Chase v. Hodge

• Decision Date: 25 January 2023
• Docket Number: 1:20-CV-00175-DH
• Parties: DEAN CHASE, Plaintiff v. RYAN E. HODGE, HELPING HANDS CAPITAL, LLC, A TEXAS LIMITED LIABILITY COMPANY; Defendants
• Court: U.S. District Court — Western District of Texas

DEAN CHASE, Plaintiff
v.
RYAN E. HODGE, HELPING HANDS CAPITAL, LLC, A TEXAS LIMITED LIABILITY COMPANY; Defendants

No. 1:20-CV-00175-DH

United States District Court, W.D. Texas, Austin Division

January 25, 2023

MEMORANDUM ORDER AND OPINION AND FINAL JUDGMENT

DUSTIN M. HOWELL UNITED STATES MAGISTRATE JUDGE

Before the Court is Defendants' Motion for Summary Judgment, Dkt. 97, Plaintiff's Response, Dkt. 98, and Defendants' Reply, Dkt. 106, along with all related briefing and exhibits. For the reasons stated below, the Court finds Defendants' Motion should be GRANTED.

I. BACKGROUND

This case involves a dispute about the ownership of Texas limited liability company Helping Hands Capital, LLC. Helping Hands provides non-recourse living expenses for parties involved in personal injury claims and suits. Helping Hands was formed in 2013, by Ryan Hodge, an attorney licensed in and residing in Kansas, who formed the business as its sole member. Dean Chase, a Florida citizen, asserts an ownership claim in Helping Hands, based upon an alleged agreement among Hodge, Chase, and another individual, Mark Guedri, to partner in a litigation funding business, which was ultimately organized as Helping Hands. Chase filed the suit in

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Travis County on February 11, 2020, Dkt. 1-1, which Defendants removed to federal court on the basis of diversity on February 17, 2020. Dkt. 1-4.

After removal, Magistrate Judge Andrew W. Austin submitted a Report and Recommendation to the district court. Dkt. 72. The district court adopted the Report and Recommendation and dismissed the majority of Chase's claims. Accordingly, Chase's remaining claims against Hodge are: (1) breach of fiduciary duty arising from the formation of Helping Hands Capital, LLC, Dkt. 72, at 18; and (2) breach of contract. The district court also did not dismiss the requested remedies against all Defendants for: (1) declaratory relief and (2) the appointment of a receiver.

Defendants now move for summary judgment asserting: (1) Chase's claims are barred by the applicable statute of limitations; (2) Chase's claims are barred by the Statute of Frauds: (3) Chase's claims fail for indefiniteness; and (4) appointment of a receiver is not available to Chase under Texas law as he is not a partner or joint owner of Helping Hands Capital, LLC.

II. FACTUAL BACKGROUND

The following facts are taken from Chase's First Amended Complaint, Dkt. 54. Chase asserts that in 2013, Ryan Hodge, Chase, and Mark Guedri, decided to start a business to provide loans to litigants, which would be secured by the future proceeds of any lawsuit settlement. At the time, the three were partners in a separate business, HMR, that provided case expense loans. Chase maintains that Hodge, acting as an attorney for Chase and Guedri, formed the new entity, and that the parties agreed to treat it as an equal partnership in which each owned one third of the company, and

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would share profits in thirds as well. On March 28, 2013, Hodge formed Helping Hands Capital, LLC, as a Texas limited liability company, listing himself on the Certificate of Formation as the Managing Member, but making no mention of Chase or Guedri in the filing.

From 2013 through 2016 the Company typically reinvested profits into the Company; however, when funds were occasionally distributed to the three partners, it was always on the same one-third basis as initially agreed upon. In 2016, Guedri tendered his interest back to the Company. Chase asserts Hodge acknowledged to Chase in writing that going forward they were “50/50 partners.” In 2016 and 2017, distributions to Hodge and Chase were allegedly made on a 50/50 basis. Chase alleges that up to 2017, Hodge was always forthcoming with financial information on the Company, and Chase and Hodge worked together to further the interests of the Company. In early 2018, Chase began pressing Hodge for financial information on the Company. On April 26, 2018, Hodge sent a communication to Chase advising that Chase's interest in the Company was an “economic benefit only” and not “legal ownership.” Chase alleges that Hodge instructed Chase to cease telling third parties that he was an owner of the Company, despite Hodge having mentioned to third parties on countless occasions that Chase was his “partner” and an “owner of Helping Hands.”

Chase contends that Hodge asserted for the first time in 2018 that the Company was “owned 100% by a trust” and that Hodge had no ownership in Helping Hands himself. It was during this timeframe that Chase alleges Hodge began

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excluding Chase from the business. On May 13, 2018, Hodge and Chase met in Washington, DC to try to resolve their issues regarding Helping Hands. Chase alleges that during this meeting Hodge again assured Chase that each were “50/50 partners” in Helping Hands and each would continue to work to realize solid growth and an exit strategy for the Company. Following the meeting, Chase requested he be provided with all information and documents pertaining to Helping Hands since its inception and requested “complete and unlimited access” to Helping Hands' books and records on a going forward basis. Chase requested that this information be provided on or before June 1, 2018. Hodge, however, never provided the information.

On January 11, 2019, Hodge forwarded “preliminary financials” to Chase, and Chase requested further documentation be provided to a forensic accountant. Hodge refused. Throughout 2019, Chase tried to resolve the issues with Hodge. Then, on September 26, 2019, Hodge emailed Chase and offered to buy Chase's “interests” in Helping Hands for $25,000, or otherwise he would “transfer” his money out of Helping Hands and sell the assets and wind down the Company. Chase argues this offer was patently disingenuous because the company has made and received millions of dollars in loans over the past two years.

III. LEGAL STANDARD

Summary judgment is appropriate when the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986);

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Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 2007). A dispute regarding a material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Washburn, 504 F.3d at 508. Further, a court “may not make credibility determinations or weigh the evidence” in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.

Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. Id. The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Adams v. Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006). If the nonmoving party fails to make a showing sufficient to establish the existence of an element

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essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

IV. ANALYSIS

A. Limitations

Defendants assert that limitations bar all of Chase's claims. The parties agree that Texas' four-year statute of limitations applies to Chase's claims for breach of contract and breach of fiduciary duty. See, e.g., Tex. Civ. Prac. & Rem. Code §§ 16.004(a)(5) (breach of fiduciary duty), 16.051 (residual limitations period, applicable to breach-of-contract claims); Eagle Oil & Gas Co. v. TRO-X, L.P., 619 S.W.3d 699, 707 (Tex. 2021). The parties agree that the same four-year statute of limitations also applies to the remedies of declaratory judgment and receivership. See, e.g., Ammerman v. Ranches of Clear Creek Cmty. Ass'n, 562 S.W.3d 622, 636 (Tex. App.-Houston [1st Dist.] 2018, no pet.); Petro Harvester Operating Co., L.L.C. v. Keith, 954 F.3d 686, 699 (5th Cir. 2020); Dkt. 98, at 8 (Plaintiff's brief states “Plaintiff agrees with Defendants that Texas law governs the limitations issue in this case and that the four-year statute applies.”)

1. Accrual of Chase's claim

Defendants assert that Chase's claims accrued on March 28, 2013, when Hodge formed Helping Hands Capital, LLC, and executed the Limited Liability Company Operating Agreement for Helping Hands Capital, LLC. Dkt. 97, at 14; Dkt. 97-5, Certificate of Formation; Dkt. 97-6, Operating Agreement. Chase argues that his claim accrued in 2018 “when Ryan Hodge first asserted that Plaintiff was not an owner of Helping Hands, LLC.” Dkt. 98, at 8. Chase contends that “he had no idea

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that Hodge had breached the parties' agreement until Hodge admitted it in the Spring of 2018.” Dkt. 98, at 12.

In support of their contention that the formation of Helping Hands is the relevant legal injury in this case, Defendants rely on statements in Chase's First Amended Complaint, the live pleading in this case, which he verified. Dkt. 54. In it, Chase states:

7. In 2013, Plaintiff Dean

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