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§ IN THE DISTRICT COURT
§
Plaintiff, §
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v. § 113th JUDICIAL DISTRICT
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§
Defendant. § HARRIS COUNTY, TEXAS
Defendant Kirk Evans files this response to the Plaintiff’s Second Motion for Summary
Judgment. In support thereof, defendant would respectfully show the Court as follows:
This is an appellate legal malpractice action. The issue of whether or not the
Court of Appeals would have overturned the judgment against Mr. Bloomingkemper is solely a
legal issue. There are no circumstances where a jury would be asked to make a factual finding as
to how an appellate court would rule on a given trial court record. “In cases of appellate legal
malpractice the determination of causation requires determining whether the appeal in the
underlying action would have been successful.” , 861 S.W.2d 291 (Tex. App.-
San Antonio, 1993). The issue is to be resolved by the court as a question of law.
, 775 S.W.2d 626, 627-28 (Tex.1989).
Inexplicably the plaintiff and his expert are attempting to persuade this Court as
to how an appellate court would rule – without a single cite to the trial transcript from the
original case. In other words, the plaintiff is trying to convince this Court as to how an appellate
Court would rule, without the very evidence that a court of appeals would look at in making that
In addition to this fatal flaw, the plaintiff’s motion completely ignores the primary
liability finding against Mr. Bloomingkemper – “control person” status under the Texas
Securities Act. The underlying trial court found Mr. Bloomingkemper liable as a control person
under the Texas Securities Act, and found that his attempts to refute this fact lacked credibility.
FOF 21. Not one word in plaintiff’s motion for summary judgment, or in the proffered
testimony of Agent Walther even addresses, much less refutes, this factual finding of the trial
court. This finding alone is sufficient for an appellate court to affirm the judgment against
Bloomingkemper.
Setting aside these incurable defects in the motion, summary judgment must also
be denied because (1) under the correct standards for appellate review, a court of appeals could
not overturn the underlying judgment because there is substantial evidence in the record to
support the trial court’s findings; (2) the evidence in support of this response demonstrates
unequivocally that no malpractice occurred, (3) substantial evidence exists to refute causation,
(4) the damage model asserted by the plaintiff, even if unrefuted, is legally and factually
bankrupt; and; even if the Court disagrees with all of the foregoing, fact issues exist as to every
essential element needed to establish liability.
Plaintiff’s Second Motion for Summary Judgment is nothing more than a slightly
rehashed version of plaintiff’s original Motion for Summary Judgment which was already denied
by this Court. Nothing has changed. The same result should be reached here. Plaintiff’s
Second Motion for Summary Judgment should be denied.
Defendant objects to the Affidavit and Testimony of Greg White and moves to
Defendant incorporates by reference Defendant’s Response to Motion for Summary Judgment filed April 13,
2015, and considered by the Court in denying the very similar Plaintiff’s Motion for Summary Judgment by order
dated May 4, 2015.
strike them.
The Plaintiff has hired Greg White, an appellate lawyer from Waco, Texas, to
opine on solely an issue of law, that being the issue of how a court of appeals would rule on a
given appellate record. To make matters worse, Mr. White has completely ignored the one item
make that decision – the reporter’s record. This omission is not
a matter of simply shading the facts in favor of one position or another. Instead, it is the
abandonment of any sense of the “reliability” requirement recognized by Texas courts as it
pertains to expert testimony.
Mr. White’s testimony should be excluded because Texas courts uniformly reject
the practice of having an expert opine on matters of law versus matters for the trier of fact.
Texas courts uniformly recognize that the purpose of the expert witness is to “assist the trier of
fact.” An expert witness may not testify as to questions of l United Way v. Helping Hands
949 S.W.2d 707, 714 (Tex. App.-San Antonio 1997, writ denied) (“testimony, taken as a whole,
was tantamount to a legal conclusion” and should have been excluded). In addition, while an
expert may testify as to underlying facts, the witness may not testify as to whether those facts
meet the ultimate legal requirements:
However, both witnesses and others were also asked whether this conduct
constituted a violation of section 779.003. This was improper.
, 949 S.W.2d at 713. Thus, the court did not abuse its discreti
insofar as it sustained the City's objections that these witnesses were improperly
Schronk v. City of Burleson, 387 S.W.3d 692, 705 (Tex. App.-Waco 2009, pet. denied).
Mr. White is attempting to violate these precise tenants by testifying as to whether or not a court
of appeals would affirm the deci
“In cases of appellate legal malpractice the determination of causation requires
determining whether the appeal in the underlying action would have been successful.” Veschi v.
, 861 S.W.2d 291 (Tex. App.-San Antonio, 1993). The issue is to be resolved by the
, 775 S.W.2d 626, 627-28 (Tex.1989).
As a result, the affidavit of Mr. White should be excluded and Mr. White should
be precluded from testifying by affidavit, deposition, live or
EFERENCE TO
11. As stated above, “[i]n cases of appellate legal malpractice the determination of
causation requires determining whether the appeal in the underlying action would have been
Veschi v. Stevens, 861 S.W.2d 291 (Tex. App.-San Antonio, 1993). The issue is t
be resolved by the court as a question of law. Millhouse v. Wiesenthal, 775 S.W.2d 626,
12. Inexplicably, plaintiff’s motion completely omits any reference or citation to the
very record that the court of appeals would review in making this determination. Plaintiff’s
motion contains not a single citation to the actual testimony and exhibits from the original trial.
The reason for this is obvious. Only one portion of the trial transcript was lost, which is the
portion containing the testimony of Agent Walther. The remaining portions are available and
are replete with testimony in support of the liability findings against Bloomingkemper.
13. As discussed below in more detail, as to each of the liability findings at issue, an
appellate court is required to review the record and determine if there is any evidence to support
the finding. Here, the plaintiff has completely omitted any discussion of the trial court record
from his motion for summary judgment, meaning this Court cannot perform the very task it is
required to perform in order to grant summary judgment.
14. Plaintiff’s motion must be denied accordingly.
PPROPRIATE TANDARDS OF PPELLATE OURT OF
PPEALS
15. The basic facts of the underlying case involved a multimillion dollar Ponzi
scheme that was sold by a number of representatives and brokers affiliated with two companies
owned and controlled by Bloomingkemper. See Exhibit “A” (Plaintiffs’ Eighth Amended
Petition). Exhibit “B” (Amended Findings of Fact and Conclusions of Law (“Amended Findings
of Facts”)). At trial, Bloomingkemper was not alleged to have received any of the money from
the scheme or personally solicited any “investors” in the scheme. He was, however, alleged
to have been a “control person” under the Texas Securities Act and to have directly or indirectly
aided the sellers of the securities. See Exhibit “A” (Plaintiffs’ Eighth Amended Petition).
(1) A person who directly or indirectly controls a seller, buyer, or issuer of a
security is liable under Section 33A, 33B, or 33C jointly and severally with the
seller, buyer, or issuer, and to the same extent as if he were the seller, buyer, or
issuer, unless the controlling person sustains the burden of proof that he did not
know, and in the exercise of reasonable care could not have known, of the
(2) A person who directly or indirectly with intent to deceive or defraud or with
reckless disregard for the truth or the law materially aids a seller, buyer, or issuer
of a security is liable under Section 33A, 33B, or 33C jointly and severally with
the seller, buyer, or issuer, and to the same extent as if he were the seller, buyer,
16. According to the comment, “[t]he rationale for control person liability is that a
control person is in a position to prevent the violation and may be able to compensate the injured
investor when the primary violator (e.g., a corporate issuer which has gone bankrupt) is not.”
Frank v Bear, Stearns & Co., 11 S.W.3d 380 (Tex. App. - 1 Dist., 2000). The comment also
notes that “a control person might include an employer, an officer or director, a large
shareholder, a parent company, and a management company.” . Control is defined in the same
terms as under federal securities law; under that law “control means the possession, direct or
indirect, of the power to direct or cause the direction of the management or policies of a person,
17. The trial court made liability findings that Mr. Bloomingkemper was a “control
“Ron Bloomingkemper directly or indirectly controlled the sellers of the
securities of each Plaintiff. To the extent that he attempted to contradict this
. Bloomingkemper’s testimony to
“Mr. Bloomingkemper directly or indirectly materially aided the sellers with
reckless disregard for the truth. To the extent that he attempted to contradict this
. Bloomingkemper’s testimony to
“Mr. Bloomingkemper had actual knowledge that the securities were being sold
by means of an untrue statement of material fact. This knowledge existed before
the security was sold to an Plaintiff. (Defendants’ burden to negate). To the
extent that he attempted to contradict this point, the Court did not find Mr.
Bloomingkemper’s testimony to be credible.”
“Mr. Bloomingkemper could have known in the exercise of reasonable care
before any security was sold to any Plaintiff that the securities were being sold by
means of an untrue statement of a material fact. (Defendants’ burden to negate).
To the extent that he attempted to contradict this point, the Court did not find Mr.
Bloomingkemper’s testimony to be credible.”
See Exhibit “B“ (Amended Findings of Facts)
18. The question for this Court, given these findings, is “under what standard would a
court of appeals review these findings, and given the record here, would a court of appeals be
legally able to overturn these findings?” Under the relevant standards, this cannot be done and
plaintiff’s motion for summary judgment must be denied.
19. The relevant standard of review differs slightly depending upon which party has
the burden of proof with respect to a given issue. Here, as to findings of fact 28 & 31, the Texas
Securities Act places the burden on Mr. Bloomingkemper to negate these issues. Texas
Securities Act Section 33.F. If a party with the burden of proof (here Bloomingkemper)
challenges the legal sufficiency of an adverse finding, the court of appeals must determine
whether the complaining party has demonstrated on appeal that the evidence establishes, “as a
matter of law, all vital facts in support of the issue.” Barnes v. Mathis, 353 S.W.3d 760, 762
(Tex. 2011); Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam); Garcia,
314 S.W.3d at 544; Perez v. Perez, No. 13-11-00169-CV, 2013 WL 398932, at *4 (Tex. App.—
Corpus Christi Jan. 31, 2013, no pet.) (mem. op.).
20. In a “matter of law” challenge, the court must “first examine the record for
evidence that supports the finding, while ignoring all evidence to the contrary
., 46 S.W.3d at 241 (emphasis added). If there is no evidence to support the finding, only then
will the court examine the entire record in order to determine whether the contrary proposition is
established as a matter of law. , 314 S.W.3d at 544. At that point, the court will only
sustain the issue if the contrary proposition is conclusively e ., 46
S.W.3d at 241; , 314 S.W.3d at 544. The final test for legal sufficiency must always be
whether the evidence at trial would enable reasonable and fair-minded people to reach the
verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005); , 314
S.W.3d at 544.
21. Applied here, this means that the court must “first examine the record for
evidence that supports the finding, while ignoring all evidence to the contrary.”
46 S.W.3d at 241. In other words, the court must look to see if there is any evidence to support
findings 28 & 31, while ignoring all evidence to the contrary; ., ignoring the purported
testimony of Agent Walther. Only if there is no evidence to support the finding, will the court
then examine the entire record in order to determine whether the contrary proposition is
established as a matter of law. , 314 S.W.3d at 544. As discussed above, the plaintiff
did not even bother to attach or compile the record, so this Court cannot perform the required
22. As to findings of fact 21 & 25, the Texas Securities Act places the burden on the
plaintiffs in the underlying case to prove these issues. See Texas Securities Act, Section 33. In
this circumstance, the trial court's findings of fact have the same weight as a jury verdict; a court
will therefore review the legal and factual sufficiency of the evidence as itwould following a
Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). If there is more than a mere
scintilla of evidence supporting a finding of fact, the court will overrule a legal sufficiency
Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41,
48 (Tex. 1998). In reviewing a factual sufficiency challenge, the court will set aside a finding
only if it is so against the great weight and preponderance of the evidence as to be clearly wrong
, 917 S.W.2d 770, 772 (Tex. 1996).
23. This Court cannot perform either task because plaintiff’s motion fails to cite or
attach the trial court record. Obviously, the reason for this glaring omission is that the record is
replete with evidence in support of Judge Baker’s liability findings. That evidence is addressed
C. Applying These Standards to the Record at Trial.
24. In applying these standards, this Court must initially determine whether there is
(i) Was Mr. Bloomingkemper a “control person?”
(ii) Did he directly or indirectly aid the sellers?
(iii) Did he know or have reason to know that the sellers were using untrue
statements?
25. The following is a recap of a portion of the evidence in su
(1) There is Substantial Evidence of “Control Person” Status.
26. As a background matter for this Court, itis important to note that one of Mr.
Bloomingkemper’s central complaints in this case is that Evans failed to secure replacement trial
testimony of an FBI Agent, Vanessa Walther. See Plaintiff’s Original Petition, on file with this
Court, at pp. 3-4. Agent Walther testified at trial,but her portion of the transcript was lost at
some point by one of the court reporters from the original tria
27. Incredibly, the proffered testimony of Agent Walther does not even begin to
address whether or not Bloomingkemper was a ‘control person’ under the Texas Securities Act
or whether he directly or indirectly aided the sellers of the securities, and is therefore, irrelevant
for the purposes of any appeal as to these factual findings. Exhibit “D” (Deposition of Vanessa
Walther (“Walther Depo.”))
28. In fact, when the parties conducted her deposition a few weeks ago, she testified
to facts concretely establishing that Mr. Bloomingkemper was a
Q. Do you know where Mr. Bloomingkemper worked?
A. He owned a company, but I don't recall the name of the company that he
Q. Do you recall what his position was at that company?
A. He was president or CEO.
Q. Do you know if Mr. Sims and Mr. Garrett (two of the “sellers”) worked at
that company?
A. I believe they did.
Q. And what was their position with regard to Mr. Bloomingkemper, ifyou
know it?
A. I don't know.
Exhibit “D“ (Walther Depo.) at p. 12:12-24. In other words, as best she can recall, the sellers of
the Ponzi scheme worked at a company owned by Mr. Bloomingkemper, where he was the
29. This is nearly prima facie evidence of control person liabi
“The Act creates liability for persons "who directly or indirectly controls a seller,
buyer, or issue of a security" who run afoul of 581-33A. According to the
comment, "[t]he rationale for control person liability is that a control person is in
a position to prevent the violation and may be able to compensate the injured
investor when the primary violator (e.g., a corporate issuer which has gone
bankrupt) is not." The comment also notes that "a control person might include
an employer, an officer or director, a large shareholder, a parent company,
and a management company." .Control is defined in the same terms as under
federal securities law; under that law "control means the possession, direct or
indirect, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting securities, by
Federal courts construing control person liability have fashioned a two-prong test:
that the defendant exercised control over the operations of the corporation in
activity upon which the primary violation is predicated. Abbott v. Equity Group
.,2 F.3d 613, 620 (5th Cir. 1993) (quoting Metge v. Baehler, 762 F.2d 621,
631 (8th Cir. 1985). Texas courts interpreting this requirement have held only
that a major shareholder or director is a "control person" for purposes of
the statute Summers v. Welltech Inc., 935 S.W.2d 228, 231 (Tex. App.-Houston
, 896 S.W.2d 807,
., 11 S.W.3d 380 (Tex. App. - 1 Dist., 2000) (emphasis added).
30. Specific examples of other testimony and evidence in support of control person
a. Bloomingkemper personally invested $200,000 in the scheme and got his money
back when he did not receive a promised $2,000,000 a few months later and he
complained. See Exhibit “E“ (Trial Transcript 2/19/2003 (“
182. Demonstrating actual knowledge of the scheme, sold by means of untrue
statements, and control over the sellers. Bloomingkemper’s threats to go to the FBI
were not to protect investors, but were to get his own money back out of the
scheme. See Exhibit “F” (Trial Transcript 2/18/2003 (2/18/2003)), p. 240:4 –
b. Bloomingkemper was the “uppest manager” and had “absolute control” over the
c. Hinojosa (one of the “sellers”) testified that he would not have sold the product to
N.M.A., or Bloomingkemper had admonished them
or threatened them with firing. Exhibit “G” (Trial Transcript 1/23/2003 (“
pp. 40-41 and Exhibit E (2/19/2003) p. 137. Demonstrating
d. Bloomingkemper had control over the sellers and the power to terminate them.
Exhibit “E” p. 142 (“Q. So, it was your belief they had that control
over you? A. They had the ability to terminate me, yes.”). Demonstrating control
Exhibit “E”
e. The Court even acknowledged that Mr. Bloomingkemper made this point in his
testimony:
Q: Won't you admit that because whatever stroke you had with the insurance
company that you have at least indirect control over what Mr. Hinojosa does or
doesn't say that you can threaten with him?
THE COURT: I think he's already said that he had the right to recommend the
termination. So, I think your point has been made.
f. According to the underlying plaintiffs’ expert, when Bloomingkemper found out Mr.
Byrum (another “seller”) was involved in the scheme, as Bloomingkemper admits in
his deposition, Bloomingkemper should have conducted an investigation, notified
investors, and fired Mr. Byrum. See Exhibit “H” (Plaintiffs’ Reply to Defendants’
Supplement to Closing Brief and Objections to Expert Testimony). Demonstrating
actual knowledge of the scheme, sold by means of untrue statements, and control
g. According to the underlying plaintiffs’ expert, the standard of care required
Bloomingkemper, the representative, the supervisors and the broker/dealer to do
due diligence to determine whether or not the representations in the contract were
correct, if there is actually currently trading going on, who is did it, do they have
the resources to carry on, etc. Exhibit “F” (2/18/2003), pp. 141-144.
Demonstrating control over the sellers.
h. Bloomingkemper claims that once the scheme was discovered, t
all the reps and fire those involved. Exhibit “E”
Curby and Mr. Hinojosa deny such an interview or even a letter. Exhibit “G”
(1/23/2003), pp. 40-41 and Exhibit “E” (2/19/2003) pp. 137, 138.
Demonstrating actual knowledge of the scheme, sold by means of
statements, and control over the sellers.
i. Bloomingkemper was in weekly contact with the head of the Ponzi scheme, Randall
Garrett. Exhibit “F”
31. The foregoing is only a small portion of the evidence at trial on these subjects, but
each is legally sufficient to support the trial court’s findings under the appropriate legal standards.
The testimony of Agent Walther does not even remotely counter (and in fact likely supports) Mr.
Bloomingkemper’s status as a control person. Further, there is no evidence establishing the
contrary position as a matter of law.
32. It is particularly essential to emphasize that this single liability finding is enough to
support a judgment against Mr. Bloomingkemper for the entire amount under the Texas Securities
Act. As a matter of law, a court of appeals could not overturn the judgment against
Bloomingkemper, plaintiff’s motion for summary judgment must be denied and summary judgment
(2) There is Substantial Evidence Bloomingkemper Directly or In
33. The evidence at trial demonstrated that Bloomingkemper aided the sellers in two
primary ways. First, Bloomingkemper personally invested $200,000 in the scheme and got his
Without belaboring the point, it is important to note again that this Court’s review of these issues must be judged
from the perspective of an appellate court. This Court must determine whether there was “some evidence” or “more
than a scintilla of evidence” on certain points.This is not a circumstance where there is a “fact issue” that defeats
money back when he did not receive a promised $2,000,000 a few months later and complained.
See Exhibit “E” . (2/19/2003), p. 182. The trial court correctly interpreted this investment
either directly or indirectly aiding the sellers. This provided the “bad guys” with $200,000 in
capital to perpetuate their scheme, and enhanced the credibility of the scheme as a whole because
the sellers could now brag that they had a big investment because the owner and CEO had actually
put in his own money. Bloomingkemper’s threats to go to the FBI were not to protect investors,
but were to get his own money back out of the scheme. Exhibit (2/18/2003), p. 240:4 –
34. In addition, Bloomingkemper directly or indirectly aided the sellers because he
could have investigated, terminated those involved, instructed the representatives not to sell the
scheme, notified investors, etc.; and yet, there was substantial evidence at trial that he failed to
a. Bloomingkemper claims that once the scheme was discovered, t
all the representatives and fire those involved. Exhibit “E” p. 236.
Both Mr. Curby and Mr. Hinojosa deny such an interview occurred or even a
b. Hinojosa (one of the “sellers”) testified that he would not have sold the product to
N.M.A., or Bloomingkemper had admonished them
or threatened them with firing. Exhibit “G”
c. Bloomingkemper had control over the sellers and the power to terminate them.
Exhibit “E” p. 142 (“Q. So, it was your belief they had that control
over you? A. They had the ability to terminate me, yes.”). Exhibit “F”
d. According to the underlying plaintiffs’ expert, when Bloomingkemper found out Mr.
Byrum (another “seller”) was involved in the scheme, as Bloomingkemper admits in
his deposition, Bloomingkemper should have conducted an investigation, notified
investors, and fired Mr. Byrum. Exhibit “F”
e. According to the underlying plaintiffs’ expert, the standard of care required the
representative, the supervisors and the broker/dealer to do due diligence to determine
summary judgment simply because bot tions.
whether or not the representations in the contract were correct, if there is a bond, if
there is actually currently trading going on, who is did it, do they have the
35. At a minimum, there is “some evidence” that Bloomingkemper aided the sellers.
In reality, providing $200,000 to those perpetuating a Ponzi scheme is overwhelming evidence
of providing aid to the scheme. T
THE COURT: You're not saying that they all got together and said, we're going
to do this scheme together?
THE COURT: Okay. I didn't think so.
MR. GREEN: Only Mr. Garrett and Mr. Bynum -- and I'm not sure if that's the
right name -- and Mr. Sims. And as far as they're a part of th
THE COURT: Right. Other than the personal money that Mr.
, p. 265:5-14 (Emphasis added).
36. As a result, under the applicable legal standards, a court of appeals could not
overturn factual findings relating to Bloomingkemper’s aiding the sellers. Both findings are
sufficient to support the judgment against Bloomingkemper. Plaintiff’s motion for summary
judgment must be denied and summary judgment in favor of Evans should be granted
(3) There is Substantial Evidence Bloomingkemper Knew or Should Have
Known of the False Statements.
37. As described above, it is Bloomingkemper’s burden to refute the knowledge
component in these factual findings. This means that the court must "first examine the record for
evidence that supports the finding, while ignoring all evidence to the contrary."
46 S.W.3d at 241. In other words, the court must look to see if there is any evidence that
supports findings 28 & 31, while ignoring all evidence to the c ., ignoring the
purported testimony of Agent Walther. Only if there is no evidence to support the finding, will
the court then examine the entire record in order to determine
established as a matter of law. , 314 S.W.3d at 544.
38. Here, the evidence of knowledge of the falsity of the statements is substantial. In
Bloomingkemper’s own trial testimony:
Q. Tell me why you put your money in the program.
A. Well, I'm sick and tired of Mr. Garrett and Mr. Sims lying about how
much money they were making, luring agents away to sell their products. So, I
called Mr. Sims, and I said, you know, what's the best deal you can give me. And
he said 90 days, we can pay you "X" number of dollars. If you'll put in 200,000,
we'll give you 2 million. I said, well, here's my money, put your money where
your mouth was. And 90 days later, it didn't happen.
Exhibit “E” . (2/19/2003), pp. 241:14-242:1. Bloomingkemper admits that he believed the
sellers were lying. Bloomingkemper also testified that he thought it was “stupid” and “reckless”
to sell from the outset:
Q. You've never heard of it referred to as a pyramid scheme?
A. I mean, the whole thing sounds stupid at the start. Outside of saying it's
stupid, I don't know what else you'd call.
Q. Why does it sound stupid?
A. Who in their right mind thinks that you're going to get 20 percent return a
month on your money?
Q. That's reckless, isn't it?
A. I would think that -- reckless on whose part?
Q. On the person putting his money in there?
A. It's reckless on his part?
Q. Yes.
A. Perhaps.
Q. Well, it's certainly reckless for the guy who's recommending that he's
doing this that's supposed to be a professional, isn't it?
A. I would think so, yes.
, p. 183:7-25.
39. Even in the unlikely event that a court of appeals determined that there was no
evidence in support of the finding, the court is then required to determine if the contrary
proposition is established as a matter of law. , 314 S.W.3d at 544. The court will only
sustain the issue if the contrary proposition is conclusively e ., 46
S.W.3d at 241; , 314 S.W.3d at 544. Meaning, in this case, a court of appeals would have
to then look to determine whether the evidence conclusively established that Bloomingkemper
did not know/could not have reasonably known that the securities were being sold by means of
untrue statements.
40. The proffered testimony of Agent Walther does nothing of the sort, and is
therefore, irrelevant for the purposes of any appeal as to these factual findings. The testimony
might tangentially touch on these issues, but certainly does not conclusively establish any
contrary proposition. Agent Vanessa Walther testifies in her affidavit that Bloomingkemper
assisted her in the investigation of the underlying scheme (para. 3), and had no involvement in
While only January 23, 2003 (Exhibit “G”), February 18, 2003 (
2003 (Exhibit “E”) are cited herein, the complete trial transcr
Conference (Exhibit “M”), are attached for completeness of reco
the Ponzi scheme (para. 4), but the proffered testimony fails to even address M
Bloomingkemper’s knowledge of the scheme, much less provide any conclusive proof on that
front. Whether or not Bloomingkemper was actively involved pushing this Ponzi scheme does
not address the underlying Court’s ruling on his status as a “control person”. Agent Walther’s
testimony has no impact on the findings as to “control person” status of Bloomingkemper.
41. As a result, under the applicable legal standards, a court of appeals could not
overturn factual findings 28 & 31, even with a trial court record and Agent Walther’s testimony.
Both findings are sufficient to support the judgment against Bloomingkemper, plaintiff’s motion
for summary judgment must be denied and summary judgment in favor of Evans should be
granted. Again, this is not a fact-based summary judgment issue. Bloomingkemper testified
repeatedly to the contrary and the Court found that he lacked credibility. See Exhibit “B”
(Amended Findings of Facts) at nos. 21, 25, 28 & 31.
III. No Malpractice or Breach of Fiduciary Duty Exists.
Mr. Bloomingkemper and His Companies Have a Long History of Adv
42. The plaintiff in this action is Ronald Bloomingkemper. Mr. Bloomingkemper and his
companies have been repeatedly accused of and found to have committed fraud and engaged in
deceptive and unlawful conduct. Some of these examples include
09-06677; 4/12/2011; $500,000 awarded in favor of Claimants Robert Cordaro; Lisa
Cordaro for securities violations;
Mr. Bloomingkemper 08/23/2007 – Plead guilty to lying on his ap
Mr. Bloomingkemper’s company (that sells water that purportedly cures cancer) was
sued in HEALTH20 Products, LLC and Evolvhealth LLC.; Cause No. 4:2009cv03699
(selling water that supposedly cures cancer and falsely claiming it was supported by
A $111,000 fine by the NASD for numerous securities violations;
NASD award 04/23/2009; securities violations; $227,301 awarded against Mr.
Bloomingkemper’s companies;
James Zazalli v. Ronald Keith Bloomingkemper, et al., Cause No. 1:2014cv00419
pending in the U.S. District Court for Idaho; Filed 9/29/2014 alleging securities
Lindsay Byrum v. Bloomingkemper, et al., Cause No. 1999-29139 in the District Court of
Winchester, Terry v. United Securities Alliance, et al., Cause No. 2001-49574 (securities
violations alleged over scheme to sell pay phones to investors)
43. Now, however, Mr. Bloomingkemper contends that this case is different. In this
case, unlike the slew of others, it is his lawyer’s fault that
securities violations. If it were to determine these issues in connection with a summary
judgment motion, the Court is left to decide between two fact s
The defendant, an attorney in his twenty-second year of practice without any disciplinary history
The plaintiff, who had not paid a single legal bill in several years and who (1) refused to
acknowledge representation by the new firm or pay his bills for almost two years, and (2) has
been repeatedly accused of and found liable/guilty of similar violations, is now seeking to
unlawfully find a funding source for his own misdeeds.
Mr. Bloomingkemper was advised that no further work would be pe
44. As set forth in the affidav
“After approximately six months of working on Mr. Bloomingkemper’s case at my new firm,
without being paid once, Mr. Bloomingkemper continued his practice of not paying a single legal
bill. Finally, after observing the amount of work performed, essentially for free, for Mr.
Bloomingkemper, I became (1) concerned that we should perform no further work unless the
representation was transferred to my new firm, and (2) determined that my firm would perform no
further work for Mr. Bloomingkemper or Marketing Alliance, Inc. or United Securities Alliance, Inc.
unless they paid for those fees in some form o
Preview
§ IN THE DISTRICT COURT § Plaintiff, § § v. § 113th JUDICIAL DISTRICT § § Defendant. § HARRIS COUNTY, TEXAS Defendant Kirk Evans files this response to the Plaintiff’s Second Motion for Summary Judgment. In support thereof, defendant would respectfully show the Court as follows: This is an appellate legal malpractice action. The issue of whether or not the Court of Appeals would have overturned the judgment against Mr. Bloomingkemper is solely a legal issue. There are no circumstances where a jury would be asked to make a factual finding as to how an appellate court would rule on a given trial court record. “In cases of appellate legal malpractice the determination of causation requires determining whether the appeal in the underlying action would have been successful.” , 861 S.W.2d 291 (Tex. App.- San Antonio, 1993). The issue is to be resolved by the court as a question of law. , 775 S.W.2d 626, 627-28 (Tex.1989). Inexplicably the plaintiff and his expert are attempting to persuade this Court as to how an appellate court would rule – without a single cite to the trial transcript from the original case. In other words, the plaintiff is trying to convince this Court as to how an appellate Court would rule, without the very evidence that a court of appeals would look at in making that In addition to this fatal flaw, the plaintiff’s motion completely ignores the primary liability finding against Mr. Bloomingkemper – “control person” status under the Texas Securities Act. The underlying trial court found Mr. Bloomingkemper liable as a control person under the Texas Securities Act, and found that his attempts to refute this fact lacked credibility. FOF 21. Not one word in plaintiff’s motion for summary judgment, or in the proffered testimony of Agent Walther even addresses, much less refutes, this factual finding of the trial court. This finding alone is sufficient for an appellate court to affirm the judgment against Bloomingkemper. Setting aside these incurable defects in the motion, summary judgment must also be denied because (1) under the correct standards for appellate review, a court of appeals could not overturn the underlying judgment because there is substantial evidence in the record to support the trial court’s findings; (2) the evidence in support of this response demonstrates unequivocally that no malpractice occurred, (3) substantial evidence exists to refute causation, (4) the damage model asserted by the plaintiff, even if unrefuted, is legally and factually bankrupt; and; even if the Court disagrees with all of the foregoing, fact issues exist as to every essential element needed to establish liability. Plaintiff’s Second Motion for Summary Judgment is nothing more than a slightly rehashed version of plaintiff’s original Motion for Summary Judgment which was already denied by this Court. Nothing has changed. The same result should be reached here. Plaintiff’s Second Motion for Summary Judgment should be denied. Defendant objects to the Affidavit and Testimony of Greg White and moves to Defendant incorporates by reference Defendant’s Response to Motion for Summary Judgment filed April 13, 2015, and considered by the Court in denying the very similar Plaintiff’s Motion for Summary Judgment by order dated May 4, 2015. strike them. The Plaintiff has hired Greg White, an appellate lawyer from Waco, Texas, to opine on solely an issue of law, that being the issue of how a court of appeals would rule on a given appellate record. To make matters worse, Mr. White has completely ignored the one item make that decision – the reporter’s record. This omission is not a matter of simply shading the facts in favor of one position or another. Instead, it is the abandonment of any sense of the “reliability” requirement recognized by Texas courts as it pertains to expert testimony. Mr. White’s testimony should be excluded because Texas courts uniformly reject the practice of having an expert opine on matters of law versus matters for the trier of fact. Texas courts uniformly recognize that the purpose of the expert witness is to “assist the trier of fact.” An expert witness may not testify as to questions of l United Way v. Helping Hands 949 S.W.2d 707, 714 (Tex. App.-San Antonio 1997, writ denied) (“testimony, taken as a whole, was tantamount to a legal conclusion” and should have been excluded). In addition, while an expert may testify as to underlying facts, the witness may not testify as to whether those facts meet the ultimate legal requirements: However, both witnesses and others were also asked whether this conduct constituted a violation of section 779.003. This was improper. , 949 S.W.2d at 713. Thus, the court did not abuse its discreti insofar as it sustained the City's objections that these witnesses were improperly Schronk v. City of Burleson, 387 S.W.3d 692, 705 (Tex. App.-Waco 2009, pet. denied). Mr. White is attempting to violate these precise tenants by testifying as to whether or not a court of appeals would affirm the deci “In cases of appellate legal malpractice the determination of causation requires determining whether the appeal in the underlying action would have been successful.” Veschi v. , 861 S.W.2d 291 (Tex. App.-San Antonio, 1993). The issue is to be resolved by the , 775 S.W.2d 626, 627-28 (Tex.1989). As a result, the affidavit of Mr. White should be excluded and Mr. White should be precluded from testifying by affidavit, deposition, live or EFERENCE TO 11. As stated above, “[i]n cases of appellate legal malpractice the determination of causation requires determining whether the appeal in the underlying action would have been Veschi v. Stevens, 861 S.W.2d 291 (Tex. App.-San Antonio, 1993). The issue is t be resolved by the court as a question of law. Millhouse v. Wiesenthal, 775 S.W.2d 626, 12. Inexplicably, plaintiff’s motion completely omits any reference or citation to the very record that the court of appeals would review in making this determination. Plaintiff’s motion contains not a single citation to the actual testimony and exhibits from the original trial. The reason for this is obvious. Only one portion of the trial transcript was lost, which is the portion containing the testimony of Agent Walther. The remaining portions are available and are replete with testimony in support of the liability findings against Bloomingkemper. 13. As discussed below in more detail, as to each of the liability findings at issue, an appellate court is required to review the record and determine if there is any evidence to support the finding. Here, the plaintiff has completely omitted any discussion of the trial court record from his motion for summary judgment, meaning this Court cannot perform the very task it is required to perform in order to grant summary judgment. 14. Plaintiff’s motion must be denied accordingly. PPROPRIATE TANDARDS OF PPELLATE OURT OF PPEALS 15. The basic facts of the underlying case involved a multimillion dollar Ponzi scheme that was sold by a number of representatives and brokers affiliated with two companies owned and controlled by Bloomingkemper. See Exhibit “A” (Plaintiffs’ Eighth Amended Petition). Exhibit “B” (Amended Findings of Fact and Conclusions of Law (“Amended Findings of Facts”)). At trial, Bloomingkemper was not alleged to have received any of the money from the scheme or personally solicited any “investors” in the scheme. He was, however, alleged to have been a “control person” under the Texas Securities Act and to have directly or indirectly aided the sellers of the securities. See Exhibit “A” (Plaintiffs’ Eighth Amended Petition). (1) A person who directly or indirectly controls a seller, buyer, or issuer of a security is liable under Section 33A, 33B, or 33C jointly and severally with the seller, buyer, or issuer, and to the same extent as if he were the seller, buyer, or issuer, unless the controlling person sustains the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of the (2) A person who directly or indirectly with intent to deceive or defraud or with reckless disregard for the truth or the law materially aids a seller, buyer, or issuer of a security is liable under Section 33A, 33B, or 33C jointly and severally with the seller, buyer, or issuer, and to the same extent as if he were the seller, buyer, 16. According to the comment, “[t]he rationale for control person liability is that a control person is in a position to prevent the violation and may be able to compensate the injured investor when the primary violator (e.g., a corporate issuer which has gone bankrupt) is not.” Frank v Bear, Stearns & Co., 11 S.W.3d 380 (Tex. App. - 1 Dist., 2000). The comment also notes that “a control person might include an employer, an officer or director, a large shareholder, a parent company, and a management company.” . Control is defined in the same terms as under federal securities law; under that law “control means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person, 17. The trial court made liability findings that Mr. Bloomingkemper was a “control “Ron Bloomingkemper directly or indirectly controlled the sellers of the securities of each Plaintiff. To the extent that he attempted to contradict this . Bloomingkemper’s testimony to “Mr. Bloomingkemper directly or indirectly materially aided the sellers with reckless disregard for the truth. To the extent that he attempted to contradict this . Bloomingkemper’s testimony to “Mr. Bloomingkemper had actual knowledge that the securities were being sold by means of an untrue statement of material fact. This knowledge existed before the security was sold to an Plaintiff. (Defendants’ burden to negate). To the extent that he attempted to contradict this point, the Court did not find Mr. Bloomingkemper’s testimony to be credible.” “Mr. Bloomingkemper could have known in the exercise of reasonable care before any security was sold to any Plaintiff that the securities were being sold by means of an untrue statement of a material fact. (Defendants’ burden to negate). To the extent that he attempted to contradict this point, the Court did not find Mr. Bloomingkemper’s testimony to be credible.” See Exhibit “B“ (Amended Findings of Facts) 18. The question for this Court, given these findings, is “under what standard would a court of appeals review these findings, and given the record here, would a court of appeals be legally able to overturn these findings?” Under the relevant standards, this cannot be done and plaintiff’s motion for summary judgment must be denied. 19. The relevant standard of review differs slightly depending upon which party has the burden of proof with respect to a given issue. Here, as to findings of fact 28 & 31, the Texas Securities Act places the burden on Mr. Bloomingkemper to negate these issues. Texas Securities Act Section 33.F. If a party with the burden of proof (here Bloomingkemper) challenges the legal sufficiency of an adverse finding, the court of appeals must determine whether the complaining party has demonstrated on appeal that the evidence establishes, “as a matter of law, all vital facts in support of the issue.” Barnes v. Mathis, 353 S.W.3d 760, 762 (Tex. 2011); Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam); Garcia, 314 S.W.3d at 544; Perez v. Perez, No. 13-11-00169-CV, 2013 WL 398932, at *4 (Tex. App.— Corpus Christi Jan. 31, 2013, no pet.) (mem. op.). 20. In a “matter of law” challenge, the court must “first examine the record for evidence that supports the finding, while ignoring all evidence to the contrary ., 46 S.W.3d at 241 (emphasis added). If there is no evidence to support the finding, only then will the court examine the entire record in order to determine whether the contrary proposition is established as a matter of law. , 314 S.W.3d at 544. At that point, the court will only sustain the issue if the contrary proposition is conclusively e ., 46 S.W.3d at 241; , 314 S.W.3d at 544. The final test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005); , 314 S.W.3d at 544. 21. Applied here, this means that the court must “first examine the record for evidence that supports the finding, while ignoring all evidence to the contrary.” 46 S.W.3d at 241. In other words, the court must look to see if there is any evidence to support findings 28 & 31, while ignoring all evidence to the contrary; ., ignoring the purported testimony of Agent Walther. Only if there is no evidence to support the finding, will the court then examine the entire record in order to determine whether the contrary proposition is established as a matter of law. , 314 S.W.3d at 544. As discussed above, the plaintiff did not even bother to attach or compile the record, so this Court cannot perform the required 22. As to findings of fact 21 & 25, the Texas Securities Act places the burden on the plaintiffs in the underlying case to prove these issues. See Texas Securities Act, Section 33. In this circumstance, the trial court's findings of fact have the same weight as a jury verdict; a court will therefore review the legal and factual sufficiency of the evidence as itwould following a Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). If there is more than a mere scintilla of evidence supporting a finding of fact, the court will overrule a legal sufficiency Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). In reviewing a factual sufficiency challenge, the court will set aside a finding only if it is so against the great weight and preponderance of the evidence as to be clearly wrong , 917 S.W.2d 770, 772 (Tex. 1996). 23. This Court cannot perform either task because plaintiff’s motion fails to cite or attach the trial court record. Obviously, the reason for this glaring omission is that the record is replete with evidence in support of Judge Baker’s liability findings. That evidence is addressed C. Applying These Standards to the Record at Trial. 24. In applying these standards, this Court must initially determine whether there is (i) Was Mr. Bloomingkemper a “control person?” (ii) Did he directly or indirectly aid the sellers? (iii) Did he know or have reason to know that the sellers were using untrue statements? 25. The following is a recap of a portion of the evidence in su (1) There is Substantial Evidence of “Control Person” Status. 26. As a background matter for this Court, itis important to note that one of Mr. Bloomingkemper’s central complaints in this case is that Evans failed to secure replacement trial testimony of an FBI Agent, Vanessa Walther. See Plaintiff’s Original Petition, on file with this Court, at pp. 3-4. Agent Walther testified at trial,but her portion of the transcript was lost at some point by one of the court reporters from the original tria 27. Incredibly, the proffered testimony of Agent Walther does not even begin to address whether or not Bloomingkemper was a ‘control person’ under the Texas Securities Act or whether he directly or indirectly aided the sellers of the securities, and is therefore, irrelevant for the purposes of any appeal as to these factual findings. Exhibit “D” (Deposition of Vanessa Walther (“Walther Depo.”)) 28. In fact, when the parties conducted her deposition a few weeks ago, she testified to facts concretely establishing that Mr. Bloomingkemper was a Q. Do you know where Mr. Bloomingkemper worked? A. He owned a company, but I don't recall the name of the company that he Q. Do you recall what his position was at that company? A. He was president or CEO. Q. Do you know if Mr. Sims and Mr. Garrett (two of the “sellers”) worked at that company? A. I believe they did. Q. And what was their position with regard to Mr. Bloomingkemper, ifyou know it? A. I don't know. Exhibit “D“ (Walther Depo.) at p. 12:12-24. In other words, as best she can recall, the sellers of the Ponzi scheme worked at a company owned by Mr. Bloomingkemper, where he was the 29. This is nearly prima facie evidence of control person liabi “The Act creates liability for persons "who directly or indirectly controls a seller, buyer, or issue of a security" who run afoul of 581-33A. According to the comment, "[t]he rationale for control person liability is that a control person is in a position to prevent the violation and may be able to compensate the injured investor when the primary violator (e.g., a corporate issuer which has gone bankrupt) is not." The comment also notes that "a control person might include an employer, an officer or director, a large shareholder, a parent company, and a management company." .Control is defined in the same terms as under federal securities law; under that law "control means the possession, direct or indirect, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by Federal courts construing control person liability have fashioned a two-prong test: that the defendant exercised control over the operations of the corporation in activity upon which the primary violation is predicated. Abbott v. Equity Group .,2 F.3d 613, 620 (5th Cir. 1993) (quoting Metge v. Baehler, 762 F.2d 621, 631 (8th Cir. 1985). Texas courts interpreting this requirement have held only that a major shareholder or director is a "control person" for purposes of the statute Summers v. Welltech Inc., 935 S.W.2d 228, 231 (Tex. App.-Houston , 896 S.W.2d 807, ., 11 S.W.3d 380 (Tex. App. - 1 Dist., 2000) (emphasis added). 30. Specific examples of other testimony and evidence in support of control person a. Bloomingkemper personally invested $200,000 in the scheme and got his money back when he did not receive a promised $2,000,000 a few months later and he complained. See Exhibit “E“ (Trial Transcript 2/19/2003 (“ 182. Demonstrating actual knowledge of the scheme, sold by means of untrue statements, and control over the sellers. Bloomingkemper’s threats to go to the FBI were not to protect investors, but were to get his own money back out of the scheme. See Exhibit “F” (Trial Transcript 2/18/2003 (2/18/2003)), p. 240:4 – b. Bloomingkemper was the “uppest manager” and had “absolute control” over the c. Hinojosa (one of the “sellers”) testified that he would not have sold the product to N.M.A., or Bloomingkemper had admonished them or threatened them with firing. Exhibit “G” (Trial Transcript 1/23/2003 (“ pp. 40-41 and Exhibit E (2/19/2003) p. 137. Demonstrating d. Bloomingkemper had control over the sellers and the power to terminate them. Exhibit “E” p. 142 (“Q. So, it was your belief they had that control over you? A. They had the ability to terminate me, yes.”). Demonstrating control Exhibit “E” e. The Court even acknowledged that Mr. Bloomingkemper made this point in his testimony: Q: Won't you admit that because whatever stroke you had with the insurance company that you have at least indirect control over what Mr. Hinojosa does or doesn't say that you can threaten with him? THE COURT: I think he's already said that he had the right to recommend the termination. So, I think your point has been made. f. According to the underlying plaintiffs’ expert, when Bloomingkemper found out Mr. Byrum (another “seller”) was involved in the scheme, as Bloomingkemper admits in his deposition, Bloomingkemper should have conducted an investigation, notified investors, and fired Mr. Byrum. See Exhibit “H” (Plaintiffs’ Reply to Defendants’ Supplement to Closing Brief and Objections to Expert Testimony). Demonstrating actual knowledge of the scheme, sold by means of untrue statements, and control g. According to the underlying plaintiffs’ expert, the standard of care required Bloomingkemper, the representative, the supervisors and the broker/dealer to do due diligence to determine whether or not the representations in the contract were correct, if there is actually currently trading going on, who is did it, do they have the resources to carry on, etc. Exhibit “F” (2/18/2003), pp. 141-144. Demonstrating control over the sellers. h. Bloomingkemper claims that once the scheme was discovered, t all the reps and fire those involved. Exhibit “E” Curby and Mr. Hinojosa deny such an interview or even a letter. Exhibit “G” (1/23/2003), pp. 40-41 and Exhibit “E” (2/19/2003) pp. 137, 138. Demonstrating actual knowledge of the scheme, sold by means of statements, and control over the sellers. i. Bloomingkemper was in weekly contact with the head of the Ponzi scheme, Randall Garrett. Exhibit “F” 31. The foregoing is only a small portion of the evidence at trial on these subjects, but each is legally sufficient to support the trial court’s findings under the appropriate legal standards. The testimony of Agent Walther does not even remotely counter (and in fact likely supports) Mr. Bloomingkemper’s status as a control person. Further, there is no evidence establishing the contrary position as a matter of law. 32. It is particularly essential to emphasize that this single liability finding is enough to support a judgment against Mr. Bloomingkemper for the entire amount under the Texas Securities Act. As a matter of law, a court of appeals could not overturn the judgment against Bloomingkemper, plaintiff’s motion for summary judgment must be denied and summary judgment (2) There is Substantial Evidence Bloomingkemper Directly or In 33. The evidence at trial demonstrated that Bloomingkemper aided the sellers in two primary ways. First, Bloomingkemper personally invested $200,000 in the scheme and got his Without belaboring the point, it is important to note again that this Court’s review of these issues must be judged from the perspective of an appellate court. This Court must determine whether there was “some evidence” or “more than a scintilla of evidence” on certain points.This is not a circumstance where there is a “fact issue” that defeats money back when he did not receive a promised $2,000,000 a few months later and complained. See Exhibit “E” . (2/19/2003), p. 182. The trial court correctly interpreted this investment either directly or indirectly aiding the sellers. This provided the “bad guys” with $200,000 in capital to perpetuate their scheme, and enhanced the credibility of the scheme as a whole because the sellers could now brag that they had a big investment because the owner and CEO had actually put in his own money. Bloomingkemper’s threats to go to the FBI were not to protect investors, but were to get his own money back out of the scheme. Exhibit (2/18/2003), p. 240:4 – 34. In addition, Bloomingkemper directly or indirectly aided the sellers because he could have investigated, terminated those involved, instructed the representatives not to sell the scheme, notified investors, etc.; and yet, there was substantial evidence at trial that he failed to a. Bloomingkemper claims that once the scheme was discovered, t all the representatives and fire those involved. Exhibit “E” p. 236. Both Mr. Curby and Mr. Hinojosa deny such an interview occurred or even a b. Hinojosa (one of the “sellers”) testified that he would not have sold the product to N.M.A., or Bloomingkemper had admonished them or threatened them with firing. Exhibit “G” c. Bloomingkemper had control over the sellers and the power to terminate them. Exhibit “E” p. 142 (“Q. So, it was your belief they had that control over you? A. They had the ability to terminate me, yes.”). Exhibit “F” d. According to the underlying plaintiffs’ expert, when Bloomingkemper found out Mr. Byrum (another “seller”) was involved in the scheme, as Bloomingkemper admits in his deposition, Bloomingkemper should have conducted an investigation, notified investors, and fired Mr. Byrum. Exhibit “F” e. According to the underlying plaintiffs’ expert, the standard of care required the representative, the supervisors and the broker/dealer to do due diligence to determine summary judgment simply because bot tions. whether or not the representations in the contract were correct, if there is a bond, if there is actually currently trading going on, who is did it, do they have the 35. At a minimum, there is “some evidence” that Bloomingkemper aided the sellers. In reality, providing $200,000 to those perpetuating a Ponzi scheme is overwhelming evidence of providing aid to the scheme. T THE COURT: You're not saying that they all got together and said, we're going to do this scheme together? THE COURT: Okay. I didn't think so. MR. GREEN: Only Mr. Garrett and Mr. Bynum -- and I'm not sure if that's the right name -- and Mr. Sims. And as far as they're a part of th THE COURT: Right. Other than the personal money that Mr. , p. 265:5-14 (Emphasis added). 36. As a result, under the applicable legal standards, a court of appeals could not overturn factual findings relating to Bloomingkemper’s aiding the sellers. Both findings are sufficient to support the judgment against Bloomingkemper. Plaintiff’s motion for summary judgment must be denied and summary judgment in favor of Evans should be granted (3) There is Substantial Evidence Bloomingkemper Knew or Should Have Known of the False Statements. 37. As described above, it is Bloomingkemper’s burden to refute the knowledge component in these factual findings. This means that the court must "first examine the record for evidence that supports the finding, while ignoring all evidence to the contrary." 46 S.W.3d at 241. In other words, the court must look to see if there is any evidence that supports findings 28 & 31, while ignoring all evidence to the c ., ignoring the purported testimony of Agent Walther. Only if there is no evidence to support the finding, will the court then examine the entire record in order to determine established as a matter of law. , 314 S.W.3d at 544. 38. Here, the evidence of knowledge of the falsity of the statements is substantial. In Bloomingkemper’s own trial testimony: Q. Tell me why you put your money in the program. A. Well, I'm sick and tired of Mr. Garrett and Mr. Sims lying about how much money they were making, luring agents away to sell their products. So, I called Mr. Sims, and I said, you know, what's the best deal you can give me. And he said 90 days, we can pay you "X" number of dollars. If you'll put in 200,000, we'll give you 2 million. I said, well, here's my money, put your money where your mouth was. And 90 days later, it didn't happen. Exhibit “E” . (2/19/2003), pp. 241:14-242:1. Bloomingkemper admits that he believed the sellers were lying. Bloomingkemper also testified that he thought it was “stupid” and “reckless” to sell from the outset: Q. You've never heard of it referred to as a pyramid scheme? A. I mean, the whole thing sounds stupid at the start. Outside of saying it's stupid, I don't know what else you'd call. Q. Why does it sound stupid? A. Who in their right mind thinks that you're going to get 20 percent return a month on your money? Q. That's reckless, isn't it? A. I would think that -- reckless on whose part? Q. On the person putting his money in there? A. It's reckless on his part? Q. Yes. A. Perhaps. Q. Well, it's certainly reckless for the guy who's recommending that he's doing this that's supposed to be a professional, isn't it? A. I would think so, yes. , p. 183:7-25. 39. Even in the unlikely event that a court of appeals determined that there was no evidence in support of the finding, the court is then required to determine if the contrary proposition is established as a matter of law. , 314 S.W.3d at 544. The court will only sustain the issue if the contrary proposition is conclusively e ., 46 S.W.3d at 241; , 314 S.W.3d at 544. Meaning, in this case, a court of appeals would have to then look to determine whether the evidence conclusively established that Bloomingkemper did not know/could not have reasonably known that the securities were being sold by means of untrue statements. 40. The proffered testimony of Agent Walther does nothing of the sort, and is therefore, irrelevant for the purposes of any appeal as to these factual findings. The testimony might tangentially touch on these issues, but certainly does not conclusively establish any contrary proposition. Agent Vanessa Walther testifies in her affidavit that Bloomingkemper assisted her in the investigation of the underlying scheme (para. 3), and had no involvement in While only January 23, 2003 (Exhibit “G”), February 18, 2003 ( 2003 (Exhibit “E”) are cited herein, the complete trial transcr Conference (Exhibit “M”), are attached for completeness of reco the Ponzi scheme (para. 4), but the proffered testimony fails to even address M Bloomingkemper’s knowledge of the scheme, much less provide any conclusive proof on that front. Whether or not Bloomingkemper was actively involved pushing this Ponzi scheme does not address the underlying Court’s ruling on his status as a “control person”. Agent Walther’s testimony has no impact on the findings as to “control person” status of Bloomingkemper. 41. As a result, under the applicable legal standards, a court of appeals could not overturn factual findings 28 & 31, even with a trial court record and Agent Walther’s testimony. Both findings are sufficient to support the judgment against Bloomingkemper, plaintiff’s motion for summary judgment must be denied and summary judgment in favor of Evans should be granted. Again, this is not a fact-based summary judgment issue. Bloomingkemper testified repeatedly to the contrary and the Court found that he lacked credibility. See Exhibit “B” (Amended Findings of Facts) at nos. 21, 25, 28 & 31. III. No Malpractice or Breach of Fiduciary Duty Exists. Mr. Bloomingkemper and His Companies Have a Long History of Adv 42. The plaintiff in this action is Ronald Bloomingkemper. Mr. Bloomingkemper and his companies have been repeatedly accused of and found to have committed fraud and engaged in deceptive and unlawful conduct. Some of these examples include 09-06677; 4/12/2011; $500,000 awarded in favor of Claimants Robert Cordaro; Lisa Cordaro for securities violations; Mr. Bloomingkemper 08/23/2007 – Plead guilty to lying on his ap Mr. Bloomingkemper’s company (that sells water that purportedly cures cancer) was sued in HEALTH20 Products, LLC and Evolvhealth LLC.; Cause No. 4:2009cv03699 (selling water that supposedly cures cancer and falsely claiming it was supported by A $111,000 fine by the NASD for numerous securities violations; NASD award 04/23/2009; securities violations; $227,301 awarded against Mr. Bloomingkemper’s companies; James Zazalli v. Ronald Keith Bloomingkemper, et al., Cause No. 1:2014cv00419 pending in the U.S. District Court for Idaho; Filed 9/29/2014 alleging securities Lindsay Byrum v. Bloomingkemper, et al., Cause No. 1999-29139 in the District Court of Winchester, Terry v. United Securities Alliance, et al., Cause No. 2001-49574 (securities violations alleged over scheme to sell pay phones to investors) 43. Now, however, Mr. Bloomingkemper contends that this case is different. In this case, unlike the slew of others, it is his lawyer’s fault that securities violations. If it were to determine these issues in connection with a summary judgment motion, the Court is left to decide between two fact s The defendant, an attorney in his twenty-second year of practice without any disciplinary history The plaintiff, who had not paid a single legal bill in several years and who (1) refused to acknowledge representation by the new firm or pay his bills for almost two years, and (2) has been repeatedly accused of and found liable/guilty of similar violations, is now seeking to unlawfully find a funding source for his own misdeeds. Mr. Bloomingkemper was advised that no further work would be pe 44. As set forth in the affidav “After approximately six months of working on Mr. Bloomingkemper’s case at my new firm, without being paid once, Mr. Bloomingkemper continued his practice of not paying a single legal bill. Finally, after observing the amount of work performed, essentially for free, for Mr. Bloomingkemper, I became (1) concerned that we should perform no further work unless the representation was transferred to my new firm, and (2) determined that my firm would perform no further work for Mr. Bloomingkemper or Marketing Alliance, Inc. or United Securities Alliance, Inc. unless they paid for those fees in some form o