DIXON FINANCIAL SERVICES, LTD. v. Chang

325 S.W.3d 668, 2010 Tex. App. LEXIS 1116, 2010 WL 547497
CourtCourt of Appeals of Texas
DecidedFebruary 18, 2010
Docket01-07-00233-CV
StatusPublished
Cited by10 cases

This text of 325 S.W.3d 668 (DIXON FINANCIAL SERVICES, LTD. v. Chang) 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
DIXON FINANCIAL SERVICES, LTD. v. Chang, 325 S.W.3d 668, 2010 Tex. App. LEXIS 1116, 2010 WL 547497 (Tex. Ct. App. 2010).

Opinions

OPINION

LAURA CARTER HIGLEY, Justice.

We withdraw our August 31, 2009 opinion, substitute this opinion in its place, and vacate our judgment of that date.1

In one issue, appellants, Dixon Financial Services, Ltd. (“Dixon Financial”) and Hy-perdynamics Corporation (“Hyperdynam-ics”), contend that the trial court erred by granting summary judgment in favor of appellees, James Chang, Nick H. Johnson, Riley L. Burnett, Jr., and Johnson, Burnett & Chang, L.L.P.

We affirm.

[671]*671Background2

In September 1999, Ron Bearden and R.F. Bearden Associates, Inc. (collectively, “Bearden”), Erin Oil, and Bill Knollen-berg, principal of Erin Oil, obtained an arbitration award against Michael Watts, a securities broker, and Texas Capital Securities, the securities brokerage firm for whom Watts worked. As part of the award, Bearden, Knollenberg, and Erin Oil were awarded, jointly and severally, “140,-000 shares of common stock and 200,000 warrants in Hyperdynamics.” In the arbitration proceeding, Greenberg, Peden, Si-egmyer & Oshman, P.C. (“Greenberg Pe-den”) represented Bearden, and the law firm of Johnson, Burnett, & Chang (“JBC”) represented Erin Oil and Knollen-berg.

In an effort to collect the arbitration award, JBC attorney James Chang notified Hyperdynamics’s transfer agent, Fidelity Transfer Company (“Fidelity”), of the award. Chang sent a number of correspondences to Fidelity to secure his clients’ interest in the Hyperdynamics stock by instructing Fidelity that the subject stock should not be transferred or conveyed. Chang told Fidelity that “some of [the] securities of [Hyperdynamics] that our client is entitled to in accordance with the [arbitration award] are held or deposited in an account in the name of Island Communications Investments, Ltd.” Chang warned Fidelity that it should not transfer or convey common stock or other securities held or owned by Island Communications.

Chang, on behalf of Erin Oil and Knol-lenberg, and Greenberg Peden attorney Gerald Siegmyer, on behalf of Bearden, filed suit (“the Waits litigation”) against Texas Capital, Michael Watts, and Hyper-dynamics, seeking confirmation of the arbitration award and injunctive relief. Erin Oil, Knollenberg, and Bearden (“the Watts plaintiffs”) alleged that Watts had sold securities belonging to them for Watts’s own personal benefit. The Watts plaintiffs further alleged that Watts had transferred shares of Hyperdynamics stock, to which they were entitled, into the account of Island Communications. The Watts plaintiffs obtained a temporary restraining order restricting the transfer of Hyperdynamics stock out of Island Communications’s account.

The Watts plaintiffs entered into a settlement agreement with Hyperdynamics in the Watts litigation. The Watts plaintiffs agreed to dismiss Hyperdynamics from the suit, and Hyperdynamics agreed that it would not allow Michael Watts “to sell, transfer, assign or exercise any warrant or option to purchase any securities of Hy-perDynamics.”

Chang tried unsuccessfully to obtain information from Fidelity regarding which Hyperdynamics stock being held in Island Communications’s name belonged to his clients. Fidelity informed Chang that Kent Watts, principal of Hyperdynamics and brother of Michael Watts, had requested the transfer of 574,500 shares of Hyperdynamics stock held in Island Communications’s name to Dixon Financial. Chang informed Fidelity that “there were adverse claimants to those shares held in the name of Island and that [Hyperdynam-ics] may be prohibited from transferring any shares in the name of Island.”

Approximately one year later, Dixon Financial filed the underlying suit against Hyperdynamics, Fidelity, Greenberg Pe-den, Siegmyer, Bearden, Erin Oil, Knollen-[672]*672berg, James Chang, JBC, and two other JBC partners: Nick Johnson and Riley Burnett, Jr.3 Dixon Financial asserted that Chang and his “co-conspirators” had falsely claimed and misrepresented that Dixon Financial’s stock shares held in the name of Island Communications were subject to the arbitration award obtained by the Watts plaintiffs. Specifically, Dixon Financial alleged that Chang had misrepresented to Fidelity that “the 574,500 shares of stock of Hyperdynamics held in the name of Island Communications was in fact property of Ghang and Siegmyer’s clients and the subject of an arbitration award.” Dixon Financial further alleged that, based on the misrepresentation, Fidelity had “placed a ‘hold’ on the 574,500 shares of Hyperdynamics stock” owned by Dixon Financial thereby preventing Dixon Financial “from exercising any ownership rights to the stock, including its ability to sell the stock at a time when the stock was trading large volume at a higher price.”

Dixon Financial also claimed that “[t]he defendants intentionally and knowingly misrepresented facts to the court in order to obtain the Temporary Restraining Order” in the Watts litigation. Dixon Financial asserted that the restraining order was “sought and obtained” by “using a false and perjurious affidavit signed by Chang.” Dixon Financial further alleged that Chang, “with the knowledge and consent of his co-conspirators [including Bear-den, Greenberg Peden, and Siegmyer], intentionally and knowingly on numerous times contacted Fidelity ... and wrongfully advised [Fidelity]” that the temporary restraining order “prohibited Fidelity” from issuing the Hyperdynamics stock to Dixon Financial. Dixon Financial further alleged that, when Fidelity finally transferred the stock to it, the stock “had dropped from a high in January 2000 of $7.75 per share when Dixon Financial was entitled to receive the shares to less than $2.00 resulting in a loss [to Dixon Financial] in excess of $3,000,000.”

Dixon Financial asserted causes of action against Bearden, Greenberg Peden, Siegmyer, Erin Oil, Chang, JBC, Nick Johnson, and Riley Burnett, Jr. for conversion, abuse of process, tortious interference, and fraud. Dixon Financial claimed that the defendants were jointly and severally liable based on theories of conspiracy, agency, and concert of action.

Hyperdynamics also filed a cross-claim against Bearden, Greenberg Peden, Sieg-myer, Erin Oil, Chang, JBC, Johnson, and Burnett asserting claims for negligent misrepresentation, tortious interference, abuse of process, malicious prosecution of a civil suit, and contribution. Like Dixon Financial’s claims, Hyperdynamics’s cross-claims were premised on allegations that Chang had misrepresented to the trial court and to Fidelity the extent to which the arbitration award applied to Hyperdy-namics’s stock held in the name of Island Communications.

Hyperdynamics also filed a cross-claim for breach of contract. Hyperdynamics asserted that the defendants had breached the settlement agreement between it, Erin Oil, and Bearden in the Watts litigation. Hyperdynamics claimed that the defendants continued to interfere with the transfer of its stock to Dixon Financial “in violation of the spirit and terms of the agreement.”

Greenberg Peden and Siegmyer filed motions for summary judgment, asserting that Dixon Financial had no actionable claim against them, as a matter of law, for conduct undertaken in the representation [673]*673of a client. The attorneys based the motions for summary judgment on Dixon Financial’s pleadings.

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325 S.W.3d 668, 2010 Tex. App. LEXIS 1116, 2010 WL 547497, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dixon-financial-services-ltd-v-chang-texapp-2010.