In Re Kimco Developers, Inc. KD Houston 1086A, Inc., Kimco Realty Services, Inc., and Kimco Realty Corporation v. the State of Texas

Court of Appeals of Texas·Decided March 26, 2025·No. 15-25-00025-CV·Published

Opinion

ACCEPTED 15-25-00025-CV FIFTEENTH COURT OF APPEALS AUSTIN, TEXAS 3/26/2025 12:43 PM No. 15-25-00025-CV CHRISTOPHER A. PRINE _______________ CLERK FILED IN IN THE 15th COURT OF APPEALS AUSTIN, TEXAS

Fifteenth Court of Appeals 3/26/2025 12:43:59 PM CHRISTOPHER A. PRINE Clerk _______________

In re Kimco Developers, Inc., KD Houston 1086A, Inc., Kimco Realty Services, Inc., and Kimco Realty Corporation, Relators, _______________

Original Proceeding from Business Court, Eleventh Division Cause No. 24-BC11A-0013 Honorable Sofia Adrogué _______________ Real-Party’s Response to Motion for Emergency Temporary Relief _______________

Real-Party-in-Interest Cypress Towne Center, Ltd., individually and derivatively on behalf of Kimco 290 Houston II, L.P. (“Cypress”), submits this response to the motion for emergency temporary relief filed by Relators Kimco Developers, Inc. (“KDI”), KD Houston 1086A, Inc. (“KD Houston”), Kimco Realty Services, Inc. (“KRS”), and Kimco Realty Corporation (“KRC”) (collectively, “Kimco”), to explain why the motion should be denied in its entirety. INTRODUCTION

Kimco’s “emergency” motion is an attempt to manufacture urgency where none exists. This Court should deny the motion for three straightforward reasons.

First, there is no actual emergency—Kimco waited three weeks after the remand order before filing this motion and identifies no imminent deadline or irreparable harm. Second, Kimco cannot demonstrate a likelihood of success on the merits—the Business Court correctly applied the unambiguous text of Section 8, which limits jurisdiction to “civil actions commenced on or after September 1, 2024,” in accordance with every Business Court division that has consistently interpreted this provision the same way. Third, Kimco faces no irreparable harm—Kimco’s stated concern about “potentially” conflicting rulings it “could” face is as speculative as it is nonsensical.

At its core, Kimco simply disagrees with a jurisdictional ruling and tries to elevate its disagreement to “emergency” status. That is not enough to justify a stay. The motion should be denied.

2 BACKGROUND

In 2005, Cypress entered into a partnership with Kimco to develop and operate a shopping center. 1 The Partnership Agreement granted Kimco extensive management authority subject to specific restrictions, including that any additional capital would be provided through loans at a specific rate.2 For 15 years, Kimco consistently treated its capital contributions as loans under this rate structure. 3

In 2021, without notice to Cypress, Kimco retroactively recharacterized its prior loans as equity investments earning a 10% preferred return. 4 This unilateral change increased Kimco’s priority return by 230 percent—from $2.1 million to nearly $7 million— effectively eliminating Cypress’s partnership value while increasing Kimco’s invested capital by over $2 million. 5

1 MR.441. 2 MR.444. 3 MR.444. 4 MR.445. 5 MR.445–46.

3 PROCEDURAL HISTORY

In June 2022, Cypress sued Relators KDI and KD Houston in Harris County District Court, asserting two claims: an individual breach-of- contract claim and a derivative claim for breach-of-fiduciary duty. 6 Over the next two-and-a-half years, the parties conducted considerable discovery, including document production, depositions, and third- party discovery, while the district court oversaw substantial motion practice, including a motion to dismiss, motions to compel, motions to exclude, special exceptions, and motions for summary judgment. 7

In September 2024, Cypress filed its third amended petition, adding Relators KRS and KRC as defendants. 8 Kimco responded by filing a notice of removal to the Business Court, relying on the fact that KRC is a publicly traded company to remove the entire action under Chapter 25A.9

6 MR.021; MR.030–31. 7 See MR.125 (order denying Kimco’s motion to dismiss); MR.139 (order denying Kimco’s motion to exclude damages); MR.259 (order denying Kimco’s traditional and no-evidence motions for summary judgment); MR.260 (order denying Kimco’s motion to exclude experts); MR.261–63 (order granting Cypress’s motion to compel); MR.265–66 (order granting non-party’s motion for protection); MR.431 (order granting Cypress’s motion to compel); MR.432 (order denying Kimco’s special exceptions). 8 MR.437–57. The case was set for its third trial setting in March 2025. MR.433. 9 MR.011. Texas Government Code Section 25A.004(c)

4 Cypress timely filed a motion to remand, arguing that the Business Court lacked jurisdiction because (1) Chapter 25A and its removal provisions do not apply to this 2022 action,10 and (2) even if they did, Kimco failed to obtain agreement of all parties and the district court as required to support supplemental jurisdiction over Cypress’s breach- of-contract claim. 11 Kimco filed a response, arguing that the Business Court has jurisdiction over the entire action because Cypress added a publicly traded company as a defendant after September 1, 2024.12

On February 25, 2025, the Business Court granted the motion, holding that it lacked subject-matter jurisdiction over the removed action because it commenced before September 1, 2024, and the addition of a publicly traded defendant did not affect the jurisdictional analysis. 13 Three weeks later, Kimco filed its mandamus petition and a motion for emergency temporary relief seeking a stay pending the disposition of its mandamus petition.

10 MR.837–42. 11 MR.842–48 (citing Tex. Gov’t Code § 25A.004(f) (“A claim within the business court’s supplemental jurisdiction may proceed in the business court only on the agreement of all parties to the claim and a judge of the division of the court before which the action is pending.”) (emphasis added)). 12 MR.857–65. 13 Cypress Towne Center, Ltd. v. Kimco Realty Services, Inc., 2025 Tex. Bus. 8, 2025 WL 610519 (Feb. 25, 2025).

5 LEGAL STANDARD

Kimco’s motion argues that a stay is necessary to preserve the status quo. 14 But, in considering Kimco’s motion, equitable principles and “preservation of the parties’ rights” are the North Star, not “preservation of the status quo.” 15 Thus, in determining whether to grant “just relief,” the Court should consider the likelihood of Kimco’s success on the merits, the balance of harms, and other case-specific equitable considerations that bear on the exercise of discretion. 16 None favors a stay here.

I. There is no emergency.

Kimco’s motion should be denied because it fails to state any penalty, plight, or pressure warranting “emergency” relief. It does not identify an imminent deadline that will cause irreparable harm or a substantial right that will be permanently lost absent a stay. The only “emergency” is that Kimco thinks the remand order is wrong. But its

14 Mot. at 6, 11. 15 In re State, No. 24-0325, 2024 WL 2983176, at *2 (Tex. June 14, 2024) (emphasis added). 16 Id. at *3.

6 disagreement with the order is not enough to justify the “emergency” relief requested. 17 Denial is proper for this reason alone.18 II. Kimco is not likely to succeed on the merits.

Apart from the absence of a true emergency, Kimco’s motion should be denied because Kimco’s mandamus petition will, in all likelihood, fail on the merits. As Cypress will explain more fully in its mandamus response, Kimco’s petition did not and cannot establish that the Business Court “clearly abused its discretion” or that “no adequate appellate remedy exists.” 19

17 See In re ETC Field Servs. LLC, No. 15-24-00131-CV, 2025 WL 582320, at *3 (Tex. App.—15th Dist., Feb. 21, 2025, orig. proceeding) (resolving mandamus challenge to remand order without a stay).

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In Re Kimco Developers, Inc. KD Houston 1086A, Inc., Kimco Realty Services, Inc., and Kimco Realty Corporation v. the State of Texas, (Tex. Ct. App. 2025).

In Re Kimco Developers, Inc. KD Houston 1086A, Inc., Kimco Realty Services, Inc., and Kimco Realty Corporation v. the State of Texas (In Re Kimco Developers, Inc. KD Houston 1086A, Inc., Kimco Realty Services, Inc., and Kimco Realty Corporation v. the State of Texas) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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