Richardson et al v. Schmidt et al

Filing 11

MEMORANDUM OPINION AND ORDER EXTENDING TEMPORARY RESTRAINING ORDER. (Ordered by Judge Sam A Lindsay on 12/10/2012) (tln)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
COLIN RICHARDSON,
derivatively on behalf of Sun River
Energy, Inc.,
Plaintiff,
v.
SUN RIVER ENERGY, INC.,
Nominal Defendant,
v.
DONAL R. SCHMIDT, JR., STEPHEN
W. WEATHERS, TIMOTHY S.
WAFFORD, DANIEL M. COFALL,
JUDSON F. HOOVER, MARK HALL,
SIERRA FOXTROT LP, SIERRA
FOXTROT GENPAR LLC, MAXWELL
RESOURCES, INC. f/k/a Mericol, Inc.
d/b/a Maxwell Technical Resources, and
JAMES E. PENNINGTON,
Defendants.

§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§
§

Civil Action No. 3:12-CV-5020-L

MEMORANDUM OPINION AND ORDER
EXTENDING TEMPORARY RESTRAINING ORDER
Before the court is Plaintiff’s Emergency Motion to Extend Temporary Restraining Order,
filed December 7, 2012. After careful consideration and conducting a hearing, the court grants
Plaintiff’s Emergency Motion to Extend Temporary Restraining Order.
Plaintiff originally filed this action in the 134th Judicial District Court, Dallas County, Texas,
on June 7, 2012. Plaintiff amended his pleading and filed Plaintiff’s Second Amended Verified
Shareholder Derivative Petition (“Petition”) on November 5, 2012. The 134th Judicial District

Memorandum Opinion and Order Extending Temporary Restraining Order - Page 1

Court issued a temporary restraining order on November 26, 2012, which expires today at 6:00 p.m.,
unless extended by this court. Defendant James Pennington (“Pennington”) removed this action to
federal court on December 6, 2012, contending that this court has jurisdiction over the action
because a federal question is presented by Plaintiff’s Petition.
All parties agreed to or had no objection to a seven-day extension of the temporary
restraining order. By agreeing to an extension, the parties acknowledge the requirements of Rule
65 of the Federal Rules of Civil Procedure and existing precedent have been met,* and that an
extension of seven days is proper. The question thus becomes whether the court should extend the
temporary restraining order beyond seven days. For the reasons stated below, the court concludes
that the temporary restraining order issued by the 134th Judicial District Court should be extended
beyond seven days.
In addition to the temporary restraining order, Plaintiff has also filed a motion to remand,
contending that this court lacks subject matter jurisdiction. The court believes that the issue of
jurisdiction should be decided as soon as possible and has ordered expedited briefing. The court
believes that the status quo should be preserved until it decides the issue of jurisdiction. It is beyond
cavil that a district court possesses inherent authority to preserve the status quo until it resolves the

*

There are four prerequisites for the extraordinary relief of a temporary restraining order. A court
may grant such relief only when the movant establishes that:
(1) there is a substantial likelihood that the movant will prevail on the
merits; (2) there is a substantial threat that irreparable harm will result if the
injunction is not granted; (3) the threatened injury [to the movant]
outweighs the threatened harm to the defendant; and (4) the granting of the
preliminary injunction will not disserve the public interest.
Clark v. Prichard, 812 F.2d 991, 993 (5th Cir. 1987); Canal Auth. of the State of Florida v. Callaway, 489
F.2d 567, 572 (5th Cir. 1974) (en banc).

Memorandum Opinion and Order Extending Temporary Restraining Order - Page 2

question of jurisdiction. Jones v. Belhaven Coll., 98 F. App’x 283, 284 (5th Cir. 2004) (citing
United States v. United Mine Workers of America, 330 U.S. 258, 292-93 (1947); United States v.
Hall, 472 F.2d 261, 265 (5th Cir. 1972)). The court therefore determines that the temporary
restraining order issued by the 134th Judicial District Court should be, and is hereby, extended to
December 24, 2012, 6:00 p.m.
Accordingly, it is ordered that each Defendant, Sun River, and all of their officers, directors,
agents, servants, employees, and attorneys, and all those in active concert or participation with them
who received actual notice of this temporary restraining order, are hereby immediately restrained
and enjoined from taking any and all actions consummating, effectuating, or assisting in the
following:
(1)

any and all performance, claims of default, payments, transfers, or other
actions under or with respect to the Secured Promissory Notes (the
“Notes”) and the Mortgage, Security Agreement, Financing Statement
and Assignment of Production and Revenue (the “Mortgage”) between
Sun River and Defendants Sierra Foxtrot, LP, Timothy S. Wafford, and
James E. Pennington, including, but not limited to, any claim, notice, or
attempt to enforce a default or foreclosure on the Notes and Mortgage;

(2)

any and all actions or entry into any contracts by Defendant Donal
Schmidt on behalf of Sun River to “enter into any contract on behalf of
the Corporation regarding the lease, purchase or sale of the
Corporation’s interests in its hard rock minerals, coal, timber, oil, gas,
and/or other minerals” in Colfax County without Board approval and
without providing notice to the parties; and

(3)

any and all issuances of shares of stock or the provision of any other
compensation, payments, bonuses, gifts, or other transfers by Sun River
to Defendants, provided that Sun River is permitted to continue its
payroll practices as have been followed in the ordinary course of
business since the execution of the Rule 11 Agreement of June 13, 2011,
and provided that Sun River need not give notice to Plaintiff prior to
making payroll.

The bond of $10,000 previously set by the 134th Judicial District Court remains in effect.
Memorandum Opinion and Order Extending Temporary Restraining Order - Page 3

It is so ordered this 10th day of December, 2012, at 4:10 p.m.

_________________________________
Sam A. Lindsay
United States District Judge

Memorandum Opinion and Order Extending Temporary Restraining Order - Page 4