Preview
No. 2012-75663
KO.D TOF
TRIDENT VENTURES, INC,
int
OUNTY,
QUANTA « QUANTA
NMENT SOL Ss, INC;
QUANTA NT SERVICES
INC.; QUANTA INTE TIO “JUDICIAL DISTRICT
LIMITED; and JR. COLS ON,
efendants.
PLAINTI S’ SUPPLEMENTAL RESPONSE TO
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
REQUEST FOR ORAL HEARING
E AW IRM
obA. DeLeon
Sta Bar No. 24036465
1250 Four Houston Center
1331 Lamar Street
Houston, Texas 77010-3027
(713) 228-7300 - Tdephone
(713) 228-7302 - Telopi
FOR’ LAIN ATRIC O.
EV EY AND RIDE ENT ESI
No. 2012
0.D TOF
NI VEN
int
OUNTY,
QUANTA « QUANTA
NMENT 3
QUANTA NT
3 Q ) ANTA NIE
TED; ON,
efe nis.
S’ SUPPLEMENTAL RESPONSE TO
DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
TO THE HO
inti niu ile this Supplemental
Response to Defendants’ Motion for Summary Judgment (the Motion , and in support
thereof would show as follows
OBJECTION TO SUMMARY JUDGMENT EVIDENCE AND RIPENESS
Defendant properly points out the oral argument for their December 2013 summary
udgment motion. Plaintiff timely objected to the Court striking portions of Plaintiff's
affidavit.
Plaintiff objects to Quanta’s Motion for Summary Judgment on all claims as they are
not ripe under Texas Rule of Civil Procedure, Rule 193.6. This exclusionary mle applies
On December 27, 2013 Defendants moved for summary judgement. Plaintiff's filed a reply brief on (DATE) with
exhibits. Although Defendants motion for summary judgment was not ripe due to outstanding adjudication of a
Motion to Compel, which remains in this case at this time, Plaintiff incorporates that motion and all exhibits into this
Response to Defendants’ Motion for Summary Judgment.
equally to trial and summary judgment proceedings. Fort Brown Villas III Condo. Ass'n, Inc.
v. Gillenwater, 285 S.W.3d 879, 881 (Tex.2009) “The essence of the ripeness doctrine is to
avoid premature adjudication ... [and] to hold otherwise would be the essence of an advisory
opinion, advising what the law would be on a hypothetical set of facts.” Id. (quoting Patterson
v. Planned Parenthood of Houston & Se. Tex., Inc.,971 S.W.2d 439, 444 (Tex.1998)
fendants have yet to comply with reasonable discovery requestsa Motion to Compel
on certain of those requests is pending, and would reasonably lead to facts and evidence that
support Plaintiff's claims for which Defendant is trying to dismiss in entirety. Defendant does
not comply with reasonable discovery requests, then moves for so called no evidence
summary judgment without specific findings what evidence was lacking on any of the claims,
nor presenting any facts to support a contrary finding to the claim.
Plaintiff requests a new docket control order on those claims, accelerated
at the rate of
Defendant’ s compliance with Plaintiff’ s reasonably discovery requests and the Court's order to
the same, which is consistent
with the Federal Court's finding when Defendant unsuccessfully
removed
the case.
Plaintiff objects to Defendants’ footnote 2 of Defendants’ Supplemental Motion for
Summary Judgment stating that “Quanta's Motion for Summary Judgment contains a detailed
description of the facts of this case. Quanta incorporates that motion and all exhibits into this
Supplemental Motion for Summary Judgment A copy of Quanta's Motion for Summary
Judgment is attached to this Motion as Exhibit 25. Specifically Plaintiff objects to all
assertions made regarding the existence or non existence of a “formal” compensation
agreement
from pages 4 12 of Quanta’s Motion for Summary Judgment because Quanta
recently produced bates numbers Quanta0062672 Quanta006420, attached as ExhibitA to this
Motion, that jarove without any doubt that a compensation agreement was for Patrid«
ney was ralified by the Compensation Conmitiee and Board of Directors of Quanta
and thus John Colson outright lied to Plaintiff about the status or existence of this
document
and enforceable agreement.
Colson’s lies continue into his Deposition dated December 5, 2013 where he testifies
as to Devaney’s employment contract and the business cards he was issued from 2004 up and
to 2011 when Quanta moved it’s offices:
OLSON CAN REMEMBER ANY DETAIL OF THE EVANEY ONTRACT APPROVED BY
THE OARDIN ARCH DAYS AFTER EVANEY JOINED AND HE WAS TO BE
THE HIGHEST PAID EMPLOY EE INTHE COMPANY AFTER OLSON THA AND
80:1
E NEVER TESTIFIES HE ACTUALLY PRESENTED TH OARD PPROVED OFFER TO
EVANEY
ATER AT HE TESTIFIES HE UANTA GAVE EVANEY TWO DIFFERENT
BUSINESS CARDS SAYING EVANEY IS RESIDENT OF UANTA OVERNMENT
OLUTIONS AND UANTA NTERNATIONAL
HEN AT 8:25 HE SAYS EVANEY ISTHE ONLY PRESIDENT WHO WAS NOT A
EMPLOYEE WITH STOCK OPTIONS BENEFITS AND INSURANCE JUST LIKE THE TERMS
OF THE APPROVED MPLOYMENT ONTRACT THAT OLSON UANTA NEVER
DELIVERED TO EVANEY
TD HE TESTIFIES THAT HE REDUCED THE FEE PAID A FEE THAT WAS
LREADY LESS THAN THE OARD APPROVED CONTRACT THAT WAS NEVER
DELIVERED
TD 91:8TO
ID YOU GO TO THE BOARD TO GET THESE TO BASICALLY HAVE EVANEY NAMED
AS PRESIDENT OF UANTA NTERNATIONAL AND UANTA OVERNMENT
OLUTIONS
HO MADE THE DECISION OU ALONE
E WAS NOT MADE PRESIDENT IN THE CAPACITY THAT AN EMPLOYEE WOULD
BEA PRESIDENT OF THOSE DIVISIONS
ND M NOT TRYING TO TRICK YOU ON THAT DO UNDERSTAND YOUR
POSITION
KAY
UI SOMEBODY HAD TO MAKE THE DECISION THAT HE CAN BE CALLED
PRESIDENT OF THESE TWO COMPANIES
ASITYOU WASIT YOU ALONE OR ANYONE ELSE
EWITH AS TOLD YOU BEFORE THIS LONG DISCUSSION WITH THE GENERAL,
COUNSELAND EVANEY
LLRIGHT OTHEGENERAL COUNSEL WAS ALSO INVOLVED
ND M SURE THERE ISN BUT LL CONFIRM WITH YOU HERES NO
DOCUMENT IS THERE THAT SETS OUT SOME SORT OF A DISTINCTION BETWEEN HIS
TITLE AS PRESIDENT A SOMEONE ELSES TITLE AS PRESIDENT FOR A DIFFERENT
DIVISION OF THE COMPANY
DONT KNOW HERE MAY WELLBE BUT DONT KNOW
OU CANT THINK OF ANY THING LIKE THAT
HERE WAS CERTAINLY DISCUSSIONS BUT DONT KNOW IF THERE
DOCUMENTS
MTALKING ABOUT DOCUMENTS
KNOW
ID YOU GET MEAN DO YOU RECALL GETTING ANY KIND OF AN OPINION
FROM THE GENERAL COUNSEL
KAY
EFENDANTS OTION HOULD ISMISSED WITH REJUDIC
Plaintiff's motion for summary judgment should be dismissed with prejudice
for Defendant's knowingly false statements central to this case. (Chambers v.
NASCO(S501 USS. 32, 43 (1991)
OVERVIEW OF CASE AND SUMMARY OF RESPONSE
UANTA USINESS DEL VERLY COMPLEX AND ILLUSORY AND IDDEN
At the core of this case is how Defendant’s unlawful acts and reasonably relied upon.
inducements to Plaintiff to establish, manage, and execute two, unheralded and unique,
enterprise wide businesses that focused and leveraged the Operating Units toward domestic
and foreign govemment contracts (Quanta Govemment Solutions) and intemational
commercial contracts (Quanta Intemational Ltd.) and the concerted conduct and unethical
business schemes of the Quanta Defendants to cut Plaintiff Patrick Devaney out of his rightful
share of the substantial revenue, compensation and equity share commensurate
with the
business that he independently brought to the Quanta companies and shareholders, including
the CEO and Chairman John Colson.
Defendant Quanta Services is an overly complex, highly sophisticated, accounting
driven holding company with few peers among other issuers listed on the New Y ork Stock
Exchange. Quanta Services, Inc. is not a construction company, it is a holding company
whose assets consist primarily of future and intangible assets such as goodwill”
and backlog
allowing Quanta to book endless series of accounting “impairments” and revenue swaps
through its operating companies (“OpCo”) cash and share of stock in its federation of
undistinguishable construction companies. The assets that one might consider part of a
onstruction company, such as equipment, trucks, tools, fabrication facilities, construction
workers, and engineers are found at the OpCo level Exhibit
Quanta OpCo financial details are not disclosed to investors or general executive
leadership and comprise Quanta’s most closely guarded information by its highest
management. (Exhibit and (Exhibit In fact, on September 21, 2010, Quanta
Plaintiff incorporates the factual assertions made in its responsive motions and exhibits to Quanta’s Motion for
Summary Judgment but does not incorporate the statements
subject of Defendants’ Motion
to Strike Devaney
Affidavit in Affidavit Paragraphs 10, 12, 15, 19, 22, 25, 28, 29 and 30. Plaintiff concedes the striking of these
specifically requested statements and therefore the motions to strike are now moot. The incorporated motions and
exhibits consist of the following documents: Plaintiff’ s Response in Opposition
to Defendant’ s Motion for Summary
Judgment (Image 5976039), Plaintiffs Surreply in Opposition to Defendants Motion for Summary Judgment (Image
59833810), Supplement to Surreply to Defendants Motion for Summary Judgment (Image 59904261), Plaintiff’ s
Motion For Reconsideration of Order Granting Defendant’s Motion to Strike Devaney Affidavit (Image 59932327),
Plaintiffs Motion for Emergency Hearing (Image 599988888) and Order Granting Plaintiffs’ Motion for Remand.
Gilmore, Vanessa 4:14cv US District Court Southem District of Texas, attached hereto as Exhibit B, all
subject to newly discovered evidence.
See Exhibit OpCo Equipment for Irby, Potelco, and Alteck Line Contractor sub entity in South Africa
See Exhibit Hiding OpCo data. Scott Bames worked for Jim
O’ Neil in the Intemal Audit group
See Exhibit Quanta reply letter to the SEC dated December 11, 2008, Quanta’s CODM (chief operating
accountant explicitly admitted to Plaintiff that financial information was maintained by Quanta
but only certain special executives had access to this information. (Exhibit ). Quanta
conducts dozens of intemal self dealing transactions and arms lengths transactions
generally characterized as reorganization (Exhibit , consolidation, asset transfers, liability
transfers, and intemal mergers (aka “goodwill impairments”) Quanta simply dump
performing OpCo’s into “super OpCo’s” such as PAR Electric and Potelco and (Exhibit
Specific to Plaintiff and his OpCo’s QIL and QGS, information and revenue that originated
with QGS for the Chad project, the Point Loma poject, the South African projects, the
Trinidad Gas Company project, etc., was either completely hidden and diverted, or it was
booked without Plaintiff’s knowledge or consent as Incoming Revenue to QIL, and outbound
Cost of Goods Sold to QIL without any mark up or incentive.
An example of Quanta's complex maize of intercompany transfers and deal making
between OpCo presidents, xhibit shows what occurred in South Africa. One Quanta
company, here it's Quanta Technology, expects to be paid by another Quanta company who
controls
the bigger project. However, in the prior years when there_were no ina
decision maker) is John Colson, the Company’s Chief Executive Officer.... The Company currently has 26
operating units that are separately managed on an entity entity basis. Although the Company has recently begun
to aggregate certain measures by type of work and certain presidents and vice presidents have been named to
oversee companies with similar operations, major decisions involving budgets, capital expenditures, local
management, accounting, business development, contracts, etc. are all discussed and resolved on an entity —_ entity
basis with Mr. Colson
See Exhibit Company Profile. At the time Plaintiff joined Quanta, they faced their most
challenging operating environment in decades, and directed Investor's to invest in Quanta’s future...Quanta
Govemment Solutions, it’s strategic and long term initiative.
See Exhibit EPG Division 2005. PAR and POTELCO revenues are a result of intemal mergers. For example,
according to (Exhibit ) Quanta Telephone Directory May08, Computapole, Harker & Harker, Mustang Line
Contractors, Network Electric, Riggin & Diggin, and Union Power (founding Quanta company), all OpCo’s, merged
into PARas they became non performing OpCo’s.
See Exhibit Novosel Email UAE
particular Country or with a particular Customer to pay the virtual revenue produced between
sister entities, Colson would make whole (here, Quanta Technology) out of his budget
10 11
(Exhibit Another example is the QIL Pakistan project (Exhibit Quanta’s
accountants are independently trying to reallocate revenue to avoid UAE taxation. They also
show booked phantom revenue produced by Quanta Technology (Quanta Tech IC) and PAR
(PAR IC) in the amount of $85,651 that was never billed to the customer, and was outside
the
Price and scope of the original contract with NOOR Financial Group, a 50% venture partner
with the Karachi Electric Supply Company.
The rest of the OpCo’s (Colson testified Quanta had 26 OpCo’s (Depo 136:4 by
routinely bid against each other for the same jobs with the same Utility customers. One
OpCo would act as _ stalking horse for the other, or purposely refrain from bidding in order to
defer to another subsidiary Exhibi 12" the net effect of which would ultimately hide
revenue rightfully produced by Plaintiff's OpCo’s QIL and QGS. (See Exhibit xxx . Quanta
maintained no “chinese wall” for this activity, in fact it was the opposite effect owing to the
Quanta Management System (QMS). QMS was Quanta’s Sarbanes Oxley compliance
program. Control 2.2.7 states that certain bids must be reviewed by Division Presidents,
particularly multi year outsource services contracts and storm restoration contracts. Two, to as
See Exhibit Corp Expenses
from 2011 10 k, taken from Quanta’s annual report
for fiscal year 2011 submitted
to the SEC.Corporate and Unallocated expenses is, essentially, the cost of running Quanta. Net profits from the
OpCo’s, after fully expensing their costs...and THEIR subsidiary costs...makes it way to Quanta Services, Inc.
holding company as Operating Income. From there, Quanta deducts these Corporate and Unallocated expenses.
See Exhibit AbuDhabi Branch Acct. Here, Quanta has re opened its prior year books and records for QIL.
and QGS in an effort to create a history that did not exist in order to submits
a financial report
to the UAE financial
regulators for the QIL office in Abu Dhabi. This was prompted by a $140k project won by Quanta subsidiary
MEARS Group in August 2011.
See Exhibit Example Quanta Bid Logs
many as five, Quanta subsidiary 2.2.7 control documents would make their way, on the same
job, to the Division President's desk for approval. He say all the prices, and profits, etc.,
BEFORE it wes submitted
to the Customer. For certain work, smart grid and
telecommunications work in particular, Quanta management transfers and shares resources
13,
between OpCo’s such as equipment
and personnel Exhibit
Interestingly, some of Quanta’s closed or defunct businesses reemerge years later with
anew name or different name/brand. Quanta would dump non performing OpCo’s into other
OpCo’s, but the Quanta legal department maintained the State registration filings thus
preserving
the identity sans the people, equipment, customers, etc. that make up the assets and
income of the defunct company. On an ad hoc basis, any other Quanta company seemingly
pulled the NAME out of the Legal grab _, and filed a “doing business as” in another State.
For example, Quanta’s VCI subsidiary was purchased by Quanta on March 9, 1999 “
Bradford Bros was purchased on October 11, 2001. Both companies
were listed in the Quanta
Annual report
up to 2001. Then, from 2002 to 2007, they were not. In the 2008 annual report,
both companies magically re emerged.
Through its aggressive accounting tactics, and complex maize of intercompany
transfers, Quanta has thrived on compartmenting information by and between its subsidiaries
vertically and horizontally to investors and ousted leadership executives (ie. Plaintiff)
creating ambiguity and double talk on the road to what it is today. Adding
to the complexity
of compiling its consolidated financial statements, Quanta had to sort through 27 or more
See Exhibit Example Quanta Smart Grid. CMI services was the main recipient and primary “hands on”
contractor for dozens of jobs bid and won by affiliated Quanta companies which had little or no smart grid
capabilities.
Quanta’s annual report to shareholders filed with the SEC and available for public viewing, in years 1999 through
2008 are incorporated herein by reference.
different accounting systems Exhibit 'Sthroughout its federation of companies. This
revenue hocus pocus is central to fraud and misrepresentations made to Plaintiff in
determining his rightful compensation shares. Quanta’s intent was and is clear...keep
outsiders, including Plaintiff, in the
Quanta’s subsidiary expenses are often separated from underlying expenses associated
with project contracts, the lifeblood of the subsidiary operating companies. Quanta
17
management,
in ad hoc fashion, selects which OpCo conducts certain projects Exhibit
while related marketing and administrative expenses are diluted across the Quanta federation
Exhibit 18 engineered so certain OpCo presidents can eam higher bonuses while some
(Plaintiff) were black balled and simply preyed upon for revenue work.
Tt wes within this unorthodox corporate environment that Plaintiff succeeded and
delivered what promised to Defendants. Despite the difficulties, from 2004 until 2012,
Plaintiff was a significant catalyst in Quanta’s transition from humble Kansas City beginnings
to Wall Street
to its 2009 S&P 500 index inclusion. he harm Quanta imposed knowingly
and
recklessly on Plaintiff is egregious and straightforward when viewed in totality.
LAINTIFF ACKGROUND
Plaintiffs professional background is straightforward. He served in the US Navy on
See Exhibit : 27 Accounting Systems One challenge for Plaintiff and his team was to align Quanta to Federal
Acquisition Regulations which, in many instances, were in direct opposition
to Quanta’s business model within its
federation.
See Exhibit IRBY 2004 Balance Sheet and Accountants’ Review Report at page 7, NOTE 6: “The
accompanying financial statements include transactions with the Parent Company and other affiliated entities. The
Parent Company’s management has discretionary authority over the allocation of certain expenses between
companies and, therefore, has the ability to influence the operating results of the Company.”
See Exhibit See “Chad Contract” Quanta submits a QIL bid, later to be reengineered
by the accountants
despite the contract being executed between QIL and KBR.
active duty from 1987 until 1992, and again from 2001 until 2003. In between, and after these
dates, he served
in the US Navy Reserve until 2011. His civilian occupation started with Wall
Street investment bank, Kidder Peabody & Co. in 1983
as a NASD (now FINRA) registered
representativeKidder Peabody & Co was sold to GE Capital in 1986. After leaving military
activity duty in 1992, he registered with the NASD and briefly rejoined his former Kidder
Peabody & Co. colleagues at Canturbury Capitalin Newport Beach, CA.
he started Trident Ventures and moved to Kuwait. In Kuwait, he joined
boutique investment management company who _ clients included the Govemment of Kuwait,
the Govemment of Abu Dhabi, and several wealthy families in the region where he oversaw a
multi billion portfolio of real estate, publicly traded stocks, and private equity investments
He created over 70 joint ventures with financial services firms including Jones Lang LaSalle,
the Tiger Fund mn by Julian Robertson, Intemet Capital Group, and Anthem Venture Partners.
Plaintiff's regional insights, particulady his knowledge of the human terrain, were
helpful when, in September 2001, he was recalled
to active duty and served until August 2003.
From August to December 2003 he worked in Kuwait to re establish his businesses, left
dormant for more than two years. He was on track for success, including ownership in one of
the largest sporting goods chains in the iddle t and the first concept retail store for
Adidas in Kuwait. He owned part of a general contracting and cement construction company.
DHL Logistics was a client, where he advised and helped establish landing rights and
logistical services into Afghanistan and Irag. He was retained by Iraqi families, in the north
and south,to develop oil & gas and telecommumication assets they each owned.
Quanta approached Plaintiff in December 2003, while he was in Kuwait, and induced
him to join Quanta in January 2004 Defendants wanted to leverage his US and foreign
govemment contacts to open doors to a new potential revenue streams
Quanta desired. At the
least, Quanta needed to deflect criticism from its own shortcomings as a management team
to that point
OLSON ACKGROUND
ndant John Colson joined PAR Electrical in the early 1970's after serving out his
draft obligation. He became President of PAR Electrical Contractors, and it’s largest
shareholder. In 1997 he migrated from Kansas City, MO to Houston in 1997, where he
founded Quanta Services (“Quanta”) along with CFO James Haddox, Treasurer Nick
Grindstaff, and investor Vincent Foster of Mainstreet Capital. Haddox and Foster were Arthur
Andersen’ alumni, and veterans of financial engineering business combinations flipped to
investors (i.e. Quanta Services and US Concrete Colson and Foster founded and sat on
defunct US Concrete
board of directors until its bankruptcy).
Colson sold his PAR Electrical to Quanta for $35 million. The owners of Potelco,
Union Power, and Trans Tech each sold their companies for $12 million, $22 million, and $18
million respectively, in 1997 at Quanta’s initial public offering of stock on the New York
Stock Exchange. Then Quanta bought 85 more, similar companies serving the
telecommunication, electric power utility and natural gas utility customers across the United
States.
The companies Quanta purchased served and shared the same pool of mullti state
power generation and telecom industry customers, albe in diverse geographic locations.
Quanta’s subsidiaries generally provide “equipped” labor to maintenance, repair, and upgrade
contracts where the Utility provides the materials.
The former Arthur Andersen was part of the “Big Five” accounting firms, who voluntarily surrendered it’s
licenses to practice as a certified public accountant in 2002.
The average price Quanta paid for each of these subsequent companies was under $15
million”, Quanta paid for these subsidiaries using a combination of stock and cash. Quanta
became the conduit for “mom and pop” construction companies seeking to exit their family
business, and benefiting from purchasing revenues and cash flow at a discount to the eamings
multiple that it’s stock traded at.
Jim O'Neil” joined Quanta in August 1999, and was singularly responsible
to integrate
over 85 acquired companies into Quanta’s public accounting
and financial disclosure system
(aka Quanta Management System or QMS). O'Neil reported directly to the Quanta Board of
Directors, AuditCommittee.
QUANTA’S BOARD APPROVES PLAINTIFF’S STRATEGIC PLAN
PLAINTIFF'S EMPLOYMENT COMPENSATION AGREEMENT
In January 2004, when Plaintiff joined, Quanta’s stock market value was $840 million. First
Reserve Corporation, a private equity firm, owned 34% and occupied two board seats. 18
months previous, First Reserve bailed out Quanta and its incumbent management team, froma
takeover attempt. The takeover attempt, caused in part,by the collapse of Quanta’ s stock price
owing to a $640 million charge to goodwill amounting to nearly as much as the entire price
paid for all of Quanta’s acquisitions to that point. Across the federation, Quanta companies
eamed less than $10 million in US Govemment revenues, and $15 million in foreign
revenue”
Quanta’s SEC filings incorporated herein by reference
Jim O’Neil came to Quanta by way of a 20yr career at Halliburton where he worked on Off shore business
development, including in Nigeria.
By the end of 2011, Quanta had eamed over $300 million in US Govemment revenues in the previous 3 years. In
years 2011, 2010, and 2009 Quanta eamed $535 million, $256.1 million, and $112.2 million, respectively, from
Intemational operations. Quanta’s market value at December 31, 2011 was $4.6 billion
Quanta desired to increase its customer base outside its domestic utility customers into
US govemment Exhibit 3 and foreign govemment. customers. Plaintiff made a
presentation to the Board of Directors on March 17, 2004 (Exhibit 24 ‘The Quanta board
endeavored to make Plaintiff it’s second highest paid executive, second only to John Colson,
in March 2004 via Board resolution Quanta’s compensation committee, and outside
consultant Emst and Young, vetted the employment contract. The contract considered that
Devaney would run a $1 billion business located overseas in dangerous locations, unlike any
25
other venture in Quanta’s history Exhibit Quanta had knowledge of the complexities
and dangers facing Plaintiff.
The contract was never delivered to Devaney, despite the Board’s resolution and
written intentionsThe contract was ap proved after Quanta was informed that they were
unsuccessful
in the Iraq Reconstruction bid. Instead, Colson hid it, and preferred
to subsume
Plaintiff's knowledge and contacts while Plaintiff delivered in good faith unaware of the
contracts existence. Plaintiff became aware of its existence when it was produced in this case
on (DATE when PRODUCTION 011 was sent by SUSMAN), after Plaintiffs Deposition
which Defendant substantially relies on for the present motion.
LAINTIFF MBARKS ON YEAR OPERATIONAL AND ADMINISTRATIVE SET UP OF
UANTA S INTERNATIONAL AND GOVERNMENT BUSINESS
Exhibit Traq Bid From inception of the relationship, Quanta’s CEO and Chairman of the Board is
representing Devaney as President of Quanta Govemment Solutions, Inc. “confident” he can managed $1 billion in
US Govemment contracting.
Exhibit QGS_ BoD Mig
Exhibit Devaney Contract
Quanta knew what it was going to take to build a billion dollar intemational and
govemment construction business. They already paid Emst & Y oung over a million dollars to
develop a 590 individual tasks list that could be completed in six months, and would
conclude Quanta’s intemational and govemment construction business certified and fully
compliant with EVERY US Statute that Quanta would be operating under, including FCPA,
26
Sarbanes Oxley, FAR, DFAR, CASand the Department of Labor( Exhibit
Colson induced Plaintiff to develop detailed branch and sequel plans the would allow
Quanta to succeed, based on the Emst and Y oung frameworkPlaintiff informed Colson every
step of the way, relying on his hand shake to eventually come through on his promises
Quanta and Colson had effective control over the process, timeline and financial resources
needed to execute and when issued amived, Colson encouraged patience and continued
optimism.
UANTA REASURER ELIVERSTHE IRST USINESS FORMA
April 7, 2004, the Quanta Treasurer delivered to Plaintiff it’s Company template pro
forma for Devaney to work from Exhibit 2"Together with other stakeholders of QGS at
Quanta, Plaintiff developed a sequel strategic plan for Colson to make decisions on “next
steps”, based on what was presented to the Board a few weeks earlierand presented it on April
to Colson and Quanta’s CFO James Haddox.From this meeting and Colson’s decision,
hiring decisions were made for Ginger James and an investment bank advisory firm, FMI.
29
Exhibit Colson informs the Board of what is happening.( Exhibit
Exhibit QGS Set Up 590 Tasks
Exhibit Treasury Pro forma:
Exhibit Colson selects a comprehensive approach, and Quanta takes actions based on this decision
Defendants, try dilute these facts and infer that certain references to Plaintiff in a
consulting role, or that “consultant” is a dirty word. Quanta regularly paid consultants to help
manage s holding company investment business. It hired Emst and Young , and other
consultants, to create a roadmap for establishment of the intemational and govemment
business at a cost of nearly $1.7million charged to Quanta Govemment Solutions, Inc ( Exhibit
30
It hired McKinsey & Company to establish it’s renewables business in 2008, and
converted McKinsey consultant Peter Lorenz and Joe Avila Unlike these other pursuits,
Plaintiff’ s was the largest and most complex, and
it paid off. ...for Quanta.
Plaintiffs efforts were highly coordinated between January 2004 and the end of the
“set up” period culminating
with the approval of the final business plan and performance
compensation model (Exhibit 3! and the hiring of additional staff to bid work and open
Quanta Intemational office in Dubai. During this period, Plaintiff documented 4,969 email
conversations Exhibit 2 nd dozens of conference calls with Colson and the functional
department heads and leadership of Quanta including:
560 emails to Colson
103 emails to the Board of Directors, Audit Committee representative
236 emails
to Quanta’s CFO
emails
to the General Counsel’s (Legal) office
Exhibit May 20, 2004 Board Meeting
Exhibit QGS 2004 6mos: Quanta accountants accrued to QGS $1.4 million in professional fees associated
with the three month Iraq Bid. These contracts were put in place before Plaintiff arrived. Plaintiff eamed $84,000
for the same period.
Exhibit Perf Comp Plan Milestones: Indicative planning process on the road to the Performance
Compensation Plan, and the final “upload” of the related budget into the Quanta accounting system.
Exhibit Devaney email 04 06.pdf
624 emails to Quanta’ s other Division Presidents
976 emails to Quanta’s OpCO presidents to coordinate opportunities for them
to bid
ACT ISSUES EXIST ON LAINTIFFS CLAIMS
In attacking Devaney’s fraud negligent misrepresentation, and promissory estoppel
claims, Quanta’s Motion does ___ challenge the falsity of the misrepresentations that that were
made
to Devaney. Rather, Quan argues that Devaney cannot show reliance on such
misrepresentations
because they are too vague or uncertain. There are two fundamental
problems with that argument.
Colson Knowingly Makes False Representations Which Defendant Relies on for Their
Motio
Plaintiff took Swom Deposition of John Colson on December 5, 2013
Quanta Board of Director's adopted Code of Ethics (2003 and all subsequent
revisions) incorporated herein by reference:
Compliance with this code is Mandatory for all employees
Compliance with applicable govemment and self regulatory
organization laws, rules and regulations
Accountability for compliance with this Code
Iv. No conflicts of interest
Anti trust Compliance
vi. Non disclosure of Confidential Information
Lying under oath: (Colson Dep) at 12:1 Colson approved a sole source
contract for All About Travel related to Quanta’s Travel Policy initiated during
Project LEAP:
Q....just the name of the former wife relative to the 1993 divorce?
A Marka, M
Q And did she keep Colson as the name?
Iv. A She's remarried.
Q What is her new name?
A I really don't know.
Exhibit XX (LEAP Newsletter) and Exhibit LEAP Files) : Colson tells
Ginger James, who conducted the procurement and prepared the
solicitationfor multiple travel agencies who answered:
Q: [have lots of old project leap. . information
A: Pitch It
See Colson Depo Ex 1 through Ex 8: Marka Barker
is owner and
exclusive travel agent to Quanta Services’ 18,000 employees through
her firm All About Travel.
Simple Questions Regarding Quanta’s Organizational Chart id. 25:10
Q. You wer the CEO, so that's the top of the heap of Quanta and he
would report directly to you, correct?
A. Not forthe
whole period, but yes, most of the period.
Q. Actually, and let's pin that down. At what point in time was it when
Mr. Devaney would report directly to someone else?
Iv. A. When Jim O'Neil took over the direct reports, the presidents of the
operating units began to report to him instead of to the CEO. That was
probably 2008 or nine.
See Colson Depo Ex.9 Ex.10 Devaney is direct report to Colson in
2009, as disclosed
to Quanta’s auditor
Colson Trips with Devaney id 26: 19
Q. Okay. And you still made trips with Patrick Devaney back in the
2010 timeframe, correct?
A. I don't recall any, but there might have been. I don't recall.
See Colson Depo Ex. 11 to 15 Trips Colson took with Devaney.
Samsung meeting in Seoul produced a $150 million Atwell Island Solar
Installation Project forQuanta in 2011.
Iraqel Deal id 28: 10
Q._ And the southem Iraq telephone maintenance contract, did that
actually go through?
A. No.
Q. And what was the proposed size of that, if you recall?
Iv. A. Say again.
What do you recall was the dolla range of dollar values of that
potential contract?
A. I don't think we ever got to the point that we
See Colson Depo Ex. 16 Quanta committed $50 million to the Iraq
telephone contract, a commitment that had to be vetted and approved
the Quanta’s board of directors in advance according to the Sarbaines
Oxley certified
Quanta Management System.
Kuwait Deal id 155:19 156:6 Colson discloses Kuwait’s classified
information to investor in Quanta stock
Q. Did you have any communications with Mr. Grounds about the
Kuwait deal?
A. Might have, yes. Probably did.
Q. What would have what types of communications?
Iv. A. Tomisalong _ time personal friend of mine andhe owns about 10
or 15, maybe 20 shares of Quanta stock, so he is always reading
on the
web page of everything that's going on, jabbing me in a joking sort of
way about why you did this and why I did that. You know, were
friends. He called I know him very
well how many people are
working on Katrina, you know, thosekinds of questions.
See Colson Depo Ex. 17 Colson tries to pin the “wrong doing” on the Agent,
when Quanta was the one trying to skirt the Kuwait Central Tenders Committee
process
Kuwait Deal Quanta wrote the RFP 35: 23 to 36:6
When you say T'm going back to your earlier testimony. When you
say they violated rules of procurement, do you know what rules you're
refering to?
A. The apparently in Kuwait they have a process that is required to
go through where you parliament okays a bid of that size going out
and the Minister of Electricity sends the bid out (to Central Tenders
Committee)
iv. Q. Allright. Any other niles you can think of?
A. No.
vi. See Colso Depo Ex. 18 20: Quanta drafted and provided
the
Govemment of Kuwait a draft RFP which was slightly modified and
published by the Central Tenders Committee, which Colson is referring
to.
Colson testifies a number of Quanta companies “shut down” id 61: 24 to 63:15
Colson’s testimony onflicts with “goodwill impairment” double talk
1d 112: 20. Contradicts Ex. 13 from Samsung addressed to Patrick Devaney,
President of Quanta Govemment Solutions, Inc. Later, at Id: 115: 8 25 Colson
testifies Devaney as also President, Quanta Intemational to a foreign
govemment (Saudi Arabia).
See Colso Dep. Ex. 21
First, the legal standard
that Quanta relies is incomect. Relying largely on cases that
predate the law as clarified by the Grant Thornton LLP v. Prospect
High Income Fund case
(314 S.W.2d 913 (Tex. 2010)), Quanta claims that a plaintiff suing for fraud and negligent
misrepresentation must show that reliance on the alleged promises must be both reasonable
and justified° In fact, there is no reasonable in the standard. The proper standard is
actual and justifiable reliance. Here, he actual reliance by Devaney
is evident from his
affidavit and the other attached evidence and can hardly be challenged from a summary
judgment standpoint In measuring justifiable reliance , the Texas Supreme Court and Fifth
Circuit frame the proper inquiry as being whether, given a fraud plaintiff's individual
Quanta ignores clear, long standing precedent that makes clear the standard is “actual and justified reliance.” See,
eg., Ernst
& Young, L.LP. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001).
characteristics, abilities, and appreciation of facts and circumstances at or before the time of
the alleged fraud[,] it is extremely unlikely that there is actual reliance on the plaintiff's
part.
(emphasis added). Grant Thornton LLP v. Prospect High Income Fund case, 314 S.W.2d 913,
923 (Tex. 2010) (quoting from Haralson v. E.F. Hutton Group, Inc., 919 F.2d 1014, 1026 (5
Cir. 1990) . Given the multiple promises and business model that the evidence shows support
Devaney’
s reliance, and the evidence that Quanta not only agreed to implement the model so
as to provide Devaney witha share of the carry percentage but als o approved
annual budgets
for QIL and QGS to carry out the plan, the justifiable reliance element
is met as well
The second problem
with Quanta’s argument is the suggestion that the false promises
made by the Quanta Defendants are not sufficiently specific to support the formation of a
binding contract and hence also cannot support the tort claims. However, Quanta relies on
inapplicable cases that deal with either employment — will or express/implied contract claims
as support If fraud claims had to be based on promises that necessarily must support the
existence of an enforceable contract, the doctrine of fraud would be subsumed within contract
law itis not. See, eg., Formosa Plastics Corp. USA v. Presidio Eng’rs, 960 S.W.2d 41, 46
47 (Tex. 1998) (The Texas Supreme Court has repeatedly recognized
that a fraud claim can
be based on a promise made with no intention of performing, imespective of whether the
promise is later subsumed within a contract. Fed. Land Bank Ass’n v. Sloane, 825 S.W.2d
9, 442 (Tex. 1991) (recognizing duty of reasonable care in providing information (i.e, tort
of misrepresentation) is separate and distinct from duties under a contract).Here, to cut to the
chase, if someone were to promise the other an equity or similar interest in the profits to a new
business that is being developed, and the promissee performs in reliance on the promise, the
promissee is not left without recourse merely because the specific amount of equity or carried
interest was never set in stone. The promise
of equity or quasi equity (in our case a share of a
ecific carry percentage reserved for the new company) is sufficiently specific to support
both actual and justifiable reliance (and reasonable reliance as well for that matter). See, eg
Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432 (Tex. 1986) (allowing recovery for damages
where employer promised bonus to retain employee's service, despite contract never being
formalized
Moreover, Texas courts have unifonmly treated the issue of justifiable reliance as a
question for the factfinder. In re Enron Corp. Securities, Derivative & ERISA Litigation, Civ.
No. H 0481, 2010 WL 9077875, at *20 (S.D. Tex. Jan. 19, 2010) (mem. op.)
(citing 1001 McKinney Lid. v. Credit Suisse First Boston Mortg. Capital, 192 S.W.3d 20, 30
(Tex. ApHouston [14th Dist] 2005, pet. denied) (citing Coston v. Bank of Malvern, 991
F.2d 257, 260 (5th Cir. 1993); Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d
573, 577 (Tex. 2001)). For that reason alone summary judgment should be denied as the
question of justifiable reliance is a quintessential question of fact.
Quanta further asserts that laintiffs ave vidence to support claims for ortiou
Preview
No. 2012-75663 KO.D TOF TRIDENT VENTURES, INC, int OUNTY, QUANTA « QUANTA NMENT SOL Ss, INC; QUANTA NT SERVICES INC.; QUANTA INTE TIO “JUDICIAL DISTRICT LIMITED; and JR. COLS ON, efendants. PLAINTI S’ SUPPLEMENTAL RESPONSE TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT REQUEST FOR ORAL HEARING E AW IRM obA. DeLeon Sta Bar No. 24036465 1250 Four Houston Center 1331 Lamar Street Houston, Texas 77010-3027 (713) 228-7300 - Tdephone (713) 228-7302 - Telopi FOR’ LAIN ATRIC O. EV EY AND RIDE ENT ESI No. 2012 0.D TOF NI VEN int OUNTY, QUANTA « QUANTA NMENT 3 QUANTA NT 3 Q ) ANTA NIE TED; ON, efe nis. S’ SUPPLEMENTAL RESPONSE TO DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT TO THE HO inti niu ile this Supplemental Response to Defendants’ Motion for Summary Judgment (the Motion , and in support thereof would show as follows OBJECTION TO SUMMARY JUDGMENT EVIDENCE AND RIPENESS Defendant properly points out the oral argument for their December 2013 summary udgment motion. Plaintiff timely objected to the Court striking portions of Plaintiff's affidavit. Plaintiff objects to Quanta’s Motion for Summary Judgment on all claims as they are not ripe under Texas Rule of Civil Procedure, Rule 193.6. This exclusionary mle applies On December 27, 2013 Defendants moved for summary judgement. Plaintiff's filed a reply brief on (DATE) with exhibits. Although Defendants motion for summary judgment was not ripe due to outstanding adjudication of a Motion to Compel, which remains in this case at this time, Plaintiff incorporates that motion and all exhibits into this Response to Defendants’ Motion for Summary Judgment. equally to trial and summary judgment proceedings. Fort Brown Villas III Condo. Ass'n, Inc. v. Gillenwater, 285 S.W.3d 879, 881 (Tex.2009) “The essence of the ripeness doctrine is to avoid premature adjudication ... [and] to hold otherwise would be the essence of an advisory opinion, advising what the law would be on a hypothetical set of facts.” Id. (quoting Patterson v. Planned Parenthood of Houston & Se. Tex., Inc.,971 S.W.2d 439, 444 (Tex.1998) fendants have yet to comply with reasonable discovery requestsa Motion to Compel on certain of those requests is pending, and would reasonably lead to facts and evidence that support Plaintiff's claims for which Defendant is trying to dismiss in entirety. Defendant does not comply with reasonable discovery requests, then moves for so called no evidence summary judgment without specific findings what evidence was lacking on any of the claims, nor presenting any facts to support a contrary finding to the claim. Plaintiff requests a new docket control order on those claims, accelerated at the rate of Defendant’ s compliance with Plaintiff’ s reasonably discovery requests and the Court's order to the same, which is consistent with the Federal Court's finding when Defendant unsuccessfully removed the case. Plaintiff objects to Defendants’ footnote 2 of Defendants’ Supplemental Motion for Summary Judgment stating that “Quanta's Motion for Summary Judgment contains a detailed description of the facts of this case. Quanta incorporates that motion and all exhibits into this Supplemental Motion for Summary Judgment A copy of Quanta's Motion for Summary Judgment is attached to this Motion as Exhibit 25. Specifically Plaintiff objects to all assertions made regarding the existence or non existence of a “formal” compensation agreement from pages 4 12 of Quanta’s Motion for Summary Judgment because Quanta recently produced bates numbers Quanta0062672 Quanta006420, attached as ExhibitA to this Motion, that jarove without any doubt that a compensation agreement was for Patrid« ney was ralified by the Compensation Conmitiee and Board of Directors of Quanta and thus John Colson outright lied to Plaintiff about the status or existence of this document and enforceable agreement. Colson’s lies continue into his Deposition dated December 5, 2013 where he testifies as to Devaney’s employment contract and the business cards he was issued from 2004 up and to 2011 when Quanta moved it’s offices: OLSON CAN REMEMBER ANY DETAIL OF THE EVANEY ONTRACT APPROVED BY THE OARDIN ARCH DAYS AFTER EVANEY JOINED AND HE WAS TO BE THE HIGHEST PAID EMPLOY EE INTHE COMPANY AFTER OLSON THA AND 80:1 E NEVER TESTIFIES HE ACTUALLY PRESENTED TH OARD PPROVED OFFER TO EVANEY ATER AT HE TESTIFIES HE UANTA GAVE EVANEY TWO DIFFERENT BUSINESS CARDS SAYING EVANEY IS RESIDENT OF UANTA OVERNMENT OLUTIONS AND UANTA NTERNATIONAL HEN AT 8:25 HE SAYS EVANEY ISTHE ONLY PRESIDENT WHO WAS NOT A EMPLOYEE WITH STOCK OPTIONS BENEFITS AND INSURANCE JUST LIKE THE TERMS OF THE APPROVED MPLOYMENT ONTRACT THAT OLSON UANTA NEVER DELIVERED TO EVANEY TD HE TESTIFIES THAT HE REDUCED THE FEE PAID A FEE THAT WAS LREADY LESS THAN THE OARD APPROVED CONTRACT THAT WAS NEVER DELIVERED TD 91:8TO ID YOU GO TO THE BOARD TO GET THESE TO BASICALLY HAVE EVANEY NAMED AS PRESIDENT OF UANTA NTERNATIONAL AND UANTA OVERNMENT OLUTIONS HO MADE THE DECISION OU ALONE E WAS NOT MADE PRESIDENT IN THE CAPACITY THAT AN EMPLOYEE WOULD BEA PRESIDENT OF THOSE DIVISIONS ND M NOT TRYING TO TRICK YOU ON THAT DO UNDERSTAND YOUR POSITION KAY UI SOMEBODY HAD TO MAKE THE DECISION THAT HE CAN BE CALLED PRESIDENT OF THESE TWO COMPANIES ASITYOU WASIT YOU ALONE OR ANYONE ELSE EWITH AS TOLD YOU BEFORE THIS LONG DISCUSSION WITH THE GENERAL, COUNSELAND EVANEY LLRIGHT OTHEGENERAL COUNSEL WAS ALSO INVOLVED ND M SURE THERE ISN BUT LL CONFIRM WITH YOU HERES NO DOCUMENT IS THERE THAT SETS OUT SOME SORT OF A DISTINCTION BETWEEN HIS TITLE AS PRESIDENT A SOMEONE ELSES TITLE AS PRESIDENT FOR A DIFFERENT DIVISION OF THE COMPANY DONT KNOW HERE MAY WELLBE BUT DONT KNOW OU CANT THINK OF ANY THING LIKE THAT HERE WAS CERTAINLY DISCUSSIONS BUT DONT KNOW IF THERE DOCUMENTS MTALKING ABOUT DOCUMENTS KNOW ID YOU GET MEAN DO YOU RECALL GETTING ANY KIND OF AN OPINION FROM THE GENERAL COUNSEL KAY EFENDANTS OTION HOULD ISMISSED WITH REJUDIC Plaintiff's motion for summary judgment should be dismissed with prejudice for Defendant's knowingly false statements central to this case. (Chambers v. NASCO(S501 USS. 32, 43 (1991) OVERVIEW OF CASE AND SUMMARY OF RESPONSE UANTA USINESS DEL VERLY COMPLEX AND ILLUSORY AND IDDEN At the core of this case is how Defendant’s unlawful acts and reasonably relied upon. inducements to Plaintiff to establish, manage, and execute two, unheralded and unique, enterprise wide businesses that focused and leveraged the Operating Units toward domestic and foreign govemment contracts (Quanta Govemment Solutions) and intemational commercial contracts (Quanta Intemational Ltd.) and the concerted conduct and unethical business schemes of the Quanta Defendants to cut Plaintiff Patrick Devaney out of his rightful share of the substantial revenue, compensation and equity share commensurate with the business that he independently brought to the Quanta companies and shareholders, including the CEO and Chairman John Colson. Defendant Quanta Services is an overly complex, highly sophisticated, accounting driven holding company with few peers among other issuers listed on the New Y ork Stock Exchange. Quanta Services, Inc. is not a construction company, it is a holding company whose assets consist primarily of future and intangible assets such as goodwill” and backlog allowing Quanta to book endless series of accounting “impairments” and revenue swaps through its operating companies (“OpCo”) cash and share of stock in its federation of undistinguishable construction companies. The assets that one might consider part of a onstruction company, such as equipment, trucks, tools, fabrication facilities, construction workers, and engineers are found at the OpCo level Exhibit Quanta OpCo financial details are not disclosed to investors or general executive leadership and comprise Quanta’s most closely guarded information by its highest management. (Exhibit and (Exhibit In fact, on September 21, 2010, Quanta Plaintiff incorporates the factual assertions made in its responsive motions and exhibits to Quanta’s Motion for Summary Judgment but does not incorporate the statements subject of Defendants’ Motion to Strike Devaney Affidavit in Affidavit Paragraphs 10, 12, 15, 19, 22, 25, 28, 29 and 30. Plaintiff concedes the striking of these specifically requested statements and therefore the motions to strike are now moot. The incorporated motions and exhibits consist of the following documents: Plaintiff’ s Response in Opposition to Defendant’ s Motion for Summary Judgment (Image 5976039), Plaintiffs Surreply in Opposition to Defendants Motion for Summary Judgment (Image 59833810), Supplement to Surreply to Defendants Motion for Summary Judgment (Image 59904261), Plaintiff’ s Motion For Reconsideration of Order Granting Defendant’s Motion to Strike Devaney Affidavit (Image 59932327), Plaintiffs Motion for Emergency Hearing (Image 599988888) and Order Granting Plaintiffs’ Motion for Remand. Gilmore, Vanessa 4:14cv US District Court Southem District of Texas, attached hereto as Exhibit B, all subject to newly discovered evidence. See Exhibit OpCo Equipment for Irby, Potelco, and Alteck Line Contractor sub entity in South Africa See Exhibit Hiding OpCo data. Scott Bames worked for Jim O’ Neil in the Intemal Audit group See Exhibit Quanta reply letter to the SEC dated December 11, 2008, Quanta’s CODM (chief operating accountant explicitly admitted to Plaintiff that financial information was maintained by Quanta but only certain special executives had access to this information. (Exhibit ). Quanta conducts dozens of intemal self dealing transactions and arms lengths transactions generally characterized as reorganization (Exhibit , consolidation, asset transfers, liability transfers, and intemal mergers (aka “goodwill impairments”) Quanta simply dump performing OpCo’s into “super OpCo’s” such as PAR Electric and Potelco and (Exhibit Specific to Plaintiff and his OpCo’s QIL and QGS, information and revenue that originated with QGS for the Chad project, the Point Loma poject, the South African projects, the Trinidad Gas Company project, etc., was either completely hidden and diverted, or it was booked without Plaintiff’s knowledge or consent as Incoming Revenue to QIL, and outbound Cost of Goods Sold to QIL without any mark up or incentive. An example of Quanta's complex maize of intercompany transfers and deal making between OpCo presidents, xhibit shows what occurred in South Africa. One Quanta company, here it's Quanta Technology, expects to be paid by another Quanta company who controls the bigger project. However, in the prior years when there_were no ina decision maker) is John Colson, the Company’s Chief Executive Officer.... The Company currently has 26 operating units that are separately managed on an entity entity basis. Although the Company has recently begun to aggregate certain measures by type of work and certain presidents and vice presidents have been named to oversee companies with similar operations, major decisions involving budgets, capital expenditures, local management, accounting, business development, contracts, etc. are all discussed and resolved on an entity —_ entity basis with Mr. Colson See Exhibit Company Profile. At the time Plaintiff joined Quanta, they faced their most challenging operating environment in decades, and directed Investor's to invest in Quanta’s future...Quanta Govemment Solutions, it’s strategic and long term initiative. See Exhibit EPG Division 2005. PAR and POTELCO revenues are a result of intemal mergers. For example, according to (Exhibit ) Quanta Telephone Directory May08, Computapole, Harker & Harker, Mustang Line Contractors, Network Electric, Riggin & Diggin, and Union Power (founding Quanta company), all OpCo’s, merged into PARas they became non performing OpCo’s. See Exhibit Novosel Email UAE particular Country or with a particular Customer to pay the virtual revenue produced between sister entities, Colson would make whole (here, Quanta Technology) out of his budget 10 11 (Exhibit Another example is the QIL Pakistan project (Exhibit Quanta’s accountants are independently trying to reallocate revenue to avoid UAE taxation. They also show booked phantom revenue produced by Quanta Technology (Quanta Tech IC) and PAR (PAR IC) in the amount of $85,651 that was never billed to the customer, and was outside the Price and scope of the original contract with NOOR Financial Group, a 50% venture partner with the Karachi Electric Supply Company. The rest of the OpCo’s (Colson testified Quanta had 26 OpCo’s (Depo 136:4 by routinely bid against each other for the same jobs with the same Utility customers. One OpCo would act as _ stalking horse for the other, or purposely refrain from bidding in order to defer to another subsidiary Exhibi 12" the net effect of which would ultimately hide revenue rightfully produced by Plaintiff's OpCo’s QIL and QGS. (See Exhibit xxx . Quanta maintained no “chinese wall” for this activity, in fact it was the opposite effect owing to the Quanta Management System (QMS). QMS was Quanta’s Sarbanes Oxley compliance program. Control 2.2.7 states that certain bids must be reviewed by Division Presidents, particularly multi year outsource services contracts and storm restoration contracts. Two, to as See Exhibit Corp Expenses from 2011 10 k, taken from Quanta’s annual report for fiscal year 2011 submitted to the SEC.Corporate and Unallocated expenses is, essentially, the cost of running Quanta. Net profits from the OpCo’s, after fully expensing their costs...and THEIR subsidiary costs...makes it way to Quanta Services, Inc. holding company as Operating Income. From there, Quanta deducts these Corporate and Unallocated expenses. See Exhibit AbuDhabi Branch Acct. Here, Quanta has re opened its prior year books and records for QIL. and QGS in an effort to create a history that did not exist in order to submits a financial report to the UAE financial regulators for the QIL office in Abu Dhabi. This was prompted by a $140k project won by Quanta subsidiary MEARS Group in August 2011. See Exhibit Example Quanta Bid Logs many as five, Quanta subsidiary 2.2.7 control documents would make their way, on the same job, to the Division President's desk for approval. He say all the prices, and profits, etc., BEFORE it wes submitted to the Customer. For certain work, smart grid and telecommunications work in particular, Quanta management transfers and shares resources 13, between OpCo’s such as equipment and personnel Exhibit Interestingly, some of Quanta’s closed or defunct businesses reemerge years later with anew name or different name/brand. Quanta would dump non performing OpCo’s into other OpCo’s, but the Quanta legal department maintained the State registration filings thus preserving the identity sans the people, equipment, customers, etc. that make up the assets and income of the defunct company. On an ad hoc basis, any other Quanta company seemingly pulled the NAME out of the Legal grab _, and filed a “doing business as” in another State. For example, Quanta’s VCI subsidiary was purchased by Quanta on March 9, 1999 “ Bradford Bros was purchased on October 11, 2001. Both companies were listed in the Quanta Annual report up to 2001. Then, from 2002 to 2007, they were not. In the 2008 annual report, both companies magically re emerged. Through its aggressive accounting tactics, and complex maize of intercompany transfers, Quanta has thrived on compartmenting information by and between its subsidiaries vertically and horizontally to investors and ousted leadership executives (ie. Plaintiff) creating ambiguity and double talk on the road to what it is today. Adding to the complexity of compiling its consolidated financial statements, Quanta had to sort through 27 or more See Exhibit Example Quanta Smart Grid. CMI services was the main recipient and primary “hands on” contractor for dozens of jobs bid and won by affiliated Quanta companies which had little or no smart grid capabilities. Quanta’s annual report to shareholders filed with the SEC and available for public viewing, in years 1999 through 2008 are incorporated herein by reference. different accounting systems Exhibit 'Sthroughout its federation of companies. This revenue hocus pocus is central to fraud and misrepresentations made to Plaintiff in determining his rightful compensation shares. Quanta’s intent was and is clear...keep outsiders, including Plaintiff, in the Quanta’s subsidiary expenses are often separated from underlying expenses associated with project contracts, the lifeblood of the subsidiary operating companies. Quanta 17 management, in ad hoc fashion, selects which OpCo conducts certain projects Exhibit while related marketing and administrative expenses are diluted across the Quanta federation Exhibit 18 engineered so certain OpCo presidents can eam higher bonuses while some (Plaintiff) were black balled and simply preyed upon for revenue work. Tt wes within this unorthodox corporate environment that Plaintiff succeeded and delivered what promised to Defendants. Despite the difficulties, from 2004 until 2012, Plaintiff was a significant catalyst in Quanta’s transition from humble Kansas City beginnings to Wall Street to its 2009 S&P 500 index inclusion. he harm Quanta imposed knowingly and recklessly on Plaintiff is egregious and straightforward when viewed in totality. LAINTIFF ACKGROUND Plaintiffs professional background is straightforward. He served in the US Navy on See Exhibit : 27 Accounting Systems One challenge for Plaintiff and his team was to align Quanta to Federal Acquisition Regulations which, in many instances, were in direct opposition to Quanta’s business model within its federation. See Exhibit IRBY 2004 Balance Sheet and Accountants’ Review Report at page 7, NOTE 6: “The accompanying financial statements include transactions with the Parent Company and other affiliated entities. The Parent Company’s management has discretionary authority over the allocation of certain expenses between companies and, therefore, has the ability to influence the operating results of the Company.” See Exhibit See “Chad Contract” Quanta submits a QIL bid, later to be reengineered by the accountants despite the contract being executed between QIL and KBR. active duty from 1987 until 1992, and again from 2001 until 2003. In between, and after these dates, he served in the US Navy Reserve until 2011. His civilian occupation started with Wall Street investment bank, Kidder Peabody & Co. in 1983 as a NASD (now FINRA) registered representativeKidder Peabody & Co was sold to GE Capital in 1986. After leaving military activity duty in 1992, he registered with the NASD and briefly rejoined his former Kidder Peabody & Co. colleagues at Canturbury Capitalin Newport Beach, CA. he started Trident Ventures and moved to Kuwait. In Kuwait, he joined boutique investment management company who _ clients included the Govemment of Kuwait, the Govemment of Abu Dhabi, and several wealthy families in the region where he oversaw a multi billion portfolio of real estate, publicly traded stocks, and private equity investments He created over 70 joint ventures with financial services firms including Jones Lang LaSalle, the Tiger Fund mn by Julian Robertson, Intemet Capital Group, and Anthem Venture Partners. Plaintiff's regional insights, particulady his knowledge of the human terrain, were helpful when, in September 2001, he was recalled to active duty and served until August 2003. From August to December 2003 he worked in Kuwait to re establish his businesses, left dormant for more than two years. He was on track for success, including ownership in one of the largest sporting goods chains in the iddle t and the first concept retail store for Adidas in Kuwait. He owned part of a general contracting and cement construction company. DHL Logistics was a client, where he advised and helped establish landing rights and logistical services into Afghanistan and Irag. He was retained by Iraqi families, in the north and south,to develop oil & gas and telecommumication assets they each owned. Quanta approached Plaintiff in December 2003, while he was in Kuwait, and induced him to join Quanta in January 2004 Defendants wanted to leverage his US and foreign govemment contacts to open doors to a new potential revenue streams Quanta desired. At the least, Quanta needed to deflect criticism from its own shortcomings as a management team to that point OLSON ACKGROUND ndant John Colson joined PAR Electrical in the early 1970's after serving out his draft obligation. He became President of PAR Electrical Contractors, and it’s largest shareholder. In 1997 he migrated from Kansas City, MO to Houston in 1997, where he founded Quanta Services (“Quanta”) along with CFO James Haddox, Treasurer Nick Grindstaff, and investor Vincent Foster of Mainstreet Capital. Haddox and Foster were Arthur Andersen’ alumni, and veterans of financial engineering business combinations flipped to investors (i.e. Quanta Services and US Concrete Colson and Foster founded and sat on defunct US Concrete board of directors until its bankruptcy). Colson sold his PAR Electrical to Quanta for $35 million. The owners of Potelco, Union Power, and Trans Tech each sold their companies for $12 million, $22 million, and $18 million respectively, in 1997 at Quanta’s initial public offering of stock on the New York Stock Exchange. Then Quanta bought 85 more, similar companies serving the telecommunication, electric power utility and natural gas utility customers across the United States. The companies Quanta purchased served and shared the same pool of mullti state power generation and telecom industry customers, albe in diverse geographic locations. Quanta’s subsidiaries generally provide “equipped” labor to maintenance, repair, and upgrade contracts where the Utility provides the materials. The former Arthur Andersen was part of the “Big Five” accounting firms, who voluntarily surrendered it’s licenses to practice as a certified public accountant in 2002. The average price Quanta paid for each of these subsequent companies was under $15 million”, Quanta paid for these subsidiaries using a combination of stock and cash. Quanta became the conduit for “mom and pop” construction companies seeking to exit their family business, and benefiting from purchasing revenues and cash flow at a discount to the eamings multiple that it’s stock traded at. Jim O'Neil” joined Quanta in August 1999, and was singularly responsible to integrate over 85 acquired companies into Quanta’s public accounting and financial disclosure system (aka Quanta Management System or QMS). O'Neil reported directly to the Quanta Board of Directors, AuditCommittee. QUANTA’S BOARD APPROVES PLAINTIFF’S STRATEGIC PLAN PLAINTIFF'S EMPLOYMENT COMPENSATION AGREEMENT In January 2004, when Plaintiff joined, Quanta’s stock market value was $840 million. First Reserve Corporation, a private equity firm, owned 34% and occupied two board seats. 18 months previous, First Reserve bailed out Quanta and its incumbent management team, froma takeover attempt. The takeover attempt, caused in part,by the collapse of Quanta’ s stock price owing to a $640 million charge to goodwill amounting to nearly as much as the entire price paid for all of Quanta’s acquisitions to that point. Across the federation, Quanta companies eamed less than $10 million in US Govemment revenues, and $15 million in foreign revenue” Quanta’s SEC filings incorporated herein by reference Jim O’Neil came to Quanta by way of a 20yr career at Halliburton where he worked on Off shore business development, including in Nigeria. By the end of 2011, Quanta had eamed over $300 million in US Govemment revenues in the previous 3 years. In years 2011, 2010, and 2009 Quanta eamed $535 million, $256.1 million, and $112.2 million, respectively, from Intemational operations. Quanta’s market value at December 31, 2011 was $4.6 billion Quanta desired to increase its customer base outside its domestic utility customers into US govemment Exhibit 3 and foreign govemment. customers. Plaintiff made a presentation to the Board of Directors on March 17, 2004 (Exhibit 24 ‘The Quanta board endeavored to make Plaintiff it’s second highest paid executive, second only to John Colson, in March 2004 via Board resolution Quanta’s compensation committee, and outside consultant Emst and Young, vetted the employment contract. The contract considered that Devaney would run a $1 billion business located overseas in dangerous locations, unlike any 25 other venture in Quanta’s history Exhibit Quanta had knowledge of the complexities and dangers facing Plaintiff. The contract was never delivered to Devaney, despite the Board’s resolution and written intentionsThe contract was ap proved after Quanta was informed that they were unsuccessful in the Iraq Reconstruction bid. Instead, Colson hid it, and preferred to subsume Plaintiff's knowledge and contacts while Plaintiff delivered in good faith unaware of the contracts existence. Plaintiff became aware of its existence when it was produced in this case on (DATE when PRODUCTION 011 was sent by SUSMAN), after Plaintiffs Deposition which Defendant substantially relies on for the present motion. LAINTIFF MBARKS ON YEAR OPERATIONAL AND ADMINISTRATIVE SET UP OF UANTA S INTERNATIONAL AND GOVERNMENT BUSINESS Exhibit Traq Bid From inception of the relationship, Quanta’s CEO and Chairman of the Board is representing Devaney as President of Quanta Govemment Solutions, Inc. “confident” he can managed $1 billion in US Govemment contracting. Exhibit QGS_ BoD Mig Exhibit Devaney Contract Quanta knew what it was going to take to build a billion dollar intemational and govemment construction business. They already paid Emst & Y oung over a million dollars to develop a 590 individual tasks list that could be completed in six months, and would conclude Quanta’s intemational and govemment construction business certified and fully compliant with EVERY US Statute that Quanta would be operating under, including FCPA, 26 Sarbanes Oxley, FAR, DFAR, CASand the Department of Labor( Exhibit Colson induced Plaintiff to develop detailed branch and sequel plans the would allow Quanta to succeed, based on the Emst and Y oung frameworkPlaintiff informed Colson every step of the way, relying on his hand shake to eventually come through on his promises Quanta and Colson had effective control over the process, timeline and financial resources needed to execute and when issued amived, Colson encouraged patience and continued optimism. UANTA REASURER ELIVERSTHE IRST USINESS FORMA April 7, 2004, the Quanta Treasurer delivered to Plaintiff it’s Company template pro forma for Devaney to work from Exhibit 2"Together with other stakeholders of QGS at Quanta, Plaintiff developed a sequel strategic plan for Colson to make decisions on “next steps”, based on what was presented to the Board a few weeks earlierand presented it on April to Colson and Quanta’s CFO James Haddox.From this meeting and Colson’s decision, hiring decisions were made for Ginger James and an investment bank advisory firm, FMI. 29 Exhibit Colson informs the Board of what is happening.( Exhibit Exhibit QGS Set Up 590 Tasks Exhibit Treasury Pro forma: Exhibit Colson selects a comprehensive approach, and Quanta takes actions based on this decision Defendants, try dilute these facts and infer that certain references to Plaintiff in a consulting role, or that “consultant” is a dirty word. Quanta regularly paid consultants to help manage s holding company investment business. It hired Emst and Young , and other consultants, to create a roadmap for establishment of the intemational and govemment business at a cost of nearly $1.7million charged to Quanta Govemment Solutions, Inc ( Exhibit 30 It hired McKinsey & Company to establish it’s renewables business in 2008, and converted McKinsey consultant Peter Lorenz and Joe Avila Unlike these other pursuits, Plaintiff’ s was the largest and most complex, and it paid off. ...for Quanta. Plaintiffs efforts were highly coordinated between January 2004 and the end of the “set up” period culminating with the approval of the final business plan and performance compensation model (Exhibit 3! and the hiring of additional staff to bid work and open Quanta Intemational office in Dubai. During this period, Plaintiff documented 4,969 email conversations Exhibit 2 nd dozens of conference calls with Colson and the functional department heads and leadership of Quanta including: 560 emails to Colson 103 emails to the Board of Directors, Audit Committee representative 236 emails to Quanta’s CFO emails to the General Counsel’s (Legal) office Exhibit May 20, 2004 Board Meeting Exhibit QGS 2004 6mos: Quanta accountants accrued to QGS $1.4 million in professional fees associated with the three month Iraq Bid. These contracts were put in place before Plaintiff arrived. Plaintiff eamed $84,000 for the same period. Exhibit Perf Comp Plan Milestones: Indicative planning process on the road to the Performance Compensation Plan, and the final “upload” of the related budget into the Quanta accounting system. Exhibit Devaney email 04 06.pdf 624 emails to Quanta’ s other Division Presidents 976 emails to Quanta’s OpCO presidents to coordinate opportunities for them to bid ACT ISSUES EXIST ON LAINTIFFS CLAIMS In attacking Devaney’s fraud negligent misrepresentation, and promissory estoppel claims, Quanta’s Motion does ___ challenge the falsity of the misrepresentations that that were made to Devaney. Rather, Quan argues that Devaney cannot show reliance on such misrepresentations because they are too vague or uncertain. There are two fundamental problems with that argument. Colson Knowingly Makes False Representations Which Defendant Relies on for Their Motio Plaintiff took Swom Deposition of John Colson on December 5, 2013 Quanta Board of Director's adopted Code of Ethics (2003 and all subsequent revisions) incorporated herein by reference: Compliance with this code is Mandatory for all employees Compliance with applicable govemment and self regulatory organization laws, rules and regulations Accountability for compliance with this Code Iv. No conflicts of interest Anti trust Compliance vi. Non disclosure of Confidential Information Lying under oath: (Colson Dep) at 12:1 Colson approved a sole source contract for All About Travel related to Quanta’s Travel Policy initiated during Project LEAP: Q....just the name of the former wife relative to the 1993 divorce? A Marka, M Q And did she keep Colson as the name? Iv. A She's remarried. Q What is her new name? A I really don't know. Exhibit XX (LEAP Newsletter) and Exhibit LEAP Files) : Colson tells Ginger James, who conducted the procurement and prepared the solicitationfor multiple travel agencies who answered: Q: [have lots of old project leap. . information A: Pitch It See Colson Depo Ex 1 through Ex 8: Marka Barker is owner and exclusive travel agent to Quanta Services’ 18,000 employees through her firm All About Travel. Simple Questions Regarding Quanta’s Organizational Chart id. 25:10 Q. You wer the CEO, so that's the top of the heap of Quanta and he would report directly to you, correct? A. Not forthe whole period, but yes, most of the period. Q. Actually, and let's pin that down. At what point in time was it when Mr. Devaney would report directly to someone else? Iv. A. When Jim O'Neil took over the direct reports, the presidents of the operating units began to report to him instead of to the CEO. That was probably 2008 or nine. See Colson Depo Ex.9 Ex.10 Devaney is direct report to Colson in 2009, as disclosed to Quanta’s auditor Colson Trips with Devaney id 26: 19 Q. Okay. And you still made trips with Patrick Devaney back in the 2010 timeframe, correct? A. I don't recall any, but there might have been. I don't recall. See Colson Depo Ex. 11 to 15 Trips Colson took with Devaney. Samsung meeting in Seoul produced a $150 million Atwell Island Solar Installation Project forQuanta in 2011. Iraqel Deal id 28: 10 Q._ And the southem Iraq telephone maintenance contract, did that actually go through? A. No. Q. And what was the proposed size of that, if you recall? Iv. A. Say again. What do you recall was the dolla range of dollar values of that potential contract? A. I don't think we ever got to the point that we See Colson Depo Ex. 16 Quanta committed $50 million to the Iraq telephone contract, a commitment that had to be vetted and approved the Quanta’s board of directors in advance according to the Sarbaines Oxley certified Quanta Management System. Kuwait Deal id 155:19 156:6 Colson discloses Kuwait’s classified information to investor in Quanta stock Q. Did you have any communications with Mr. Grounds about the Kuwait deal? A. Might have, yes. Probably did. Q. What would have what types of communications? Iv. A. Tomisalong _ time personal friend of mine andhe owns about 10 or 15, maybe 20 shares of Quanta stock, so he is always reading on the web page of everything that's going on, jabbing me in a joking sort of way about why you did this and why I did that. You know, were friends. He called I know him very well how many people are working on Katrina, you know, thosekinds of questions. See Colson Depo Ex. 17 Colson tries to pin the “wrong doing” on the Agent, when Quanta was the one trying to skirt the Kuwait Central Tenders Committee process Kuwait Deal Quanta wrote the RFP 35: 23 to 36:6 When you say T'm going back to your earlier testimony. When you say they violated rules of procurement, do you know what rules you're refering to? A. The apparently in Kuwait they have a process that is required to go through where you parliament okays a bid of that size going out and the Minister of Electricity sends the bid out (to Central Tenders Committee) iv. Q. Allright. Any other niles you can think of? A. No. vi. See Colso Depo Ex. 18 20: Quanta drafted and provided the Govemment of Kuwait a draft RFP which was slightly modified and published by the Central Tenders Committee, which Colson is referring to. Colson testifies a number of Quanta companies “shut down” id 61: 24 to 63:15 Colson’s testimony onflicts with “goodwill impairment” double talk 1d 112: 20. Contradicts Ex. 13 from Samsung addressed to Patrick Devaney, President of Quanta Govemment Solutions, Inc. Later, at Id: 115: 8 25 Colson testifies Devaney as also President, Quanta Intemational to a foreign govemment (Saudi Arabia). See Colso Dep. Ex. 21 First, the legal standard that Quanta relies is incomect. Relying largely on cases that predate the law as clarified by the Grant Thornton LLP v. Prospect High Income Fund case (314 S.W.2d 913 (Tex. 2010)), Quanta claims that a plaintiff suing for fraud and negligent misrepresentation must show that reliance on the alleged promises must be both reasonable and justified° In fact, there is no reasonable in the standard. The proper standard is actual and justifiable reliance. Here, he actual reliance by Devaney is evident from his affidavit and the other attached evidence and can hardly be challenged from a summary judgment standpoint In measuring justifiable reliance , the Texas Supreme Court and Fifth Circuit frame the proper inquiry as being whether, given a fraud plaintiff's individual Quanta ignores clear, long standing precedent that makes clear the standard is “actual and justified reliance.” See, eg., Ernst & Young, L.LP. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001). characteristics, abilities, and appreciation of facts and circumstances at or before the time of the alleged fraud[,] it is extremely unlikely that there is actual reliance on the plaintiff's part. (emphasis added). Grant Thornton LLP v. Prospect High Income Fund case, 314 S.W.2d 913, 923 (Tex. 2010) (quoting from Haralson v. E.F. Hutton Group, Inc., 919 F.2d 1014, 1026 (5 Cir. 1990) . Given the multiple promises and business model that the evidence shows support Devaney’ s reliance, and the evidence that Quanta not only agreed to implement the model so as to provide Devaney witha share of the carry percentage but als o approved annual budgets for QIL and QGS to carry out the plan, the justifiable reliance element is met as well The second problem with Quanta’s argument is the suggestion that the false promises made by the Quanta Defendants are not sufficiently specific to support the formation of a binding contract and hence also cannot support the tort claims. However, Quanta relies on inapplicable cases that deal with either employment — will or express/implied contract claims as support If fraud claims had to be based on promises that necessarily must support the existence of an enforceable contract, the doctrine of fraud would be subsumed within contract law itis not. See, eg., Formosa Plastics Corp. USA v. Presidio Eng’rs, 960 S.W.2d 41, 46 47 (Tex. 1998) (The Texas Supreme Court has repeatedly recognized that a fraud claim can be based on a promise made with no intention of performing, imespective of whether the promise is later subsumed within a contract. Fed. Land Bank Ass’n v. Sloane, 825 S.W.2d 9, 442 (Tex. 1991) (recognizing duty of reasonable care in providing information (i.e, tort of misrepresentation) is separate and distinct from duties under a contract).Here, to cut to the chase, if someone were to promise the other an equity or similar interest in the profits to a new business that is being developed, and the promissee performs in reliance on the promise, the promissee is not left without recourse merely because the specific amount of equity or carried interest was never set in stone. The promise of equity or quasi equity (in our case a share of a ecific carry percentage reserved for the new company) is sufficiently specific to support both actual and justifiable reliance (and reasonable reliance as well for that matter). See, eg Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432 (Tex. 1986) (allowing recovery for damages where employer promised bonus to retain employee's service, despite contract never being formalized Moreover, Texas courts have unifonmly treated the issue of justifiable reliance as a question for the factfinder. In re Enron Corp. Securities, Derivative & ERISA Litigation, Civ. No. H 0481, 2010 WL 9077875, at *20 (S.D. Tex. Jan. 19, 2010) (mem. op.) (citing 1001 McKinney Lid. v. Credit Suisse First Boston Mortg. Capital, 192 S.W.3d 20, 30 (Tex. ApHouston [14th Dist] 2005, pet. denied) (citing Coston v. Bank of Malvern, 991 F.2d 257, 260 (5th Cir. 1993); Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001)). For that reason alone summary judgment should be denied as the question of justifiable reliance is a quintessential question of fact. Quanta further asserts that laintiffs ave vidence to support claims for ortiou