Covarrubias v. Dukes et al

Filing 95

REPORT AND RECOMMENDATIONS re 86 Motion for Summary Judgment, filed by Ryerson & Associates, P.C., Carlos Ryerson. Signed by Judge Mark Lane. (jk)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
ADRIAN CERVANTES
COVARRUBIAS,
PLAINTIFF,
V.
GREGORY E. DUKES; HOUSTON
AVIATION TECHNICAL SERVICES,
INC.; ALLIANCE AIRPARTS, INC.;
CARLOS RYERSON;
RYERSON AND ASSOCIATES, P.C.;
AND MANAGEMENT BY GT
SERVICES, INC.,
DEFENDANTS.

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CAUSE NO. 1:14-CV-379-LY

REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO: THE HONORABLE LEE YEAKEL
UNITED STATES DISTRICT JUDGE
ON April 30, 2015, the Magistrate Court held a hearing on all pending motions in the
above-styled matter, and specifically [#86], the Motion for Summary Judgment filed by Carlos
Ryerson and Ryerson and Associates, P.C. (collectively, the “Ryerson Defendants”), and all
responsive briefing relating thereto. See Clerk’s Dkt. [#88, #90, #91, #92]. All dispositive
motions in this case have been referred to the undersigned by United States District Judge, Lee
Yeakel, for a Report and Recommendation as to the merits pursuant to 28 U.S.C. § 636(b), Rule
72 of the Federal Rules of Civil Procedure, and Rule 1(d) of Appendix C of the Local Rules of
the United States District Court for the Western District of Texas, and all nondispositive motions
have likewise been referred for resolution pursuant to 28 U.S.C. § 636(b)(1)(A), Federal Rule of
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Civil Procedure 72, and Rule 1(c) of Appendix C of the Local Rules of the United States District
Court for the Western District of Texas.
At the hearing, Cade Adams appeared for the Plaintiff, Adrian Cervantes Covarrubias.
Brett Hill and Ty Gibson 1 appeared on behalf of the Ryerson Defendants.

George Crow

appeared for defendant, Gregory Dukes. After carefully considering the arguments of counsel at
the hearing, reviewing the pending motion and related briefing, analyzing the relevant case law,
and viewing the motion in light of the entire case file, the undersigned issues the following
Report and Recommendation.
I. ALLEGATIONS OF EX PARTE CONTACT
First to be addressed at the hearing were statements allegedly made by Brett Hill, counsel
for the Ryerson Defendants, to either Cade Adams or his wife (and attorney partner), to the effect
that Mr. Hill had consulted with the undersigned and determined the undersigned “didn’t have
any problem” with Hill’s opposed motion to extend the deadline to file the dispositive motion
now under consideration. See Resp. Mot. Summ. J. [#88] at 1. At the hearing, Hill denied
suggesting that the Court had made any comment regarding the merits of his motion to extend
the deadline. Hill admitted, however, that in answer to a question from his opposing counsel to
the effect of “what is the Court going to think of your filing this frivolous motion?” he had
responded by stating that he had already spoken with the Judge about the motion and “didn’t
think the Court would care.”
The Court is sensitive to the difficult position Mr. Hill’s conduct and statements created
1

It does not appear from the Clerk’s records that Ty Gibson is currently admitted to practice in the Western District
of Texas. Mr. Gibson stated at the hearing that he was appearing for the Ryerson Defendants, but made no argument
or otherwise participated on their behalf. Should Mr. Gibson intend to further represent the Ryerson Defendants, he
is advised that he must file a motion for admission pro hac vice and a notice of appearance before he will be heard to
speak for any party in this matter. See Local Rule AT-1, Admission and Discipline of Attorneys.

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for Mr. Adams.

Faced with either version of the statement that Mr. Hill allegedly made

concerning his contact with the Court over a contested motion, Mr. Adams was justified in
thinking the Court “had no problem with” or “didn’t care” about granting the motion for
extension because of some argument or commentary made by Mr. Hill ex parte. The Court
admonished Mr. Hill that any statement to opposing counsel intimating that an attorney has
spoken with a judge about a pending motion is highly improper, as it inherently carries the strong
implication that the judge has somehow already chosen sides in the matter. The Court further
admonished Mr. Hill not to call the undersigned’s chambers again for any reason, in this or
future litigation before this Court.
Fortunately, the actual call that took place was not a violation of the rules against ex parte
conduct.

The Code of Judicial Conduct for United States Judges addresses ex parte

communications in Canon 3, Subsection (A)(4). Specifically, ex parte communication is not
objectionable if the communication is for scheduling or administrative purposes, does not
address substantive matters, and “the judge reasonably believes that no party will gain a
procedural, substantive, or tactical advantage as a result of the ex parte communication.” Id.
at § (A)(4)(b). In this case, Mr. Hill had made a series of calls to chambers with procedural
questions, each of which the undersigned’s staff had told him could not be answered by the
Court. On this occasion, the undersigned stepped in to prevent Mr. Hill from continuing to place
his staff in this awkward position. The undersigned specifically told Mr. Hill to file whatever, in
his judgment, needed to be filed, and the Court would rule on it. The undersigned told Mr. Hill
that, as a trial court, we can only react to filings actually made, and cannot give legal advice.
Nothing in Mr. Hill’s phone conversations, either with chambers staff or on this single
occasion with the undersigned, could reasonably have given Mr. Hill any procedural,
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substantive, or tactical advantage. In Mr. Hill’s multiple calls to chambers staff, he never spoke
with any law clerk actually assigned to this case. The term clerk with whom he did speak on
several occasions consistently and properly told him that she could not give him advice on how
or what to file in his case. The undersigned’s only conversation with Mr. Hill was likewise to
inform him that this chambers does not give legal advice and can only rule on motions properly
filed.
Furthermore, with regard to the specific motion in question, it is not the practice of the
Magistrate Court to move a dispositive motion deadline set by the District Court without first
conferring with the District Court about the potential impact of such a change on its heavy trial
docket. Thus, once Mr. Hill actually filed his motion for extension, it was granted only after the
undersigned’s staff attorney consulted with the District Court concerning the merits of the
proposed extension.
At the hearing, Mr. Adams agreed that these facts “put the matter to bed” and he had no
further concerns that the Court’s judgment had been tainted by Mr. Hill’s ex parte
communication. Given Mr. Hill’s relative inexperience and clear lack of ill intent, the
undersigned believes no sanction or further disciplinary action against Mr. Hill is necessary,
beyond the admonishment made in open court to make no further calls to chambers for any
reason and to conduct any business with the court either through motion practice or letter
briefing copying opposing counsel.
II. MOTION FOR SUMMARY JUDGMENT
The motion to extend the deadline having been granted, see Order of March 25, 2015
[#84], and the propriety of that determination having been established at the hearing, the
Magistrate Court next considers the Ryerson Defendants’ Motion for Summary Judgment. For
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the reasons below, the undersigned RECOMMENDS the District Court GRANT the motion.
A. BACKGROUND
This case arises out of Plaintiff’s allegations that Defendant Gregory E. Dukes (“Dukes”)
stole Plaintiff’s private airplane in May of 2012 by forging a Bill of Sale transferring the aircraft
from Plaintiff’s company, Falcon N297PF, LLC (“The Company” or “Falcon”) to Dukes. Third
Am. Compl. [# 43] at ¶ 13. Plaintiff asserts Dukes sold the aircraft for parts in August of 2012.
Id. According to Plaintiff, Dukes’ theft of the airplane was made possible by breaches of
contract and fiduciary duty committed by Plaintiff’s former lawyer, Carlos Ryerson. Id. at ¶ 11.
Plaintiff’s account of Ryerson’s role in the drama, supported by documentation entered into the
record by Plaintiff or produced in discovery by Plaintiff, is as follows:
In Plaintiff’s own words, he hired Carlos Ryerson “in order to hold legal title to the
Aircraft in trust for the benefit of Plaintiff in an effort to effectuate registration of the Aircraft in
the United States on the Federal Aviation Administration’s (herein referred to as “FAA”)
Registry as a United States Citizen.” Id. (emphasis added). As Plaintiff candidly admits,
“Ryerson accomplished this task by forming a Delaware Limited Liability Company under the
name Falcon N297PF, LLC, [“the Company” or “Falcon”] and by placing title into and by
registering the Aircraft in the name of this Limited Liability Company . . ..” Id. 2
Plaintiff complains that, in the course of these actions, Ryerson breached fiduciary and
contractual duties to him by failing to file an affidavit of citizenship or a copy of the parties’
“Trust Agreement” with the FAA “as required under the Federal Aviation Regulations.” Id. As

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Plaintiff incorrectly refers to Falcon N297PF, LLC as “the Trust” throughout the remainder of the Third Amended
Complaint and other briefing. Id. As detailed above, the Trust consisted of the membership interests in the
Company, held in trust for Covarrubias, but did not confer any right of control over the Company and never
consisted of any ownership interest in the airplane, which was an asset of the Company.

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Plaintiff correctly points out, FAA Regulation 14 C.F.R. 14.47-7, allowing the creation of “noncitizen trusts,” would have required Ryerson to file documents with the FAA disclosing the
interest of Plaintiff, a non-U.S. citizen, in any trust that owned the airplane. Id. at ¶ 21. But the
aircraft was never owned by a non-citizen trust. See Resp. Mot. Summ. J. Ex. 1-10, Bill of Sale
to Falcon and FAA Registration to Falcon. The plane was owned by the Company, Falcon,
whose sole member was Ryerson, a U.S. citizen. Id.
Ryerson, in his capacity as the sole Member of the Company, caused Falcon to create a
Trust in which Ryerson was the “Owner Trustee” and Covarrubias was the “Beneficiary.” Resp.
[#88] at Ex. 1-7, Declaration of Trust, at 1. The aircraft, however, was never part of the Trust
Estate. Id. Instead, the Trust Estate consisted of the Membership Units in the Company. 3
Id. at 1. The stated purpose of the Trust was “to ensure the eligibility of the aircraft owned or to
be owned by the Company, . . . for United States Registration with the Federal Aviation
Administration.” Id. at 1 (emphasis added).
Plaintiff himself has tendered evidence that Ryerson did, in fact, place title to the aircraft
into the Company and register the aircraft to the Company in documents filed with the FAA.
Resp. to Mot. Summ. J. [#88] at Ex. 1-10, July 24, 2009 Bill of Sale to Falcon; see also id.,
August 10, 2009 Registration of Aircraft to Falcon. The aircraft was thus registered to a “United
States Citizen” within the definition of FAA regulations—the very thing Plaintiff asserts he hired
Ryerson to do. Third Am. Compl. [#43] at ¶ 11; see also 14 C.F.R. 47.2(3) (defining “United
States Citizen” as including organizations managed and controlled by U.S. Citizens.)
On November 9, 2011, via Resolutions Adopted by Unanimous Consent, Ryerson

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The terms of the Declaration of Trust expressly stripped the Beneficiary of any right to direct the Owner Trustee
with respect to the Membership Units or otherwise control the Company through the Trust. Id. at Art. III.

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resigned as the sole Manager and Treasurer of the Company, “effective immediately after the
execution of these resolutions.” Resp. Mot. Summ. J. [#88] Ex. 2, Resolutions Adopted by
Unanimous Consent.

These final resolutions also “accepted, approved, and ratified” the

resignation of Capt. José de Jesús Bautista López as EVP of Global Operations and Secretary of
the Company, and from “all other positions of authority in the Company.” Id.
Ryerson sent Plaintiff a letter, also dated November 9, 2011, enclosing a copy of the
Resolutions by which Ryerson, as sole member of Falcon, accepted Bautista’s resignation and
himself resigned from all management roles in the Company. Mot. Summ. J. [#86] Ex. 2. 4 In
this letter, Ryerson also notified Plaintiff of Ryerson’s immediate resignation as Owner Trustee
of the Trust, and tendered to Plaintiff all the Membership Units of the Company. Id. The letter
noted that the aircraft was no longer registered in the United States, and therefore it was no
longer necessary to hold the Membership Units in trust. Id. Finally, the letter noted that Ryerson
was that day delivering the books and records of the Company to William H. Weiland, a
representative of Plaintiff, to be forwarded to Plaintiff’s legal counsel in Mexico City. Id.
Plaintiff, on November 9, 2011, “being the sole member of Falcon N297PF, LLC (‘the
Company’),” appointed himself Manager of the Company and approved, ratified, and adopted
the “actions taken on behalf of the Company . . . to remove [the aircraft] from the Civil Aviation
Registry maintained by the United States Federal Aviation Administration . . ..” Third Am.
Compl. [# 43], Ex. 1. Thus, the documents produced in this litigation by the Plaintiff alone
establish that on November 9, 2011, Plaintiff owned and was the sole manager of the Company,

4

Plaintiff asserts he produced this Letter of Resignation in discovery on at least two occasions as Bates Number
JA00217. See Pf’s Resp. to Df. Carlos Ryerson’s Mot. to Extend Deadline to File Disp. Mots. [#81] at 2. Given
Plaintiff’s production of the letter in response to discovery requests concerning this matter, the vague intimations
made by Plaintiff’s counsel that the letter is unathenticated are not well taken.

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Falcon; the Company continued to own the aircraft, 5 which had been removed or was in the
process of being removed from the FAA’s domestic registry; and Carlos Ryerson had no
continuing role in the Company or the Trust. Third Am. Compl. [#43], Ex. 1, Mot. Summ. J.
[#86] Ex. 2; Resp. Mot. Summ. J. [#88] Ex. 2.6
Plaintiff, as the sole Member of the Company that owned the plane at the time of Dukes’
alleged forged Bill of Sale, admits he was aware of the forged bill of sale as early as July 20,
2012. Id. at ¶ 14. Yet the record is silent as to any action taken by Plaintiff—or the Company
under Plaintiff’s sole control—to contest the validity of Dukes’ bill of sale until November 2012,
long after Dukes had sold the plane for parts. Id. at ¶ 14. Plaintiff nevertheless asserts he is
entitled to damages because Ryerson’s 2009 registration of the plane to the LLC, instead of to a
non-citizen trust, and Ryerson’s 2011 resignation as a trustee constituted negligence, breach of
contract, and breach of fiduciary duty that facilitated the theft of the plane by Dukes in 2012.
B. STANDARD OF REVIEW
Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure
only “if the movant shows there is no genuine dispute as to any material fact and that the movant
is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute is genuine only if
the evidence is such that a reasonable jury could return a verdict for the nonmoving party.
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At some time after this suit was filed, Plaintiff caused the Company to transfer all right, title, and interest to the
aircraft and to “any and all claims it could have brought in the above referenced Lawsuit” to the Plaintiff
individually. The purported transfer of the Company’s interest in the aircraft to Plaintiff in 2014, after suit was
filed, does not create an ownership interest in the Plaintiff that predates this transfer. To the extent the Company has
transferred its causes of action to Plaintiff, Plaintiff stands in the shoes of the Company and can assert only the
claims available to the Company arising out of these facts.
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On July 7, 2014, Plaintiff retroactively dissolved the Trust, effective November 9, 2011. As the Trust estate
consisted solely of the Membership Interest in the Company, which was conveyed to Plaintiff by Ryerson on
November 9, 2011, it appears the Trust was effectively dissolved as of that date, when Plaintiff declared himself the
sole Member of the Company. It is thus not clear what purpose the retroactive dissolution of the Trust serves, other
than to confirm Plaintiff’s intention to take control of the Company and its assets as of November 9, 2011 rather
than continuing his role as the non-controlling Beneficiary of a Membership Interest held in trust by another party.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254,106 S. Ct. 2505, 2513 (1986).
The party moving for summary judgment bears the initial burden of “informing the
district court of the basis for its motion, and identifying those portions of [the record] which it
believes demonstrates the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett,
477 U.S. 317, 323, 106 S. Ct. 2548, 2553 (1986). The burden then shifts to the nonmoving party
to establish the existence of a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 585–87,106 S. Ct. 1348, 1355-56 (1986); Wise v. E.I. Dupont de
Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). The parties may satisfy their respective
burdens by tendering depositions, affidavits, and other competent evidence. Estate of Smith v.
United States, 391 F.3d 621, 625 (5th Cir. 2004).
The Court will view the summary judgment evidence in the light most favorable to the
non-movant. Griffin v. United Parcel Serv., Inc., 661 F.3d 216, 221 (5th Cir. 2011). The nonmovant must respond to the motion by setting forth particular facts indicating that there is a
genuine issue for trial. Miss. River Basin Alliance v. Westphal, 230 F.3d 170, 174 (5th Cir.
2000). “After the non-movant has been given the opportunity to raise a genuine factual issue, if
no reasonable juror could find for the non-movant, summary judgment will be granted.” Id.
C. ANALYSIS
Breach of contract, negligence, and breach of fiduciary duty all have two basic elements
in common. Each requires the plaintiff to establish the existence and breach of a duty owed by
the defendant to the plaintiff, and each requires the plaintiff to establish a causal connection
between the breach and some compensable damage. See, e.g., Myers v. Hall Columbus Lender,
LLC, 437 S.W.3d 632, 635 (Tex. App.—Dallas, 2014, no pet.) (setting out the elements of
breach of contract); Nabors Drilling, U.S.A. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009) (setting
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out the elements of negligence); Barrow v. Arce, 997 S.W.2d 229, 237 (Tex. 1999) (setting out
the elements of breach of fiduciary duty). Reading the summary judgment evidence in this
matter in the light most favorable to Plaintiff, the non-movant, the record is devoid of any
evidence that Ryerson had a duty to the Plaintiff at any time after November 9, 2011. As the
plane was allegedly stolen in May of 2012, there is no evidence Ryerson owed Plaintiff a duty
during the relevant time period. To the extent Ryerson allegedly breached duties owed to
Plaintiff prior to November 9, 2011, there is no evidence in the record that any of those alleged
breaches caused the theft of the plane, impaired Plaintiff’s knowledge of the theft or ability to
take action concerning the theft, or otherwise damaged the Plaintiff or unjustly enriched the
Ryerson Defendants.

Summary judgment in favor of the Ryerson Defendants is therefore

appropriate.
1. No Evidence of a Duty Owed to Plaintiff During the Relevant Time Period
The relevant documents terminating Carlos Ryerson’s duties to the Plaintiff are the
Resolutions Adopted By Unanimous Consent dated November 9, 2011, Resp. Mot. Summ. J.
[#88] Ex. 2, and the letter of resignation as Trustee, dated November 9, 2011, Mot. Summ. J.
[#86] Ex. 2. At the hearing, Plaintiff’s counsel argued the documents leave a fact issue as to
whether Ryerson’s resignation from the Company was effective on November 9, 2011 or was
contingent on the resignation of Bautista from the company at some later date. However, the
plain language of the Resolutions, in relevant part, states:
RESOLVED, that the resignation of Carlos Ryerson as the sole Manager and
Treasurer of the Company effective immediately after the execution of these
resolutions, and the resignation of Capt. José de Jesús Bautista López, as EVP of
Global Operations and Secretary of the Company, and from all other positions of
authority in the Company, be, and the same hereby are, accepted, approved, and
ratified for all purposes . . . .

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Resp. Mot. Summ. J. [#88] Ex. 2 (emphasis added). Nothing in this language makes Ryerson’s
resignation dependent on Bautista’s, or conditions either resignation on some future event.
Rather, Bautista’s resignation is accepted in this Resolution by Ryerson as Manager, and
Ryerson’s resignation is effective immediately after the execution of this Resolution. Id. There
is no evidence in the record that Ryerson held any position of authority in the Company after this
November 9, 2011 resignation.
Plaintiff has argued that, notwithstanding Ryerson’s clear tender of his resignation on
November 9, 2011, the Trust document rendered Ryerson’s resignation ineffective until a
successor was appointed. But Plaintiff’s decision, prior to filing suit, to backdate his July 7,
2014 dissolution of the trust to coincide with same day as Ryerson’s resignation effectively
negates any continued need for a trustee after November 9, 2011. Third Am. Compl. [#43]
Ex. 2.
Even without giving the 2014 dissolution of the Trust retroactive effect, the plain
language of the Declaration of Trust does not support Plaintiff’s argument that Ryerson owed
any duties as Trustee in May of 2012, some seven months after he tendered his resignation. The
Declaration of Trust states that the “Owner Trustee may resign at any time upon giving thirty
(30) days prior written notice of such resignation to the Trustor. Such resignation shall take
effect only upon the appointment of a successor trustee pursuant to Section 2.05 . . ..” Resp.
Mot. Summ. J. [#88] Ex. 1-7, Sec. 2.03. That section, in turn, requires “Promptly upon the
removal, resignation, or vacancy of an Owner Trustee . . . a successor trustee shall be appointed
by a written instrument signed by the Beneficiary.” Id. at Sec. 2.05. In this case, the Beneficiary
did not appoint a successor trustee at all, but instead waited until July 7, 2014 to dissolve the
trust entirely (an action he declared retroactive to November 9, 2011). Third Am. Compl. [#43]
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Ex. 2.
Plaintiff’s delay of almost three years before addressing the issue of a successor trustee
surely breaches the requirement of “prompt appointment” found in Section 2.05 of the
Declaration of Trust. See CherCo Props, Inc. v. Law, Snakard, & Gambill, P.C., 985 S.W.2d
262, 266 (Tex. App.—Fort Worth, 1999, no pet.) (when a contract does not specify a time for
performance, the “the law will imply a reasonable time”); see also DaimlerChrysler Motors Co.,
LLC v. Manuel, 362 S.W.3d 160, 172 (Tex. App.—Fort Worth, 2012, no pet.) (“‘[R]equiring
contracting parties to fix a date certain in order to set a temporal guideline in which to complete
a certain task demands more definiteness than Texas law requires.’”) (quoting Herrmann
Holdings, Ltd. v. Lucent Technologies, Inc., 302 F.3d 552, 556 (5th Cir. 2002), emphasis added).
Ordinarily, what constitutes a reasonable time is a question of fact, but when the underlying
timeline is admitted or undisputed, the reasonableness of performance can be determined as a
matter of law. CherCo Props., 985 S.W.2d at 266. Plaintiff’s undisputed delay in taking action
to dissolve the trust until July 7, 2014 is not reasonably prompt as a matter of law. Third Am.
Compl. [#43] Ex. 2; see, e.g., Miller v. Carter, 2012 Tex. App. LEXIS 7255, n.5 (Tex. App.—
Dallas 2012, pet. rev. denied) (“Failing to complete a project that was supposed to require 7-10
working days within four months does not constitute performance within a reasonable time”).
Because Plaintiff was required to appoint a successor trustee “promptly,” he cannot claim
Ryerson’s resignation was held hostage until 2014 by his failure to take action. Resp. Mot.
Summ. J.[#88] Ex. 1-7, Sec. 2.05. By the same reasoning, Plaintiff cannot claim that Ryerson’s
resignation remained in limbo until May of 2012, seven months after his written resignation
triggered Plaintiff’s “prompt appointment” duty. Id.
At the hearing, counsel for Plaintiff argued in the alternative that an “Operating
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Agreement” provides some evidence that Ryerson continued to hold positions of responsibility
with respect to the aircraft after November 9, 2011. There are two Operating Agreements in the
record:

the Operating Agreement of Falcon N297PF, LLC (the “Company Operating

Agreement”), Resp. Mot. Summ. J. [#88] Ex. 1-4, and the Aircraft Operating Agreement, id. at
Ex. 1-9.
To the extent Plaintiff relies on the Company Operating Agreement to create a continuing
duty owed by Ryerson after his resignation, this document provides “A manager shall serve until
a successor is elected by the Members.” Id. at Art. III, §1(b). Ryerson resigned as manager on
November 9, 2011. Covarrubias, as sole Member of the Company, elected himself Manager
effective November 9, 2011, the same day Ryerson resigned. Third Am. Compl. [# 43], Ex. 1.
There is thus no evidence this term of the Operating Agreement held Ryerson in a position of
control within the Company after his resignation date. The Company Operating Agreement
allows the resignation of officers at any time. Resp. Mot. Summ. J. [#88] Ex. 1-4 at Art. III, §
2(b). The Company Operating Agreement also specifically allows the withdrawal of a Member:
“Withdrawal by a Members [sic] is not a breach of this Agreement.” Id. at Art. VII, §1(a).
Thus, nothing in the Company Operating Agreement invalidates or qualifies Ryerson’s
resignation.
To the extent Plaintiff relies on the Aircraft Operating Agreement to suggest Ryerson had
ongoing contractual and fiduciary duties to Plaintiff after his resignation from the Company and
the Trust, the Aircraft Operating Agreement expressly negates this argument. The Aircraft
Operating Agreement specifies that it “shall terminate upon the effective date of (i) any
removal, resignation, or cessation of citizenship of the Owner as trustee under the Trust
Agreement in accordance with the terms thereof or (ii) the termination, for any reason, of the
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Trust Agreement.” Id. at Ex. 1-9, ¶ 15 (emphasis added). The plain language of the Aircraft
Operating Agreement thus establishes the parties intended any duties running between the Owner
(Falcon, as held in trust by Ryerson) and the Operator (Intergalactic Air, LLC) to terminate when
Ryerson tendered his resignation as Trustee of the Owner Company.
Plaintiff has entered into the record a public filing establishing that that Intergalactic Air,
LLC, the Operator under the Aircraft Operating Agreement, was jointly managed by Ryerson
and Bautista as of December 31, 2015. Resp. Mot. Summ. J. [#88], Ex. 3. At the hearing,
Plaintiff’s counsel contended Ryerson and Bautista were the managers of Intergalactic Air at the
time of the dispute in question, and because Ryerson “wore a lot of hats” with respect to the
aircraft transaction, there was necessarily a fact issue as to his role in the alleged theft of the
plane. Plaintiff has provided no evidence, however, of any abuse of the corporate form or any
manner in which Ryerson, in any of his multiple roles, had any continuing responsibility to
Plaintiff after November 9, 2011. 7
Absent some duty that existed at the time of the alleged breach, Plaintiff’s claims of
breach of contract, negligence, and breach of fiduciary duty must fail. See, e.g., Allen Keller Co.
v. Foreman, 343 S.W.3d 420, 426 (Tex. 2011) (where contractor had finished work and “vacated
the premises more than four months before the accident occurred,” the contractor had “no duty to
rectify the site conditions or to warn of them”); Joe v. Two Thirty Nine J.V., 145 S.W.3d 150,
159 (Tex. 2004) (“Generally, a lawyer’s fiduciary duties to a client, although extremely
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Plaintiff has already asserted, in seeking summary judgment against another defendant, Gregory Dukes, that the
purported bill of sale from Falcon to Dukes signed by Ryerson, first as President and then as Manager, in December
of 2011 (filed with the FAA by Dukes in May of 2012) is a forgery. Having taken this position and relied on
Ryerson’s affidavit of forgery in asking this Court for summary judgment against Dukes, Plaintiff cannot now be
heard to argue that Ryerson actually signed the bill of sale for purposes of establishing a fact issue against him. See,
e.g., Hall v. G.E. Plastic Pac. PTE, Ltd., 327 F.3d 391, 396 (5th Cir. 2003) (“Judicial estoppel prevents a party from
asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier
proceeding.”) (emphasis added); Ergo Science v. Martin, 73 F.3d 595, 599–600 (“What is clear is that the district
court, as a matter of federal procedure, is entitled to rely on statements made by counsel . . ..”).

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important, extend only to dealings within the scope of the underlying relationship of the
parties.”) (internal quotation omitted); Shindler v. Mid-Continent Life Ins. Co., 768 S.W.2d 331,
335 (Tex. App.—Houston [14th Dist.] 1989, no writ) (no cause of action was available against a
party to the contract for alleged misconduct that took place after the contract had already
terminated). Nor can Plaintiff claim that Ryerson owed some independent duty to prevent the
forgery, as Texas law generally provides no duty to control the conduct of third persons. Loram
Maint. of Way, Inc. v. Ianni, 210 S.W.3d 593, 596–97 (Tex. 2005).
2. No Evidence Alleged 2008–2011 Breaches Caused or Contributed to 2012 Theft
Plaintiff nevertheless contends that Ryerson’s legal advice and actions during the period
2008 through 2011, when he was acting as an attorney, Manager of the Company, and Owner
Trustee of the Company, damaged Plaintiff, and that ongoing damage extended to theft of the
aircraft in 2012. Plaintiff’s argument on this point seems to be that Ryerson, by structuring the
Company and Trust as he did, essentially wrote Plaintiff out of the aircraft’s chain of title.
Plaintiff contends that, because Ryerson structured the aircraft’s chain of title to exclude
Plaintiff’s personal interest in the plane, Plaintiff was hampered in his ability to prevent Dukes
from forging the bill of sale and ultimately prevented from obtaining relief from Alliance Air
Parts, who bought the airplane as an innocent purchaser without notice of Plaintiff’s interest.
The record constructed by Plaintiff’s own documentation and factual contentions,
however, establishes that (1) at the time Greg Dukes filed the allegedly forged bill of sale with
the FAA, Plaintiff was the sole Member and Manger of the Company, Falcon, that actually
owned the aircraft, see Third Am. Compl. [#43], Ex. 1; and (2) Plaintiff had actual knowledge of
the forged bill of sale on or about as July 20, 2012, a full month before Dukes sold the aircraft to
Alliance Air Parts on or about August 23, 2012. Id. at ¶¶ 13–14. Thus, even if Plaintiff’s
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individual interest, or interest as the beneficiary of a non-citizen trust, was not reflected in the
chain of title constructed by Ryerson in 2008, there is no evidence that Plaintiff’s interests were
excluded from the chain of title in 2012, as he was the owner and manager of the Company that
held title to the aircraft and he had actual knowledge of the allegedly fraudulent bill of sale
before Dukes sold the aircraft to an innocent third party. There is no evidence in the record that
anything Ryerson did or failed to do while performing as attorney for Plaintiff, Manager of the
Company, Trustee of the Trust, or in any other capacity impaired Plaintiff’s standing or ability to
raise timely objections to the allegedly fraudulent bill of sale filed by Dukes in May of 2012.
Without this essential element of causation, Plaintiff’s claims for breach of contract, negligence,
and breach of fiduciary duty must fail.
D. RECOMMENDATION
For the reasons outlined above, the undersigned RECOMMENDS that the Ryerson
Defendants’ Motion for Summary Judgment [#86] be GRANTED and all of Plaintiff’s claims
against Carlos Ryerson and Ryerson & Associates, P.C. be DISMISSED WITH PREJUDICE.
III. OBJECTIONS
The parties may file objections to this Report and Recommendation. A party filing
objections must specifically identify those findings or recommendations to which objections are
being made. The District Court need not consider frivolous, conclusive, or general objections.
See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party’s failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the
Report shall bar that party from de novo review by the District Court of the proposed findings
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and recommendations in the Report and, except upon grounds of plain error, shall bar the party
from appellate review of unobjected-to proposed factual findings and legal conclusions accepted
by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150–53, 106
S. Ct. 466, 472–74 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428–29 (5th
Cir. 1996) (en banc).
To the extent that a party has not been served by the Clerk with this Report and
Recommendation electronically, pursuant to the CM/ECF procedures of this District, the Clerk is
ORDERED to mail such party a copy of this Report and Recommendation by certified mail,
return receipt requested.
SIGNED on May 7, 2015.
__________________________________________
Mark Lane,
United States Magistrate Judge

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