                                                                                             ACCEPTED
                                                                                        13-15-00452-CV
                                                                        THIRTEENTH COURT OF APPEALS
                                                                               CORPUS CHRISTI, TEXAS
                                                                                  12/10/2015 2:49:53 PM
                                                                                       Dorian E. Ramirez
                                                                                                  CLERK

                               NO. 13-15-00452-CV

                  IN THE THIRTEENTH COURT OF APPEALS FILED IN
                                              13th COURT OF APPEALS
                    CORPUS CHRISTI—EDINBURG, TEXAS
                                           CORPUS  CHRISTI/EDINBURG, TEXAS
                                                       12/10/2015 2:49:53 PM
                                                         DORIAN E. RAMIREZ
                                 SANDEEP PATEL,                 Clerk
                                                   Appellant,
                                        v.

     HARBOR HOSPICE OF BEAUMONT, L.P., HARBOR HOSPICE MANAGER, L.L.C.,
               QAMAR ARFEEN, AND ARFEEN PROPERTIES, L.P.,
                                              Appellees.


                  ON APPEAL FROM THE 172nd DISTRICT COURT,
                   JEFFERSON COUNTY, TEXAS, NO. E-192,576


                              APPELLEES’ BRIEF

      Glen W. Morgan                 David Gaultney             Brandy Wingate Voss
  State Bar No. 14438900         State Bar No. 07765300        State Bar No. 24037046
gmorgan@rmqlawfirm.com      davidgaultney@mehaffyweber.com    brandy@appealsplus.com
        John Werner                   Elana Einhorn           Smith Law Group LLLP
  State Bar No. 00789720         State Bar No. 06502455        820 E. Hackberry Ave.
 jwerner@rmqlawfirm.com     elanaeinhorn@mehaffyweber.com      McAllen, Texas 78503
  Reaud, Morgan & Quinn            MehaffyWeber, P.C.              (956) 683-6330
       801 Laurel St.        823 Congress Avenue, Suite 200      (956) 225-0406 Fax
   Post Office Box 26005           Austin, Texas 78701
  Beaumont, Texas 77720              (512) 394-3840
      (409) 838-1000.              (512) 394-3860 Fax
    (409) 833-8236 Fax


                           ATTORNEYS FOR APPELLEES

                      ORAL ARGUMENT REQUESTED
                  IDENTITY OF PARTIES AND COUNSEL
Appellant: Sandeep Patel

Represented by:

Chris Portner
State Bar No. 24007858
cportner@portnerbond.com
J. Trenton Bond
State Bar No. 00785707
tbond@portnerbond.com
Portner Bond, PLLC
1905 Calder Avenue
Beaumont, Texas 77701
Phone: (409) 838-4444
Fax: (409) 554-0240

Anthony Malley, III
State Bar No. 24041382
tony@mallaw.com
Malley Law Firm, PLLC
905 Orleans, Suite 110
Beaumont, Texas 77701
Phone: (409) 212-8888
Fax: (409) 212-8002

Jamie D. Matuska
State BarNo. 24051062
jamie@matuskalaw.com
Matuska Law Firm
2809 Highway 69 North
Nederland, Texas 77627
Phone: (409) 722-5600
Fax: (409) 727-1290




                                 ii
Appellees: Harbor Hospice of Beaumont, L.P., Harbor Hospice Manager, L.L.C.,
Qamar Arfeen, and Arfeen Properties, L.P.

Represented by:

David Gaultney                             David E. Bernsen
State Bar No. 07765300                     State Bar No. 02217500
davidgaultney@mehaffyweber.com             dbernsen@bernsenlaw.com
Elana Einhorn                              Christine L. Stetson
State Bar No. 06502455                     State Bar No. 00785047
elanaeinhorn@mehaffyweber.com              cstetson@bernsenlaw.com
MehaffyWeber, P.C.                         420 North MLK, Jr. Pkwy
823 Congress Avenue, Suite 200             Beaumont, Texas 77701
Austin, Texas 78701                        Phone: (409) 212-9994
Phone: (512) 394-3840                      Fax: (409)212-9411
Fax: (512) 394-3860
                                           Brandy Wingate Voss
Jeremy Stone                               State Bar No. 24037046
State Bar No. 24013577                     brandy@appealsplus.com
jeremystone@mehaffyweber.com               Smith Law Group LLLP
MehaffyWeber, P.C.                         820 E. Hackberry Ave.
500 Dallas, Suite 1200                     McAllen, Texas 78503
Houston, Texas 77002                       Phone: (956) 683-6330
Phone: (713) 655-1200                      Fax: (956) 225-0406
Fax: (713) 655-0222

Glen W. Morgan
State Bar No. 14438900
gmorgan@rmqlawfirm.com
John Werner
State Bar No. 00789720
jwerner@rmqlawfirm.com
Reaud, Morgan & Quinn
801 Laurel St.
Post Office Box 26005
Beaumont, Texas 77720-6005
Phone: (409) 838-1000
Fax: (409)833-8236




                                     iii
                                          TABLE OF CONTENTS

Identity of Parties and Counsel ................................................................................. ii 

Table of Contents ..................................................................................................... iv 

Index of Authorities ................................................................................................. vi 

Statement of the Case.................................................................................................x 

Request for Oral Argument ...................................................................................... xi 

Issues Presented ...................................................................................................... xii 

Statement of Facts ......................................................................................................1 

Summary of the Argument.........................................................................................5 

Argument....................................................................................................................6 

         I.        All of Patel’s claims are barred by limitations. ..................................... 6 

                   A.       Patel’s claims accrued by March 10, 2008. ................................6 

                   B.       Neither the discovery rule nor fraudulent
                            concealment delays accrual or tolls
                            limitations here. ...........................................................................9 

                            1.        The discovery rule does not apply
                                      because the alleged injury was not of
                                      the limited type that is inherently
                                      undiscoverable. .................................................................9 

                            2.        The fraudulent concealment doctrine
                                      does not apply because the
                                      Partnership did not try to conceal
                                      termination of Patel’s interests and
                                      Patel had notice of facts giving rise to
                                      his claims by March 2008...............................................13 

                            3.        The presence of fiduciary duties does
                                      not relieve Patel of his own obligation
                                      of diligent inquiry. ..........................................................14 



                                                             iv
                             4.        The same statute of limitations applies
                                       to Patel’s declaratory-judgment claim
                                       as to his substantive claims. ............................................15 

         II.       Defendants conclusively negated at least one element of
                   each of Patel’s claims. ......................................................................... 17 

                   A.        Patel has no breach-of-fiduciary-duty claim.............................17 

                   B.        There is no genuine issue of material fact as
                             to breach of contract..................................................................21 

                   C.        There is no genuine issue of material fact as
                             to conversion and theft. .............................................................23 

         III.      There is no fact question as to damages. ............................................. 24 

         IV.       The summary judgment evidence was properly
                   considered by the trial court. ............................................................... 26 

Prayer .......................................................................................................................28 

Certificate of Compliance ........................................................................................30 

Certificate of Service ...............................................................................................31 

Index to Appendix ....................................................................................................32 




                                                               v
                                      INDEX OF AUTHORITIES

Cases 

Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd.,
      287 S.W.3d 877 (Tex. App.—Dallas 2009, no pet.) .....................................23

B&W Supply, Inc. v. Beckman,
    305 S.W.3d 10 (Tex. App.—Houston [1st Dist.] 2008, pet.
    denied) ...........................................................................................................21

Bandy v. First State Bank,
     835 S.W.2d 609 (Tex. 1992) .........................................................................24

Bohatch v. Butler & Binion,
     977 S.W.2d 543 (Tex. 1996) ................................................ 14, 17, 18, 19, 20

Bokor v. State,
      114 S.W.3d 558 (Tex. App.—Fort Worth 2002, no pet.) .............................24

Brosseau v. Ranzau,
      81 S.W.3d 384 (Tex. App.—Beaumont 2002, pet. denied) ..........................19

City of Houston v. Clear Creek Basin Auth.,
       589 S.W.2d 671 (Tex. 1979) .........................................................................28

Computer Assocs. Int’l., Inc., v. Altai, Inc.,
    918 S.W.2d 453 (Tex. 1994) ...........................................................................9

Cosgrove v. Cade,
     468 S.W.3d 32 (Tex. 2015) ...........................................................................14

Cotton v Cotton,
      169 S.W.3d 824 (Tex. App.—Dallas 2005, pet. denied) ..............................27

Douglas v. Aztec Petroleum Corp.,
     695 S.W.2d 312 (Tex. App.—Tyler 1985, no writ) ......................................17

Exxon Corp. v. Emerald Oil & Gas Co. L.C.,
     348 S.W.3d 194 (Tex. 2011) ...........................................................................7

Graham Mortg. Corp. v. Hall,
     307 S.W.3d 472 (Tex. App.—Dallas 2010, no pet.) .....................................17


                                                           vi
Green Int’l v. Solis,
     951 S.W.2d 384 (Tex. 1997) .........................................................................23

Guidry v. Wells, No.
     09-05-00182-CV, 2006 WL 246493 (Tex. App.—Beaumont
     2006, no pet.) (mem. op.) ..............................................................................27

Hooks v. Samson Lone Star, Ltd. P’Ship,
     457 S.W.3d 52 (Tex. 2015) .................................................................... 13, 14

In re Estate of Denman,
       362 S.W.3d 134 (Tex. App.—San Antonio 2011, pet. denied) ....................16

J.M. Davidson, Inc. v. Webster,
      128 S.W.3d 223 (Tex. 2003) .........................................................................12

LG Ins. Mgmt. Servs., LP v. Leick,
      378 S.W.3d 632 (Tex. App.—Dallas 2012, pet. denied) ..............................18

Luna v. Runyon,
      No. 03-06-00615-CV, 2008 WL 2609171 (Tex. App.—Austin
      2008, pet. denied) (mem. op.) ..........................................................................9

McConathy v. McConathy,
    869 S.W.2d 341 (Tex. 1994) .........................................................................26

Merriman v. XTO Energy, Inc.,
     407 S.W.3d 244 (Tex. 2013) ...........................................................................6

Mowbray v. Avery,
    76 S.W. 3d 663 (Tex. App.—Corpus Christi 2002, pet. denied) ..................27

Nalle Plastics Family L.P. v. Porter, Rogers, Dahlman & Gordon,
      P.C.,
      406 S.W.3d 186 (Tex. App.—Corpus Christi 2013, pet. denied) ...................6

Neely v. Comm’n for Lawyer Discipline,
      302 S.W.3d 331 (Tex. App.—Houston [14th Dist.] 2009, pet.
      denied) .................................................................................................... 26, 28

Pink v. Goodyear Tire & Rubber Co.,
      324 S.W.3d 290 (Tex. App.—Beaumont 2010, writ dism’d) .......................28



                                                          vii
Provident Life & Accident Ins. Co. v. Knott,
      128 S.W.3d 211 (Tex. 2003) ...........................................................................7

Royston, Rayzor, Vickery & Williams, LLP v. Lopez,
      467 S.W.3d 494 (Tex. 2015) .........................................................................12

S.V. v. R.V.,
       933 S.W.2d 1 (Tex. 1996) ...................................................................... 14, 15

Schneider Nat’l Carriers, Inc. v. Bates,
      147 S.W.3d 264 (Tex. 2004) ...........................................................................7

Schrock v. City of Baytown,
      No. 01-13-00618, 2015 WL 1882190 (Tex. App.—Houston [1st
      Dist.] April 23, 2015, no pet.) (mem. op.) .....................................................15

Sci. Spectrum, Inc. v. Martinez,
       941 S.W.2d 910 (Tex. 1997) .................................................................... 6, 17

Shell Oil Co. v. Ross,
      356 S.W.3d 924 (Tex. 2011) .................................................................. 10, 12

Strebel v. Wimberly,
      371 S.W.3d 267 (Tex. App.—Houston [1st Dist.] 2012, pet.
      denied) ...........................................................................................................18

Thomas v. Ray,
     889 S.W.2d 237 (Tex. 1994) .......................................................................8, 9

Valdez v. Hollenbeck,
      465 S.W.3d 217 (Tex. 2015) ............................................................ 6, 7, 9, 13

Via Net v. TIG Ins. Co.,
      211 S.W.3d 310 (Tex. 2006) (per curiam) ....................................................10

Wagner & Brown, Ltd.,
     58 S.W.3d 732 (Tex. 2001) ...........................................................................10

Weaver v. Witt,
     561 S.W.2d 792 (Tex. 1977) .........................................................................13




                                                           viii
Statutes 
TEX. BUS. ORG. CODE ANN. § 152.002........................................................ 18, 21, 22

TEX. BUS. ORG. CODE ANN. § 152.206 ....................................................................20

TEX. BUS. ORG. CODE ANN. § 153.003 ....................................................................22

TEX. BUS. ORG. CODE ANN. § 153.105 ....................................................................21

TEX. CIV. PRAC. & REM. CODE ANN. § 16.003 ........................................................16

TEX. CIV. PRAC. & REM. CODE ANN. § 16.004 ........................................................16

TEX. CIV. PRAC. & REM. CODE ANN. § 134.002 ......................................................24

TEX. CIV. PRAC. & REM. CODE ANN. § 134.003 ......................................................24

Rules 
TEX. R. APP. P. 33.1..................................................................................................28

TEX. R. CIV. P. 166a ................................................................................ 6, 26, 27, 28




                                                          ix
                       STATEMENT OF THE CASE

Nature of the Case:   Claims for breach of contract, breach of fiduciary duty,
                      conversion, theft, and fraud arising out of partnership
                      dispute.

Trial Court:          The Honorable Donald J. Floyd, 172nd District Court,
                      Jefferson County.

Trial Court’s         Summary judgment granted in favor of Defendants on all
Disposition:          claims. CR255.




                                      x
                   REQUEST FOR ORAL ARGUMENT
      Appellees respectfully request the opportunity to present oral argument.

Appellees believe oral argument will assist the Court in resolving the issues

presented.




                                      xi
                           ISSUES PRESENTED

The trial court properly granted summary judgment because:

I.     All of Patel’s claims are barred by a statute of limitations.

II.    Defendants negated at least one element of each of Patel’s claims.

III.   Patel did not sustain any damages.

IV.    The summary judgment evidence was properly before the court.




                                           xii
                               STATEMENT OF FACTS

       Defendant Harbor Hospice of Beaumont, L.P. (the “Partnership”) is a

limited partnership formed in 2005 to build and operate a hospice in Beaumont,

Texas. CR42-43. Defendant Harbor Hospice Managers, L.L.C., was the general

partner. CR73. The limited partners included Defendant Arfeen Properties, L.P.

(Defendant Dr. Qamar Arfeen was its general partner), and Plaintiff Sandeep Patel.

CR74,79.

       Patel, an engineer, did not contribute any money to the Partnership; instead

he was granted a 3% ownership interest in exchange for overseeing construction of

the hospice. CR92-93,110-11.1 Midway through construction, however, Patel

demanded that his interest in the Partnership be doubled, and he threatened to walk

off the job if his demand was not met. CR 107,116. Given the circumstances, the

Partnership reluctantly agreed to his demand. Id.

       Because of faulty construction and use of subcontractors who were not

specialized in building medical facilities, the hospice did not pass state inspection.

CR 110-12,114-15. Patel then promptly disappeared. CR105-07. This forced the

Partnership to obtain substitute contractors at additional expense. CR107,118-19.

Patel never responded to the Defendants’ numerous attempts to contact him.
1
  The parties attached color-highlighted deposition testimony as exhibits to the motion for
summary judgment and response. As it appears in the clerk’s record, however, that highlighted
testimony may be difficult to read. The parties therefore provided accurate color copies of that
highlighted deposition testimony in their stipulation filed with this Court on November 24, 2015.
CR105,107. Dr. Arfeen testified that “before the facility was finished or could pass

the Life Safety Code, he would not answer my calls.” CR105. “He just totally

disappeared from the scene.” CR107.

        Patel also failed to respond to requests for updated financial information

from the bank financing the construction. Patel was a guarantor on the construction

loan for the hospice, CR101-03, and the bank requested updated financial

information as the loan approached maturity. App’x Tab A (CR121; Supp.CR102-

06).2

        Because Patel ignored the bank’s requests, on March 4, 2008, the

Partnership’s general counsel sent a letter to Patel informing him that the bank was

once again requesting updated financial information from him as the loan was

about to mature. Id. The letter, sent by certified and regular mail, stated that the

bank had tried several times to get the information from him, yet he had refused to

provide the information or return phone calls. Id. The letter further told Patel that if

he failed to provide the information to the bank by March 10, 2008, he would “be

in material breach of [his] obligations under the partnership agreement . . . .” Id.

        The letter then spelled out that the effect of this material breach would be

termination of his partnership interest:


2
  As Patel notes, the second page of the letter can be found in the supplemental clerk’s record.
Supp.CR103. Patel testified about the second page of the letter at his deposition. CR95. The text
is not in dispute. See the stipulation filed in this appeal on November 24, 2015.


                                               2
               Please allow this letter to serve as notice that unless you
               remedy this breach and provide updated financials to the
               bank on or before March 10, 2008, the general partner
               shall terminate your interest in Harbor Hospice of
               Beaumont, L.P. and expel you for your continued breach
               of this written obligation. Please further note that if the
               general partner is forced to take action pursuant to
               Section 10.2 of the partnership agreement, you will
               forfeit to the partnership the entire value of your
               partnership interest upon your termination and expulsion.

Id. Patel’s wife signed for the certified letter. CR94. The return receipt is dated

March 29, 2008. CR134. Patel did not submit the required financials, CR106, and

the Partnership was forced to refinance with another bank. CR117.

       Because Patel failed to meet his commitments to the Partnership, his

partnership interest was forfeited under section 10.2 of the Partnership Agreement.

App’x Tab C (CR62); App’x Tab A (Supp.CR103). An amendment to the

Partnership Agreement was executed to document the fact Patel was no longer a

member of the Partnership effective January 1, 2008. CR126-29.3

       Patel’s 2008 IRS schedule K-1 accordingly showed his capital account and

ownership interest as zero. App’x Tab B; CR96,141. Patel admitted that his 2008

tax return included the K-1 showing a zero equity interest in the Partnership.

CR98.
3
  The amendment incorrectly states that Patel's limited partnership interests were redeemed rather
than forfeited, but this mistake is immaterial because Patel had a negative balance in his capital
account at the end of 2007, CR130-33, and under the Partnership Agreement, any redeemed
interest would be equal to the redeemed partner’s capital account. CR57-58. In other words,
there was no value to the partnership interest in a redemption situation.



                                                3
      More than four years after the deadline set in the letter, Patel sued the

Partnership, its general partner (Harbor Hospice Manager, L.L.C.), and two of its

limited partners (Dr. Arfeen and Arfeen Properties, L.P.). His original petition,

filed June 15, 2012, claimed breach of fiduciary duty, conversion, and fraud.

CR5,7. He filed an amended petition on May 20, 2013, dropping the fraud claim

but adding a breach-of-partnership-agreement claim. CR15,16. The Defendants

moved for summary judgment on January 22, 2015. Supp.CR5. On February 26,

2015, Patel amended his petition again to reassert the fraud claim, add a claim

under the Theft Liability Act, and add a request for declaratory judgment and

specific performance. CR19,21,23.

      A little less than a month later, the Defendants filed an amended motion for

summary judgment demonstrating that: (1) statutes of limitations barred all claims;

(2) there was no genuine issue of material fact as to at least one element of each of

the substantive claims; and (3) Patel suffered no damages, a necessary element for

each of his claims. CR26. The trial court granted summary judgment on all claims.

CR255.




                                         4
                       SUMMARY OF THE ARGUMENT

      The Partnership Agreement Patel signed authorized his involuntary

termination, and allowed the general partner to reallocate his interest. Under the

terms of the Agreement, Patel ratified and confirmed the general partner’s actions.

Patel admitted when he filed his tax return for 2008 that his partnership interest

had terminated—he reported a zero ownership interest to the IRS.

      Patel was notified that his interest would be terminated if he did not provide

updated financial information to the bank by March 10, 2008. He did not do so,

and his interest was terminated and reallocated. Those actions were not a breach of

contract, fraud, breach of fiduciary duty, conversion, or theft. They were in fact

what Patel agreed could happen.

      Any claim that the contract was breached, or that the general partner should

not have terminated his interest, should have been brought within four years after

March 10, 2008—the deadline in the letter for him to avoid termination. Any claim

for conversion or theft should have been brought within two years of that date. All

of Patel’s claims are barred by limitations.   Neither   the   discovery   rule   nor

fraudulent concealment delays accrual or tolls limitations in this case.

      Furthermore, Patel suffered no damages. The Partnership Agreement

provides that a limited partner who leaves the partnership leaves with nothing more

than his capital account. The value of Patel’s capital account was never a positive



                                          5
amount while he was a partner, and so he was not entitled to any amount when he

walked away from the partnership.

      There are no genuine issues of material fact, and the Defendants were

entitled to judgment as a matter of law. The trial court’s summary judgment should

be affirmed.

                                  ARGUMENT
      Summary judgments are reviewed de novo. Merriman v. XTO Energy, Inc.,

407 S.W.3d 244, 248 (Tex. 2013); Nalle Plastics Family L.P. v. Porter, Rogers,

Dahlman & Gordon, P.C., 406 S.W.3d 186, 199 (Tex. App.—Corpus Christi 2013,

pet. denied). To be entitled to summary judgment, the movant must establish that

there is no genuine issue as to any material fact, and that the movant is entitled to

judgment as a matter of law. TEX. R. CIV. P. 166a; Nalle Plastics Family L.P., 406

S.W.3d at 199-200. A defendant can meet its summary-judgment burden by

conclusively negating at least one element of each cause of action or conclusively

establishing each element of an affirmative defense. See Sci. Spectrum, Inc. v.

Martinez, 941 S.W.2d 910, 911 (Tex. 1997). Defendants did both here.

I.    All of Patel’s claims are barred by limitations.

      A.       Patel’s claims accrued by March 10, 2008.
      Patel’s claims all arise out of the termination of his partnership interest. The

determination of when those claims accrued, and when the statute of limitations

began to run, is a question of law. See Valdez v. Hollenbeck, 465 S.W.3d 217, 229

                                          6
(Tex. 2015) (“When a cause of action accrues is typically a question of law.”);

Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264, 274-75 (Tex. 2004)

(“Accrual of limitations is a question of law for the court.”). To answer that

question, the Court must decide when facts came into existence that authorized

Patel to seek a judicial remedy. See Exxon Corp. v. Emerald Oil & Gas Co. L.C.,

348 S.W.3d 194, 202 (Tex. 2011); Provident Life & Accident Ins. Co. v. Knott, 128

S.W.3d 211, 221 (Tex. 2003). “In most cases, a cause of action accrues when a

wrongful act causes a legal injury, regardless of when the plaintiff learns of that

injury or if all resulting damages have yet to occur.” Knott, 128 S.W.3d at 221.

      Patel’s claims accrued on the March 10, 2008 deadline. In failing to supply

updated financial information by that deadline, he forfeited his partnership interest.

Patel was notified by letter of the deadline and that he would be expelled and his

interest terminated. He was notified that he would “forfeit to the partnership the

entire value of your partnership interest upon your termination and expulsion.”

App’x Tab A (Supp.CR103). On receipt of the letter, Patel was on actual notice of

facts in existence that authorized him “to seek a judicial remedy.” See Knott, 128

S.W.3d at 221.

      Patel claims the letter was only a threat, but the letter was more than that. He

received notice of the reason for the termination of his partnership interest and the

deadline for his compliance. He knew from the letter that he had only until March



                                          7
10, 2008, to act to avoid termination of his partnership interest. App’x Tab A

(Supp.CR103). The Partnership plainly informed him that if he ignored the

deadline his interest would be terminated. His interest was in fact terminated, and

the termination was made effective as of January 1, 2008. But for purpose of the

accrual of his causes of action, by March 10, 2008, facts had come into existence

that permitted him to seek a judicial remedy.

      The March 4, 2008 notice was mailed by regular mail and certified mail.

CR121. When notice is sent to a proper address by regular mail there is a

presumption of receipt that may only be overcome by sworn proof of non-receipt.

See Thomas v. Ray, 889 S.W.2d 237, 238-39 (Tex. 1994). In Thomas, the Court

explained:

             When a letter, properly addressed and postage prepaid, is
             mailed, there exists a presumption that the notice was
             duly received by the addressee. This presumption may be
             rebutted by an offer of proof of nonreceipt. In the
             absence of any proof to the contrary, the presumption has
             the force of a rule of law.

Id. at 238. (internal citations omitted). Moreover, section 13.2 of the Partnership

Agreement provides that notice shall be deemed completed two days after it is

deposited in the United States mail, first class, postage prepaid. CR67.

      Patel testified that the letter was properly addressed to his residence and he

confirmed his wife’s signature on the certified letter. CR94. The fact that Patel did

not personally sign the green card does not rebut the presumption or constitute


                                          8
evidence of non-receipt. See Luna v. Runyon, No. 03-06-00615-CV, 2008 WL

2609171, at * 2 (Tex. App.—Austin 2008, pet. denied) (mem. op.). Patel neither

denied receipt of the copy sent by regular mail nor offered proof of non-receipt.

CR95-96. When he was asked if his wife brought the certified letter to his

attention, he simply stated, “[s]he may have. I just don’t recall." CR95. And he

testified, “Well, I’m not telling you I didn’t read it. I just don’t recall.” Id. Under

the circumstances, the presumption that he received the notice “has the force of a

rule of law.” See Thomas, 889 S.W.2d at 238. His claims accrued and the statute of

limitations began to run when he learned of facts giving rise to his right to seek a

judicial remedy—by March 10, 2008.

      B.     Neither the discovery rule nor fraudulent concealment delays
             accrual or tolls limitations here.
      The Texas Supreme Court has recognized two limited doctrines that in

appropriate circumstances may delay accrual or toll limitations: (1) the discovery

rule, and (2) fraudulent concealment. See Valdez v. Hollenbeck, 465 S.W.3d 217,

229 (Tex. 2015). Contrary to Patel’s argument, neither doctrine applies here.

             1.     The discovery rule does not apply because the alleged injury
                    was not of the limited type that is inherently
                    undiscoverable.
      The discovery rule is a “very limited exception” to statutes of limitations

that applies “in certain limited circumstances.” Computer Assocs. Int’l., Inc., v.

Altai, Inc., 918 S.W.2d 453, 456-57 (Tex. 1994). When it applies, the doctrine


                                          9
“defers the accrual of the cause of action until the injury was or could have

reasonably been discovered.” Shell Oil Co. v. Ross, 356 S.W.3d 924, 929-30 (Tex.

2011). The Supreme Court has limited the discovery rule to “exceptional cases to

avoid defeating the purposes behind the limitations statutes.” Via Net v. TIG Ins.

Co., 211 S.W.3d 310, 313 (Tex. 2006) (per curiam).

      The discovery rule applies “only when the nature of the plaintiff’s injury is

both inherently undiscoverable and objectively verifiable.” Wagner & Brown, Ltd.,

58 S.W.3d 732, 734 (Tex. 2001). The legal question of whether an injury is

inherently undiscoverable “is decided on a categorical rather than a case-specific

basis; the focus is on whether a type of injury rather that a particular injury was

discoverable.” Via Net, 211 S.W.3d at 314. A type of injury is inherently

undiscoverable only if it is by its nature unlikely to be discovered within the statute

of limitations despite due diligence. Id. at 313.

      The loss of an interest in a partnership is not the type or category of injury

that can be described as inherently undiscoverable. The Texas Supreme Court has

explained that breach-of-contract cases to which the discovery rule would apply

“should be rare, as diligent contracting parties should generally discover any

breach during the relatively long four-year limitations period provided for such

claims.” Id. at 315. The exercise of due diligence in this case in responding to the

letter would have provided Patel any information he did not already know. The



                                          10
loss of a partnership interest is not the type or category of injury that is unlikely to

be discovered despite due diligence. Indeed, Patel’s 2008 IRS schedule K-1 and his

non-receipt of K-1 schedules in the subsequent years made the injury not merely

discoverable, but obvious.

       Patel cites section 13.4 of the Partnership Agreement as requiring his

signature on the termination to make it effective. App’x Tab C (CR68).4 And he

cites section 3.4 to the same effect. Id. (CR45).5 But his termination was

involuntary, not voluntary. Section 13.4 begins with the words “Except as

otherwise expressly provided in this Agreement.…” Id. (CR68). Section 10.2

expressly provides for the expulsion of a limited partner and the involuntary

termination of his interest by the general partner. Id. (CR62). And Section 3.4

applies only to “agreed” changes, not involuntary termination. Id. (CR45).

       Section 12.1 expressly provides that each limited partner “authorizes” and

“ratifies and confirms” the actions of the general partner in, among other things,

executing “[a]ll instruments and documents necessary to effectuate or act upon any

reallocation of a defaulting partner’s partnership interest.” Id. (CR66). The contract

does not require Patel’s consent in writing to an involuntary termination. He knew

4
 Section 13.4 provides in part: “Except as otherwise expressly provided in this Agreement, no
modification, waiver or termination of this Agreement, or any part hereof, shall be effective
unless made in writing signed by the party or parties sought to be bound thereby….”
5
  Section 3.4 provides that “Any changes, additions or deletions to the list of GPs or LPs or their
partnership interests made and agreed upon hereafter from that listed on Exhibit ‘A’ shall be
recorded on Exhibit ‘C’ and initialed by all GPs and any LPs whose PI has so changed.”


                                                11
that when he signed the Partnership Agreement. Royston, Rayzor, Vickery &

Williams, LLP v. Lopez, 467 S.W.3d 494, 500 (Tex. 2015) (“[A]bsent fraud,

misrepresentation, or deceit, one who signs a contract is deemed to know and

understand its contents and is bound by its terms.”). He also knew that when he

received the termination letter. Requiring a partner’s consent in writing for an

involuntary termination to be effective would render the section authorizing

involuntary termination meaningless. In construing a written contract, a court

“must examine and consider the entire writing in an effort to harmonize and give

effect to all the provisions of the contract so that none will be rendered

meaningless.” J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003).

      Furthermore, even when applicable, the discovery rule only tolls accrual

“until the injury was or could have reasonably been discovered.” Shell Oil Co., 356

S.W.3d at 929-30. The “injury was or could have reasonably been discovered” by

the March 10, 2008 deadline. Patel discovered or could have reasonably discovered

then that he failed to meet the deadline, and knew or could have reasonably

discovered the forfeiture of his partnership interest.

      Patel also claims that somehow his interest may not yet have been

terminated. This argument ignores not only the terms of the Agreement but his

own 2008 tax return showing he no longer owned an interest in the Partnership.

App’x Tab B (CR141). The contract authorized the general partner to reallocate his



                                          12
interest, and the Partnership Agreement was amended as permitted by the

Agreement. Nothing about this type of alleged injury brings it within the narrow

orbit of the discovery rule.

             2.     The fraudulent concealment doctrine does not apply
                    because the Partnership did not try to conceal termination
                    of Patel’s interests and Patel had notice of facts giving rise
                    to his claims by March 2008.
      The fraudulent concealment doctrine also does not apply. Fraudulent

concealment tolls limitations until fraud is discovered or should have been

discovered with reasonable diligence. Valdez, 465 S.W.3d at 229. It is an

affirmative defense to the statute of limitations under which the plaintiff has the

burden of proof. See Weaver v. Witt, 561 S.W.2d 792, 793 (Tex. 1977).

      Defendants did not try to conceal the termination of Patel’s interest in the

Partnership. To the contrary, they actually advised him of the occurrence of

forfeiture in the March 4th letter. App’x Tab A (Supp.CR102-06). Patel testified

that he had no reason to believe that the Partnership did not terminate his interest

as provided in the letter. CR96. He filed a K-1 with his tax return showing zero

interest in the Partnership for 2008, and he did not receive any additional K-1

schedules in the following years. CR96-97.

      The Texas Supreme Court has explained that, even in cases of alleged fraud,

in some circumstances a court “can determine as a matter of law that reasonable

diligence would have uncovered the wrong.” Hooks v. Samson Lone Star, Ltd.


                                        13
P’Ship, 457 S.W.3d 52, 58-59 (Tex. 2015); see also Cosgrove v. Cade, 468 S.W.3d

32, 38-39 (Tex. 2015). When there is actual or constructive notice, the accrual of a

fraud claim is not delayed. Cosgrove, 468 S.W.3d at 38-39 (citing Hooks). By

March 2008, Patel was aware that he was being expelled, yet he did not exercise

any right to judicial relief until he filed suit more than four years later on June 15,

2012.

        Nor can Patel create an issue based on the fact that Partnership Amendment

4 was executed twice. Both documents give the effective date of the termination as

January 1, 2008. CR126, CR135. And in filing his 2008 tax return, he reported a

zero interest in the Partnership for 2008. App’x Tab B (CR141).

              3.    The presence of fiduciary duties does not relieve Patel of his
                    own obligation of diligent inquiry.
        Patel is not entitled to special consideration due to any fiduciary duty owed

to him as a limited partner. First, the Texas Supreme Court has explained that

“partners have no obligation to remain partners.” Bohatch v. Butler & Binion, 977

S.W.2d 543, 545 (Tex. 1996). “The fiduciary duty that partners owe one another

does not encompass a duty to remain partners or else answer in tort damages.” Id.

at 546. And second, a fiduciary’s misconduct is only inherently undiscoverable in

situations when the person to whom a fiduciary duty is owed is either unable to

inquire into the fiduciary’s actions or unaware of the need to do so. See S.V. v.

R.V., 933 S.W.2d 1, 8 (Tex. 1996). As the Supreme Court has explained,


                                          14
            [w]hile a person to whom a fiduciary duty is owed is
            relieved of the responsibility of diligent inquiry into the
            fiduciary’s conduct, so long as that relationship exists,
            when the fact of misconduct becomes apparent it can no
            longer be ignored, regardless of the nature of the
            relationship.

Id. Defendants took affirmative steps to put Patel on notice of the impending

expulsion from the Partnership. App’x Tab A (CR121;Supp.CR102-06). Patel

simply chose to ignore his obligations. CR97. Patel was neither unable to inquire

nor unaware of the need to do so. Neither the discovery rule nor the doctrine of

fraudulent concealment applies.

            4.     The same statute of limitations applies to Patel’s
                   declaratory-judgment claim as to his substantive claims.
      Finally, Patel argues that the trial court improperly disposed of his

declaratory-judgment claim. But Defendants moved for summary judgment on all

of his substantive claims, and it was properly granted on all of them. As the First

Court of Appeals has stated, “because claims for declaratory relief necessarily

derive from claims for substantive relief, the statute of limitations for the

underlying action at law is applied to an accompanying action for declaratory

relief.” Schrock v. City of Baytown, No. 01-13-00618, 2015 WL 1882190, at *7

(Tex. App.—Houston [1st Dist.] April 23, 2015, no pet.) (mem. op.). Because all

of Patel’s underlying substantive claims were barred by limitations, the procedural

device and remedy of a declaratory judgment was also properly dismissed. See id.;



                                        15
In re Estate of Denman, 362 S.W.3d 134, 144 (Tex. App.—San Antonio 2011, pet.

denied) (“Because a declaratory judgment action is a procedural device used to

determine substantive rights, to determine the applicable limitations period, we

must look to the legal remedy underlying the cause of action.”).

      Any alleged misconduct was not inherently undiscoverable. Patel was

required to act. Since the termination occurred more than four years before he filed

his original petition, Patel’s claims for breach of partnership agreement, breach of

fiduciary duty, and fraud are barred. See TEX. CIV. PRAC. & REM. CODE ANN. §

16.004(a)(5).

      Patel had two years from accrual to file his claims for conversion and

violation of the Texas Theft Liability Act. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 16.003. He was on notice in March 2008 of his expulsion from the Partnership,

and admits that he received, sometime in 2009, the 2008 K-1 showing a zero

interest in the partnership. CR96. He also admits that he included this K-1 in his

2008 tax return. CR96. Having waited to file suit until June 15, 2012, Patel’s

claims are time-barred, as any claim for an alleged conversion or theft accrued

before June 15, 2010.

      The trial court properly granted summary judgment on all claims based on

the statute of limitations. The judgment should be affirmed.




                                         16
II.     Defendants conclusively negated at least one element of each of Patel’s
        claims.

      A defendant can meet its summary-judgment burden by conclusively negating

at least one element of each of a plaintiff’s claims. See Sci. Spectrum, 941 S.W.2d

at 911. Defendants did that here with respect to each of Patel’s claims, as to

damages on the fraud claim and as to both damages and another element on all

other claims.

        A.    Patel has no breach-of-fiduciary-duty claim.
        Breach of fiduciary duty is a tort. Douglas v. Aztec Petroleum Corp., 695

S.W.2d 312, 318 (Tex. App.—Tyler 1985, no writ). The elements for a breach-of-

fiduciary-duty claim are: (1) plaintiff and defendant had a fiduciary relationship;

(2) defendant breached this duty; (3) this breach resulted in harm to plaintiff or

benefit to defendant. See Graham Mortg. Corp. v. Hall, 307 S.W.3d 472, 479 (Tex.

App.—Dallas 2010, no pet.).

        Harbor Hospice Managers, L.L.C., the general partner of Harbor Hospice of

Beaumont, L.P., terminated Patel’s limited partnership interest in the Partnership.

Patel alleges this termination of his partnership interest was a breach of fiduciary

duty. But the Supreme Court has already determined that, as a matter of law,

“partners have no obligation to remain partners.” Bohatch, 977 S.W.2d at 545. The

fiduciary duty that partners owe each other “does not encompass a duty to remain




                                        17
partners or else answer in tort damages.” Id. at 546.6 Defendants had no fiduciary

duty to remain partners with Patel. See LG Ins. Mgmt. Servs., LP v. Leick, 378

S.W.3d 632, 643 (Tex. App.—Dallas 2012, pet. denied). As a matter of law, Patel

has no breach-of-fiduciary-duty claim based on the termination of his partnership

interest.

       Furthermore, any action taken after termination of Patel’s partnership

interest, for example in transferring his former interest, cannot be a breach of

fiduciary duty either. No fiduciary duty is owed to a former partner after the

partnership interest is terminated. See id.

       Even if a duty were owed, Defendants’ actions were proper as a matter of

law. Defendants’ actions complied with the Partnership Agreement and the statutes

governing partnership fiduciary obligations. See TEX. BUS. ORG. CODE ANN. §

152.002(a) (partnership statutes govern to the extent a partnership agreement does

not otherwise provide).

       A partner’s fiduciary duty includes: (1) duty of loyalty to the joint concern;

(2) duty of good faith, fairness, and honesty in dealings with each other on matters

pertaining to the partnership; (3) duty of full disclosure of all matters; (4)

accounting for partnership profits and property; and (5) refraining from competing
6
  Moreover, there is no claim that the limited partners terminated Patel’s interest; limited partners
generally do not owe any fiduciary duty to each other in this context. See Strebel v. Wimberly,
371 S.W.3d 267, 281 (Tex. App.—Houston [1st Dist.] 2012, pet. denied). But see LG Ins. Mgmt.
Servs., LP v. Leick, 378 S.W.3d 632, 643 n.8 (Tex. App.—Dallas 2012, pet. denied) (“Texas law
is not clear whether limited partners owe each other fiduciary duties.”).


                                                 18
or dealing with the partnership in a manner adverse to the partnership. See

Bohatch, 977 S.W.2d at 545; Brosseau v. Ranzau, 81 S.W.3d 384, 394-95 (Tex.

App.—Beaumont 2002, pet. denied). The claimed actions of Defendants in

terminating Patel’s interest do not constitute a breach of any of these duties.

      Patel cites various provisions of the Agreement that he claims required his

consent to the termination and reallocation of his interest. But his termination was

involuntary. Section 10.2 expressly provides for the expulsion of a limited partner

and the involuntary termination of his interest by the general partner. App’x Tab C

(CR62). Section 12.1 expressly provides that Patel “authorizes” and “ratifies and

confirms” the actions of the general partner in, among other things, executing “[a]ll

instruments and documents necessary to effectuate or act upon any reallocation of

a defaulting partner’s partnership interest.” Id. (CR66). The Agreement does not

require Patel’s consent to an involuntary termination or to the reallocation of his

interest as a defaulting partner. Id. (CR62,66). The Agreement he signed

authorized his involuntary termination and in that Agreement he ratified and

confirmed the reallocation of his interest. Id. (CR62,66). He knew that when he

signed the Agreement and when he received the March 4th letter from the

Partnership. App’x Tab B (CR121;Supp.CR102-06). He acknowledged that when

he filed his tax return showing a zero partnership interest. CR96; App’x Tab B

(CR141).



                                          19
      As the Supreme Court stated in Bohatch, partners may choose with whom

they associate. See Bohatch, 977 S.W.2d at 545. Patel can point to no requirement

in the Agreement or the law that barred Defendants from rejecting him as their

partner. Once the decision was made to reject him, he was notified, and under the

terms of the Agreement, he was not owed any money. Regardless of the language

used in the resolution terminating his interest, the termination was not a breach of

fiduciary duty. See id. at 546.

      A partner is presumed to satisfy the duty of care if the partner acts on an

informed basis and in good faith with a reasonable belief that it is acting in the

partnership’s interest. TEX. BUS. ORG. CODE ANN. § 152.206. Removing Patel from

the Partnership was objectively in the best interest of the Partnership. Patel had

shown himself to be unreliable by not finishing the construction properly and by

failing to pay subcontractors on-time, if at all. CR105,110-11. He held the half-

completed major construction project hostage for an increase in ownership.

CR107,116. He proved to be detrimental to the Partnership yet again when he

failed to respond to the bank’s request for financial information. This forced the

Partnership to have to refinance the loan with another bank. CR117. Considering

that Patel put up no money for his interest, but was supposed to successfully

complete the construction project (CR92-93,110), his failure to act and his cavalier




                                        20
attitude towards his partnership commitments and responsibilities were not in the

best interest of the Partnership.

      A partnership has the right to rid itself of partners who do not live up to their

obligations. To exercise that right cannot be a violation of a fiduciary duty. The

trial court properly granted summary judgment on the fiduciary-duty claim.

      B.     There is no genuine issue of material fact as to breach of contract.
      To prevail on a breach-of-contract claim, a plaintiff must prove: (1) there is

a valid, enforceable contract; (2) the plaintiff is a proper party to sue for breach of

contract; (3) the plaintiff performed, tendered performance of, or was excused from

performing its contractual obligations; (4) the defendant breached the contract; and

(5) defendant’s breach caused plaintiff injury. See B&W Supply, Inc. v. Beckman,

305 S.W.3d 10, 16 (Tex. App.—Houston [1st Dist.] 2008, pet. denied). The trial

court properly granted summary judgment on Patel’s breach-of-contract claim

because there is no question of fact with respect to any breach.

      Under Texas Business Organizations Code section 153.105, rights of limited

partners may only be created by: (1) the certificate of formation; (2) the partnership

agreement; (3) other sections of that chapter; or (4) other limited partnership

provisions. TEX. BUS. ORG. CODE ANN. § 153.105. Section 152.002(a) of the Code

provides:

             Except as provided by Subsection (b)[not relevant here],
             a partnership agreement governs the relations of the


                                          21
            partners and between the partners and the partnership. To
            the extent that the partnership agreement does not
            otherwise provide, this chapter and the other partnership
            provisions govern the relationship of the partners and
            between the partners and the partnership.

Id. § 152.002(a); see also id. § 153.003. Therefore, unless the Partnership

Agreement conflicts with a non-waivable provision of the law, the Agreement

governs the permissible actions by members of the Partnership with relation to it

and one another.

      Section 10.2 of the Partnership Agreement allowed the general partner to

terminate Patel’s partnership interest and expel him from the Partnership:

            Expulsion. All of the general partners may unanimously
            terminate the interest of a limited partner and expel
            him… (c) for failing to meet any commitment to the
            partnership or manager in accordance with any written
            undertaking signed by such limited partner… [T]he
            expulsion and termination may, in the sole discretion of
            the general partners in order to compensate for any
            damages caused to the partnership, result in a forfeiture
            to the partnership of all or a portion of the value of the
            partnership interest of the expelled partner at the time of
            such expulsion or termination.

App’x Tab C (CR62).

      No provision of the Texas Business Organizations Code prohibits partners

from agreeing to expulsion provisions in a partnership agreement. Because Patel

failed to meet his commitments to the Partnership, his interest was terminated and

his partnership interest was forfeited under section 10.2 of the Partnership



                                         22
Agreement. App’x Tab C (CR62); App’x Tab A (Supp.CR102-06). An amendment

to the Partnership Agreement was executed to document the fact Patel was no

longer a member of the Partnership effective January 1, 2008. CR126-29. Patel’s

2008 K-1, which he admitted filing with the IRS, accordingly showed his capital

account and ownership interest as zero. CR96,98, App’x Tab B (CR141).

      The forfeiture of the value of Patel’s partnership interest was “in the sole

discretion” of the general partner. App’x Tab A (CR62). The Partnership had the

right to expel him under section 10.2, and Patel cannot identify any provision of

the Agreement that was breached. There is no genuine issue of material fact

regarding Patel’s claim of breach of the Partnership Agreement. The trial court

properly granted summary judgment on the breach of contract claim.

      C.    There is no genuine issue of material fact as to conversion and
            theft.
      The trial court also properly granted a summary judgment on Patel’s

conversion and theft liability claims. The elements of conversion are: (1) the

plaintiff owned, possessed, or had the right to immediate possession of property;

(2) the property was personal property; (3) the defendant wrongfully exercised

dominion or control over the property; and (4) the plaintiff suffered injury. See

Green Int’l v. Solis, 951 S.W.2d 384, 391 (Tex. 1997); Alan Reuber Chevrolet, Inc.

v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 888-89 (Tex. App.—Dallas 2009, no

pet.). The elements are similar under the Theft Liability Act. TEX. CIV. PRAC. &


                                       23
REM. CODE ANN. §§ 134.002(2) (“‘Theft’ means unlawfully appropriating property

or unlawfully obtaining services….”), 134.003.

       Patel violated the Partnership Agreement and triggered the expulsion clause.

Defendants had the right to take control of his partnership interest under section

10.2 of the Agreement. App’x Tab C (CR62). Furthermore, when ownership of

property is subject to a legitimate claim under a contract, there is no theft. See

Bokor v. State, 114 S.W.3d 558, 560 (Tex. App.—Fort Worth 2002, no pet.).

Patel’s expulsion and the reallocation of his partnership interest were authorized by

the contract. See, e.g., Bandy v. First State Bank, 835 S.W.2d 609, 622 (Tex. 1992)

(no conversion when bank had right to offset deposits against customer’s debts).

There is no genuine issue of material fact as to whether expulsion was justified or

authorized by the contract; therefore the termination of Patel’s interest cannot

constitute conversion or theft. The trial court properly granted summary judgment

on these claims.

III.   There is no fact question as to damages.
       Furthermore, there is no fact question as to whether Patel suffered any injury

from any of Defendants’ alleged actions. The Partnership Agreement governs the

relationship of the parties. Once Patel signed the Agreement, he agreed to each of

the following provisions:




                                         24
   Section 4.2 Return of Capital.

    Except as otherwise expressly provided for elsewhere herein, no
    partners shall be entitled to a refund or return of any capital
    contributions nor to withdraw any part of his capital account nor to
    receive any distributions of any kind, including of profits, from the
    partnership, except upon termination of the partnership which shall
    mean a complete winding up of the partnership and following the
    filing of a certificate of cancellation. App’x Tab C (CR45-46).

   Section 8.1 General Limitations.

    No limited partner may sell, pledge, transfer, exchange, hypothecate,
    encumber, give, devise, assign or otherwise dispose of or allow to be
    attached (“transfer” or “assign”) any portion of his partnership interest
    nor may he withdraw from the partnership without the prior written
    consent of all of the general partners, which decision shall be made at
    their sole discretion. Id. (CR53).

   Section 8.5 Redemption of Partnership Interest

    a.    The partnership interest of all limited partners are subject to
          redemption by the partnership at the election of the general
          partners. In the event the general partners make such an
          election, the general partners shall provide the limited partner
          whose partnership interest is to be redeemed (the “Redeemed
          Partner”) with at least sixty (60) days’ prior written notice of
          the redemption.

    b.    The purchase price of the Redeemed Partner’s LPI shall equal
          the balance of the Redeemed Partner’s capital account
          established under Section 5.1 hereof, determined as of the end
          of the calendar month immediately preceding the month in
          which the closing of the redemption transaction takes place. Id.
          (CR57-58).

   Section 10.2 Expulsion

    All of the general partners may unanimously terminate the interest of
    a limited partner and expel him (a) for interfering in the management
    of the partnership affairs or otherwise engaging in conduct which

                                25
             could result in the partnership losing its tax status as a partnership, (b)
             if the conduct of a limited partner brings the partnership into
             disrepute, or (c) for failing to meet any commitment to the partnership
             or manger in accordance with any written undertaking signed by such
             limited partner, but the general partners shall be not be required to so
             terminate. In each of the foregoing events, the expulsion and
             termination may, in the sole discretion of the general partners in order
             to compensate for any damages caused to the partnership, result in a
             forfeiture to the partnership of all of a portion of the value of the
             partnership interest of the expelled partner at the time of such
             expulsion or termination. Id. (CR62).

      Under these provisions, any partner who leaves the partnership, either

voluntarily or through expulsion, leaves with nothing more than his capital

account. Patel had a negative balance in his capital account. CR130-33. The value

of Patel’s capital account was never a positive amount during any time in which he

was a partner. As a matter of law he suffered no injury.

IV.   The summary judgment evidence was properly considered by the trial
      court.
      Patel claims for the first time on appeal that the summary judgment proof

was not properly authenticated. The objection has no merit. See TEX. R. CIV. P.

166a(d). The summary judgment evidence in this case consists exclusively of

deposition testimony and deposition exhibits. It was not necessary to authenticate

them. McConathy v. McConathy, 869 S.W.2d 341, 341 (Tex. 1994); Neely v.

Comm’n for Lawyer Discipline, 302 S.W.3d 331, 344 n.14 (Tex. App.—Houston

[14th Dist.] 2009, pet. denied) (“Deposition transcripts and the exhibits discussed




                                          26
in the deposition need no authentication and constitute proper summary judgment

evidence.”).

      This Court and the Ninth Court of Appeals have applied Rule 166a(d) to

discovery documents and concluded authentication was unnecessary. The Ninth

Court ruled “[a]uthentication of discovery documents is unnecessary if the

proponent complies with Rule 166a(d).” Guidry v. Wells, No. 09-05-00182-CV,

2006 WL 246493, at *1 (Tex. App.—Beaumont 2006, no pet.) (mem. op.) (holding

that referring to requests for admission and attaching an unauthenticated copy

satisfied Rule 166a(d)). Likewise, in Mowbray v. Avery, this Court explained that

two exhibits “were discovery documents in the same case and so do not need to be

authenticated to serve as summary judgment proof.” 76 S.W. 3d 663, 689 n.44

(Tex. App.—Corpus Christi 2002, pet. denied).

      Patel did not object in the trial court and does not argue in this Court that

any of the summary judgment evidence is not subject to Rule 166a(d). See Cotton v

Cotton, 169 S.W.3d 824, 829 (Tex. App.—Dallas 2005, pet. denied) (“To the

extent the ‘exhibits’ are discovery products, Neel’s argument is not well taken, and

Neel makes no argument that the exhibits are not subject to rule 166a(d).”). He

does not point to any one exhibit as objectionable; he globally objects to them all

without mentioning Rule 166a(d). Yet he did not object to the summary judgment

evidence in the trial court. He did not ask the trial court for a ruling on any



                                        27
objection to the evidence. He has waived the objection. See TEX. R. APP. P. 33.1;

City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 677 (Tex. 1979);

Pink v. Goodyear Tire & Rubber Co., 324 S.W.3d 290, 301 (Tex. App.—

Beaumont 2010, writ dism’d) (“Generally a party is required to obtain an express

ruling on its objection to summary judgment evidence.”); Neely, 302 S.W.3d at

344-45.

      Patel’s objection has no basis. The deposition excerpts and exhibits were

properly considered by the trial court under Rule 166a(d), and any objection cannot

be made for the first time on appeal.

                                        PRAYER

      Appellees respectfully request that the summary judgment be affirmed.

                                         Respectfully submitted,

                                         MEHAFFYWEBER, P.C.

                                         By: /s/ David Gaultney
                                         David Gaultney
                                         State Bar No. 07765300
                                         davidgaultney@mehaffyweber.com
                                         Elana Einhorn
                                         State Bar No. 06502455
                                         elanaeinhorn@mehaffyweber.com
                                         MehaffyWeber, P.C.
                                         823 Congress Avenue, Suite 200
                                         Austin, Texas 78701
                                         Phone: (512) 394-3840
                                         Fax: (512) 394-3860




                                           28
Jeremy Stone
State Bar No. 24013577
jeremystone@mehaffyweber.com
MehaffyWeber, P.C.
500 Dallas, Suite 1200
Houston, Texas 77002
Phone: (713) 655-1200
Fax: (713) 655-0222

David E. Bernsen
State Bar No. 02217500
dbernsen@bernsenlaw.com
Christine L. Stetson
State Bar No. 00785047
cstetson@bernsenlaw.com
420 North MLK, Jr. Pkwy
Beaumont, Texas 77701
Phone: (409) 212-9994
Fax: (409) 212-9411

Glen W. Morgan
State Bar No. 14438900
gmorgan@rmqlawfirm.com
John Werner
State Bar No. 00789720
jwerner@rmqlawfirm.com
Reaud, Morgan & Quinn
801 Laurel St.
Post Office Box 26005
Beaumont, Texas 77720-6005
Phone: (409) 838-1000
Fax: (409) 833-8236

Brandy Wingate Voss
State Bar No. 24037046
brandy@appealsplus.com
Smith Law Group L.L.L.P.
820 E. Hackberry Ave.
McAllen, Texas 78503
Phone: (956) 683-6330


 29
                                       Fax: (956) 225-0406

                                       Attorneys for Harbor Hospice of Beaumont,
                                       LP, Harbor Hospice Manager, L.L.C, Qamar
                                       Arfeen, and Arfeen Properties, L.P.



                      CERTIFICATE OF COMPLIANCE

      I certify that this Appellees’ Brief complies with the length limits of Tex. R.
App. P. 9.4(i). The Brief contains 6,837 words, not counting the contents excluded
by Rule 9.4(i)(1).

                                       /s/ David Gaultney




                                         30
                         CERTIFICATE OF SERVICE

      I certify that a true and correct copy of this document has been forwarded to
the following counsel of record via electronic filing manager and e-mail on
December 10, 2015.

Chris Portner                             Jamie D. Matuska
cportner@portnerbond.com                  jamie@matuskalaw.com
J. Trenton Bond                           Matuska Law Firm
tbond@portnerbond.com                     2809 Highway 69 North
Portner Bond, P.L.L.C.                    Nederland, Texas 77627
1905 Calder A venue                       (409) 722-5600 Telephone
Beaumont, Texas 77701                     (409) 727-1290 Facsimile
(409) 838-4444 Telephone
(409) 554-0240 Facsimile

Anthony Malley, III
tony@mallaw.com
Malley Law Firm, P.L.L.C.
905 Orleans, Suite 110
Beaumont, Texas 77701
(409) 212-8888 Telephone                  ATTORNEYS FOR APPELLANT,
(409) 212-8002 Facsimile                  SANDEEP PATEL



                                             /s/ David Gaultney




                                        31
                           No. 13-15-00452-CV

              IN THE THIRTEENTH COURT OF APPEALS
                CORPUS CHRISTI—EDINBURG, TEXAS


                              SANDEEP PATEL,
                                                 Appellant,
                                     v.

 HARBOR HOSPICE OF BEAUMONT, LP, HARBOR HOSPICE MANAGER, LLC, QAMAR
                  ARFEEN, AND ARFEEN PROPERTIES, L.P.,
                                            Appellees.


           ON APPEAL FROM THE 172nd DISTRICT COURT,
            JEFFERSON COUNTY, TEXAS, NO. E-192,576

                         INDEX TO APPENDIX

Tab:          Description:

A.             Letter from the Partnership to Patel
B.             Patel’s 2008 IRS Schedule K-1
C.             Partnership Agreement




                                     32
             Tab A
(Letter from the Partnership to Patel)
                                                                                                          FILED
                                                                                                          DISTRICT CLERK OF
                                                                                                          JEFFERSON CO TEXAS
                                                                                                          1/22/2015 5:19:08 PM
              1
                                                                                                          JAMIE SMITH
                                                                                                          DISTRICT CLERK
                                                                                                          E-192576

                                                                                                                Maggie Parker

                                                                                                          GeMral Cot,lllsel and
                                                                                                 Director of Risk Management

                                                                                                Harbor Healt.hcara System, LP

                                                                                                        8515 Fannin, Suite lG7

                                                                                                          Beaumont, TX 7770i

                                                                                                            409.813.2332. office

                                                                                                              409.838.7598 fu

                                                                                                       mparkru:@harborhcs.com


                  March 4, 2008

                  VIA CERTIFIED 1.\'IAIL, RETUR.t~ RECEIPT REQUESTED AND REGULAR U.S. MAIL
                  Sandeep Patel
                  12802 Aspen Terrace
                  Cypress~ TX 7743j


     ()           Re:     Harbor Hospice of Beaumont, L.P.;
                          Loan fl330001985366 with Capital One1 N.A.

                  Dear Mr. Patel,

                  I am writing as General Counsel for Hat:bor Healthcare System~ L.P. and the Harbor Hospice
                  affiliates, including but not limited to Harbot· Hospice of Beaumont, L.P. As you know, the above
                  referenced loan on which you are a Guarantor matures March 12~ 2008. A copy of a letter from
                  Capital One dated February 25, 2008 was received this morning and is enclosed for your review. A
                  copy of the Cotntl:tercial Guaranty signed by you on th!s loan is also enclosed for your reference, as
l'
l
                  well as the Notice of Final Agreement.
I
i
I                 The bank has attempted on several occasions to obtain updated financials from you and yQu have
                  refused to provide same. Further, you have failed to return several phone messages regarding this
                  matter. If you do not provide updated financials to 1he bank on or before March 10, 2008, you will
                  be in material breach of your obligations .under the partnership agreement and the enclosed loah
                  documents.

                  Pursuant to Section 10.2 of the Agreement of Limited Partnership for Harbor Hospice of Beaumont,
                  .L.P~, '.'[~]~ <;>f .th~ g~~r~ p~~~r~ m~y .u~~O.l;l~ly terminat~. the inte!est of a !~t~d partnex:_ and
                  expel him .•. for failing to meet any commitment to the partnership or manager in accordance with
                  any written undertaking signed by such limited partner .... fTJhe expulsion and 1ermina~ion may,
                  in the sole discretion of the general partners in order to compensate for any damages caused to the
          )       partnership~ result in a forfeiture to the partnership of all or a portion of the· value of th.e partnership
                  interest of the expelled partner at the time of such expulsion or termination.,


                                                                                EXHIBIT     NO.~                  EXHIBIT "F":
                                                                                                                     102
                                                                                S. B~;·w!   4/l /J 4                 DEF000578
    ,..-\
    \   j

            Please allow this letter to serve as notice that unless you remedy this breach and provide updated
            financials to the bank on or before March 10, 2008, the general partner shall terminate your interest
            in Harbor Hospice of Beaumont~ L.P. and expel you for your continued breach of this written
            obligation. Please further note that if the general partner is forced to take action pursuant to Section
            10.2 of the partnership agreement, you will forfeit to the partnership the entire value of your
            partnershipinterest upon your term:ination and expulsion.

            Please give this matter your immediate attention. It is our hope that you will honor· your obligations
            and resolve this situation accordingly. Please give me a call to discuss your intentions on or before
            the March 10, 200& deadline.

            ve.ry nuty y~u:1}     .
            L-1!1;/!fp.e IM!h.
            ~~f:}Parker
            MMP/nunp
            Enc.



    ()




i
I
I
.
!




                                                                                                                 103
                                                                                                           DEF000579
    ~·            h



                      -CapitalOne®                                                                                                               I
("'\                                               <:ap.ual one, N.A.
\. J                                               F. 0. Box3597
                                                   Bato.n Rouge, 1A 70821
                                                   (225) 381·2000
                                                                                                                Roc:c:o v. Kuhn
                                                                                                                VIce President



                       February     25 1    2008


                      Harbor Hospice of Beaumont, L.P.
                      ATTN: Sandeep Patel 1 Member
                      2450 N. Major Drive
                      Beaumont/ TX. 77713

                       RE:    Loan i3300019S5366
                      Dear Mr. Patel:
                         ,.
                      The above referenced loan with Capital One, N.A. (~c.o.N.A.")
                      matures March 12" :woe and will become due and payable in full,
                      Due to this loan"s pending maturity, CONA hereby makes formal
(_)                   demand for the outstanding debt as follows:
                              Principal                                                     $493,708.32
                              Interest {through March 12, 2008)                               $3,373,67
                              Total Amount Due                                              $4971081.99
                      Formal qemand is hereby made for $497,081.99 to be paid on or
                      before March 12, 2008. Should you fail to comply with CONA's
                      formal demand for $.497, 081.99, it is CONA' s intention to proceed
                      with any legal action necessary to collect all sums due under
                      your Promissory Note, including all alla"lflable attorney's fees and
                      court costs which CONA incurs in collecting the amounts owed
                      under the said Note. Your remi.ttance must be paid by cashier's
                      check and mailed to the undersigned.
                       Should any payments less than the total outstanding balance plus all accrued
                       ;interest and :.fees be received £_rom you, C!ONA will apply those payments t:o
                       reduce your debt. However,. CON.A does not waive any or i.t::s rights and
                      _spea.iri.cally reserves its rights to enforC$ the terms of yo~r loan documents
                       even 1.£ those payment~ are reoe.:Lved and applied to your debt.




~
"'~      ,.
              )

                              CAPI~AL   ONB, N.A, • P. 0. BOX 3697_ • BATON   ~QUGE,   LA   108~1   • PttONBt     (225)   381-~214




                                                                                                                                         104
                                                                                                                                     DEF000580
.. ...   •,
              .
 ,.. \
\ l
                  February 25, 2008
                  Harbor Hospice of Beaumont, L.P.
                  ATTN: Sandeep Patel, Member
                  Page: 2


                  Should you have any questions concerning this matter, l can be
                  reached at (225) 381-2214.



                  1;Z.~
                  Rocco v. Kuhn
                  Vice !?resident
                  rvk/kwb.

                  cc:   File


()




                                                                                   105
                                                                               DEF000581
                                                                                                                                                                                      "




        -----~-----·-------




               C;JJpit~IOnee                                                                  ·'-":
                                                                                                                                                                             ~-¢;~ :~J                    -- ·~ ,._
                       .       ,            ,



                                                     Capital One, N.A.
                                                     P.o. Box 3597
                                                                                                                                                                       •
                                                                                                                                                                           f {l~<s~"f.R';m::.'~ ~
                                                                                                                                                                            <?;

                                                                                                                                                                           ':)~~ ...l...-~
                                                                                                                                                                                              '                    •



                                                     aaton Rouge, lA 70821                                                                                                 02 1A
                                                                                                                                                                           0004554243
                                                                                                                                                                                                   $   00. . 41°
                                                                                                                                                                                              FEB 26 200'8
                                                     ADDRESS SERVICE REQUESTED                                                                                             M.41iEO.FR01ill ZIP CODE 10802




                                                                                                  Harbor Hospice. of 'Beaumont, LP.
                                                                                                 ATIN: Sandeep Rate!,                     Mem~r
                                                                                                  2450 N. Majm::J)riv~ ....... _...              .. ···---·· ..
                                                                                                  BeaUfT!Ont, T)i                                                 __ _,......... ·- ·· - ..... ·· · ---- ·· · · ·-·· · .. --
                                                                                                                                                        709 N7E; .:1.· 'aO"?::t 2S .02/~S../Oe
                                                                                                                                   .        •..   . · · · .                  ..           .       r.a.Feh1 esq.7
                                                                                                                                   . :·HAREilbR .HGSF:tOE· OF·-S~al1MONT                                      .
                                                                                                                                       ·:Po eo.x. 23£'/'l'r . · .                                                      .
                                                                                                                                       SEAIJMONT TX 77"(~9-:307.7                                                              I
                                                                                                                                       ee~·.;~;r~~~077~i · .. *ae7~-~tX94~""2&-:'Se
0
m
"T1                                                                          ·•_,• ,,.:,.,..i .:.~~"::"'...;::::      ~{"ll   I
                                                                                                                                                                                                                           l.j
 106




0                                                                              . . . _ .... ,..._.,
                                                                                               ·~,...,.;    ....,.,w.
                                                                                                              ~~     ~.

g                                                                                                  '?7'720@307(.                       · l'lu!l~~~-;n.J~J,j~h)lJu~.iiiJdl.uiiu~JJ-niJlmUmJ,Jl.uj                           . -~
C'l
~      --·-...........-..-.-.......---...        --·------
                                        - " ......                       ----··-··~-----·
                                                                                                                                  ,•H>~·-'1"'· .... ···~~---------~               •••••"""--···     ........!,r,.~~
         Tab B
(Patel’s 2008 IRS Schedule K)
                         7

                                                                                                                                                                      651108
  Selledule K·1
  (Fmm 1065)                               ForcalMdoryoor 2003, or !lo>:
                                                                                2008
  Oa11artment of til& Troasury              yoor beglcmll!ll - - - - - - - - - - - !----...Al~lli!:ili!lru!:...Q!~:ru!Ll!lrul2!!!1§!!:J!!i!.IDL~
  lntemal R~Mmoo.SefllklD                          endll!ll - - - - - - - - - - - -
  Partner's Share of Income, ue.~:~uc..:aon:s,
  Credits, etc.

                                                                                                                  m;t rental income (loss)




                                                                                                                                                            min tax (AMT) Items




      D   D        Chook If tills Is a !}UbUc.'y lraded partnership {PTP)                                       sllort·lerm capitaroatn (toss)

                                                                                                                long·tarm capl!al gain (loss}
                          Information About the Partner
   E Partn&r'llldDntlf)llng number




                                                                           limttEtd partner or other lLC
                   rnember·mana\}or                                        member
   H      00 Dornesllc partner                                    D        Fnralgn partner
   I What type of entity Is this palinar? --=-I..;;;.N.;..;;D_I.;;;..V"'-'-'I"'-D~U..:c-AL-=-------         1----------+--1---------l
  J f>ltrtners share of profit, loss, and capital:
                     -Beginning                                                Eni!lng
          Profit                 6. 6 0 3529 h.                                   0.0000000%
          ~-                     6.6035294%                                       0.0000000%
    ca · 1                       6. 603529h.                                      0.0000000%
  K Partners share of liabllilies at year end:
    Nonrecourse ................................................ $ - - - - - - - - !-2S~!!!!Qllil!!§@!~lf!!.11~!l!i!!~J!lli!l!l!!!iQ!l,__ _ _ _~
    Qualified nonrecourse tlnancl.ng ........................ $ ------~
    RecQurse ................... ;;~......... .:. ..................... $ _ _ _ _ _ ___;;,_,

  t       P~rtners capital t~coounl analysis:
          Beginning capltafaecount .............................. $ ~-----'-<-::4:-::1:-''-:6:-:6~4i2-. <»
          C~pital eont!lbutlld during toe year .~............... $                    70 r 2 3 9 • ~
          Curran! year Increase (decrease) ..................... $ -----::-::,..--::,...,.,0:':-. ~
       Withdrawals & dlstrlbuHons ...........,.................. $(                          2 8 , 5 75 ~                            EXHIBIT No.ac:L
       Eadlno caf)itala~nt .................................... $                                      0 • u.

       00 Tax basis                        0GAAP                           D     Sectlon 704(b) book
                                                                                                                                     S. Bearcl4   /<f/I fi
LHA For Paperwtlfk R!!iluctlon At! Notlue, see lnstru~tlons lor Form 1ll55.                                                                      Sclledula K·1 (f11rm 11165) 2t!Ofl


                                                                                                       30                                                                     7
                                                                           2008.03040 HARBOR HOSPICE OF BEAUMONT 1 31200 __ 1
                                                                                                                       141
                                                                                                                                                         DEF002164
      Tab C
(Partnership Agreement)
.•




                            AGREEMENT OF LIMITED PARTNERSHIP
                          FOR HARBOR HdSPICS OF BEAUMONT, L.P.,
                               A TEXAS LIMITED PARTNERSHIP

       ----~This Agreement is made by and among each of the parties (all
      referred to as '~partners- 11)-Taent:.Tfied on E~~f-as·-ngenera±--------­
      partners" and as 11 1imited partners 11 , effective on the      n day of
       0"\..,...J~     , 2005 ( 11 effective date"). In consideration of the
      covenants of each other, these 11 partners 11 agree to the formation of
      this limited partnership ( 11 partnership 11 ) and to be bound by all of
      the following~

                                          ARTICLE l
                          FORMATION; NAME AND OFFICE; PURPOSE
              Section 1.1    Formation,

          The partners hereby form this limited partnership pursuant to
      the provisions of the Texas Revised Limited Partnership Act
      ("Act 11 ) ,

             Section 1.2     Name and Office.

           The name, register~¢ office 1 registered agent and principal
     office of the partnership are desi$;Jnat:ed on the Certificate of
     Limited Partnership {11Certificate 11 } 1 a copy of which is attached -M
     Exhibit ·u8 11 1 or shall become such other name, agent or address c1S
     the general partner(s} shall hereafter agree upon and designat~ by
     not·~£~ to the 1 imited partners and, where required 1 the Certiiicatt;:
     filed with the Secretary of State of Texas ( 1'S0S"} shall be
     am(:mded.
             Section 1.3     Purpose and Activities.

             The general purposes for which this partnership is organized
     are-:
             {a)     For the tranpaction of any or all lawful business;

            (b) To enter into any lawful arrangements for sharing profits
     and_losses in any transaction or transactions 1 and to promote· and
     organ:i ze other entitie~;,
             {c)     To invest 1 buy, sell 1 lease or deal in any property
     (pe~'sonal,      intangible, real or mixed) or t6 render services 1

          (d) 'l'o have and exercise all rights and powers that are now
     or may hereafter be granted to a limited partnership by law.


                                           1




                                                 EXHIBIT NO.    j_    Defendants p. ·3.
                                                 S. Beard   'f/fJiq            DEF00031542

                                                                                EXHIBIT "A"
      The foregoing shall be construed as objecta 1 purpose$, and
 powers and enumeration thereof shall not be held to l.ilni t or
 restrict in any martner the powers hereafter conferred on this
 partnership by the laws of the State of Texas.
       The objects~ purposes I and-powers--speci-fied-in-t-hi-s-eect :ian__ .______
 shall not be limited or restricted by reference to or inference
 from the term of any other clause or paragraph Pin this Agreement«
  { herein ) .
   11     11
               The objects, purposes, and. powers specified in each of
 the clauses or paragraphs herein shall be regarded as independent
 and cumulative objects, purposes <;>r powers·.
             .                                         .
       The specific activity in which the partnership intends to
 engage upon formation is to provide inpatient hospice cart?. and
 services related or incidental thereto to individuals·in need of
 such services.                                        ·

     Notwithstandirtg any provision in this Agreement to the
contrary, if a physician owns 1 directly or indirectly, an LP or GP
interest in the partnership, there shall be·an absolute prohibition
a9ainst the referral by that physician of that physician's patients
to the partnership for the receipt of hospice services covered by
Medicare, unless the hospice services are reimbursed under· the
hospice composite rate.
      Section 1.4   Partnership Property.
     The property· owned by the partnership may be held in the name
of the partnership or in the name of any general partner.
                             AR.TICLE I I

                                 TERM
     The term of the partnership shall commence on the effective
date of this agreement and shall continue for ninety-nine (99)
years, after which date the partnership shall dissolve, unless
sooner dissolved in accordance with the Act or upon the occurrence
of any of tpe following events of dissolution:
      (a)   the voluntary bankruptcy of the partnership;
     (b)    the termination and winding up of the partnership
pursuant to other provisions contained elsewhere herein; or

       (c)  the written agreement of all partners to dissolve the
Pa:rt.nershiPi

provided, however, that the sale or other disposition of all or


                                  2




                                                            Defend(lnts p. 4   -

                                                                    DEF00031643
 substantially all of the assets of the partnership or any time
 perioq of inactivity by the partnership shall not in and of itself
 dissolve or be grounds to dissolve the partnership.

                                ARTICLE III
                INTEREST OF GENERAL AND LIMITED
      Section 3:1     General Partner(s)

        The initial General Partner (the 11 GP11) is identified and its
address is listed on Exhibit 11 A11 under the caption "General
Partner 11 • The initial General Partner and each succeeding general
partner, whether one or more, is referred to individually and
collectively as general partner, general partners 1 GP, or GPs.
Each GP 13hall have a upartnership interest" {IIPJU) (which term is
defined in the Act) and shall be allocated profits and losse~ in
the percentage set forth opposite its name under the column labeled
11
   Pl"1 .subject to it being changed over time in accordance with the
other provisions herein. The aggregate or s~m of all partnership
intere.sts of all GPs ia referred to as the 11 AGIU (aggregate general
partnership interest}. The general partnership interest of a GP ·is
referred to as IIGPI 11 •

      Section 3.2    Limited Partners.

     There shall be three (3) classes of "limited partners"
(collect:tvely ~ the "LPs 11 and each 1 an \\LP 11 ) • as fo1.1ows! Class 'A,
Class B, and Class c. The initial Class A LPs and Class S LPa are
identified on Exhibit "A" under the caption "Limited PartnerS 11 •
The Class C limited partnership inte:rests shown on Exhibit 11 1\/1 are
initially reserved for future investors and shall be issued to such
investors in the discretion of the GP_        ·                '
      Except as otherwise provided in this Agreement, each LP have a
partnership interest and shall be allocated profits and losses in
the percentage set forth opposite his, her or its respective name
under the column labeled 11 PP 1 subject to it being changed over
time in accoroance with the other.provisions herein. The aggregate
or sum of al~ partnershi.p interests of all Lf's is referred to as
the 11 111..! '1 (aggregate limited partnership interest) . ·A LP Pl is
referred to as a "LPI".




                                                                  Defendants   p.   5


                                                                         DEF000317
                                                                                        44
          Section 3.3     Voting.
       Each partner shall have , the number o-r--votes--equ.a.l---to_tbe_ _ __
 percentage of their respective Pl (partnerahip interest{e)), The
 agg:regate or sum of all AGI and ALI shall be I'API 11 (aggregate
 partnership interest) .There shall be no difference in votirig rights
 among the different classes of LP!.
          Section 3.4     Changes.
      Any changes,,aclditions or deletions to the list of GPs o:r LPs
 or their partnership interests made and agreed upon hereafter from
 that listed on Exhibit 11 A11 shall be .recorded on Exhibit ncu ·and
 initialed by all GPs and any LPs whose PI nas so changed.
                                     ARTICLE IV

                              CAPITAL CONTRIBUTIONS
    ,. , Section 4.1      Capital Contributions.
     Each partner shall make (if he has· not already made the
contribution of capital to the partnership} contributions of cash 1
services, property or obligations set forth opposite his or her
name and initials on Exhibit nJ.\. 11 or ncu (if any shall be noted on
 ucu} •

          Sectio~   4.2   Return of Capital.
       Except as otherwise expressly provided for elsewhere herein,
 no partner shall be entitled to a r~fund or return of any capital
 contributions nor to withdraw any part of his capital account nor
 to receive any distributions of any kind, including of profits 1
frQm the partnership, except upon termination of the partnership
which shall mean a complete winding up of , the partnership anC!
following· the filing of a certificate of cancellation.          Such a
termination or winding up does not include a dissolution which
involves only a change in the relationship of the partners where
the partnership continues (referred to in the Act and he~e aa a
11
   reconstitution 11 ) . Mo):"eover, except as provided to the contrary
herein or by the law, the general -partner shall not be personally
liable for the return of contributions of oi additions to the
capital of any limited partner 1 or any portion thereof, it being
expressly understood that any such return shall be made solely from
partnership assets. The GP~ shall decide for each partner whether
he may receive property or oash in exchange of all or part .of his




                                                            Defendants p. e·
                                                                               45
                                                                   DEF000318
                   partnership interest if and when auch e:x.chang_e may be permitted by
                   the other provisions herein.

                         Section 4. 3    Loans ..
---··H······-···        The ~artnership shall be authorized to loan to and borrow
                   money from any partner or oEner intlivi'dua1·-or-ent-i-ty~e~on.11 .)- •.
                   The amount of any loan made by or to a partner shall not: be
                   considered an increase or decrease in such partner 1 a capital
                   contribution or account or otherwise a contribution to the
                   partnership,nor shall the making of any such loan affect the profit
                   and loss ratios.     The general partner may, but shall not be
                   obligated toj make loans to the partnership so that the partnership
                   may pay its obligations timely.     obligations incluoe debts for
                   which the partnership has no personal liability but to which its
                   property m~y be subject.
                                                    ARTICLE V

                                 CA-PITAL ACCOUNTS; INTEREST; WITBDRAt>1AL

                        Section 5.l     Capital Accounts.

                    A capital account shall be estimated for each partner and
               shall. be maintained according to the Act and income tax accounting
               principles, including 1 for exampleJ (a) increasing or crediting a
               partner 1 s capital account _with the amount of his capital
               contribution when made {b) crediting or reducing {debiting), as the
               case may be 1 a partner 1 s ca);:dtal account \<lith such partner 1 s
               allocated share of partnership profit or loss and (c) charging or
               debiting permitted distributions of capital to partners, other than
               any salary or guaranteed payments, against their respective capital
               accounts.                                ·

                       Section 5.. 2    Interest.
                    No interest shall be paid to any partner on the amount of his
               capital contribution or the amount in his capital account.
                       Section 5.3      Negative Balance.
                   If, after the net profit or the net loss of the partnership
              for the fiscal year has been determined and allocated, a general
              partner's capital account shows a deficit or negative balance,
              whether occasioned by permitted withdrawals or by charging him for
              his share of partne:rahip loss, the deficit shall constitute an
              obligation of that partner t.o the partnership to be paid to the .
              partnership upon its final termination and winding up. No limited
              partner shall be personally liable for any deficit amount in his
              capital account.


                                                       5




                                                                                 Defendants p. 1

                                                                                         DEF000319
                                                                                                   46
          Section 5.4    Additional Capital,
           Additional capital may 1 from time to time 1 be contributed to
    the partnership by the partners in such amounts and proportions as
····~-~shati--b~imousl~eed upon by the partners,         A deeo:dption of
    such additional contrib\ltions shall be set forth on Ex-l:ti-hit_J'·C--l'----
    at tac,hed hereto and made a part hereof for all purposes 1 along with
    any change in partnership i:nt.erests of the partners; which changes
    must be agreed upon unanimously.
         Section 5.5    Distribution of Capital and Profits.
           Distribution of any 11 amount in the capital account of a
     pa:rtner 11 , including his share of profits ( 11 capitalU) 1 may only be
     made as provided herein or as agreed upon from time to time by the
     GPs. The GPs may consider special circumstances of the partnership
     and of individual partners and may allow disproportionate or no
     distributions of capital among partners.              Since one of the
     partnership goals is to earn profit by investing its assets, the'
     GPs shall decide when, how much and to or by whom withdrawals or
   . distribution of capital shall be made.
         Notwithstanding any provision in this Agreement               to the
    contrary 1 the following provisions shall be applicable:
           (i) prior to the issuance of all of the Class c LPl 1 the
    portion of the profit or loss recognized by the partnership that is
    allocable to the unissued Class C LPI shall be reallocated to the
    Class A and Class B LPs and the GP on a pro-rata basis; and
          (ii) when distributions of cash are made to partners, fifty
   percent (SO%) of such distributions shall be allocated 15,625% to
   Class B and 84.375% to Class C LPs until $275 1 000.00 of the
   initial capital contributions made by Class a LPs and $1,485 1 000.00
   of the initial capital contr~butions made by Class C LPs have been
   :ceturned to such partne~s. Once the amounts of the initial capital
   contributions have been returned to the Class B and Class C LPs as
   described herein, distributions of cash shall be allocated to all
   partners according to their respective GPI or LPI.

         Section 5.6    Adjustments of Capital Accounts.
         In the event it is subsequently determined that the fair
   market value of an asset contributed by any partner was not, on the
   date of such contribution, set' forth on any Exhibit or Schedule
   attached hereto, tbe capital account of the contributing partner
   shall be adjusted to reflect such determined fair market value.



                                       6



                                                                 Defendants p. 8

                                                                        DEF000320
                                                                                    47
                     The provisions of this Agreement relating to the maintenance
               of capital accounts are intended to comply with Treasury
               Regulations Section 1. 704-l (b), and shall ·be interpreted a:nd
               applied in a manner consistent. with such Regulations. In, the event
               the GPs shall determine that it is prudent to modify the manner in
--------c_w~m.on-t:he...-:_'ccipi-~al-·accounts,. <¢r any debits or credits thereto
                (including/ without limitation~ debits or credJ:t:$ ···'rt::d:at:±ng----t.o·,-     ----~
               liabilities which are secured by contributions or distributed
               property or which are assumed by the Partnership or GP) 1 are
              compute~ in order to comply with such Regulations, the GPs may make
              such modification, provided that it is not likely to have a
              material effect·on the amounts dist~ibuted to any partner upon the
              dissolution of the Partnership. The GPs also shall (i) make any
              adjustments that are necessary or appropriate to maintain equality
              between the capital accot,mt:s of the partners and the amount of
              partnership capital reflected on the partnership 1 s balance sheetr
              as computed for book purposes 1 in accordance \'lith Regulations
              section 1.704-l(h) (2) (iv) (g) 1 and (ii) make any appropriate
              modifications in the event unanticipated events {for example~ the
              acquisition by the partnership of oil or gas properties) might
              otherwise cause this Agreement not to comply with Regulations
              section 1.?04-l(b}.

                                               ARTICLE VI
                                           LIMITED PARTNERS
                    Section 6.1    Powers; Actions.
                   Except as otherwise expressly provided elsewhere herein, any
              actions taken 1 or to be taken {incl.uding but not limited to
              objections, approvals and consents) by the lim~ted partners shall
              be duly and validly taken if app~oved, in writing, by LPs owning
             more than fifty pe~cent {SO%} of all ALl, unless another percentage
              is required by applicable law. The general partners shall notify.
              the limited partners .in \'Jriting whenever any auch objection,
             consent or approval is required, and within ten {~0} days after
             sending of such notice, each limited partner shall notify the
             general partners of .his consent, approval or objection. Failure of
             any limited partner to so notify the general partners of an
             objections, disapproval or refusal of consent within such period
             shall be deemed to be conaent 1 apprqval or waiver of objection by
             such limited partner, unless a specific response is :required
             hereunder.   All such actions by the limited partners shall be
             within their sole and absolute di&cretion except as otherwise
             expressly provided for elsewhere herein.      The limited partners
             ~hall   not participate in the management or control of the
             partnership's business nor shall they 1 as limited partners/
             transact any business for the partnership or have the power to sign


                                                    7




                                                                                Defendants p. 9
                                                                                                   48
                                                                                       DEF000321
      for or bind     the partnership, said powers being vested solely and_
      exclusively    in the general partners. All ,of the partners shall be
      entitled at    all times to devote themselves to any other business,
      whether or       not similar in nature to the business of the
        partnership, without offering any interest or participation therein
- ·----to-any---e              artners. All decisions to be made regarding
       "this partnership shall be made by the genera1-partners-e:x-oept--whe:~:e_~·-----·
        specifically required elsewhere herein or in the Act (as either may
        be amended from time to time) .
           section 6.2     Li~itat~on   of Liability.
          Subject only to the provisions of the Act and notw~thstanding
     anything elsewhere provided herein to the contrary:
          (a)   No limited partner shall be Hable for any debts,
     liabilities or obligations of the partnership; and
           {b) No limited partner shall have to make any contributions
     of c<;~.sh o:l:' other property, unless otherwise agreed to by such
     limited partner and evidenced in a writing signed by such limited
     partner, Any amounts loaned by any partner to the partnership and
     not repaid upon termination; winding up and liquidation of the
     partnership, shall be deemed to be in restoration of any ~eficit in
     such partner's capital account.
          Section   6,3   Incapacity.
          ln the event that a limited partner cannot vote on partnership
     matters or otherwise becomes incapacitated, such limited partner's
     attorney in fact, if any, or legal guardian 1 if any, shall be
     entitled to cast his vote on any, matter requiring a decision by
     limited partners. lf no guardian or attorney in fact is appointed
     at a time when a vote of LPs is taken, the incapacitated .limited
     partner •.s interest shall be disregarded for purposes of such a vote
     or decis;l.on.

                                   ARTICLE VIl

                                 GENERAL PARTNER
          Section 7.1     PQwe:rsi Action.
          (a) The general partners shall have the responsibility for
    the management ( operation and control of the .business and affairs
    of the partnel:"ship and each GP s.hall act as a 11 manage:r 11 of the
    partnership unless it is agreed by general partners owning at least
    90% of the AGI that one or more general partners shall not act as a
    manager, in which case the partnership may employ one or more non~


                                          8




                                                               Defendants p. 10


                                                                       DEF000322
                                                                                   49
            general partner managers to carry out or assist in carrying out
            such day-to-day management, operation and control (the 11 manager 11 ) ,
            The. general partners shall remain responsible to the partnership
            for the acts or omissions of the manager and for performance of
--~----____ their GPs 1 duties prov~ded fqr herein or otherwise undertaken.  The
             mana-g-er-may-be-any.-p~r_ent i       ty.
                                                     ~---


                    (b) Without limiting the generality of subsection {a} above 1
              the general partners shall have full power to (i) borrow-money for
              any partnership purposes and to secure the repayment of s\lch
              loan{s) by pledging partnership assets; (ii) cause the partnership
              to acquire assets; {iii} manage partnership assets (which term
             would include any investments and/or property)i (iv) execute such
           . other documents as it may deem advisable :for partnership purposes;
              (y) operate, sell, maintain, insure and lease partnership assets;
              (vi) transfer, assign, convey, sublet, operate assets or construct
             additional assets or improvements thereon;                (vii) pay all
             partnership expenses, (ix) perform o~ cause to be performed the
             partnership 1 s.obligationst and exercise or cause to be exercised
             all of the partnership's rights, under any agreement to which the
             partnership or any nomin~e of the partnership is a party; {x) loan
             funds to. any partne~, and {xi) admit additional limited partners
             into the partnership,       The use hereafter of the term 11 manager"
             includes 11 Gl? managersn and other 11 managers 11 to the extent that such
             other managers are appointed. The manager mayJ on behalf of the
             partnershipJ employ, engage, retain or deal with any person to ~ct
             in such other capacities as he may determine in his sole and.
             complete discretion, including, without limitation 1 the hiring of
            any person to perform services in connection with the investment,
            operation, service, repair, leasing 1 advertising and/or sale of
            partnership assets, provided that in all such cases such services
            are deemed by the manager to be advisable and the compensation
            therefor is reasonable, and provided further that the general
            partners shall continue to be primarily responsible for the
            fulfillment of all of tbe~r obligations pursuant to this Agreement.
              The fact that .a partner. or manager is directly or indirectly
            connected with any person shall not prohibit them from employing or
            otherwise dealing with such person. Any such employment or dealing
            shall be done at reasonable rates for similar services, supplies or
            materials.      The partnership shall reimburse the manager for all
           direct out:..of-pocket· expenses incurred on behalf of the partnership
            in.accordance herewith.                                               ·
                 (c) ·subject to the provisions of Section 7.2(a) herein 1 the
           manager shall have the power to execute and/or accept any
           instrument or agreement incident to the partnership 1 s business and
           in furtherance of its purposes and any such instrument or agreement
           so e:xecuted or accepted as s1,1ch shall be deemed executed and
           accepted on behalf of the partnership by the general partners.



                                               9




                                                                          Defendants p. 11
                                                                                              50
                                                                                  DEF000323
51
(.

      substitute general partner if one is to be elected. A substitute
      general partner may be elected upon vote of partners owning more
      than fifty percent (50%) ·of the API.

           Seet:-ien--'7.-.-3--.Duties_and ...Oblig~tions of the General Partner.
           {a) During the continuance of the partnersh:ip 1 the general
      partners shall diligently and faithfully devote such time to the
      management of the business of the partnership as·may be necessary
      to serve the interests of th~ partnership and shall perform all of
      the duties of a general partner which are provided f9r herein.
           {b} . In the event that at any time there are more than one
      general partner~ all obligations of the general partners under this
      Agreement shall.be joint and several.
            {c) The general partners shall have the authority to draw
      checks and drafts on the partnership bank accounts. The general
      partners shall be under no obligation to spend any of the assets of
      the limited partnership, but they 1nay use or invest such portions
      thereof as they deem best for the interests of the partnership.

           Section 7.4    Compensation.
           Annuallyt the general partners may receive a reasonable fee
     for services rendered which is agreed upon py the GP majority,
     which payment {i) shall not exceed 20% of the net profits of the
     pa~~nership for the year in question 1 and (ii) shall be in addition
     to any respective share of partnership profits paid to general
     partners.   This compensation shall he reviewed periodically and
     adjusted by the general partners and shall be a guaranteed payment.
     If the cash flow of the partnership is insufficient to pay such
     salary, the unpaid portion of such salary may be deferred and bear
     interest.
           Section 7.5   Liability; Jndemnification.
           The general partners shall be entitled to all indemnification
     authori~ed   in the Act even it such indemnification is not
     specifically described else\'lhere herein.     The general partners
     shall have no obligation to loant advance or contribute any amounts
     to the partnership {whether any deficit exists or otherwise} other
     than their obligation to pay their capital contribution provided
     for herein, Each general partner shall indemnify 1 save and hold
     harml-ess the partnership and e_ach of the limited partners from any
     lossr damage, claim or liability incurred by them, including but
     not limited to reasonable attorneys 1 fees and expenses, due to or
     arising. out of any breach of such general partner 1 s obligations
     under this Agreement, negligence, fraud or bad faith.            The


                                          ll



                                                                      Defendants p. 13
                                                                                         52
                                                                              DEF000325
            partnership shall indenmity, save and hold harmless the manager
            frorn any loss, damage, claim o:r liability, including but: not
            limited to direct and indirect costs and reasonable attorneys' fees
            and expenses, incurred by them by reason of any act performed by
            th~ manager on behalf of the partnership or in furtherance of the
-----=p-;;;a~r=t=n=e~;'!:""stri-p-'-s--inter-est.. other..than.. c;tn act which is a breach of any
            obligation under this Agreement, negligence 1 frau~-fa~th·r·--------­
            p:rovided, ho\vever 1 that this indem:nity from the partnership shall
            be satisfied out of partnership assets only. The partnership may
            purchase insurance to provide all or part of this indemnification.
              Section 7.6     Banking,
             All funds in the partnership shall be deposited in ita name in
        such checking account or accounts as shall be designated by the
        general partners. All withdrawals therefrom shall be made upon
        checks signed by at least one (l) of the general partners or the
        manager, if he is authorized to so sign by the general partners.
              Section 7.7    Relation.
            Except whel:'e provided else\IJhere herein or in the Act 1 a
       general partner shall have the rights and po"111ers 1 and shall be
       subject to the restrictions and liabilities, of a partner in a
       partnership wi.thout limited partners.
             Section 7.8     Personal Services.
            By acting aa a general partner or by signing this Agreement as
       a general partner, each general partner has made a personal
       services contract to perform each of the duties and obligations of
       a general partner that are specified herein and in the Act.
                                         ARTICLE VHI

                     DISPOSITION OF L!MITSD PARTNERS' INTERESTS
             Section S.l     General Limitation.
             No limited partner may sell,          pledge(    transfer,      exchange,
       hypothecate, encumber, give, devise, assign or otherwise dispose of
       or allow to be attached ( 11 tranafer 11 or 11 ass:i.gn") any portion of his
       parenership interest nor may he withdraw from the partnership
       without ,the prior written consent of all of. the general partners~
       which decision shall be made at their sole discretion.                  such
       consent may not be given unless the general partners are satisfied
       that:
                   {i)  the transfer will not generate any unfavorable tax
                   consequences, including impairing the ability of the


                                             12




                                                                          Defendants p. 14
                                                                                              53
                                                                                  DEF000326
                   partnership to be taxed as a partnership or to take advantage
                   of accelerated depreciation or any similar concept enacted in
                   the future under the federal income tax. laws or 1 taken
                   together with other transferred intere~ts within the period of
                   twelve (12) consecutive months prior to the proposed date of
------------------t~ransfe~,-~~~uLt._in the termination of the partnership under
                   Section 708 of the Internal Revenue Code of -1-s-s-s-;-cr:ramended----
                   (the 11 Code 11 };
             and 1 in addition, that the transferee!
                        (ii}  represents that he is acquiring the transferred
                  interest for his own account for investment and not with a
                  view to the resale o~other distribution thereof; and
                        (iii) agrees in writing to comply with and be bound by
                       all of the provisions of this Agreement (as it may have
                  been amended) and to execute any and all documents and furnish
                  such other information or documents that the general
                  partner (s} may deem necessary in connection with the
                  transactioni
            and, unless the transfer is to anot.her existing partner, in
            addition to all of the foregoing 1 either (a) the transferee
            furnishes an opinion of counsel, which counsel and the form and
            substance of which opinion shall be satisfactory to the general
            partners, to the effect that registration of such transactio11 is
            not required under the Securities Act 19~3, as amended; or any
            state securities act, or (b) such transfer is made pursuant to an
            effective registratJ.on statement under. such laws, Any. attempted
            assignment or withdrawal of or part of any partnership interest
            which is not permitted {11 unperl(litted 1') by the provisions in this
            Section 8.1 shall be automatically void and ineffective, except to
            the extent otherwise required by law.
                  Section 8.2   Right of First Refusal.
                  (a) A limited partner may sell his partnership interest only
            after he has {1) first offered it -to the partnership pursuant to
            the provisions of this paragraph 8.2, and {2) obtained the prior
            written consent of the general partners as specified above.
                  (b}  The selling limited partner shall give written notice to
            the partrterehip that he desires to sell his interest.     He shall
            attach to that notice the written offer of a prospective purchaser
            to buy the interest. This offer shall be complete in all details
            of purchase price and terms of payment. The limited partner shall
            certify tl:lat the offer is genuine.
                  (c}   For sixty (60} days from.receipt of the written notice


                                               13




                                                                         Defendants p. 15

                                                                                . DEF000327
                                                                                              54
            from the limited partner 1 the partnership shall have the option to
            redeem the interest of the limited partner at the price and on the
            terms contained in the offer submitted by the limited partner;

----------J-cl-}--Fo:t"~another sixty_{_~_Q.L_ days  thereafter 1 the existing
            partners shall have the option to purchase the remaining int-erest--·---~
            of the limited partner at the price and on the terms contained in
            the offer submitted by the limited partner,     If more than one
            partner wishes to make this purchase, then their rights shall be
            prorated between them based upon their respective partnership
            interests,
                 {e)   If the partnership does not 1 and none of the partners
            exercise the option to acquire this interest, the selling limited
            partner shall be free to sell his partnership interest to the said
            prospective purchaser for the price 1 and on the· terms contained in
            the certified off~r s~bmitted b~ the ~imited Partner, if such sale
            has been approved in advance in writing by all of the general
            partners, and all other applicable conditions and provisions herein
            have been satisfied.
                 Section $.3       Substituted Limited Partner.
                No assignee or transferee of the whole or any portion of a
           partner 1 s interest in this partnership shall have the right to
           become a substituted partner in place of his assignor unless all of
           the following conditions are satisfied:

                 (a)    All   of    the other conditions and provisions herein
           regarding a transfer or      ass~gnment are satisfiedi

                 {b)   All. of the general partners have consented in writing to
           the admission    o~ the assignee as a substituted limited partner;

                 {c) A fully executed and acknowledged written instrument of
           assignment has been filed with the partnership which sets for the
           i11tention of the asstgnor that the assignee become a substitute
           limited partner.
                {d)    Unless waived in a writing signed by all general
           partners/ the partnership interest being acquired by the assignee
           consists of one hundred percent {100%) of the ass~gning partner's
           interest.
                 (e) The assignor and assignee execute and acknowledge such
           other instruments as the general partners may deem necessary or
           desirable to effect such admission, including the written
           acceptance and adoption by the assignee of the provisions of the
           Agreement and the a~signee 1 s execution, acknowledgment and delivery


                                                14



                                                                     Defendants p. 16

                                                                             DEF000328
                                                                                         55
(
          to the general partners of a J?ower of Attorney 1 the to:t:"m and
          content of which shall be provided by the general partner;
               (f)· A reasonable transfer fee, not exc"eeding Two Thousand
          Dollars ($2, ooo. 00), has been paid by assignee to the limited
    ·--·--pan-n-
               ~(g~}~~T~h_e_g_e_n_e_r_a~l-p_a_r_t_n_e_r_s_·_w_i_l_l_b_e_r_e_q_u_i_r_e_d::---t-o_a_m_e_n-:d-:---:th:-e---~-·~-
         Agreernent of Limited Partnership no more frequently than quarterly
         to reflect the permitted substitution of partners, and until such
         Agreement is so amended, an assignee shall not hecome a substituted
         partner;
               (h) In the event any note or consent of any partners shall be
         taken or sought pursuant to this Agreement for any reason, an
         assignqr or prospective assignor partner shall, solely tor the
         purpose of determining the number of partnership interests beld by
         him in weighting his vote, be deemed the holder of any partnership
         interests assigned by him in respect of which the assignee has not
         yet become a substituted partner;
              {i}   Subject to the other prov:tsl.ons herein, any limited
         partner may transfer at death or by way of gift any part of his
         interest in the Partnership; and
              (j)   Upon the withdrawal 1 death, bankruptcy or legal
        incompetency of a limited partner {and 1 in the case of a limited
        partner that is a corporation, association, partnership, joint
        venture or trust, the dissolution of such limited partner) 1 the
        paxtnership shall not be dissolved but shall continue in existence
        without interruption 1 and in case of the death or legal
        incompetency of a limited partner 1 the executor, administrate~,
        personal representative or guardian of such limited partner, if
        any, shall have the rights provided for in the Act·.
              Section S .4         Other Assignees or Transferees; Transferor.
              (a}     Anything in     this Agreement     to the contrary
        notwithstanding, no person, including but not limited to any
        attempted or actual assignee of all or any part of any partnership
        .interest, may become a substitute partner nor may such right to
        substitute be granted by a partner to any assignee, by operation of
        law ox- otherwise, without the prior written consent of all of the
        general partners, the granting of \vhich shall be in their sole and
        uncontrolled discretion, and otherwise complying with the other
        provisions herein, Nor may any attempted assignee, except to the
        extent required by law, become an assignee or transferee of any
        portion of any partnership interest or partnership rights without
        the prior written unanimm.ls consent of all general partners,



                                                     15



                                                                                        Dafendantsp. 17
                                                                                                            56
                                                                                                DEF000329
                                 (b) Except as otherwise expressly provided elsewhere herein,
                      an attempted transferee who does not become a full substitute
                      limited partner shall have no rights of a partner and shall have no
                      right to vote or otherwise act as a partner under any of the
                      provisions of this Agreement, including but not limited to the
-'-------__;pr<ti,.,gr+hrrt--tt...,.o"r-'1t~-eql:li!'e any ::i nfonnation or accotmt of the partnership 1 s
                      transactions or to inspect the partnership'S___booX:s, but at most-------
                      shall only be allocated the share of the assigned interest of the
                     partnership to the income, gain, loss, deduction, credit and
                     distributions to which his ~.ssignor would otherwise be entitled.
                     Except to the ·extent otherwise required by la111 1 any such assignee
                      (including but not limited to an intestate successor, a receiver, a
                     trustee, legal representative 1 guardian or other successor in
                     interest) 1 who desires to make a further transfer of all or any
                     part of his interest in the partnership shall be subject to all of
                     the restrictive provisions herein to the same extent and in the
                     same manner as any partner desiring to make an assignment of all or
                     part of his interest in the partnership,
                    (c) Any limited partner who properly assigns as permitted
            herein all of his int~rest in the partnership shall cease to be a
             limited partner of the partnership and shall no longer have any
            rights or privileges of a limited partner e~cept that, unless and
            until the assignee of such limited partner is admitted as a
            substitute limited partner, said transferring limit.ed partner shall
            retain the statutory rights and obligations of an assignor limited
            l_:>artner.
                  {d} No partner (GP or LP) may withdraw and receive the fair
            value of his partnership interests as of the date of his withdrawal
            until the earlier of (a} the date that the partnership liquidates
            and winds up its affairs pursuant to Section 8.04 of the Act or (b)
            the date agreed upon by all general partners in the partnership
            {excluding/ if applicable, the withdrawing partner)r which
            agreement is memorialized in writing, signed by all such general
            partners and made at their sole discretion.
                  (e} Except where otherwise required by applicable law, an
           assignee or attempted assignee of a partn~r shall not be entitled
           to receive distributions of the assignor or would-be assignor
           partner unless and until all general partners in the partnership
            (excluding the assignor if he were a general partner) have agreed
           to such assignment and to permit such di.stributions or withdrawals
           and evidence such agreement in writing, signed by all of them, made
           at their ~ole discretion.

                 Section 8.5     Redemption of ?artnership Interest.
                (a) The partnership interests of all limited partners are
           subject to redemption by the partnership at the election of the


                                                  16




                                                                               Defendants p. 18
                                                                                                   57
                                                                                       DEF000330
 general partne~s. In  the event the general partners make such an,
 election~ the general partners shall provide the limited partner
 whose partnership interest is to be redeemed (the '\Redeemed
 Partner"} with at least sixty {60) days' prior written notice of
 the redemption.
       tr)-The--purehase....p-~i-ce of the Redeemed Partner's LPI shall
 equal the Ralance of the Redeemed Partner1 s capi~account
 established under Section 5.l hereof, determined as of the end of
 the calendar month immediately preceding the month in which the
 closing of the redemption transaction takes place,

                              ARTlCLE IX
             DXSPOSITION OF GENERAL PARTNER'S INTEREST
      Section 9,1   Voluntary Disposition or Encumbrance; Removal,
       (a}   No general partner may assign or transfer (i.e. sellt
  transfers assign 1 exchange 1 dispose of, pledge, hypothecate,
 encumber or allow to be att.ached) all or any part of his interest
 in the partnership, or withdraw or resign as general partner, no~
 shall a new or substitute general partner be admitted to the
 partnership, without the prior written consent of all of the other
 partners (general partners and limited partners),         Providedr
 however 1 a sole remaining general partner shall have the right to
 withdraw as a general partner only i f he notifies the limited
 partners of his desire to admit a substitute general partner and
 the unanimous written consent of the limited partners to such
 admission is granted and the new general partner is admitted to the
 partnership prior to the time of the withdrawal of the prior
 general partner. AnY attempted unpermitted assignment or transfer
 of all or part of any partnership interest shall be automatically
void and ineffective, except to the extent otherwise required by
 law. Upon the granting of unanimous written consent of all of the
partners, additional or substitute general partners may be
 designated with such share of the then existing transferring
general partners' aggregate interest as the general partner(s) and
designated additional or substitute general partners may agree
upon. Without limitation to the generality of the.foregoing, any
general partner may 1 at any time without obtaining any prior
written consent 1 convert all but one percent (1%) of his general
partnership interest to a limited partnership interest.          Any
permittect assignee or transferee· of a GP pursuant to all of.the
provisions herein shall become a general partner under this
Agreement with all of the rights and subj.ect to all of the
obligations of a general partner under this Agreement.            No
substitution or change of general partners shall- eve-r cause a
termination/ liquidation or winding up of this partnership/ but
instead the partnership shall continue uninterrupted and shall be -


                                  17



                                                           Defendants p. 1g

                                                                               58
                                                                   DEF000331
                                     ....
                                 ~~--


  reconstituted pursuant to the Act.
          (b) Notwithstanding the other prov:tsJ.ons herein and without
  limiting any other rights and remedies of any of the parties hereto
  arising from any breach by a general partner of the provisions of
  thi.s Agreemen\: 1                        Lthe___ p~ovisions of Section
  9. l (a} above by the general partner {11 breaching general partner 11 · ) - ; , - - - - -
  or upon any attempted -unpermitted assignment, transfer or
 attachment of any part of a general partner partnership interest
 without the prior wr~tten consent signed by all other partners, the
 partner status and partnership interest of such breaching general
 partner or such status and interest of his assignee or creditor {if
 such assignment~ transfer or attachment is ever permitted or is not
 void) shall automatically become a limited partner and limited
 partnership interest~ ~less a vote to accomplish this is required
 by law~ in which case the percentage in inte:rest of the limited
 partners required by law ~~lect to deem such genexal partner as
 having retired and ceased to be a general partner and his
 partnership interest shall thereupon become a limited partnership
 interest and the partnership shall continue uninterrupted and shall
 be reconstituted pursuant to the Act·.
       (c)  Upon the written consent or affi:rmative vote of all
 limited partners, a general partner may be removed if, immediately
 prior to such removal{ a successor general partner is elected by
 the limited partners owning ninety percent (90%) of the (then
 outstanding) AL! and becomes a substitute general partner or more
 than fifty percent (50%) of the ALl agree that no successor general
 partner shall be elected,
        (d.) Notwithstanding the prov~slons of Section 9.1\a), then
  the existing general partners may, at any time, upon their
  unanimous written consent, appoint a new general partner from the
. ranks of the then existing limited partners, if such appointee
  shall <Jonsent .in writing to act as a general partner.         'l'he
  appointee may convert as ·;.much of his prior limited partnership
  interest to a general partnership interest as all of the partners
  shall agree, otherwise at least one percent {1%) of bis prior
  partner~hip interest shall be so converted.    The general partners
 may also, at any t.ime 1 by their unanimous written consent,
  designate one or more persons who are limited partners to act as a
 general partner {subject to the provisions in the preceding
  sentence} on a standby basis and specify any order or conditions of
  such appointmentsl such de$ignation to occur in a writing signed by
 all existing general partners and a copy mailed or delivered to
 each limited partner and one kept with the partnership's copy of
 this Agreement (which shall be considered an amendment for this
 conditional appointment purpose), but requiring no other formality
 or approval other than the written consent of the appointees to so
 act. For example, the general partners may decide to appoint one


                                            18



                                                                   Defendants p. .20
                                                                                       59
                                                                         , DEF000332
    or more standby eligible partner{s) to serve in the event of.the
    withdrawal of one or more existing general partner(s) or to appoint
    additional general. partner{a) from those who are eligible 1 such
    appointment to occur at some specified future time or upon the
    happening. of some condition. These examples are given by way of
· --i-1-l-ust-:t:=a.t-ion---Only:._and.....DQ!; to limit the types of such· eligible
    appointments.
      {e)   Unless they are (a) specifically contradicted by the
 provisions of Axticle IX, or {b) expressly applicable only to ·a
 limited partner, the provisions of Article VII! shall also apply to
 general partners,
        Section 9.2     Death 1 Bankruptcy, Incompetence, Attachment and
                        Incapacity.
       (a)  Upon the death, attempted unpermitted assignment or
 transfer or attachment of all or any part of his partnership
 interest 1 attempted attachment of. all or any part of the
 outstanding stock of a co~poration acting as a general partner,
 retirement,       removal1     resignation 1      withdrawal t     dissolution,
 termination,     bankruptcy or adjudication of incompetency of a
 general partner or his permanent incapacitation so that he is
 unable to perform his' duties or vpon his attempted withdrawal or
 resignation as general partner 1 he shall thereupon be deemed
 (except as provided differently elsewhere herein) to have retired
 as and ceased to be a general partner and his partnership interest
 shall thereupon be converted into an interest of a.limited partner.
  For' exaruple 1 a ten percent {10%} PI as a GP shall become a ten
 percent (10%) PI as an I.1P.·
      (b)    lf 1 -upon the occurrence of any event referred to in
 Section 9-.2 (a) or Section 14.1 1 there remains one or more other
 general partners I all such remaining . general partners acting
 together shall have the right and duty to continue the business of
 the partnership.
       1f there e~ist such remaining general partners, or if none 1
·any standby GPs exist, the partnership shall not liquidate,
 terminate and/or wind llP. but shall continue its busines!S and
 existence without interruption or other change in its reconstituted
 form with the remaining or nev1 standby Gl?s who agree to act as a GP
 pursuant to the provisions of the Act.
      (c)  lf, upon the occurrence of any event, including those
referred to in Section 9. 2 (a) or Section 14.1 1 there is not a
general partner, the partnership shall not be terminated,
liquidated or wound up if, within a period of ninety (90) days
after the occurrence of such event, the majority in interest of the
limited partners elect to continue the business of the partne~ship


                                        19



                                                                       Defendants p. 21

                                                                                DEF000333
                                                                                            60
 . I
         in a reconstituted form and designate if necessary and for such
         purpose at least one new general partner who consents to and
         accepts such designation as of. the date of such event and agrees to
         be bound by all of the obligations of a general partner und~r this
         Agreement. If the limited partners elect to continue the business
        ·ot·-t·he--pa.rtnershi.P and designate one or more general partners
        pursuant to this Section, such ereccion-and-des~~B~io~
        be deemed a termination of the partnership and the business of the___________
        partnership shall be continued uninterrupted using the partnership
        assets and name/ in a reconstituted form 1 upon the same terms ~nd
        conditions as are set forth in this Agreement, except for any
        agreed upon changes in percentage partnership interests of the
        parties and eaoh partner hereby agrees to such continuation and/or
        reconstitution.
             Section 9.3   Continuing· Obligation.
            Nothing in Section 9. 2 (b)· or in this Article IX shall be
       construed to relieve any general partner 1 or its successors,
       assigns, heirs or legal representatives from liability, if any, for
       any breaches or defaults incurred as a result of or in connection
       with, the termination, attempted assignment and/or conv~raion, as
       the case may bet of its partnership interest, or from any liability
       with respect to any claims arising from acts or omissions while he
       was a general partner, or from any of ita obligations, whether or
       not theretofore incurred or accrued.
             Section.9.4   Removal.
            Except as provided elsewhere herei)j, removal of the sole
       general partner 1 which may occur only upon the written consent of
       all of the limited partners {exc~pt in cases of certain breaches by
       the general partners where the percentage vote of the limited
       partners to remove him may be ninety pe~cent {90%} of the ALI),
       shall be effective only upon the selection of a successor general
       partner and such successor is admitted immedi.qtely prior to the
       time the removal is effective and the partnership shall continue
       its business and existence in its reconstituted form as provided
       for in the Act and such removal shall not be grounds to tex-minate,
       liquidate or wind up the partnership.
                                       ARTICLE!   X
                 DURATION OF BUSINESSi DISSOLUTION; TERMINATION
            Section 10.1   Duration.
            The Limited Partnership shall continue for its full term as
       provided for in Article II here.in unless i. t is terminated and wound
       up earlier as provided for below.



--
                                                                 Defendants p. 22
                                                                                     61
                                                                         DEF000334
                            Section 10.2    Expulsion.
                         All of the general partners may unanimously terminate the
____ ·-·-           interest of a limited partner and expel him (a) for interfering in
            ------·-tn~ent-of-t·he-pa-rt.nel?ship -a.ffairs or: otherwise engaging in
                   conduct which could result in the partnership losing its tax at~a~t~u~s~------­
                   as· a partnership, {b} if the conduct of a limited partner brings
                   the partnership into disrepute, or (c) for failing to meet any
                   commitment to the partnership or manager in accordance with any
                   written undertaking signed by such limited partner, but the general
                   partners shall not he required to so terminate.     In each of the
                   foregoing events, the expulsion and termination may 1 in the sole
                   discretion of the general partners in ot"der to compensate for any
                   damages caused to the partnership, result in a forfeiture to the
                   partnership of all or a portion of the value of the partnership
                   interest of the expelled partner at the time of such expulsion·or
                   termination.
                           section 10.3    Dissolution.
                           The partnership shall be dissolved only when required by the
                   .Act.
                           Section 10.4    Reconstitution.
                        Upon any dissolution, the partners and partnership shall have
                   all rights provided for in the .Act or elsewhere in this Agreement
                   to reconstitute the partnership and continue its business and
                   existence without terminating 1 liquidating or winding up.     The
                   partners are authorized to do any and all acts contemplated or
                   referred to in the Act relative to reconstitution. A single simple
                   majority of API in interest of all partners may authorize such a
                   reconstitution.
                           Section 10.5    Winding up the Partnership.
                        Only if the partnership is dissolved and is not reconstituted
                  as provided for in the Act 1 shall the pa~tnership commence to wind
                  up its affairs, terminate Qr liquidate.      In such case 1 the GPs
                  shall sell all the partnership assets as promptly as is consistent
                  with obtaining, insofar as possible 1 the fair value thereof, and
                  after paying all liabilities, including all costs of dissolution/
                  and subject to the right of the general partners to set up cash
                  :reserves to meet short-term partnership 1 iabilities, other
                  liabilit~es or obligations of the partnership 1 shall distribute the
                  remainder to th~ partners pursuant to the relevant provisions of
                  this Agreement and the Act. Except where otherwise required 1 such
                  remaining distribution shall be first to pay off capital accounts
                  ratably and the excess, ~f any, divided according to the


                                                          21



                                                                              Defendants p. 23

                                                                                      DEF000335
                                                                                                 62
          percentages by which the partners shat'e profit;s.     The partners.
          shall continue to share profits and losses during the period of
          liquidation in the same proportions a_s. before dissolution.
            Section 10.6 Gains or Losses in Process of Winding up and
-------------- --~------------ L:iqui9a~_~on,
                                         -------------------
              Any gain or loss on disposition of partnership properties in
         winding up and liquidation shall be credit.ed or charged to the
         partners in the proportion of their partnership interests (which
         are their interests in profits or losses as specified in Article
         III). Any property distributed in kind in liquidation shall be
         valued and treated as though the property \'lere sold and the cash
         proceeds were distributed. The difference between the value of the
         property distributed in kind and its book value shall be treated as
         a gain or loss on sale of the property and shall be credited or
         charg~d to tbe partners in the proportions of their interests in
         profits and losses.
                                       AR.TJC:WE XI
                             ACCOUNTING FOR THE PARTNERSHIP
              .section 11.1 Method of Accounting.
              The Partnership shall keep its accounting records and shall
         report for income tax purposes on the cash basis. The records
         shall otherwise be maintained in accordance with generally accepted
         accounting principles.
              Section 11.2    Annual Statement.
              Financial statements shall be prepared not less than annually
         and copies of the statement shall be mailed to each partner.
         Copies of all income tax returns filed by the partnership shall be
         furnished to ali partners and shall suffice as annual financial
         statements.
              Section 11.3    Gain or Loss from Contributed Property.
              Pursuant to Section 704(c) of the Code 1 income, gain, losa1
         and deduction ''lith respect to property contributed to the
         partnership by a partner may be shared among the partners so as to
         take account of the variation bet\'leen the basis of the property to
         the partnership and its fair market value at the time of
         contribution.




                                           2·2




                                                                   Defendants p. 24

                                                                           DEF000336
                                                                                       63
          Section 11.4    Tax Matters Partner.
             The general partner with the largest interest in the
       partnership ( 11 largest general partneru) (after combining his
       general partne~ and limited partner interest 1 if any) or if there
-----i$_nn_single largest general partner, the largest general partner
       whose last name would appear first in an alphabet-i-ca-1-}y--a~g.ed _ _ _ __
       li~t of last names of all      general partners at the beginning of
       each year, shall be during such year and is hereby designated as
       the tax matters partner of the partnership pursuant to Section
       6231 (a) {7) of the Code {!'Tax Partner 11 or '~'!'ax pn} for all returns
      filed for such year unless a replacement is designated and approved
      by more than fifty percent {SO%) of the aggregate partnership
      interests owned by all partners or the Tax P gives notice of his
      intent to no longer be treated as Tax t>artner. If, however, he
      gives notice of his intent to no long~r be treated as Tax Partner
      aa provided a~ove, a Tax Partner shall be designated as provided by
      Section 623l(a} {7) of the Code. The Tax Partner shall keep all
      other partners informed of all administrative and judicial
      proceedings and any other matters which may come to the attention
      of the Tax Partner in its capacity as Tax Partner and which may, in
      the sole discretion of the ~ax Parttler, affect a partner 1 s tax
      liability \'Jith respect to. partnership tax items·, by giving the
      other partners notice thereof within a reasonable time after the
     Tax Partner becomes informed of any such matter and in a reasonable
     manner consistent with the regulations promulgated under Section
      6223 (g) of the Code.        The Tax Partner may take any action
     contemplated by Sections 6224 through 6232 of the Code if it has
     fi~st giyen the other partners notice of the contemplated action
     and has not received within twenty (20) days after such notice is
     sent, notice of the disapproval of such contemplated action by
     partners owning in the aggregate at least fifty-one percent (51%)
     of the partnership aggregate interests owned by all partners. This
     provision is not intended to authori~e the Tax Partner to take any
     action which is left to the determination of an inoividual partner
     under Sections 6222 through 6232 of the Code. The general partners
     shall insure that there is always a Tax Partner who is aware that
     he has such status and the GPs may 1 if a Tax Partner resigns such
     position, by majority vote of GPX, appoint a Tax Partner
     replacement.
         section 11.5    Annual Meeting to Review Financial Statements.
        Not less than once a year 1 and as soon as possible after
   completion of the financial statements; a meeting shall be held for
   all general and limited partners to attend, The GPs shall review
   and discuss the financial statement at that meeting and report to
   the limited partners the financial condition of the partnership.
   All annual meetings shall be held at a place agreed upon by the
   general partners 1 or if not 1 then at the principal place of


                                     23




                                                            .Defendants p. 25

                                                                     DEF000337
                                                                                 64
 business of the partnership on or before the third Tuesday in April
 of each year and all partners shall receive prior notice of such
 meeting dates and places.
      Section 11,6  Interim Financial Statements.
                          ----··----···- ~-----
      On written request, any limited partner shill be ent·ttred-t-o---_____,____
 copies of any interim financial statements prepared for· the
 partnership which exiat,
                             .ARTICLE XII
                          :POWER OF ATTORNEY

      Section 12.1   Power of Attorney.
      The GPs shall from time to time elect one GP to act as
attorney-in-fact {AIF). Without limiting the generality and effect
of any other provisions herein appointing a general partner as
attorney in fact for all the limited partners under this Agreement
in connection \'lith the doing of certain acts and the filing of
certain papers 1 each limited partner hereunder hereby makes,
constitutes and appoints~ reserving full power of substitution and
revocation, the general partner \'lho is the .AIF (or if none/ the
general partner v1ith the largest partnership interest. in this
partnership or if more than one of them, the oldest), his true and
lawful attorney in fact, empowered to act alone, and in the name1
place and stead of each such limited partner, to make, execute,
sign, acknowledge and swear to all instruments and file and record
all documents requisite to carrying out the intention and purpose
of this Agreement, including but not limited to the following:
     {a) All business certificates and necessary Certificates of
Limited Partnership (if any) and amendments thereto from time to
time as required by the Act or this Agreement;
     (b)   All documents which may be required to effect the
dissolution of the partnership which is permitted herein and any
permitted cancellation of its Certificate of Limited Partnership,
as amended from time to time;
     (c} All fictitious or assumed name certificates required or
permitted to be file on behalf -of the ~artnership;
      (d) All such other instruments, documents and certificates
which may from time to time be required by the laws of the State of
Texas, the United States of America, or any other jurisdiction in
which the .partnexship shall determine to do business, or any
political subdivision or agency thereof, to effectuate, implement 1
continue and defend the valid and subsisting existence of the




                                                         Defendants p. 26
                                                                             65
                                                                 DEF000338
 Partnership as a limited partnership;
      {e) All instruments and.documents necessary to effectuate or
 act upon any reallocation of a defaulting partner 1 s partnership
 interest;
      (:f}   . 'l'o   reflect any amendments._duly made to the--Ag:reeme!'!t; an.,...d--. - - - -
      {g/   To reflect the admission to the partnership of any
 substituted partner or the withdrawal of any partner, i~ the manner
 prescribed in this         ~greement.

     All such powers of attorney shall survive the incompetency,
incapacity, bankruptcy, retirement or withdrawal of any limited
partner granting the same and the assignment by any such granting
partne~ of the whole or any part of his interest hereunder.

     Each limited partner authorizes the API to take any further
action which such AFI shall consider necessary or advisable to be
done regarding the foregoing as fully as such limited partner might
or could do if personally present and hereby ~atifies and confirms
all that such AF! shall lawfully do or cause to be done by virtue
hereof.
     Section 12.2           Amendments.
      (a} Each limited partner hereby authorizes and empowers the
general partners to amend this Agreement from time to time by
agreement of GPs owning at least ninety {90%) percent of the AGI,
provided that without the prior written consent of all of the
limited partners 1 no such amendment by the ,general partners shal~~
          {i)   enlarge the rights or reduce the obligations or
duties of the general partners;
         (ii)   affect the rights or restrictions regarding the
assignability of partnership interests;

        {iii}          modify the term of the partnership or amend this
Section 12.2;
        . (iv)  reduce the rights or interests, or ·enlarge the
obligations, of the limited partners; or
           (v) add or delete any GP unless permitted by the other
provisions herein.
     (b)   The general partner shall promptly notify the limited
partners of any such amendments.



                                          25




                                                                      Defendants p. 27

                                                                              DEF000339
                                                                                          66
              (c)Except where specifically provided elsewhere herein or by
                 applicable law and except with respect to vested rights
                 of the partners, this Partnership Agreement may be
                 amended at any time by a vote of partners owning more
                 than fifty percent (50%} of each of the ~GI and ALI. A
-------------------+~~ny_a~dment s~gped by all partners voting in
                 favor of such amendment shall be prompt.:Ly·- mailed or--~---·­
               . delivered to each partner at his or her last known
                 address.
                                     ARTICLE XIII
                                  GENERAL PROVISIONS
             Section 13.1    Recipient of Distributions and Payments,
             All distributions and payments of cash or property to be made
        pursuant to the provisions of this Agreement shall be made directly
        to the part;ies l'lho are entitled hereto at their respective
        addresses indicated on Exhibits uAn and ncu or at such other
        address as $hall have been set forth in a notice sent·pursuanc to
        the provisions of Section 13,2.
            Section 13 • 2   Communicat-ions and Notice.

            E~cept as otherwise expressly provided in this Agreement/ any
       offer,    acceptance,   election,  approval,   consent,      objection,
       certification, reguest, waiver, notice or other document required
       or permitted to be made or given pursuant to any provisions of this
       Agreement, shall be deemed duly made or given 1 as the case may be,
       if in writing 1 signed by or one behalf of the person making or
       giving . the same 1 and shall be deemed completed when eithe;c
       personally delivered (with receipt acknowledged by the recipient)
       or two {2) days after deposited in the United States mail, first
       class, postage prepaid/ addressed to .the person or persons to whom
       such offer, acceptance 1 election, approval, consent, certification,
       required, waiver or notice is to be made or given at their
       respective addreg:ses as indicated on Exhibit 11 .A 11 and, in the case
       of the Partnership, at the office of the partnership specified in
       Exhibit 11 Bu of this Agreement, or 1 in any case 1 at such other
       address as shall have been set forth in a notice sent pursuant to
       the provisions of this Section 13.2.
            Section 13.3     Entil:e Agreement; Applicable Law; Effect.
            This document contains the entire agreement by and among the
       parties and supereedes any prior understandings and agreements
       among them respecting the matters provided for herein.        This
       agreement shall be construed, enforced. and governed in conformity
       with the la~tlS of the State of Texas 1 without giving effect to




                                                                   Defendants p. 28
                                                                                      67
                                                                           DEF00034Q
{
     principles of conflicts of 1aw 1 and shall be binding upon the
     parties hereto/ their sucoessors 1 heirs, devisees~ permitted
     assigns, legal representatives, executors and administrators but
     shall not be deemed for the benefit of creditoxs or any other
     person.

          Section 13 .. 4 Modificationi v7aiver or Termination.
         Except as otherwise expressly provided in this Agreement, no
    modification, waiver or tet'mination of thia·Agr~ement, or any P?rt
    hereof, shall be effective unless made in writing signed by l:he
    party or parties sought to be bound thereby, and no failure to
    pursue or elect any remedy shall constitute a waiver of any default
    under or breach of any provision of this Agreement 1 nor shall any
    waiver of any default under or breach of any provision of this
    Agreement b.e deemed to be a waiver of any other s·ubsequent similar
    or different default under or breach of such or any other provision
    of or any election or remedies available in connection therewith,
    Receipt by any party of any money or other consideration due under
    this Agreement 1 with or without knowledge of any breach or default,
    shall not constitute a waiver of such breach or default or of any
    provision of this Agreement.
          Section 13,5 Counterparts.
         This Agreement may he executed in one or more counterparts
    and, notwithstanding that all of the parties did not execute the
    same counterpart, each of the counterparts shall, for all purposes,
    be deemed to be an origina·l so long as they all sign at lea.st. one
    copy or a signature page, and all of such counterparts shall
    constitute one and the same instrument binding on all of the
    parties het'eto,     Limited· partners may become parties to this
    Agreement by executing and delivering to the general partner a
    uaignature page 11 hereto in form approved and signed by the general
    partner.
         Section 13.6    Separability.
          Each provision of this Agreement shall be considered separable
    and (a) if for any reason any provision (clause·, 'lrlord 1 sentence or
    portion of a sentence) or provisions herein are determined to be
    invalid and contra:ty to any existing or future 1aw 1 such inval;i..dity
    shall not impair the operation of or affect those portion of this
    Agreement which are valid, and (b) if for any reason any provision
    or pxovisions of this Agreement would subject the limited partners
    to any personal liability for the obligations of the partnership
    under the laws of the State of Texas or any other 1aws 1 as the same
    may no'll or hereafter exist 1 such provision or provisions shall be
    deemed void and of no effect.


                                       27




                                                                Defendants p .. 29

                                                                         DEF000341
                                                                                     68
                       Section 13.7       Article and Section Headings.

                        Article and section titles or capt;.ions contained in this
                 Agreement are inserted only as a matter of convenienc·e and for
------~r~e~f;_,;e;_:r;,.e~nci;r;·-'--and~shal-1--not-be- . .constxp.li:l<Lin any way to define, limit,
                 extend or' describe the scope of any of the prov1s1ons }'ftgreof.                     ---··----..._,_____,

                       Section 13,8       Word Meanings,
                      The words such as 11 herein,H '1 hereina:fter 1 11 11 hereof 1' . and
                11
                  hereunder 11 refer to this Agreement as a whole and not merely to a
               subdivision in which such words appear unless the context otherwise
               requires, The singular shall include the plural and vice versa.
               The masculine gender shall include the feminine and vice versa;
               unless the context otherwise requires.          11 And 11 or 11 or 11 means
               11
                  and/or •
                        11     Unless otherwise specified herein, words used herein
               which are defined in the Act shall have the same meaning as they
               have in the Act.

                      Section 13.9        ~Xhibits.

                    Exhibits 11 A 11 1 11 Bll and 11 C 11 are attached hereto, incorporated by
               this reference and their contents are made a part bereof.
                      Section 13.10        survival of Covenants.
                     All covenants, representations, warranties and other written
               statements set forth in this Agreement shall survive execution and
               delivery hereof and making of the capital contributions provided
               for elsewhere herein.     All of the covenants 1 :t"epresentations 1
               \'larranties and statements shall be deemed to be independently
               material and to have been relied upon by the party or parties to
               whom made.
                     Section 13.11        Further Actions.
                   Each of the partners shall hereafter execute and deliver such
              further instruments and do such further acts and things as may be
              required or useful to carry out the intent and purpose of this
              Agreement and as are not inconsistent with the provisions hereof.
                     Section 13.12        Meetings.
                   Special Meetings of the partnership may be called ny any
              general partners or limited partners holding more than ten percent
              {lOt) of the limited partners 1 aggregate interests, for any matters
              for which the 1 imi ted partners may vote, as set forth in this
              Agreement. Upon receipt of a written request, either in person or
              by registered mail, stating the purpose of the meeting, the general


                                                          28




                                                                                          Defendants p. 30

                                                                                                  DEF000342
                                                                                                              69
 partner shall provide all limited partners, within fifteen (15)
 days after receipt of said request 1 notice of a meeting and the
 purpose of such meeting to be held on a date not less than thirty
 {30) nor more than sixty (60) days after receipt of said request,
 at a time and place selected by the general partne~.

     The notice of meeting shall state the nature of the business
to be transacted/ and no other business flhall be considered at the
meeting. Lim~ted partners may vote in person or by proxy at any
meeting thereof, and the presence in person or by pro~y of limited
partners holding at least a majority of the limited partners'
aggregate interests shall be necessary to constitute a quorum at
such meeting.   The general partner _shall maintain a list of the
names and addresses of, and the partnership interests owned by, the
limited partners at the pa~tnership 1 s principal office, Such list
shall be made available for the review of any limited partner or
hie representative at reasonable times, and upon request received
by the general partner, the general partner shall furnish a copy of
such list to any limited partner or his representative for the cost
of reproduction and mailing.
       Section 13.13       Confidentiality.
     Ey execution hereof, each partner agrees to keep all
information concerning the partnership confidential, including but
not limited to the na~es and ownership interests of the partners.
This restriction shall not apply to information which is already
available to the general public.

                                   ARTICLE XXV
                      INVESTMENT AND NOTXCE PROVIS10NS
      Section 14.1       Notice to Limited Partners.
      THE LlMITED PAR'!'NERSH:tP I»'.l'ERES'l'S (THE ''UNITS 11 )          OF HARBOR
HOSPICE    OF Blil.A'O'MON'.l' 1 r., P, ('l'HE "PARi;rNERSHIP 11 } H,AVll1 NO"l' 'BEEN
REGIST~RED 1 APPROVED OR DISAPPROVED BY ~HE SECURITIES ~ EXCaANGE
CO~llcrSSION OR BY THE S~CORITXES ADMINIST~'!'OR OF ANY STATE. ANY
REPRESENTATION TO THE        CO~RARY     IS A CRIMINAL OFFENSE.

     'f'HERE !S NO PUBLIC MARKET FOR Tll:B WITS. IN MAKING . AN
INVESTMENT DECISION, YOU ~WST RELY ON YOUR OWN E~INATION OF THE
PARTNERSHIP AND THE T:E!R.MS OF THE: OFFERING, INCLUDilif!J THJU 'MERITS AND
RISKS lNVOLVED,




                                         29




                                                                        Defendants p. 31
                                                                                            70
                                                                                DEF000343
      ~HE  UNITS ARE RESTRICTED SECURITIES, AND YOU MAY NOT TRANSFER
 OR RESELL THEM EXCEPT AS PER!UTTED tiNPER TKE SECURITIES ACT OF
 193~ 1 AS A:MENDEDt AND APPLICABLE STATE SECO'RITIES LAWS, PURSUANT TO
 REGISTRATION OR EXEMPTION THEREFROM.    THE SALE OR OTHER TRAI'iSFER OF
 THE UNITS !S ALSO   RES~RICTED   BY ARTICLE VIII OF THE AGREEMENT OF
 LIMITED PARTNElr.SlllP OF ~'IIE-P.AR'l'NERSH-r·P-~~BE-REQUIRE~.o_--­
 BEAR THE FIN.ANCIAL RISKS OF THIS IWESTHENT FOR AN :tNDEFIN1TE
 PERIOD OF TIME.

      Section 14.2   Risk Factors.
      (a) Business Risks. The partnership will he a new business
venture with no.prior operating experience 1 subject to all of the
risks that are attendant to any such venture. The partnership does
not anticipate epgaging in any business except the activities
described herein. While the discussion herein seeks to summari~e
the foreseeable risks affecting the operations of the partnership,
investors in the·partnerehip should recognize the partnership, like
any new business venture, ia subject to a number of unforeseeable
risks.
      (b) Failure of Assumptions Regarding_Performance. The actual
revenues and expenses of the partnership will vary from those
presented in financial forecasts and the variation may be material.
Therefore, a prospective investor should evaluate carefully the
reasonableness of the assumptions which underlie the financial
forecasts.
      (c) Regulatory Ri~ks. Investors should be aware that there
is increasing scrutiny by law enforcement authorities, the Office
of Inspector General, Centers for Medicare and Medicaid, the
courts, and Congress of arrangements between health care providers
and potential referral sources .to ensure that these arrangements
are not designed as a mechanism to exchange remuneration for
patient care referrals aud opportunities. These agencies have also
demonstrated a willingness to look behind the formalities of a
contractual relationship (such as a partnership or limi~ed
liability company) to determine the underlying purpose of payments
between health care providers and potential referral sources.
     The  partnership believes that the partnership has been
st~uctured  to comply with federal and state law because the Limited
Partners Vlill receive financial benefits solely on the basis of
their equity interests in the partnership and the r~ceipt of such
benefits is not conditioned upon the wimited Partners 1 referral of
patients to the lnstitute. No documents or agreements have been
submitted to the OIG, CMS 1 or the United States Department of
Justice for a determination of whether conditions for investor
suitability 1  capital contributions to the partnership 1 or


                                  30



                                                             Defendants p. 32

                                                                     DEF00034471
distributions to the Limited l?artners, or any of the partnership's
contractual arrangements constitute remuneration in consideration
of referral or fee-spl:i.tting a_:rrangements, kick-backs 1 commissions!
bonuses 1 or rebates,


     Section l4. 3     I.imited Partners 1 Representations aha
                        Warranties.
     By execution hereof 1 each Limited Partner represents and
warrants to the Partnership that;
      (1}    The Limited Partner is either an "accredited investor11 or
             is a \\sophisticated and well~inforrned investor'1 {as
             defined in the Securities Act of 1933 ·or the Texas
             Securities Act 1 and the Limited Partner has the required
             financial sophistication 1 net worth 1 knowledge and
             experience in financial matters.
     (2}    The information contained in the EXecution Page of this
            Subscription Agreement is complete, accurate, and may be
            relied upon by the partnership and the General Pa~tner.
     (3)    The Limited Partner will notify the partnerphlp      and the
            General ·Partner immediately of any material         adverse
            change in any of the information contained           in the
            Execution Page occurring before acceptance of the    Limited
            Partner's subscription.
     (4}    The Limited Partner will provide any further necessary
            information as.may be required by the partnership, the
            General Partner, or their counsel to verify the
            information contained in'the Execution Page,
     (5)    The Limited Partner is subscribing for inv~stment
            purposes only and not for resale or distribution.
     (6)    The Limited Partner has adequate means of providing for
            his, her or its current needs and personal contingencies,
            and does not anticipate that he, she or it will have a
            need to liquidate or transfer the Units.
    {7}     The Limited Partner recognizes and acknowledges h~s 1 her
            or its understanding of the speculative nature and.risk
            of loss associated. with this type of investment and
            confirm that the Units subscribed for constitute an
            investment that is suitable and consistent with the
            Limited Partner 1 s overall investment prog:ram and that the
            Limited Partner's financial situation enables the Limi~ed



                                   31



                                                              Defendants   p. 33

                                                                     DEF000345
                                                                                   72
                           Partner to bear the risks of this investment which may
                           include the total loss of the subscription.
                    {B)          In making the decision to purchase the Units 1 the Limited
                                 Partner pas. ~elied on independent investigations,
                                 including the Limited Partner's own professional tax and
---------~b;u;s;~:;n;e;s::;;s~a;;:;-cdV;;;;!;:,s~o;..r::,;s;:1 :._::arrd-·ttre-~-tfle:t;·-has.....:Seen-gi.ven--.----·-··-
                                 the opportunity to examine all relevant documents and to
                                 ask questior.ta of 1 and to receive answers froll\ 1 the
                                 General Partner concerning the terms and conditions of
                                 the offering.
                    (9}    The Limited Partner shall not, directly or indirectly(
                           own an interest in an entity or facility located within a
                           lO~mile radius of any facility owned or operated by the
                           Partnership that competes with or is substantially
                           similar to the business of the Partnership.
                   Section 14.4        Spousal Joinder.
                 By execution hereof, each Limited Partner 1 s spouse, if
            applicable 1 acknowledges that he or she has received and reviewed.
            this Agreement of. Limited Partnership and that he or she agrees to
            be bound by all of the terms and conditions hereof to the extent of
            such spouse 1 s con~unity property interest 1 if any, in the Units.
                   E:XECUTED THIS      J...l of   Tv.x-..lL     1   2005.

                                                      GENERAL PARTNER:
                                                      HARBOR HOSP!CE MANAGERS 1 L.L.C.




                           (EXECUTlON PAGES




                                                        32



                                                                                           Defendants p. 34

                                                                                                           73
                                                                                                   DEF000346
                     LIMITED PARTNER EXBCUTlON PAGE

NAME OF LIMITED PARTNER: Arfeen Properties 1 L.P.




Signature of Spouse {if applicable):




nate ot Execution:    lf{!Jfl/0)




                                   33




                                                      Defendants p. 35
                                                                          74
                                                              DEF000347
                     LIMITED PARTNER RXBCOTION PAGE

NAME OF L!MITED PARTNER: Texas Realms, Ltd,
           of Limited Paxt.ne:r:
By:   Texas Teal 1                 Partner




Signature of Spouse (if applicable)     1


Not applicable,



Date of Execution:
                     ----------------~




                                   34




                                                      Defendants -p. 36

                                                              DEF000348
                                                                          75
                    L!l>HTED PAR.TNER EXECUTION PAGE

NAME OF LIMITED PARTNER: Aman Jafar




Aman Jafar

Signature of Spouse {if applicable):




Date of Execution: __~/~1_-~0~?_~~~-----




                                  35




                                                       Defendants p. 37

                                                               DEF000349
                                                                          76
                     LIMITED PARTNER EXECUTION PAGE

NAME OF LIMITED   P~TNER:    Janet Montagne
          of Limited Partner:


Janet

Signature of Spouse {if applicable} :




Date of Execution:    /(:?Jc; ·--'1)5




                                    36




                                                      , Defendants p. 38

                                                                DEF000350
                                                                           77
                     LIMITEP       PJ4~TNER    EXECUTION PAGE

 NAME OF LIMITED PARTNER: Joe Royall Chapman
 Signature of Limited Partner:


    ~&<---"~~
Joe ~all    Chapman'-.::

. Signature of Spouse (if applicable}:


    ~c~                                          =


Date of Execution: __      ~1~~~--~-r~;j-~-~------




                                          37




                                                                Defendants p. 39

                                                                        DEF000351
                                                                                   78
                     LIMITED PARTNER .EXECUTION PAGE

NAME OF LIMITED PARTNER: Sandeep Patel




Signature of Spouse (if applicable}:




Date of Execution:




                                  38




                                                       Defendants p. 40


                                                               DEFOOQ352
                                                                          79
                     LIM!TEO PARTNER EXECUTION PAGE

NAME OF LIMITED PARTNER: Allen David Ayres




Signature o.f· Spouse (if applicable) :




Date of Execution!      ll- c:l( • D\
                     ---=------------




                                 39




                                                      Defendants p. 41

                                                               DEF000353
                                                                         80
                  LlMlTED PARTNER EXECUTION PAGE

NAME OF LIMITED PARTNER: Triptesh Chaudhury
Signature of Limited   Partner~



.Tripg~
Signature of Spouse (if applicable)    ~




                                  40




                                                   Defendants p. 42

                                                                      81
                                                           DEF000354
                      LIMITED PARTNER EXECUTION PAGE

NAME OF L!MlTED PARTNER: Anwar Family Partners, Ltd.


                                  General Partner




Signature   o~   Spouse (if applicable}:
Not applicable.



Date of   Execution:~_/l+~~~+r~-6~--~----




                                   41




                                                       Defendants p. 43

                                                                          82
                                                               DEF000355
                         BXHIBIT "A.11 CONTINtrED
INITIALS LIMITED PARTNERS
         Name                            Contribution

                                                        to total PI
         Class A Limited Partners {cont 1 d}:

         sandeep Patel
         12802 Aspen Terrace
         Cypress 1 TX 77433                               3.0000%


         Allen David Ayre~
         2501 North Street
         Beaumont 1 TX 77702                             3.0000%

         ~nwa:rFamily Partners. Ltd.
         3850 Champions Dr.
         Beaumont/ TX 7770?       $ 7 1 832.84           7.8330%



         ~        B Limited .Partners:
         Arfeen Properties~ L.P.
         7683 Cobblestone Terrace
         ~umberton 1 TX 77657                            4.1670%


         Te~as    Realms! Ltd.
         3840 Champions Dr.
         Beaumont, TX 77107              $ 49,992,00     4.1660%

         Aman Jafar
         1323 Meadowlark Lane
         Sugarland 1 TX 7?4?8            $ 49,992.00     4.1660%


         Triptesh chaudhury
         P.O. Box 2652
         Port Arthur, TX 77643           $ 50,004.00     4.1670%




                                                              Defendants p. 44

                                                                                 83
                                                                       DEF000356
INITIALS GENERAL PARTNER
            Name                       contribution    Percentage

                                                        to total PI
            Harbor Hospice Managers 1 L.L.C.
            4010 College Street
            Suite 100
            Beaumont, Texas ?7707        $1~000.00         1.00%



INITlA~S   LIMITED PARtNERS
           Name                        Contribu'tion   Percentage
           &·Address                   pf Capital      & Interest
                                                          LPI %
                                                       to total PI
           Class A Limited Partners:
           Arfeen Properties, L.P.
 ~ 7683 Cobblestone Terrace
~          ~umberton, TX 77657                         23,5000%

           Texas Realms 1 Ltd.
           3840 Champions Dr.
           Beaumont, TX 77707          $ 7,833.43        7.8335%

           Aman Jafar
           1323 Meadowlark ~ane
           Sugar1and 1 TX 77478        $ 7,833.43       7.8335%


           Janet Montagne
           2230 Chasse Bend
           orange 1 T:X. 77632                          3,0000%

           Joe Royall Chapman
           7880 Lantana
           Beaumont, TX 77713          $ 3,000.15       3.0000%




                                                              Defendants p. 45


                                                                      DEF000357
                                                                                 84
                   LIM!TED PARTNER EXECUTlON PAG$

NAMB OF LIMITED PARTNER: Suleman Lalani
Signature of Limited Partner:


Suleman   Lalan~
Signature of SpQUSe (if applicable)                =




Pate of Execution: _   ____.['-'-lq~1+1lf-"o-'-L_.__




                                          42




                                                       Defendan~ p.   46

                                                                       85
                                                               DEFOOQ358
                       EXHIBIT "An CONTINUED
INITIALS LIMITED PARTNERS




         Class B Limited Partners (cont 1 d);


         A.n\<lar Family Partners 1 Ltd,
         3850 Champions Dr.
         Beaumont, TX 7?701           $ 50,004.00     4.1670%

         Suleman Lalani
         442 Williams Landing Dr.
         Sugarl.and 1 TX 77479    $ 50r004.00        4 .167<H


         Class C Limited Partners:
         Rese~ed in accordance       $1,500,000,00   15.0000%
         with Section 3.2 of
         this Agreement.




                                                          Defendants p. 47

                                                                           86
                                                                   DEF000359
                            EXHIBIT IIB 11
              CERTIFICATE OF LIMITED PARTNERSHIP FOR
                 HARBOR HOSPICE OF BBAUMONT 1 - L.P.
                    A TEXAS LIMITED PARTNERSHIP



2. The address of the registered office of the partnership is 4010
College Street, Suite 100, :Beaumont 1 Texas 77707 and the name and
address of registered agent for the partnership is Triptesh
Chaudhury, 4010 College street, Suite 100, Beaumont 1 Texas 77707.

3.    The address of the principal office of the ·partnership where
the records are to be kept or made available under Section l.07 of
the Texas Revised Limited Partnership Act is Triptesh Chaudhury,
4010_ College Street, Suite 100 1 Beaumont, Texas 77707,
1.   The name 1 mailing and street address of the general partner
are as follows!
                     Harbor Hospice Managers 1 L.L.C.
                     4010 College Street, ·suite 100
                     Beaumont, Texas 7770?
5, Other matte~s that the general   partne~   has determined to   ~nclude
are: None.
     The Manager of the general partner has signed this document
under penalty of perjury and certifies that to the best of his
knowledge and belief 1 the facts stated in this Certificate of
Limited Partnership are true.
                                GENERAL PARTNER:
                                aARBOR HOSPICE MANAGERS 1 L.L.C.


                                By;    Tr~d~,                Manager




                                                              Defendanls p. 48

                                                                              87
                                                                       DEF000360
         'I

(   ..                                    EXHXBlT   11   Cif

              INITIALS GENERAL PARTNER
                                                           Changes to

                                               & Date               & Interest
                                                                      GPI -%
                                                                    to total PI




              INlTIALS LIMITED PARTNER$
                                                           Chang,es to
                       Name                    Capital             Percentage
                       & Address               & Date              & Interest
                                                                      LPI %
                                                                   to total PI




                                                                             Defendants p. 49


                                                                                             88
                                                                                      DEF000361
