-00568-CV, 2015 TeX. App. LEXIS 33 12, 2015 WL 1535669, at *1-2 (TeX. App.—Dallas Apr.

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 12
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
2, 2015, n0 pet.) (mam. 0p.) (communication relating t0 Medicaid fraud related t0 community

well-being).

3. The Second Supplemental Counterclaims is “based 0n, relates t0, 0r is in response
t0” Counter-Defendants’ exercise 0ftheir right ofassociation.

The exercise 0f the right 0f association refers t0 “a communication between individuals

who join together t0 collectively express, promote, pursue, 0r defend common interests.” TEX.

CIV. PRAC. & REM. CODE § 27.001.
Texas courts have held that communications made in furtherance 0f common interests,

such as employment interests, business interests, 0r a purported conspiracy harmful t0 the opposing

party, trigger the TCPA’S application under the right 0f association. E.g., Elite Auto Body LLC,

520 S.W.3d at 205 (applying TCPA under the right t0 associate prong t0 claims for trade secret

misappropriation, breach 0f ﬁduciary duty, unfair competition, and civil conspiracy when claims

related t0 communications between defendants and plaintiff” s employees for purpose 0f furthering

common business interest); Craig v. Tejas Promotions, LLC, 550 S.W.3d 287, 295 (Tex. App.—

Austin 2018, pet. ﬁled) (concluding allegations that co-defendants joined together t0 pursue their

business interests, in allegedly wrongful ways t0 harm plaintiff, triggered right 0f association

prong); Grant v. Pivot Tech. Sols., Ltd, 556 S.W.3d 865, 881 (Tex. App.—Austin 201 8, pet. ﬁled)

(noting Plaintiffs’ allegations that Defendants “conspired t0 commit all these illegal acts. ..and that

[they] did so with a common plan”) (internal quotes omitted).

Here, the Second Supplemental Counterclaims not only recognizes that Counter-

Defendants joined together in furtherance 0f operating the Regency Facilities, but also alleges that

they engaged in a joint effort t0 harm Counter-Plaintiffs. The communications 0f which Counter-

Plaintiffs complain (see Section IV(A)(2) supra) were made incident t0 both efforts. Indeed, the

crux 0f NHI-REIT’S Second Supplemental Counterclaims is that, in the course 0f operating the

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 13
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
Regency Facilities, Counter-Defendants acted together t0 deprive NHI-REIT 0f receivables, in the

form 0f the checks, by not depositing them, and then when they did deposit them, they did so into

bank accounts held in the name 0f East Lake 0r another entity associated with White. E.g., Sec.

Supp. Countercl. at W 6, 7, 36, 38, 39, 41. By alleging that Counter-Defendants engaged in the

above conduct, NHI-REIT leaves n0 doubt that its claims target communications “between

individuals who join[ed] together t0 . . . pursue . . . common interests.” Thus, the right 0f

association prong 0f the TCPA applies t0 NHI-REIT’S Second Supplemental Counterclaims.

B. NHI-REIT Cannot Establish Prima Facie Claims With Clear and Speciﬁc Evidence.

Because the TCPA applies, NHI-REIT must establish by “clear and speciﬁc evidence a

prima facie case for each essential element” 0f its claims for breach 0f the security agreement,

fraudulent transfer, tortious interference with existing contracts, conspiracy, aiding and

abetting/assisting 0r encouraging, aiding and abetting/assisting and participating, and Vicarious

and personal liability, 0r face dismissal of those claims. Witt, 404 S.W.3d at 723-24 (quoting TEX.

CIV. PRAC. & REM. CODE § 27.005(c)); MVS Int’l Corp, 2017 WL 4534331.

At this time, Counter-Defendants need not “prove a negative” — i.e., prove why NHI-REIT

cannot make its prima facie case — because ithas not put forth any admissible evidence t0 date.

Counter-Defendants thus reserve the right t0 address any deﬁciencies 0r issues in a Reply brief

after reviewing NHI-REIT’S response and any purported evidence. Counter-Defendants further

reserve their right t0 submit their defenses, if NHI-REIT shifts the burden 0f proof.

V. CONCLUSION & PRAYER

Counter-Defendants and Third-Party Defendants respectfully request that the Court grant

the Motion t0 Dismiss Pursuant t0 the Texas Citizens’ Participation Act, dismiss with prejudice

all of NHI-REIT’S claims set forth in its Second Supplemental Counterclaims, award Counter-

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 14
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
Defendants and Third-Party Defendants their costs, expenses, and reasonable attorneys’ fees, as

well as sanctions against NHI-REIT, and award any additional relief t0 which Counter-Defendants

and Third-Party Defendants may show themselves entitled.

DATED: January 11, 2019 Respectfully submitted,

/s/ Samuel B. Hardy
Eric W. Pinker
Texas State Bar N0.
epinker@lvnnllp.com
Samuel B. Hardy, IV
Texas State Bar N0. 24074360
shardv@lvnnllp.com
Patrick Disbennett
Texas State Bar N0. 24094629
pdisbennett@lvnnllp.com
Michael Kalis
Texas State Bar N0. 24092606
mkalis@lvnnllp.com
Paulette C. Miniter
Texas State Bar N0. 24102213
pminiter@lvnnllp.com
LYNN PINKER COX & HURST, LLP
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
(2 14) 98 1 -3 800 - Telephone
(214) 981-3839 - Facsimile

ATTORNEYS FOR PLAINTIFFS/COUNTER—
DEFENDANTS AND THIRD-PARTY
DEFENDENTS

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 15
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT
CERTIFICATE OF SERVICE

Icertify that counsel 0f record as shown below have been served a true and correct copy 0f
the foregoing document Via electronic ﬁling 0n January 11, 2019:

Daniel D. McGuire
Michael M. Besser
POLSINELLI PC
2950 N. Harwood, Suite 2100
Dallas, Texas 75201
dmcguire@polsinelli.com
mbesser@polsinelli.com

/S/ Samuel B. Hardy
Samuel B. Hardy

COUNTER-DEFENDANTS AND THIRD-PARTY DEFENDANTS’ MOTION T0 PAGE 16
DISMISS PURSUANT T0 THE TEXAS CITIZENS’ PARTICIPATION ACT

Case Info

Judge

EVANS, DAVID Track Judge’s New Case

Case No.

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Document Filed Date

March 08, 2019

Case Filing Date

June 15, 2018

County

Parties

East Lake Capital Management LLC Plaintiff
EL FW Intermediary I LLC Plaintiff
JOHANSEN, MARK L Attorney for the Plaintiff
MCGUIRE, DANIEL D Attorney for the Defendant
MITCHELL, BRIAN C Attorney for the Plaintiff
National Health Investors, Inc. Defendant
NHI-REIT of Axel, LLC Defendant
PINKER, ERIC WOLF Attorney for the Plaintiff
SH Regency Leasing LLC Plaintiff
SMITH, STEVE Attorney for the Plaintiff

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