In re Ubican Glob.

• Decision Date: 05 October 2021
• Docket Number: 01-21-00293-CV,01-21-00356-CV
• Parties: IN RE UBICAN GLOBAL, INC., UBICAN GLOBAL LICENSING, LLC, AND UBICAN GLOBAL MANAGEMENT, LLC, RelatorsUBICAN GLOBAL, INC., UBICAN GLOBAL LICENSING, LLC, UBICAN GLOBAL MANAGEMENT, LLC, BRYCE DAVIS, AND CHRIS HERGHELEGIU, Appellants v. JUSTIFIED HEMP INVESTMENTS, LLC, Appellee
• Court: Texas Court of Appeals

IN RE UBICAN GLOBAL, INC., UBICAN GLOBAL LICENSING, LLC, AND UBICAN GLOBAL MANAGEMENT, LLC, RelatorsUBICAN GLOBAL, INC., UBICAN GLOBAL LICENSING, LLC, UBICAN GLOBAL MANAGEMENT, LLC, BRYCE DAVIS, AND CHRIS HERGHELEGIU, Appellants v. JUSTIFIED HEMP INVESTMENTS, LLC, Appellee

Nos. 01-21-00293-CV, 01-21-00356-CV

Court of Appeals of Texas, First District

October 5, 2021

Original Proceeding on Petition for Writ of Mandamus On Appeal from the 157th District Court Harris County, Texas Trial Court Cause No. 2020-53141

Panel consists of Chief Justice Radack and Justices Rivas-Molloy and Guerra.

MEMORANDUM OPINION

Sherry Radack Chief Justice.

In these related proceedings, relators, Ubican Global, Inc. Ubican Global Licensing, LLC, and Ubican Global Management LLC (collectively, "Ubican"), filed a petition for writ of mandamus, asking this Court to direct the respondent^[1] to vacate its order denying their motion to strike the petition in intervention by real party in interest, Justified Hemp Investments, LLC ("JHI") in the underlying suit^[2]and to enter an order striking the intervention. Ubican also filed an interlocutory appeal, challenging the trial court's denial of its "alternative" motion to dismiss JHI 's claims "for improper venue." Appellants, Ubican CEO Bryce Davis ("Davis") and Vice President Chris Herghelegiu ("Herghelegiu"), also challenge the denial of their motion to dismiss JHI 's claims for improper venue.

We conditionally grant mandamus relief and dismiss the appeal as moot.

Background

Ubican is a Delaware corporation with its principal place of business in Kansas City, Missouri. It is a health and wellness company participating in the global advertising and vending industry. In its original petition, Ubican alleged that, in August 2019, it entered into two exclusive licensing agreements with its business partner, Invenda Group AG ("Invenda"), ^[3] a Swiss-based supplier of vending machine technology. Ubican and Invenda executed agreements for the sale of Ubican products in Invenda vending machines throughout North America and for the sale of emerging wellness products, such as CBD and hemp products, worldwide. Ubican further alleged that, in late 2019 through early 2020 Todd Colter ("Colter"), who was a Ubican director, and Ian Young, Andrew Gizienski, Steve Franco, and Zachary Isaacks, who were Ubican employees (the "Ubican Employees"), ^[4] were working in Texas to solicit investors and develop Ubican's business. Accordingly, Ubican granted them access to its confidential internal strategies and key financial, customer, employee, and investor information.

Ubican alleged that, on March 3, 2020, Colter and the Ubican Employees traveled to Serbia to inspect the assembly of Invenda vending machines. It alleged that, during that visit, Invenda, Colter, and the Ubican Employees colluded to usurp Ubican's business opportunities. Invenda provided Colter and the Ubican Employees with prospective business information, including sales statistics, test cases, machine literature, and information on vending machines in Texas, that

Invenda withheld from Davis and Herghelegiu. And, Colter and the Ubican Employees provided Invenda with inside information on Ubican's financial position. Ubican alleged that Invenda then used that information to subject Ubican to increasing financial demands, with which it could not comply, in order to justify transferring Ubican's assets to a new entity in Texas formed by Colter.

In support, Ubican pointed to emails reflecting planning and discussions. On March 14, 2020, Young emailed Colter with details of a proposed business structure for "Invenda Global," a chart identifying "Our Investment Group," and a description of the various stakes and ownership interests. And, through the end of March 2020, Colter and Young solicited Ubican customers, vendors, and investors. On March 27, 2020, Colter emailed a quote for 500 vending machines to a Ubican customer, which Colter did not disclose to Ubican. In April 2020, Colter formed Invenda Media Solutions, LLC ("IMS"), a Texas entity with its registered office at Colter's home address in Houston. And, Invenda terminated its exclusive licensing agreements with Ubican. On June 12, 2020, Colter resigned as a Ubican director. And, Ubican terminated the employment of the Ubican Employees.

Subsequently, Ubican sued Colter, IMS, and the Ubican Employees for breach of fiduciary duty, tortious interference, civil conspiracy, libel, and unjust enrichment. With respect to its claim for breach of fiduciary duty, Ubican asserted that it had placed a high level of trust in Colter and the Ubican Employees and had given them access to confidential financial and strategic information. And, Colter and the Ubican Employees violated their duty of loyalty, duty not to compete, and duty of confidentiality by soliciting capital, customers, and business contacts for IMS, rather than for Ubican, and usurping Ubican's business opportunities. Further, by pursuing a domain name, receiving vending-related documents from Invenda, and soliciting capital, customers, and business contacts for IMS, Colter and the Ubican Employees went beyond mere preparation and engaged in direct competition against Ubican. Ubican sought damages for loss of customers, property, assets, goodwill, and revenue, along with punitive damages, and sought to impose a constructive trust.

With respect to its civil-conspiracy claim, Ubican alleged that, in addition to devising an agreement to usurp Ubican's business opportunities, Colter and the Ubican Employees took several overt acts, including misappropriating confidential information, colluding with Invenda, and creating a competing enterprise, for which they procured a domain name and solicited Ubican's investors and venders. Ubican sought damages for loss of customers, revenue, and goodwill.

With respect to its claims for tortious interference and libel, Ubican asserted that Colter and the Ubican Employees were aware of Ubican's contractual relationship with Invenda, its business relationships with potential vendors, and its reasonable expectancies in the profitable use, marketing, sales, lease, and imports of Invenda vending machines in North America and globally. However, they intentionally and maliciously interfered with those agreements and expectancies by placing Ubican under unreasonable duress, by disparaging Ubican, and by creating a competing enterprise, for which they solicited Ubican's investors and vendors. In addition, Colter and the Ubican Employees interfered with Ubican's employment contracts, including confidentiality and proprietary-rights provisions. Ubican sought damages for loss of revenue, assets, and business expectancies, in addition to punitive damages.

Subsequently, JHI, a separate entity of which Colter was the principal, filed a petition in intervention, asserting claims against Ubican Global, Inc. and asserting third-party claims against its officers, Davis and Herghelegiu. In its petition in intervention, JHI asserted that, in 2019, it was fraudulently induced, through misrepresentations by Ubican, Davis, and Herghelegiu, to enter into a Subscription Agreement and to invest $2, 000, 000 in Ubican. The Subscription Agreement contained a choice-of-law provision, requiring that any disputes arising thereunder were to be governed by the laws of the State of Delaware, and JHI asserted that the misrepresentations constituted statutory and common-law fraud under the laws of both Delaware and Texas. The Subscription Agreement also contained a forum-selection clause, requiring that any disputes arising thereunder were to be brought in a Delaware court. JHI asserted, however, that Ubican had waived the forum-selection clause by filing its lawsuit against Colter in a Texas court.

Ubican filed a motion to strike the intervention, asserting that JHI had no justiciable interest in Ubican's suit. Ubican noted that it did not allege any claims against JHI and asserted that JHI's fraud claims were fundamentally different from those Ubican had asserted against Colter and the Ubican Employees. JHI's claims involved different predicate facts, different time periods, different theories of liability, and different alleged harms and damages. Namely, JHI, a limited-liability company and a shareholder in Ubican, alleged that Ubican, Davis, and Herghelegiu had fraudulently induced JHI's execution of the Subscription Agreement and investment, and further were liable for securities fraud under Texas and Delaware law. Conversely, Ubican sued its former director (Colter) and former employees (Young, Gizienski, Franco, and Isaacks), in their individual capacities, for breaching fiduciary duties they owed to Ubican and for engaging in unfair competition. Ubican noted that,

[a]s a third-party investor in Ubican, JHI's interests should be aligned with Ubican's lawsuit against Defendants. Ubican seeks damages against Defendants based on their orchestrated effort to raid Ubican of its assets, create a competing company to capitalize on those assets, and undercut Ubican's business for their own personal benefit. Defendants' actions amount to egregious violations of their duties of loyalty to Ubican as a director-fiduciary (Defendant Colter) and employees-agents (Defendants Young, Gizienski, Franco, and Isaacks). Ubican's recovery of damages from Defendants will benefit JHI by increasing the value of its shares.

Ubican asserted that JHI had improperly sought to intervene in order to "help defend" its controlling shareholder Colter, against Ubican's claims and that JHI's claims were being used as a source of delay, distraction, and complication. For instance, Colter had relied on JHI's claims as a basis for his more than 100 document requests that...