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CAUSE NO. 2013-44862

SUSAN PRUITT Plaintiff,

v. PATRICIA ARRINGTON GRIFFITH,

Defendant

§ § § §§§ §

IN THE DISTRICT COURT OF

HARRIS COUNTY, TEXAS

157TH JUDICIAL DISTRICT

GRIFFITH’S NO-EVIDENCE AND TRADITIONAL MOTIONS FOR PARTIAL SUMMARY JUDGMENT

Defendant Patricia Griffith asks this Honorable Court to grant partial summary judgment under Texas Rule of Civil Procedure 166a:

(1) against Susan Pruitt’s claims for (a) breach of contract and (b) breach of fiduciary duty; and

(2) in favor of Tricia Griffith’s breach of fiduciary duty claim.

I. SUMMARY OF GRIFFITH’S MOTION 1. Susan Pruitt has no evidence Tricia Griffith breached a contract, breached a fiduciary

duty, or caused damages via same. Finally, Tricia Griffith can prove that Susan Pruitt has breached her fiduciary duty as a matter of law and injured Griffith thereby.

II. TIMELINE OF EVENTS

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III. SUMMARY JUDGMENT EVIDENCE

2. To support the facts in this motion, Griffith includes evidence in the appendix filed

herewith and incorporates said evidence by reference herein.

IV. GRIFFITH’S MOTION FOR NO-EVIDENCE SUMMARY JUDGMENT

a. STANDARDS

3. To succeed on her no-evidence motion for summary judgment, Griffith must allege that

there is no evidence supporting an essential element of Pruitt’s cause of action despite the existence of an adequate time for discovery. Tex. R. Civ. P. 166a(i); see Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). If Griffith meets her burden, the burden shifts to Pruitt to produce more than a scintilla of evidence to raise a genuine issue of material fact on the challenged element. Tex. R. Civ. P. 166a(i); see Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). The evidence must be sufficient to allow reasonable and fair-minded people to differ in their conclusions on whether the challenged fact exists; evidence that raises only a speculation or surmise is insufficient. Forbes, Inc., 124 S.W.3d at 172. If less than a scintilla of evidence is produced, Griffith is entitled to a summary judgment.

4. To determine whether an adequate time for discovery has passed, courts consider the following nonexclusive factors:

a. the nature of the suit (breach of contract and breach of fiduciary duty);

b. the evidence necessary to controvert the motion (proof of Griffith’s alleged breach and damages therefrom);

c. the length of time the case has been on file (more than one year);

d. the length of time the motion has been on file (approximately 3 weeks at the

time of the hearing hereon);

e. the amount of discovery that has already taken place (Pruitt served Griffith with 240 Requests for Admissions, 55 Requests for Production, and 26 Interrogatories);

f. whether the movant requested stricter deadlines for discovery (no); and

g. whether the discovery deadlines in place were specific or vague (specific).

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See generally Cmty. Initiatives, Inc. v. Chase Bank, 153 S.W.3d 270, 278 (Tex. App.—El Paso 2004, no pet.); Rest. Teams Int’l, Inc. v. MG Sec. Corp., 95 S.W.3d 336, 339 (Tex. App.—Dallas 2002, no pet.); Martinez v. City of San Antonio, 40 S.W.3d 587, 591 (Tex. App.—San Antonio 2001, pet. denied).

5. This case was filed over a year ago and is set for trial in October 2014.

6. The discovery period ends on September 11, 2014.

7. The deadline for summary judgment in this case is September 11, 2014.

8. An adequate time for discovery has passed.

9. Therefore, Griffith’s motion for no evidence summary judgment should be granted.

b. PRUITT’S BREACH OF FIDUCIARY DUTY CLAIM

10. To prevail on her claim for breach of fiduciary duty, Pruitt must prove the following: (1) Pruitt and Griffith had a fiduciary relationship; (2) Griffith breached her fiduciary duty to Pruitt, and (3) Griffith’s breach resulted in either (a) injury to Pruitt or (b) benefit to Griffith.

11. Pruitt has no evidence Griffith breached her fiduciary duty.

12. Further, Pruitt has no evidence Griffith’s alleged breach of fiduciary duty resulted in injury to Pruitt or benefit to Griffith.

c. PRUITT’S BREACH OF CONTRACT CLAIM

13. To prevail on her claim for breach of contract, Pruitt must prove (1) there was a valid enforceable contract; (2) Pruitt is a proper party to sue for the alleged breach; (3) Pruitt performed, tendered performance, or was excused from performing its obligations; (4) Griffith breached the contract; and (5) Griffith’s breach caused injury.

14. Pruitt has no evidence Griffith breached a contract.

15. Further, Pruitt has no evidence Griffith’s alleged breach resulted in damages.

d. SPECIFIC ARGUMENTS RELEVANT TO PRUITT’S CLAIMS

16. Pruitt’s petition contains five general yet equally unsupportable complaints upon which she appears to seek recovery: (1) failure to turn over corporate assets, (2) improper receipt of donations from members, (3) misuse of Websleuths’ corporate name, (4) failure to reimburse, and (5) Griffith’s remuneration as manager.

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i. Pruitt has no evidence Griffith breached a duty or contract

1. Griffith’s alleged failure to turn over corporate assets

17. Pruitt alleges Griffith “has continued to hold, operate and utilize assets of the business venture in her own name, or in the name of an alter ego, but always under her direction and control.” (Pruitt’s Amended Original Petition, p. 4).

18. Pruitt admits she cannot identify any such asset. (Exhibit A, 45: 12-18).

19. Therefore, Pruitt has no evidence Griffith breached her fiduciary duty or contract with regard to corporate assets.

20. Further, Pruitt has no evidence that she incurred damages associated with Griffith’s alleged but unprovable breach(es). See generally § IV(d)(ii)., infra.

2. Griffith’s alleged improper receipt of donations from members

21. Pruitt alleges Griffith “acted improperly and to the detriment of Plaintiffs [sic] by

seeking funds from persons that volunteer their time in support of Websleuths.com, LLC....[who] have donated and loaned significant amounts of funds to Griffith to be used in by [sic] the company in support of the website.” (Pruitt’s Amended Original Petition, p. 5).

22. Pruitt concedes, however, that she does not know of any person who gave Griffith a donation to be used by the company in support of the website. (Exhibit A, 58: 6-10).

23. Therefore, Pruitt has no evidence Griffith breached her fiduciary duty or a contract with regard to donations.

24. Pruitt also has no evidence of damages associated with Griffith’s alleged but unprovable breach(es). See generally § IV(d)(ii), infra.

3. Griffith’s alleged misuse of the corporate name

25. Pruitt alleges Griffith “has also used the proprietary and licensed name of ‘Websleuths’

to advance her own interests.” (Pruitt’s Amended Original Petition, p. 6).

26. Pruitt has no evidence Griffith breached her fiduciary duty or a contract with regards to her alleged use of the corporate name.

27. Pruitt further has no evidence of damages associated with Griffith’s alleged but unprovable breach(es). See generally § IV(d)(ii), infra.

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4. Griffith’s alleged failure to reimburse Pruitt

28. Pruitt alleges Griffith has breached her fiduciary duty via a purported failure to reimburse her for monies owed. (Pruitt’s Amended Original Petition, p. 5).

29. Pruitt concedes, however, that she never requested reimbursement from Griffith. (Exhibit A, 92: 2-4).

30. Pruitt further concedes Griffith offered her money but that she declined to accept it. (Id., at 44: 15-24).

31. Therefore, Pruitt has no evidence Griffith breached her fiduciary duty or a contract with regards to reimbursements.

5. Griffith’s remuneration as manager

32. Pruitt alleges Griffith breached her contract and fiduciary duty by removing monies from Websleuths’ bank account. (Pruitt’s Amended Original Petition, pp. 4-5).

33. However, Pruitt acknowledges sending an April 25, 2011 email to Griffith (Exhibit A, at 68: 11-12) which expressly permitted Griffith to “draw a salary of the amount $3,000 a month…”. (Id., at 66: 19-25, 67: 1-14). A copy of said email is attached as Exhibit B.

34. Pruitt does not allege (and has no evidence) Griffith breached the terms of their April 25, 2011 agreement. See generally Pruitt’s Amended Original Petition.

35. Pruitt further acknowledges that she asked her husband to draft Websleuths’ “Regulations”. (Exhibit A, at 39: 21-23, 40: 3-4). These regulations were signed by Pruitt (Id., at 22: 5-9) and expressly contemplate compensating the manager of Websleuths. (Id., at 39: 1-3). This provision concerning managerial remuneration was never changed by the parties. (Id., at 39: 4-6).

36. Pruitt concedes that Websleuths’ Articles of Incorporation provide for only one manager, that Griffith was the sole manager of Websleuths at the time of incorporation, and that successors to Griffith must be duly elected and qualified. (Id., at 36: 22-25, 37: 1-4).

37. Pruitt further concedes she has no evidence that a second manager was ever elected or qualified. (Id., at 37: 12-14).

38. Therefore, Griffith was and remains Websleuths’ sole manager and is entitled to compensation therefor.

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39. Pruitt also expressly concedes that the Regulations she asked her husband to draft fail to provide a monetary amount for Griffith’s compensation as manager. (Id., at 39: 7-10).

40. Therefore, the Regulations are patently ambiguous on their face because they provide for managerial compensation but do not provide an amount therefor. In re McNelly, 14-13-00281-CV, at 5 (Tex.App.—Houston [14th Dist.] May 15 2014), citing Mescalero Energy, Inc. v. Underwriters Indem. Gen. Agency, Inc., 56 S.W.3d 313, 322-323 (Tex. App.—Houston [1st Dist.] 2001, pet. denied) (“A patent ambiguity is evident on the face of the contract.”).

41. As a result, the Regulations cannot be given a definite or certain meaning concerning the specifics of managerial compensation as a matter of law. In re McNelly, 14-13-00281-CV, at 6 (“A contract is not ambiguous when the language can be given a definite or certain meaning as a matter of law.”), citing Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex. 2000), Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (per curiam), and Burlington N. & Santa Fe Ry. Co. v. S. Plains Switching, Ltd., 174 S.W.3d 348, 356 (Tex. App.—Fort Worth 2005, no pet.).

42. The Regulations’ ambiguity requires this Honorable Court to consider parol evidence in order to discern the parties’ intentions concerning the specifics of managerial remuneration. Hubacek v. Ennis State Bank, 317 S.W.2d 30, 31 (Tex.1958); Transit Enter., Inc. v. Addicks Tire & Auto Supply, Inc., 725 S.W.2d 459, 461 (Tex.App.—Houston [1st Dist.] 1987, no writ).

43. Failure or refusal to consider parol evidence in this matter would render the contractual clause concerning managerial compensation moot and would violate longstanding precedent. See Westwind Exploration, Inc. v. Homestate Sav. Ass'n, 696 S.W.2d 378, 382 (Tex. 1985) ("‘[T]he parties to an instrument intend every clause to have some effect and in some measure to evidence their agreement…and…‘[a] reasonable interpretation [of an agreement] will be preferred to one which is unreasonable.’"), quoting Portland Gasoline Co. v. Superior Marketing Co., 243 S.W.2d 823, 824 (Tex. 1951).

44. It would be patently unreasonable for the parties to agree that a manager of an entity should be paid zero dollars based upon the failure of the drafter to include a specific amount, particularly where a previous agreement specifically identified the amount to be paid.

45. Pruitt admits that her April 25 email to Griffith expressly states “Griffith will continue to draw a salary of the amount [sic] $3,000 per month.” (Id., at 67: 13-16; see also Id., at 78: 3-9).

46. Pruitt further admits her April 25 email to Griffith was expressly contingent “Upon the formation of the partnership of Websleuths.com, L.L.C.” (Id., at 67: 10-11).

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47. Pruitt further concedes that she subjectively believed Griffith would continue to receive

a draw after Websleuths’ incorporation. (Exhibit A, at 77: 13-16).

48. Pruitt’s April 25 email to Griffith is either directly dispositive or parol evidence; either way, it unambiguously shows that Griffith is entitled to continue removing up to $3,000 a month from the corporate bank account and estops Pruitt from claiming otherwise.

49. Therefore, Pruitt has no evidence Griffith breached a contract or fiduciary duty with regards to her managerial remuneration.

6. Conclusion

50. Pruitt has no evidence Griffith breached her fiduciary duty or a contract with regards to any of her claims.

ii. Pruitt has no evidence Griffith’s alleged breaches resulted in injuries to Pruitt or benefit to Griffith

51. Despite claiming Griffith has damaged the company, Pruitt has admitted she is unable

to identify said damages. (Exhibit A, 29: 20-23 and 59: 17-21).

52. Despite alleging Griffith has utilized unidentifiable corporate assets, Pruitt concedes she does not know how she has been harmed by Griffith’s alleged utilization thereof. (Id., at 47: 12-25).

53. Despite claiming lost profits, Pruitt has no evidence she has incurred lost profits or that Griffith has benefitted therefrom.

54. Despite claiming Griffith improperly utilized the corporate name, Pruitt has no evidence that she has been injured thereby or that Griffith benefited therefrom.

55. Despite alleging Griffith removed monies from the corporate account, Pruitt has no evidence that she was harmed or that Griffith benefited in any manner not contemplated by their contractual agreement.

56. Despite alleging Griffith failed to provide Pruitt with a bill of sale, Pruitt doesn’t know if she has been harmed thereby (Id., at 47: 4-8) and is unable to identify any other type of harm associated therewith. (Id., 47: 14-25). Therefore, she has no evidence of harm.

57. Therefore, Pruitt has no evidence Griffith’s alleged breaches have caused injury to Pruitt or benefit to Griffith.

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58. Therefore, Griffith is entitled to no-evidence summary judgment because Pruitt has no evidence that Griffith’s alleged breaches (1) caused Plaintiff injury or (2) benefited Griffith.

V. GRIFFITH’S MOTION FOR TRADITIONAL SUMMARY JUDGMENT a. STANDARDS

59. To succeed on a traditional motion for summary judgment on her cause of action,

Griffith must show that there is no genuine issue of material fact and that she is entitled to summary judgment as a matter of law. Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). To meet this burden, Griffith must conclusively prove all essential elements of its claim. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). A matter is conclusively established if reasonable people could not differ on the conclusion to be drawn from the evidence. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005). If Griffith establishes her right to summary judgment as a matter of law, the burden shifts to Pruitt to present evidence that raises a genuine issue of material fact. Boudreau v. Fed. Trust Bank, 115 S.W.3d 740, 743 (Tex. App.—Dallas 2003, pet. denied).

b. GRIFFITH’S BREACH OF FIDUCIARY DUTY CLAIM

60. Griffith is entitled to summary judgment on her breach of fiduciary duty claim against

Pruitt because the undisputed facts in this case conclusively establish each essential element of her claim.

61. The essential elements of a breach of fiduciary duty claim are: (1) movant and non-movant had a fiduciary relationship; (2) the non-movant breached her fiduciary duty to movant and (3) the non-movant’s breach resulted in either (i) injury to the movant or (ii) benefit to the non-movant. See Plotkin v. Joekel, 304 S.W.3d 455, 479 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).

i. Griffith and Pruitt had a fiduciary relationship

62. Pruitt has admitted she was Griffith’s partner. (Exhibit A, at 49: 1-4; 20: 2-4; 42: 17-18; 50: 6-7).

63. Texas law has long held that, as a matter of common law, "[t]he relationship between ... partners ... is fiduciary in character, and imposes upon all the participants the obligation of loyalty to the joint concern and of the utmost good faith, fairness, and honesty in their dealings with each other with respect to matters pertaining to the enterprise." Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 264 (1951).

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64. The term "fiduciary" generally applies "to any person who occupies a position of

peculiar confidence towards another," refers to "integrity and fidelity," and contemplates "fair dealing and good faith." Dunnagan v. Watson, 204 S.W.3d 30, 46 (Tex. App.—Fort Worth 2006, pet. denied), quoting Daniel v. Falcon Interest Realty Corp., 190 S.W.3d 177, 185 (Tex. App.—Houston [1st Dist.] 2005, no pet.).

65. Pruitt admitted that she believed Griffith trusted her and intended for Griffith to trust her. (Exhibit A, at 48: 7-13).

66. Therefore, Griffith and Pruitt had a fiduciary relationship.

ii. Pruitt breached her fiduciary duty to Griffith

67. Pruitt admitted she told people Griffith took money from Websleuths and its members under false pretenses (Exhibit A, at 102: 5-7).

68. Pruitt has no evidence supporting her allegation that Griffith took money from Websleuths or its members under false pretenses.

69. Pruitt’s undisputed admission is further corroborated by other persons with knowledge of relevant facts. (Exhibit C, Affidavit of Brad Dennis at ¶¶ 1-3 and Exhibit D, Affidavit of Vicki Pate at ¶¶ 1-2).

70. Pruitt believed Griffith trusted her (Exhibit A, at 48: 7-8), intended for Griffith to trust her, (Id., at 48: 9-10), and breached Griffith’s trust by acting in bad faith and telling numerous people that Griffith took money under false pretenses. (Id., at 102: 5-15).

71. These acts constitute a breach of fiduciary duty.

iii. Pruitt’s breach caused Griffith injury

72. Pruitt’s unfounded allegations forced Griffith to hire and pay legal counsel to protect her interests herein. See generally Griffith’s Original Answer. See also § VI, infra.

73. Pruitt’s unfounded allegations that Griffith took money under false pretenses (Exhibit A, at 102: 5-15) have also caused Griffith to suffer reputational damages as a matter of law insofar as they:

a. injured Griffith’s reputation and exposed her to public hatred, contempt, ridicule, or financial injury (Tex. Civ. Prac. & Rem. Code § 73.001 (1));

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b. injured her in her occupation as manager of Websleuths (KTRK TV, Inc. v. Robinson, NO. 01-12-00372-CV (Tex.App.—Houston [1st Dist.] 2013, pet. filed 10-7-13); Aldous v. Bruss, 405 S.W.3d 847, 858 n. 11 (Tex.App.—Houston [14th Dist.] 2013, no pet.); and

c. imputed a crime (e.g., embezzlement) (Leyendecker & Assocs. V. Wechter, 683

S.W.2d 369, 374 (Tex.1984).

74. Furthermore, Pruitt deliberately posted court documents from the instant case on Websleuths.com, thereby intentionally making her unfounded allegations known to all 70,000 members thereof. (Exhibit A, at 88: 4-25; 89: 24-25; and 90: 1-11). See also screenshot below (corroborating Pruitt’s admission that there are approximately 70,000 members).

75. Therefore, Pruitt’s breach has caused Griffith injury.

VI. DAMAGES

76. The damages for Griffith’s counterclaim are unliquidated. A Defendant moving for summary judgment on a counterclaim is not required to prove the amount of unliquidated damages, only that damages were incurred. Tex. R. Civ. P. 166a(a); see Pinnacle Anesthesia Consultants, P.A. v. Fisher, 309 S.W.3d 93, 100 (Tex. App.—Dallas 2009, pet. denied).

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77. Because Griffith is entitled to summary judgment on liability and Griffith proved the existence of damages, the Court should grant Griffith an order for a summary judgment on liability and set the issue of damages for trial. See, e.g., City of Hous. v. Socony Mobil Oil Co., 421 S.W.2d 427, 429-30 (Tex. App.—Houston [1st Dist.] 1967, writ ref’d n.r.e.) (after court rendered partial summary judgment, issue of damages was tried to jury).

VII. CONCLUSION

78. Despite extensive discovery, Susan Pruitt has no evidence that Tricia Griffith breached a contract or any fiduciary duty.

79. Further, Susan Pruitt has no evidence that she has incurred damages as a result of Griffith’s alleged breach or that Griffith benefited therefrom.

80. Finally, Tricia Griffith has proven that Susan Pruitt breached her fiduciary duty as a matter of law and injured Griffith thereby.

VIII. PRAYER

81. For these reasons, Griffith asks the Court to grant this motion and sign an order for partial summary judgment.

Respectfully submitted,

/s/ Meagan Hassan Meagan Hassan State Bar No. 24065385 meagan.hassan@demondhassan.com William Pieratt Demond State Bar No. 24058931 william.demond@demondhassan.com DEMOND & HASSAN, PLLC 2450 Louisiana St, Suite 400-528 Houston, Texas 77006 Telephone: 713-701-5240 Telecopier: 713-588-8407

ATTORNEYS FOR DEFENDANT PATRICIA GRIFFITH

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CERTIFICATE OF SERVICE

I hereby certify that on this 19th day of August, 2014, a true and correct copy of the foregoing document, entitled “DEFENDANT’S TRADITIONAL AND NO-EVIDENCE PARTIAL MOTION FOR SUMMARY JUDGMENT” was served upon the following parties and attorneys of record in accordance with the Texas Rules of Civil Procedure:

Anthony L. LaPorte Ciro Samperi Hanzen LaPorte, L.L.P. 11767 Katy Freeway, Suite 850 Houston, Texas 77079 Telephone: (713) 522-9444 Telecopier: (713) 524-2580

/s/ Meagan Hassan

MEAGAN HASSAN