Appellant's Brief E filed Confirmation (PDF)

ACCEPTED
02-14-00286-CV
SECOND COURT OF APPEALS
FORT WORTH, TEXAS
12/29/2014 12:00:00 AM
DEBRA SPISAK
CLERK

Case No. 02-14-00286-CV
IN THE COURT OF APPEALS FOR THE
SECOND DISTRICT OF TEXAS
Fort Worth, Texas
____________________________________
FRANCIS W.S. CHAN,
Appellant
V.
J. SHELBY SHARPE, HENRY CHANG, KAREN CHANG
& THE LAW OFFICES OF J. SHELBY SHARPE,
A PROFESSIONAL CORPORATION,
Appellees
_______________________________________________
Appealed from the 48TH District Court of Tarrant County, Texas
Cause No. 48-243228-10; Honorable David L. Evans, Presiding
________________________________________________________________
APPELLANT’S BRIEF
________________________________________________________________
Mayur Amin
Texas Bar No. 00790227
The Amin Law Firm
2131 N. Collins- Suite 433-610
Arlington, Texas 76011
Ph. 817-253-6711
Fax 1-888-580-6175
Email: amin@theaminlawfirm.com
ATTORNEY FOR APPELLANT.
Available for Oral Argument If It Would Significantly Aid the Decisional
Process. Tex. R. App. P. 39.1(d); Local Rule 4A

Case No. 02-14-00286-CV
IN THE COURT OF APPEALS FOR THE
SECOND DISTRICT OF TEXAS
Fort Worth, Texas
____________________________________
FRANCIS W.S. CHAN,
Appellant
V.
J. SHELBY SHARPE, HENRY CHANG, KAREN CHANG &
THE LAW OFFICES OF J. SHELBY SHARPE,
A PROFESSIONAL CORPORATION,
Appellees
________________________________________________
IDENTITY OF PARTIES & COUNSEL
_________________________________________________

APPELLANT:
Represented By:

Mr. Francis W. S. Chan
Mayur Amin
TX Bar No. 00790227
The Amin Law Firm
2131 N. Collins- Suite 433-610
Arlington, Texas 76011
Ph. 817-253-6711
Fax 1-888-580-6175
Email: amin@theaminlawfirm.com

i

APPELLEES:

Represented By:

APPELLEES:
Represented By:

Mr. James Shelby Sharpe &
The Law Office of J. Shelby Sharpe,
A Professional Corporation
John W. Proctor
TX Bar No. 16347300
Brown Dean Wiseman Proctor Hart & Howell
306 W. 7th Street, Suite 200
Fort Worth, Texas 76102
Ph. 817-332-1391
Fax 817-870-2427
Email: jproctor@browndean.com

Mr. Henry Chang &
Mrs. Karen Chang
Marshall M. Searcy, Jr.
TX Bar No. 17955500
Kelly Hart & Hallman, L.L.P.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Ph. 817-332-2500
Fax 817-878-9280
Email: marshall.searcy@kellyhart.com

ii

TABLE OF CONTENTS
IDENTITY OF PARTIES & COUNSEL………………………………..………..i
INDEX OF AUTHORITIES………………………………………..…………….x
ABBREVIATIONS …………………………………………...………………xxv
RECORD REFERENCES…………………………………...….…………….xxvi
STATEMENT OF THE CASE………………………………….……………xxvii
ISSUES PRESENTED………………………………………………………xxviii
STANDARDS OF REVIEW………………………….……………………….xxx
STATEMENT OF PROCEDURAL HISTORY…………………….………xxxiii
STATEMENT OF FACTS………………………………….…...…...…………..1
SUMMARY OF THE ARGUMENT………………………...…………………..7
ARGUMENT………………….………………………………..……………….12
I.
On June 17, 2014, the court erred in granting Sharpe’s fourth motion to
disqualify Amin because Sharpe: (1) waived the right to seek disqualification by
delay, (2) failed to show “actual” prejudice as required for a Rule 3.08(a)
disqualification, and (3) failed to meet his burden of proof on the substantive
elements of such a disqualification………………………………….…………..12
II.
On June 17, 2014, the court erred in granting Sharpe’s (third and fourth)
motions for summary judgment………………………………………..….…….21
II-A. The court erred in granting judgment on any unpleaded claims or
defenses because appellant objected to the trying of the same through
summary judgment…………………………………………………….…21
iii

II-B. The court erred in granting judgment on appellant’s breach of
fiduciary duty claim because appellant produced more than a scintilla of
evidence on each element…………………………………………..…….22
1.0 More than a scintilla of evidence shows that Sharpe was
appellant’s attorney…………………………………………..……23
2.1 More than a scintilla of evidence shows that Sharpe breached
his fiduciary duty by using the knowledge he gained from appellant
about the existence of a dispute to further pit appellant against his
opponents; only to then side with the party where he stood most to
gain financially……………………………………………………28
2.2 More than a scintilla of evidence shows that Sharpe breached
his fiduciary duty to appellant by unlawfully switching sides on the
“same matter”……………………………………………………...40
2.3 More than a scintilla of evidence shows that Sharpe breached
his fiduciary duties by failing to intermediate in good faith, without
deception, and/or impartially………………………………………43
2.4 More than a scintilla of evidence shows that Sharpe breached
his fiduciary duty to timely withdraw from defending the primary
defendants in this suit……………………………………...………47
3.1 More than a scintilla of evidence shows that Sharpe’s breach
injured appellant…………………………………………..……….49
3.2 More than a scintilla of evidence shows that Sharpe benefitted
from the breach………………………………………………….…52

II-C. The court erred in granting judgment on appellant’s conspiracy
claims because appellant produced more than a scintilla of evidence as to
each element…………………………………………………………..….54
1.0 More than a scintilla of evidence shows that “two or more
persons” were involved………………………………………...….55
iv

2.1 More than a scintilla of evidence shows that one of the objects
to be accomplished was to defend WFFI against appellant’s
shareholder rights claims……………………………………….….56
2.2 More than a scintilla of evidence shows that the other object
to be accomplished was to maliciously suppress, convert and/or
divert dividend monies owed to appellant…………………………57
3.1 More than a scintilla of evidence shows that Sharpe and WFFI
had a meeting of the minds for Sharpe to defend WFFI against
appellant’s shareholder rights claims……………………...………58
3.2 More than a scintilla of evidence shows that Sharpe and WFFI
had a meeting of the minds for WFFI to maliciously suppress,
convert, and/or divert dividend monies owed to appellant…..…….59
4.0 More than a scintilla of evidence shows that one or more
unlawful, overt acts were committed by Sharpe or WFFI in
furtherance of the conspiracies……………………………….……59
5.1 More than a scintilla of evidence shows that appellant’s
damages were a proximate result of the wrongful acts underlying the
conspiracies and/or Sharpe’s direct fiduciary breach………...……62
5.2 More than a scintilla of evidence shows that appellant
suffered monetary damages as a result of the wrongful acts
underlying the conspiracies and/or Sharpe’s direct fiduciary
breach…………………………………………………………..….63
II-D. The court erred in barring appellant’s claims based on any
limitations defense because (1) a two-year negligence limitations period
does not apply as Sharpe argues, (2) Sharpe failed to meet his burden to
show when appellant’s claims accrued, and (3) more than a scintilla of
evidence shows that appellant’s claims accrued within the applicable fouryear limitations period……………………………………………………64

v

II-E. The court erred by failing to take judicial notice of pertinent
adjudicative facts and by overruling appellant’s proper objections to
Sharpe’s summary judgment motions and evidence………………..……66
II-F. The court erred by granting Sharpe more relief than requested in his
summary judgment motions………………………………………..…….68
III. On September 26th and November 14th, 2011, the court erred by denying
appellant’s motion to compel seeking discovery of non-privileged information
that goes to the crucial element of fiduciary breach……………………….……69
IV. On October 23, 2013, the court erred by severing appellant’s TUFTA claims
against Sharpe from his common law tort claims against Sharpe. Given the more
efficient and convenient option of bifurcation, Sharpe did not show how he would
be prejudiced by denial of his motion to sever. Further, Sharpe judicially admits
that the TUFTA claims against him (as “the debtor”) are not independent of the
common law tort claims..........................................................................................71
V.
On October 25, 2013, the court erred by abating appellant’s TUFTA claims.
Appellant is entitled to file a TUFTA claim based on pending, unliquidated tort
claims and there is no evidentiary threshold he must cross before seeking TUFTA
discovery or relief………………………………………………………...…….…75
VI. On June 24, 2014, the court erred by denying appellant’s motion to compel
supplemental net-worth discovery responses. Appellant is legally entitled to know
information about Sharpe’s “current” net-worth in this punitive damages
case………………………………………………………………………..………77
VII. On July 24, 2013, October 15, 2013, and May 6, 2014, the court erred by
denying appellant’s motions to compel his third set of discovery requests.
Appellant is legally entitled to discover the financial information sought because it
relates to appellant’s TUFTA claims and/or to the issue of Sharpe’s net-worth in
the context of proving exemplary damages………………………………….……78
vi

VIII. On October 22, 2013, the court erred in granting Sharpe’s motion for
protective order because it precludes appellant from filing discovery materials
which constitute “court records”………………………………………….………84
IX. On June 17, 2014, the court erred in granting the Changs’ motion for
summary judgment……………………………………………………………....86
IX-A. The court erred in granting judgment on any unpleaded claims or
defenses because appellant objected to the trying of the same through
summary judgment……………………………………………...………..86
IX-B. The court erred by failing to take judicial notice of pertinent
adjudicative facts and by overruling appellant’s proper objections to the
Changs’ summary judgment motion…………………………...…………87
IX-C. The court erred in granting the Changs summary judgment because
their no-evidence motion is (a) legally insufficient with respect to any
claims or defenses where they failed to state the specific challenged
element as to which there is “no evidence” and (b) improper with respect
to any defensive elements where they have the burden of proof at
trial…………………………………………………………….………….88
IX-D. The court erred in finding, as a matter of law, that there is no
fiduciary duty owed by the Changs, as majority shareholders, to appellant,
as a minority shareholder. The Texas Supreme Court has not foreclosed
the existence of such a duty and several other Texas courts have
specifically recognized it…………………………………………………92
IX-E. The court erred in granting the Changs judgment based on §§21.223
and 21.224 of the Tex. Bus. Orgs. Code because those sections do not
foreclose the Changs’ liability for conduct committed in their capacity as
the officers and directors of WFFI; as compared to their capacity as
shareholders of WFFI………………………………………….…………95

vii

IX-F. The court erred in finding that the Changs are not jointly and
severally liable with Sharpe for the attorney’s fees incurred by appellant to
have Sharpe ordered “permanently withdrawn” from defending them in
this suit. More than a scintilla of evidence shows that the Changs
knowingly participated in Sharpe’s breach of his fiduciary duty not to
switch sides on the same matter…………………………………………..96
IX-G. The court erred in granting the Changs summary judgment based on
any legal argument or theories that they cannot, as a matter of law, be held
individually liable for damages arising from WFFI’s breach of its
employment contract with appellant. Such liability can accrue to them
through their knowing participation in Sharpe’s fiduciary breach….……98
IX-H. The court erred in granting the Changs summary judgment based on
any legal argument or theories that all of appellant’s damages necessarily
arise only out of breach of contract claims against WFFI for which the
Changs cannot be held individually liable. Disparate treatment by
controlling directors of a minority shareholder’s rights emanating from
stock ownership can constitute a fiduciary breach.…….….……………102
IX-I. The court erred in granting the Changs summary judgment against
appellant on any pleaded claims or defenses because appellant produced
more than a scintilla of evidence as to all challenged
elements…………………………………………………………..……..108
IX-J. The court erred by granting the Changs more relief than requested in
their summary judgment motion…………………………………...……118
X.
On October 23, 2013, the court erred by severing appellant’s common law
tort claims against the Changs from his TUFTA claims against them, as “the
debtor(s)”. Given the more efficient and convenient option of bifurcation, the
Changs did not show how they would be prejudiced by denial of their motion to
sever……………………………………………………………………………120
XI. On October 25, 2013, the court erred by abating appellant’s TUFTA
claims. Appellant is entitled to file a TUFTA claim based on pending,
unliquidated tort claims and there is no evidentiary threshold he must cross
before seeking TUFTA discovery or relief……………………………...…..…122
viii