Sargeant v. Saleh, NUMBERS 13–15–00327–CV

Decision Date28 January 2016
Docket NumberNUMBERS 13–15–00327–CV,13–15–00395–CV
Parties Harry SARGEANT III and BTB Refining LLC, Appellants, v. Mohammad Anwar Farid AL SALEH, Appellee.
CourtTexas Court of Appeals

Debbie Green, Deirdre B. Ruckman, Stacy R. Obenhaus, Gardere Wynne Sewell LLP, Dallas, TX, Mark T. Mitchell, Gardere Wynne Sewell LLP, Austin, TX, for Appellants.

Daniel D. Pipitone, Attorney at Law, Kenneth Bullock II, Houston, TX, Nolan C. Knight, Munsch Hardt Kopf & Harr P.C., Dallas, TX, for Appellee.

Before Chief Justice Valdez and Justices Rodriguez and Benavides


Opinion by Chief Justice Valdez

By notice of appeal filed in cause number 13–15–00327–CV, appellants Harry Sargeant III and BTB Refining LLC ("BTB") challenged a July 2, 2015 temporary injunction rendered in favor of appellee Mohammad Anwar Farid Al Saleh. BTB, but not Sargeant, also challenged the temporary injunction through a separate petition for writ of mandamus filed in cause number 13–15–00395–CV.

In the underlying lawsuit, Al Saleh is attempting to collect on a judgment rendered against Sargeant in the State of Florida and domesticated in Texas. The temporary injunction at issue in these causes prevented Sargeant and BTB from transferring approximately $21 million dollars in assets to other persons or entities or transferring that amount out of the jurisdiction of the court. The temporary injunction was issued on grounds that BTB was Sargeant's alter ego and BTB was attempting to transfer assets out of the country to another entity as a "transfer made with the intent to delay, hinder, and defraud." We dismiss the petition for writ of mandamus, and we affirm the temporary injunction in the interlocutory appeal.

A. Business Venture

In 2004, Al Saleh entered into a business venture with Sargeant and Mustafa Abu Naba'a to bid for and obtain government contracts to supply fuel to United States troops in Iraq. Al Saleh's role in this venture was critical because he had obtained an authorization letter from the King of Jordan to transport oil through Jordan to Iraq. The parties agreed to use International Oil Trading Center, Ltd. ("IOTC Jordan"), a Jordanian company as the vehicle to bid on and obtain the fuel contracts. The shares of IOTC Jordan were distributed evenly to Al Saleh, Naba'a, and Sargeant. IOTC Jordan began obtaining fuel contracts.

In 2005, without Al Saleh's knowledge, Sargeant and Naba'a formed two new business entities: International Oil Trading Company, LLC ("IOTC USA"), a Florida corporation, and International Oil Trading Free Zone Company ("IOTC Dubai"). Sargeant and Naba'a transferred their interests in IOTC USA to IOTC Dubai. They used IOTC USA to bid on and obtain new fuel contracts. IOTC USA replaced IOTC Jordan as the contracting party to the original fuel contract. IOTC USA and IOTC Dubai began receiving all profits from the business venture, and Al Saleh was excluded from the profits for the fuel contracts that IOTC Jordan continued to service.

B. Florida Lawsuit

In 2008, Al Saleh filed suit against Sargeant, Naba'a, and IOTC USA in Florida based upon the foregoing transactions regarding the fuel contracts. Following a jury trial, the trial court entered judgment in favor of Al Saleh against these defendants for $28,800,000. The trial court also entered a final "cost" judgment on February 9, 2012 in the amount of $85,489.92, with interest, and a supplemental judgment on September 16, 2013 in the amount of $3,484,753.92.

Al Saleh began efforts in Florida to collect these judgments from the defendants and entities owned or controlled by the defendants. In one proceeding, for instance, Al Saleh initiated collection efforts against BTB, relator and appellant herein, which is an entity wholly owned by Sargeant. BTB was originally a Florida limited liability company but was converted to a Texas limited liability company on June 25, 2011, two days before entry of the $28,800,000 judgment against Sargeant. In that collection proceeding, Al Saleh asserted: (1) a claim for constructive trust over BTB's primary asset, a promissory note payable for over $29,000,000 with interest, that BTB acquired in 2007 using proceeds from the fuel contracts; (2) a claim that BTB is the alter ego of Sargeant; and (3) BTB was fraudulently re-domiciled to Texas just before entry of the verdict and should be re-domiciled to Florida to allow foreclosure of Sargeant's interest under Florida law. Nevertheless, Al Saleh's collection efforts were fruitless.

C. This Litigation

In 2014, Al Saleh domesticated the Florida judgment in the underlying court, the 319th District Court of Nueces County, Texas, as a Texas judgment. See TEX. CIV. PRAC. & REM.CODE ANN. § 35.003(c) (West, Westlaw through 2015 R.S.).1 Al Saleh filed an agreed motion and obtained an agreed order charging Sargeant's member interest in BTB with the judgment debt. See TEX. BUS. ORG.CODE ANN. § 101.112 (West, Westlaw through 2015 R.S.). Al Saleh then filed a "Verified Amended Petition, Third–Party Petition, Application for Temporary Restraining Order and Injunctive Relief and Request for Appointment of Receiver" against Sargeant, Naba'a, IOTC USA, BTB, and Sargeant Marine Ltd. ("Sargeant Marine"), a corporation operating and existing in the Bahamas. According to Al Saleh's petition, the Florida judgments had not been satisfied and Sargeant "has consciously refused and systematically avoided satisfying the foreign Judgments" and "has evaded his obligations." The petition states, in part:

4. A sales transaction is scheduled to close on or about June 5, 2015 at which time Defendant BTB, and ultimately Defendant Sargeant as Defendant BTB is merely his alter ego, would ultimately receive approximately $52 million. A portion of the foregoing sum should quite clearly and justly be distributed to Plaintiff in order to completely and fully satisfy the Judgments existing in his favor. Plaintiff respectfully requests the assistance of this Court for this purpose.
5. Plaintiff immediately seeks a Temporary Restraining Order enjoining Defendants from disposing of, directing or transferring away, or in any way removing the availability of funds sufficient to satisfy Plaintiffs judgments and to direct such funds to be taken into custody by a receiver appointed by this Court. Plaintiff requests such relief given the substantial likelihood, even certainty, that such funds shall be immediately transferred to offshore accounts or accounts otherwise beyond the jurisdictional powers of this Honorable Court, by further frustrating Plaintiff's attempts to have satisfied the Judgments duly and lawfully entered in his favor.

Al Saleh's causes of action against the defendants included claims pertaining to: turnover in satisfaction of judgments, see TEX. CIV. PRAC. & REM.CODE ANN. § 31.002 (West, Westlaw through 2015 R.S.); an action upon a foreign judgment, see id. § 16.066 (West, Westlaw through 2015 R.S.); violation of the Uniform Fraudulent Transfers Act, see TEX. BUS. & COM.CODE ANN. § 24.001 (West. Westlaw through 2015 R.S.); and fraud and conspiracy to commit fraud. Al Saleh further alleged theories pertaining to vicarious liability and disregard of the corporate form, including allegations that Sargeant owned and operated BTB and Sargeant Marine as "mere tools or business conduits" such that they were nothing more than Sargeant's "alter egos." Al Saleh sought collection of the debt, the appointment of a receiver, damages, and a temporary restraining order and injunctive relief.

In support of his claim for relief, Al Saleh alleged and provided evidence that BTB's primary asset was a promissory note payable for over $29,000,000 "that BTB acquired in 2007 using proceeds from the [f]uel [c]ontracts." Al Saleh also referenced two separate instances of litigation that he alleged supported his claims. First, in PDVSA Petroleo S.A. v. Trigeant, Ltd., et al., a proceeding involving Sargeant, BTB, and others, the federal district court entered findings of fact and conclusions of law that transfer of an asphalt refinery constituted actual and constructive fraud under the Texas Uniform Fraudulent Transfer Act. See PDVSA Petroleo S.A. v. Trigeant, Ltd., No. CIV.A. C–09–38, 2012 WL 3249531, at *1–16 (S.D.Tex. Aug. 7, 2012) ; see also PDVSA Petroleo S.A. v. Trigeant, Ltd., No. 2:09–CV–00038, 2012 WL 6020036, at *1 (S.D.Tex. Dec. 3, 2012). The gist of the findings and conclusions were that Sargeant had used BTB in commission of the fraud. See 2012 WL 3249531, at *1–*16. The findings included, inter alia, that: Sargeant was the "sole owner and member and had full control over [BTB's] operations"; Sargeant "was the 100% owner and sole member of BTB"; Sargeant had "ultimate managerial control" over BTB; and Sargeant had "full control over BTB's operations and directed and controlled its decisions." See id. The federal district court entered judgment against Sargeant and BTB; however, the judgment was settled during the pendency of an appeal to the United States Fifth Circuit Court of Appeals, and the appeal was dismissed by stipulation of the parties.

Second, in In re Trigeant Holdings, Ltd, case no. 14–29027–EPK filed in the United States Bankruptcy Court for the Southern District, Sargeant and his family settled business disputes amongst themselves and their entities. Specifically, Sargeant and his entities, including IOTC Dubai (then domiciled in the Bahamas), BTB, and Sargeant Marine, SA. (predecessor to Sargeant Marine) entered a settlement agreement with other members of the Sargeant family and related entities. According to Al Saleh, despite having released valuable claims he had asserted in various courts against other members of the Sargeant family, Sargeant received no consideration from the settlement agreement and all proceeds of the settlement were instead paid solely to Sargeant's corporations, including over $52,000,000 to BTB. Al Saleh argued that the settlement was...

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