Motion-Secondary: DEWEY M. MOORE, Jr vs. WINSTEAD, P.C.

On September 27, 2019 a Motion-Secondary was filed involving a dispute between Moore, Dewey M., Jr, and Winstead, P.C., for PROFESSIONAL LIABILITY in the District Court of Dallas County.

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FILED
DALLAS COUNTY
12/4/2019 4:00 PM
FELICIA PITRE
DISTRICT CLERK
Dorothy Strogen

CAUSE NO. DC-19-15858
DEWEY M. MOORE, JR. § IN THE DISTRICT COURT
§
Plaintiff, §

§
v. § 44th JUDICIAL DISTRICT
§
§
WINSTEAD, P.C. §
Defendant. §
§ DALLAS COUNTY, TEXAS
PLAINTIFF’S RESPONSE TO WINSTEAD PC’S MOTION TO DISMISS
UNDER THE TEXAS CITIZENS PARTICIPATION ACT
TO THE HONORABLE JUDGE OF SAID COURT:

Plaintiff, Dewey M. Moore, Jr., (“Plaintiff’ or "Moore"), ﬁles this his Response

to Winstead PC’s Motion to Dismiss under the Texas Citizens Participation Act

(“TCPA”) and presents the following:

SUPPORTING AFFIDAVIT REQUIRING
DENIAL OF WINSTEAD’S UNFOUNDED MOTION

The Afﬁdavit of Plaintiff Dewey M. “Rusty” Moore, Jr., attached hereto as

Exhibit A, establishes that Moore and Winstead have had a personal, ongoing

attorney-client relationship since approximately 1999, that Winstead had a duty to

Plaintiff, and that Winstead breached that duty. The Affidavit and exhibits attached

thereto are clear and speciﬁc evidence 0f Plaintiffs prima facie case for each of his

claims, showing that Winstead’s Motion to Dismiss is entirely unfounded. An index

t0 the Exhibits to the Moore Afﬁdavit are as follows:
Exhibit A—l: Engagement Letter from Winstead to Moore
executed June 13, 2017

Exhibit A-2: Various emails between Moore and
Christopher Williams showing Attorney—
Client Relationship

Exhibit A-3: July 10, 2018 Letter 0f Intent with Highland
Capital Management, negotiated by
Christopher Williams, including Moore’s
personal compensation

Exhibit A—4: SEC Examination Letter dated August 28,
2018

Exhibit A—5: Moore Amended U-5 dated June 20, 2019

Exhibit A—G: Moore U-5 from Commerce Street Capital
dated August 5, 2019

INTRODUCTION TO ARGUMENT
This is a legal malpractice, negligent representation and equitable

indemniﬁcation case. Plaintiff, Dewey M. “Rusty” Moore, Jr., is the former Chairman,

CEO and President, and a former Director 0f, Institute for Wealth Holdings, Inc.,

(“IWH”), a small, privately held company of investment advisory firms, and the

former President and Chief Compliance Ofﬁcer for two 0f IWH’s subsidiaries,

Institute for Wealth Advisers, Inc. (“IW ”) and Institute for Wealth Consultants, Inc.

(“IWC”).

Plaintiff received an engagement letter from Winstead 0n May 31, 2017 and

signed it 0n June 13, 2017 (the “Engagement Letter). Afﬁdavit of Dewey M. Moore,

Jr., attached hereto as Exhibit A (“Moore Afﬁdavit”), and the Engagement Letter,

attached as Exhibit A-l to the Moore Affidavit. The Engagement Letter was

2
addressed, “Dear Rusty” and signed by Moore in his own name, with no reference 0n

the signature line t0 his title or to IWH. Winstead was engaged by Plaintiff to

“represent you in connection With (a) a private placement of a to-be-created class of

preferred securities to accredited investors, and (b) a Tier II Regulation A+ offering

of preferred securities...” Exhibit A-l to Moore Afﬁdavit. Plaintiff will show that he

did have an ongoing, individual attorney-client relationship With Winstead over a

period of many years, and that he justiﬁably relied on them t0 conduct due diligence

and perform their legal services in keeping With the standard of care for attorneys

working 0n private placements and securities offerings.

Winstead’s failure to perform the appropriate due diligence and provide legal

services in keeping With the required standard of care in its representation of Plaintiff

and IWH led directly to Plaintiffs loss of employment (twice) and the loss 0f Plaintiffs
reputation and the ability to gain future employment, as well as additional financial

and other losses. Plaintiff Will show that (1) he reasonably relied on Winstead t0

protect his interests as an individual, as well as Chairman and CEO, a director, and

major shareholder of IWH; (2) Winstead knew that Plaintiffs interests and the

interests of IWH were very closely aligned and Winstead knew that Plaintiff, as an

individual, was relying on its representations and its legal services, and failed t0 take

steps to correct this reliance; (3) Winstead therefore had a duty of care to Plaintiff;

(4) Winstead breached its duty of care t0 Plaintiff; and (5) Winstead’s failures were a

proximate cause 0f Plaintiffs injuries.
Additionally, because 0f Winstead’s breach of its duties to him, in the event

that Plaintiff is sued in his role as an Officer and/or Director of IWH, or any 0f its

subsidiaries, regarding the 2017 Reg D Offering or the 2018 Reg A offering, Plaintiff

is entitled to equitable indemniﬁcation for any losses he may incur as a result 0f

Winstead’s malpractice, negligent misrepresentation and breach 0f duty 0f due care.

Winstead claims that its services were a protected form of the “right to

petition” under the Texas Citizens Participation Act. Plaintiff disputes this

conclusion; however, even if Winstead’s services were covered under the TCPA,

Plaintiff can show a prima facie case for each of his claims in order t0 overcome

Winstead’s motion to dismiss. Finally, Plaintiff Will show that the “attorney

immunity” defense is not applicable in this case.

THE TEXAS CITIZENS PARTICIPATION ACT
The Texas State Legislature recently made signiﬁcant changes t0 the Texas

Citizens Participation Act, Tex. Civ. Prac. & Rem. Code § 27.001, et seq. (hereinafter

“TCPA”) in May 0f this year with “overwhelming bipartisan support.“ As one

commentator noted, “Given the overwhelming bipartisan support for this

amendment, it seems clear that the Legislature felt compelled t0 act. This is not the

ﬁrst legislative attempt t0 modify what is considered by most practitioners t0 be the

broadest anti-SLAPP (strategic lawsuits against public participation) law in the

country.”2

1
Simmons, Matthew, “Amendments Would Add Clarity to Texas Anti—SLAPP Law”, Littler ASAP:
Recent Developments, May 22, 2019.
2
Id.
Plaintiffs case, filed September 26, 2019, is covered by the new, amended

version 0f the TCPA, Which applies to all suits filed after September 1, 2019.3 Thus,

all of the case law cited by Winstead in its Motion t0 Dismiss under the TCPA is based
upon the earlier, broader version of the TCPA. T0 Plaintiffs knowledge, there is no

case law interpreting the amended version of the TCPA.

The Purpose of the TCPA

Section 27.002 of the TCPA provides:

The purpose of this chapter is to encourage and safeguard the
constitutional right 0f persons t0 petition, speak freely, associate freely,
and otherwise participate in government t0 the maximum extent
permitted by law and, at the same time, protect the rights of a person to
file meritorious lawsuits for demonstrable injury.

(Emphasis added).

This Court must interpret the TCPA in keeping with its legislative purpose,

Which includes protecting the rights 0f persons such as Plaintiff “to ﬁle meritorious

lawsuits for demonstrable injury.” Id. “To effectuate the statute’s purpose, the

Legislature has provided a two—step procedure t0 expedite the dismissal 0f claims

brought to intimidate 0r to silence a defendant’s exercise 0f those First Amendment

rights.” ExxonMobil Pipeline Co. v. Coleman, 512 S.W.3d 895, 898 (Tex. 2017) (per

curiam). The party moving t0 dismiss under the statute bears the initial burden of

demonstrating that “the legal action is based 0n or is in response to: (1) the party’s

exercise 0f ...(B) the right to petition...” § 27.005 (b).

3
Legislative Notes to Tex. CiV. Prac. & Rem. Code § 27.001.
5
Plaintiff will show that his complaint is not “based on 0r in response to”

Winstead’s “right t0 petition.” § 27.005 (b).4 Winstead cites two of the TCPA’S

deﬁnitions 0f the “right to petition” in support 0f its argument that its legal work for

Plaintiff is covered under the TCPA. Section 27.001(4)(B) deﬁnes “right t0 petition”

as “a communication in connection with an issue under consideration or review
by a

governmental body.” Section 27.001(4)(C) deﬁnes “right t0 petition” to include “a

communication that is reasonably likely t0 encourage consideration or review of an

issue by a governmental body 0r in another governmental or ofﬁcial proceeding.”

“Communication” under the TCPA “includes the making or submitting of a statement
or document in any form or medium, including oral, visual, written, audiovisual, or

electronic.” § 27.0010).

In its Motion t0 Dismiss under the TCPA, Winstead alleges that Plaintiffs

claims are covered by the TCPA. In particular, Winstead states that “any claim that

its submissions regarding IWH’s Reg A Offering were deﬁcient, inaccurate or

otherwise defective is therefore Within the scope of the TCPA.” Winstead TCPA
Motion to Dismiss at 10. Winstead cites Brown Sims, RC. v. L. W. Matteson, Inc., O4-

18—00596—CV, 2019 WL 4739439 (Tex.App.———San Antonio Sept. 30, 2019, no pet. h.)

in support 0f its claim that its work on the Reg A offering is protected as part of its

“right t0 petition” under the TCPA. However, the Brown Sims case concerns

4
The amended statute here deletes the phrase “relates to,” which previously appeared in 27.005
§ (b)
as “the legal action is based on, relates to, or is in response to."
6
statements made by an attorney in a “judicial proceeding” under §27.001(4)(A)(i), and

therefore does not apply here. Id. at *8.

Winstead also cites Riggs & Ray, P.C. v. State, N0. 05-17-00973-CV, 2019 WL
4200009 (TeX.App.—Da11as, September 5, 2019) in support of its argument that the

TCPA covers its legal work on behalf of Plaintiff and IWH. However, in Riggs & Ray,
decided just two months ago, the Dallas Court oprpeals declined t0 apply the TCPA

to the plaintiffs suit. The Court stated:

In order t0 trigger the TCPA’s protection, the ‘legal action’ must be
factually predicated on the alleged conduct that falls within the scope of
[the] TCPA’S deﬁnition of exercise of the ‘right of free speech,’ petition,
or association. If this nexus is missing, then the statute does not
apply. We consider the pleadings and any supporting afﬁdavits in the
lightmost favorable to the non—movant, favoring the conclusion that
the non-movant’s claims are not predicated 0n protected expression. ..
We cannot ‘blindly accept’ attempts by the movant to characterize the
claims as implicating protected expression. ...5

The gravamen of Plaintiffs complaint is that, during the course of its

representation, Winstead failed to perform the due diligence required in advising and

representing Plaintiff and IWH. Due diligence is pot a “communication” but rather a

process of verification. See Makins & Molitor, “Due Diligence in Private Placements

— Checklists”, Warner Norcross & Judd LLP, March 2008, attached hereto as Exhibit

B. Due diligence requires that the attorney review an extensive list of documents and

materials related t0 organization and standing, capitalization, ﬁnancial statements,

and taxes. See Exhibit B. A mere cursory review of the August 28, 2018 Examination

5
2019 WL 4200009 at *4, internal quotations and citations omitted.
7
Letter (Exhibit A-4 t0 Moore Afﬁdavit) reveals that Winstead did not perform its due

diligence in its representation 0f Plaintiff, IWH, and its subsidiaries. In addition,

Christopher Williams’ email of February 20, 2018, admits that he did not even have

a ﬁnal copy 0f the October 1, 2017 Private Placement Memorandum before he signed

off on it. Exhibit A-Z, Bates No. 015.

In their motion, Winstead essentially argues that the process of due diligence

is a protected “communication” under the TCPA. This is disingenuous and “would

lead to an absurd result as nothing would be outside the scope of the TCPA.” See

Riggs & Ray, 2019 WL 4200009 at *5 (Withholding a document is not a

“communication” under the TCPA) (internal citation omitted). Furthermore, in its

Motion to Dismiss, Winstead does not allege that its legal work With respect to the

2017 Reg D Offering (which was a private placement offering) or its January 28, 2018

Opinion Letter was within the scope 0f the TCPA. Accordingly, the Court should ﬁnd

that Plaintiffs claims d0 not fall within the scope 0f the TCPA and deny Winstead’s

motion t0 dismiss.

PLAINTIFF’S PRIMA FACIE CASE

Even if the Court finds that Plaintiffs claims fall within the TCPA, Plaintiff

can demonstrate a prima facie case to support his claims for attorney malpractice,

negligent misrepresentation, and equitable indemnification, as required under TCPA

§ 27.005 (c). Section 27.006(a) of the TCPA provides:
In determining Whether a legal action is subject to or should be
dismissed under this chapter, the court shall consider the pleadings,
evidence a court could consider under Rue 166a, Texas Rules of Civil

8
Procedure, and supporting and opposing affidavits stating the facts on
Which the liability or defense is based.

Plaintiffs Afﬁdavit, and its supporting exhibits, are evidence a court could

consider under Tex. R. CiV. P. 166a, Summary Judgment, and are enough t0 raise a

material question of fact regarding each of the elements of Plaintiffs
claims, as set

forth below.

ATTORNEY MALPRACTICE
T0 prove a legal malpractice claim, the client must establish that: the
(1)

lawyer owed a duty of care t0 the client; (2) the lawyer breached that duty; and (3)

the lawyer's breach proximately caused damage to the Client. Stanfield v. Neubaum,

494 S.W.3d 90, 96 (Tex. 2016).

WINSTEAD HAD A DUTY TO PLAINTIFF
Winstead owed Plaintiff a duty of care. In MacFarlane v. Nelson, 2005 WL
2240949 at *4 (Tex.App.-—Austin 2005) (memo 0p.), the court explained how an

attorney/client relationship can arise when an attorney represents a small entity with

extensive common ownership and management;

A relationship and lawyer arises When: (1) a person manifests
of client
to a lawyer the person’s intent that the lawyer provide legal services for
the person; and either (a) the lawyer manifests to the person consent t0
d0 so; or (b) the lawyer fails to manifest lack of consent t0 d0 so, and the
lawyer knows or reasonably should know that the person reasonably
relies 0n the lawyer to provide the services.”
If a person reasonably
relies on a lawyer t0 provide legal services, and the lawyer is
aware 0f
this reliance but does nothing t0 prevent it, then an attorney/client
relationship may arise by implication. ‘

Difﬁculties in determining the existence 0f an attorney/client
relationship often occur When a lawyer represents a small entity With
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“extensive common ownership and management,” such as a limited
partnership. Factors to consider in determining Whether an entity
lawyer also represents an individual partner include: whether the lawyer
affirmatively assumed the duty of individual representation, whether the
partner had independent representation, whether the lawyer previously
represented the partner 0n a personal basis, and whether the evidence
demonstrates the partner’s reliance on or expectations of the lawyer’s
separate representation. If the lawyer knows that, contrary to his own
intentions, a partnerrelying 0n the lawyer to represent his personal
is
interests as well as those 0f the partnership, then the lawyer must
clarify
his intentions.

Id., internal citations omitted (emphasis added).

Plaintiffs circumstances are nearly identical to that in the MacFarlane case:

in his afﬁdavit, Plaintiff testiﬁed that he had been in an ongoing attorney-client

relationship with Winstead since 1999 and had worked With at least 10 Winstead

attorneys 0n both personal and corporate matters. Afﬁdavit 0f Moore, Exhibit
A,

paragraph 3. He further testiﬁed that Christopher Williams afﬁrmatively assumed

the duty 0f individual representation in his meetings With Plaintiff and
IWH, and

that Christopher Williams also represented IWH subsidiaries IWA and IWM.

Afﬁdavit 0f Moore, Exhibit A, paragraphs 9, 10 and 12. Plaintiff also testiﬁed that he

did not have independent legal representation during the time
Winstead was

performing work for IWH. Affidavit 0f Moore, Exhibit A, at paragraph 18. He also

testiﬁed that, because Christopher Williams knew that the majority 0f Plaintiffs net

worth and life savings were invested in IWH, Winstead knew, 0r should have known,

that Plaintiff was relying on Winstead t0 protect his personal interests Afﬁdavit of

Moore, Exhibit A, paragraph 6 and 7. Finally, Plaintiff testiﬁed that, during the 20

years in which he engaged Winstead for legal services, no one at Winstead ever

10
advised him that he needed separate representation for his personal interests.

Affidavit 0f Moore, Exhibit A, paragraph 3. Accordingly, Plaintiff has produced

sufficient evidence to show that Winstead owed Plaintiff a duty of care.

WINSTEAD BREACHED ITS DUTY OF CARE
By failing to perform its due diligence and ensure that the legal work done in

connection with the Reg D and Reg A offerings was done properly, Winstead breached

its duty of care t0 Plaintiff. “Generally, the exercise 0f due diligence is a question of

fact.” Parsons v. Turley, 109 S.W.3d 804, 808 (Tex.App.—Da11as 2003, pet. denied).

Plaintiff has produced clear and specific evidence that Winstead failed to perform its

due diligence and breached its duty of care in its representation of Plaintiff.

The August 28, 2018 SEC Examination Letter, Exhibit A—4, hereto, states,

under the heading “Participation in Fraudulent Private Offerings”:

The three capital-raising rounds for IWH securities were presented
through an Investor Presentation, dated August 2016, for the Senior
Secured 8% Notes and Warrants Offering (the “2016 Notes Offering”); a
Private Placement Memorandum (“PPM”) dated October 1, 2017, for the
Series D. Convertible Preferred Stock offered pursuant to Regulation D
0fthe Securities Act of 1934 (the “2017 Reg. D Offering”); and Offering
Circular, dated February 28, 2018, for the Series D. Convertible
Preferred Stock and Common Stock offered pursuant to Regulation A 0f
the Securities Act (the “2018 Reg. A Offering”) (collectively, the “Offering
Memoranda”). The examination disclosed that the Offering Memoranda
contained material misstatements with respect to IWH, the Advisers
[IWA and IWC], and their leadership, including exaggerated,
inaccurate, and misleading statements t0 the potential investors t0
Whom these materials were providedﬁ

6 “Exhibit B: Examination Findings” to August 28, 2018 SEC Examination Letter, Exhibit A-4
to
Moore Affidavit. The Examination Letter goes on in a full 16 pages of detail regarding the
deficiencies discussed above.

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With the exception 0f the 2016 Investor Presentation, all of the items discussed above

were under the supervision and direction of Winstead in the course 0f its legal

representation 0f Plaintiff, IWH, and its subsidiaries. Accordingly, the SEC
Examination Letter itself is clear and speciﬁc evidence 0f Winstead’s breach of its

duty of care in performing due diligence in its representation.

Christopher Williams’ email of February 20, 2108, Where he states “we do not

have a ﬁnal copy 0f the PPM,” is also clear and specific evidence of Winstead’s failure

to perform the required due diligence and verify the accuracy of the Private

Placement Memoranda before Williams signed off 0n the Reg D Offering 0f October

1, 2017. Exhibit A-2, Bates No. 015. Therefore, Plaintiff has produced sufﬁcient

evidence t0 raise a question of material fact on this issue and to defeat Winstead’s

Motion to Dismiss under the TCPA.

PLAINTIFF WAS DAMAGED BY WINSTEAD’S BREACH
In his Affidavit, Plaintiff explains how the SEC Examination Report (a direct

result of Winstead’s failure to do due diligence and perform its legal services in

keeping With the standard 0f care) led directly to his loss 0f position and employment

at IWH and its subsidiaries, and his later loss 0f employment at his next position at

Commerce Street Capital, LLC. The June 20, 2018 Amended U-5 ﬁled by IWA
expressly references an “SEC Investigation” and led directly t0 his discharge from

Commerce Street. See Afﬁdavit of Moore, Exhibits A-5. The U-5 from Commerce

Street Capital expressly states that he was “discharged” from his position there due

to the June 20, 2018 U-5. See Affidavit 0f Moore, Exhibit A-6. This is clear and specific

12
evidence of Plaintiffs damages due t0 Winstead’s malpractice, negligent

misrepresentation and breach of duty.

Because Plaintiff has produced clear and speciﬁc evidence of each of the

elements of his attorney malpractice claim, the Court should deny Winstead’s motion

t0 dismiss under the TCPA. See § 27.005 (c).

NEGLIGENT MISREPRESENTATION
In the alternative, and without waiving his rights to his attorney malpractice

claim, Plaintiff brings a negligent misrepresentation claim against Winstead. The

elements 0f negligent representation are: “(1) the defendant in the course of his

business 0r a transaction in which he had an interest; (2) supplied false information

for the guidance 0f others; (8) without exercising reasonable care or competence in

communicating the information; (4) the plaintiffjustiﬁably relied 0n the information;

(5) proximately causing the plaintiff’s injury.” Kastner v. Jenkins & Gilchrist, P.C.,

231 S.W.3d 571, 5'77 (Tex.App.—Dallas 2007, n0 pet).

In McCamish, Martin, Brown and Loeffer v. F.E. Appling Interests, 991 S.W.2d

787 (Tex. 1999), the Texas Supreme Court set forth the circumstances where a third

party may bring a negligent representation claim against a lawyer, irrespective of

privity. Under Subsection 73(2) of the RESTATEMENT (THIRD) OF THE LAW
GOVERNING LAWYERS, entitled “Duty 0f Care to Certain Nonclients”, an attorney

owes a duty 0f care t0 a nonclient:

When and t0 the extent that: (a) a lawyer invites the non-client to rely
on the lawyer’s opinion or provision of other legal services, and the non-

13
client so relies, and (b) the non-client is not, under applicable tort
law,
too remote from the lawyer to be entitled t0 protection.

McCamish, 991 S.W.2d at 794-95. The McCamish court also noted that, in a negligent

misrepresentation case, the characterization of the relationship between the client

and third party should be guided by “the extent t0 Which the interests 0f the client

and the third party are consistent with each other.” 991 S.W.2d at 794. In this case,

as Plaintiff testified in his Afﬁdavit, because the majority of his net worth and
life

savings is invested in IWH, his personal interests, and the interests of IWH, are

almost completely aligned. Afﬁdavit of Moore, Exhibit A, paragraph 7. The Texas

Supreme Court also acknowledged McCamish’s ongoing application in Cantey

Hanger, LLP v. Byrd, 467 S.W.3d 477 at n. 7 (Tex. 2015), Where they stated, “[i]n

McCamish, we held that an attorney can be liable to a non-client for negligent

misrepresentation Where ‘an independent duty t0 the nonclient [arises] based 0n the

[attorney’s] manifest awareness of the nonclient’s reliance on the misrepresentation

and the [attorney’s] intention that the nonclient so rely.” Id. (citations omitted).

Plaintiff has also produced clear and speciﬁc evidence of the elements of

negligent misrepresentation. The same evidence that supports Plaintiffs attorney

malpractice claim supports a negligent misrepresentation claim. Plaintiff, after

twenty years of working With Winstead attorneys, justiﬁably relied 0n Winstead as

his legal counsel to assist him in the Reg A and Reg D Offerings, and Winstead, in

the course 0f its business, supplied false information Without exercising reasonable

care and competence. See Exhibit A, Affidavit of Moore and SEC Examination Letter,

14
Exhibit A~4 thereto. Further, because 0f Christopher Williams’ intimate involvement

With Plaintiffs negotiations in the Highland Capital matter, and his knowledge 0f

Plaintiffs substantial personal stake in IWH, Winstead, and Williams, were

manifestly aware 0f Plaintiffs reliance, and so intended for Plaintiff to rely upon

them. Plaintiffs Affidavit, and the two U-5 forms attached thereto, are further

evidence that Winstead’s failures and misrepresentations proximately caused

Plaintiffs injury. Affidavit of Moore, Exhibit A, and Exhibits A-5 and A-6 thereto.

ATTORNEY IMMUNITY DEFENSE
Lastly, Winstead argues that it is entitled t0 dismissal under § 27.005 (d) of

the TCPA, Which provides that, “notwithstanding the provisions of Subsection (c), the

court shall dismiss a legal action against the moving party if the moving party is

entitled to judgment as a matter of law.” Winstead argues that it has established the

afﬁrmative defense of “attorney immunity,” citing Cantey Hanger, LLP v. Byrd, 467

S.W.3d 477 (Tex. 2015) and Youngkin v. Hines, 546 S.W.3d 675 (Tex. 2018). In

Youngkin u. Hines, the court explained that, “[t]he only two facts required t0 support

an attorney-immunity defense are the type of conduct at issue and the existence of

an attorney-client relationship.” 546 S.W.8d at 681.

As noted earlier, Plaintiff has produced evidence to show an attorney-client

relationship existed With Winstead during its representation. Furthermore,
the

Cantey-Hanger case cited by Winstead expressly acknowledges the ongoing Viability

0f a negligent misrepresentation claim. 467 S.W.3d 477 at n. 7. Therefore, under

either theory, the attorney-immunity defense does not apply.

15
In addition, the cases cited by Winstead, including Cantey Hanger, d0 not

involve claims similar to Plaintiff’s against Winstead. In almost all of the other
cases

cited, the plaintiff was suing opposing counsel (such as in a divorce case) 0r an

attorney in an adverse position Where it was obvious that their interests were

completely opposed to each other. See, e.g., Cantey Hanger, LLP U. Byrd, 467 S.W.3d

477 (Tex. 2015) (eX-husband sues opposing counsel in a divorce case); Diaz v. Monnig,

04-15-00670-CV, 2017 WL 2351095 (Tex.App.—San Antonio May 31, 2017, n0 pet.)

(ex-Wife sues opposing counsel in divorce case); Santiago v. Mackie Wolf Zientz &
Mann, P.C., 05-16-00394-CV, 2017 WL 944027 (TeX.App.—~—Dallas March 10, 2017, n0
pet.) (homeowners sue opposing counsel in a foreclosure).

In addition, another case cited by Winstead, Ironshore Europe DAC v. Schiff

Hardin, L.L. P., 912 F.3d 759 (5th Cir. 2019), also quotes from both Cantey Hanger

and McCamish Camish, Martin, Brown & Loefﬂer v. F. E. Appling Interests, 991

S.W.2d 787, 791 (Tex. 1999):

An attorney can be liable t0 a non-client for negligent misrepresentation
where ‘an independent duty to the nonclient
[arises] based 0n the
[attorney’s] manifest awareness of the nonclients reliance 0n the
misrepresentation and the [attorney’s] intention that the nonclient so
rely.

991 S.W.2d at 765-66. The Ironshore court added, “The plaintiffs do not assert such a

claim here.” Id. at 766.

In contrast, Plaintiff has plainly asserted a negligent misrepresentation claim

here. During Winstead’s representation in the IWH matter, Plaintiff was working

With a ﬁrm he had known for twenty years and Who had represented him extensively

16
in the past in both personal and corporate matters. Winstead, and Christopher

Williams, knew of Plaintiffs personal stake in IWH and his personal commitment to
the success 0f IWH, the close alignment of Plaintiffs personal and ﬁnancial
interests

With that of IWH, and Plaintiffs reliance on Winstead to protect his personal

interests. Winstead and Christopher Williams’ actions, as described in Plaintiffs

Affidavit, indicate that they were “manifestly aware” of Plaintiff’s reliance on them

and intended for him t0 d0 so. Accordingly, Winstead has failed to establish the

affirmative defense of attorney immunity.

EQUITABLE INDEMNIFICATION
Plaintiffs third claim, for equitable indemnification, is also substantiated
by

Plaintiffs evidence, as set forth above. Plaintiff has produced clear evidence
that

Winstead had a duty t0 him, breached that duty, and that he has been damaged as a

result. Therefore, if Plaintiff is sued in his role as a director 0r ofﬁcer 0f IWH or its

subsidiaries, under principles of equity Winstead should be required t0 indemnify

him for any such losses.

Winstead cites three cases in support 0f their argument that Plaintiff is not

entitled to equitable indemniﬁcation. Munoz v. Whirlpool Corp, 7:09-CV-096-O, 2012

WL 13019087 (N.D. Tex. June 18, 2012), is a complex product—liability case, With

multiple defendants, involving a forum selection clause and choice 0f law issues, and

is therefore not controlling p¥ecedent. The second case cited by Winstead regarding

equitable indemniﬁcation is F & F Ranch v. Occidental Chem. Corp., 14-09-00901-

CV, 2011 WL 1123402 (Tex. App.————Houston [14th Dist] March 29, 2011, no pet.)

17
(memo 0p.). F & F Ranch is another complex product liability case where the court

held that the appellant had not preserved their equitable indemniﬁcation claim
for

review. Id. at *4. Thus, any discussion regarding equitable indemnification in
that

case is dicta. Winstead’s third case, Malibu Consulting Corp. v. Funair Corp, SA-O6-

CA-735-XR, 2008 WL 11411857 (W.D. Tex. Mar. 7, 2008) is another federal court case
involving dicta, Where the court merely notes that “unlike in Texas,” California
does

recognize a claim for equitable indemnification. Id. at *2. None 0f the cases cited by

Winstead are controlling legal authority on the issue 0f Plaintiffs equitable

indemnification claim; therefore, the Court should deny Winstead’s Motion to

Dismiss as t0 that claim as well.

CONCLUSION
WHEREFORE, premises considered, Plaintiff requests that the Court deny

Winstead’s Motion t0 Dismiss under the Texas Citizens Participation
Act, deny

Winstead’s request for attorney’s fees and costs, and deny Winstead’s motion
for

sanctions, and for all such further relief, whether in law or in equity, t0 which

Plaintiff may be justly entitled.

Respectfully submitted,

/s/ Stephen A. Kennedy
Texas State Bar No. 11300425
KENNEDY LAW, P.C.
1445 Ross Avenue, Suite 2750
Dallas, TX 75202
Telephone: (214) 716-4343
Fax: (214) 593-2821

18
/s/ Michelle D. Daniel
Texas State Bar N0. 05360550
Of Counsel
KENNEDY LAW, P.C.
1445 Ross Avenue, Suite 2750
Dallas, TX 75202
Telephone: (214) 716-4343
Fax: (214) 593-2821

CERTIFICATE OF SERVICE

This certifies that a copy of the foregoing has been served by all counsel of
record using the TexasEﬁlegov portal this 4th day of December 2019.

/s/ Stephen A. Kennedy

19
EXHIBITA
CAUSE NO. DC-19-15858
DEWEY M. MOORE, JR. § IN THE DISTRICT COURT
§
Plaintiff, §

§
V.
§ 44th JUDICIAL DISTRICT
§

§
WINSTEAD, P.C. §
Defendant. §

§ DALLAS COUNTY, TEXAS
AFFIDAVIT OF DEWEY M. “RUSTY” MOORE, JR.

STATE OF TEXAS

COUNTY OF DALLAS

On this day personally appeared before me, the undersigned, Dewey M.

Moore, Jr., who ﬁrst being duly sworn upon his oath, deposed and stated:

1. “My name is Dewey M. Moore, Jr. Family and friends have always

called me Rusty. I am over the age 0f twenty-one years, 0f sound mind, and fully

capable 0f making this Afﬁdavit. I have personal knowledge of the facts and

statements made herein, which are true and correct.

2. I am the Plaintiff in the above-referenced case and I am familiar with

the facts and circumstances Which are the basis of this Response t0 Winstead, P.C.’s

Motion t0 Dismiss under the Texas Citizens Participation Act, and Winstead, P.C.’s

Rule 91a Motion to Dismiss.
3. I have engaged the legal services of Winstead, P.C. in a variety of

matters, both personal and corporate, since about 1999. Prior to my engagement of

Winstead in relation to the Institute for Wealth Holdings, I engaged Winstead for

legal services on behalf 0f myself and two 0f my former companies, Rushmore

Financial Group and Puritan Financial Group. My main point of contact at

Winstead was Talmage Boston, Who had previously represented me with Rushmore
Financial Group at his former ﬁrm Paine & Vindig, in Rushmore vs. Investors Life

of Nebraska. Talmage Boston ﬁrst introduced me to Winstead in 1999. In 2007,

Winstead represented me personally in my Form A hearing in Austin before the

Texas Insurance Department related to my approval as a Director 0f a life

insurance company. Winstead also represented me personally in various

arbitrations and mediations, as well as in my negotiations related t0 my
employment agreement and individual stock options and grants With Puritan

Financial Group. Other Winstead attorneys Who performed legal services for me
over that 20-year period, in addition t0 Talmage Boston, included Lori T. Oliphant,

Ben Allen, Bruce Cheatham, Henry “Bud” Ehrlich, Alex Gonzales, David Knoll, Jay

Madrid, Christopher J. Volkmer, and Christopher Williams, Who each in their areas

of specialty represented me in various capacities, both individually and With my
former companies. In all these years, no one at Winstead ever told me that I needed

separate representation for issues that related to me personally. Therefore, I relied

on Winstead over these past 20 years t0 have both my personal and my companies’

best interests in mind in their provision 0f legal services t0 me.

2
4. On 0r about June 13, 2017, I once again engaged the services of

Winstead in connection With the 2017 Reg D Private Placement Offering by

Institute for Wealth Holdings, Inc. (“IWH”) and 2018 Reg A+
its Offering. It is my
signature 0n the May 31, 2017 Engagement Letter from Christopher Williams,

attached hereto as Exhibit A-l.

5. While Winstead was engaged in the work on those offerings,

Christopher Williams was the attorney in charge 0f their representation.

6. IWH is a small, privately held company, with less than 100

shareholders. I was a co-founder, director, and executive ofﬁcer, and one of the

major shareholders of IWH. Christopher Williams knew, 0r should have
known,

that the majority of my net worth and life savings were invested in IWH. N0 one at

Winstead ever told me that I could not rely upon Winstead to protect my personal

interests in the legal work they were performing.

7. Because the majority of my personal net worth and life savings were

invested in IWH, Winstead, and Christopher Williams, knew or should have known

my personal and financial interests were almost completely aligned With IWH as it

related to their representation.

8. I relied upon Winstead and Christopher Williams to perform the

appropriate due diligence in relation t0 both the Reg D and the Reg A Offerings. My
reliance was in my role as Chairman and CEO 0f IWH, as Chief Compliance Officer

of IWH subsidiaries Institute for Wealth Advisors, Inc. (“IWA”) and Institute for

Wealth Consultants, LLC (“IWC”), as an Investment Advisory Representative, as a

3
Director of IWH, and lastly, as an individual, because of my substantial personal

ﬁnancial stake in IWH.

9. Winstead and Christopher Williams also represented IWH’S Registered

Investment Adviser (“RIA”) subsidiaries,

Case Info

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GOLDSTEIN, BONNIE LEE Track Judge’s New Case

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Document Filed Date

December 04, 2019

Case Filing Date

September 27, 2019

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Motion-Secondary: DEWEY M. MOORE, Jr vs. WINSTEAD, P.C.

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