                                                                                  ACCEPTED
                                                                              01-14-00990-CV
                                                                   FIRST COURT OF APPEALS
                                                                           HOUSTON, TEXAS
                                                                        4/23/2015 11:52:38 AM
                                                                        CHRISTOPHER PRINE
                                                                                       CLERK

                          NO. 01-14-00990-CV

                                                            FILED IN
                                                     1st COURT OF APPEALS
                 IN THE COURT OF APPEALS FOR      THE HOUSTON, TEXAS
                      FIRST DISTRICT OF TEXAS        4/23/2015 11:52:38 AM
                                                     CHRISTOPHER A. PRINE
                                                              Clerk
                           MANFRED FINK,

                                            Appellant,
                                  v.

                   JOANNA D. ANDERSON, ET AL.,

                                            Appellant.


     ON APPEAL FROM THE 152ND JUDICIAL DISTRICT COURT
                   HARRIS COUNTY, TEXAS
                    CAUSE NO. 2014-22740


                          APPELLEES’ BRIEF


                                       Wade T. Howard
                                       State Bar No. 00787725
                                       Michael P. Cash
                                       State Bar No. 03965500
                                       Alma F. Gomez
                                       State Bar No. 24069800
                                       Liskow & Lewis
                                       1001 Fannin Street, Suite 1800
                                       Houston, Texas 77002-6756
                                       (713) 651-2900 (Telephone)
                                       (713) 651-2908 (Facsimile)
                                       Email: wthoward@liskow.com
                                       Email: mcash@liskow.com
                                       Email: afgomez@liskow.com
                                       ATTORNEYS FOR APPELLEES
Oral Argument Requested
                                         TABLE OF CONTENTS

I.       Statement of the Case ...................................................................................... 6

II.      Statement Regarding Oral Argument .............................................................. 6

III.     Statement of Facts............................................................................................ 7
IV.      Standard of Review.......................................................................................... 9

V.       Summary of Argument .................................................................................. 10
VI.      Argument ....................................................................................................... 11

         A.       Scope of Employment ......................................................................... 11
         B.       Appellant Was Not Acting Within the Course and Scope
                  of His Employment as a Physics Professor With the
                  University When He Committed Fraud in Connection
                  With His Attempts to Solicit Investments For IsoSpec. ..................... 16
                  1.        Soliciting Investments for a Private Company and
                            Committing Fraud in the Course of Such
                            Solicitations is Entirely Unrelated to and Exceeds
                            the Scope of Appellant’s General Duties as a
                            Physics Professor for the University. ........................................ 17
                  2.        Assuming Appellant’s Scope of Employment with
                            the University Could be Expanded by the Patent
                            Licensing Agreement Between the University and
                            IsoSpec, Such Expanded Scope is Limited by the
                            Terms of the Agreement. .......................................................... 22

         C.       A Fact Issue Exists as to Whether Appellant Was Acting
                  Within the Scope of His Employment. ............................................... 24

         D.       Appellant Cannot Establish That Appellees’ Suit Could
                  Have Been Brought Against the University Under the
                  Tort Claims Act. .................................................................................. 27
VII. Conclusion ..................................................................................................... 30



                                                             i
                                         INDEX OF AUTHORITIES

Cases
Alexander v. Walker, 435 S.W.3d 789 (Tex. 2014) .................................................29

Anderson v. Bessman, 365 S.W.3d 119 (Tex. App.—Houston [1st Dist.] 2011, no
  pet.)................................................................................................................ 16, 28
Bagg v. Univ. of Texas Med. Branch, 726 S.W.2d 582 (Tex. App.—Houston [14th
  Dist.] 1987, writ ref’d n.r.e.) ................................................................................14
Camacho v. Samaniego, 954 S.W.2d 811 (Tex. App.—El Paso 1997, pet. denied)
  ..............................................................................................................................14

City of Lancaster v. Chambers, 883 S.W.2d 650 (Tex. 1994) ................................12

Clark v. Univ. of Tex. Health Science Ctr., 919 S.W.2d 185 (Tex. App.—Eastland
  1996, writ denied) ......................................................................................... 13, 16

Cobb v. Harrington, 190 S.W.2d 709 (Tex. 1945) ..................................................15
Davis v. Klevenhagen, 971 S.W.2d 111 (Tex. App.—Houston [14th Dist.] 1998, no
  pet.).......................................................................................................................15

Durand v. Moore, 879 S.W.2d 196 (Tex. App.—Houston [14th Dist.] 1994, no
  writ) ......................................................................................................................15

Franka v. Velasquez, 332 S.W.3d 367 (Tex. 2011) .................................... 11, 13, 29
Griffin v. Hawn, 341 S.W.2d 151 (Tex. 1960) ........................................................14
Kelemen v. Elliot, 260 S.W.3d 518 (Tex. App.—Houston [1st Dist.] 2008, no pet.)
  ..............................................................................................................................16

Kelly v. Galveston Cnty., 520 S.W.2d 507 (Tex. App.—Houston [14th Dist.] 1975,
  no writ) .................................................................................................................13

Kersey v. Wilson, 69 S.W.3d 794 (Tex. App.—Fort Worth 2002, no pet.).............15

Lenoir v. Moore, Cause No. 01-13-01034-CV, 2014 Tex. App. LEXIS 12703 (Tex.
  App.—Houston [1st Dist.] November 25, 2014, no pet.) ....................................15



                                                                ii
Millan v. Dean Witter Reynolds, Inc., 90 S.W.3d 760 (Tex. App.—San Antonio
  2002, pet. denied) .......................................................................................... 14, 16

Mission Consol. Indep. Sch. Dist. v. Garcia, 235 S.W.3d 653 (Tex. 2008)29, 30, 31

Molina v. Alvarado, 441 S.W.3d 578 (Tex. App.—Texarkana Apr. 23, 2014, pet.
 filed). ............................................................................................................. 12, 25
Phelan v. Norville, No. 07-13-00040-CV, 2014 Tex. App. LEXIS 10560 (Tex.
  App.—Amarillo Sept. 22, 2014, no pet.) .............................................................16
Ross v. Marshall, 426 F.3d 745 (5th Cir. 2005) ......................................................21

Russell v. Edgewood Indep. School Dist., 406 S.W.2d 249 (Tex. Civ. App. San
  Antonio 1966) ......................................................................................................13

State Bar of Tex. v. Heard, 603 S.W.2d 829 (Tex.1980).........................................11
State ex rel. State Dep’t of Hwys & Pub. Transp. V. Gonzalez, 82 S.W. 3d 322
  (Tex. 2002) ...........................................................................................................11
Telthorster v. Tennell, 92 S.W.3d 457 (Tex. 2002) .................................................12
Tex. Adjutant General’s Office v. Ngakoue, 408 S.W.3d 350 (Tex. 2013) .............27

Wallace v. Moberly, 947 S.W.2d 273 (Tex. App.—Fort Worth 1997, no writ)......13
Weaver v. McKeever, No. 01-12-00851-CV, 2014 Tex. App. LEXIS 2092 (Tex.
 App.—Houston [1st Dist.] Feb. 25, 2014) ...........................................................29
Welch v. Milton, 185 S.W.3d 586 (Tex. App.—Dallas 2006, pet. denied) .............12
Zarzana v. Ashley, 218 S.W.3d 152 (Tex. App.—Houston [14th Dist.] 2007, no
  pet.).......................................................................................................... 14, 16, 21

Statutes
Tex. Civ. Prac. & Rem. Code § 101.001(5)...................................................... 12, 23

Tex. Civ. Prac. & Rem. Code § 101.003 .................................................................29

Tex. Rev. Civ. Stat. art. 581-29 ........................................................................ 21, 30
Tex. Rev. Civ. Stat. art. 581-4 .................................................................................30

                                                             iii
Texas Civil Practices and Remedies Code § 101.106(f) ................................. passim

Other Authorities
Texas Pattern Jury Charge 10.6 (2014) ...................................................................27




                                                    iv
                    RECORD REFERENCES

The single volume of the clerk’s record is cited by page number: C.R. 14




                                  v
                             NO. 01-14-00990-CV


                   IN THE COURT OF APPEALS FOR THE
                        FIRST DISTRICT OF TEXAS


                               MANFRED FINK,

                                                 Appellant,
                                       v.

                      JOANNA D. ANDERSON, ET AL.,

                                                 Appellant.


      ON APPEAL FROM THE 152ND JUDICIAL DISTRICT COURT
                    HARRIS COUNTY, TEXAS
                     CAUSE NO. 2014-22740


                             APPELLEES’ BRIEF


To the Honorable Court of Appeals:

      Plaintiffs Joanna D. Anderson, Betty Bailey, Doug Bird, Ann Brown, Brad

Bullock, M.D., Jim Byron, Mike Clann, Claire Crowder, Evan Quiros, Paul

Fulmer, M.D., Eric Geibel, Mark Griffin, Steve Gerguis, Stacey Harvey, Bill

Henderson, Allen Holt, Linda Hudson, Cullen Kappler, Ralph Kirkland, Sam Lo,

M.D., Thomas Lu, M.D., Gail Miller Holt, Mary Quiros, Larry Sams, Bob Solberg,

Lynn Whitt, and Clarissa Willis, M.D.’s (“Appellees”) file this Brief in response

to Defendant Manfred Fink, Ph.D.’s (“Appellant”) Brief.

Oral Argument Requested
                           I.    Statement of the Case

Nature of the Case:                       This is a securities fraud dispute arising
                                          out of the sale of limited partnerships in
                                          IsoSpec Technologies, L.P. (“IsoSpec”)
                                          based       on        the       fraudulent
                                          misrepresentations and/or omissions
                                          regarding the alleged existence of a fully
                                          functioning      Raman       spectrometer
                                          prototype named ANDRaS.

Course of Proceedings:                    Appellees filed this lawsuit on April 24,
                                          2014. (C.R. 4-8) Appellees subsequently
                                          filed a First Amended Petition on June
                                          3, 2014 and a Second Amended Petition
                                          on July 9, 2014. (C.R. 53-60) On
                                          November 6, 2014, Appellant filed a
                                          Motion to Dismiss Based on
                                          Governmental Immunity, alleging that
                                          he is entitled to immunity pursuant to
                                          Section 101.106(f) of the Texas Civil
                                          Practice and Remedies Code because his
                                          conduct occurred within the scope of his
                                          employment as a physics professor at
                                          the University of Texas at Austin (the
                                          “University”). (C.R. 70-81)

Trial Court Disposition:                  On December 11, 2014, the trial court
                                          signed an order denying Appellant’s
                                          Motion to Dismiss Based on
                                          Governmental Immunity. (C.R. 313)
                                          This order is interlocutory and does not
                                          dispose of all parties and claims.


                  II.    Statement Regarding Oral Argument
      This is a straightforward case in which Appellees do not see the need for

oral argument: the facts before the trial court were not complicated and the impact


                                        -7-
of the case is limited to the parties. However, if the Court grants oral argument to

Appellant, Appellees request the opportunity to participate. For these reasons,

Appellees request oral argument.

                             III.   Statement of Facts
      Appellees filed this lawsuit against Defendants Dr. Manfred Fink, Ph.D. and

Dr. Rainer Fink, Ph.D. (“Defendants”), alleging Defendants committed fraud,

violated the Texas Securities Act, and aided, abetted and conspired with others to

commit fraud and violate the Texas Securities Act. Specifically, Appellees believe

that in late 2010, Defendants developed a scheme to defraud Appellees and other

investors of more than a million dollars.

      Defendants and others in the Senior Management Team and Science and

Engineering Team (the “Founders”) created IsoSpec, a company located in

Houston, Texas, which purported to specialize in developing highly advanced,

patented, Raman Spectroscopy technology platforms. As one of the co-inventors

on the Science and Engineering Team and as part of the Senior Management

Team, Appellant and his son, Defendant Dr. Rainer Fink, respectively, were

involved in the development and issuance of a Private Placement Memorandum

(“PPM”) in an effort to get investors, including Appellees, to purchase limited

partnership interests in exchange for financial contributions. (C.R. 208-300) A




                                            -8-
true and correct copy of the PPM is attached here as Tab 1 in Appellees’

Appendix.

      In the PPM, Appellees were told that IsoSpec already had a functioning

prototype instrument developed, named ANDRaS, that performed measurements

using Raman Spectroscopy. (C.R. 209) Specifically, the PPM stated: “ANDRaS

is rugged, inexpensive, small and portable providing onsite analytical capabilities.

Two operating prototype instruments have proven the accuracy and operating

capabilities of ANDRaS.” (Id.) The PPM promised Appellees that next generation

instruments of ANDRaS, once fully developed and commercialized, could be used

in a variety of industries, including the medical, environmental, energy and

homeland security sectors. (Id.) It also stated: “It is believed that there is no

commercial competition for ANDRaS.” (Id.)

      In addition to the statements made regarding the operational status of

ANDRaS and the commercial uses therefore, the PPM contained a Limited

Partnership Agreement and details regarding the offering being made to investors.

The PPM stated that “this financing will be used to further develop and market the

Raman Technology instruments and their applications.” (C.R. 215).




                                        -9-
      In addition to the PPM, Appellees attended numerous partnership meetings

between late 2010 and through 2012, at which Defendants1 and the Founders made

numerous misrepresentations and/or failed to disclose material facts regarding the

actual state of the equipment and the steps being taken towards developing and

commercializing ANDRaS.           Appellant’s Appendix: Tab 5 (Affidavit of Bob

Solberg) at pp. 1-2; Tab 6 (Affidavit of Mark Griffin) at pp. 1-2; Tab 7 (Affidavit

of William Hightower) at pp. 1-2. (C.R.174-180)

      Based on misrepresentations made in the PPM, as well as other

misrepresentations, many of which were made orally at the investment and

partnership meetings, Appellees invested their money (totaling over a million

dollars) in IsoSpec in exchange for limited partnership interests. Id.

      In late 2012, Appellees began to question the validity of IsoSpec when

certain milestones towards commercializing ANDRaS were not being met as

promised in partnership memorandums. Ultimately, Appellees discovered that at

no point did any fully functioning ANDRaS prototype ever exist, contrary to

Defendants’ and the Founders’ repeated representations.

                              IV.    Standard of Review
      Appellate courts review a motion to dismiss based on Texas Civil Practices

and Remedies Code § 101.106(f) as a plea to the jurisdiction that challenges the

1
      It is undisputed that Appellant attended at least one of these meetings. See Appellant’s
      Appendix, Tab 3 (Affidavit of Dr. Manfred Fink) at ¶ 6.

                                            -10-
trial court’s subject-matter jurisdiction to hear the case. State Bar of Tex. v. Heard,

603 S.W.2d 829, 833 (Tex. 1980). The existence of subject-matter jurisdiction is a

question of law that an appellate court reviews de novo. State ex rel. State Dep’t of

Hwys & Pub. Transp. V. Gonzalez, 82 S.W. 3d 322, 327 (Tex. 2002).

                           V.    Summary of Argument
      The trial court did not err in denying Appellant’s motion to dismiss based on

governmental immunity.       The immunity afforded governmental employees by

Section 101.106(f) of the Texas Tort Claims Act (the “TTCA”) applies only in

very limited circumstances. Specifically, the employee must prove that (1) he was

employed by the government at the time of the incident giving rise to the claim; (2)

he was acting within the course and scope of his authority or employment; and (3)

the plaintiff’s claim could have been brought against the governmental employer

under the TTCA. Tex. Civ. Prac. & Rem. Code § 101.106(f); Franka v. Velasquez,

332 S.W.3d 367, 381 (Tex. 2011). Here, Appellant is not entitled to governmental

immunity because (1) Appellant’s intentional acts or omissions which form the

basis of this lawsuit took place during a course of conduct designed to obtain

investments for IsoSpec, a private company, and thus lie outside the course and

scope of his employment with the University; and (2) Appellant’s suit could not

have been brought against the University under the TTCA. As such, the trial

court’s order dated December 11, 2014 should be affirmed.


                                         -11-
                                VI.    Argument
      Immunity under Section 101.106 is an affirmative defense which must be

specifically pleaded, and the burden is on the employee to conclusively establish

all elements as a matter of law. Welch v. Milton, 185 S.W.3d 586, 593, 599 (Tex.

App.—Dallas 2006, pet. denied); Molina v. Alvarado, 441 S.W.3d 578, 581-582

(Tex. App.—Texarkana Apr. 23, 2014, pet. filed). The existence of a factual

dispute will preclude a dismissal or summary judgment on immunity grounds.

Welch, 185 S.W.3d at 593; Molina, 441 S.W.3d 578; 581-582; Telthorster v.

Tennell, 92 S.W.3d 457, 461 (Tex. 2002).

      A.    Scope of Employment
      To be entitled to immunity, the governmental employee must prove that he

was acting within the course and scope of his employment or authority at the time

of the incident giving rise to the claim. Tex. Civ. Prac. & Rem. Code § 101.106(f).

“Scope of employment” is defined as “the performance for a governmental unit of

the duties of an employee’s office or employment and includes being in or about

the performance of a task lawfully assigned to an employee by competent

authority.” Tex. Civ. Prac. & Rem. Code § 101.001(5) (emphasis added). “An

official acts within the scope of her authority if she is discharging the duties

generally assigned to her.” City of Lancaster v. Chambers, 883 S.W.2d 650, 658

(Tex. 1994). If the employee is acting not as a governmental official or employee,


                                       -12-
but instead as a private citizen, the employee is not acting within the scope of his

authority and the immunity provided by Section 101.106(f) will not apply.

Wallace v. Moberly, 947 S.W.2d 273, 277 (Tex. App.—Fort Worth 1997, no writ).

      Immunity does not apply to conduct that “exceeds the legitimate bounds of

[the governmental employee’s] office.” Kelly v. Galveston Cnty., 520 S.W.2d 507,

513 (Tex. App.—Houston [14th Dist.] 1975, no writ) (interference with contract).

Thus, government employees are generally not immune from liability for their

intentional or “individual and separate torts,” such as fraud, assault, trespass,

conversion, or intentional infliction of emotional distress, because such torts are

rarely within the scope of employment. Russell v. Edgewood Indep. School Dist.,

406 S.W.2d 249, 252 (Tex. Civ. App. San Antonio 1966); see Clark v. Univ. of

Tex. Health Science Ctr., 919 S.W.2d 185, 188 (Tex. App.—Eastland 1996, writ

denied) (dean of university would not have immunity in connection with claim of

emotional distress intentionally inflicted in dean’s unofficial capacity).

      As Appellant acknowledges, the Texas Supreme Court has recognized that

“[w]hether an employee’s intentional tort is within the scope of employment is a . .

. complex issue.” Franka, 332 S.W.3d at 381 n.63. An employee’s intentional,

tortious conduct does not fall within the scope of employment when it is not of the

same general nature as or incidental to the tasks the employee was hired to carry

out. Zarzana v. Ashley, 218 S.W.3d 152, 159-60 (Tex. App.—Houston [14th Dist.]


                                         -13-
2007, no pet.) (holding the fraudulent sale of counterfeit inspection stickers is not

“closely connected or incidental to the authorized conduct” of a car mechanic’s

work) (citations omitted); see Millan v. Dean Witter Reynolds, Inc., 90 S.W.3d

760, 768 (Tex. App.—San Antonio 2002, pet. denied) (holding that broker’s fraud

and embezzlement from client was not related to his authorized brokerage duties

and thus greatly exceeded the scope of his authority).

      Likewise, an employee’s criminal acts are almost never within the scope of

employment or authority, especially where such acts are “unforeseeable

considering the employee’s duties.”      Zarzana, 218 S.W.3d at 160.        Thus, a

governmental employee generally does not enjoy immunity for illegal or

“wrongful unofficial acts.” Bagg v. Univ. of Texas Med. Branch, 726 S.W.2d 582,

586 (Tex. App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.) (unlawful or

unauthorized actions such as ordering eavesdropping “could not have been within

the scope of [hospital employees’] official duties”). This is true because when an

“employee acts without statutory authority, then he cannot act within the course

and scope of employment.” Camacho v. Samaniego, 954 S.W.2d 811, 822 (Tex.

App.—El Paso 1997, pet. denied) (collection of unauthorized bail bond fee); see

also Griffin v. Hawn, 341 S.W.2d 151, 153 (Tex. 1960) (“The question is not

whether [the state officials] were acting on behalf of the State to accomplish a

proper governmental purpose but whether the action they were about to take is


                                        -14-
authorized by law.”); Cobb v. Harrington, 190 S.W.2d 709, 712 (Tex. 1945) (“The

acts of officials which are not lawfully authorized are not acts of the State . . .

within the rule of immunity”).

      While Appellant cites to Lenoir v. Moore, in which a state employee’s

tortious conduct was held to be within the scope of employment, that case and,

indeed, all the Texas cases in which an employee’s intentional tortious or criminal

conduct was held to be within the scope of employment involved conduct directly

arising from the performance of the employee’s authorized tasks, or which was

otherwise foreseeable given the nature of the services the employee was engaged

to perform on the employer’s behalf. See Lenoir v. Moore, Cause No. 01-13-

01034-CV, 2014 Tex. App. LEXIS 12703, *25-27 (Tex. App.—Houston [1st Dist.]

November 25, 2014, no pet.) (because the attending physician, employed by the

government, was performing a task lawfully assigned to him, he was acting within

the scope of his employment). For example, assault or false imprisonment may be

within the scope of employment of a police officer or bouncer. Kersey v. Wilson,

69 S.W.3d 794 (Tex. App.—Fort Worth 2002, no pet.) (assault during arrest was

within scope of officer’s duties); Davis v. Klevenhagen, 971 S.W.2d 111 (Tex.

App.—Houston [14th Dist.] 1998, no pet.) (police officer enjoyed immunity from

false imprisonment claim); Durand v. Moore, 879 S.W.2d 196 (Tex. App.—

Houston [14th Dist.] 1994, no writ) (bouncer’s use of force was within general


                                       -15-
authority). Likewise, employees alleged to have committed torts in connection

with their recommendation that the plaintiffs’ employment be terminated were

acting within the scope of their duties, as their superior had asked for such

recommendations. Anderson v. Bessman, 365 S.W.3d 119 (Tex. App.—Houston

[1st Dist.] 2011, no pet.).

      In contrast, acts which occur outside the performance of the employee’s

general responsibilities, exceed the employee’s authority, or are unforeseeable

given the employee’s usual duties are not subject to immunity. See, e.g., Phelan v.

Norville, No. 07-13-00040-CV, 2014 Tex. App. LEXIS 10560, at *17 (Tex.

App.—Amarillo Sept. 22, 2014, no pet.) (professor was not acting within the scope

of his employment when he slapped another professor during a meeting); Kelemen

v. Elliot, 260 S.W.3d 518, 524 (Tex. App.—Houston [1st Dist.] 2008, no pet.)

(officer was not acting within the scope of his employment when he kissed

coworker while on duty); Clark, 919 S.W.2d at 188 (immunity did not apply to

claim against supervisor for emotional distress intentionally inflicted in the

workplace); see also Zarzana, 218 S.W.3d at 159-60 (fraudulent sale of counterfeit

inspection stickers is not “closely connected or incidental to the authorized

conduct” of a car mechanic’s work); Millan, 90 S.W.3d at 768 (broker’s fraud and

embezzlement from client was not related to his authorized brokerage duties and

thus greatly exceeded the scope of his authority).


                                        -16-
      B.     Appellant Was Not Acting Within the Course and Scope of His
             Employment as a Physics Professor With the University When He
             Committed Fraud in Connection With His Attempts to Solicit
             Investments For IsoSpec.
      Appellant did not satisfy his burden of proving that the fraudulent

misrepresentations and omissions made by him in the PPM and during various

IsoSpec investor and partnership meetings in connection with his efforts to solicit

or assist in soliciting investments for IsoSpec occurred within the scope of his

employment as a physics professor with the University. To the contrary, as the

record demonstrates, Appellant’s participation in IsoSpec’s solicitation activities

and, specifically, his fraudulent conduct which took place during such solicitations

deviated from and greatly exceeded (1) the scope of his duties as a physics

professor and (2) the scope of the University’s licensing agreement with IsoSpec.

Further, his actions benefitted the financial interests of his son, Dr. Ranier Fink,

who was an owner and officer of IsoSpec. See Appellees’ Appendix, Tab 1 (PPM)

at “Executive Summary, p. 1. (C.R. 209) Thus, Appellees’ suit does not fall

within the limited immunity afforded government employees under Section

101.106(f), and the trial court did not err in denying Appellant’s motion.




                                        -17-
             1.     Soliciting Investments for a Private Company and
                    Committing Fraud in the Course of Such Solicitations is
                    Entirely Unrelated to and Exceeds the Scope of Appellant’s
                    General Duties as a Physics Professor for the University.
      An examination of all of the jurisdictional evidence in the record reveals that

Appellant’s conduct which forms the basis of this lawsuit does not fall within the

duties generally assigned to him at the University, despite the fact that he makes

the self-serving assertion that his “assistance to IsoSpec was entirely related to his

employment as a UT physics professor”2 and allegedly believed he was acting in

the scope of his employment with the University. Appellant’s Appendix, Tab 3 at

pp. 1-3. Appellant is employed by the University as a physics professor. In

addition to teaching, his duties include conducting research. Id. at p. 2. These

duties, however, cannot be expanded to include his participation in seeking

investments for a private company, especially when Appellant presented no

evidence that soliciting such investments was part of his regular duties as a

professor at the University or that his usual scope of employment had been

expanded by orders from his employer to actively solicit or assist in soliciting such

investments on behalf of IsoSpec.          While Appellant claims that he was not

involved in helping IsoSpec acquire money from investors, he admits to attending


2
      While Appellant improperly seeks to now attach an affidavit from the University’s Vice-
      President for Research, this affidavit was filed with or presented to the trial court.
      Appellant’s Appendix, Tab 10. For these reasons, the Court cannot now consider it upon
      appeal because it is not part of the record considered by the trial court.

                                           -18-
a meeting which potential investors attended, and the affidavits from Appellees

demonstrate that these meeting were clearly for the purpose of soliciting

investments. Id.; Appellant’s Appendix: Tab 5 at pp. 1-2; Tab 6 at pp. 1-2; Tab 7

at pp. 1-2. (C.R. 174-180) Simply put, Appellant was in no way carrying out the

tasks for which he, as a physics professor, was hired to perform for the benefit of

the University when he assisted IsoSpec and his son, Defendant Dr. Ranier Fink,

the CTO of IsoSpec, in their efforts to obtain funding.

      Further, even assuming arguendo Appellant’s interactions with IsoSpec in

sharing technical knowledge and expertise on research and inventions may have

been within the scope of his employment, his interactions with Appellees and other

targeted investors were not in any way authorized or required by the University

and were not otherwise in the course and scope of his employment as a physics

professor.   When Appellant attended investment meetings, he was no longer

serving the University’s interests or acting on behalf of the state or in furtherance

of the state’s interests. Appellant has introduced no evidence of any orders given

to him by the University to assist IsoSpec in fundraising or showing that his

attendance at these meetings was at the behest of the University.                   Instead,

Appellant concedes that his attendance at the one meeting he admits attending3 was


3
      Contrary to Appellant’s assertions, Appellees contend Appellant attended multiple
      investment meetings. Appellant’s Appendix: Tab 5, pp. 1-2; Tab 6, pp. 1-2; Tab 7, pp. 1-
      2. (C.R. 174-180)

                                            -19-
at the request of Jack McCrary, the owner of IsoSpec, and not at the request or

demand of the University. Appellant’s Appendix, Tab 3 at p. 3. At that particular

meeting, marketing materials, including the PPM, were handed out to third parties,

including Appellees, and the strengths of IsoSpec and ANDRaS were discussed at

length, as well as the details of the investment opportunity (for instance, the

number of partnership units that could be obtained, the total amount of investment

capital being sought and what the investment money would be used for).

Appellant’s Appendix: Tab 5 at pp. 1-2; Tab 6 at pp. 1-2; Tab 7 at pp. 1-2. (C.R.

174-180). It is simply inconceivable that Appellant lacked an understanding that

the obvious purpose of that and other meetings he attended was to pitch investment

opportunities. Id.

      Indeed, IsoSpec’s own marketing materials make clear that Appellant’s

relationship with IsoSpec is something more than merely tangentially related to his

employment with the University of Texas. For example, in the PPM, Appellant is

listed under the IsoSpec “company profile” as a member of IsoSpec’s Science and

Engineering Team and as a member of IsoSpec’s Technology and Business

Advisory Group.      See Appellees’ Appendix, Tab 1 (PPM) at “Executive

Summary,” p. 1 and p. 7 of 25. (C.R. 207 and C.R. 216) In addition, IsoSpec itself

asserted that Appellant was acting within the scope of his employment with

IsoSpec when he made any misrepresentations to Appellees. See Appellant’s


                                       -20-
Appendix, Tab 8 (IsoSpec Technologies’ Petition in Intervention) (“any and all

representations made by either father or son Fink were done within the course and

scope of their relationship with [IsoSpec]. . . . [IsoSpec] owes a duty of indemnity

to any honest and faithful person who acts in the authorized and legitimate

furtherance of its business.”) (emphasis added).

      Further, Appellees have alleged that Appellant committed intentional torts

and criminal conduct. Tex. Rev. Civ. Stat. art. 581-29 (criminalizing fraudulent

conduct in connection with the sale of securities). Under Texas law, an agent’s

intentionally tortious or criminal acts are almost never within the scope of

authority granted by the principal. Zarzana, 218 S.W.3d at 160 (citing Ross v.

Marshall, 426 F.3d 745, 764-56 & n. 85 (5th Cir. 2005)). Appellant’s fraudulent

misrepresentations and omissions taking place during his solicitation of

investments for a private company could not have occurred within the performance

of his official duties or within the scope of his employment as a physics professor,

as this conduct is so far removed from and entirely unrelated to the general duties

encompassed by such a position.         Even assuming Appellant made truthful

statements   (which    is   denied),   Appellant’s   failure   to   correct   others’

misrepresentations at the potential investor meetings constituted tortious conduct

outside the scope of his employment.       Appellant’s Brief at p. 5; Appellant’s

Appendix: Tab 5 at pp. 1-2; Tab 6 at pp. 1-2; Tab 7 at pp. 1-2. (C.R. 174-180)


                                        -21-
      As Appellant’s motion makes clear, his job duties entailed teaching and

researching at a state university; not soliciting investments for a private company,

and certainly not making fraudulent statements in pursuit of such investments.

Unlike a police officer’s or a bouncer’s commission of assault in connection with

an arrest or in controlling admission to a club, a physics professor’s commission of

fraud in connection with a sale of stock or in solicitation of investments for a

private company of which his son is an owner is entirely unrelated to the duties

lawfully assigned to professors (i.e., teaching and researching).         Soliciting

investments and making fraudulent statements or omissions in connection with

such solicitations is not conduct of the same general nature as or incidental to the

conduct professors are authorized to engage in, and such actions are not

foreseeable given the duties assigned to professorship positions.

      In short, Appellant’s participation in pitching investment opportunities was

for the benefit IsoSpec, a private company, and was not for the purpose of

accomplishing the duties for which he was employed by the University. Appellant

should not enjoy governmental immunity for the fraudulent acts he committed

against private citizens while acting on behalf of a private company and his son.




                                        -22-
            2.     Assuming Appellant’s Scope of Employment with the
                   University Could be Expanded by the Patent Licensing
                   Agreement Between the University and IsoSpec, Such
                   Expanded Scope is Limited by the Terms of the Agreement.
      Even assuming some of Appellant’s involvement with IsoSpec could have

been in performance of his duties as a professor for the University by virtue of the

Patent Licensing Agreement between IsoSpec and the University, the scope of his

employment in that regard is limited by the terms of the licensing agreement, a true

and correct copy of which is attached hereto as Tab 2 in Appellee’s Appendix.

The scope of an employee’s duties may be defined by an employment contract, and

the Tort Claims Act defines “scope of employment” as “the performance of a task

lawfully assigned to an employee by competent authority.” Tex. Civ. Prac. &

Rem. Code § 101.001(5) (emphasis added). Thus, even if Appellant’s “lawfully

assigned” duties extended beyond his general teaching and researching activities to

some involvement with IsoSpec, the only actions which could possibly fall within

the scope of his employment with the University are those acts which were

undertaken to satisfy the University’s obligations and responsibilities, as defined

by the licensing agreement.

      The licensing agreement, however, does not impose any obligation on the

University or its employees to obtain or assist IsoSpec in obtaining funding or

investments (or any other obligation, for that matter). In fact, the agreement

unambiguously provides exactly the opposite:

                                        -23-
      [IsoSpec] by itself . . . will use diligent efforts to make Licensed
      Products or Licensed Services commercially available. . . .
      [IsoSpec] will (a) maintain a reasonably funded, ongoing and
      active research, development, manufacturing, regulatory,
      marketing or sales program required to make License Products or
      Licensed Services commercially available, and (b) fulfill the
      [funding] milestone events specified in Section 2.4 of the Patent
      License Agreement. . . . If the obligations under this Section 2.4 are
      not fulfilled, [the University] may treat such failure as a breach. . . .

Appellees’ Appendix, Tab 2 at Exhibit A, Sec. 2.4 (emphasis added). Indeed, the

licensing agreement places the obligation to commercialize and obtain funding

entirely on IsoSpec—“by itself”—and gives the University the right to treat the

failure of IsoSpec to obtain funding as a breach of the agreement. Id. Thus, not

only did the University—and, consequently, its employees—have no affirmative

obligations under the agreement whatsoever, the agreement expressly places the

obligation to commercialize and obtain funding on IsoSpec alone.

      Appellant cannot possibly contend that his conduct of actively soliciting or

assisting IsoSpec in soliciting investments were within the scope of his

employment with the University even though the scope of the University’s

involvement with IsoSpec was limited to the granting of a license and even though

the University expressly disclaimed any requirement to assist in fundraising. To

the contrary, Appellant’s conduct greatly exceeded the scope of the limited

engagement between IsoSpec and the University and in fact directly contributed to

fulfilling the obligations the agreement placed exclusively on IsoSpec.


                                        -24-
      C.     A Fact Issue Exists as to Whether Appellant Was Acting Within
             the Scope of His Employment.
      Even if the Court cannot conclude as a matter of law that Appellant was not

acting within the scope of his employment with the University in connection with

his solicitation efforts for IsoSpec, the Court must nevertheless affirm the denial of

Appellant’s motion because (1) the burden is on Appellant to conclusively

establish that he was in fact acting within the scope of his employment, which he

has failed to do, and (2) at the very least, a fact issue has been raised.

      Whether an employee was acting within the scope of employment as

required by Section 101.106(f) is a question of fact, and the existence of a fact

issue as to what conduct the employee engaged in and/or whether such conduct fell

within the scope of employment precludes the granting of a dismissal or summary

judgment on immunity grounds. Molina, 441 S.W.3d 578 (holding the existence

of a fact issue concerning whether the officer was acting within the scope of his

employment and whether he was under the influence of alcohol precluded a grant

of summary judgment).

      Here, Appellant has created a fact issue by denying engaging in tortious

conduct or making any misrepresentations, and by directly contradicting the

material facts alleged by Appellees’ to have taken place. See Plaintiff’s Second

Amended Petition (C.R. 51-60); Appellant’s Appendix: Tab 5 at pp. 1-2; Tab 6 at

pp. 1-2; Tab 7 at pp. 1-2 (C.R 174-180). Specifically, Appellant asserts he only

                                          -25-
attended one IsoSpec meeting, that he did not know the purpose of such meeting

was to obtain investments or that those in attendance were potential investors, and

that he did not participate in drafting the PPM and was not otherwise involved in

soliciting investors. Appellant’s Appendix, Tab 3 at p. 3. Appellant also offers the

affidavit of Dr. Phillip Varghese that contains the conclusory statement that both

he and Appellant were acting in the scope of their employment with the University

when assisting IsoSpec.4 Nevertheless, Appellees contend precisely the opposite

and have attached counter-affidavits which show Appellant was actively involved

in the solicitation of investments for IsoSpec and in fact attended multiple

meetings, the obvious purpose of which was to pitch investment opportunities. See

Plaintiffs’ Second Amended Petition; Appellant’s Appendix: Tab 5 at pp. 1-2; Tab

6 at pp. 1-2; Tab 7 at pp. 1-2. Further, the contrary contention of IsoSpec that

Appellant was in fact acting within the scope of his relationship with IsoSpec and

in furtherance of IsoSpec’s business supports Plaintiffs’ position and also raises a

4
      Appellant also contends that a travel payment voucher submitted by Phillip Varghese,
      showing payment for mileage to and from IsoSpec Technologies for a meeting where Dr.
      Varghese met with Jack McCrary, somehow confirms that both he and Appellant were
      acting in the scope of their employment with the University. Appellant’s Appendix, Tab
      4. (C.R. 305-312) However, the specific purpose of this meeting is vague. The voucher
      only states the purpose of the meeting was to “discuss commercializ[ing] their
      technology.” Id. Dr. Varghese suggests in his affidavit that this meeting was to meet
      with representatives of IsoSpec, but the payment of an expense by a University is hardly
      evidence that the reimbursement was in fact proper payment for some expenses falling
      within the scope of the employment of the Dr. Varghese. Moreover, payment for
      expenses associated meeting representatives of IsoSpec is hardly sufficient evidence that
      Appellant was at all times acting in the course and scope of his employment for the
      University when he met with potential investors. Id.

                                            -26-
fact issue.   See IsoSpec Technologies Petition in Intervention (“any and all

representations made by either father or son Fink were done within the course and

scope of their relationship with [IsoSpec] . . . in the authorized and legitimate

furtherance of its business”) (emphasis added).

      While Appellant has certainly come up with some new and creative

arguments in its appellate brief,5 such arguments, if anything, only serve to further

highlight the existence of these disputed fact issues. These disputed fact issues

which directly relate to a necessary element of Appellant’s defense preclude

dismissal under Section 101.106(f). The resolution of these fact issues and the

larger question of whether these facts, once established, prove that Appellant was

acting within the scope of his employment is for the jury to decide. Tex. Adjutant

General’s Office v. Ngakoue, 408 S.W.3d 350, 365 (Tex. 2013) (Boyd, J.,

dissenting) (“There may be fact issues that a jury must resolve to establish whether

the conduct at issue was within the scope of employment.”); see Texas Pattern Jury

Charge 10.6 (2014) (“Scope of Employment”).

      In short, Appellant’s subjective belief that he was acting within the scope of

his employment is insufficient to establish his entitlement to dismissal under

Section 101.106(f). Appellees’ counter-affidavits, at a minimum, are sufficient to

5
      Notably, Appellant’s motion to dismiss at the trial court level was only seven pages in
      substance, but Appellant has now come up with thirty-one pages of briefing to attempt to
      convince this Court that Appellant is entitled to governmental immunity as a matter of
      law.

                                            -27-
raise a fact issue as to whether Appellant engaged in the disputed conduct and/or

was acting within the course and scope of his employment when he did so.

Because it would be inappropriate and premature to dismiss Appellant from this

suit on immunity grounds, the denial of his motion should be affirmed.

      D.    Appellant Cannot Establish That Appellees’ Suit Could Have
            Been Brought Against the University Under the Tort Claims Act.
      Appellant has also failed to prove the third element of Section 101.106(f)’s

immunity defense: that Appellees’ suit could have been brought against his

governmental employer, the University, under the Tort Claims Act.        First, as

shown above, suit could not have been brought against the University because an

employer is not vicariously liable for the conduct of its employees occurring

outside the scope of employment. See Anderson, 365 S.W.3d at 126 (concluding

in part that because the employees were acting within the scope of their

employment, suit “could have been brought” against the governmental unit under

the Act).

      In addition, even assuming Appellant was acting within the scope of his

employment when he made fraudulent misrepresentations or omissions while

soliciting investments for IsoSpec (which is expressly denied), Appellees’ claim

under the Texas Securities Act is not a common-law tort action which “could have

been brought under this chapter [i.e., under the Tort Claims Act] against the

governmental unit.” See Tex. Civ. Prac. & Rem. Code § 101.106(f) (emphasis

                                       -28-
added). In addition to their common-law claims, Appellees have sued Appellant

under the Texas Securities Act, which provides an independent statutory remedy

for fraud, distinct from the common-law tort of fraud and the Tort Claims Act. See

Franka, 332 S.W.3d at 379 (“The rule [is] that a tort suit against the government,

as distinct from a statutory claim, is brought ‘under’ the [Tort Claims] Act for

purposes of section 101.106”) (emphasis added); Alexander v. Walker, 435 S.W.3d

789, 792 (Tex. 2014) (holding common-law tort claims could have been brought

against the government under the TTCA); Weaver v. McKeever, No. 01-12-00851-

CV, 2014 Tex. App. LEXIS 2092 (Tex. App.—Houston [1st Dist.] Feb. 25, 2014)

(construing Franka as holding that “all common-law tort theories alleged against a

governmental unit are assumed to be ‘under’ the Tort Claims Act for purposes of

section 101.106”) (emphasis added); see also Tex. Civ. Prac. & Rem. Code §

101.003 (“The remedies authorized by this chapter are in addition to any other

legal remedies.”).

      Appellant’s interpretation of Section 101.106(f) would effectively erase the

phrase “under this chapter” from the statute. Mission Consol. Indep. Sch. Dist. v.

Garcia, 235 S.W.3d 653, 659-60 (Tex. 2008) (“Since we give effect to all words in

a statute, ‘under this chapter’ must operate to make the scope of [TTCA Section

101.106] (a), (c), (e), and (f) different from that of (b).”).     Thus, Section

101.106(f)’s “could have been brought” element refers to only common-law tort


                                       -29-
claims, as opposed to statutory claims, such as Appellees’ claim under the Texas

Securities Act. Id. (stating that the phrase “under this chapter” was a “limiting

phrase” which refers to only common-law tort claims).

      Further, even if Section 101.106(f)’s phrase “under this chapter” could be

construed as applying to statutory claims unless such statute contains a waiver of

governmental immunity, the Texas Securities Act clearly and unambiguously

contains such a waiver. The Texas Securities Act prohibits “[a]ny person” from

engaging in fraud in connection with a sale of securities. Tex. Rev. Civ. Stat. art.

581-29. “Person” is defined by the Securities Act as including “a government, or a

political subdivision or agency thereof.” Tex. Rev. Civ. Stat. art. 581-4. In

Mission, the Texas Supreme Court considered whether a claim brought under the

Texas Commission on Human Rights Act (“TCHRA”), which prohibited an

“employer” from engaging in certain acts, “could have been brought” under the

Tort Claims Act for purposes of Section 101.106. Mission, 235 S.W.3d at 660.

The Court construed the TCHRA’s definition of “employer,” which included “a

county, municipality, state agency, or state instrumentality,” as operating as a

“clear[] and unambiguous[] waive[r] [of] immunity.” Id. Thus, the Court held that

a claim under the TCHRA could not have been brought under the Tort Claims Act.

Id.




                                        -30-
      Likewise, Appellees’ claim under the Texas Securities Act is not one which

“could have been brought under the [Tort Claims] Act,” because, like the statute at

issue in Mission, the Securities Act’s definition of “person” as including a

government and its agencies is a clear and unambiguous waiver of governmental

immunity. See id. at 659 (“Claims against the government brought pursuant to

waivers of sovereign immunity that exist apart from the Tort Claims Act are not

‘brought under [the Tort Claims Act].”). Therefore, the Court properly denied

Appellant’s motion to dismiss because he could not satisfy the third element of his

immunity defense as he cannot prove that Appellees’ claim under the Texas

Securities Act could have been brought against the University under the Tort

Claims Act.

                                 VII. Conclusion
      For the factual and legal reasons set forth above, this Court should overrule

all of the Appellant’s points of errors, affirm the trial court’s order of November




                                         -31-
21, 2014 denying Appellant’s motion to dismiss, and remand the case back to the

trial court for a full trial on the merits of the case.


                                          Respectfully submitted,

                                          LISKOW & LEWIS

                                          By: /s/ Wade T. Howard
                                                Wade T. Howard
                                                State Bar No. 00787725
                                                Michael P. Cash
                                                State Bar No. 03965500
                                                Alma F. Gomez
                                                Texas State Bar No. 24069800
                                          1001 Fannin, Suite 1800
                                          Houston, Texas 77002
                                          Telephone: (713) 651-2900
                                          Telecopier: (713) 651-2908

                                          ATTORNEYS FOR APPELLEES


                        CERTIFICATE OF COMPLIANCE

       I hereby certify that Appellees’ Brief was produced on a computer using
Microsoft Word and contains 5767 words, as determined by the word-count feature
of the word processing software, excluding the sections of the documented listed in
Tex. R. App. 9.4(i)(1).
                                           /s/ Wade T. Howard
                                          Wade T. Howard




                                            -32-
                         CERTIFICATE OF SERVICE
       I hereby certify that a true and correct copy of Appellees’ Brief was served
on all counsel of record by email on this the 23rd day of April 2015:

William B. Mateja, Esq.                         Timothy M. McDaniel, Esq.
John C.C. Sanders, Jr., Esq.                    IRELAN MCDANIEL, PLLC
FISH & RICHARDSON P.C.                          440 Louisiana Street
1717 Main Street, Suite 5000                    Suite 1800
Dallas, Texas 75201                             Houston, Texas 77002
Tel. 214-747-5070                               Tel. 713-222-7666
Fax. 214-747-2091                               Fax. 713-222.7669
Via Email: mateja@fr.com                        Via Email :
Via Email: jsanders@fr.com                      tmcdaniel@imtexaslaw.com
Attorneys for Defendant Dr. Manfred Fink,       Attorneys for Defendant Dr.
Ph.D                                            Rainer Fink, Ph.D

H. Melissa Mather                               Andrew R. Harvin, Esq.
Assistant Attorney General                      Peter Wells, Esq.
Office of the Attorney General                  DOYLE, RESTREPO, HARVIN &
for the State of Texas                          ROBBINS, LLP
Financial Litigation, Tax, and Charitable       The Lyric Centre
Trusts Division                                 440 Louisiana, Suite 2300
P.O. Box 12548                                  Houston, TX 77002
Austin, TX 78711-2548                           Tel: 713-228-5100
(512) 475-2540 – direct                         Fax: 713-228-6138
(512) 475-2994 - fax                            Via Email:
Via Email                                       aharvin@drhrlaw.com
H.Melissa.Mather@texasattorneygeneral.gov       Via Email:PWells@drhrlaw.com
Attorneys for Defendant Dr. Manfred Fink,       Attorneys for Third-Party
Ph.D                                            Defendant William Hightower




                                       -33-
Arnold Anderson “Andy” Vickery, Esq.          Paul Flack
Fred H. Shepherd, Esq.                        PRATT & FLACK, LLP
THE VICKERY LAW FIRM                          1331 Lamar Street
Park Laureate Building                        Four Houston Center, Suite 1250
10000 Memorial Drive, Suite 750               Houston, Texas 77010
Houston, Texas 77024                          Tel: (713) 936-2401
Tel. 713-526-1100                             Fax: (713) 481-0231
Fax. 713-523-5939                             Via Email:
Via Email: andy@justiceseekers.com            pflack@prattflack.com
Via Email: fred@justiceseekers.com            Attorneys for Third-Party
Via Email: karin@justiceseekers.com           Defendant UBS
Attorneys for IsoSpec Technologies, L.P.


                                      /s/ Wade T. Howard
                                     Wade T. Howard
4178307v1_doc.




                                       -34-
