Preview
FILED
DALLAS COUNTY
3/6/2014 3:23:37 PM
GARY FITZSIMMONS
DISTRICT CLERK
CAUSE NO. DC-11-04489
TOM KARTSOTIS, § IN THE DISTRICT COURT
§
Plaintiff / Counter-Defendant, §
§
v. § 134th JUDICIAL DISTRICT
§
CLB CAPITAL PARTNERS, LP, CLB §
CAPITAL PARTNERS, GP, LLC, §
RICHARD BLOCH, INDIVIDUALLY §
AND AS TRUSTEE OF THE §
RICHARD AND NANCY BLOCH §
FAMILY TRUST, and NANCY §
BLOCH, AS TRUSTEE OF THE §
RICHARD AND NANCY BLOCH §
FAMILY TRUST, §
§
Defendants / Counter-Plaintiffs. § DALLAS COUNTY, TEXAS
COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED
COUNTERCLAIM
Defendants/Counter-Plaintiffs Richard Bloch, Individually and as a Trustee of The
Richard and Nancy Bloch Family Trust (“Trust”), and Nancy Bloch, as a Trustee of the Trust
(collectively, the “Blochs”) file this Motion for Leave to File Fifth Amended Counterclaim and,
in support thereof, would respectfully show the Court as follows:
The Blochs respectfully request that the Court grant them leave to file their Fifth
Amended Counterclaim against Plaintiff/Counter-Defendant Tom Kartsotis (“Kartsotis”). The
Blochs seek to assert an additional cause of action against Mr. Kartsotis for his knowing
participation in non-party Winstead, P.C.’s (“Winstead”) breaches of fiduciary duty to the
Blochs. Mr. Kartsotis, either personally or through his agents, instructed Winstead to open an
engagement adverse to the Blochs with respect to the Restructure despite knowing that Winstead
represented the Blochs in that transaction. Mr. Kartsotis has also directed Winstead to keep
COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE
FIFTH AMENDED COUNTERCLAIM Page 1
confidences from the Blochs regarding its role in the Restructure. Winstead’s compliance with
those instructions violated Winstead’s fiduciary duties to the Blochs, which Mr. Kartsotis knew.
The Blochs seek leave to add a single claim based on these facts: Mr. Kartsotis’ knowing
participation in a breach of fiduciary duty. The facts are largely undisputed; indeed Mr.
Kartsotis’ attorney, Lynda Zimmerman, has confirmed the essential facts in deposition testimony
and affidavits. The Court should grant the Blochs leave to amend to assert this claim because Mr.
Kartsotis cannot claim surprise and will suffer no undue prejudice if the amendment is allowed.
The amendment is based largely on the testimony of Ms. Zimmerman,1 who has confirmed the
essential facts of the claim. Accordingly, the Blochs respectfully request that the Court grant
leave to file their Fifth Amended Counterclaim.
Rule 63 states that a party may amend its pleadings more than seven days before trial so
long as the amendment does not “operate as a surprise to the opposite party.” TEX. R. CIV. P. 63.
When a court enters a scheduling order setting a deadline for amendments, the court-ordered
deadline, and not Rule 63’s seven-day deadline, controls. See In re Estate of Henry, 250 S.W.3d
518, 526 (Tex. App.—Dallas 2008, no pet.). However, the Court retains wide discretion to
manage its docket, including the authority to modify its orders to prevent a manifest injustice. Id.
“A court may not refuse a trial amendment unless (1) the opposing party presents evidence of
surprise or prejudice, or (2) the amendment asserts a new cause of action or defense, and thus is
prejudicial on its face.” State Bar of Tex. v. Kilpatrick, 874 S.W.2d 656, 658 (Tex. 1994);2 see
also Burrow v. Arce, 997 S.W.2d 229, 246 (Tex. 1999).
1
Ms. Zimmerman was Mr. Kartsotis’ agent at all times relevant. It is axiomatic that an agent’s acts and knowledge
that are within the scope of the agent’s authority are imputed to the principal.Biggs v. U.S. Fire Ins. Co., 611
S.W.2d 624, 629 (Tex. 1981) (acts); La Sara Grain Co. v. First Nat’l Bank of Mercedes, 673 S.W.2d 558, 563
(knowledge).
2
Though Kilpatrick dealt with a post-trial amendment, the Dallas Court of Appeals has cited post-trial-amendment
cases in resolving disputes as to pre-trial amendments. See, e.g., Graham v. Adesa Tex., Inc., 145 S.W.3d 769, 775-
COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE
FIFTH AMENDED COUNTERCLAIM Page 2
The burden of showing surprise or prejudice rests on the party resisting the amendment.
Kilpatrick, 874 S.W.2d at 658. Even if the resisting party carries its burden, the Court retains
discretion to allow the amendment. Id. (citing Hardin v. Hardin, 597 S.W.2d 347, 349-50 (Tex.
1980)). The addition of a cause of action that is legally and factually related to already-existing
claims is less likely to “impair” the opposing party’s ability to defend against the claims. Id.
Likewise, a party that receives “adequate notice and opportunity to respond” to the amended
pleading is less likely to be able to carry its burden of proving surprise.
The deadline to file amended pleadings under the most recent scheduling order was July
6, 2012. The current trial setting is April 7, 2014. Mr. Kartsotis cannot claim that the amendment
creates any surprise. The essential facts of the new claim have been admitted to by Ms.
Zimmerman in her deposition in this lawsuit and in her testimony as a corporate representative in
a related lawsuit. In addition, she has admitted to knowingly participating in Winstead’s breaches
of fiduciary duty in at least one affidavit. Ms. Zimmerman’s knowledge and actions are imputed
to Mr. Kartsotis. Floyd v. Hefner, 556 F. Supp. 2d 617, 655 (S.D. Tex. 2008) (applying Texas
law).
In addition, Mr. Kartsotis cannot show any undue prejudice. The additional claim stems
from the Restructure transaction, which is already at issue in this case. See Kilpatrick, 874
S.W.2d at 658 (noting that factually and legally related claim “did not impair” party’s ability to
defend). Further, Mr. Kartsotis’ own actions—including instructing Winstead to conceal its
advocacy against its own clients, the Blochs—are the cause of any delay. Further, this
amendment is requested approximately one month before the current trial setting, leaving Mr.
76 (Tex. App.—Dallas 2004, pet. denied) (citing Greenlagh v. Serv. Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex.
1990)). The same standards govern pre-trial and post-trial amendments. See Greenlagh, 787 S.W.2d at 939.
COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE
FIFTH AMENDED COUNTERCLAIM Page 3
Kartsotis with ample notice.3 In re Estate of Henry, 250 S.W.3d at 527 (finding that amended
pleading filed ten days before trial provided adequate notice). To the extent that prejudice could
be claimed, the Blochs do not oppose a continuance of the current trial setting to enable Mr.
Kartsotis to respond to the Blochs’ new claim. No new parties are added, and the amendment
will not occasion delay or surprise.
Even if Mr. Kartsotis could introduce some evidence of surprise or prejudice, the Court
should nevertheless exercise its discretion to allow the amendment. See Kilpatrick, 874 S.W.2d
at 658. Mr. Kartsotis took steps (and continues to do so) to conceal the nature and extent of his
tortious activity, which hampered the Blochs’ ability to investigate their injury. Mr. Kartsotis
should not be seen to profit from his duplicitous behavior of asking a law firm to conspire
secretly against its own client.
WHEREFORE, PREMISES CONSIDERED, the Blochs hereby respectfully request that
the Court enter grant this Motion, grant leave for the Blochs to file their Fifth Amended
Counterclaim, and award such further relief at law and in equity to which the Court finds the
Blochs justly entitled.
3
The Blochs do not oppose re-opening discovery on a limited basis with respect to the new claim.
COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE
FIFTH AMENDED COUNTERCLAIM Page 4
Dated: March 6, 2014 Respectfully submitted,
By: /s/ Jeffrey Goldfarb
Jeffrey Goldfarb
State Bar No. 00793820
HICKS THOMAS LLP
Saint Ann Court
2501 N. Harwood Street, Suite 1801
Dallas, TX 75201
214.583.2233 (Telephone)
214.583.2234 (Facsimile)
ATTORNEYS FOR DEFENDANTS /
COUNTERCLAIMANTS
CERTIFICATE OF CONFERENCE
I hereby certify that on March 6, 2014, I personally conferred via telephone with Jason
Copling, counsel for Mr. Kartsotis, regarding the merits of this Motion. Mr. Copling stated that
Mr. Kartsotis is opposed to the relief requested in this Motion. It is therefore submitted to the
Court for determination.
/s/ Keith Koshkin
Keith Koshkin
COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE
FIFTH AMENDED COUNTERCLAIM Page 5
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing has been served on the
following counsel in accordance with the Texas Rules of Civil Procedure on March 6, 2014.
D. Ronald Reneker
Jason A. Copling
Michael C. Lee
MUNSCH HARDT KOPF & HARR, P.C.
3800 Lincoln Plaza
500 N. Akard Street
Dallas, TX 75201-6659
/s/ Jeffrey Goldfarb
Jeffrey Goldfarb
COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE
FIFTH AMENDED COUNTERCLAIM Page 6
Preview
FILED DALLAS COUNTY 3/6/2014 3:23:37 PM GARY FITZSIMMONS DISTRICT CLERK CAUSE NO. DC-11-04489 TOM KARTSOTIS, § IN THE DISTRICT COURT § Plaintiff / Counter-Defendant, § § v. § 134th JUDICIAL DISTRICT § CLB CAPITAL PARTNERS, LP, CLB § CAPITAL PARTNERS, GP, LLC, § RICHARD BLOCH, INDIVIDUALLY § AND AS TRUSTEE OF THE § RICHARD AND NANCY BLOCH § FAMILY TRUST, and NANCY § BLOCH, AS TRUSTEE OF THE § RICHARD AND NANCY BLOCH § FAMILY TRUST, § § Defendants / Counter-Plaintiffs. § DALLAS COUNTY, TEXAS COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED COUNTERCLAIM Defendants/Counter-Plaintiffs Richard Bloch, Individually and as a Trustee of The Richard and Nancy Bloch Family Trust (“Trust”), and Nancy Bloch, as a Trustee of the Trust (collectively, the “Blochs”) file this Motion for Leave to File Fifth Amended Counterclaim and, in support thereof, would respectfully show the Court as follows: The Blochs respectfully request that the Court grant them leave to file their Fifth Amended Counterclaim against Plaintiff/Counter-Defendant Tom Kartsotis (“Kartsotis”). The Blochs seek to assert an additional cause of action against Mr. Kartsotis for his knowing participation in non-party Winstead, P.C.’s (“Winstead”) breaches of fiduciary duty to the Blochs. Mr. Kartsotis, either personally or through his agents, instructed Winstead to open an engagement adverse to the Blochs with respect to the Restructure despite knowing that Winstead represented the Blochs in that transaction. Mr. Kartsotis has also directed Winstead to keep COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED COUNTERCLAIM Page 1 confidences from the Blochs regarding its role in the Restructure. Winstead’s compliance with those instructions violated Winstead’s fiduciary duties to the Blochs, which Mr. Kartsotis knew. The Blochs seek leave to add a single claim based on these facts: Mr. Kartsotis’ knowing participation in a breach of fiduciary duty. The facts are largely undisputed; indeed Mr. Kartsotis’ attorney, Lynda Zimmerman, has confirmed the essential facts in deposition testimony and affidavits. The Court should grant the Blochs leave to amend to assert this claim because Mr. Kartsotis cannot claim surprise and will suffer no undue prejudice if the amendment is allowed. The amendment is based largely on the testimony of Ms. Zimmerman,1 who has confirmed the essential facts of the claim. Accordingly, the Blochs respectfully request that the Court grant leave to file their Fifth Amended Counterclaim. Rule 63 states that a party may amend its pleadings more than seven days before trial so long as the amendment does not “operate as a surprise to the opposite party.” TEX. R. CIV. P. 63. When a court enters a scheduling order setting a deadline for amendments, the court-ordered deadline, and not Rule 63’s seven-day deadline, controls. See In re Estate of Henry, 250 S.W.3d 518, 526 (Tex. App.—Dallas 2008, no pet.). However, the Court retains wide discretion to manage its docket, including the authority to modify its orders to prevent a manifest injustice. Id. “A court may not refuse a trial amendment unless (1) the opposing party presents evidence of surprise or prejudice, or (2) the amendment asserts a new cause of action or defense, and thus is prejudicial on its face.” State Bar of Tex. v. Kilpatrick, 874 S.W.2d 656, 658 (Tex. 1994);2 see also Burrow v. Arce, 997 S.W.2d 229, 246 (Tex. 1999). 1 Ms. Zimmerman was Mr. Kartsotis’ agent at all times relevant. It is axiomatic that an agent’s acts and knowledge that are within the scope of the agent’s authority are imputed to the principal.Biggs v. U.S. Fire Ins. Co., 611 S.W.2d 624, 629 (Tex. 1981) (acts); La Sara Grain Co. v. First Nat’l Bank of Mercedes, 673 S.W.2d 558, 563 (knowledge). 2 Though Kilpatrick dealt with a post-trial amendment, the Dallas Court of Appeals has cited post-trial-amendment cases in resolving disputes as to pre-trial amendments. See, e.g., Graham v. Adesa Tex., Inc., 145 S.W.3d 769, 775- COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED COUNTERCLAIM Page 2 The burden of showing surprise or prejudice rests on the party resisting the amendment. Kilpatrick, 874 S.W.2d at 658. Even if the resisting party carries its burden, the Court retains discretion to allow the amendment. Id. (citing Hardin v. Hardin, 597 S.W.2d 347, 349-50 (Tex. 1980)). The addition of a cause of action that is legally and factually related to already-existing claims is less likely to “impair” the opposing party’s ability to defend against the claims. Id. Likewise, a party that receives “adequate notice and opportunity to respond” to the amended pleading is less likely to be able to carry its burden of proving surprise. The deadline to file amended pleadings under the most recent scheduling order was July 6, 2012. The current trial setting is April 7, 2014. Mr. Kartsotis cannot claim that the amendment creates any surprise. The essential facts of the new claim have been admitted to by Ms. Zimmerman in her deposition in this lawsuit and in her testimony as a corporate representative in a related lawsuit. In addition, she has admitted to knowingly participating in Winstead’s breaches of fiduciary duty in at least one affidavit. Ms. Zimmerman’s knowledge and actions are imputed to Mr. Kartsotis. Floyd v. Hefner, 556 F. Supp. 2d 617, 655 (S.D. Tex. 2008) (applying Texas law). In addition, Mr. Kartsotis cannot show any undue prejudice. The additional claim stems from the Restructure transaction, which is already at issue in this case. See Kilpatrick, 874 S.W.2d at 658 (noting that factually and legally related claim “did not impair” party’s ability to defend). Further, Mr. Kartsotis’ own actions—including instructing Winstead to conceal its advocacy against its own clients, the Blochs—are the cause of any delay. Further, this amendment is requested approximately one month before the current trial setting, leaving Mr. 76 (Tex. App.—Dallas 2004, pet. denied) (citing Greenlagh v. Serv. Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex. 1990)). The same standards govern pre-trial and post-trial amendments. See Greenlagh, 787 S.W.2d at 939. COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED COUNTERCLAIM Page 3 Kartsotis with ample notice.3 In re Estate of Henry, 250 S.W.3d at 527 (finding that amended pleading filed ten days before trial provided adequate notice). To the extent that prejudice could be claimed, the Blochs do not oppose a continuance of the current trial setting to enable Mr. Kartsotis to respond to the Blochs’ new claim. No new parties are added, and the amendment will not occasion delay or surprise. Even if Mr. Kartsotis could introduce some evidence of surprise or prejudice, the Court should nevertheless exercise its discretion to allow the amendment. See Kilpatrick, 874 S.W.2d at 658. Mr. Kartsotis took steps (and continues to do so) to conceal the nature and extent of his tortious activity, which hampered the Blochs’ ability to investigate their injury. Mr. Kartsotis should not be seen to profit from his duplicitous behavior of asking a law firm to conspire secretly against its own client. WHEREFORE, PREMISES CONSIDERED, the Blochs hereby respectfully request that the Court enter grant this Motion, grant leave for the Blochs to file their Fifth Amended Counterclaim, and award such further relief at law and in equity to which the Court finds the Blochs justly entitled. 3 The Blochs do not oppose re-opening discovery on a limited basis with respect to the new claim. COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED COUNTERCLAIM Page 4 Dated: March 6, 2014 Respectfully submitted, By: /s/ Jeffrey Goldfarb Jeffrey Goldfarb State Bar No. 00793820 HICKS THOMAS LLP Saint Ann Court 2501 N. Harwood Street, Suite 1801 Dallas, TX 75201 214.583.2233 (Telephone) 214.583.2234 (Facsimile) ATTORNEYS FOR DEFENDANTS / COUNTERCLAIMANTS CERTIFICATE OF CONFERENCE I hereby certify that on March 6, 2014, I personally conferred via telephone with Jason Copling, counsel for Mr. Kartsotis, regarding the merits of this Motion. Mr. Copling stated that Mr. Kartsotis is opposed to the relief requested in this Motion. It is therefore submitted to the Court for determination. /s/ Keith Koshkin Keith Koshkin COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED COUNTERCLAIM Page 5 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing has been served on the following counsel in accordance with the Texas Rules of Civil Procedure on March 6, 2014. D. Ronald Reneker Jason A. Copling Michael C. Lee MUNSCH HARDT KOPF & HARR, P.C. 3800 Lincoln Plaza 500 N. Akard Street Dallas, TX 75201-6659 /s/ Jeffrey Goldfarb Jeffrey Goldfarb COUNTER-PLAINTIFFS’ MOTION FOR LEAVE TO FILE FIFTH AMENDED COUNTERCLAIM Page 6