3CM, LLC D/B/A 3CM Multifamily v. Gregory Trimble and Group of Investors

CourtCourt of Appeals of Texas
DecidedMarch 29, 2023
Docket04-22-00233-CV
StatusPublished

This text of 3CM, LLC D/B/A 3CM Multifamily v. Gregory Trimble and Group of Investors (3CM, LLC D/B/A 3CM Multifamily v. Gregory Trimble and Group of Investors) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
3CM, LLC D/B/A 3CM Multifamily v. Gregory Trimble and Group of Investors, (Tex. Ct. App. 2023).

Opinion

Fourth Court of Appeals San Antonio, Texas MEMORANDUM OPINION

Nos. 04-22-00233-CV, 04-22-00253-CV

3CM, LLC d/b/a 3CM Multifamily, Appellant

v.

Gregory TRIMBLE and Group of Investors, Appellees

From the 198th Judicial District Court, Bandera County, Texas Trial Court No. CVCD-XX-XXXXXXX Honorable M. Rex Emerson, Judge Presiding

Opinion by: Irene Rios, Justice

Sitting: Rebeca C. Martinez, Chief Justice Irene Rios, Justice Liza A. Rodriguez, Justice

Delivered and Filed: March 29, 2023

MOTION FOR REVIEW OF FURTHER ORDER GRANTED; REVERSED AND REMANDED IN PART; DISMISSED FOR LACK OF JURISDICTION IN PART

In this consolidated, interlocutory appeal, appellant 3CM, LLC d/b/a 3CM Multifamily

(“3CM”) argues the trial court erred when it granted appellees Gregory Trimble and Group of

Investors’ (“the Investors”) application for a temporary injunction. 3CM also complains about the

trial court’s order granting its own motion to compel arbitration. Although the trial court granted

3CM’s motion to compel arbitration, 3CM argues the order granting the temporary injunction

operates as an effective denial of its motion to compel arbitration because the temporary injunction 04-22-00233-CV, 04-22-00253-CV

granted the Investors relief on issues that are subject to arbitration. We reverse the trial court’s

temporary injunction order, dismiss for lack of jurisdiction 3CM’s appeal of the trial court’s order

compelling arbitration, and remand the case to the trial court for further proceedings consistent

with this opinion.

BACKGROUND

3CM is a syndication sponsor who identifies an investment property to purchase, collects

capital from other investors, and secures a loan for the remaining capital needed to purchase the

investment property. Specifically, 3CM purchases multifamily properties such as apartment

complexes. 3CM also manages the properties that it purchases as a syndication sponsor. Each

person in the Group of Investors has invested in at least one of fifteen different multifamily

properties purchased by 3CM. 1

Each property 3CM sponsored was purchased by a different limited liability company

bearing the name of that property. 2 It is undisputed the company agreements for each limited

liability company are identical. We refer to the fifteen limited liability companies collectively as

“the LLCs” and the company agreements governing the LLCs collectively as “the Company

Agreements.” In the Company Agreements, 3CM is listed as the manager of the LLCs, and the

Investors are listed as members of the LLCs; however, the LLCs do not all have the same members.

While there may be some crossover between members of some of the LLCs, it appears that each

company is largely owned by different members.

1 According to their verified original petition, Investors “represent the interests of over 1,200 investors” who invested “over $120 million . . . to invest in several different apartment properties.” 2 The fifteen different limited liability companies are: (1) Arroyo Square, LLC; (2) Aventine Corpus Christi, LLC; (3) Bent Tree 360, LLC; (4) Bridge Apartments 360, LLC; (5) Brooke Apartments 360, LLC; (6) Brownstone 360, LLC; (7) Carmel Manor, LLC; (8) Cielo Vista 360, LLC; (9) Harvard House Apartments, LLC; (10) Indigo Apartments, LLC; (11) Latitude Apartments, LLC; (12) Magnolia Greens, LLC; (13) Monterra 360, LLC; (14) Park on Paint Rock, LLC; and (15) The Retreat 360, LLC. The Investors’ verified original petition in intervention also lists Riverway Apartments 360, LLC; however, it appears there were not enough votes among its members to remove 3CM as its manager and it is not listed as one of the companies affected by the temporary injunction.

-2- 04-22-00233-CV, 04-22-00253-CV

At some point in 2021, the Investors began to suspect 3CM was impermissibly transferring

funds to itself and between the different limited liability companies. The Investors also began to

suspect the occupancy reports sent to investors contained either false or misleading information to

inflate the occupancy rates of the multifamily properties, and 3CM was neglecting some of the

properties. Finally, the Investors suspected 3CM was paying a contractor associated with an

employee of 3CM for work that was not performed by that contractor. 3 According to the Investors,

3CM “refused to provide basic financial information to [the Investors], in direct violation of the

[Company Agreements] at issue.”

The Company Agreements provide a process whereby investors in the respective

companies can remove 3CM as the manager and substitute a new manager in its place. Section

8.2 of the Company Agreements states:

Prior to initiating a removal action per this Article for Good Cause, the Members (other than the Manager or Affiliates of the Manager) representing seventy-five (75%) of the Percentage Interests 4 shall issue a Notice to Perform to the Manager in accordance with the notice provision in Article 15.1 hereof. Such Notice to Perform shall describe the matters of concern to the Members. If the Manager fails to respond to the concerns or demands contained in such Notice to Perform within sixty (60) days, to the satisfaction of the Members then;

Upon the affirmative vote of seventy-five (75%) of the Percentage Interests (other than those belonging to the Manager or Affiliates of the Manager), the Manager may be immediately removed, temporarily or permanently, for Good Cause as determined by: (a) the Members holding the requisite Percentage Interests, or (b) by an arbitrator or judge per Article 13.5.4. Note, however, that any resignation or removal of the Manager may require approval of a lender or substitution of a loan guarantor if any loan was conditioned on the qualifications of the Manager.

3 It is unclear from the record whether the Investors suspected the issues with the contractor before or after litigation commenced. 4 The Company Agreements define “Percentage Interests” as “the percentage of ownership interests of the Members, other than any Economic Interest . . . .” “Economic Interest” is defined as “a Person’s right to share in the income, gains, losses, deductions, credit, or similar items of, and to receive Distributions from, the Company, but does not include any other rights of a Member, including without limitation, the right to vote or to participate in management, and any right to information concerning the business and affairs of the Company.”

-3- 04-22-00233-CV, 04-22-00253-CV

Article 13 of the Company Agreements provides an internal dispute resolution procedure

(“the IDR Procedure”) to resolve disputes arising between the members and the manager. The

IDR Procedure lists a series of steps the aggrieved party must take to resolve a dispute. The steps

include informal negotiations and at least three “face-to-face mediation sessions.” Section 13.5 of

the Company Agreements states: “Any [d]ispute that remains unresolved after good faith

negotiation[s] and three (3) failed mediation sessions shall be settled by binding arbitration.”

However, section 8.6 of the Company Agreements expressly provides:

Nothing in Article 13 (i.e., the Internal Dispute Resolution Procedure) shall prevent any Manager from being immediately removed pursuant to the procedures described in this Article. However, the removed Manager may request application of the Internal Dispute Resolution Procedure (as described in Article 13) to settle disputes related to possible reinstatement or a determination of the amount(s) of Distributable Cash or Fees to which the removed Manager may be entitled.

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3CM, LLC D/B/A 3CM Multifamily v. Gregory Trimble and Group of Investors, Counsel Stack Legal Research, https://law.counselstack.com/opinion/3cm-llc-dba-3cm-multifamily-v-gregory-trimble-and-group-of-investors-texapp-2023.