                                                                                    ACCEPTED
                                                                                03-13-00081-CV
                                                                                        5163833
                                                                     THIRD COURT OF APPEALS
                                                                                AUSTIN, TEXAS
                                                                            5/5/2015 4:38:36 PM
                                                                              JEFFREY D. KYLE
                                                                                         CLERK
           !     !     !     !       !   !     !     !       !
                                     !
                           No.!03'13'00081'CV!                 FILED IN
                                                        3rd COURT OF APPEALS
            !     !      !     !     !   !     !     !       !
                                                            AUSTIN,  TEXAS
                                     !                  5/5/2015 4:38:36 PM
                     IN#THE#COURT#OF#APPEALS#             JEFFREY D. KYLE
                                                                Clerk
                FOR#THE#THIRD#DISTRICT#OF#TEXAS#
                           AT#AUSTIN,#TEXAS#
            !     !      !     !     !   !     !     !       !
                                     !
   TWENTY#FIRST#CENTURY#HOLDINGS,#INC.#D/B/A#AMERICAN#GEOTHERMAL#
           SYSTEMS,#INC.,#VICTOR#DEMARCO,#AND#N.#WEST#SHORT#
                                     #
                                    V.#
                                     #
                 PRECISION#GEOTHERMAL#DRILLING,#L.L.C.#
            !     !      !     !     !   !     !     !       !
                                     !
         FROM#THE#COUNTY#COURT#AT#LAW#NO.#2#OF#TRAVIS#COUNTY,#
   NO.#C<1<CV<12<12503,#HONORABLE#ERIC#SHEPPERD,#JUDGE#PRESIDING#
            !     !      !     !     !   !     !     !       !
                                     #
               APPELLANT’S#MOTION#FOR#REHEARING!
            !     !      !     !     !   !     !     !       !
                                     !
                                     !
LEAD!COUNSEL:! !         !     !     !   !
WEST!SHORT!&!ASSOCIATES,!P.C.! !         !
N.!West!Short!    !      !     !     !   !
State!Bar!No.!00788407!!       !     !   !
313!West!10th!Street! !        !     !   !
Georgetown,!Texas!78626!
512.864.3911!
512.864.3966!(Fax)!
west.short@westshortlawfirm.com!!
!
                    ATTORNEYS#FOR#APPELLANTS#
                                     #
                    ORAL#ARGUMENT#REQUESTED#
                                ISSUES%PRESENTED!

I.      Because! the! issue! of! unfairness! has! not! been! fully! litigated! or!
        adjudicated,!the!September!2012!Settlement!Agreement!is!a!valid!
        and! enforceable! agreement.! Thus,! the! Court! cannot! unilaterally!
        declare! the! September! 2012! Settlement! Agreement! unfair! and!
        treat! it! as! void! by! failing! to! enforce! it.! Texas! Business!
        Organization!Code!section!101.255!only!gives!the!company!or!the!
        company’s! members! a! cause! of! action! against! the! “interested!
        governing! person”! if! the! company! or! the! company’s! members!
        believe! a! contract! is! not! fair.! Section! 101.255! does! not!
        automatically! void! an! unfair! contract.!Thus,! Patricia! Denny! must!
        assert! a! cause! of! action! against! Victor! DeMarco! to! determine!
        fairness,! obtain! findings! of! unfairness,! and! obtain! a! judgment!
        declaring! the!September! 2012! Settlement! Agreement! void!in!
        order!to!avoid!the!terms!of!that!agreement.!!
!
II.     Regardless,! even!if!the!Court!has!authority!to!determine!fairness!
        (which! it! does! not),! the! evidence! shows! that! Mr.! DeMarco’s!
        release! of! his! personal! claims! against! Ms.! Denny! and! the! other!
        items! Mr.! DeMarco! was! willing! to! give! in! exchange! for! a! “walkR
        away”!settlement,!do!have!value,!value!that!may!be!even!beyond!
        the!$5,100.00!negotiated!for!the!July!2012!Settlement!Agreement.!!
!
III.!   Because! the!September! 2012! Settlement! Agreement! is! valid! and!
        enforceable,! and! Mr.! DeMarco! was! denied! mediation! by! the!
        Justice! Court,! this! Court! should! compel! arbitration! pursuant! to!
        the!September!2012!Settlement!Agreement.!
!
                                         !
%                           %




!                                       1!
                          STATEMENT%OF%FACTS!!
                                        !
       This! case! originally! arose! under! a! Drilling! Agreement.! PGD! (a!

company! owned! in! part! by! Patricia! Denny! and! Victor! DeMarco)!

contended! that! AGSI! (a! company! owned! by! Mr.! DeMarco)! owed!

amounts!to!PGD!under!the!Drilling!Agreement,!and!AGSI!contended!that!

it!was!required!to!pay!a!third!party!to!do!what!PGD!was!required!to!do,!

namely!install!pilings,!and!that!it!didn’t!agree!to!pay!for!any!extras!for!

which!it!was!being!billed!by!PGD!(the!“Drilling!Dispute”).!(CR!38R44.)!

       While! the! Drilling! Dispute! was! in! litigation,! a! separate! dispute!

arose! between! Mr.! DeMarco! and! PGD! concerning! Patricia! Denny’s!

operation! of! PGD! and! her! refusal! to! provide! documents! and! other!

information! he! had! requested! as! a! 49%! owner! of! PGD! (the! “PGD!

Dispute”).!Her!refusal!to!provide!the!requested!records!to!Mr.!DeMarco!

was!a!violation!of!the!Texas!Business!Organizations!Code.!!

       On! our! about! June! 29,! 2012,! AGSI! and! PGD! settled! the! Drilling!

Dispute! for! a! lumpRsum! payment! by! AGSI! to! PGD! of! $5,100.00,! which!

settlement! was! confirmed! by! way! of! a! Rule! 11! Agreement! drafted! by!

PGD’s! counsel! and! filed! with! the! JP! Court.! (CR! 62.)! On! or! about! July! 6,!

2012,! PGD! drafted! and! sent! a! settlement! agreement! to! AGSI’s! counsel!

confirming!the!Drilling!Settlement.!(CR!63R64)!!


!                                        2!
      On! or! about! July! 9,! 102,! PGD! repudiated! the! Drilling! Settlement,!

retracted!the!settlement!agreement!it!had!sent,!and!demanded!that!Mr.!

DeMarco!also!agree!to!release!all!claims!arising!from!the!PGD!Dispute!as!

well,!which!was!not!part!of!the!Drilling!Settlement.!(CR!12;!CR!75R77.)!

Mr.!DeMarco!refused!to!release!his!claims.!!

      When!PGD!finally!produced!the!documents!that!Mr.!DeMarco!had!

been!requesting,!the!documents!revealed,!among!other!things,!that:!(1)!

PGD!had!not!filed!a!tax!return!for!2011,!!generated!any!KR1!statements!

to!the!owners!of!PGD!for!2011,!or!obtained!an!extension!from!the!IRS!to!

file! PGD’s! 2011! tax! returns! (see! CR! 233);! (2)! no! meetings! of! the!

members! or! managers! of! PGD! had! ever! occurred;! (3)! without! Mr.!

DeMarco’s! knowledge! or! consent,! PGD! had! hired! and! been! paying! Ms.!

Denny’s! husband! as! a! “consultant”! to! PGD;! (4)! without! Mr.! DeMarco’s!

knowledge!or!consent,!Ms.!Denny!had!retroactively!changed!her!capital!

contributions! to! PGD! for! 2010! and! 2011! into! a! promissory! note! she!

signed! on! behalf! of! PGD! to! her! husband;! (5)! Mr.! DeMarco! was! and!

always!had!been!a!Manager!of!PGD,!notwithstanding!representations!by!

Ms.! Denny! to! Mr.! DeMarco! and! others! that! she! was! the! sole! Manager;!

and! (6)! PGD! is! minimally! capitalized,! and! hasn’t! done! any! business! or!

made!any!income!since!2011.!(CR!79R85.)!


!                                      3!
      Because! PGD! refused! to! proceed! with! the! July! 2012! Settlement!

Agreement! without! Mr.! DeMarco’s! release! of! claims! against! Ms.! Denny!

and! PGD,! and! failed! to! timely! produce! PGD’s! books! and! records! to! Mr.!

DeMarco,! it! is! suspected! that! Ms.! Denny! knew! all! along! that! she! was!

mismanaging! PGD! and! wanted! to! protect! herself! from! liability! for! her!

mismanagement!of!PGD.!!

      Also,!PGD!refused!to!submit!its!federal!tax!returns!for!2011!unless!

and! until! Mr.! DeMarco! paid! the! $5,100.00! under! the! July! 2012!

Settlement!Agreement,!which!PGD!had!already!repudiated.!(CR!70R72.)!

      PGD’s! counsel! again! stated! that! unless! Mr.! DeMarco! released! his!

claims!arising!from!the!PGD!Dispute,!PGD!would!set!the!Drilling!Lawsuit!

for!trial.!When!Mr.!Demarco!did!not!agree!to!release!his!claims!arising!

from! the! PGD! Dispute,! PGD’s! counsel,! having! repudiated! the! Drilling!

Settlement,!set!the!Drilling!Lawsuit!for!another!trial.!(CR!78.)!

      In! addition! to! giving! Ms.! Denny! the! release! she! so! desperately!

wanted,! the! September! 2012! Settlement! Agreement! was! also! intended!

to! restore! PGD! into! compliance! with! state! and! federal! laws.! In! the!

September! 2012! Settlement! Agreement,! Mr.! DeMarco! settled! both! the!

Drilling!Dispute!and!the!PGD!Dispute!for!a!“walk!away,”!meaning!that!all!

parties—PGD,! AGSI,! Ms.! Denny,! and! Mr.! DeMarco—would! release! all!


!                                      4!
claims! against! each! other,! without! any! payment! by! any! party.! (CR! 79R

85.)! Given! the! irregularities! in! PGD’s! books! &! records! produced,! the!

extreme!delays!in!producing!such!records,!and!the!failure!to!file!PGD’s!

2011!tax!return,!Mr.!DeMarco!also!agreed!to!hire!and!pay!a!CPA!firm!to!

prepare! PGD’s! tax! return! for! 2011! and! balance! and! rehabilitate! PGD’s!

books! and! records,! at! his! own! expense.! (CR! 81.)! The! September! 2012!

Settlement!Agreement!also!included!a!mediation!and!arbitration!clause!

to!settle!any!further!disputes!between!the!parties.!(CR!84.)!

!

%                         %




!                                     5!
                                ARGUMENT!

I.%   Because%the%issue%of%unfairness%has%not%been%fully%litigated%or%
      adjudicated,% the% September% 2012% Settlement% Agreement% is% a%
      valid% and% enforceable% agreement.% Thus,% the% Court% cannot%
      unilaterally% declare% the% September% 2012% Settlement%
      Agreement%unfair%and%treat%it%as%void%by%failing%to%enforce%it.%
      Texas%Business%Organization%Code%section%101.255%only%gives%
      the% company% or% the% company’s% members% a% cause% of% action%
      against% the% “interested% governing% person”% if% the% company% or%
      the%company’s%members%believe%a%contract%is%not%fair.%Section%
      101.255%does%not%automatically%void%an%unfair%contract.%Thus,%
      Patricia% Denny% must% assert% a% cause% of% action% against% Victor%
      DeMarco%to%determine%fairness,%obtain%findings%of%unfairness,%
      and% obtain% a% judgment% declaring% the%September% 2012%
      Settlement%Agreement%void%in%order%to%avoid%the%terms%of%that%
      agreement.%%
%
!     Texas! Business! Organizations! Code! section! 101.255! provides,! in!

relevant!part:!!

      §!! 101.255.! Contracts! or! Transactions! Involving! Interested!
          Governing!Persons!or!Officers!
      !
      (a)!! This! section! applies! to! a! contract! or! transaction!
            between!a!limited!liability!company!and:!
            (1)!! one! or! more! governing! persons! or! officers,! or!
                   one! or! more! affiliates! or! associates! of! one! or!
                   more! governing! persons! or! officers,! of! the!
                   company;!or!
            (2)!! an!entity!or!other!organization!in!which!one!or!
                   more! governing! persons! or! officers,! or! one! or!
                   more! affiliates! or! associates! of! one! or! more!
                   governing!persons!or!officers,!of!the!company:!
                   (A)!is!a!managerial!official;!or!
                   (B)!has!a!financial!interest.!

!                                     6!
                !
    (b)!! An! otherwise! valid! and! enforceable! contract! or!
          transaction! described! by! Subsection! (a)! is! valid! and!
          enforceable,! and! is! not! void! or! voidable,!
          notwithstanding! any! relationship! or! interest!
          described! by! Subsection! (a),! if! any! one! of! the!
          following!conditions!is!satisfied:!
          (1)!! the! material! facts! as! to! the! relationship! or!
                interest! described! by! Subsection! (a)! and! as! to!
                the! contract! or! transaction! are! disclosed! to! or!
                known!by:!
                (A)!! the! company's! governing! authority! or! a!
                        committee!of!the!governing!authority!and!
                        the! governing! authority! or! committee! in!
                        good! faith! authorizes! the! contract! or!
                        transaction! by! the! approval! of! the!
                        majority! of! the! disinterested! governing!
                        persons! or! committee! members,!
                        regardless! of! whether! the! disinterested!
                        governing! persons! or! committee!
                        members!constitute!a!quorum;!or!
                (B)!! the! members! of! the! company,! and! the!
                        members! in! good! faith! approve! the!
                        contract! or! transaction! by! vote! of! the!
                        members;!or!
          (2)!! the! contract! or! transaction! is! fair! to! the!
                company! when! the! contract! or! transaction! is!
                authorized,! approved,! or! ratified! by! the!
                governing! authority,! a! committee! of! the!
                governing! authority,! or! the! members! of! the!
                company…!
    (d)!! A! person! who! has! the! relationship! or! interest!
          described!by!Subsection!(a)!may:!
          (1)!! be!present!at!or!participate!in!and,!if!the!person!
                is! a! governing! person! or! committee! member,!
                may! vote! at! a! meeting! of! the! governing!
                authority! or! of! a! committee! of! the! governing!
                authority! that! authorizes! the! contract! or!
                transaction;!or!


!                                   7!
            (2)!! sign,! in! the! person's! capacity! as! a! governing!
                   person! or! committee! member,! a! written!
                   consent!of!the!governing!persons!or!committee!
                   members! to! authorize! the! contract! or!
                   transaction.!
      (e)!! If%at%least%one%of%the%conditions%of%Subsection%(b)%is%
            satisfied,% neither% the% company% nor% any% of% the%
            company's% members% will% have% a% cause% of% action%
            against% any% of% the% persons% described% by%
            Subsection% (a)% for% breach% of% duty% with% respect% to%
            the% making,% authorization,% or% performance% of% the%
            contract% or% transaction% because% the% person% had%
            the% relationship% or% interest% described% by%
            Subsection% (a)% or% took% any% of% the% actions%
            authorized%by%Subsection%(d).!
!
(Emphasis!added.)!(See!Appendix!1.)!

      The!goal!of!statutory!construction!is!to!give!effect!to!the!intent!of!

the!legislature.!Sorokolit*v.*Rhodes,!889!S.W.2d!239,!241!(Tex.!1994).!If!

language!in!a!statute!is!unambiguous,!this!court!must!seek!the!intent!of!

the!legislature!as!found!in!the!plain!and!common!meaning!of!the!words!

and! terms! used.*Id.! In! applying! the! plain! and! common! meaning! of! the!

language! in! a! statute,! courts! may! not! by! implication! enlarge! the!

meaning!of!any!word!in!the!statute!beyond!its!ordinary!meaning;!such!

implication! is! inappropriate! when! legislative! intent! may! be! gathered!

from!a!reasonable!interpretation!of!the!statute!as!it!is!written.!Id.!!

!     A! plain! reading! of! section! 101.255! establishes! that! unless! and!

until! Ms.! Denny! and/or! PGD! asserts! a! cause! of! action! against! Mr.!


!                                     8!
DeMarco! and! obtains! a! judgment! voiding! the! September! 2012!

Settlement! Agreement,! the! September! 2012! Settlement! Agreement,!

including!the!arbitration!clause!within!it,!is!valid!and!fully!enforceable.!

Texas! Business! Organizations! Code! section! 101.255! does! not! declare!

that! an! unfair! contract! with! an! “interested! governing! person”! is! per*se!

void! or! voidable.! Rather,! section! 101.255,! in! subsection! (e),! merely!

provides!PGD!and!Ms.!Denny!with!a!cause!of!action!against!Mr.!DeMarco!

if!they!believe!that!the!September!2012!Settlement!Agreement!is!unfair!

to! PGD.! Thus,! in! order! to! avoid! the! terms! of! the! September! 2012!

Settlement! Agreement,! Ms.! Denny! and! PGD! must! litigate! the! fairness!

issue! and! obtain! a! judgment! voiding! the! September! 2012! Settlement!

Agreement.!!

!      Because!Ms.!Denny!and!PGD!have!not!asserted!a!cause!of!action!to!

void! the! September! 2012! Settlement! Agreement,! this! Court! must!

enforce!it.!!

II.%   Regardless,% even% if% the% Court% has% authority% to% determine%
       fairness% (which% it% does% not),% the% evidence% shows% that% Mr.%
       DeMarco’s% release% of% his% personal% claims% against% Ms.% Denny%
       and% the% other% items% Mr.% DeMarco% was% willing% to% give% in%
       exchange%for%a%“walkXaway”%settlement,%do%have%value,%value%
       that% may% be% even% beyond% the% $5,100.00% negotiated% for% the%
       July%2012%Settlement%Agreement.!%%
!


!                                      9!
!     Here,! the! Court! has! no! authority! to! determine! whether! the!

September! 2012! Settlement! Agreement! is! unfair! to! PGD.! Whether! a!

transaction!is!fair!is!a!fact!question!for!the!jury!to!determine!from!all!the!

facts!and!circumstances!of!the!case.!!Wilson*Fin.*Co.*v.*State,!342!S.W.2d!

117,!125!(Tex.!Civ.!App.—Austin!1960,!writ!ref’d!n.r.e.).!!

!     However,! even! if! the! Court! has! authority! to! determine! the! fact!

issue! of! fairness,! the! facts! demonstrate! that! the! September! 2012!

Settlement! Agreement! was! more! than! fair! to! PGD! and! Ms.! Denny.! The!

fact! that! Ms.! Denny! repudiated! the! July! 2012! Settlement! Agreement!

(which! she! and! her! attorneys! negotiated,! agreed! to! and! drafted),!

refused! to! settle! the! Drilling! Dispute! without! Mr.! DeMarco’s! release! of!

his! claims! against! her! for! mismanaging! PGD,! and! was! willing! to! go! to!

trial!again,!shows!that!she!certainly!placed!a!good!deal!of!value!on!Mr.!

DeMarco’s! release! of! his! claims! against! her.! Also,! the! fact! that! PGD!

(under!Ms.!Denny’s!mismanagement)!was!not!going!to!timely!file!its!tax!

return!was!harmful!to!PGD,!since!the!IRS!had!not!granted!an!extension!

to! PGD! to! file! its! tax! return! late.! (CR! 233).! Mr.! DeMarco! released! his!

claims!against!Ms.!Denny!and!agreed!to!hire!and!pay,!out!of!his!pocket,!a!

CPA!firm!to!file!PGD’s!overdue!tax!returns!and!balance!and!rehabilitate!

PGD’s!books!and!records!in!the!September!2012!Settlement!Agreement.!


!                                       10!
Thus,!under!the!September!2012!Settlement!Agreement,!Ms.!Denny!got!

the!release!she!so!desperately!wanted!and!also!got!PGD’s!books!in!order!

and!in!compliance!with!state!and!federal!laws.!!

!       Because! the! facts! demonstrate! that! the! September! 2012!

Settlement! Agreement! was! more! than! fair! to! PGD! and! Ms.! Denny,!

probably! even! more! fair! than! a! lumpRsum! payment! of! $5,100.00! from!

AGSI,!the!Court!should!make!no!determination!that!the!September!2012!

Settlement!Agreement!is!unfair,!if!the!Court!even!has!authority!to!make!

such!determination!(which!it!does!not).!!

III.%   Because% the%September% 2012% Settlement% Agreement% is% valid%
        and% enforceable,% and% Mr.% DeMarco% was% denied% mediation% by%
        the% Justice% Court,% this% Court% should% compel% arbitration%
        pursuant%to%the%September%2012%Settlement%Agreement.%
!
        Regarding!Footnote!6!in!the!Court’s!Opinion,!Mr.!DeMarco!did,!in!

fact,! ask! the! Justice! Court! to! refer! the! dispute! between! the! parties! to!

mediation.! (CR! 362,! bottom! of! the! page.).! However,! the! Justice! Court!

ignored! Mr.! DeMarco’s! request! for! mediation! and! denied! arbitration.!

(CR! 222R223.)! Because! the! Justice! Court! made! mediation! impossible,!

lack!of!mediation!should!not!be!an!additional!reason!to!refuse!to!compel!

arbitration.!!

%                          %


!                                       11!
                                  PRAYER!

!     For!the!reasons!above,!Appellants!Twenty!First!Century!Holdings,!

Inc.!d/b/a!American!Geothermal!Systems,!Inc.!and!Victor!DeMarco!pray!

that!the!Court:!

    (1)   Vacate! or! rescind! its! determination! that! the! September! 2014!

          Settlement!Agreement!is!not!fair;!!

    (2)   enter! an! order! compelling! the! parties! to! arbitrate! any!

          remaining!disputes!between!them;!and!!

    (3)   grant! Appellants! any! other! and! further! relief! to! which! they!

          may!be!entitled.!

                                Respectfully!submitted,!!
                                !
                                WEST!SHORT!&!ASSOCIATES,!P.C.!
                                !
                                By:! /s/!N.!West!Short!!    !   !
                                !    N.!West!Short!
                                !    State!Bar!No.!00788407!
                                !    313!West!10th!Street!
                                !    Georgetown,!Texas!78626!
                                !    512.864.3911!
                                !    512.864.3966!(Fax)!
                                !    west.short@westshortlawfirm.com!!
%
                                       Of!Counsel:!
                                       Tracia!Y.!Lee!
                                       State!Bar!No.!24013021!
                                       TRACIA!Y.!LEE,!P.L.L.C.!
                                       P.O.!Box!171022!
                                       Austin,!Texas!78717!


!                                    12!
                                           512.814.6167!
                                           512.271.6806!(Fax)!
                                           tlee@tleelaw.com!
!
                                           ATTORNEYS%FOR%APPELLANTS%
                                   %
%
                               %
                       CERTIFICATE%OF%COMPLIANCE%

      I! certify! that! I! drafted! Appellant’s! Motion! for! Rehearing! using!
Microsoft!Word!for!Mac!2011!using!Cambria!14Rpoint!font!and!that!the!
Motion!for!Rehearing!contains!2500!words.!!
      !
                                            /s/!Tracia!Y.!Lee! !       !      !
                                            Tracia!Y.!Lee!
                                            !
!
                       CERTIFICATE%OF%CONFERENCE!
                                            !
      Per! local! rule! 54,! I! certify! that! I! have! conferred! with! Jason! Snell,!
attorney!for!Appellees,!and!he!opposes!this!Motion.!!
      !
                                            /s/!N.!West!Short!!        !      !       !
!     !      !      !       !        !      N.!West!Short!
      !
%
%                           %




!                                        13!
                         CERTIFICATE%OF%SERVICE%
                                          !
!      I! hereby! certify! that! a! true! and! correct! copy! of! the! foregoing!
document! was! served! via! facsimile,! eRmail,! or! eRservice,! in! accordance!
with! the! Texas! Rules! of! Appellate! Procedure,! on! this! 5th! day! of! May,!
2015!upon!the!following:!
!
The!Snell!Law!Firm,!P.L.L.C.!             !
Jason!Snell!
The!Littlefield!Building!
106!E.!6th!Street,!Suite!330!
Austin,!Texas!78701!
512.477.5291!
512.477.5294!(Fax)!
!
ATTORNEYS*PRECISION*
GEOTHERMAL*DRILLING*LLC*
*
!      !      !     !       !     !       /s/!N.!West!Short!!       !      !    !
!      !      !     !       !     !       N.!West!Short!
!
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           !     !     !    !         !    !    !     !    !
                                      !
                            No.!03R13R00081RCV!
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                                      !
                       IN%THE%COURT%OF%APPEALS%
                  FOR%THE%THIRD%DISTRICT%OF%TEXAS%
                            AT%AUSTIN,%TEXAS%
   !      !     !     !      !     !     !   !     !     !    !   !
                                      !
   TWENTY%FIRST%CENTURY%HOLDINGS,%INC.%D/B/A%AMERICAN%GEOTHERMAL%
            SYSTEMS,%INC.,%VICTOR%DEMARCO,%AND%N.%WEST%SHORT%
                                      %
                                     V.%
                                      %
                  PRECISION%GEOTHERMAL%DRILLING,%L.L.C.%
   !      !     !     !      !     !     !   !     !     !    !   !
                                      !
         FROM%THE%COUNTY%COURT%AT%LAW%NO.%2%OF%TRAVIS%COUNTY,%
    NO.%CX1XCVX12X12503,%HONORABLE%ERIC%SHEPPERD,%JUDGE%PRESIDING%
   !      !     !     !      !     !     !   !     !     !    !   !
                                      %
                        APPELLANT’S%APPENDIX%
   !      !     !     !      !     !     !   !     !     !    !   !
                                      !
                                      !
                                      !
ITEM!1!      Texas!Business!Organizations!Code!§!101.255!




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               !       !     !     !     !    !     !      !  !
                                         !
                               No.!03'13'00081'CV!
               !     !       !     !     !    !     !      !  !
                                         !
                           IN#THE#COURT#OF#APPEALS#
                     FOR#THE#THIRD#DISTRICT#OF#TEXAS#
                               AT#AUSTIN,#TEXAS#
               !     !       !     !     !    !     !      !  !
                                         !
    TWENTY#FIRST#CENTURY#HOLDINGS,#INC.#D/B/A#AMERICAN#GEOTHERMAL#SYSTEMS,#
                    INC.,#VICTOR#DEMARCO,#AND#N.#WEST#SHORT#
                                         #
                                        V.#
                                         #
                      PRECISION#GEOTHERMAL#DRILLING,#L.L.C.#
               !     !       !     !     !    !     !      !  !
#
                     APPELLANT’S#MOTION#FOR#REHEARING!
               !      !    !    !    !    !    !    !             !
                                     !
                                     !

                                 ITEM!1!
                                    !
                   Texas!Business!Organizations!Code!§!101.255#
§ 101.255. Contracts or Transactions Involving Interested..., TX BUS ORG § 101.255




(a) This section applies to a contract or transaction between a limited liability company and:


  (1) one or more governing persons or officers, or one or more affiliates or associates of one or more governing persons or
  officers, of the company; or


  (2) an entity or other organization in which one or more governing persons or officers, or one or more affiliates or associates
  of one or more governing persons or officers, of the company:


     (A) is a managerial official; or


     (B) has a financial interest.


(b) An otherwise valid and enforceable contract or transaction described by Subsection (a) is valid and enforceable, and is not
void or voidable, notwithstanding any relationship or interest described by Subsection (a), if any one of the following conditions
is satisfied:


  (1) the material facts as to the relationship or interest described by Subsection (a) and as to the contract or transaction are
  disclosed to or known by:


     (A) the company's governing authority or a committee of the governing authority and the governing authority or committee
     in good faith authorizes the contract or transaction by the approval of the majority of the disinterested governing persons
     or committee members, regardless of whether the disinterested governing persons or committee members constitute a
     quorum; or


     (B) the members of the company, and the members in good faith approve the contract or transaction by vote of the members;
     or




                © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                            1
§ 101.255. Contracts or Transactions Involving Interested..., TX BUS ORG § 101.255




  (2) the contract or transaction is fair to the company when the contract or transaction is authorized, approved, or ratified by
  the governing authority, a committee of the governing authority, or the members of the company.


(c) Common or interested governing persons of a limited liability company may be included in determining the presence of
a quorum at a meeting of the company's governing authority or of a committee of the governing authority that authorizes the
contract or transaction.


(d) A person who has the relationship or interest described by Subsection (a) may:


  (1) be present at or participate in and, if the person is a governing person or committee member, may vote at a meeting of
  the governing authority or of a committee of the governing authority that authorizes the contract or transaction; or


  (2) sign, in the person's capacity as a governing person or committee member, a written consent of the governing persons or
  committee members to authorize the contract or transaction.


(e) If at least one of the conditions of Subsection (b) is satisfied, neither the company nor any of the company's members will
have a cause of action against any of the persons described by Subsection (a) for breach of duty with respect to the making,
authorization, or performance of the contract or transaction because the person had the relationship or interest described by
Subsection (a) or took any of the actions authorized by Subsection (d).


Credits
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006. Amended by Acts 2009, 81st Leg., ch. 84, § 44, eff. Sept. 1, 2009; Acts
2011, 82nd Leg., ch. 139 (S.B. 748), § 38, eff. Sept. 1, 2011.


V. T. C. A., Business Organizations Code § 101.255, TX BUS ORG § 101.255
Current through the end of the 2013 Third Called Session of the 83rd Legislature

End of Document                                                    © 2015 Thomson Reuters. No claim to original U.S. Government Works.




               © 2015 Thomson Reuters. No claim to original U.S. Government Works.                                                  2
