Natin Paul WC 1st and Trinity, LP WC 1st and Trinity, GP, LLC WC 3rd and Congress, LP And WC 3rd and Congress, GP, LLC v. the Roy F. and JoAnn Cole Mitte Foundation

CourtCourt of Appeals of Texas
DecidedFebruary 8, 2023
Docket03-21-00502-CV
StatusPublished

This text of Natin Paul WC 1st and Trinity, LP WC 1st and Trinity, GP, LLC WC 3rd and Congress, LP And WC 3rd and Congress, GP, LLC v. the Roy F. and JoAnn Cole Mitte Foundation (Natin Paul WC 1st and Trinity, LP WC 1st and Trinity, GP, LLC WC 3rd and Congress, LP And WC 3rd and Congress, GP, LLC v. the Roy F. and JoAnn Cole Mitte Foundation) 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.

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Natin Paul WC 1st and Trinity, LP WC 1st and Trinity, GP, LLC WC 3rd and Congress, LP And WC 3rd and Congress, GP, LLC v. the Roy F. and JoAnn Cole Mitte Foundation, (Tex. Ct. App. 2023).

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-21-00502-CV

Natin Paul; WC 1st and Trinity, LP; WC 1st and Trinity, GP, LLC; WC 3rd and Congress, LP; and WC 3rd and Congress, GP, LLC, Appellants

v.

The Roy F. and JoAnn Cole Mitte Foundation, Appellee

FROM THE 126TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-18-007636, THE HONORABLE JAN SOIFER, JUDGE PRESIDING

MEMORANDUM OPINION

This is the latest appeal to arise out of a commercial dispute between appellants—

Natin Paul and several corporate entities that he controls—and the Roy F. and JoAnn Cole Mitte

Foundation. The most recent appeal concerned the appointment of a receiver over two entities

and their properties pending resolution of arbitration proceedings. See generally WC 1st &

Trinity, LP v. Roy F. & JoAnn Cole Mitte Found., No. 03-19-00799-CV, 2021 WL 4465995

(Tex. App.—Austin Sept. 30, 2021, pet. denied) (mem. op.) [WC 1st & Trinity]. Appellants now

challenge the district court’s judgment confirming the arbitrator’s award and its order directing

the receiver to liquidate the entities under receivership. Also before the Court are Mitte’s motion

to dismiss portions of the appeal and Paul’s motion for review of a post-judgment injunction.

We deny both motions and affirm the judgment. BACKGROUND

We draw the following factual background from the record before us in this case

as well as the record in WC 1st & Trinity. 1

Original Agreement

Paul is a real estate investor who does business through a network of entities that

use “World Class” or “WC” in the name. His principal entity is World Class Capital Group

(WCCG). This dispute concerns two limited partnerships: WC 1st and Trinity, LP and WC 3rd

and Congress, LP (Limited Partnerships). These entities each own a piece of property in

downtown Austin at the location suggested by their names: WC 1st and Trinity, LP owns

property at the corner of First and Trinity Streets (Trinity Property), and WC 3rd and Congress,

LP owns property at the corner of Third Street and Congress Avenue (Congress Property and,

collectively with the Trinity Property, the Properties).

The general partner of each entity was a limited-liability corporation with almost

the same name: WC 1st and Trinity GP, LLC, and WC 3rd and Congress GP, LLC (collectively,

General Partners). Paul owns and controls both general partnerships. In accordance with each

limited partnership agreement, each general partner owned a controlling interest in its respective

limited partnership and had sole authority to manage the limited partnership’s affairs.

Paul initially represented to investors that he was either developing the Properties

or marketing them for sale. In 2011, the Roy F. and JoAnn Cole Mitte Foundation (Mitte), a

1 We take judicial notice of the record in WC 1st & Trinity. See Reynolds v. Quantlab Trading Partners US, LP, 608 S.W.3d 549, 558 (Tex. App.—Houston [14th Dist.] 2020, no pet.) (“An appellate court may take judicial notice of its own records in the same or related proceedings involving the same or nearly the same parties.”).

2 nonprofit organization, invested a portion of its endowment with the Limited Partnerships. It

acquired approximately 16% of WC 1st and Trinity, LP and 6% of WC 3rd and Congress, LP.

Lawsuit and Arbitration Proceedings

The dispute began in 2018 when the General Partners allegedly refused to provide

Mitte with financial information about the Limited Partnerships. Mitte sued the General Partners

and the Limited Partnerships (collectively, World Class Entities) in Travis County District Court.

In response, the World Class Entities invoked the arbitration provision in the limited partnership

agreements. In July of 2019, the parties reached a settlement agreement in the arbitration where

the World Class Entities agreed to purchase Mitte’s interests in the Limited Partnerships for

$10.5 million.

Four days before payment was due, the FBI raided the World Class Entities’

offices and Paul’s residence in connection with a pending federal criminal investigation. On the

day before the payment deadline, the World Class Entities informed Mitte that no payment

would be made. The settlement agreement gave Mitte two options in the event of nonpayment:

end the arbitration and sue for breach of the settlement agreement or declare the agreement void

and continue with the arbitration. Mitte chose the latter option, and the arbitration continued.

Appointment of a Receiver

In October of 2019, Mitte filed a motion asking the arbitrator to appoint a receiver

over the Limited Partnerships, arguing that their asserts were “at imminent risk of being lost,

removed, or materially injured.” The motion cited the FBI raid, the World Class Entities’ failure

to pay the amount due under the settlement agreement, and other factors showing that the

entities might be in financial distress. The arbitrator granted the motion and appointed

3 Gregory S. Milligan as the receiver. At the request of counsel for the World Class Entities, the

arbitrator delayed signing the order until the following Monday so that counsel could review the

order over the weekend. On Monday, however, the World Class Entities represented to the

arbitrator and Mitte’s attorney that the two properties had been sold to unnamed “affiliates”; the

Trinity Property had purportedly sold for $23 million, and the Congress Property for $25 million.

According to the letter, the sale price for the Trinity Property was “equal to the highest offer yet

made” on that property. Both representations were later found to be false. See WC 1st & Trinity,

2021 WL 4465995, at *11.

The arbitrator nonetheless signed the order appointing Milligan as receiver. Mitte

filed a petition with the district court to confirm Milligan’s appointment as receiver, which the

presiding judge granted. The World Class Entities then filed an interlocutory appeal as well as a

petition for mandamus relief, seeking a stay of the order. Three days later, Mitte petitioned the

same district court to appoint a receiver over the Limited Partnerships and the Properties under

its statutory authority. At the hearing on that motion, counsel for the World Class Entities

represented that the transfer had not occurred. The district court granted the motion and

appointed Milligan as receiver over the Limited Partnerships and all their properties. The World

Class entities filed an interlocutory appeal and sought emergency relief.

This Court issued a stay prohibiting any alienation of property belonging to the

Limited Partnerships and abated and remanded for the district court to determine whether the

World Class Entities’ rights “would be adequately protected by supersedeas or another order

under Texas Rule of Appellate Procedure 24.” Id. at *3. The district court ordered the World

Class Entities to post a $3,875,305.00 supersedeas bond by April 7, 2020. Id. The World Class

Entities sought and received a two-week extension, making the bond due on April 21, 2020. Id.

4 The day before the bond was due, Paul created two limited liability companies, 1st and Trinity

Super Majority, LLC and 3rd and Congress Super Majority, LLC (Supermajority Entities). On

the same day, the General Partners, WCCG, and other entities purportedly transferred their

interests in the Limited Partnerships to the Supermajority Entities. Paul executed the documents

on behalf of the transferors and the transferees.

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Natin Paul WC 1st and Trinity, LP WC 1st and Trinity, GP, LLC WC 3rd and Congress, LP And WC 3rd and Congress, GP, LLC v. the Roy F. and JoAnn Cole Mitte Foundation, Counsel Stack Legal Research, https://law.counselstack.com/opinion/natin-paul-wc-1st-and-trinity-lp-wc-1st-and-trinity-gp-llc-wc-3rd-and-texapp-2023.