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10/16/2017 12:00 AM
Donna Kay McKinney
Bexar County District Clerk
Accepted By: Nikki J Garcia

CAUSE NO. 2017CI19805




v. 285TH




COME NOW Jasmine Norris and Joshua Norris (hereinafter Plaintiffs), and files

this, their Original Petition against June Roberts and Jason Roberts, and Green Energy

Xperts, Inc (Collectively Defendants) showing the Court as follows:


1. Pursuant to Texas Rules of Civil Procedure, Rule 190.1, Plaintiffs intend to

conduct discovery in this case under Level 2.


2. Jasmine Norris and Joshua Norris (Norris or Plaintiffs) are husband and

wife residing in Wilson County, Texas. At all times relevant herein, Jasmine Norris and

Joshua Norris were over the age of eighteen and are residents of the city of La Vernia,

Texas, County of Wilson, State of Texas.

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3. Defendant June Roberts (June) is a Texas resident residing in Comal

County, Texas. June may be served with process at her residence located at 361 Fallen

Oak, New Braunfels, Texas 78130.

4. Defendant Jason Roberts (Jason) is a Texas resident residing in Comal

County, Texas. Jason may be served with process at her residence located at 361 Fallen

Oak, New Braunfels, Texas 78130.

5. Defendant Green Energy Xperts, Inc. (Green) is a Texas for profit

corporation. Green may be served by its registered agent United States Corporation

Agents, Inc and its registered office at 12301 Research Park Blvd, Bldg. 4, Suite 200,

Austin, Texas 78759.


6. Venue in Bexar County, Texas is proper in this cause under 15.002 of the

Texas Civil Practice and Remedies Code because all or a substantial part of the events or

omissions giving rise to the claims occurred in this county.

7. Jurisdiction is proper because the amounts in controversy exceed the

minimum jurisdictional limits of this Court, because Defendants do conduct business in

this State, and because the events giving rise to this suit arose out of the business conducted

by Defendants in this county.


8. All conditions precedent have been performed or have occurred pursuant to

Texas Rules of Civil Procedure 54.


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9. The Plaintiffs are a hardworking and honest married couple with vast

experience in the residential and commercial roofing business in this state.

10. The Norriss were contacted by Roberts about opening a Bow Tie

Franchise sales office in January of 2016. The Roberts informed the Norriss that they

wanted to expand Bow Tie across Texas. The Norriss decided to move forward with the

alleged opportunity in hope that they would be able to build a successful business.

11. The Norriss in early February of 2016 opened one of nine franchise1

offices in Jourdanton, Texas doing business as Bow Tie Roofing Systems Brush Country.

At that time the Norris were informed that the sales offices were to be setup in each of the

regions or franchise locations and all production was to go through the Corporate

offices in New Braunfels, Texas.

12. After three months of production not going as it was promised by the

Roberts (including the roofs not being installed correctly, not being completed in a timely

manner), the Norris decided to take over production and bring it back in house and

complete each of the outstanding roofs on their own.

13. In December of 2016 Jason proposed the idea to the Norris to come to the

New Braunfels location, the Corporate headquarters to assist with the sales. Due to the

extremely long commute (1 hours from New Braunfels) the Norris were hesitant to do


It was later discovered that there was no franchise whatsoever.

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14. In January of 2017 Jason discussed with the Norriss that he-Jason was going

to close all of the other businesses except that of the Jourdanton, Texas office because

Jason said ..due to bad business. It became apparent to the Norriss that franchise owners

by the name of Matt Venezuela of Helotes, and Mike Sholtis of San Antonio had some

type of an agreement with Jason to complete the roof customer jobs which they Matt

Venezuela and Mike Sholtis had sold and collected initial deposits for. In this same

conversation between the Norriss and Jason, Jason suggested that the Norriss run the New

Braunfels office. The three agreed and the understanding was that Jason would take over

the Jourdanton offices remaining production (the completion of the actual roof


15. In February of 2017 the Norriss initiated their work in the New Braunfels

office. At even date therewith, Jason spoke with his sales/sub-contractor named George

Driskell about taking over the production of all offices that were in need of installations

for outstanding jobs. Georges son Bret Dryer had a friend that was looking to invest some

money in a business. During that time, and despite a pending buyout, Joshua Norris was

instructed by Jason to continue selling jobs in the name of Bow Tie. Jason informed the

staff that he-Jason had a business idea to start a new program that would have the staff

selling to other roofing contractors. This service would provide the sales arm for these

companies, basically Green Energy Xperts, Inc d.b.a Bow Tie would sell the jobs and then

hand them off to the various roofing contractors for the production/completion.

16. The Norriss were able to assist with sales and increased the sales of Bow

Tie exponentially. The Norris closed the Jourdanton office and moved their household to

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La Vernia, Texas. At this same time, Jason moved into a new office. Mike Sanders which

was a franchise owner in Corpus Christi, Texas and a lifelong friend of the Roberts was

present and was instructed to assist with the transition by Jason. Mike was contacting the

franchise clients (the homeowners) to inform them that the New Braunfels office would be

taking over the completion/production of the existing clients roofs and to have the clients

sign new contracts with the New Braunfels office. Mike and Jason were also in the process

of starting a roof warranty company (Above and Beyond). Jason held a meeting with the

office staff stating that the investor pulled out. He tried to come up with some kind of

tier plan on how to sell more, and stating longer hours less pay. A day later Jason and Mike

met with Jasmine and requested that Jasmine help Mike with starting up the Above and

Beyond Roof Warranty Company. They presented it as a position that Jasmine can work

from home due to having five kids which three were in diapers. Thinking that this would

be a better fit, Jasmine agreed.

17. In April of 2017 Joshua received a call from a homeowner from the

Jourdanton office asking why his roof was not completed. Joshua told the homeowner he

will look into it and will get back to him. When Joshua approached Jason about the call

Jason and Joshua got into a verbal argument and Joshua asked Jason to give him the

commission he was owed and his old jobs so that he can attempt to get the roofs completed.

Later that day Jason called Joshua Norris and asked that if Joshua thought that he could get

the production completed and if he-Joshua could run the business, that Jason wanted to see

if he (Joshua) and Jasmine Norris would be interested in purchasing the Bow Tie business.

Jason told the Norris that it was because Jason wanted to start a scuba shop in the Virgin

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Islands. Jason had told Joshua that he can no longer concentrate on Bow Tie and that he

was taking his family to the Virgin Islands.

18. After the fact, and by conversations with previous employees of Jason, it was

discovered that Jason told the employees that he was in fear for his life everyday

because of the threats from homeowners, this because Jason had promised to complete the

roofs, took initial deposits, but failed to do anything. Further these same employees told

Jasmine that Jason told the employee that I have found someone stupid enough to take

everything over, referring to the Norriss taking over the Green Energy Xperts, Inc,

Bow Tie company considering all of the issues Jason was experiencing.

19. On April 26, 2017 June and Jason Roberts met Joshua and Jasmine Norris at

a restaurant in New Braunfels, Texas to discuss the general aspects of the Norris taking

over the business. Jason wanted out as soon as possible. It was discovered later that it was

because of the constant pressure from the multitude of phone calls and complaints from

homeowners. Having very little conversations about the details of the transaction, the

Roberts, desperate to distance themselves from Green Energy Xperts, Inc Bow Tie, the two

couples went to a bank to sign documents that the Roberts had already had prepared. Not

reading the documents, but counting on the Roberts to do the right thing, the Norris signed

some documents (it is still unclear as to exactly what documents). It is believed that the

Roberts presented the Norriss with a document by the name of Original Agreement (see

Exhibit A). The Roberts alleged that certain monies were to remain in the business bank

accounts to complete the current jobs, that the business owned $1,214,898.00 of assets, that

there was cash/Accounts Receivable in the amount of $238,203.10, cash in the business

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accounts of $16,990, and that the liabilities of the company were at $715,000.00 most of

which were for suppliers of roofing materials. As part of the transaction the parties

negotiated a debt component for the goodwill of the company in the amount of $33,800.00.

This amount was to be paid out over a few months. During that meeting Jason had said that

he did not tell the attorney a Cheryl Lynn Friedberg2 about the matter because she-Cheryl

would attempt to talk Jason out of the sale.

20. Shortly after that meeting Jasmine Norris was given access to the books and

records of the company. It was found that nothing was accounted for, nothing was

organized or consistent with GAAP (Generally Accepted Accounting Principles). Further,

it was discovered that most of the transactions which were leaving the business accounts

were for personal items of Jason and June Roberts. Obviously, this created substantial

anxiety for Jasmine Norris. For this reason, Jasmine again contacted Cheryl Friedberg to

discuss the contemplated transaction (purchasing Green Energy Xperts, Inc), and to inquire

as to some of the red flags that Jasmine had seen, and if the Norriss should go through

with the transaction, could the Norriss be held responsible for any bad business dealings

of Jason and June Roberts. Cheryl informed Jasmine that provided she had no knowledge

of the dealings, that she and Joshua could not be held responsible for the business dealings

of June and Jason Roberts.

The Norriss had engaged Friedbergs services in the past. It is believed that a conflict exists.

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21. In May of 2017, it was agreed, but never formally consummated3, that the

Norriss would purchase Green Energy Xperts, Inc from the Roberts. A number of

documents were signed (it has been discovered recently that some of the documents were

clearly fraudulently signed (these documents included the Franchise Agreements4) by other

parties (the Norriss signatures were forged by other parties on some of the documents)),

and the Norriss began running Green Energy Xperts, Inc based on the representations of

the Roberts.

22. The Roberts convinced the Norriss to continue with the same bank accounts

the business had at Wells Fargo, by representing that the names on the accounts could just

be switched from the Roberts to the Norris names. Believing that the Roberts were honest

and trustworthy, the Norriss agreed to continue with the existing Wells Fargo accounts. It

was later discovered why the Roberts requested the same bank accounts be used. In the

days to come tens of thousands of dollars of checks and withdraws occurred from the

business accounts by the Roberts, all of which were not disclosed (none of the following

transaction were agreed to nor disclosed to the Norriss):

a. Pre-dated checks to vendors were written by Jason Roberts and undisclosed

by the Roberts and then presented for payment to the company account;

Documents attached to this petition and those expected to be produced in discovery will show that although the
parties contemplated a sale, all that was consummated was a purchase and sale agreement. No closing documents,
no formal conveyance of ownership via stock certificates were ever conveyed and never occurred.
The Norriss had multiple conversations with previous employees of the Roberts to find that it was common
practice that each of the employees were instructed to forge franchise owners signatures on the documents at
Jasons request.

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b. Personal withdraws were made by the Roberts, payments of the Roberts

personal credit cards were made from the company account;

c. Previous bills and debts of the Roberts were paid from the company account;

d. Previous week payroll which the Roberts were responsible for was drawn on

the company accounts;

e. Life insurance payments were paid from the company accounts;

f. Equipment rental used for Roberts jobs was charged to the company


g. Jasons fathers rental property payment was charged to the company


h. Roberts other business debts were charged to the company accounts;5

23. The withdraws and checks were for both personal items of the Roberts and

for checks which were predated and written to suppliers by Jason Roberts, all of which

were not disclosed by the Roberts to the Norriss. Tens of Thousands of dollars which the

Roberts promised would remain the company accounts to allow the completion of the

customers jobs were taken and not disclosed by the Roberts.

24. When the Norriss made inquiry with the Roberts, they said in must be a

mistake, but the Roberts did nothing to replenish the company accounts. In fact, the

Norriss immediately engaged the services of the below signed firm to assist with this

Plaintiffs have all the bank statements to substantiate each of the above charges but have not attached same to
protect the identity of the payees. This will be produced in discovery.

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matter. The below signed immediately contacted Mr. Roberts and he denied the allegations

and demanded that the below signed contact his attorney Ms. Cheryl Friedberg.

25. As if this was not bad enough, vendors of the company started calling and

complaining of past due accounts. One such supplier, a roofing supplier was promised by

Jason that it would receive an insurance check in the amount of $80,000.00 to pay the

account down, however the insurance check was never paid to this vendor. Many of the

vendors which were not paid initiated filing of mechanics liens on the Roberts jobs.

26. The City of Universal City sent a summons for the company to appear for

violations of city ordinances. The Roberts never pulled the appropriate permits to perform

the work on a job. A lawsuit was signed for by the companys receptionist for a disgruntled

customer of the Roberts.

27. In an effort to keep the company afloat the Norriss began laying employees

off so as to reduce expenses and try to make the situation right with the customers. Nothing

was working though, no matter how hard the Norriss tried to get the Roberts to return the

money, and no matter how much overhead the Norriss attempted to trim, nothing could

keep the devastated company afloat.

28. While Jason Roberts were moving on to the next scheme, (Roberts has

purportedly created another company named Large Loss Consulting), the Norriss were

trying to mop up the Roberts mess. Fearing that their financial viability was being affected,

the Norriss were forced to start their own entity. The Norriss did so on May 11, 2017.

Thereafter, the Norriss moved from the physical location of the Roberts. When the

Norriss contacted the landlord to notify him that they were moving out, it was found that

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Jason Roberts had not informed the landlord that he had left the building, and the fact that

landlord was owed many months of rent.

29. Since the Norriss departure, the Norriss continue to pay the debts for the

assets they retained. For instance, there is a work truck which remains in the Norriss

possession and is being paid for by the Norriss.

30. Since the Norriss departure it has been discovered that the transaction with

the Roberts was a complete sham:

a. The initial proposal / agreement which was proposed on April 26, 2017 (see

Exhibit A) was a complete fraud. It is now clear that each of the numbers

contained in the proposal were a complete fraud;

i. The vendor totals were all understated. Most of the accounts were

already in default and the vendors had shut the accounts down due to


ii. The accounts receivables were not collectable because the customers

were furious due to failure to complete the jobs at all or extreme

delays. The below signed has been in contact with at least thirty

affected customers which have stated that the Roberts took initial

materials deposits but would never come back and have not

completed the job;

iii. Assets/cash in the bank: was nonexistent due to undisclosed checks

that had been written and the fact that the Roberts made withdraws;

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b. The entities: Multiple entities have been formed by the Roberts. It appears

that vendors and customers start turning up the heat and the Roberts form

another entity;

i. Green Energy Xperts, Inc was formed on December 7, 201 by June

Roberts (see Exhibit B);

ii. As of today, the ownership of Green Energy remains with June

Roberts, no change occurred. No further action has been taken. In

fact, the following is a screen shot of the Texas Secretary of States

corporation section search;

iii. Closing and Stock transfer: there was no closing and no stock transfer

which occurred. In fact, as will be detailed below there were no

formal steps taken whatsoever;

iv. Bow-Tie Roofing is a d/b/a which was formed by June Roberts on

June 13, 2016;

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v. Complete Production is a d/b/a formed by June Roberts on June 15,


vi. Complete Construction is a d/b/a formed by Jason Roberts on June

28, 2016.

c. All of the documents presented and signed were the initial or a precursor to

the sale and transfer of a business sale:

i. Terms of Share Transfer (see Exhibit C) this document if ever

executed appears to create restrictions on the transfer only, and

ironically attempts to shift liability for prior bad actions of the Roberts

to the Shareholders, and attempts to Release Criminal Liabilities an

action which can never be done, therefore is void;

ii. Assignment and Bill of Sale/Release: purports to be signed by an

employee Jason Roberts whom has no authority or control over Green

Energy Xperts, Inc whatsoever. Further there is reference to a

Purchase Agreement of which Plaintiffs are not aware of

whatsoever. Again, as stated above Plaintiff Jasmine Norris did not

have ownership of the stocks of Green Energy Xperts, Inc, and

therefore of authority to act on behalf of the company (see Exhibit


iii. Green Energy Voluntary Separation Agreement; this document is

signed by Jasmine Norris, a party which had no authority to act on

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behalf of Green Energy Xperts, Inc, therefore it is void (see Exhibit


iv. Assignment and Assumption of Contracts: this document purports to

have Green Energy Xperts, Inc assign the contracts to Assignee Jason

Roberts. First, the document has no effective date, and second the

assignment is signed by Plaintiff Jasmine Norris whom has no

authority to act on behalf of Green Energy Xperts, Inc (see Exhibit


v. Distributor Agreement: this document alleges that Bow-Tie Storm

Restoration, INC as the Company will provide certain services for

the Distributor Mr. Joshua Norris. Bow-Tie Storm Restoration,

INC does not exist in Texas as a corporation. Further, this document

is signed by Jason Roberts whom has in the past alleged that he is only

an employee (see Exhibit G);

vi. Stock certificates: The Plaintiffs never received any formal

conveyance of ownership, no bills of sale for specific equipment, and

no stock certificates. Interestingly, the only document which appears

to suggest a formal conveyance was three blank stock certificates (see

Exhibit H).

31. It is clear that the Roberts never intended to convey ownership, and failed to

do so, of Green Energy Xperts, Inc, rather they took advantage of the Norriss and swindled

unsuspecting and unsophisticated individuals. While the Norris were attempting to keep

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the company afloat the spent thousands of dollars of their own personal money trying to

resolve the issues.

32. It is believed that the Roberts were embezzling tens of thousands of dollars

from unsuspecting customers and then keeping the money for personal use and not

completing the work.



33. Plaintiffs reallege each and every allegation made in paragraphs 1-32 above

as if it were plead herein. Civil conspiracy is a combination by two or more persons to

accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means.

Great National Life Insurance Co. v. Chapa, 377 S.W.2d 632, 635 (Tex. 1964); State v.

Standard Oil Co., 130 Tex. 313, 107 S.W.2d 550, 559 (1937).

34. The essential elements are: (1) two or more persons; (2) an object to be

accomplished; (3) a meeting of minds on the object or course of action; (4) one or more

unlawful, overt acts; and (5) damages as the proximate result. Massey v. Armco Steel Co.,

652 S.W.2d 932, 934 (Tex. 1983); Chon Tri v. J.T.T., 162 S.W.3d 552 (Tex. 2005). In this

case each of the Defendants conspired to deprive the Plaintiffs of their money by alleging

that certain monies were present when they were not, by alleging that certain receivables

were due and owing when they were not, by alleging that accounts payables were at a level

when they were not, and then by convincing Plaintiffs to retain the current Wells Fargo

account so as to allow the Defendants to treat the account like their own little savings

account, all under the guise of selling a business to the Plaintiffs.

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35. Each of the Defendants, being more than two, with a goal of taking monies

from Plaintiffs accomplished that goal and absconded with tens of thousands of dollars of

money from Plaintiffs and that of countless homeowners. It is believed that the

Defendants took advantage of a friendship and conned the Plaintiffs into the transaction

just based simply on fraudulent representations made in writing.


36. Plaintiffs reallege each and every allegation made in paragraphs 1-35 above

as if it were plead herein. The Texas Supreme Court has already adopted the tort of negligent

misrepresentation as described by the restatement (Second) of Torts 552. See Federal Land Bank

Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex.1991). The elements of negligent

misrepresentation are: (1) the representation was made by a defendant in the course of his business,

profession or employment, or a transaction in which he has a pecuniary interest; (2) the defendant

supplied false information for the guidance of others in their business; (3) the defendant did not

exercise reasonable care or competence in obtaining or communicating the information; and (4)

the plaintiff suffered pecuniary loss by justifiably relying on the representation. Federal Land Bank

Association of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex.1991); Williams v. City of Midland, 932

S.W.2d 679, 684 (Tex.App.-El Paso 1996, no writ); Papas Telecasting Companies v. Lee

Enterprises, Inc., 08-00-00394-CV, 2002 WL 59693 (Tex. App. Jan. 17, 2002).

37. Defendants clearly made false representations in the course of their business,

profession or employment. It is expected to be proven in discovery that in fact Defendants made

these representations in a transaction that Defendants in fact had a pecuniary interest in.

Defendants and each of them, supplied false information as specified above. Each and every

representation whether in writing or orally that was made has proven to be false. Defendants failed

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to exercise reasonable care or competence in making the statements. Defendants expected and

therefore can reasonably believe that Plaintiffs relied on their representations. Plaintiffs have

suffered extreme pecuniary losses as a result of Defendants representations.


38. Plaintiffs reallege each and every allegation made in paragraphs 1-37 above

as if it were plead herein. In order to prove fraud, a plaintiff must show that (1) the defendant

made a material representation that was false, (2) the defendant knew the representation was false

or made it recklessly as a positive assertion without any knowledge of its truth, (3) the defendant

intended to induce the plaintiff to act upon the representation, and (4) the plaintiff actually and

justifiably relied on the representation, which caused the injury. Ernst & Young, L.L.P. v. Pac.

Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001).

39. Plaintiffs have suffered greatly due to Defendants material misrepresentations

which are as shown above clearly false. Defendants knew that the representations were false, or

Defendants made the representations recklessly and made such statements as a positive assertion

without knowledge of its truth. Because of the downward slipping business and fear for criminal

prosecution Defendants wanted to shirk the responsibility of the company on to another party.

Because of this desire, Defendants believed that they could take advantage of their friends to

Plaintiffs. In considering same, it is clear that the Defendants intended to induce the Plaintiffs to

act upon the representations. The written representations and affirmative statements made caused

a situation wherein it was justifiable for Plaintiffs to rely on the statements. Plaintiffs actually

relied on the statements made and proceeded with what Plaintiffs initially believed was a business

purchase and sale. This reliance and the misrepresentations made cause


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40. Plaintiffs reallege each and every allegation made in paragraphs 1-39 above

as if it were plead herein. The Texas Business and Commerce Code 27.01 defines the

terms of Fraud in a Stock Transaction.6

41. As shown above, Defendants violated Tex. Bus. & Com. Code Ann. 27.01(a)(2)

as they made numerous material false promises with the intention not to fulfill and made with

purpose to induce the Plaintiffs to agree to a possible sale and was relied on by the Plaintiffs to

their detriment. Further the statute states:

(b) A person who makes a false representation or false promise commits the fraud
described in Subsection (a) of this section and is liable to the person defrauded for
actual damages.
(c) A person who makes a false representation or false promise with actual
awareness of the falsity thereof commits the fraud described in Subsection (a) of
this section and is liable to the person defrauded for exemplary damages. Actual
awareness may be inferred where objective manifestations indicate that a person
acted with actual awareness.
(d) A person who (1) has actual awareness of the falsity of a representation or
promise made by another person and (2) fails to disclose the falsity of the
representation or promise to the person defrauded, and (3) benefits from the false
representation or promise commits the fraud described in Subsection (a) of this
section and is liable to the person defrauded for exemplary damages. Actual
awareness may be inferred where objective manifestations indicate that a person
acted with actual awareness.7
Defendants by misrepresenting to Plaintiffs that certain monies were in the bank, that the accounts

receivables and accounts payable were of a certain nature, and the fact that Defendants failed to

disclose that certain checks were already remitted to vendors, and by pulling money out of the

business accounts without disclosure, Defendants defrauded Plaintiffs this caused Plaintiffs harm

and is fraud. Texas law has established the elements of statutory fraud as (1) the defendant made

a material misrepresentation; (2) the defendant knew the representation was false or made the

representation recklessly without any knowledge of its truth; (3) the defendant made the

See Henning v. One West Bank 405 S.W.3d 950, 963 (Tex.App.Dallas 2013, no pet.)
Tex. Bus. & Com. Code Ann. 27.01

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representation with the intent that the other party would act on that representation or intended to

induce the party's reliance on the representation; and (4) the plaintiff suffered an injury by actively

and justifiably relying on that representation. Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348

S.W.3d 194, 217 (Tex. 2011); Italian Cowboy Partners v. Prudential Ins., 341 S.W.3d 323, 337

(Tex.2011);See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990); Trenholm v.

Ratcliff, 646 S.W.2d 927, 930 (Tex.1983).


42. Plaintiffs reallege each and every allegation made in paragraphs 1-41 above

as if it were plead herein.

43. An actual controversy has arisen and now exists between Plaintiffs and Defendants

regarding the respective rights and duties, in that Plaintiffs contends that Defendants failed to

consummate any purchase and sale of the business known as Green Energy Xperts, Inc/Bow-


44. Plaintiffs request this Court pursuant to the Uniform Declaratory Judgments Act,

Tex. Civ. Prac. & Rem. Code Chapter 37 et seq declare the rights, status, and other legal relations

as between them and Defendants the alleged purchase and sale of the business known as Green

Energy Xperts, Inc/Bow-Tie Roofing.


45. Plaintiffs reallege each and every allegation made in paragraphs 1-44 above

as if it were plead herein. Pleading in the alternative, if this Court so finds that the

transaction contemplated between Plaintiffs and Defendants was in fact consummated

(Plaintiffs in no way make this allegation), and this Court finds that there is a binding

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contract, the Plaintiffs allege that Defendants miserably and completely defaulted on same

and failed to perform pursuant to any of the terms thereof.

46. The Texas Constitution outlines a contract clause stating, No bill of attainder ... or

any law impairing the obligation of contracts shall be made. Tex. Const. art. I, 16. Under Texas

law, the essential elements of a breach of contract claim are: (1) the existence of a valid contract;

(2) performance or tendered performance by the plaintiff; (3) breach of contract by the defendant;

and (4) damages sustained as a result of the breach. Sauceda v. GMAC Mortg. Corp., 268 S.W.3d

135, 140 (Tex.App.-Corpus Christi 2008, no pet.)) Roof Sys., Inc. v. Johns Manville Corp., 130

S.W.3d 430, 442 (Tex.App.-Houston [14th Dist.] 2004, no pet.) Defendants, and each of them,

have breached whatever agreement was had with Plaintiffs.


47. Plaintiffs reallege each and every allegation made in paragraphs 1-46 above

as if it were plead herein.

48. It is believed that discovery will show that Defendants embezzled monies

from both Plaintiffs and unsuspecting homeowners and transferred these ill-gotten

proceeds to other business of Defendants. Plaintiffs seek to hold all Defendants jointly and

severally liable for the debts incurred by Plaintiffs. In contemplating this end, Plaintiffs

began an extensive investigation of where and for what use the Plaintiffs money was used,

and how Defendants literally stole the Plaintiffs money and used same for personal use.

49. The Texas Uniform Fraudulent Transfer Act ("TUFTA") creates the

statutory framework and cause of action through which a creditor may pursue a fraudulent

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transfer claim in Texas.8 The Texas Business and Commerce Code states that: (a) A

transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the

creditors claim arose before or within a reasonable time after the transfer was made or the

obligation was incurred, if the debtor made the transfer or incurred the obligation: (1) with

actual intent to hinder, delay, or defraud any creditor of the debtor.9 Since direct proof of

fraud often is not available, courts may rely on circumstantial evidence to establish

fraudulent intent. Roland v. United States, 838 F.2d 1400 (5th Cir. 1998); Williams &

Chastain v. Laird, 32 S.W.2d 502, 505 (Tex. Civ. App. 1930). When several indicia of

fraud are found, they may form the foundation for an inference of fraud. Roland, 838 F.2d

at 1403. This foundation is built upon what are known as "badges of fraud." Texas Sand

Co. v. Shield, 381 S.W.2d 48, 53 (Tex. 1964). The TUFTA lists eleven non-exclusive

badges of fraud that may be used to prove actual fraudulent intent: (b) In determining actual

intent under Subsection (a)(1) of this section, consideration may be given, among other

factors, to whether:

(1) the transfer or obligation was to an insider; (2) the debtor retained

possession or control of the property transferred after the transfer; (3)

the transfer or obligation was concealed; (4) before the transfer was

made or obligation was incurred, the debtor had been sued or

threatened with suit; (5) the transfer was of substantially all the

debtors assets; (6) the debtor absconded; (7) the debtor removed or

Litzler v. Ethridge (In re Gordon), Nos. 02-32599-HDH-7, 03-3787, 2004 Bankr. LEXIS 2570, at *4-5 (U.S.
Bankr. N.D. Tex. Sep. 27, 2004)
Tex. Bus. & Com. Code 24.005

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concealed assets; (8) the value of the consideration received by the

debtor was reasonably equivalent to the value of the asset transferred

or the amount of the obligation incurred; (9) the debtor was insolvent

or became insolvent shortly after the transfer was made or the

obligation was incurred; (10) the transfer occurred shortly before or

shortly after a substantial debt was incurred; and (11) the debtor

transferred the essential assets of the business to a lienor who

transferred the assets to an insider of the debtor.10

50. In addition, as seen on each of the attached Exhibits, the Defendants

purposely misled Plaintiffs to believe that the assets, accounts receivables, and the

accounts payables were of a character that just were not. The obligations were created and

almost immediately Defendants defaulted on same by causing withdraws to be made from

the company account. A transfer made or obligation incurred by a debtor is fraudulent as

to a creditor whose claim arose before the transfer was made or the obligation was incurred

if the debtor made the transfer or incurred the obligation without receiving a reasonably

equivalent value in exchange for the transfer or obligation and the debtor was insolvent at

that time or the debtor became insolvent as a result of the transfer or obligation.11

51. It is now clear after extensive investigations that the Defendants defrauded

not only the Plaintiffs but many homeowners, then fraudulently transferring and

converting the money from Plaintiffs and the homeowners into personal assets of

Tex. Bus. & Com. Code 24.006

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Defendants. Therefore, TUFTA is relevant for just this occasion in that it is on point for

just this type of situation where transfers are made with actual intent to hinder, delay, or

defraud creditors. Tex. Bus. & Comm. Code 24.005(a)(1) (Vernon 2002).

52. Pursuant to TUFTA, the presence of a number of badges of fraud will

always make out a strong case of fraud, and in the instant case, as explained below, at least

six of the eleven factors the statute provides are present. Plaintiffs ask the Court to take

notice of all of the exhibits attached hereto which clearly and unequivocally evidences

Defendants actions were fraudulent, and that Defendants acted with a fraudulent intent to

defraud the Plaintiffs by both handing off a company which was in dreadful financial

fitness but making representations to the contrary, then withdrawing monies for personal


53. When assets are transferred after suit or threat of suit, or shortly before or

after a substantial debt was incurred, these circumstances are considered badges of fraud.

Tex. Bus. & Comm. Code 24.005(b)(4), (10) (Vernon 2002). Transfers of substantially

all of the debtor's assets, as well as the debtor becoming insolvent shortly after the transfer

are badges of fraud. Tex. Bus. & Comm. Code 24.005(b)(5), (9) (Vernon 2002). A

transfer made by a debtor is fraudulent as to a creditor whose claim arose before the transfer

was made if the transfer was made to an insider for an antecedent debt, the debtor was

insolvent at that time, and the insider had reasonable cause to believe that the debtor was

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insolvent.12 As noted above, Defendants allegedly tried to transfer everything to new


54. Both transfers to insiders and transfers for no consideration are considered

badges of fraud. Tex. Bus. & Comm. Code 24.005(b)(1), (8) (Vernon 2002). While a

close relationship between the transferor and transferee is not, standing alone, a badge of

fraud, it may in fact be a badge of fraud when considered in conjunction with other

suspicious circumstances. Wilhite, 636 S.W.2d at 856. Defendants as husband and wife

appeared to sign some documents while not signing others, this is believed to have been

done so that one of two or each of them can allege that the other was the one with the power

to perform certain tasks. With regard to close relationships between the transferor and

transferee, it is believed that discovery will prove that Defendants transferred assets from

one shell to another shell company.

55. It is believed that Defendants will claim and attempt to prove that they have

assets to satisfy a judgement when each Defendant moved around assets to allegedly

protect themselves. Plaintiffs are confident that Defendants fraudulently transferred assets

to other entities and possibly one of the two of Defendants names to attempt to avoid

liability. Therefore, if the transferee (either one of the Defendants) has either actual or

constructive knowledge of the debtor's intent, the transfer is void even where valuable

consideration is paid. Wilhite, 636 S.W.2d at 855. Constructive knowledge of the debtor's

fraudulent intent is present where the transferee "knows facts which would put a reasonably

Tex. Bus. & Com. Code 24.006.

Page 24 of 26
prudent person on inquiry and if diligence would lead to knowledge of the transferor's

fraudulent intent, the [transferee] is charged with constructive notice of the intent and is

not protected." Id. (quoting Creditors' Bills To Discover and Reach Property, in State Bar

of Texas, Creditors' Rights in Texas 14.43(a)(2), at 631 (2d ed. 1981)).



56. Plaintiffs reallege each and every allegation made in paragraphs 1-55 above

as if it were plead herein.

57. Texas Civil Practice and Remedies Code 73.001 defines the elements of

Libel and Slander. The Defendants published a statement of fact (see Exhibit I). The

statements contained therein reference Plaintiffs. The statements were clearly defamatory.

Each of the statements contained in Exhibit I were false. It is believed that when

Defendants published the statements they were acting with actual malice; were negligent

or liable without regard to fault. Because of the published statements Plaintiffs reputation

has been harmed.


58. Forbes, Inc. v. Granada Biosciences, Inc 124 S.W.3d 167, 170 (Tex.2003)

defines the elements of business disparagement. Defendants published disparaging

word/statements about the Plaintiffs economic interests. (see Exhibit I). The statements

contained therein were false. It is believed that when Defendants published the statements

they were acting with actual malice. The Defendants published the statements without

privilege of any kind. The publication caused special damages.

Page 25 of 26
59. Each of the facts stated herein are verified by Plaintiffs (see Exhibit J).


WHEREFORE, PREMISES CONSIDERED, Plaintiffs request, inter alia, the following


a. After trial upon the merits and proof presented at trial that all Plaintiffs
Actual damages be awarded; and
b. After trial upon the merits and proof presented at trial that all Plaintiffs
Exemplary damages be awarded;
c. After trial upon the merits and proof presented at trial that all Plaintiffs
Punitive damages be awarded;
d. After trial upon the merits and proof presented at trial that all Plaintiffs
reasonable and necessary attorneys' fees be awarded;
e. Any other and further relief that the Court considers just and proper.

Respectfully submitted,


P.O. BOX 2125
Austin, Texas 78768-2125
512-505-0053 tel
512-505-0054 fax

Jeffrey S. Kelly
State Bar No. 24043749
Keith S. McMahon
State Bar No. 24060992
Chad W. Eaton
State Bar No. 24056666

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