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NO. 2011 61780
GULF COAST ASPHALT COMPANY, IN THE DISTRICT COURT OF
L.L.C. and TRIFINERY, INC.
Plaintiffs,
VS. HARRIS COUNTY, TEXAS
RUSSELL T. LLOYD AND
JOHN M. OQUINN AND
ASSOCIATES, L.L.P.,
Defendants. 190th JUDICIAL DISTRICT
PLAINTIFFS’ RESPONSE TO DEFENDANTS’
MOTION FOR PARTIAL SUMMARY JUDGMENT ON CAUSATION
Plaintiffs, Gulf Coast Asphalt Company, L.L.C. and Trifinery, Inc. (collectively
Gulf Coast) file this response to Defendants’ otion for summary judgment directed at
he element of causation. In support, Gulf Coast shows as follows:
A
Summary
This is Gulf Coasts response to Defendants’ motion for partial summary
judgment which desperately invites this Court to resolve the element of ausation
quintessential question of fact as matter of law where the facts regarding causation are
hotly contested. Indeed, this motion represents Defendants’ second attempt to avoid
having Lloyd’ conduct in allowing case he secretly valued at nearly $80 million to be
dismissed on he eve of trial to be judged by jury. Regrettably, not only is the motion
not well founded, but it also includes multiple misrepresentations regarding the
applicable law and operative facts
Quite simply, this Court’ analysis should begin an end with the undisputable law
in Texas that causation is ultimate question of fact to be resolved by the jury; this nile
of law makes it fundamentally improper for this Court to resolve motions (and legal
disputes) that th alifornia trial judge declined to rule on prior to dismissing the
California Lawsuit on procedural grounds. Moreover, this is not case of appellate
malpractice where factual disputes regarding causation are to be determined by the trial
court Like in other cases of professional malpractice, the jury in this case will answer
the question of causation based on the evidence as presented through expert testimony
and otherwise. For these reasons alone, this Court need make no further inquiry to deny
Defendants motion for partial summary judgment on causation.
Not only is causation question of fact to be resolved by the jury, but the evidence
shows that the fraud claim in the California Lawsuit (1) was never dismissed on the
merits prior to the case bein dismissed on procedural grounds, and (2) was not likely to
be dismissed on the merits had Lloyd not missed the year trial deadline. This is
because the summary adjudication record in the California Lawsuit which includes
evidence conveniently omitted by Defendants in their motion created triable issues of
fact which would have been resolved by California jury. For this additional reason,
summary judgment is improper.
Perhaps the most disturbing aspect of this second effort by Defendants to have
Lloyd absolved of any wrongdoing for allowing the California Lawsuit to be dismissed
the eve of trial are Defendants’ repeated misrepresentations of facts made in the
motion. In this regard, any suggestion by Defendants to this Court that Gulf Coasts
fraud cause of action was dismissed by the California Court is patently false. See
generally EFENDANTS OTION FOR ARTIAL UMMARY UDGMENT ASED ON
NVALIDITY OF LAINTIFFS NDERLYING RAUD/DECEIT/MISREPRESENTATION LAIMS
AND AMAGES at Even worse, Defendants’ motion misrepresents the scope of the
legal issue and facts presented in the summary djudication proceeding on fraud:
Defendants’ motion includes tegal arguments” not raised by Chevron below, while
omitting the controverting facts presented to the Court by Lloyd in response to Chevrons
motion. Thats not only incredulous, but disingenuous.
he natural and negative consequences of this Court accepting Defendants’
invitation to resolv fact issues as matter of law is to create new causes of action based
on the same set of facts. Think about it. Were this Court to accept Defendants’ invitation
to grant partial summary judgment on causation by concluding the Califomia trial judge
should have granted summary judgment on the record as presented by Lloyd then it
would simultaneously expose Lloyd to new claim for negligence; that is, that Lloyd
failed to properly respond to Chevrons motion on fraud. It would also serve to bifurcate
the causation analysis, risking the possibility of another trial involving the same set of
facts and witnesses. Of course, and in reality, the California trial judge never ruled on
Chevrors motion before dismissing on procedural grounds, so Lloyd was not exposed to
such claim. This all demonstrates the absurdity of Defendants’ second motion and is
further reason it should be denied
Background Facts
Defendants’ trial strategy is now clear: Lloyd contends he did nothing wrong in
allowing the California Lawsuit to be dismissed on the eve of trial, but eve if he id it
does not matter because the case he secretly valued at as much $80 million lacked merit.
Such defensive posture is not only absurd, but it is belied by Lloyd’ own acts and his
admissions to those whom he confided in the days leading up to the trial of the largest
case he would ever try Here are the relevant facts that undermine Defendants’ second
motion for artial summary judgment and expose Lloyd& strategy for what it is:
desperate attempt to have this Court absolve him of all legal responsibility for his
negligent acts and omissions and once again deprive Gulf Coast of its right to jury trial.
1 The California Lawsuit.
Lloyd understands the enormous value lost by Gulf Coast when he allowed the
case to be dismissed the eve of trial Indeed, Lloyd is keenly aware of the damning
evidence he was prepared to present to California jury that proved Chevron defrauded
Gulf Coast about the scope of the 1976 spill and its efforts to remediate the resulting
contamination to the Property as part of an overall effort to induce Gulf Coast to purchase
the Property
This Court is, no doubt, familiar with the operative facts surrounding Lloyds failure to satisfy
the year trial deadline. In any event, and subject to the Agreed rotective Order, Gulf Coast
incorporates this reference Plaintiffs’ Response Defendants’ Partial Summary Judgment
originally filed under seal and pursuant to the greed Protective Order on August
a The overwhelming evidence of fraud against Chevron.
The evidence of Chevroré fraudulent conduct that Lloyd discovered during the
five years he spent litigating against Chevron is overwhelming. So much so, that
Chevron delayed seeking summary adjudication on Gulf Coasts fraud claim until just
prior to trial. In any event, the evidence of Chevrons fraud is detailed in LAINTIFF
ULF OAST SPHALT » L.L.C.’ ESPONS AND EMORANDA OF OINTS AND
UTHORITIES PPOSING HEVRON U.S.A. NC.’ ENEWED OTION FOR UMMARY
DJUDICATION and LAINTIFF ULF OAST SPHALT » LLC’ ESPONSE TO
HEVRON U.S.A., NC.’ EPARATE TATEMENT OF NDISPUTED ATERIAL ACTS IN
UPPORT OF OTION FOR UMMARY DJUDICATION AND LAINTIFF EPARATE
TATEMENT OF NDISPUTED ATERIAL ACTS filed in the California Lawsuit on
February 6, 2009 (Exhibit 1; Exhibit at 10 38).
Perhaps Lloy himself best highlighted the overwhelming evidence of fraud in his
response to Chevron$ motion for summary adjudication on fraud. Here is how Lloyd in
his own written words, described the evidence of fraud against Chevron in his response to
their motion for summary adjudication
This case arises out of serious misrepresentations Chevron made about the
environmental condition of its Mobile, Alabama asphalt refinery (the
facility} while selling it to Trifinery, Inc. (Trifinery), Texas corporation
owned by longtime refinery operator Sanford Brass (Brass }, as well as
Chevrors misrepresentations about and failure to complete its remediation
obligations [P.Sep.Stm. {§ 12, 20]. The facility is composed of three
parcels: Parcel located next to the Mobile River, and Parcels and on
Gulf Coast is at loss for any explanation why Defendants would omit this critical component
of the summary adjudication proceeding from the summary judgment record they now present to
this Court.
the other side of an intersecting highway. [P.Sep.Stm. {7 3, 116]. Brass
teamed up with the Hunt Refining Group to form joint venture to
purchase and operate the facility. [P.Sep.Stm. 9].
Chevron and Trifinery signed Purchase Sale Agreement on September 30,
1993, which required Chevron to fumish Trifinery with environmental
reports about the condition of the facility, gave Trifinery an option period
to review the reports and cancel the sale, and obligated Chevron to conduct
monitoring and remediation operations after the sale to clean up
contamination there. [P.Sep.Stm. 4 13 15]. The purchase price was
$3,500,000. [P.Sep.Stm. 12].
Chevron furnished Trifinery with three environmental reports prior to the
sale: January 1993 report, an August 1993 report, and November 1993
report. [P.Sep.Stm. § 16 17, 19, 21]. The January 1993 report disclosed
that there had been one million gallon spill of asphalt on Parcel in 1976,
and that the Spilled material was removed and disposed of in accordance
”
with ADEM [Alabama Department of Environmental] regulations...
[P.Sep.Stm. 18]. The August 1993 and November 1993 reports both
referred back to the August report for description of the sites
environmental history. [P.Sep.Stm. §§ 20, 22]. Brass and his purchase
team of environmental experts reviewed and heavily relied on these
reports in concluding Parcel was clean and Chevron would clean up
Parcel A. [P.Sep.Stm. ff 23 29].
Furthermore, during the September December 1993 timeframe, Brass had
meetings with Chevron representative Frank Schaefer at the facility and
told Schaefer about his plans to build new vacuum (refinery) unit on
Parcel and to erect new storage tanks there utilizing vacant tank pad
bases. [P.Sep.Stm. § 30, 31, 41]. Schaefer said two of the three vacant
tank pads would be suitable for usage and Brass was fortunate to be able to
save money by utilizing them. [P.Sep.Stm. 33]. Brass and Schaefer also
had discussions about the projected timeframe for completion of Chevrons
remediation responsibilities. Brass planned to begin work on the new
refinery unit in 1998 and asked Shaefer if five years would be enough time
to complete the remediation operations; Schaefer said five years would be
reasonable time. [P.Sep.Stm. 9 37 39].
Parcel was the most logical and economical site for construction of the new refinery unit
because it was more contiguous to the maritime docks on Parcel and closer to pipe rack
conduit that spanned from Parcel over the highway to Parcel B; there was no room for the unit
on ParcelA. [P.Sep.Stm. 36].
The cquisition was funded, and Chevron conveyed the property to
Trifinery in December 1993. [P.Sep.Stm. 43]. Trifinery had co venture
to purchase and operate the facility with Hunt Refining Group. Hunt
provided some of the financing and held title to th property for few
months as security for its financial contributions. Pursuant to their joint
venture agreement, Trifinery retained 50% ownership of the facility
throughout this period. [P.Sep.Stm. §§ 43 53]. GCAC was formed by
Trifinery and Hunt, an the property was transferred and remains with
GCAC. Trifinery has at all times been 50% owner of GCAC; the other
50% is currently owned by Joyce Brass, Sanford Brass’ wife. [P.Sep.Stm.
51, 58]. []
By 1998, Brass, relying on Chevrors promise to clean up covered
contamination, was planning in earnest for construction of the new refinery.
He negotiated with the Venezuelan National Oil Company, PDVSA, for
supply of crude oil, and proposed to split profits with them from the sale of
the refined asphalt product. [P.Sep.Stm. 59]. The PDVSA board
approved the project, and GCAC would have been able to sell all of its
daily refined product. [P.Sep.Stm. §{ 60, 62]. In reliance on Chevrons
promises to clean up the facility, GCAC spent more than $10 million
preparing the planned refinery by making improvements, e.g., reworking
tanks, and began lining up more than $60 million in financing from various
financial institutions. [P.Sep.Stm. 63]. GCAC applied for and obtained
air and water permits for the refinery in 2001, and later in 2004.
[P.Sep.Stm. 64].
In 2001, Brass had numerous meetings with David Gardner (Gardner) of
Chevron Environmental Management Company (CEMCO}, the company
Chevron had designated to perform the remediation of the facility, pleading
with him to finish the remediation of Parcel A, because the slow pace was
interfering with the plans for the refinery. [P.Sep.Stm. 107, 108, 112,
113]. There was serious problems on Parcel A, as oil was still issuing in
the areas surrounding tanks 18, 19, 24, 26, and 29. [P.Sep.Stm. 109].
Gardner appreciated GCACs problems in building the new refinery and
said that Chevron would honor the purchase sale agreement and finish
cleaning up Parcel A. [P.Sep.Stm. {| 107, 108, 113]. To this very day,
Chevron is still acting under governmental orders, the most recent being
January 2007 directive from ADEM to continue monitoring Parcel for
contamination. [P.Sep.Stm. 106].
GCAC contacted Southern Geo Environmental Consultants, Inc.
(Southem Geo} to evaluate Parcel and its existing tank pads for
planned construction of two floating roof tanks to hold crude oil for the
refinery. [P.Sep.Stm. § 66, 67]. In September 2002, when Southern Geo
began to take samples and drill openings through the tank pads on Parcel
to test their support pilings, large amount of asphaltic material began
flowing from the openings. This was the first notice GCAC had of the
massive amounts of buried asphalt under Parcel B. GCACS consultants
concluded after testing that there was excessive petroleum contamination
all over the parcel and no construction could take place there until it was
cleaned up. [P.Sep.Stm. 2, 67 70, 72].
GCAC began to search to determine the source of the contamination and,
after looking through several filing cabinets of documents Chevron had
abandoned at the facility, found two separate memorandums from former
Chevron plant manager L.B. Ramsey about the 1976 spill. [P.Sep.Stm. 9
83, 85]. The first memorandum, from June 29, 1978, reveals that Chevron
buried massive amounts of asphalt on Parcel B:
Due to the extreme cost of clean up as well as problems
encountered during disposal, it was decided that the North
marsh area would not be worked since it was believed the
cane and marsh grass would soon grow thick in this area and
contain the asphalt
We new [sic] find that with each rain considerable amounts of
asphalt flow out of the marsh and comes to rest in the area
east of highway 90 with some asphalt going into the ditch on
the east side of the highway We have used considerable
manpower, both company and contract casual, and have
picked up 200 300 drums of asphalt this year. Unfortunately,
the work merely keeps us from getting into possible problems
with regulatory agencies and has not depleted the source any
measurable amount.
We can not [sic] haul this asphalt/marsh material to the Wolf
Ridge dump without getting approval from various regulatory
agencies, so the only obvious course of action is to cover the
site with sand.
In my judgment, if the asphalt remains loose in the marsh and
continues to float out with each heavy rain, be readily visible
along the highway, it is just matter of time before
environmentalist, news media, ect. [sic] makes an issue of the
situation.
[P.Sep.Stm. 87].”
Brass immediately notified Chevron about the findings of gross
contamination and held several meetings with them. [P.Sep.Stm. §§ 91 95].
Gardner and Russell Weigand, an outside environmental consultant for
Chevron recognized there was problem, but they said there was nothing
they could do without permission from higher level Chevron authorities.
[P.Sep.Stm. { 94 95]. To this day, Chevron has made not effort to clean
up Parcel B.
Peachtree Environmental, Inc. an environmental firm hired by GCAC,
concluded that Chevrons Selective analysis” of samples taken on Parcel
has resulted in misrepresentation of the actual environmental
conditions,” and Parcel has been severely impacted by Chevroré
environmental contamination and the property is not usable in its current
state for any type of improvement More importantly, Pacel poses an
imminent and substantial threat to human health and the environment.”
[P.Sep.Stm. 1 103 105].
The severe contamination not only of Parcel B, but also of Parcel (which
has not yet been adequately cleaned up), has made the land unsuitable as
collateral for much needed financing. SouthTrust Bank, which has
provided loans to GCAC using Parcel as collateral, has refused to loan
money on Parcels and because of the contamination there. Bank Vice
President John Godwin, III confirmed through his testimony and in letter
to GCAC that, “ the banks loan committee has declined your most
recent request for $400,00 loan secured by mortgage on Parcel A.’
Unlike parcel C,’ the land identified as parcel A’ (main facility) in the
Phase Environmental Report, prepared by PPM Consultants, Inc. in
September 2002, referenced numerous environmental concerns that are
unacceptable to the bank. In addition, based on information provided to the
bank concerning Parcel B’ it also is considered unacceptable collateral.”
[P.Sep.Stm. § 100 102]. Further, the facilit is located on Blakely Island,
adjacent to bird sanctuary, and within the city limits of Mobile, Alabama.
The City of Mobile has refused to issue building permits for the facility
because of environmental contamination. [P.Sep.Stm. 115].
Ramsey prepared another memorandum May documenting that the spill
consisted of 100,000 barrels, that 65,000 barrels were hauled away for burial and that
barrels were buried in place. [P.Sep.Stm. 88].
5 Furthermore, documents produced Chevroré engineering department reveal that there was
100,000 barrel leak. [P.Sep.Stm. {89 90].”
Today, more than fourteen years after selling the facility, Chevron still has
not completed its monitoring and remediation obligations, Parcels and
remain highly contaminated, there are more than 1,470,000 gallons of
asphalt unaccounted for and presumably buried on Parcel B, and GCAC
still cannot built [sic] its new efinery unit.
(Exhibit at Exhibit ).
Inexplicably, review of Gulf Coasts response to Chevrors summary
adjudication motion shows that Lloyd omitted from that response the most damning
evidence he discovered during the litigation: the affidavit of Steve McKenna which
proves that Chevron covered up the contamination on the eve of the 1994 sale. Here is
what that omitted evidence discloses
In the early 1990s, was called to the Chevron refinery on Blakely Island to
clean out and remove large above ground storage tank. This tank was
separated from the rest of the facility by Highway 90. have come to learn
that that tank was probably Tank #118 and that the tank was located on
Parcel of the Blakely Island facility. After we had been on the job or
weeks, an employee of mine came to me and told me there was oil
boiling” out of the hole in vacant tank pad on the same parcel, not far
away. went to investigate and saw black tarry, oil substance coming
out of hole in the middle of tank pad, which have leamed had
supported Tank #117. This was tank that had been involved in large
asphalt spill in the 1970s. saw an oily substance coming out of hole in
the tank pad and _ saw oil floating on water in ditches around the pad.
had several meetings with [Chevron representatives] about this situation
during which they asked me what it would take to clean up the place. told
them had no idea how much il was in the ground but that ould inject
steam into the ground to both liquefy and force it out, which ould then
* The 1,470,000 gallon figure is derived from Ramsey’ Memorandum that only 65,000 barrels
were hauled away. This leaves 35,000 barrels unaccounted for; one barrel equals llons
thus the 1,470,000 gallon figure.”
10
recover. They asked me how much this would cost and said about [sic]
$1 million year and that it might take 10 years to finish this job.
They werent interested in my proposal and stated tha they had somebody
to buy this place and all that they wanted was to stop the flow and to leave.
told him could stop the flow for while and they said to go ahead and do
it.
The first thing did was to suck out lot of oil from the hole in the middle
of pad 117. put 24 bales of hay into the hole, which tamped down.
Then put 24 loads of clay in the hole, tamping down all the time. During
the course of packing all of this material down, packed it into the hole and
back underneath the slab with my backhoes and other equipment. stopped
the oil from flowing. Chevron said that it looked good and_ was to get my
equipment out and not say anything about this to anybody.
(Exhibit ). Lloyd, so far, has offered no explanation as to why he failed to offer such
critical evidence in response to Chevrors motion for summary adjudication on fraud.
b August 4, 2009, hearing on Chevron’s summary adjudication motions
Lloyd discovers the Crystal Pier case
On August 4, 2009, the trial court conducted hearing on Chevrors motions for
summary adjudication on fraud and breach of contract. (Exhibit ). At the time, trial was
se to begin on August 31, 2009.
The record shows that Lloyd persuasively argued that the tentative ruling on fraud
was wrong; Lloyd research had uncovered Califomia Supreme Court case he
described as white horse” case. Id. at 9. Here is what Lloyd told the California trial
judge about the Crystal Pier case at the August 4, 2009, hearing:
We know the fraud cause of action does not travel Tun with the land, as
that term is understood in property law. But in this case, we have
different kind of situation. I$ not even situation where we have _ third
party purchase of the property that came in and bought the property from
Trifinery for Gulf Coast.
11
This is different situation because all of the entities involved in here are
closely held LLCs or corporations operated by Sandy Brass and his
business partner. was trying to think about this because the Court said in
the tentative ruling that the negligent misrepresentations or the fraudulent
misrepresentations made to Sandy Brass cant be attributed to Gulf Coast
because Gulf Coast was created after the property was purchased.
And Im sitting here trying to think to me why why do _ think this doesnt
make lot of sense? What is my objection to that? Because see it
maybe Im too close to it. see the whole thing, this is Sandy Brass
moving property from one place to another, not selling it to another arty.
In poking around last night found and the proposition of the law we
have is the same in California as it isin Alabama The law of the two
states is not different. That is to say, this particular area of law that
misrepresentation made to party can be relied upon by someone who
had the intent to communicate the misrepresentation to the other
party.
In fact, the case cited by Chevrors representatives, Seward versus
Dickinson states that the case its the same law in Alabama as it is in
alifornia that where third party fraudulent misrepresentation is
alleged, statements to persons other than the plaintiff will support the fraud
allegations only where there is sufficient evidence of an intent on the
part of the speaker to communicate.
Now, Im poking around last night, found case, white horse case on
this particular issue. Its Supreme Court of California. But it elucidates
and explains this proposition of law by reference to the law of many other
states. And, in fact, it is basically an essay on the issue of fraudulent
misrepresentation. Im going to supplied copy of the case to Mr.
Normington.
would like to provide case with this. Its, as said, its white horse
case We tumed it up last night when _ started focusing on the issue of why
itisnt Sandy Brass’ misrepresentation why cant Gulf Coast Supply sue
on the misrepresentations made to Sandy Brass?
And this is case Crystal Pier Amusement Company versus Cannan from
the Supreme Court of California. And it is the the operators and
incorporators of an amusement company bought pier in California. Now
12
that pier, they wanted to build on for various - convention hall or
something.
And the representations were made to the incorporators of the amusement
company through the individuals that operate the amusement company
about the state of the piers undemeath _ the state of the piers underneath
this dock, and that the piers had been creosoted and the pilings the state of
the pilings. Thats what Im trying to think. The state of the pilings, the
were of certain quality.
These misrepresentations were accepted. The amusement company
purchased the pier. And then subsequently formed holding company to
build and transfer he pier to the building to the holding company for the
purpose of building on that pier, and they built convention hall or dance
hall, some sort of structure.
And they found out after they had done this that the pilings were not as
advertised. That hey were not creosoted. They were faulty. They sued the
sellers of the pier based on fraud. And the defense was that the
misrepresentations had been made to the amusement company and not the
holding company who built the built on the who subsequent purchase
the subsequent owner of the use the word purchase shouldnt the
subsequent owner of the pier after the they built this facility on it.
In fact, the Court itself, Mr. Justice Langdon on page of what We given
you at the bottom says, the defendants concluded that since the amusement
company did not build the ballroom, and the holding company was not
defrauded there can be no recovery for the loss because the fraudulent
statements were made to the preceding title holder, the amusemen
company.
However, it says here on the second in page 3, talking about the
defendants have argued bottom of the first column where it says 841.
The defendants have argued that representations were made before the
holding company was commuted, or mad not to it, but made solely to the
amusement company.
The Court makes the finding, is what Im trying always try to argue in
this case, is that the corporation only exists through its individuals. The
representations were made in this case, as is always, to individuals to
Taylor, Nettleship, and Tai (phonetic). They were made to the corporation
by virtue of the fact that hese individuals were agents of the corporation.
13
And then they went on to, these people relied upon them when they acted
on behalf of the holding company in building the ballroom. At all times,
the representations were in the minds of the executive officers of both
corporations misstatements would not have been more fully accomplished,
their fraudulent purpose, if they had been repeated to Tai Nettleship on the
the day the holding company was created and every day thereafter the work
continued.
In other words, this stands for the proposition, and it cites different cases
from different individuals. In fact, they state the Connecticut Supreme
Court on page 6. It says in the middle of the at the end of the first full
paragraph, whatever had been thus said to them to influence the action of
projected corporation was, in legal effect, known to the corporation as soon
as it was formed
In other words, this case stands for the proposition that if you make
misrepresentations to persons who are operating who are forming
corporation for the purpose of operating _ business, or taking over property,
or whatever the situation is, that that you misrepresentations made to
the to people incorporating the corporation are misrepresentations to the
corporation as soon as it’ formed.
In other words, they made misrepresentations to Sandy Brass and his staff
who purchased the Trifinery property, through Trifinery, purchased the
Gulf Coast Asphalt Property, the Mobile Blakely Island refinery. They
didn’t sell it to Gulf Coast Asphalt, they incorporated and formed Gulf
Coast Asphalt LLC and transferred the property with all the rights
and contract.
And in the contract there was no dispute the contract gives the right to
transfer the contract to assignees. They transferred all the property and
rights under the contract to Gulf Coast Asphalt. And the
misrepresentations that wee relying on were not made to somebody up the
chain of title, they were made to Sandy Brass who actually was the person
who made formed Gulf Coast Asphalt after purchasing the property based
on his understanding of the status of the property as represented by
Chevron
So, it seems clear to me mean, it§ not clear, but its after studying it, the
significance of the factual distinction between the general proposition that
Chevron has relied upon that fraud is personal and doesnt transfer, is, one,
cant be true this instance because of the fact situation. Everything was
created by Sandy Brass. Trifinery was Sandy Brass. Gulf Coast Asphalt
14
was Sandy Brass.
This case stands for the proposition that misrepresentation made in
similar fact situation, this case is on all fours, believe, on the facts of
this case, or can be relied upon as being having defrauded the
subsequent owner, the holder of the title, not even purchaser. The
property was transferred not pursuant to purchase, but pursuant to
the business operations of Sandy Brass from one of its corporations to
another corporation. That's that issue.
(Exhibit at 10 (emphasis added)
The Crystal Pier case is so persuasive that the trial judge allowed Chevron an
opportunity to provide additional briefing, and ultimately never granted summary
adjudication on the fraud claim before dismissing the California Lawsuit on procedural
grounds (Exhibit at 237 38; Exhibit at 13 14). Considering the significance of the
Crystal Pier case which Lloy described as being white horse case” and 6n all
fours” it is not surprising that Defendants devote 25% of their substantive argument to
convince this Court the Crystal Pier ase does not apply. See EFENDANTS OTION
FOR ARTIAL UMMARY UDGMENT ASED ON NVALIDITY OF LAINTIFFS NDERLY ING
RAUD/DECEIT/MISREPRESENTATION LAIMSAND AMAGES at 16 25; see also Exhibit
at 9.
c The motion for summar adjudication on fraud wa never granted.
Lloyd knows full well that the fraud claim was never di missed on the merits.
Therefore, any suggestion by Defendants that Gulf Coasts fraud cause of action was
dismissed by the California Court is false This falsity is proven by the law in California
governing tentative rulings” and the affidavit of Richard T. Bowles, licensed attorney
in California who routinely practices in Contra Costa County and in front of Judge
15
Craddick See ALIFORNIA ULE OF OURT 3.1308; Exhibit 6. More specifically, Mr.
Bowles California attorney, explains that tentati ve ruling does not represent
ruling on the erits, and that following oral argument Chevrors motion for summary
adjudication on fraud was taken under submission and never finally ruled on. Id. at 99
1114 Further, itis Mr. Bowles opinion that Judge Craddick’ failure to rulein timely
manner following the August 4, 2009, is unusual because Judge Craddick generally
issues final rulings within thirty days of oral hearings. Id. at 14 But there is more.
d The fraud claimed remained viable at th_ time of dismissal.
On February 5, 2010, Chevron filed two important motions that are telling about
what Judge Craddick thought about the merits of Gulf Coasts case against Chevron.
The first motion which has been discussed at length in other briefing requested
dismissal on procedural grounds because Lloyd failed to comply with the year trial
deadline. (Exhibit 7). The second motion filed by Chevron, however, has not yet been
discussed in any prior briefings to this Court; this second motion requested Judge
Craddick to rule on their pending motions for summary adjudication on fraud and breach
of contract. (Exhibit ) So, when given the chance to dismiss the case on the merits or
on procedural grounds, Judge Craddick chose to dismiss on procedural grounds.
e Lloyd believed the case as being worth as much as $80 million.
Lloyd harbored many secrets about this case, one of which was his honest
evaluation of what the jury ould award belief he maintained all the way up until the
case was dismissed on the eve of trial because Lloyd failed to comply with the year
16
trial deadline.
Abel Manji, Lloyds trusted associate who began working with Lloyd in
December of 2009, testified that when he initially met with Lloyd he seemed excited and
energized about the case stating, Well, mean, it was huge case, so, you know, based
on the numbers, yes.” (Exhibit at 39 In. 19 20). Abel explained that the economic
expert told them the actual damages could reach $110 million, $0 it was huge case.”
Id. at 40 In. Abel further testified that Lloyd privately confided to him that he
believed the jury would ward between $60 $80 million fo]n the high side” and $10
$15 million on the low side. Id. at 45, In. 13. This private conversation ccurred
outside the court and on the eve of trial after Chevron had already filed their motion to
dismiss for failure to comply with the year trial deadline. Id. at 45, In. 1519. Of
course, this private exchange also took place well after the August 2009, hearing on
Chevrors motion for summary adjudication on both fraud and breach of contract, which
remained pending. Id. Exhibit 5; Exhibit 8. No doubt, Lloyd himself knew that the
fraud claim would be presented to the California jury.
2 TheLega Malpractice L awsuit.
So it is clear, the primary claims being asserted against Defendants are simple
negligence clams. While there are breach of fiduciary duty claims some of which arise
only if this ourt resolves factual issues as matter of law) nd claims of gross
Other secrets harbored Lloyd include his failure to tell anyone, other than Abel, about
phone call received from Chevron on or about January wherein Chevron advised
him they were going to mak an issue about Lloyd missing the year trial deadline. (Exhibit
at 14, In. In. 8).
17
negligence if the evidence shows Lloyd acted with malice or intentional disregard for the
righits of his clients, the primary issue is and always will be whether Lloyd acts in
allowing both the California Lawsuit and the Alabama Lawsui to be dismissed caused
damages to Gulf Coast. In this regard, the jury is most likely to be charge along the
following lines regarding Gulf Coast Asphalt Company LLCs claims
1 Did the negligence of Russell Lloyd proximately cause the occurrence in
uestion?
2 How much money would Gulf Coast have recovered and collected from
Chevron if its original suit had been properly prosecuted?
See EXAS ATTERN HARGE 61.5 and 84.3.
To this end, no where will the jury be asked to resolve questions of law or provide
specific answer about what the trial judge would (or should) have done about the fraud
motion, the contract motion, or even what the California appellate courts would (or
should) have done about the dismissal of the California Lawsuit on procedural grounds.
Instead, the jury will be asked to weigh the expert testimony, the evidence that Lloyd was
prepared to offer at trial in the California Lawsuit in support of the fraud and breach of
contract claims (the viable claims at the time of dismissal) and the damages suffered by
Gulf oastas result of Lloyds conduct in allowing both the California Lawsuit and the
Alabama Lawsuit to be dismissed When the jury finds Lloyd’ negligence proximately
caused damages to Gulf Coast, then the only remaining question will be “How much?
18
Reasons to Deny Summary | udgment
here are multiple and independent reasons why Defendants’ latest motion must
be denied. This Court applies the usual standard considering Defendants’ motion and
Gulf CoastS response See Nixon v. Mr. Property Mgmt. Co. 690 S.W.2d 546, 548 49
(Tex. 1985); EX R, IV P. 166a.
1 SummaryJ udgment on the element of causation is improper.
This Courts analysis should begin and end with the undisputable law in Texas
that causation is ultimate question of fact to be resolved by the jury in all cases except
appellate malpractice making partial summary judgment on one aspect of the causation
inquiry fundamentally improper.
Proximate Causeis question of fact.
In Texas, it is ell settled that the determination of proximate cause is question
of fact for the jury. Millhouse v. Weisenthal 775 S.W.2d 626, 627 n.2 (Tex. 1989)
(holding the determination of causation is question of fact for the jury) Farley v. MM
Cattle Co. 529 S.W.2d 751, 756 (Tex. 1975) (citing Prosser, AW OF oRTS §41 and
holding ‘whether particular act of negligence is cause in fact of an injury has been
said to be particularly apt question for jury determination.”); Welch v. Heat Rese rch
Corp. 644 .2d 487 489 (5th Cir. 1981) (recognizing well settled law that question of
negligence is to be determined by jury) see Lynch v. Ricketts 314 S.W.2d 273, 276 (Tex.
1958) (describing causation as an tiltimate fact issue} This well settled propositio
law is even recited in brief filed by counsel for Lloyd and the OQuinn Law Firm in the
19
Grider appeal. (Exhibit at 5) (acknowledging that the determination of proximate
cause is fact issue for the jury). To this end, the Texas Supreme Court instructs that
the question of proximate cause in legal malpractice case is to be proven by expert
testimony. Alexander v. Turtur Assocs., Inc. 146 S.W.3d 113, 119 20 (2004); ee also
Grider v. O'Brien 260 S.W.3d 49, 55 (Tex.App. Houston [1st Dist.] 2008, pet. denied
(In general, one proves causation in legal malpractice suit by expert testimony}
Therefore, it is not surprising that Defendants offer no legal analysis to support their
contention that this Court should resolved fact questions as matter of law In any event,
because the question of proximate cause is ultimate question of fact within the sole
province of the jury, Defendants’ second motion for partial summary judgment should be
denied.
This is not appellate malpractice.
Despite the Supreme Courts clear mandate in Millhouse that the question of
causation in legal malpractice case not involving claims of appellate malpractice is one
for the jury, Defendants invite this Court to ignore that directive and instead resolve one
aspect of the causation analysis (the underlying fraud claim) as matter of law. The
rational for Defendants asking this Court to resolve question of factas matter of law is
the same as offered in their initial motion, but they have omitted that par of the analysis
altogether this go around knowing (1) there is no legal authority to support their position
that factual disputes regarding causation should be resolved by the trial court in cases
other th appellat malpractice, and (2) they are taking position that is inconsistent
with statements of law made in their briefing in the case of ider v. O'Brien case
20
expressly relied on by Defendants in their initial partial motion for summary judgment
directed at the element of breach Because this ase involves trial malpractice, Millhouse
does not apply and all aspects of the causation analysis must be left to the sound
discretion of the jury.
c The facts surrounding causation are hotly contested.
Of course, summary judgment can be proper where here are undisputed facts
he problem Defendants face in this regard, however, is there are factual disputes on
multiple levels.
First, Defendants skip the true causation inquiry which is laden with fact issues
and requires expert testimony that asks whether Lloyds negligent acts and omissions
caused Gulf Coast to suffer damages, and instead ask this Court to resolve the underlying
fraud claim against Chevron as matter of law Second, in seeking resolution of the
fraud claim, it is not clear whethe Defendants are asking this Court to speculate about
how the California judge should have rule on question of Alabama law if she were
even inclined to do so) based on the record as presented to her in the California Lawsuit.
Or, whether Defendants ar asking this Court to conduct its own de novo review of the
underlying fraud claim based on new legal arguments not raised in California and
evidence that was not presented to the California trial judge. Either way, he facts are
To the extent this Court accepts Defendants invitation to conduct novo review of the
underlying fraud claim based on legal arguments and evidence different from what was actually
presented to the California trial judge, then Plaintiffs would request continuance so as to
complete discovery. See Section D, below.
21
hotly disputed on all evels regarding the one aspect of causation (the underlying fraud
claim) this Court is now being improperly asked to resolve
1 Fact issues on causation.
the context of the legal malpractice claim, there are multiple reasons why
summary judgment on this one aspect of causation (the underlying claim of fraud) is
improper.
First, Defendants offer no expert testimony that Lloyds negligence in allowing the
California Lawsuit to be dismissed on the eve of trial is not proximate cause of the
damages suffered by Gulf Coast. See Alexander v. Turtur Assocs., Inc. 146 S.W.3d
113, (Tex. 004) (holding that expert testimony is required when the issue is not one that
lay persons are competent to make). Therefore, the burden does not shift to Gulf Coast at
this point to offer controverting expert testimony, making summary judgment on
causation improper. To the extent Defendant are seeking to transform their motion into
fo evidence” motion, then it is not only procedurally defective but it is also remature
in that discovery remains ongoing and experts have yet to be designated. See EX R.
IV P. 166a(i).
Second, and perhaps the most compelling operative fact that precludes summary
judgment on this one narrow aspect of causation is the reality that the fraud claim was
never dismissed The fact that Chevrons motion for summary adjudication was never
ruled on in the California Lawsuit is conclusively established by (1) the law in California
To the extent this Court would inclined at this early date to entertain ho evidence
motion, then Gulf Coast requests continuance of this motion until discovery is complete. See
Section D, below.
22
ALIFORNIA ULE OF OURT 3.1308) (2) The Affidavit of Richard T. Bowles (Exhibit
and Chevrons EQUESTS FOR INAL ECISIONSON EFENDANT HEVRON U.S.A.
NC.’ UTSTANDING OTIONS FOR UMMARY DJUDICATION (Exhibit ) Moreover,
the affidavit of Richard T. Bowles confirms that following the August 4, 2009, hearing
no ruling on the merits of Chevrors motion for summary adjudication was ever made;
rather, Judge Craddick elected to dismiss the matter in its entirety on procedural grounds.
(Exhibit at 12 14)
Third, Lloyds own statements and actions the underlying case create fact issue
on causation. The following chart highlights some of Lloyds’ more memorable
Preview
NO. 2011 61780 GULF COAST ASPHALT COMPANY, IN THE DISTRICT COURT OF L.L.C. and TRIFINERY, INC. Plaintiffs, VS. HARRIS COUNTY, TEXAS RUSSELL T. LLOYD AND JOHN M. OQUINN AND ASSOCIATES, L.L.P., Defendants. 190th JUDICIAL DISTRICT PLAINTIFFS’ RESPONSE TO DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT ON CAUSATION Plaintiffs, Gulf Coast Asphalt Company, L.L.C. and Trifinery, Inc. (collectively Gulf Coast) file this response to Defendants’ otion for summary judgment directed at he element of causation. In support, Gulf Coast shows as follows: A Summary This is Gulf Coasts response to Defendants’ motion for partial summary judgment which desperately invites this Court to resolve the element of ausation quintessential question of fact as matter of law where the facts regarding causation are hotly contested. Indeed, this motion represents Defendants’ second attempt to avoid having Lloyd’ conduct in allowing case he secretly valued at nearly $80 million to be dismissed on he eve of trial to be judged by jury. Regrettably, not only is the motion not well founded, but it also includes multiple misrepresentations regarding the applicable law and operative facts Quite simply, this Court’ analysis should begin an end with the undisputable law in Texas that causation is ultimate question of fact to be resolved by the jury; this nile of law makes it fundamentally improper for this Court to resolve motions (and legal disputes) that th alifornia trial judge declined to rule on prior to dismissing the California Lawsuit on procedural grounds. Moreover, this is not case of appellate malpractice where factual disputes regarding causation are to be determined by the trial court Like in other cases of professional malpractice, the jury in this case will answer the question of causation based on the evidence as presented through expert testimony and otherwise. For these reasons alone, this Court need make no further inquiry to deny Defendants motion for partial summary judgment on causation. Not only is causation question of fact to be resolved by the jury, but the evidence shows that the fraud claim in the California Lawsuit (1) was never dismissed on the merits prior to the case bein dismissed on procedural grounds, and (2) was not likely to be dismissed on the merits had Lloyd not missed the year trial deadline. This is because the summary adjudication record in the California Lawsuit which includes evidence conveniently omitted by Defendants in their motion created triable issues of fact which would have been resolved by California jury. For this additional reason, summary judgment is improper. Perhaps the most disturbing aspect of this second effort by Defendants to have Lloyd absolved of any wrongdoing for allowing the California Lawsuit to be dismissed the eve of trial are Defendants’ repeated misrepresentations of facts made in the motion. In this regard, any suggestion by Defendants to this Court that Gulf Coasts fraud cause of action was dismissed by the California Court is patently false. See generally EFENDANTS OTION FOR ARTIAL UMMARY UDGMENT ASED ON NVALIDITY OF LAINTIFFS NDERLYING RAUD/DECEIT/MISREPRESENTATION LAIMS AND AMAGES at Even worse, Defendants’ motion misrepresents the scope of the legal issue and facts presented in the summary djudication proceeding on fraud: Defendants’ motion includes tegal arguments” not raised by Chevron below, while omitting the controverting facts presented to the Court by Lloyd in response to Chevrons motion. Thats not only incredulous, but disingenuous. he natural and negative consequences of this Court accepting Defendants’ invitation to resolv fact issues as matter of law is to create new causes of action based on the same set of facts. Think about it. Were this Court to accept Defendants’ invitation to grant partial summary judgment on causation by concluding the Califomia trial judge should have granted summary judgment on the record as presented by Lloyd then it would simultaneously expose Lloyd to new claim for negligence; that is, that Lloyd failed to properly respond to Chevrons motion on fraud. It would also serve to bifurcate the causation analysis, risking the possibility of another trial involving the same set of facts and witnesses. Of course, and in reality, the California trial judge never ruled on Chevrors motion before dismissing on procedural grounds, so Lloyd was not exposed to such claim. This all demonstrates the absurdity of Defendants’ second motion and is further reason it should be denied Background Facts Defendants’ trial strategy is now clear: Lloyd contends he did nothing wrong in allowing the California Lawsuit to be dismissed on the eve of trial, but eve if he id it does not matter because the case he secretly valued at as much $80 million lacked merit. Such defensive posture is not only absurd, but it is belied by Lloyd’ own acts and his admissions to those whom he confided in the days leading up to the trial of the largest case he would ever try Here are the relevant facts that undermine Defendants’ second motion for artial summary judgment and expose Lloyd& strategy for what it is: desperate attempt to have this Court absolve him of all legal responsibility for his negligent acts and omissions and once again deprive Gulf Coast of its right to jury trial. 1 The California Lawsuit. Lloyd understands the enormous value lost by Gulf Coast when he allowed the case to be dismissed the eve of trial Indeed, Lloyd is keenly aware of the damning evidence he was prepared to present to California jury that proved Chevron defrauded Gulf Coast about the scope of the 1976 spill and its efforts to remediate the resulting contamination to the Property as part of an overall effort to induce Gulf Coast to purchase the Property This Court is, no doubt, familiar with the operative facts surrounding Lloyds failure to satisfy the year trial deadline. In any event, and subject to the Agreed rotective Order, Gulf Coast incorporates this reference Plaintiffs’ Response Defendants’ Partial Summary Judgment originally filed under seal and pursuant to the greed Protective Order on August a The overwhelming evidence of fraud against Chevron. The evidence of Chevroré fraudulent conduct that Lloyd discovered during the five years he spent litigating against Chevron is overwhelming. So much so, that Chevron delayed seeking summary adjudication on Gulf Coasts fraud claim until just prior to trial. In any event, the evidence of Chevrons fraud is detailed in LAINTIFF ULF OAST SPHALT » L.L.C.’ ESPONS AND EMORANDA OF OINTS AND UTHORITIES PPOSING HEVRON U.S.A. NC.’ ENEWED OTION FOR UMMARY DJUDICATION and LAINTIFF ULF OAST SPHALT » LLC’ ESPONSE TO HEVRON U.S.A., NC.’ EPARATE TATEMENT OF NDISPUTED ATERIAL ACTS IN UPPORT OF OTION FOR UMMARY DJUDICATION AND LAINTIFF EPARATE TATEMENT OF NDISPUTED ATERIAL ACTS filed in the California Lawsuit on February 6, 2009 (Exhibit 1; Exhibit at 10 38). Perhaps Lloy himself best highlighted the overwhelming evidence of fraud in his response to Chevron$ motion for summary adjudication on fraud. Here is how Lloyd in his own written words, described the evidence of fraud against Chevron in his response to their motion for summary adjudication This case arises out of serious misrepresentations Chevron made about the environmental condition of its Mobile, Alabama asphalt refinery (the facility} while selling it to Trifinery, Inc. (Trifinery), Texas corporation owned by longtime refinery operator Sanford Brass (Brass }, as well as Chevrors misrepresentations about and failure to complete its remediation obligations [P.Sep.Stm. {§ 12, 20]. The facility is composed of three parcels: Parcel located next to the Mobile River, and Parcels and on Gulf Coast is at loss for any explanation why Defendants would omit this critical component of the summary adjudication proceeding from the summary judgment record they now present to this Court. the other side of an intersecting highway. [P.Sep.Stm. {7 3, 116]. Brass teamed up with the Hunt Refining Group to form joint venture to purchase and operate the facility. [P.Sep.Stm. 9]. Chevron and Trifinery signed Purchase Sale Agreement on September 30, 1993, which required Chevron to fumish Trifinery with environmental reports about the condition of the facility, gave Trifinery an option period to review the reports and cancel the sale, and obligated Chevron to conduct monitoring and remediation operations after the sale to clean up contamination there. [P.Sep.Stm. 4 13 15]. The purchase price was $3,500,000. [P.Sep.Stm. 12]. Chevron furnished Trifinery with three environmental reports prior to the sale: January 1993 report, an August 1993 report, and November 1993 report. [P.Sep.Stm. § 16 17, 19, 21]. The January 1993 report disclosed that there had been one million gallon spill of asphalt on Parcel in 1976, and that the Spilled material was removed and disposed of in accordance ” with ADEM [Alabama Department of Environmental] regulations... [P.Sep.Stm. 18]. The August 1993 and November 1993 reports both referred back to the August report for description of the sites environmental history. [P.Sep.Stm. §§ 20, 22]. Brass and his purchase team of environmental experts reviewed and heavily relied on these reports in concluding Parcel was clean and Chevron would clean up Parcel A. [P.Sep.Stm. ff 23 29]. Furthermore, during the September December 1993 timeframe, Brass had meetings with Chevron representative Frank Schaefer at the facility and told Schaefer about his plans to build new vacuum (refinery) unit on Parcel and to erect new storage tanks there utilizing vacant tank pad bases. [P.Sep.Stm. § 30, 31, 41]. Schaefer said two of the three vacant tank pads would be suitable for usage and Brass was fortunate to be able to save money by utilizing them. [P.Sep.Stm. 33]. Brass and Schaefer also had discussions about the projected timeframe for completion of Chevrons remediation responsibilities. Brass planned to begin work on the new refinery unit in 1998 and asked Shaefer if five years would be enough time to complete the remediation operations; Schaefer said five years would be reasonable time. [P.Sep.Stm. 9 37 39]. Parcel was the most logical and economical site for construction of the new refinery unit because it was more contiguous to the maritime docks on Parcel and closer to pipe rack conduit that spanned from Parcel over the highway to Parcel B; there was no room for the unit on ParcelA. [P.Sep.Stm. 36]. The cquisition was funded, and Chevron conveyed the property to Trifinery in December 1993. [P.Sep.Stm. 43]. Trifinery had co venture to purchase and operate the facility with Hunt Refining Group. Hunt provided some of the financing and held title to th property for few months as security for its financial contributions. Pursuant to their joint venture agreement, Trifinery retained 50% ownership of the facility throughout this period. [P.Sep.Stm. §§ 43 53]. GCAC was formed by Trifinery and Hunt, an the property was transferred and remains with GCAC. Trifinery has at all times been 50% owner of GCAC; the other 50% is currently owned by Joyce Brass, Sanford Brass’ wife. [P.Sep.Stm. 51, 58]. [] By 1998, Brass, relying on Chevrors promise to clean up covered contamination, was planning in earnest for construction of the new refinery. He negotiated with the Venezuelan National Oil Company, PDVSA, for supply of crude oil, and proposed to split profits with them from the sale of the refined asphalt product. [P.Sep.Stm. 59]. The PDVSA board approved the project, and GCAC would have been able to sell all of its daily refined product. [P.Sep.Stm. §{ 60, 62]. In reliance on Chevrons promises to clean up the facility, GCAC spent more than $10 million preparing the planned refinery by making improvements, e.g., reworking tanks, and began lining up more than $60 million in financing from various financial institutions. [P.Sep.Stm. 63]. GCAC applied for and obtained air and water permits for the refinery in 2001, and later in 2004. [P.Sep.Stm. 64]. In 2001, Brass had numerous meetings with David Gardner (Gardner) of Chevron Environmental Management Company (CEMCO}, the company Chevron had designated to perform the remediation of the facility, pleading with him to finish the remediation of Parcel A, because the slow pace was interfering with the plans for the refinery. [P.Sep.Stm. 107, 108, 112, 113]. There was serious problems on Parcel A, as oil was still issuing in the areas surrounding tanks 18, 19, 24, 26, and 29. [P.Sep.Stm. 109]. Gardner appreciated GCACs problems in building the new refinery and said that Chevron would honor the purchase sale agreement and finish cleaning up Parcel A. [P.Sep.Stm. {| 107, 108, 113]. To this very day, Chevron is still acting under governmental orders, the most recent being January 2007 directive from ADEM to continue monitoring Parcel for contamination. [P.Sep.Stm. 106]. GCAC contacted Southern Geo Environmental Consultants, Inc. (Southem Geo} to evaluate Parcel and its existing tank pads for planned construction of two floating roof tanks to hold crude oil for the refinery. [P.Sep.Stm. § 66, 67]. In September 2002, when Southern Geo began to take samples and drill openings through the tank pads on Parcel to test their support pilings, large amount of asphaltic material began flowing from the openings. This was the first notice GCAC had of the massive amounts of buried asphalt under Parcel B. GCACS consultants concluded after testing that there was excessive petroleum contamination all over the parcel and no construction could take place there until it was cleaned up. [P.Sep.Stm. 2, 67 70, 72]. GCAC began to search to determine the source of the contamination and, after looking through several filing cabinets of documents Chevron had abandoned at the facility, found two separate memorandums from former Chevron plant manager L.B. Ramsey about the 1976 spill. [P.Sep.Stm. 9 83, 85]. The first memorandum, from June 29, 1978, reveals that Chevron buried massive amounts of asphalt on Parcel B: Due to the extreme cost of clean up as well as problems encountered during disposal, it was decided that the North marsh area would not be worked since it was believed the cane and marsh grass would soon grow thick in this area and contain the asphalt We new [sic] find that with each rain considerable amounts of asphalt flow out of the marsh and comes to rest in the area east of highway 90 with some asphalt going into the ditch on the east side of the highway We have used considerable manpower, both company and contract casual, and have picked up 200 300 drums of asphalt this year. Unfortunately, the work merely keeps us from getting into possible problems with regulatory agencies and has not depleted the source any measurable amount. We can not [sic] haul this asphalt/marsh material to the Wolf Ridge dump without getting approval from various regulatory agencies, so the only obvious course of action is to cover the site with sand. In my judgment, if the asphalt remains loose in the marsh and continues to float out with each heavy rain, be readily visible along the highway, it is just matter of time before environmentalist, news media, ect. [sic] makes an issue of the situation. [P.Sep.Stm. 87].” Brass immediately notified Chevron about the findings of gross contamination and held several meetings with them. [P.Sep.Stm. §§ 91 95]. Gardner and Russell Weigand, an outside environmental consultant for Chevron recognized there was problem, but they said there was nothing they could do without permission from higher level Chevron authorities. [P.Sep.Stm. { 94 95]. To this day, Chevron has made not effort to clean up Parcel B. Peachtree Environmental, Inc. an environmental firm hired by GCAC, concluded that Chevrons Selective analysis” of samples taken on Parcel has resulted in misrepresentation of the actual environmental conditions,” and Parcel has been severely impacted by Chevroré environmental contamination and the property is not usable in its current state for any type of improvement More importantly, Pacel poses an imminent and substantial threat to human health and the environment.” [P.Sep.Stm. 1 103 105]. The severe contamination not only of Parcel B, but also of Parcel (which has not yet been adequately cleaned up), has made the land unsuitable as collateral for much needed financing. SouthTrust Bank, which has provided loans to GCAC using Parcel as collateral, has refused to loan money on Parcels and because of the contamination there. Bank Vice President John Godwin, III confirmed through his testimony and in letter to GCAC that, “ the banks loan committee has declined your most recent request for $400,00 loan secured by mortgage on Parcel A.’ Unlike parcel C,’ the land identified as parcel A’ (main facility) in the Phase Environmental Report, prepared by PPM Consultants, Inc. in September 2002, referenced numerous environmental concerns that are unacceptable to the bank. In addition, based on information provided to the bank concerning Parcel B’ it also is considered unacceptable collateral.” [P.Sep.Stm. § 100 102]. Further, the facilit is located on Blakely Island, adjacent to bird sanctuary, and within the city limits of Mobile, Alabama. The City of Mobile has refused to issue building permits for the facility because of environmental contamination. [P.Sep.Stm. 115]. Ramsey prepared another memorandum May documenting that the spill consisted of 100,000 barrels, that 65,000 barrels were hauled away for burial and that barrels were buried in place. [P.Sep.Stm. 88]. 5 Furthermore, documents produced Chevroré engineering department reveal that there was 100,000 barrel leak. [P.Sep.Stm. {89 90].” Today, more than fourteen years after selling the facility, Chevron still has not completed its monitoring and remediation obligations, Parcels and remain highly contaminated, there are more than 1,470,000 gallons of asphalt unaccounted for and presumably buried on Parcel B, and GCAC still cannot built [sic] its new efinery unit. (Exhibit at Exhibit ). Inexplicably, review of Gulf Coasts response to Chevrors summary adjudication motion shows that Lloyd omitted from that response the most damning evidence he discovered during the litigation: the affidavit of Steve McKenna which proves that Chevron covered up the contamination on the eve of the 1994 sale. Here is what that omitted evidence discloses In the early 1990s, was called to the Chevron refinery on Blakely Island to clean out and remove large above ground storage tank. This tank was separated from the rest of the facility by Highway 90. have come to learn that that tank was probably Tank #118 and that the tank was located on Parcel of the Blakely Island facility. After we had been on the job or weeks, an employee of mine came to me and told me there was oil boiling” out of the hole in vacant tank pad on the same parcel, not far away. went to investigate and saw black tarry, oil substance coming out of hole in the middle of tank pad, which have leamed had supported Tank #117. This was tank that had been involved in large asphalt spill in the 1970s. saw an oily substance coming out of hole in the tank pad and _ saw oil floating on water in ditches around the pad. had several meetings with [Chevron representatives] about this situation during which they asked me what it would take to clean up the place. told them had no idea how much il was in the ground but that ould inject steam into the ground to both liquefy and force it out, which ould then * The 1,470,000 gallon figure is derived from Ramsey’ Memorandum that only 65,000 barrels were hauled away. This leaves 35,000 barrels unaccounted for; one barrel equals llons thus the 1,470,000 gallon figure.” 10 recover. They asked me how much this would cost and said about [sic] $1 million year and that it might take 10 years to finish this job. They werent interested in my proposal and stated tha they had somebody to buy this place and all that they wanted was to stop the flow and to leave. told him could stop the flow for while and they said to go ahead and do it. The first thing did was to suck out lot of oil from the hole in the middle of pad 117. put 24 bales of hay into the hole, which tamped down. Then put 24 loads of clay in the hole, tamping down all the time. During the course of packing all of this material down, packed it into the hole and back underneath the slab with my backhoes and other equipment. stopped the oil from flowing. Chevron said that it looked good and_ was to get my equipment out and not say anything about this to anybody. (Exhibit ). Lloyd, so far, has offered no explanation as to why he failed to offer such critical evidence in response to Chevrors motion for summary adjudication on fraud. b August 4, 2009, hearing on Chevron’s summary adjudication motions Lloyd discovers the Crystal Pier case On August 4, 2009, the trial court conducted hearing on Chevrors motions for summary adjudication on fraud and breach of contract. (Exhibit ). At the time, trial was se to begin on August 31, 2009. The record shows that Lloyd persuasively argued that the tentative ruling on fraud was wrong; Lloyd research had uncovered Califomia Supreme Court case he described as white horse” case. Id. at 9. Here is what Lloyd told the California trial judge about the Crystal Pier case at the August 4, 2009, hearing: We know the fraud cause of action does not travel Tun with the land, as that term is understood in property law. But in this case, we have different kind of situation. I$ not even situation where we have _ third party purchase of the property that came in and bought the property from Trifinery for Gulf Coast. 11 This is different situation because all of the entities involved in here are closely held LLCs or corporations operated by Sandy Brass and his business partner. was trying to think about this because the Court said in the tentative ruling that the negligent misrepresentations or the fraudulent misrepresentations made to Sandy Brass cant be attributed to Gulf Coast because Gulf Coast was created after the property was purchased. And Im sitting here trying to think to me why why do _ think this doesnt make lot of sense? What is my objection to that? Because see it maybe Im too close to it. see the whole thing, this is Sandy Brass moving property from one place to another, not selling it to another arty. In poking around last night found and the proposition of the law we have is the same in California as it isin Alabama The law of the two states is not different. That is to say, this particular area of law that misrepresentation made to party can be relied upon by someone who had the intent to communicate the misrepresentation to the other party. In fact, the case cited by Chevrors representatives, Seward versus Dickinson states that the case its the same law in Alabama as it is in alifornia that where third party fraudulent misrepresentation is alleged, statements to persons other than the plaintiff will support the fraud allegations only where there is sufficient evidence of an intent on the part of the speaker to communicate. Now, Im poking around last night, found case, white horse case on this particular issue. Its Supreme Court of California. But it elucidates and explains this proposition of law by reference to the law of many other states. And, in fact, it is basically an essay on the issue of fraudulent misrepresentation. Im going to supplied copy of the case to Mr. Normington. would like to provide case with this. Its, as said, its white horse case We tumed it up last night when _ started focusing on the issue of why itisnt Sandy Brass’ misrepresentation why cant Gulf Coast Supply sue on the misrepresentations made to Sandy Brass? And this is case Crystal Pier Amusement Company versus Cannan from the Supreme Court of California. And it is the the operators and incorporators of an amusement company bought pier in California. Now 12 that pier, they wanted to build on for various - convention hall or something. And the representations were made to the incorporators of the amusement company through the individuals that operate the amusement company about the state of the piers undemeath _ the state of the piers underneath this dock, and that the piers had been creosoted and the pilings the state of the pilings. Thats what Im trying to think. The state of the pilings, the were of certain quality. These misrepresentations were accepted. The amusement company purchased the pier. And then subsequently formed holding company to build and transfer he pier to the building to the holding company for the purpose of building on that pier, and they built convention hall or dance hall, some sort of structure. And they found out after they had done this that the pilings were not as advertised. That hey were not creosoted. They were faulty. They sued the sellers of the pier based on fraud. And the defense was that the misrepresentations had been made to the amusement company and not the holding company who built the built on the who subsequent purchase the subsequent owner of the use the word purchase shouldnt the subsequent owner of the pier after the they built this facility on it. In fact, the Court itself, Mr. Justice Langdon on page of what We given you at the bottom says, the defendants concluded that since the amusement company did not build the ballroom, and the holding company was not defrauded there can be no recovery for the loss because the fraudulent statements were made to the preceding title holder, the amusemen company. However, it says here on the second in page 3, talking about the defendants have argued bottom of the first column where it says 841. The defendants have argued that representations were made before the holding company was commuted, or mad not to it, but made solely to the amusement company. The Court makes the finding, is what Im trying always try to argue in this case, is that the corporation only exists through its individuals. The representations were made in this case, as is always, to individuals to Taylor, Nettleship, and Tai (phonetic). They were made to the corporation by virtue of the fact that hese individuals were agents of the corporation. 13 And then they went on to, these people relied upon them when they acted on behalf of the holding company in building the ballroom. At all times, the representations were in the minds of the executive officers of both corporations misstatements would not have been more fully accomplished, their fraudulent purpose, if they had been repeated to Tai Nettleship on the the day the holding company was created and every day thereafter the work continued. In other words, this stands for the proposition, and it cites different cases from different individuals. In fact, they state the Connecticut Supreme Court on page 6. It says in the middle of the at the end of the first full paragraph, whatever had been thus said to them to influence the action of projected corporation was, in legal effect, known to the corporation as soon as it was formed In other words, this case stands for the proposition that if you make misrepresentations to persons who are operating who are forming corporation for the purpose of operating _ business, or taking over property, or whatever the situation is, that that you misrepresentations made to the to people incorporating the corporation are misrepresentations to the corporation as soon as it’ formed. In other words, they made misrepresentations to Sandy Brass and his staff who purchased the Trifinery property, through Trifinery, purchased the Gulf Coast Asphalt Property, the Mobile Blakely Island refinery. They didn’t sell it to Gulf Coast Asphalt, they incorporated and formed Gulf Coast Asphalt LLC and transferred the property with all the rights and contract. And in the contract there was no dispute the contract gives the right to transfer the contract to assignees. They transferred all the property and rights under the contract to Gulf Coast Asphalt. And the misrepresentations that wee relying on were not made to somebody up the chain of title, they were made to Sandy Brass who actually was the person who made formed Gulf Coast Asphalt after purchasing the property based on his understanding of the status of the property as represented by Chevron So, it seems clear to me mean, it§ not clear, but its after studying it, the significance of the factual distinction between the general proposition that Chevron has relied upon that fraud is personal and doesnt transfer, is, one, cant be true this instance because of the fact situation. Everything was created by Sandy Brass. Trifinery was Sandy Brass. Gulf Coast Asphalt 14 was Sandy Brass. This case stands for the proposition that misrepresentation made in similar fact situation, this case is on all fours, believe, on the facts of this case, or can be relied upon as being having defrauded the subsequent owner, the holder of the title, not even purchaser. The property was transferred not pursuant to purchase, but pursuant to the business operations of Sandy Brass from one of its corporations to another corporation. That's that issue. (Exhibit at 10 (emphasis added) The Crystal Pier case is so persuasive that the trial judge allowed Chevron an opportunity to provide additional briefing, and ultimately never granted summary adjudication on the fraud claim before dismissing the California Lawsuit on procedural grounds (Exhibit at 237 38; Exhibit at 13 14). Considering the significance of the Crystal Pier case which Lloy described as being white horse case” and 6n all fours” it is not surprising that Defendants devote 25% of their substantive argument to convince this Court the Crystal Pier ase does not apply. See EFENDANTS OTION FOR ARTIAL UMMARY UDGMENT ASED ON NVALIDITY OF LAINTIFFS NDERLY ING RAUD/DECEIT/MISREPRESENTATION LAIMSAND AMAGES at 16 25; see also Exhibit at 9. c The motion for summar adjudication on fraud wa never granted. Lloyd knows full well that the fraud claim was never di missed on the merits. Therefore, any suggestion by Defendants that Gulf Coasts fraud cause of action was dismissed by the California Court is false This falsity is proven by the law in California governing tentative rulings” and the affidavit of Richard T. Bowles, licensed attorney in California who routinely practices in Contra Costa County and in front of Judge 15 Craddick See ALIFORNIA ULE OF OURT 3.1308; Exhibit 6. More specifically, Mr. Bowles California attorney, explains that tentati ve ruling does not represent ruling on the erits, and that following oral argument Chevrors motion for summary adjudication on fraud was taken under submission and never finally ruled on. Id. at 99 1114 Further, itis Mr. Bowles opinion that Judge Craddick’ failure to rulein timely manner following the August 4, 2009, is unusual because Judge Craddick generally issues final rulings within thirty days of oral hearings. Id. at 14 But there is more. d The fraud claimed remained viable at th_ time of dismissal. On February 5, 2010, Chevron filed two important motions that are telling about what Judge Craddick thought about the merits of Gulf Coasts case against Chevron. The first motion which has been discussed at length in other briefing requested dismissal on procedural grounds because Lloyd failed to comply with the year trial deadline. (Exhibit 7). The second motion filed by Chevron, however, has not yet been discussed in any prior briefings to this Court; this second motion requested Judge Craddick to rule on their pending motions for summary adjudication on fraud and breach of contract. (Exhibit ) So, when given the chance to dismiss the case on the merits or on procedural grounds, Judge Craddick chose to dismiss on procedural grounds. e Lloyd believed the case as being worth as much as $80 million. Lloyd harbored many secrets about this case, one of which was his honest evaluation of what the jury ould award belief he maintained all the way up until the case was dismissed on the eve of trial because Lloyd failed to comply with the year 16 trial deadline. Abel Manji, Lloyds trusted associate who began working with Lloyd in December of 2009, testified that when he initially met with Lloyd he seemed excited and energized about the case stating, Well, mean, it was huge case, so, you know, based on the numbers, yes.” (Exhibit at 39 In. 19 20). Abel explained that the economic expert told them the actual damages could reach $110 million, $0 it was huge case.” Id. at 40 In. Abel further testified that Lloyd privately confided to him that he believed the jury would ward between $60 $80 million fo]n the high side” and $10 $15 million on the low side. Id. at 45, In. 13. This private conversation ccurred outside the court and on the eve of trial after Chevron had already filed their motion to dismiss for failure to comply with the year trial deadline. Id. at 45, In. 1519. Of course, this private exchange also took place well after the August 2009, hearing on Chevrors motion for summary adjudication on both fraud and breach of contract, which remained pending. Id. Exhibit 5; Exhibit 8. No doubt, Lloyd himself knew that the fraud claim would be presented to the California jury. 2 TheLega Malpractice L awsuit. So it is clear, the primary claims being asserted against Defendants are simple negligence clams. While there are breach of fiduciary duty claims some of which arise only if this ourt resolves factual issues as matter of law) nd claims of gross Other secrets harbored Lloyd include his failure to tell anyone, other than Abel, about phone call received from Chevron on or about January wherein Chevron advised him they were going to mak an issue about Lloyd missing the year trial deadline. (Exhibit at 14, In. In. 8). 17 negligence if the evidence shows Lloyd acted with malice or intentional disregard for the righits of his clients, the primary issue is and always will be whether Lloyd acts in allowing both the California Lawsuit and the Alabama Lawsui to be dismissed caused damages to Gulf Coast. In this regard, the jury is most likely to be charge along the following lines regarding Gulf Coast Asphalt Company LLCs claims 1 Did the negligence of Russell Lloyd proximately cause the occurrence in uestion? 2 How much money would Gulf Coast have recovered and collected from Chevron if its original suit had been properly prosecuted? See EXAS ATTERN HARGE 61.5 and 84.3. To this end, no where will the jury be asked to resolve questions of law or provide specific answer about what the trial judge would (or should) have done about the fraud motion, the contract motion, or even what the California appellate courts would (or should) have done about the dismissal of the California Lawsuit on procedural grounds. Instead, the jury will be asked to weigh the expert testimony, the evidence that Lloyd was prepared to offer at trial in the California Lawsuit in support of the fraud and breach of contract claims (the viable claims at the time of dismissal) and the damages suffered by Gulf oastas result of Lloyds conduct in allowing both the California Lawsuit and the Alabama Lawsuit to be dismissed When the jury finds Lloyd’ negligence proximately caused damages to Gulf Coast, then the only remaining question will be “How much? 18 Reasons to Deny Summary | udgment here are multiple and independent reasons why Defendants’ latest motion must be denied. This Court applies the usual standard considering Defendants’ motion and Gulf CoastS response See Nixon v. Mr. Property Mgmt. Co. 690 S.W.2d 546, 548 49 (Tex. 1985); EX R, IV P. 166a. 1 SummaryJ udgment on the element of causation is improper. This Courts analysis should begin and end with the undisputable law in Texas that causation is ultimate question of fact to be resolved by the jury in all cases except appellate malpractice making partial summary judgment on one aspect of the causation inquiry fundamentally improper. Proximate Causeis question of fact. In Texas, it is ell settled that the determination of proximate cause is question of fact for the jury. Millhouse v. Weisenthal 775 S.W.2d 626, 627 n.2 (Tex. 1989) (holding the determination of causation is question of fact for the jury) Farley v. MM Cattle Co. 529 S.W.2d 751, 756 (Tex. 1975) (citing Prosser, AW OF oRTS §41 and holding ‘whether particular act of negligence is cause in fact of an injury has been said to be particularly apt question for jury determination.”); Welch v. Heat Rese rch Corp. 644 .2d 487 489 (5th Cir. 1981) (recognizing well settled law that question of negligence is to be determined by jury) see Lynch v. Ricketts 314 S.W.2d 273, 276 (Tex. 1958) (describing causation as an tiltimate fact issue} This well settled propositio law is even recited in brief filed by counsel for Lloyd and the OQuinn Law Firm in the 19 Grider appeal. (Exhibit at 5) (acknowledging that the determination of proximate cause is fact issue for the jury). To this end, the Texas Supreme Court instructs that the question of proximate cause in legal malpractice case is to be proven by expert testimony. Alexander v. Turtur Assocs., Inc. 146 S.W.3d 113, 119 20 (2004); ee also Grider v. O'Brien 260 S.W.3d 49, 55 (Tex.App. Houston [1st Dist.] 2008, pet. denied (In general, one proves causation in legal malpractice suit by expert testimony} Therefore, it is not surprising that Defendants offer no legal analysis to support their contention that this Court should resolved fact questions as matter of law In any event, because the question of proximate cause is ultimate question of fact within the sole province of the jury, Defendants’ second motion for partial summary judgment should be denied. This is not appellate malpractice. Despite the Supreme Courts clear mandate in Millhouse that the question of causation in legal malpractice case not involving claims of appellate malpractice is one for the jury, Defendants invite this Court to ignore that directive and instead resolve one aspect of the causation analysis (the underlying fraud claim) as matter of law. The rational for Defendants asking this Court to resolve question of factas matter of law is the same as offered in their initial motion, but they have omitted that par of the analysis altogether this go around knowing (1) there is no legal authority to support their position that factual disputes regarding causation should be resolved by the trial court in cases other th appellat malpractice, and (2) they are taking position that is inconsistent with statements of law made in their briefing in the case of ider v. O'Brien case 20 expressly relied on by Defendants in their initial partial motion for summary judgment directed at the element of breach Because this ase involves trial malpractice, Millhouse does not apply and all aspects of the causation analysis must be left to the sound discretion of the jury. c The facts surrounding causation are hotly contested. Of course, summary judgment can be proper where here are undisputed facts he problem Defendants face in this regard, however, is there are factual disputes on multiple levels. First, Defendants skip the true causation inquiry which is laden with fact issues and requires expert testimony that asks whether Lloyds negligent acts and omissions caused Gulf Coast to suffer damages, and instead ask this Court to resolve the underlying fraud claim against Chevron as matter of law Second, in seeking resolution of the fraud claim, it is not clear whethe Defendants are asking this Court to speculate about how the California judge should have rule on question of Alabama law if she were even inclined to do so) based on the record as presented to her in the California Lawsuit. Or, whether Defendants ar asking this Court to conduct its own de novo review of the underlying fraud claim based on new legal arguments not raised in California and evidence that was not presented to the California trial judge. Either way, he facts are To the extent this Court accepts Defendants invitation to conduct novo review of the underlying fraud claim based on legal arguments and evidence different from what was actually presented to the California trial judge, then Plaintiffs would request continuance so as to complete discovery. See Section D, below. 21 hotly disputed on all evels regarding the one aspect of causation (the underlying fraud claim) this Court is now being improperly asked to resolve 1 Fact issues on causation. the context of the legal malpractice claim, there are multiple reasons why summary judgment on this one aspect of causation (the underlying claim of fraud) is improper. First, Defendants offer no expert testimony that Lloyds negligence in allowing the California Lawsuit to be dismissed on the eve of trial is not proximate cause of the damages suffered by Gulf Coast. See Alexander v. Turtur Assocs., Inc. 146 S.W.3d 113, (Tex. 004) (holding that expert testimony is required when the issue is not one that lay persons are competent to make). Therefore, the burden does not shift to Gulf Coast at this point to offer controverting expert testimony, making summary judgment on causation improper. To the extent Defendant are seeking to transform their motion into fo evidence” motion, then it is not only procedurally defective but it is also remature in that discovery remains ongoing and experts have yet to be designated. See EX R. IV P. 166a(i). Second, and perhaps the most compelling operative fact that precludes summary judgment on this one narrow aspect of causation is the reality that the fraud claim was never dismissed The fact that Chevrons motion for summary adjudication was never ruled on in the California Lawsuit is conclusively established by (1) the law in California To the extent this Court would inclined at this early date to entertain ho evidence motion, then Gulf Coast requests continuance of this motion until discovery is complete. See Section D, below. 22 ALIFORNIA ULE OF OURT 3.1308) (2) The Affidavit of Richard T. Bowles (Exhibit and Chevrons EQUESTS FOR INAL ECISIONSON EFENDANT HEVRON U.S.A. NC.’ UTSTANDING OTIONS FOR UMMARY DJUDICATION (Exhibit ) Moreover, the affidavit of Richard T. Bowles confirms that following the August 4, 2009, hearing no ruling on the merits of Chevrors motion for summary adjudication was ever made; rather, Judge Craddick elected to dismiss the matter in its entirety on procedural grounds. (Exhibit at 12 14) Third, Lloyds own statements and actions the underlying case create fact issue on causation. The following chart highlights some of Lloyds’ more memorable