On June 27, 2016 a
12.19.17 (Centurion Logistics) Response Ltr. to Hon. Goldstien re Chase Potter Ltr. v.3 - CORRESPONDENCE - LETTER TO FILE
was filed
involving a dispute between
Albanese, Antonio,
Centurion Terminals, Llc,
Marrocco, Marc,
and
Albanese, Antonio,
Ballengee Interests Llc,
Ballengee, James,
Centurion Logistics Llc,
Centurion Pecos Terminal Llc,
Marrocco, Marc,
Stampede Tx Energy, Llc,
for OTHER (CIVIL)
in the District Court of Dallas County.
Preview
REGORY HAMOUN Member of the State Bar of
@snlegal.com Texas | New York
December 19, 2017
VIA E-FILE:
Hon. Bonnie Lee Goldstein
Judicial District Court
George L. Allen, Sr. Courts Building
600 Commerce Street, 5 Floor
Dallas, Texas 75202
Re: Response to Letter from Chase Potter in Centurion Logistics LLC v. Ballengee et
, Cause No. DC-16-07706
Dear Judge Goldstein:
On Monday, December 18, 2017, you received a letter from Chase Potter, counsel for
John Calce, Centurion Midstream Group, LLC, Centurion Terminals, LLC, and Stampede TX
Energy, LLC, regarding the December 15, 2017 hearing (the “Hearing”) on Defendant/Counter-
Plaintiff John Calce’s First Amended Counterclaim Against Centurion Logistics LLC and
Centurion Pecos Terminal (the “Amended Motion”). In that letter, Mr. Potter advocates for
an interpretation of the Texas Business Organizations Code (“TBOC”) that would apply TBOC
to Section 6.2 of the Company Agreement of Centurion Logistics LLC (the “Centurion Logistics
Company Agreement”), the interpretation of which was discussed at Friday’s Hearing.
Unfortunately, Mr. Potter has misconstrued TBOC and misunderstood the argument that I
advanced last Friday regarding same. I never advised the Court that TBOC prohibits the
inclusion of advancement provisions in limited liability company agreements. It is quite clear
that Section 8.002 of TBOC allows a limited liability company to adopt “provisions of [Chapter
8] or [promulgate] other provisions, which will be enforceable, relating to: (1) indemnification;
(2) advancement of expenses; or (3) insurance or another arrangement to indemnify or hold
harmless a governing person. My argument was that TBOC didn’t apply to the Court’s
interpretation of Section 6.2 of the Centurion Logistics because neither Section 8.001 nor 8.104
of TBOC were adopted by Section 6.2 of the Centurion Logistics Company Agreement.
Mr. Potter states in his letter that “Section 8.002(b) establishes that Centurion Logistics
. . . had the ability to rely upon and adopt Section 8.104 . . .” However, Mr. Potter fails to note
that Centurion Logistics did not rely upon or adopt Section 8.001 or Section 8.104 in drafting
Section 6.2 of the Centurion Logistics Company Agreement. Of course, TBOC is invoked in
other sections of the Centurion Logistics Company Agreement through the use of the defined
term the “Code”, however, “Code” is not used anywhere in Section 6.2 of the Centurion
Tex. Bus. Orgs. Code §8.002(b).
Hon. Judge Goldstein
December 19, 2017
Page 2 of 3
Logistics Company Agreement, and accordingly, was not adopted by Section 6.2 of the
Centurion Logistics Company Agreement.
Given that Section 6.2 of the Centurion Logistics Company Agreement does not adopt
Section 8.001 or Section 8.104 of TBOC, the only guidance that TBOC provides is through
Section 8.002, which allows a limited liability company like Centurion Logistics to construct
contractual provisions related to indemnification, advancement, or other arrangements to
indemnify or hold harmless a governing person. Thus, the Court is merely directed back to the
principles of contract interpretation when construing Section 6.2 of the Centurion Logistics
Company Agreement.
Importantly, other provisions of TBOC do not gap-fill our interpretation of Section 6.2 of
the Centurion Logistics Company Agreement, precisely because those sections of TBOC are not
invoked with respect to Section 6.2 of the Centurion Logistics Company Agreement. The Court
will likely notice that the Delaware authority invoked by Defendant Calce’s central case, In re
Aguilar, interprets the Delaware General Corporation Law (“DGCL”) to gap-fill the bylaws of a
corporation.2 However, this is precisely where the law for a limited liability company diverges
from that of a corporation, as there is no legal foundation for presuming that TBOC gap-fills the
interpretation of a limited liability company agreement, unless specifically invoked. In fact,
Section 8.002 expressly states that Chapter 8 of TBOC does not apply to a limited liability
company unless that limited liability company adopts its provisions in its governing documents. 3
Even if Section 8.104 was adopted by Section 6.2 of the Centurion Logistics Company
Agreement, the statute is permissive in nature, as it merely allows Centurion Logistics to “pay or
reimburse reasonable expenses incurred by a present governing person or delegate who was, is,
or is threatened to be made a respondent in a proceeding in advance of the final disposition of the
proceeding without making [a determination on indemnification].”4
Nothing in the language of Section 8.104 requires the Court to interpret the language of
Section 6.2 of the Centurion Logistics Company Agreement to interpret “expenses” to include
attorneys’ fees as itis defined by Section 8.001 of TBOC. The only way that the Court could
justifiably rely upon the definition of “expenses” in Section 8.001 is if: (1) Centurion Logistics
was a corporation, to which Chapter 8 necessarily applied; or (2) Section 6.2 of the Centurion
Logistics Company Agreement specifically adopted Section 8.001 or Section 8.104 of TBOC.
Since neither is the case here, the Court must rely upon principles of contract interpretation to
discern the parties intent as to the definition of “expenses” in Section 6.2 of the Centurion
Logistics Company Agreement.
2
See, Kaung v. Cole Nat’l. Corp. 884 A.2d 500, 509 (Del. Supr. 2005).
3
Tex. Bus. Orgs. Code §1.104(a).
4
Id.
SHAMOUN & NORMAN, LLP
1800 Valley View Lane, Suite 200 | Farmers Branch, TX 75234
Phone 214.987.1745 | Fax 214.521.9033 | www.snlegal.com
Hon. Judge Goldstein
December 19, 2017
Page 3 of 3
Yours very truly,
/s/ C. Gregory Shamoun
C. GREGORY SHAMOUN
CGS/ty
cc:
David N. Kitner david.kitner@strasburger.com
Chase Potter chase.potter@strasburger.com
Robert A. McNiel rmcniel@cbsattorneys.com
Paul Green pgreen@cbsattornes.com
SHAMOUN & NORMAN, LLP
1800 Valley View Lane, Suite 200 | Farmers Branch, TX 75234
Phone 214.987.1745 | Fax 214.521.9033 | www.snlegal.com
Preview
REGORY HAMOUN Member of the State Bar of @snlegal.com Texas | New York December 19, 2017 VIA E-FILE: Hon. Bonnie Lee Goldstein Judicial District Court George L. Allen, Sr. Courts Building 600 Commerce Street, 5 Floor Dallas, Texas 75202 Re: Response to Letter from Chase Potter in Centurion Logistics LLC v. Ballengee et , Cause No. DC-16-07706 Dear Judge Goldstein: On Monday, December 18, 2017, you received a letter from Chase Potter, counsel for John Calce, Centurion Midstream Group, LLC, Centurion Terminals, LLC, and Stampede TX Energy, LLC, regarding the December 15, 2017 hearing (the “Hearing”) on Defendant/Counter- Plaintiff John Calce’s First Amended Counterclaim Against Centurion Logistics LLC and Centurion Pecos Terminal (the “Amended Motion”). In that letter, Mr. Potter advocates for an interpretation of the Texas Business Organizations Code (“TBOC”) that would apply TBOC to Section 6.2 of the Company Agreement of Centurion Logistics LLC (the “Centurion Logistics Company Agreement”), the interpretation of which was discussed at Friday’s Hearing. Unfortunately, Mr. Potter has misconstrued TBOC and misunderstood the argument that I advanced last Friday regarding same. I never advised the Court that TBOC prohibits the inclusion of advancement provisions in limited liability company agreements. It is quite clear that Section 8.002 of TBOC allows a limited liability company to adopt “provisions of [Chapter 8] or [promulgate] other provisions, which will be enforceable, relating to: (1) indemnification; (2) advancement of expenses; or (3) insurance or another arrangement to indemnify or hold harmless a governing person. My argument was that TBOC didn’t apply to the Court’s interpretation of Section 6.2 of the Centurion Logistics because neither Section 8.001 nor 8.104 of TBOC were adopted by Section 6.2 of the Centurion Logistics Company Agreement. Mr. Potter states in his letter that “Section 8.002(b) establishes that Centurion Logistics . . . had the ability to rely upon and adopt Section 8.104 . . .” However, Mr. Potter fails to note that Centurion Logistics did not rely upon or adopt Section 8.001 or Section 8.104 in drafting Section 6.2 of the Centurion Logistics Company Agreement. Of course, TBOC is invoked in other sections of the Centurion Logistics Company Agreement through the use of the defined term the “Code”, however, “Code” is not used anywhere in Section 6.2 of the Centurion Tex. Bus. Orgs. Code §8.002(b). Hon. Judge Goldstein December 19, 2017 Page 2 of 3 Logistics Company Agreement, and accordingly, was not adopted by Section 6.2 of the Centurion Logistics Company Agreement. Given that Section 6.2 of the Centurion Logistics Company Agreement does not adopt Section 8.001 or Section 8.104 of TBOC, the only guidance that TBOC provides is through Section 8.002, which allows a limited liability company like Centurion Logistics to construct contractual provisions related to indemnification, advancement, or other arrangements to indemnify or hold harmless a governing person. Thus, the Court is merely directed back to the principles of contract interpretation when construing Section 6.2 of the Centurion Logistics Company Agreement. Importantly, other provisions of TBOC do not gap-fill our interpretation of Section 6.2 of the Centurion Logistics Company Agreement, precisely because those sections of TBOC are not invoked with respect to Section 6.2 of the Centurion Logistics Company Agreement. The Court will likely notice that the Delaware authority invoked by Defendant Calce’s central case, In re Aguilar, interprets the Delaware General Corporation Law (“DGCL”) to gap-fill the bylaws of a corporation.2 However, this is precisely where the law for a limited liability company diverges from that of a corporation, as there is no legal foundation for presuming that TBOC gap-fills the interpretation of a limited liability company agreement, unless specifically invoked. In fact, Section 8.002 expressly states that Chapter 8 of TBOC does not apply to a limited liability company unless that limited liability company adopts its provisions in its governing documents. 3 Even if Section 8.104 was adopted by Section 6.2 of the Centurion Logistics Company Agreement, the statute is permissive in nature, as it merely allows Centurion Logistics to “pay or reimburse reasonable expenses incurred by a present governing person or delegate who was, is, or is threatened to be made a respondent in a proceeding in advance of the final disposition of the proceeding without making [a determination on indemnification].”4 Nothing in the language of Section 8.104 requires the Court to interpret the language of Section 6.2 of the Centurion Logistics Company Agreement to interpret “expenses” to include attorneys’ fees as itis defined by Section 8.001 of TBOC. The only way that the Court could justifiably rely upon the definition of “expenses” in Section 8.001 is if: (1) Centurion Logistics was a corporation, to which Chapter 8 necessarily applied; or (2) Section 6.2 of the Centurion Logistics Company Agreement specifically adopted Section 8.001 or Section 8.104 of TBOC. Since neither is the case here, the Court must rely upon principles of contract interpretation to discern the parties intent as to the definition of “expenses” in Section 6.2 of the Centurion Logistics Company Agreement. 2 See, Kaung v. Cole Nat’l. Corp. 884 A.2d 500, 509 (Del. Supr. 2005). 3 Tex. Bus. Orgs. Code §1.104(a). 4 Id. SHAMOUN & NORMAN, LLP 1800 Valley View Lane, Suite 200 | Farmers Branch, TX 75234 Phone 214.987.1745 | Fax 214.521.9033 | www.snlegal.com Hon. Judge Goldstein December 19, 2017 Page 3 of 3 Yours very truly, /s/ C. Gregory Shamoun C. GREGORY SHAMOUN CGS/ty cc: David N. Kitner david.kitner@strasburger.com Chase Potter chase.potter@strasburger.com Robert A. McNiel rmcniel@cbsattorneys.com Paul Green pgreen@cbsattornes.com SHAMOUN & NORMAN, LLP 1800 Valley View Lane, Suite 200 | Farmers Branch, TX 75234 Phone 214.987.1745 | Fax 214.521.9033 | www.snlegal.com