StatementbyAnthonyAlardin WhileIhaverespectinthejudicialsystem,myfaithistarnished.Icouldnotagreelesswiththe 5thCourtofAppealsopinion. OnMarch7,2011,the5thCourtofAppealsintheStateofTexasreversedinpartajuryverdict fromthe160thDistrictCourtinDallas.The5thCourtofAppealsthrewouta$3mjudgment againstGreggHossbutallowedthejudgmentinthatsamecaseagainstAlardintostand.So insteadofHossowingAlardinover$2m;AlardinwasleftowingHossnearly$200k. Thisnullificationofthejuryverdictinacivilbusinessdisputewasmadepossiblebyalong overdueyetconvolutedandcontradictoryopinionwrittenbyJusticeKerryFitzgerald.The CourtsopinionappearstohavecomefromalightobviouslymorefavorabletotheHoss parties.TheCourtwasnotdeferentialtothejuryverdictandappearstohaveignored importantevidencethatthejuryandlowerCourtdidnot.ThejurybelievedAlardinsclaimshad meritandwastheharmedparty,JusticeKerryFitzgeraldandthe5thCourtofAppealsdidnot. FortheAppellateCourttoassertthattherewasntascintillaofevidencetosupportAlardins positiononeachandeverypointtheyclaimisrequiredisabsolutelyuntrue.

FortheAppellate CourttoconcludesuchdemonstratestheevidencefocusedontooverturntheDistrictCourt thusnullifythejuryverdictwascherrypicked.AsHosshadpostedanearly$4MAppealBond, thatnullificationsavedtheinsurancecompanythatwrotethebondalargepayout.Thereare currentstudiespublishedbylawjournalsthatconcludejurynullificationoncases(suchasthis) withlargedamageawardsisarecurringthemeintheTexasCivilCourtsystemoflate. http://www.dallasnews.com/business/headlines/20120430texasappellatecourtsoften reverseciviljuryverdictsstudyfinds.ece?nclick_check=1 Itisdishearteningtobelievethefoundationofajudicialopinionmaybegroundedinpolitical ideologyorotherreasonsasopposedtowhatisjust.WhileIhavenoevidencesuchappliesin thiscase;therationaleforjurynullificationinthiscaseinvitesscrutinyofthepersonbehindthe opinion.Lookattheevidenceforyourself. IamnotalawyerbutwilldomybesttolayoutwhereJusticeKerryFitzgerald,writingforthe 5thCourtofAppealsgotitverywrong.Acarefulstudyofthiscaseandevidentiaryexhibits demonstratethelowregardthisCourtandthisJusticehaveforaciviljuryverdict.Thiscase invitesscrutinyastowhetherthereversalmaybegroundedinsomethingotherthanwhatis rightandjust. Itisobviousthe5thCourtofAppealsinTexasdidnotadheretotheverystandardforreview theystateasnecessarytooverturnajurysverdict. Thelogicbehindthe5thCourtofAppealsopinionwrittenbyJusticeKerryFitzgerald overturningtheDallasDistrictCourtjurysverdictisinaccurateandconvolutedinreasoning.

TheAppealsCourtappearstoclaimthatthebulkoftheevidencesupportingAlardinsposition ishisowntestimony,whichissimplyuntrue. TheAppellateCourterredinrulingtherewasnopartnership.Allrequirementsnecessaryfora partnershipwereapplicableandproven.Alardincontendsthatifthejurysverdictistobe vacatedthenhedeservedanewtrialattheleast. 1.Standardofreview(Page5oftheCourtofAppealsOpinion) Whenanappellantattacksthelegalsufficiencyoftheevidencetosupportanadverse findingonanissueonwhichitdidnothavetheburdenofproof,itmustdemonstrate thatnoevidencesupportsthefinding.Cerullov.Gottlieb,309S.W.3d160,165(Tex. App.Dallas2010,pet.denied).Whenevidenceissoweakastodonomorethan createasurmiseorsuspicionofthemattertobeproved,theevidenceisnomorethana scintillaand,inlegaleffect,isnoevidence.Guevarav.Ferrer,247S.W.3d662,668 (Tex.2007)(internalquotationsandcitationomitted).Theevidenceislegallysufficientif itissufficienttoenablereasonableandfairmindedpeopletoreachtheverdictunder review.CityofKellerv.Wilson,168S.W.3d802,827(Tex.2005). Inconductingourreview,weviewtheevidenceinthelightmostfavorabletothe verdictandindulgeeveryreasonableinferencethatwouldsupportit.Id.at822.We mustcreditevidencefavorabletotheverdictifareasonablepersoncould,andwemust disregardcontraryevidenceunlessareasonablepersoncouldnot.Id.at827.Jurorsare thesolejudgesofthecredibilityofthewitnessesandtheweighttogivetheir testimony.Id.at819(footnoteomitted).Butthejurys credibilitydeterminationsmust bereasonable;[j]urorscannotignoreundisputedtestimonythatisclear,positive, direct,otherwisecredible,freefromcontradictionsandinconsistencies,andcouldhave beenreadilycontroverted.Id.at820. ThejuryansweredyestoQuestion16ofthejurycharge,whichinquired,Didapartnership existbetweenAnthonyAlardinandGreggHoss? PartnershipclaimsWhileweproducedcompellingevidenceoneachpointnoneismore blatantlywrongthanthefollowing. (Page14oftheOpinion) C) Control:TheAppellateCourtisincorrectinsayingAlardindidnothave"control". WhileAlardinmayhavetestifiedtodeferringtoGreggHossknowledgeandexperience, AlardinheldcontrolwithGreggHossandneverstatedotherwise. AlthoughAlardinobviouslyparticipatedintheworktoadvancetheSiteWatchproject, Alardincitesnoevidenceshowingthatheexercisedauthorityoverthebusinesss operationsormadeanyofitsexecutivedecisions.Hecitesonlyevidencetendingto showthathedirectedtheHECemployeesthatHossassignedtotheSiteWatchproject.

TheevidenceofcontrolinthiscaseiscomparabletothatinKnowlesv.Wright,288 S.W.3d136(Tex.App.Houston[1stDist.]2009,pet.denied).Inthatcase,Knowles claimedthatheandWrighthadformedapartnership,butheacknowledgedthathehad nosignatoryauthorityforthepartnershipandthathedidnothaveanyauthorityto overrideWrightsdecisions.Id.at147.AlthoughKnowlestestifiedthatheandWright madedecisionstogether,histestimonymadeitclearthathehadnocontroloverthe purportedpartnershipandthatWrightretainedultimatecontroloverbusiness decisions.Id.Inthiscase,Alardinadducednoevidencethatheparticipatedinthe controlofthebusinessorhadanyrightofcontrolexcepttodirecttheHECemployees thatHossassignedtotheSiteWatchproject.AndheacknowledgedthatHosshadthe ultimatepowertodecidewhetheranythingwasdoneornotdoneontheproject. Knowlesv.Wrightdoesnotapplyinthiscaseatall.TheAppellateCourthadtocherrypick testimonytodeterminethis.AlardintestifiedthatGreggHosswashismentorandwhilehe deferredtowardhisjudgment,Alardindidrunthedaytodayoperationsandhadeveryright andauthoritytodootherwiseifhesawfit. ItappearsinthisareatheAppellateCourttakesapositionhereneitherpartyclaimed.Itwas neverdisputedthatAlardinparticipatedinthecontrolofthebusiness/partnershipthatbecame SiteWatchLLC.AlardinclaimedherandaytodayoperationsandGreggHosswashispartnerin theentity.GreggHosspositionwasthatSiteWatchLLCwasAlardinsbusinessandthatHoss wasonlythebankandhadNOCONTROLovertheentity.TheAppellateCourtseemsto contradictbothsidesandventuresoutonitsown.IfAlardindidnothavecontrolofSiteWatch LLCistheCourtstatingthatGreggHossdid?IfHossdidhavecontrolthenhowishenota fiduciarypartnerintheentityhecontrolled? Attrial,thejuryappearstohavebelievedAlardinssidecompletely;thatassumptioncanbe gleanedfromtheirverdict.Butitcutbothways;BecauseAlardinsearlynotesappearto contradictlaterclaimsandfindings.ThecontradictionisactuallyjustnomenclaturewhichIwill addressindetailfurtheron. WhereAlardinsnotescontradictHossaccountingpaperworkthejurybelievedAlardins notes.Asshownintheevidence,severalHECinvoicespaidtoRMTwhichAlardininaccurately referredtoinhisearlynotesasloansratherthancontributionstothepartnershipThejury believedAlardinnotesandawardedHossdamagesfortheloansAlardinreferredto.Yet thesewereafterthefacthandwrittennotesbyAlardinoninvoicespreviouslypaidbyHEC;a paidinvoicecannotalsobealoanmade. Alardintestifiedthatpersonalproperty,inventoryassets,tools,recordsandbusinesstrade secretsofRMT&SiteWatchwereillegallyseizedbyHossinthelockout.Alardinalsoprovided evidencethatshowshowGreggHossengagedanunderhandedschemeorchestratedwith severalHossemployeestodisintegratethebusinesspartnershipwithAlardinknownas SiteWatch.

TheHossstrategyattrialwasabaitandswitchtoconfusethejuryanditpartlyworked. Alardintestifiedthecontributionswerenotloansbutratheranaccountingnomenclature employedbyAlardintokeeptrackofcontributions.Someoftheloanslistedwerefrom Alardinaswellthatsbecauseallwerecontributions.Alardinproducedevidencetoshowthat actualloansmadebetweenthepartiesweredocumentedwithpromissorynotesandrepaid. TheHossclaimsofnonrepaidloansmadetoAlardinmaybeconfusingwithallthevarious entitiesinvolvedandtheverylongtimelinethisoccursover.Thefollowinganalogysumsitup well. Imagineyouborrowmoneyfromabanktobuyacar;afterridinginthecarwithyoufor acoupleofyearsthebankdecidesitwantsthecarback.Despitethefactthatno demandforpaymentwasevermadeoranynoticegiven(for24yearsinmostcases)the bankinexplicablydemandsthatyourepaythecarloaninfull.Meanwhilethebanksells thecaratfullpricetoasubsidiaryitowns.Soyouoweforacaryoudonothaveandthe bankgetspaidforthecarTWICE.Suchascenarioappliesinthiscaseperfectly. TheHossjustificationwasthatsomeofthefundsowedthemwereloanstoAlardinbecause Alardinsnotesclassifiedthemassuchas.ThisclaimrunscountertoHossownpaperworkand accountingexhibits.Hosspaperworkhasseveralloansclassedasfundspaidoninvoicesfor inventory,whichGreggHosssoldtohisbrotherscompany,HossEquipmentNevadaatfull valuethreeandfouryearsaftertheinitialtransaction.SoHossclaimedheisowedmoneyby AlardinforassetsHosssoldtoanotherentity. TheevidencesupportsclaimsfromAlardins3rdamendedpetitioninthatMr.Hossinitially (20012003)hadMr.AlardinsubmitHECinvoicesforuseascapitalcontributionssohecould paperthefileforthebanks.In2003,HECcameunderscrutinyforbankingcovenant infractionssoHosscontributedinotherways.In2004GreggHossactuallywrotecapital contributiononachecktoSiteWatchLLC.Henowclaimsthiswasaloantoo.Evenmoneypaid toSiteWatchafterAlardinwaslockedoutfromhisofficeontheHosspremiseswasbeing claimedbyHossasanafterthefactloan. TheevidenceshowsHossCFOAndySpeercookedtheHECbookstohidetheexistenceofthe SiteWatchpartnershipandthesecretwayGreggHosshadbeenfundingitforyears.Speertook measurestoassureanaccuraterecordofthetransactionslistedasSiteWatchinventorywas keptfromauditorsbyrequiringAlardintosubmitinvoicesforfunding.ThisR&Dfunding methodfortheSiteWatchpartnershipallowedAndySpeertohelpGreggHossconcealcapital contributionstotheSiteWatchpartnership. SiteWatchLLCwasthelegalentityformedinMay2004toencompasstheAlardinHoss partnership.ItwasforcedtoceasethebusinessoperationsitwasformedtodowhenGregg HosslockedAnthonyAlardinfromAlardinsofficeontheHosspremises.OtherHossbusiness entitiesthenproceededtoseizeanddisposeoftoitsbenefitalltoolsandpropertyacquired overthelifeofthebusinessrelationship.SinceallrecordsandpropertywasseizedbyHossin

March2005lockout,therewasneveranopportunityforataxreturntohavebeenfiledby SiteWatchLLC. TheevidenceoffersaclearrecordthatHossplacatedAlardinformonthswithfalse assuranceswhileactinginbadfaithbehindthescenesandfurtherdemonstrateshowHoss breachedhisfiduciaryresponsibilitytothepartnership. AlardinbelievesseveralquestionabletransactionsaswellasotheractionsbyHosspartiesthat occurredintheweeksbeforeandafterreturningfromasuccessfultradeshowwerenot coincidence.ItwasimmediatelyfollowingConExpoinMarch2005thatHosslockedAlardin fromthepremises. Indeposition,TonyAlardinlearnedthatpriortothelockout;GreggHossplantedamole/spy, DavidDurwoodYanceytoworkasasystemadministratorforSiteWatchLLCandtospyon Alardininanefforttofindjustifiablecausetoousthim,whennothingtangiblewasfoundthey decidedtoproceedanywayafterasuccessfultradeshow. GreggHosswasawarethatYanceyhadprioranimositywithAlardinsoanyinformationgleaned spyingonAlardinmightbetainted,yetdiditanyway.Forsuchacriticalpositioninafledgling businessatacrucialtime,itwouldbedifficultenoughforahardworkingloyalstaff;butYancey madenobonesregardinghislackofloyaltytoSiteWatchorAlardin.DavidYanceytestifiedin depositionaboutthegleehetookingettingTonysgoatbyarguingwithhimandcausing commotion.YanceywasfurtheremboldenedbytheknowledgethathissecretpactwithGregg kepthimsafefromsanctionbyAlardin.Thedamagecausedbysuchaseriousbreachoftrustis indefinable.Alardinbelievesthejurydidnotgofarenoughandtherewasmaliceintheactions ofHoss. AlunchmeetingatLaHaciendarestaurantwashastilycalledbyGreggHossthedayafter returningfromConExpo.Atthatmeeting(mentionedintheAppellateCourtsOpinion)David YanceyacknowledgedthespyingactivityagainstAlardinthathadbeenoccurringformonths. TonyAlardinwasshockedthatwhileGreggHossdeniedanyknowledgeofsuchactivity,hedid notcondemntheactivity.ThenwhentheshockofthebetrayaltoAlardindisintegratedto anger,HossaskedAlardintostayawayfromtheofficeforacoupleofweeks.DavidYancey wasthenpromotedratherthansanctionedaftertheadmissionofthemalfeasance. AlardinbelievestheevidenceshowstheargumentbetweenhimselfandYanceywasplanned byHosstoinstigatearancoroussituationtoenableafalseexcusetolockAlardinfromhis officeattheHosspremises. AfterthelockoutremovingAlardinandevidenceoftheSiteWatchpartnership,theHoss partiesconspiredtocreateanewentity,HossOnSiteSolutions,tocontinuewherethe partnershipleftoff.SiteWatchlabelsandbrandingwereremovedfromproductsandmarketing wasreplacedwiththeHossbrand.CustomersandprospectsoftheSiteWatchpartnershipwere

convertedtoHosscustomers.Over$2minsaleswerebookedbyHossoverthenext18months sellingproductsdevelopedfromthepartnership. EventuallyHossstoppedselling;promotingandmarketingsuchproductspresumablybecause continuedsuccesswouldmaketheirclaimsinthistrialmoredifficulttoprovesotheyjust stopped.ButthedamagetoSiteWatchandAlardinwasdone.Millionsofdollarsworthof productsthatmightbeproventobeaprogenyoftheproductsdevelopedbytheSiteWatch partnershipcontinuetobesold. EarlypatentfilingsbyAlardin(andfundedbyHoss)mighthavegreatvaluetodayifHosshad notceasedfundingtheirpursuitinmid2004.Othercompaniesweregrantedpatentsonsimilar productsafterAlardinsclaimswereabandoned;thosecompaniespatents(whichAlardin producedinevidence)arenowearningsubstantialroyalties. HossCFOAndySpeeracknowledgedinanemailapropertyliabilitytoAlardinofover$90k; whilestillalowervaluationthanclaimedbyAlardin,nopropertywasneverreturned.This evidencewasignoredbytheAppellateCourtyetnotthejury. (See evidence below) KylanHossstatedinanemailthatHosswassellingoffthatveryproperty.Thisevidencewas ignoredbytheAppellateCourtyetnotthejury.(See evidence below) ItisunderstandablewhythejurydidnotputmuchfaithintheaccuracyoftheHossfinancial records.TheHossfinancialslooksuspectinmanyways.Documentation(andlackof),high salariesandbigraises,tradesbetweenHossentities,newentitiescroppingup,erroneous expensereports,etc. Hosscannotbebelievedwhentheyclaimtheyearnednoprofitorlostmoneybecause theirfinancialscannotbetrustedandbasedontheverdictthejurydidnot.Documents supportingthispositionareinevidence. Thefollowingmayjustifyfurtherlegalconsideration:SeeHossExhibitP2Chronologyof Events;thedocumentwasthecenterpieceoftheHosscourtroompresentationyetit contradictedmanytheirveryclaimsagainstAlardin,RMTandSiteWatch.SeeHossExhibitA, listofclaims.Ihavelaidouttheevidencesupportingtheseclaims. TheChronologyofEvents(draftedearlyonbyTonyAlardin)shouldnothavebeenallowed asevidenceforthejurysconsiderationbecauseitwasshowntobeinaccurateiftakenatface value.Whilepartofitwaswithheldfromconsideration,theentiredocumentshouldhavebeen. TheChronologyaddsupto$182,110,notthe$125,257thatHoss;tothattime,claimed wasduethemandmanyoftheitemsclaimeddifferaswell. TheadditionalclaimsbyHossweresprungupattrialandpreventedAlardinafair chancetodefendagainstthem,forinstanceAlardinwasunabletodeposeHoss regardingtheneworadditionalclaimsinpreparationfortrial.

ThejuryawardedGreggHossthetotalvalueofallloanslistedontheChronology writtenbyAlardin$182,110. MostoftheloanslistedintheChronologyforbenefitofGreggHossaredebunked bythechecksandinvoiceswithHEC,andtheevidenceproducedsupportsAlardin. AsshownintheirownExhibitAlistingtheirclaimsagainstAlardin;severalofthe loanslistedintheChronologyweresystemspurchasedbyHEC. AsystempurchasedbyHECcannotbealoantoAlardin.

HowcantheybeloanstoAlardinasclaimedbyGreggHossif? A) Hosshaspossessionof(orsoldoff)thepropertythefundswereusedtopurchase.(see inventorylist) B) MostfundsreceivedandreferredtoinP2werefrominvoicespaidbyHEC.(Therewere noloandocumentsbecausetheywerenotloans.) C) GreggHosswasanamedDirectorwithsignatoryauthorityontheSiteWatchLLCbanking accounthavingfullaccesstoallfundsintheaccountheauthorizedcheckspaidto. ThepointherebeingtheywereinfactpartofaschemebyGreggHosstodisguisecapital contributionsassomethingother.ThesepointsbolsterAlardinscontentiontheyhada partnershipandthepaymentsinquestionwerenotloans. SeeHossExhibitA(fromtheiroriginalsuitclaims)whichcontainsthelistoffundsthesuit claimstheyareowed. GreggHossExhibitAlistfromthelawsuitclaimsheisowedof$125,257. Hossneverproducedanycancelledchecksoranydocumentationtosupporttheloan claims. ExhibitAfromHosswasriddledwitherrors.(Iprovidedcorrections,explanation,and counterargumenttoeachpointIcould) WhichoneofthesetwoExhibitsdoesHossclaimisaccurate;theybothcannotbe?In depositionthereistestimonythatmakesthediscrepanciesobvious.DidGreggHossmake claimsincourtthatarecountertotheirownpretrialexhibitsandclaims?YES. DidGreggHossstatethechronologyofevents(whichwastheirP2exhibitattrial)isaccurate andtheloansdepictedthereinindeedowedtoGreggHoss,himself?Thisisveryimportant. Theassumptionfromitsprominentusebythemisyes. Point1:CouldtheargumentbemadethatthedisparitybetweentheChronologyofEvents, P2oftheHosstrialexhibitsandtheiroriginalExhibitA(fromHosstosupporttheirclaimsof loss)beenoughthatP2shouldhavebeensuppressed?YES Evidencenotpresented. Onecaseinpoint:Evidenceshowsthatatleast10%ofthetrailersystemsHossprovidedfor reviewhavesignificantlyinflatedexpensecostsduetoadoublebillingschemewheretwo trailersarebilledintoasingletrailersystem.

CASE LAW UPDATE:

A SURVEY OF RECENT TEXAS PARTNERSHIP AND LLC CASES
By Elizabeth S. Miller Professor of Law Baylor University School of Law Waco, Texas

The University of Texas School of Law

2013 LLCs, LPs and PARTNERSHIPS July 10, 11 & 12, 2013 Austin, Texas
2013

Thefollowingcaseconcernsme,AnthonyAlardin.Themajordifferenceappearsthatthejuryand DistrictCourtlookedatalltheevidenceandtheAppellateCourtdidnot.Thisservestoquestionthe Courtandthedecisionrendered.

Hoss v. Alardin, 338 S.W.3d 635 (Tex. App.Dallas 2011, no pet.). Alardin sued Hoss alleging that he and Hoss orally formed a partnership and that Hoss breached his fiduciary duty arising from that partnership. The jury found that a partnership existed and that Hoss breached his fiduciary duty. The alleged partnership arose out of Hosss contribution of $25,000 and some equipment to Alardins SiteWatch project (a surveillance technology project). Consistent with the Texas Revised Partnership Act (TRPA) the jury was instructed that an association of two or more persons to carry on a business for profit creates a partnership, regardless of whether: (1) the persons intend to create a partnership or (2) the association is called a partnership, joint venture, or other name. The instruction also set forth the following five factors that indicate the existence of a partnership: (1) receipt or right to receive a share of profits of the business; (2) expression of intent to be partners in the business; (3) participation or right to participate in control of the business; (4) sharing or agreeing to share losses and liabilities of the business, and (5) contributing or agreeing to contribute money or property to the business. The recitation of these factors tracked the statute except for a minor variation with regard to the way the fourth factor was stated, as further explained below. The court noted that the Texas Supreme Court in Ingram v. Deere characterized the five-factor test as a totality of-the-circumstances test. The court also noted the guidelines provided by the supreme court in Ingram, i.e., that no evidence of any of the factors will preclude recognition of a partnership under TRPA, that conclusive evidence of only one factor is normally insufficient, and that conclusive evidence of all five

factors will establish the existence of a partnership as a matter of law. Between these extremes, the challenge of applying the totality-of-the-circumstances test is presented. The court noted that the commentary to TRPA states that the sharing of profits and control have traditionally been regarded as the most important factors and will probably continue to be the most important factors under the statute. The court also noted that TRPA specifically provides that an agreement to share losses is not a required element of a partnership. The court then examined the evidence pertaining to each of the five statutory factors. First, the court looked at the profit sharing factor. An agreement to share gross revenues alone is insufficient to satisfy this element. Alardin offered no evidence that the venture generated any profits, and Hoss testified that it never made a profit. Alardins primary evidence of an agreement to share profits was his own personal testimony. The court found this testimony to be some evidence of an agreement to share profits but characterized the evidence as weak and selfcontradictory. Second, the court looked to the expression of intent factor. Merely referring to another person as partner in a situation where the recipient of the message would not expect the declarant to make a statement of legal significance is not enough. Further, there must be evidence that both parties expressed their intent to be partners. Alardin again relied on his own testimony in attempting to satisfy this element. He also pointed to Hosss trial testimony that he was partnering with [Alardin] to try to get him into a business where he could be successful. The court stressed that the terms used by the parties do not control and that the context of the statements is most important in determining whether they evidence a legal partnership. Business people often use the words partner and partnership to mean any sort of close business relationship and not strictly to mean a legal partnership. Further, legal conclusions by a lay witness do not prove the existence of a partnership. Thus, the court found that no evidence supported the argument that Hoss expressed any intent to form a legal partnership with Alardin. Third, the court looked at the factor of participation in or right to participate in control. The focus of this element is the right to make executive decisions. Relevant factors for control include exercising authority over the businesss operations, the right to write checks on the businesss checking account, control over and access to the businesss books, and receiving and managing all of the businesss assets and monies. The court found that Alardin offered no evidence showing that he exercised control over the businesss operations or made any executive decisions. At most, Alardin directed Hosss employees that Hoss assigned to Alardins SiteWatch project. Fourth, the court looked to the factor regarding sharing of losses or liabilities. The court noted that the jury instruction stated the factor as whether the parties shared or agreed to share the losses and liabilities of the business rather than precisely tracking the language of TRPA, which refers to losses or liabilities of the business. Because there was no objection to the instruction, the court evaluated the evidence under the instruction given. The court noted that 16 an agreement to share losses is not necessary to create a partnership under TRPA, but the existence of such an agreement supports the existence of a partnership. Again, Alardin relied only on his own testimony. In response to a question at trial as to whether he and Hoss agreed to share liabilities, Alardin answered Yes. The court found that this statement alone was

insufficient evidence to support an agreement to share losses and that there was thus no evidence of the fourth factor as submitted to the jury. Fifth, the court looked at the fact regarding contribution of money or property. TRPA defines property as all property, real, personal, or mixed, tangible or intangible, or an interest in that property. Hoss argued that certain loans he made were not contributions to a partnership and that there was no other evidence that he contributed money or property to the alleged partnership. The court stated that loans of money can constitute contributions to the business under TRPA although TRPA provides that the right to repayment of a debt by itself does not indicate a partnership relationship. Alardin argued that Hoss agreed to contribute financing, business management, credit, mentoring, and resources of Hosss own business. Alardin testified that Hoss contributed a piece of equipment to the project, agreed to help Alardin with the credit situation, and allowed Alardin to use facilities and personnel of Hosss business. The court stated that helping someone obtain credit from a third party is not a contribution of money or property and that evidence of contributions by Hosss business was no evidence of contributions by Hoss individually. Further, even though there was evidence that Hoss made loans toward the project and contributed a piece of equipment used as part of the project, there was no evidence that Alardin himself contributed or agreed to contribute money or property to the project. Therefore, the court found no evidence to support this factor. Having concluded that there was no evidence of four of the five factors and that the evidence of an agreement to share profits was weak and self-contradictory, the court also noted other evidence that pointed away from the existence of the partnership. Despite Alardins allegation that the partnership existed for several years, the alleged partnership never filed a federal or state partnership tax return. It never applied for its own federal tax identification number or issued K-1 tax forms to its partners. Further, the alleged partnership did not have a name. There was also no evidence that anyone, including Alardin, ever treated the alleged partnership as a distinct entity independent of the people and companies that participated in the SiteWatch project. Finally, in his own pre-litigation documentation, Alardin did not refer to the partnership at all. Based on this analysis, the court concluded that the evidence was legally insufficient to support the jurys finding of a partnership between Hoss and Alardin. Because no partnership existed, Hoss could not have breached a fiduciary duty arising out of the alleged partnership.

REVERSE and RENDER in part, AFFIRM in part; Opinion issued March 7, 2011

S
In The

Court of Appeals Fifth District of Texas at Dallas

No. 05-08-01192-CV GREGG HOSS, Appellant/Cross-Appellee V. ANTHONY ALARDIN, SITEWATCH LLC, d/b/a SITEWATCH SYSTEMS, and ALARDIN DEVELOPMENT CORPORATION, d/b/a REMOTE MONITORING TECHNOLOGIES, Appellees/Cross-Appellants On Appeal from the 160th Judicial District Court Dallas County, Texas Trial Court Cause No. 06-00326-H

OPINION
Before Justices Morris, FitzGerald, and Francis Opinion By Justice FitzGerald Gregg Hoss and others sued appellees on several claims including breach of certain loan agreements. Anthony Alardin filed a separate lawsuit against Hoss for breach of fiduciary duty. The cases were consolidated and tried to a jury, which awarded Hoss a total of about $182,000 plus attorneys fees against appellees and awarded Alardin $3 million on his claim against Hoss. The trial court rendered judgment largely in accordance with the jurys verdict. Hoss appealed, and appellees cross-appealed. We reverse and render in part, we affirm in part, and we reverse and remand in part.

I. A. Facts

BACKGROUND

The evidence at trial supported the following facts and series of events. Hoss owned a company called Hoss Equipment Co. (HEC), which is a heavy-equipment dealer he founded in 1990. Alardin founded a company called Alardin Development Corporation in 1998 or 1999, and it began doing business under the name Remote Monitoring Technologies (RMT) in March 2001. Hoss and his wife Angela were friends of Alardin and his wife Kathryn. At some time before September 2001, Alardin began trying to develop a surveillance technology that would allow customers to install video cameras wherever they liked and monitor those cameras over the internet from anywhere in the world. He even started building such a surveillance system in his home garage and office. He called it the autonomous mobile ethernet video surveillance system, or AMEVSS. Because Alardin lacked business sophistication and knew that Hoss possessed business experience, he told Hoss about his efforts to develop the AMEVSS. On or about September 14, 2001, Hoss made or caused HEC to make an initial investment, loan, or purchase in the amount of $25,000 (the evidence of the nature of this transaction is conflicting), and Hoss also donated some equipment for use in building an AMEVSS prototype. Alardin testified that he and Hoss orally agreed to become partners at that time. No written partnership agreement was ever executed. From 2001 to early 2005, Alardin worked on the surveillance-system project, which was given the name SiteWatch. Hoss allowed Alardin to set the SiteWatch project up at an HEC facility. Hoss also assigned HEC personnel to assist Alardin in the SiteWatch project. In 2004,

Alardin formed a new company called SiteWatch LLC d/b/a SiteWatch Systems.1 Some evidence suggests that Alardin transferred all of RMTs business relating to the SiteWatch project to SiteWatch LLC in September 2004, but other evidence indicates that RMT continued to operate through March 2005. In March 2005, Alardin and some others went to a trade show in Las Vegas called ConExpo to display the SiteWatch surveillance system. During the show, a disagreement developed between Alardin and an HEC employee named David Yancey. Later, after everyone had returned to Texas, the Hosses and Yancey met with Alardin at a restaurant, and a heated argument broke out. Shortly after that incident, Alardin was told not to visit the HEC yard without making an appointment first, and a lock was put on his office door. On or about April 21, 2005, Alardin typed a three-page Chronology of events that described some of the history of the SiteWatch project and listed loans or notes that he, Gregg Hoss, and Angela Hoss had made towards the SiteWatch project from 2001 to September 2004. A redacted version of that chronology was admitted at trial. B. Procedural history This lawsuit began as a suit by Hoss, Angela Hoss, and HEC against Alardin and SiteWatch LLC. By the time of trial, Hoss and the other plaintiffs had amended their pleadings and added RMT as a defendant. They pleaded several claims, but for our purposes it is sufficient to note that Hoss sued all three appellees for breach of contract, alleging that they had failed to repay certain loans. He sought damages for breach of contract and attorneys fees under chapter 38 of the civil practice and remedies code. Alardin, SiteWatch LLC, and RMT filed a separate lawsuit against Hoss, an individual

We refer to this entity as SiteWatch LLC to avoid confusion with the general SiteWatch project.

named Nyle Brasch who had worked on the project, and others, but that lawsuit was eventually consolidated into Hosss lawsuit against them. They pleaded numerous claims, but for our analysis we note only two of them. First, Alardin claimed that he and Hoss orally formed a partnership and that Hoss breached his fiduciary duty arising from that partnership. Second, all appellees sued Hoss for breach of contract, specifically, breach of the oral partnership agreement. The trial court dismissed appellees breach-of-contract claims on Hosss motion for summary judgment. The remaining claims were tried to a jury, which found in favor of Hoss on his contract claims and in favor of Alardin on his fiduciary-duty claim. The jury rejected all of the parties other claims.2 As to Hosss contract claims, the jury found that Alardin owed Hoss $117,481, SiteWatch LLC owed Hoss $36,631, and RMT owed Hoss $27,998. The jury also found that Hosss recoverable attorneys fees were $500,000 for preparation and trial, $100,000 for an appeal to the court of appeals, and $50,000 for an appeal to the Texas Supreme Court. As to Alardins claim, the jury found that a partnership existed between Hoss and Alardin, and that Hoss did not comply with the fiduciary duty he owed to Alardin. The jury awarded Alardin $3 million against Hoss as damages.

The jury rejected the following claims: (1) Angela Hosss assault claim against Alardin and her claims for breach of contract against all three appellees, (2) HECs breach-of-contract claim against appellees, (3) Nyle Braschs breach-of-fiduciary-duty claim against Alardin, and (4) Alardins, SiteWatch LLCs, and RMTs conversion claims against Hoss, Brasch, HEC, and a company called Hoss Equipment Nevada, Inc.

The trial judge signed a judgment that awarded Alardin and Hoss the amounts found by the jury. The parties filed various posttrial motions, and the judge then signed an amended final judgment that reduced Alardins recovery against Hoss to $2,822,5193 but still awarded Hoss $117,481 against Alardin, $36,631 against SiteWatch LLC, and $27,998 against RMT. The parties filed post-judgment motions that were overruled by operation of law. Hoss appealed, and appellees cross-appealed. II. HOSSS APPEAL

Hoss raises four issues on appeal: (1) the evidence is legally and factually insufficient to support the jurys finding that he and Alardin entered a partnership, (2) the jurys failure to find that Hoss complied with his fiduciary duty to Alardin was against the conclusive evidence or the great weight and preponderance of the evidence, (3) the evidence is legally and factually insufficient to support the jurys finding that Alardins damages were $3 million, and (4) the trial court erred by failing to offset Hosss awards against Alardins award. A. Existence of a partnership We first consider whether sufficient evidence supports the jurys finding that a partnership existed between Hoss and Alardin. 1. Standard of review

When an appellant attacks the legal sufficiency of the evidence to support an adverse finding on an issue on which it did not have the burden of proof, it must demonstrate that no evidence supports the finding. Cerullo v. Gottlieb, 309 S.W.3d 160, 165 (Tex. App.Dallas 2010, pet. denied). When evidence is so weak as to do no more than create a surmise or suspicion of the
3

The amended judgment recites that this amount was calculated by subtracting from $3 million the $177,481.00 found by the jury as the amount owed to Gregg Hoss by Anthony Alardin. This was a mistake, because the jury actually awarded Hoss $117,481 against Alardin.

matter to be proved, the evidence is no more than a scintilla and, in legal effect, is no evidence. Guevara v. Ferrer, 247 S.W.3d 662, 668 (Tex. 2007) (internal quotations and citation omitted). The evidence is legally sufficient if it is sufficient to enable reasonable and fair-minded people to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In conducting our review, we view the evidence in the light most favorable to the verdict and indulge every reasonable inference that would support it. Id. at 822. We must credit evidence favorable to the verdict if a reasonable person could, and we must disregard contrary evidence unless a reasonable person could not. Id. at 827. Jurors are the sole judges of the credibility of the witnesses and the weight to give their testimony. Id. at 819 (footnote omitted). But the jurys credibility determinations must be reasonable; [j]urors cannot ignore undisputed testimony that is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted. Id. at 820. 2. The jurys finding and Texas partnership law

The jury answered yes to Question 16 of the jury charge, which inquired, Did a partnership exist between Anthony Alardin and Gregg Hoss? Question 16 was accompanied by the following three paragraphs of instructions: An association of two of more persons to carry on a business for profit as owners creates a partnership, regardless of whether: (1) the persons intend to create a partnership or (2) the association is called a partnership, joint venture, or other name. Factors indicating the creation of a partnership include: (1) receipt or right to receive a share of profits of the business; (2) expression of intent to be partners in the business; (3) participation or right to participate in control of the business; (4) sharing or agreeing to share losses and liabilities of the business, and (5) contributing or agreeing to contribute money or property to the business. A general partnership agreement may or may not be in writing.

The first two paragraphs of the instructions closely track provisions of the Texas Revised Partnership Act, with one exception we will note later. See generally Act of May 31, 1993, 73d Leg., R.S., ch. 917, 1, 1993 Tex. Gen. Laws 3887, 3890 (expired Jan. 1, 2010) (former articles 6132b2.02(a), 6132b2.03(a)) (cited hereafter as TRPA art. __).4 Under the TRPA, [a] partnership is an entity distinct from its partners. TRPA art. 6132b2.01. The Texas Supreme Court has described the TRPA as adopting a totality-of-thecircumstances test for partnership formation. Ingram v. Deere, 288 S.W.3d 886, 896 (Tex. 2009). [T]he issue of whether a partnership exists should be decided considering all of the evidence bearing on the TRPA partnership factors. Id. In Ingram, the court acknowledged that the totalityof-the-circumstances test would be difficult to apply uniformly, but it offered a few guidelines for application. Id. at 898. An absence of evidence as to all five factors will preclude the recognition of a partnership under the TRPA, and even conclusive evidence of only one factor will normally be insufficient to establish the existence of a partnership. Id. At the other end of the spectrum, conclusive evidence of all five factors will establish the existence of a partnership as a matter of law. Id.; see also Reagan v. Lyberger, 156 S.W.3d 925, 928 (Tex. App.Dallas 2005, no pet.) (upholding finding of partnership because all five TRPA factors were supported by evidence). Points on the spectrum between the extremes will present the challenge of the totality-of-thecircumstances test. Ingram, 288 S.W.3d at 898. In Ingram itself, the court held that the proponent of the partnership agreement adduced no evidence of any of the five factors, and thus that there was no partnership as a matter of law. Id. at 904; see also Smith v. Deneve, 285 S.W.3d 904, 91315 (Tex. App.Dallas 2009, no pet.) (affirming summary judgment as to partnership claim because nonmovant adduced no evidence of the five TRPA factors). According to the statutory comment prepared by the Partnership Law Committee of the
Although the TRPA expired on January 1, 2010, it was in effect during all of the events made the basis of this lawsuit. General partnerships are now governed by chapter 152 of the Texas Business Organizations Code. See generally TEX. BUS. ORGS. CODE ANN. 152.001.914 (West 2010). For a survey of the three statutory regimes that have governed Texas partnerships, see Ingram v. Deere, 288 S.W.3d 886, 89495 n.4 (Tex. 2009). 4

Business Law Section of the State Bar of Texas, it is not feasible to say exactly which factors [listed in article 6132b2.03(a)] must be present, or what the relative weights of the factors should be. TRPA art. 6132b2.03 cmt. But the commentators further note that the sharing of profits and control have traditionally been regarded as the most important factors, and [t]hey will probably continue to be the most important under this section. Id.; accord Big Easy Cajun Corp. v. Dallas Galleria Ltd., 293 S.W.3d 345, 348 (Tex. App.Dallas 2009, pet. denied). The TRPA specifically provides that an agreement to share losses is not a required element of a partnership. TRPA art. 6132b2.03(c). 3. Evidence of the TRPA factors

Like the supreme court in Ingram, 288 S.W.3d at 898903, we focus our inquiry on the evidence pertaining to each of the five TRPA factors. a. Profit sharing

The first TRPA factor is receipt or right to receive a share of profits of the business. TRPA art. 6132b2.03(a)(1). The Ingram court held that this factor is not satisfied by an agreement to share gross revenues. 288 S.W.3d at 899. Rather, the TRPA requires a sharing or a right to share profits, defined as the excess of revenues over expenditures in a business transaction. Id. In Ingram, two parties agreed that they would use one-third of their businesss gross revenues to pay expenses and divide the remaining two-thirds equally between them. Id. at 898. The court held that this constituted no evidence of the first TRPA factor because the parties agreement concerned gross revenues, not profits. Id. at 89899. Alardin cites no evidence that during the time period in question, 20012005, he or Hoss actually received any profits from the venture, and we have found none. Alardin testified that the alleged partnership did generate revenue, but he did not testify how much, if any, of that revenue was profit. He testified that any profits made by the partnership were reinvested, so according to Alardin,

he and Hoss did not actually implement the 50-50 split that Alardin testified they agreed to, a fact that is inconsistent with Alardins claim. Hoss testified that the products made by the alleged partnership never made a profit. Alardin argues that the evidence shows that he and Hoss orally agreed to share profits, pointing to his own testimony as follows: Q. A. Q. A. Q. Did yall specifically agree to be partners? We specifically did. Gregg [Hoss] agreed? Gregg did agree. What kindhow were yall going to work that in terms of how yall were going to split profits? We were going to split profits 50-50.

A. ... Q:

You go on here [in the chronology Alardin wrote on April 21, 2005], and the next part we talk about is, youre kind of describing what yall had agreed to after the fact, that Gregg was going to get repaid for these things, the money he put in, and the reimbursement of parts, and the shop costs. Do you see that? Yes, I do. What was the specific agreement between you and Greg[g] on how you and he were going to get paid for the various things that you each put into the partnership? We would have to have an accounting, obviously, and thats what I thinkI may even say it there on that [document]. But out of the 50-50, we would try to pay him back out of hisout of that first. Out of his profits, his side of the profits, he would get paid back for whatever he put in? Exactly.

A: Q.

A.

Q.

A.

Q. A.

And thats how you would get paid back for the labor that you put in? And the years of putting this together and transferring everything and, you know, the manufacturing and all of that, yes.

We conclude that Alardins testimony constitutes some evidence of an agreement to share profits, but that the evidence in support of this agreement is weak and self-contradictory. At first, Alardin testified unequivocally, We were going to split profits 50-50. This testimony tends to support the first TRPA factor, although it also could be interpreted to be an agreement to agree. Alardin further testified Hoss was going to be paid back for what he put into the partnership out of the 50-50, thus controverting his initial testimony. Finally, in answer to a leading question, Alardin agreed that he meant that Hoss would get paid back for whatever he put into the partnership [o]ut of his profits, his side of the profits. Alardins testimony that Hosss loans would be paid back to him out of his 50% of the profits clearly contradicted his testimony that the profits would be split 50-50.5 If, according to Alardin, Hosss loans were in fact to be repaid out of Hosss share of profits, then the parties did not agree that the profits would be split evenly between them. Alardins explanation of how Hosss loans would be repaid skews the calculations and undermines Alardins testimony that the parties agreed to split profits evenly. We conclude that Alardin adduced no evidence that he or Hoss actually received any profits of the alleged partnership. We further conclude that Alardins testimony produced only weak and self-contradictory evidence that he and Hoss made an agreement to share profits. Nonetheless, given Alardins statement that profits were going to be split 50-50, there was some evidence of the first TRPA factor, at least insofar as it relates to the right to receive profits as contrasted with the actual receipt of profits.
5

Occasionally during his testimony, Alardin would use loans and contributions interchangeably. In context, this is a distinction without a difference in view of Alardins testimony that he did not know what a capital contribution was before this lawsuit was filed, and in view of Alardins testimony that this money, whether a loan or contribution, would be repaid to Hoss out of Hosss share of profits. In addition, Alardins own chronological summary, contained in a document entitled SiteWatch LLC dba SiteWatch Systems, explains events but refers only to loans, not to contributions. Finally, the jury found Alardin agreed to repay monies advanced by Hoss, thus finding the monies advanced were loans.

10

b.

Expression of intent to be partners

The second TRPA factor is expression of an intent to be partners in the business. TRPA art. 6132b2.03(a)(2). The Ingram court clarified that this TRPA factor is distinct from the other factors, and therefore we should only consider evidence not specifically probative of the other factors when we evaluate this factor. 288 S.W.3d at 900. [C]ourts should review the putative partners speech, writings, and conduct. Id. at 899. Evidence of expressions of intent could include, for example, the parties statements that they are partners, one party holding the other party out as a partner on the businesss letterhead or name plate, or in a signed partnership agreement. Id. at 900. But the Ingram court cautioned that merely referring to another person as partner in a situation where the recipient of the message would not expect the declarant to make a statement of legal significance is not enough. Id. Thus, we must look to the terminology used by the putative partners, the context in which the statements were made, and the identity of the speaker and listener. Id. Moreover, there must be evidence that both parties expressed their intent to be partners. Id. (emphasis added); see also Reagan, 156 S.W.3d at 928 (holding that there was some evidence of second TRPA factor where both alleged partners referred to themselves as partners). In support of the second TRPA factor, Alardin relies on his own testimony that he and Hoss orally agreed to be partners: Q. A. Q. A. ... Q. Did yall specifically agree to be partners? Did you and Gregg [Hoss] have a partnership agreement? Absolutely. Did you and he agree to be partners in this SiteWatch project? We did, yes, sir.

11

A. Q. A.

We specifically did. Gregg agreed? Gregg did agree.

Alardin also refers us to Hosss trial testimony describing the parties relationship, in which Hoss testified, [I was p]artnering with Tony to try and get him into a business where he could be successful. The terms used by the parties in referring to the arrangement do not control . . . . Ingram, 288 S.W.3d at 900; accord Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 288 (Tex. 1978). Ingram instructs us that the context in which statements are made is important in assessing whether they evidence a legal partnership. See Ingram, 288 S.W.3d at 900. Indeed, there was undisputed evidence at trial that business people often use the words partner and partnered to mean any sort of close business relationship, and not strictly to mean legal partnerships. Alardin himself testified that he has used the word partner to describe a good business relationship that had nothing to do with a legal partnership. He also acknowledged that he was aware of other people also using the word partner when no legal partnership existed. Alardin used the term partner to describe transactions in which no legal partnership existed. Moreover, [m]ere legal conclusions by a lay witness . . . do not prove the existence of a partnership or joint venture. Ben Fitzgerald Realty Co. v. Muller, 846 S.W.2d 110, 121 (Tex. App.Tyler 1993, writ denied); see also Torres v. Kelley, No. 13-04-313-CV, 2007 WL 528849, at *3 (Tex. App.Corpus Christi Feb. 22, 2007, no pet.) (mem. op.) (holding that conclusory statements about the existence of a partnership are no evidence of a partnership agreement). We conclude that Alardins testimony that he and Hoss specifically agree[d] to be partners is conclusory and thus no evidence of an expression of intent to be partners in a partnership under the

12

TRPA. See Ben Fitzgerald Realty Co., 846 S.W.2d at 121. We also reject Alardins contention that Hosss trial testimony describing his relationship with Alardin as partnering with him constitutes evidence that he expressed an intent to form a legal partnership with Alardin at the relevant time several years earlier. Nothing in Hosss testimony indicates that he expressed an intention to be Alardins partner at the time the alleged partnership was formed. Alardin also directs us to his own testimony that he sometimes took customers to Hosss office and introduced Hoss as his partner, and that Hoss never corrected him for referring to him that way. Alardin adduced specific testimony in this vein from a third-party witness named Joseph Marchese, who testified by video deposition that Alardin introduced Hoss to him as Alardins partner. But Marchese also testified that he did not know whether Hoss heard Alardin say that Alardin was Hosss partner, which means his testimony about Alardins introduction does not prove any sort of adoptive admission by Hoss. And there was no evidence that using the word partner in the context of customer introductions like Alardin described would ordinarily be understood to have legal significance. Thus, we conclude that Alardins evidence that he introduced Hoss to customers as his partner, absent evidence to explain why the context of those introductions showed that the term carried legal significance, is no evidence of the second TRPA factor. Finally, Alardin testified that he specifically referred to Hoss as his partner at a meeting of the personnel involved in the SiteWatch project. His testimony was not specific, but this meeting apparently took place in or about August 2004. It is not clear from Alardins testimony whether Hoss was present at the meeting, but Alardin did testify that Hoss never disputed that Alardin referred to him as his partner at the meeting. Whether Hoss was present or not, there is no evidence that this contexta meeting of Alardin with the HEC employees who were helping with the SiteWatch projectwas one in which Alardins audience would have understood him to be making a

13

statement of legal significance regarding his business relationship with Hoss. Thus, Alardins testimony about the 2004 meeting is no evidence of the second TRPA factor. For the foregoing reasons, we conclude that Alardin adduced no evidence of the second TRPA factor. c. Control

The third TRPA factor is participation in or the right to participate in the control of the business. TRPA art. 6132b2.03(a)(3). The right to control a business is the right to make executive decisions. Ingram, 288 S.W.3d at 901. Texas courts have held that various facts can be relevant to this factor, such as exercising authority over the businesss operations, the right to write checks on the businesss checking account, control over and access to the businesss books, and receiving and managing all of the businesss assets and monies. Id. at 90102 (citing cases). Although Alardin obviously participated in the work to advance the SiteWatch project, Alardin cites no evidence showing that he exercised authority over the businesss operations or made any of its executive decisions. He cites only evidence tending to show that he directed the HEC employees that Hoss assigned to the SiteWatch project. He testified as follows: Q. In that regard, did Gregg have or did he agree to have the ability in this agreement that he could tell you what to do or yall could eacheach of you could direct the employees in this project? Yes, sir. What was your mind-set at that time in terms of sort of following Gregg, whatever he thought was best, what yall were going to do, what were you thinking in that regard? Well, if Gregg said jump, I would jump. I mean, thats just the way it was. And I was the point man in essence over the project itself, but he had final decision as far as, you know, if he wanted something done or not done, thats the way it was.

A. Q.

A.

14

Q. A.

And why was that the way it was? Respect. He washe hadhe was the money man, he had earned, you know, he hadhe had experience, his business experience, business acumen.

Alardins testimony also showed that he had to account to Hoss for the businesss finances and that Hoss ultimately made the financial decisions relating to the venture: Q. So when you had a list of bills that had to get paid, what did you do as a practical matter, what did you do with that? Usually I will see Gregg on the yard and tell him or write a note about different things that we needed, places that we needed to go, bills that needed to be paid, and it would usually add up to lot more than what I would get, quite candidly, because he was going through some financial difficulties, or his company was at that time, and he would say, okay, well, what do we really have to pay right now? And then thats what I would have to submit an invoice for.

A.

The evidence of control in this case is comparable to that in Knowles v. Wright, 288 S.W.3d 136 (Tex. App.Houston [1st Dist.] 2009, pet. denied). In that case, Knowles claimed that he and Wright had formed a partnership, but he acknowledged that he had no signatory authority for the partnership and that he did not have any authority to override Wrights decisions. Id. at 147. Although Knowles testified that he and Wright made decisions together, his testimony made it clear that he had no control over the purported partnership and that Wright retained ultimate control over business decisions. Id. In this case, Alardin adduced no evidence that he participated in the control of the business or had any right of control except to direct the HEC employees that Hoss assigned to the SiteWatch project. And he acknowledged that Hoss had the ultimate power to decide whether anything was done or not done on the project. Alardin adduced no evidence of the third TRPA factor. d. Sharing of losses and liabilities

With respect to the fourth TRPA factor, the jury was asked whether the parties shared or

15

agreed to share the losses and liabilities of the business. This is slightly different from the actual language of the TRPA, which refers to losses or liabilities of the business. See TRPA art. 6132b 2.03(a)(4). In the absence of a relevant objection to the jury charge, we evaluate the sufficiency of the evidence based on the charge and instructions that were submitted to the jury. Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000); EMC Mortg. Corp. v. Jones, 252 S.W.3d 857, 869 (Tex. App. Dallas 2008, no pet.). Thus, under the jury charge, the fourth factor required Alardin to adduce evidence that he and Hoss shared or agreed to share in both the losses and the liabilities of the business. We note that an agreement to share losses is not necessary to create a partnership under the TRPA, but the existence of such an agreement supports the existence of a partnership. TRPA art. 6132b2.03(c); Ingram, 288 S.W.3d at 902. As to this factor, Alardin cites only his own testimony, as follows: Q. What kindhow were yall going to work that in terms of how yall were going to split profits? We were going to split profits 50-50. Liabilities as well? Yes.

A. Q. A.

Even assuming Alardins testimony amounts to some evidence that he and Hoss agreed to share liabilities, it constitutes no evidence that he and Hoss shared or agreed to share in the businesss losses, as required by the jury charge. We conclude that Alardin adduced no evidence of the fourth TRPA factor as that factor was submitted to the jury. e. Contribution of money or property

The last TRPA factor is whether the alleged partners contributed or agreed to contribute

16

money or property to the business. TRPA art. 6132b2.03(a)(5). The TRPA defines property as all property, real, personal, or mixed, tangible or intangible, or an interest in that property. Id. art. 6132b1.01(15). Hoss points out that the TRPA provides that the right to receive a share of profits as repayment of a debt, by itself, does not indicate that a person is a partner in the business. Id. art. 6132b2.03(b)(1)(A). Thus, he argues, the jurys findings that Alardin, RMT, and SiteWatch LLC owed him money on various loans shows that those loans were not contributions to the alleged partnership. But we have held that loans of money can constitute contributions to the business under the TRPA, Reagan, 156 S.W.3d at 928; the TRPA provides only that right to repayment of a debt by itself does not indicate a partnership relationship, TRPA art. 6132b2.03(b)(1)(A). Hoss contends that there is no evidence that he otherwise contributed money or property to the business of the alleged partnership. Alardin argues that Hoss agreed to contribute to the venture in a variety of ways. He contends that Hoss agreed to contribute financing, business management, credit, mentoring, and the resources of his business, HEC. He also argues that Hoss contributed a light plant to the alleged partnership. Specifically, he testified as follows: And on 9-14[-2001] I went to Gregg [Hoss] and we discussed this. And he at that point in timethats when he bought in. Thats when he said, you know, he could see this being something that we could do something with. And thats when we beganhehe made that initial investment of the $25,000 that we built the first system with. He donated a light plant. It is not clear from the record what this light plant was, but the context of the evidence suggests that it was a piece of equipment that was used as part of a prototype surveillance system that was taken to construction trade shows. Alardins testimony about the light plant constitutes some evidence that Hoss contributed property to the business. The other evidence relied on by Alardin does not support this factor. Although Hoss testified

17

that he agreed to help [Alardin] with the credit situation, helping someone obtain credit from a third party is not a contribution of money or property. Alardin testified that Hoss allowed him to use HEC facilities and personnel and, more generally, that HEC was his arm, so to speak, that he would help further the partnership with. But evidence of contributions of facilities, personnel, or materials by HEC is no evidence of contributions by Hoss individually. Although the evidence shows Hoss made loans toward the project and contributed a light plant to the project, Hoss also points out that Alardin cites no evidence that Alardin contributed or agreed to contribute money or property to the project. We have reviewed the record and found only abbreviated statements by Alardin that arguably touch on the subject. At one point, Alardin testified as follows: A: We basically ran a lot of things on myon our AMEX credit cards, or on my own credit card a lot of times, too.

Later, Alardin testified as follows: Q: A: Q: A: In January of 04, the [partnerships] revenues were $58,000, is that right? Something like that, yes, sir. What were the profits in 04? They werentthey were negligible. There wasnt any because I was having to actually put my own money in.

And he also testified as follows: Q: There was a fair amount of research and development that went into this camera project from September of 2001 until the falling out in March of 2005? There was, absolutely. And Mr. Hoss paid for that R&D? I paid for some, too, but, yes, he did.

A: Q: A:

18

Evidence that business expenses were paid by a credit card, in and of itself, is not evidence that money or property was contributed as capital to the business. Alardins testimony about the use of credit cards and the payment of research and development expenses is not, therefore, evidence of contributions to the business. And Alardins statement that he had to put his own money in the business is no more than a scintilla of evidence that he contributed capital to the business. Because Alardin adduced no evidence that he contributed or agreed to contribute money or property to the project, we conclude there is no evidence to satisfy the fifth TRPA factor. 4. Sufficiency analysis

We have concluded that the record contains no evidence of four of the five TRPA factors. There was some evidence, albeit weak and self-contradictory, that Hoss and Alardin agreed to share profits. There was no evidence that the parties actually shared any profits, no evidence that they expressed an intent to be partners, no evidence that Alardin controlled or possessed a right to control the business, no evidence that the parties agreed to share losses and liabilities, as the jury charge required, and no evidence that Alardin contributed or agreed to contribute money or property to the venture. The TRPA comments note that the sharing of profits and control over the business will probably continue to be the most important factors in determining whether a partnership exists. TRPA art. 6132b2.03 cmt. As we have described, there is no evidence of a sharing of control and only weak and self-contradictory evidence of an agreement to share profits. In Ingram, the supreme court opined that an absence of evidence as to all five factors will preclude the recognition of a partnership, and that even conclusive evidence of only one factor will normally be insufficient to establish the existence of a partnership. Ingram, 288 S.W.3d at 898. In the instant case, Alardin did not put on conclusive evidence of any of the TRPA factors. He put on only weak evidence, much of its contradicted by his own testimony, of one TRPA factor. This alone

19

is sufficient to compel the conclusion that the evidence supporting the jurys finding of a partnership is less than a scintilla of evidence. Moreover, Alardins claim of the existence of a partnership was contradicted by evidence that we conclude the jury could not reasonably disregard. See Wilson, 168 S.W.3d at 827 (courts must disregard contrary evidence unless reasonable jurors could not); see also id. at 820 (Jurors cannot ignore undisputed testimony that is clear, positive, direct, otherwise credible, free from contradictions and inconsistencies, and could have been readily controverted.). Under the TRPA, a partnership is an entity distinct from its partners. TRPA art. 6132b2.01. Yet, Alardin testified that the alleged partnership, which he contended existed for several years, never filed a federal or state partnership tax return. He testified that it never applied for its own federal tax identification number and never issued K-1 tax forms to the alleged partners. He even testified that the alleged partnership did not have a name.6 And there is no evidence that anyoneAlardin includedever treated the alleged partnership as a distinct entity independent of the people and companies that participated in the SiteWatch development project. We also conclude that the jury could not reasonably disregard Alardins pre-litigation written account of the history of the SiteWatch project, which was admitted at trial in redacted form. He created this document in April 2005shortly after he was locked out of the HEC facility where the project was housed, and several months before Hoss sued him. He entitled the document SiteWatch LLC dba SiteWatch Systems, which was his own company, and not SiteWatch partnership. In the document, Alardin did not refer to a partnership at all, with Hoss or anyone else. Rather, he described the beginning of the parties business relationship as follows:

Alardin said he felt like we called it the SiteWatch project partnership.

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On September 14, 2001[,] Gregg M. Hoss of Hoss Equipment Company loaned Remote Monitoring Technologies $25,000 for research and development. Gregg Hoss asked for and was promised that in exchange for mentoring, credit and financial considerations, and use of the Hoss Equipment facilities, personnel and assets; he would receive repayment of notes, reimbursement of parts and verifiable shop costs, agree to mutual non-compete, and receive an exclusive sales and marketing agreement with RMT for SiteWatch System technology within his industry - Construction and Mining. Thus, in Alardins own pre-litigation recitation of his understanding with Hoss, he mentioned nothing about an agreement with Hoss to be partners, about mutual control of the enterprise, or about the sharing of profits, losses, or liabilities. Instead, he indicated that Hosss only interest in the project lay in repayment of loans and expenses, plus a marketing agreement regarding SiteWatch technology. None of this is consistent with a partnership involving Hoss and Alardin as individuals but, rather, is consistent with other evidence showing a partnership was never formed. 5. Conclusion

Alardin adduced no evidence of four of the five TRPA factors. He adduced only weak evidence relating to a single TRPA factor, an agreement to share profits. Undisputed evidence, including many admissions by Alardin himself, proved many facts that were inconsistent with the proposition that he and Hoss formed a partnership. Under the totality-of-the-circumstances test prescribed by Ingram, 288 S.W.3d at 898, we conclude that the evidence of a partnership is less than a scintilla, and thus is legally insufficient to support the jurys finding of a partnership. Our conclusion that the jurys finding of a partnership between Hoss and Alardin was supported by legally insufficient evidence negates the predicate for Alardins recovery for breach of fiduciary duty, so we need not consider Hosss remaining issues on appeal. III. APPELLEES CROSS-APPEAL

We next consider the three issues appellees assert in their cross-appeal. They contend (1) the

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evidence is legally and factually insufficient to support the jurys finding that appellees owed Hoss money, (2) the evidence is legally and factually insufficient to support the award of attorneys fees to Hoss, and (3) the trial court erred by rendering a take-nothing summary judgment on appellees breach-of-contract claim. A. Hosss breach-of-contract claim The jury found that each appellee agreed to repay monies advanced by Hoss. As to each of those three parties, Question No. 9 asked, What sum of money, if any, is now due and owing . . . to Gregg Hoss? The jury found that Alardin owed Hoss $117,481, RMT owed Hoss $27,998, and SiteWatch LLC owed Hoss $36,631. The judge rendered judgment against appellees in those amounts. In their first issue on cross-appeal, appellees argue that the evidence is legally and factually insufficient to support the jurys findings that these sums were due and owing. We disagree. A party breaches a contract by failing to perform when that partys performance is due. E.P. Towne Ctr. Partners, L.P. v. Chopsticks, Inc., 242 S.W.3d 117, 123 (Tex. App.El Paso 2007, no pet.); see also Orix Capital Mkts., L.L.C. v. Wash. Mut. Bank, 260 S.W.3d 620, 623 (Tex. App. Dallas 2008, no pet.) (A breach of contract occurs when a party fails or refuses to perform an act that it expressly promised to do.). Appellees concede there is conflicting evidence as to whether they agreed to repay monies to Hoss, but they contend there is no evidence that their alleged obligations to pay ever came due. They contend further that the only evidence in the record conclusively proves that their alleged obligations to pay never came due. Hoss contends there is sufficient evidence that appellees debts to him were due. Appellees argue that Hosss own testimony establishes that they were not obligated to repay his contributions until the SiteWatch project became profitable. They rely specifically on the

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following testimony by Hoss: Q: And youve talked about and youve told us that you think the terms of the loans were that Tony needed to pay that back when the SiteWatch product took off and made a profit, right? And, again, Im not trying to be contentious, but as far as the loans that I personally made? Uh-huh, yes, sir. Yes, that was correct. Angelas original loans were completely different.

A:

Q: A: ... Q:

Your particular loans you saidif I understand your version of how its goingis that, Tony, you need to pay this back when you make it, right? Correct. I dont want to put too fine a point on it, Mr. Hoss, but isnt it just logical if were being here even under your versionand Im trying to talk on your side of things and how you think it is nowthat the truth is even if they were loans under the terms that you just said under your opinion, he hasnt made it, so really theyre not due to him to pay back yet, right? Thats the truth, isnt it? Thats the truth, yes, sir.

A: Q:

A:

Appellees construe this testimony to mean that Hosss loans to them would not come due until the SiteWatch project became profitable, and that in Hosss own opinion that event never came to pass. Hoss responds that there was some evidence to support the jurys finding that appellees debts to him were due and owing. First, he relies on his own testimony that Alardin agreed to pay back each loan Hoss made and that Alardin did not do so. We agree that this is some evidence that the loans were due and owing. Ordinarily a lender does not state that a borrower did not repay him unless the obligation is already due and owing. Hoss also points out that Alardin himself testified that the SiteWatch project did generate some profits, which were reinvested in the company and thus

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not used to repay Hoss. The jury could reasonably have concluded from this evidence that, despite Hosss testimony that Alardin had not made it, the project did reach some level of profitability, thereby triggering appellees obligation to pay Hoss back. We conclude that the evidence was legally and factually sufficient to support the jurys finding that appellees loans from Hoss were due and owing. Accordingly, we reject appellees first issue on their cross-appeal. B. Attorneys fees The jury awarded Hoss his attorneys fees in the amounts of $500,000 for preparation and trial, $100,000 for an appeal to the court of appeals, and $50,000 for an appeal to the Texas Supreme Court. The jury specified those amounts in answer to Question No. 14, which asked, What is a reasonable fee for the necessary services of Gregg Hosss attorneys in regard for [sic] the claim of breach of agreement found by you in answer to Question 7? The judge rendered judgment against appellees in those amounts, specifying that Hoss could recover the appellate fee awards only if he prevailed on appeal. Appellees contend that the evidence is legally and factually insufficient to support the fee awards because Hoss did not adduce evidence segregating his recoverable attorneys fees from fee expenditures that were not recoverable. We have already set forth the standard of review for legal sufficiency of the evidence. When an appellant attacks the factual sufficiency of the evidence to support an adverse finding on an issue on which it did not have the burden of proof, it must demonstrate that there is insufficient evidence to support the adverse finding. Hani v. Jimenez, 264 S.W.3d 881, 886 (Tex. App.Dallas 2008, pet. denied). In a factual-sufficiency challenge, we consider all the evidence and set the verdict aside only if the evidence supporting the jury finding is so weak or so against the overwhelming weight of the evidence that the finding is clearly wrong and unjust. State Farm Lloyds v. Hamilton, 265

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S.W.3d 725, 729 (Tex. App.Dallas 2008, pet. dismd). If a claimant is entitled to recover attorneys fees for some but not all of his claims, he bears the burden of segregating his fees between claims for which they are recoverable and claims for which they are not. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006); A&L Engg & Consulting, Inc. v. Shiloh Apollo Plaza, Inc., 315 S.W.3d 928, 931 (Tex. App.Dallas 2010, no pet.). Segregation is not necessary, however, where the claims are inextricably intertwined. Cooper v. Cochran, 288 S.W.3d 522, 536 (Tex. App.Dallas 2009, no pet.) (citing Tony Gullo Motors, 212 S.W.3d at 312). If legal services are incurred to prosecute a claim for which fees are recoverable, the resulting fees are recoverable even if the services also support claims for which fees are not recoverable. Tony Gullo Motors, 212 S.W.3d at 313; Cooper, 288 S.W.3d at 537. Because Hoss prevailed on his breach-of-contract claim, he was entitled to recover his reasonable attorneys fees incurred in the prosecution of that claim. See TEX. CIV. PRAC. & REM. CODE ANN. 38.001 (West 2008). And the jury question limited the jurys consideration to Hosss fees incurred in connection with his breach-of-contract claims against appellees. Appellees contend that Hosss evidence of fees, however, failed to distinguish between fees incurred to prosecute those particular claims and fees incurred in connection with other claims for which fees were not recoverable. In particular, appellees point out that Hosss evidence showed that the $500,000 in fees incurred before trial were incurred not only to prosecute Hosss breach-of-contract claims, but also to provide representation for parties Angela Hoss, HEC, another company called Hoss Equipment Company Nevada, and Nyle Brasch. Angela Hoss prosecuted claims for breach of contract and for assault, and she did not prevail on those claims. Brasch prosecuted a fiduciary-duty claim against Alardin, and he did not prevail on that claim. HEC did not prevail on its breach-of-contract claim, and Hoss Equipment Company Nevada did not even submit any claims to the jury. Because of these

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failures of proof, appellees contend, the award of attorneys fees to Hoss is supported by insufficient evidence. We agree with appellees. Hoss contends that the parties various claims were so intertwined that he was not required to segregate his fees. He also contends that his defense of Alardins partnership counterclaim was necessary for him to prevail on his breach-of-contract claims because Alardin argued that Hosss contributions to the project were capital contributions and not loans. He also asserts that all the claims in this case involved the same set of facts. Hosss arguments are not persuasive. Intertwined facts do not make [unrecoverable] fees recoverable; it is only when discrete legal services advance both a recoverable and unrecoverable claim that they are so intertwined that they need not be segregated. Tony Gullo Motors, 212 S.W.3d 31314. Thus, fees incurred for the drafting of pleadings and jury-charge materials that related to tort claims or unsuccessful contract claims by other claimants were not recoverable. See id. at 313; see also Allan v. Nersesova, 307 S.W.3d 564, 573 (Tex. App.Dallas 2010, no pet.) ([F]ees incurred in drafting the original and amended petitions and the jury charge relating to the tort claims were not recoverable, while the portion of the fees relating to the contract claim was recoverable.). Hoss points to no evidence showing that the fees incurred in prosecution of the numerous unsuccessful claims brought by Angela Hoss, Brasch, and others also advanced the prosecution of his successful contract claims. Alternatively, Hoss argues that appellees failed to carry their burden to show that segregation was necessary and possible. We agree with appellees that Hoss misplaces the burden of proof. Generally, the party seeking to recover attorneys fees carries the burden of proof. A&L Engg, 315 S.W.3d at 931. If attorneys fees are authorized for some, but not all, of a partys claims, that party generally has the duty to segregate the recoverable from the non-recoverable attorneys fees. Id. In this case, Hoss adduced unsegregated evidence of the total fees his attorneys incurred in

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representing him and all the other parties on his side of the case. We conclude that those legal services necessarily involved some services that did not advance Hosss breach-of-contract claims, such as work done on Angela Hosss assault claim against Alardin, and work done on Braschs partnership claim against Alardin. Thus, Hosss evidence of fees did not support any particular amount of fees that was properly recoverable from appellees. Hoss relies on the case of Cooper v. Cochran in support of his theory that appellees bore the burden of proof on the segregation issue. We conclude that Cooper is distinguishable. In that case, Cooper argued that appellees had failed to segregate their fees, but he failed to point to any instances of legal services for which segregation would be appropriate. Id. at 537. Because the legal services for appellees claims and defenses appeared to be intertwined, we rejected Coopers argument. Id. We read Cooper to mean only that Cooper failed to carry his burden of briefing on appeal by failing to point out why appellees evidence of unsegregated fees was insufficient. In this case, appellees have provided specific reasons Hoss was obliged to segregate his feeshis attorneys represented multiple parties on multiple claims, some of which carried no right to fees and most of which failed at trial. At least some of the work on those claimssuch as work on Angela Hosss assault and breach-of-contract claimswould not support the claims on which Hoss did recover. Accordingly, we conclude that appellees adequately briefed this issue and have demonstrated that Hosss evidence of the unsegregated amount of attorneys fees incurred by his attorneys in this case provides an inadequate evidentiary basis for the jurys finding of his reasonable and necessary attorneys fees incurred in the prosecution of his successful breach-of-contract claims. Unsegregated attorneys fees for the entire case are some evidence of what the segregated amount should be. Tony Gullo Motors, 212 S.W.3d at 314. Accordingly, an award of attorneys fees that is improperly based on evidence of unsegregated fees must be remanded for further

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proceedings on the issue. Id.; A&L Engg, 315 S.W.3d at 93132; Allan, 307 S.W.3d at 57374. We sustain appellees second issue on their cross-appeal. C. Summary judgment Appellees Alardin, SiteWatch LLC, and RMT each pleaded a claim against Hoss for breach of contract, specifically breach of an oral partnership agreement. Hoss sought and obtained summary judgment on these breach-of-contract claims on traditional and no-evidence grounds, contending that the evidence disproved the essential element of damages and that appellees could produce no evidence of damages. In their third issue on cross-appeal, appellees challenge the summary judgment.7 We review a summary judgment de novo. Smith v. Deneve, 285 S.W.3d 904, 909 (Tex. App.Dallas 2009, no pet.). When we review a traditional summary judgment in favor of a defendant, we determine whether the defendant conclusively disproved an element of the plaintiffs claim or conclusively proved every element of an affirmative defense. Id. When we review a noevidence summary judgment, we inquire whether the nonmovant adduced sufficient evidence to raise a genuine issue of fact on the challenged elements. Id. Some additional background is necessary to put appellees argument in context. After Alardin and Hoss had their falling out in early 2005, HEC formed an internal division called Hoss On-Site Solutions (HOSS) to handle the sale of products that were allegedly similar to those involved in the SiteWatch project. According to appellees, evidence that HOSS was profitable is sufficient to defeat summary judgment, because evidence that HOSS was profitable would also be evidence that appellees suffered lost-profits damages caused by Hosss alleged breach of the alleged partnership agreement. In their appellate brief, appellees rely specifically on two pages of summary-

Our conclusion that Alardin failed to prove the existence of a partnership at trial arguably makes any error in the trial courts summary-judgment disposition of his breach-of-contract claim harmless. But even if this were the case, we must address the summary judgment on the merits as to the separate breach-of-contract claims asserted by SiteWatch LLC and RMT. Because we affirm the summary judgment on grounds equally applicable to all three appellees, we do not consider the possible harmless-error point.

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judgment evidence to raise a fact issue whether HOSS was profitable. One page purports to be a profit-and-loss statement for HOSS for the year ended December 31, 2005. It reflects a gross margin of $92,268.85 and reflects zero deductions for overhead such as advertising, rent, and salaries. The other page purports to be a profit-and-loss statement for HOSS for the year ended December 31, 2006. It reflects a gross margin of $277,027.97, but it also contains figures for various items of overhead, leading to a statement of a net loss of over $308,000. We conclude that the evidence cited by appellees does not raise a genuine fact issue on the element of damages. The proper measure of lost-profits damages is lost net profits, not lost gross profits. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 n.1 (Tex. 1992); Texaco, Inc. v. Phan, 137 S.W.3d 763, 771 (Tex. App.Houston [1st Dist.] 2004, no pet.). Net profit is defined as the difference between a businesss total receipts and all of the expenses incurred in carrying on the business. Texaco, Inc., 137 S.W.3d at 771; Turner v. PV Intl Corp., 765 S.W.2d 455, 465 (Tex. App.Dallas 1988), writ denied, 778 S.W.2d 865 (Tex. 1989) (per curiam). Gross profit, by contrast, is the difference between a businesss receipts and the cost of goods sold, without adjusting for additional expenses and taxes. BLACKS LAW DICTIONARY 1246 (8th ed. 2004); see also Adkins Adjustment Servs., Inc. v. Neal, No. 05-00-01419-CV, 2001 WL 1231685, at *1 (Tex. App.Dallas Oct. 17, 2001, no pet.) (not designated for publication) (describing gross profit as revenues less variable costs incurring in generating that revenue). Appellees summary-judgment evidence shows, at most, that HOSS earned gross profits in the years 2005 and 2006. Neither page of evidence relied on by appellees shows that HOSS earned any net profits. The 2005 statement reports only HOSSs gross profits, without accounting for overhead; this is no evidence of HOSSs net profits. See Wiese v. Pro Am Servs., Inc., 317 S.W.3d 857, 86364 & n.4 (Tex. App.Houston [14th Dist.] 2010, no pet.) (evidence of lost revenues

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without deducting normal business operating expenses was no evidence of lost profits); Atlas Copco Tools, Inc. v. Air Power Tool & Hoist, Inc., 131 S.W.3d 203, 209 (Tex. App.Fort Worth 2004, pet. denied) (evidence of lost gross profits constituted no evidence of damages). Although appellees argue that HOSSs statement of a net loss for 2006 instead of a net profit results from creative accounting, they adduced no evidence showing that HOSS actually made a net profit in 2006 or in any other time frame. We reject appellees third issue on their cross-appeal. IV. DISPOSITION

We reverse the judgment in favor of Alardin and render judgment that he take nothing. We reverse the award of attorneys fees to Hoss and remand for further proceedings on that issue alone. In all other respects, we affirm the judgment of the trial court.

KERRY P. FITZGERALD JUSTICE 081192F.P05

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StatementbyAnthonyAlardin WhileIhaverespectinthejudicialsystem,myfaithistarnished.Icouldnotagreelesswiththe 5thCourtofAppealsopinion. OnMarch7,2011,the5thCourtofAppealsintheStateofTexasreversedinpartajuryverdict fromthe160thDistrictCourtinDallas.The5thCourtofAppealsthrewouta$3mjudgment againstGreggHossbutallowedthejudgmentinthatsamecaseagainstAlardintostand.So insteadofHossowingAlardinover$2m;AlardinwasleftowingHossnearly$200k. Thisnullificationofthejuryverdictinacivilbusinessdisputewasmadepossiblebyalong overdueyetconvolutedandcontradictoryopinionwrittenbyJusticeKerryFitzgerald.The CourtsopinionappearstohavecomefromalightobviouslymorefavorabletotheHoss parties.TheCourtwasnotdeferentialtothejuryverdictandappearstohaveignored importantevidencethatthejuryandlowerCourtdidnot.ThejurybelievedAlardinsclaimshad meritandwastheharmedparty,JusticeKerryFitzgeraldandthe5thCourtofAppealsdidnot. FortheAppellateCourttoassertthattherewasntascintillaofevidencetosupportAlardins positiononeachandeverypointtheyclaimisrequiredisabsolutelyuntrue.FortheAppellate CourttoconcludesuchdemonstratestheevidencefocusedontooverturntheDistrictCourt thusnullifythejuryverdictwascherrypicked.AsHosshadpostedanearly$4MAppealBond, thatnullificationsavedtheinsurancecompanythatwrotethebondalargepayout.Thereare currentstudiespublishedbylawjournalsthatconcludejurynullificationoncases(suchasthis) withlargedamageawardsisarecurringthemeintheTexasCivilCourtsystemoflate. http://www.dallasnews.com/business/headlines/20120430texasappellatecourtsoften reverseciviljuryverdictsstudyfinds.ece?nclick_check=1 Itisdishearteningtobelievethefoundationofajudicialopinionmaybegroundedinpolitical ideologyorotherreasonsasopposedtowhatisjust.WhileIhavenoevidencesuchappliesin thiscase;therationaleforjurynullificationinthiscaseinvitesscrutinyofthepersonbehindthe opinion.Lookattheevidenceforyourself. IamnotalawyerbutwilldomybesttolayoutwhereJusticeKerryFitzgerald,writingforthe 5thCourtofAppealsgotitverywrong.Acarefulstudyofthiscaseandevidentiaryexhibits demonstratethelowregardthisCourtandthisJusticehaveforaciviljuryverdict.Thiscase invitesscrutinyastowhetherthereversalmaybegroundedinsomethingotherthanwhatis rightandjust. Itisobviousthe5thCourtofAppealsinTexasdidnotadheretotheverystandardforreview theystateasnecessarytooverturnajurysverdict. Thelogicbehindthe5thCourtofAppealsopinionwrittenbyJusticeKerryFitzgerald overturningtheDallasDistrictCourtjurysverdictisinaccurateandconvolutedinreasoning.

TheAppealsCourtappearstoclaimthatthebulkoftheevidencesupportingAlardinsposition ishisowntestimony,whichissimplyuntrue. TheAppellateCourterredinrulingtherewasnopartnership.Allrequirementsnecessaryfora partnershipwereapplicableandproven.Alardincontendsthatifthejurysverdictistobe vacatedthenhedeservedanewtrialattheleast. 1.Standardofreview(Page5oftheCourtofAppealsOpinion) Whenanappellantattacksthelegalsufficiencyoftheevidencetosupportanadverse findingonanissueonwhichitdidnothavetheburdenofproof,itmustdemonstrate thatnoevidencesupportsthefinding.Cerullov.Gottlieb,309S.W.3d160,165(Tex. App.Dallas2010,pet.denied).Whenevidenceissoweakastodonomorethan createasurmiseorsuspicionofthemattertobeproved,theevidenceisnomorethana scintillaand,inlegaleffect,isnoevidence.Guevarav.Ferrer,247S.W.3d662,668 (Tex.2007)(internalquotationsandcitationomitted).Theevidenceislegallysufficientif itissufficienttoenablereasonableandfairmindedpeopletoreachtheverdictunder review.CityofKellerv.Wilson,168S.W.3d802,827(Tex.2005). Inconductingourreview,weviewtheevidenceinthelightmostfavorabletothe verdictandindulgeeveryreasonableinferencethatwouldsupportit.Id.at822.We mustcreditevidencefavorabletotheverdictifareasonablepersoncould,andwemust disregardcontraryevidenceunlessareasonablepersoncouldnot.Id.at827.Jurorsare thesolejudgesofthecredibilityofthewitnessesandtheweighttogivetheir testimony.Id.at819(footnoteomitted).Butthejurys credibilitydeterminationsmust bereasonable;[j]urorscannotignoreundisputedtestimonythatisclear,positive, direct,otherwisecredible,freefromcontradictionsandinconsistencies,andcouldhave beenreadilycontroverted.Id.at820. ThejuryansweredyestoQuestion16ofthejurycharge,whichinquired,Didapartnership existbetweenAnthonyAlardinandGreggHoss? PartnershipclaimsWhileweproducedcompellingevidenceoneachpointnoneismore blatantlywrongthanthefollowing. (Page14oftheOpinion) C) Control:TheAppellateCourtisincorrectinsayingAlardindidnothave"control". WhileAlardinmayhavetestifiedtodeferringtoGreggHossknowledgeandexperience, AlardinheldcontrolwithGreggHossandneverstatedotherwise. AlthoughAlardinobviouslyparticipatedintheworktoadvancetheSiteWatchproject, Alardincitesnoevidenceshowingthatheexercisedauthorityoverthebusinesss operationsormadeanyofitsexecutivedecisions.Hecitesonlyevidencetendingto showthathedirectedtheHECemployeesthatHossassignedtotheSiteWatchproject.

TheevidenceofcontrolinthiscaseiscomparabletothatinKnowlesv.Wright,288 S.W.3d136(Tex.App.Houston[1stDist.]2009,pet.denied).Inthatcase,Knowles claimedthatheandWrighthadformedapartnership,butheacknowledgedthathehad nosignatoryauthorityforthepartnershipandthathedidnothaveanyauthorityto overrideWrightsdecisions.Id.at147.AlthoughKnowlestestifiedthatheandWright madedecisionstogether,histestimonymadeitclearthathehadnocontroloverthe purportedpartnershipandthatWrightretainedultimatecontroloverbusiness decisions.Id.Inthiscase,Alardinadducednoevidencethatheparticipatedinthe controlofthebusinessorhadanyrightofcontrolexcepttodirecttheHECemployees thatHossassignedtotheSiteWatchproject.AndheacknowledgedthatHosshadthe ultimatepowertodecidewhetheranythingwasdoneornotdoneontheproject. Knowlesv.Wrightdoesnotapplyinthiscaseatall.TheAppellateCourthadtocherrypick testimonytodeterminethis.AlardintestifiedthatGreggHosswashismentorandwhilehe deferredtowardhisjudgment,Alardindidrunthedaytodayoperationsandhadeveryright andauthoritytodootherwiseifhesawfit. ItappearsinthisareatheAppellateCourttakesapositionhereneitherpartyclaimed.Itwas neverdisputedthatAlardinparticipatedinthecontrolofthebusiness/partnershipthatbecame SiteWatchLLC.AlardinclaimedherandaytodayoperationsandGreggHosswashispartnerin theentity.GreggHosspositionwasthatSiteWatchLLCwasAlardinsbusinessandthatHoss wasonlythebankandhadNOCONTROLovertheentity.TheAppellateCourtseemsto contradictbothsidesandventuresoutonitsown.IfAlardindidnothavecontrolofSiteWatch LLCistheCourtstatingthatGreggHossdid?IfHossdidhavecontrolthenhowishenota fiduciarypartnerintheentityhecontrolled? Attrial,thejuryappearstohavebelievedAlardinssidecompletely;thatassumptioncanbe gleanedfromtheirverdict.Butitcutbothways;BecauseAlardinsearlynotesappearto contradictlaterclaimsandfindings.ThecontradictionisactuallyjustnomenclaturewhichIwill addressindetailfurtheron. WhereAlardinsnotescontradictHossaccountingpaperworkthejurybelievedAlardins notes.Asshownintheevidence,severalHECinvoicespaidtoRMTwhichAlardininaccurately referredtoinhisearlynotesasloansratherthancontributionstothepartnershipThejury believedAlardinnotesandawardedHossdamagesfortheloansAlardinreferredto.Yet thesewereafterthefacthandwrittennotesbyAlardinoninvoicespreviouslypaidbyHEC;a paidinvoicecannotalsobealoanmade. Alardintestifiedthatpersonalproperty,inventoryassets,tools,recordsandbusinesstrade secretsofRMT&SiteWatchwereillegallyseizedbyHossinthelockout.Alardinalsoprovided evidencethatshowshowGreggHossengagedanunderhandedschemeorchestratedwith severalHossemployeestodisintegratethebusinesspartnershipwithAlardinknownas SiteWatch.

TheHossstrategyattrialwasabaitandswitchtoconfusethejuryanditpartlyworked. Alardintestifiedthecontributionswerenotloansbutratheranaccountingnomenclature employedbyAlardintokeeptrackofcontributions.Someoftheloanslistedwerefrom Alardinaswellthatsbecauseallwerecontributions.Alardinproducedevidencetoshowthat actualloansmadebetweenthepartiesweredocumentedwithpromissorynotesandrepaid. TheHossclaimsofnonrepaidloansmadetoAlardinmaybeconfusingwithallthevarious entitiesinvolvedandtheverylongtimelinethisoccursover.Thefollowinganalogysumsitup well. Imagineyouborrowmoneyfromabanktobuyacar;afterridinginthecarwithyoufor acoupleofyearsthebankdecidesitwantsthecarback.Despitethefactthatno demandforpaymentwasevermadeoranynoticegiven(for24yearsinmostcases)the bankinexplicablydemandsthatyourepaythecarloaninfull.Meanwhilethebanksells thecaratfullpricetoasubsidiaryitowns.Soyouoweforacaryoudonothaveandthe bankgetspaidforthecarTWICE.Suchascenarioappliesinthiscaseperfectly. TheHossjustificationwasthatsomeofthefundsowedthemwereloanstoAlardinbecause Alardinsnotesclassifiedthemassuchas.ThisclaimrunscountertoHossownpaperworkand accountingexhibits.Hosspaperworkhasseveralloansclassedasfundspaidoninvoicesfor inventory,whichGreggHosssoldtohisbrotherscompany,HossEquipmentNevadaatfull valuethreeandfouryearsaftertheinitialtransaction.SoHossclaimedheisowedmoneyby AlardinforassetsHosssoldtoanotherentity. TheevidencesupportsclaimsfromAlardins3rdamendedpetitioninthatMr.Hossinitially (20012003)hadMr.AlardinsubmitHECinvoicesforuseascapitalcontributionssohecould paperthefileforthebanks.In2003,HECcameunderscrutinyforbankingcovenant infractionssoHosscontributedinotherways.In2004GreggHossactuallywrotecapital contributiononachecktoSiteWatchLLC.Henowclaimsthiswasaloantoo.Evenmoneypaid toSiteWatchafterAlardinwaslockedoutfromhisofficeontheHosspremiseswasbeing claimedbyHossasanafterthefactloan. TheevidenceshowsHossCFOAndySpeercookedtheHECbookstohidetheexistenceofthe SiteWatchpartnershipandthesecretwayGreggHosshadbeenfundingitforyears.Speertook measurestoassureanaccuraterecordofthetransactionslistedasSiteWatchinventorywas keptfromauditorsbyrequiringAlardintosubmitinvoicesforfunding.ThisR&Dfunding methodfortheSiteWatchpartnershipallowedAndySpeertohelpGreggHossconcealcapital contributionstotheSiteWatchpartnership. SiteWatchLLCwasthelegalentityformedinMay2004toencompasstheAlardinHoss partnership.ItwasforcedtoceasethebusinessoperationsitwasformedtodowhenGregg HosslockedAnthonyAlardinfromAlardinsofficeontheHosspremises.OtherHossbusiness entitiesthenproceededtoseizeanddisposeoftoitsbenefitalltoolsandpropertyacquired overthelifeofthebusinessrelationship.SinceallrecordsandpropertywasseizedbyHossin

March2005lockout,therewasneveranopportunityforataxreturntohavebeenfiledby SiteWatchLLC. TheevidenceoffersaclearrecordthatHossplacatedAlardinformonthswithfalse assuranceswhileactinginbadfaithbehindthescenesandfurtherdemonstrateshowHoss breachedhisfiduciaryresponsibilitytothepartnership. AlardinbelievesseveralquestionabletransactionsaswellasotheractionsbyHosspartiesthat occurredintheweeksbeforeandafterreturningfromasuccessfultradeshowwerenot coincidence.ItwasimmediatelyfollowingConExpoinMarch2005thatHosslockedAlardin fromthepremises. Indeposition,TonyAlardinlearnedthatpriortothelockout;GreggHossplantedamole/spy, DavidDurwoodYanceytoworkasasystemadministratorforSiteWatchLLCandtospyon Alardininanefforttofindjustifiablecausetoousthim,whennothingtangiblewasfoundthey decidedtoproceedanywayafterasuccessfultradeshow. GreggHosswasawarethatYanceyhadprioranimositywithAlardinsoanyinformationgleaned spyingonAlardinmightbetainted,yetdiditanyway.Forsuchacriticalpositioninafledgling businessatacrucialtime,itwouldbedifficultenoughforahardworkingloyalstaff;butYancey madenobonesregardinghislackofloyaltytoSiteWatchorAlardin.DavidYanceytestifiedin depositionaboutthegleehetookingettingTonysgoatbyarguingwithhimandcausing commotion.YanceywasfurtheremboldenedbytheknowledgethathissecretpactwithGregg kepthimsafefromsanctionbyAlardin.Thedamagecausedbysuchaseriousbreachoftrustis indefinable.Alardinbelievesthejurydidnotgofarenoughandtherewasmaliceintheactions ofHoss. AlunchmeetingatLaHaciendarestaurantwashastilycalledbyGreggHossthedayafter returningfromConExpo.Atthatmeeting(mentionedintheAppellateCourtsOpinion)David YanceyacknowledgedthespyingactivityagainstAlardinthathadbeenoccurringformonths. TonyAlardinwasshockedthatwhileGreggHossdeniedanyknowledgeofsuchactivity,hedid notcondemntheactivity.ThenwhentheshockofthebetrayaltoAlardindisintegratedto anger,HossaskedAlardintostayawayfromtheofficeforacoupleofweeks.DavidYancey wasthenpromotedratherthansanctionedaftertheadmissionofthemalfeasance. AlardinbelievestheevidenceshowstheargumentbetweenhimselfandYanceywasplanned byHosstoinstigatearancoroussituationtoenableafalseexcusetolockAlardinfromhis officeattheHosspremises. AfterthelockoutremovingAlardinandevidenceoftheSiteWatchpartnership,theHoss partiesconspiredtocreateanewentity,HossOnSiteSolutions,tocontinuewherethe partnershipleftoff.SiteWatchlabelsandbrandingwereremovedfromproductsandmarketing wasreplacedwiththeHossbrand.CustomersandprospectsoftheSiteWatchpartnershipwere

convertedtoHosscustomers.Over$2minsaleswerebookedbyHossoverthenext18months sellingproductsdevelopedfromthepartnership. EventuallyHossstoppedselling;promotingandmarketingsuchproductspresumablybecause continuedsuccesswouldmaketheirclaimsinthistrialmoredifficulttoprovesotheyjust stopped.ButthedamagetoSiteWatchandAlardinwasdone.Millionsofdollarsworthof productsthatmightbeproventobeaprogenyoftheproductsdevelopedbytheSiteWatch partnershipcontinuetobesold. EarlypatentfilingsbyAlardin(andfundedbyHoss)mighthavegreatvaluetodayifHosshad notceasedfundingtheirpursuitinmid2004.Othercompaniesweregrantedpatentsonsimilar productsafterAlardinsclaimswereabandoned;thosecompaniespatents(whichAlardin producedinevidence)arenowearningsubstantialroyalties. HossCFOAndySpeeracknowledgedinanemailapropertyliabilitytoAlardinofover$90k; whilestillalowervaluationthanclaimedbyAlardin,nopropertywasneverreturned.This evidencewasignoredbytheAppellateCourtyetnotthejury. (See evidence below) KylanHossstatedinanemailthatHosswassellingoffthatveryproperty.Thisevidencewas ignoredbytheAppellateCourtyetnotthejury.(See evidence below) ItisunderstandablewhythejurydidnotputmuchfaithintheaccuracyoftheHossfinancial records.TheHossfinancialslooksuspectinmanyways.Documentation(andlackof),high salariesandbigraises,tradesbetweenHossentities,newentitiescroppingup,erroneous expensereports,etc. Hosscannotbebelievedwhentheyclaimtheyearnednoprofitorlostmoneybecause theirfinancialscannotbetrustedandbasedontheverdictthejurydidnot.Documents supportingthispositionareinevidence. Thefollowingmayjustifyfurtherlegalconsideration:SeeHossExhibitP2Chronologyof Events;thedocumentwasthecenterpieceoftheHosscourtroompresentationyetit contradictedmanytheirveryclaimsagainstAlardin,RMTandSiteWatch.SeeHossExhibitA, listofclaims.Ihavelaidouttheevidencesupportingtheseclaims. TheChronologyofEvents(draftedearlyonbyTonyAlardin)shouldnothavebeenallowed asevidenceforthejurysconsiderationbecauseitwasshowntobeinaccurateiftakenatface value.Whilepartofitwaswithheldfromconsideration,theentiredocumentshouldhavebeen. TheChronologyaddsupto$182,110,notthe$125,257thatHoss;tothattime,claimed wasduethemandmanyoftheitemsclaimeddifferaswell. TheadditionalclaimsbyHossweresprungupattrialandpreventedAlardinafair chancetodefendagainstthem,forinstanceAlardinwasunabletodeposeHoss regardingtheneworadditionalclaimsinpreparationfortrial.

ThejuryawardedGreggHossthetotalvalueofallloanslistedontheChronology writtenbyAlardin$182,110. MostoftheloanslistedintheChronologyforbenefitofGreggHossaredebunked bythechecksandinvoiceswithHEC,andtheevidenceproducedsupportsAlardin. AsshownintheirownExhibitAlistingtheirclaimsagainstAlardin;severalofthe loanslistedintheChronologyweresystemspurchasedbyHEC. AsystempurchasedbyHECcannotbealoantoAlardin.

HowcantheybeloanstoAlardinasclaimedbyGreggHossif? A) Hosshaspossessionof(orsoldoff)thepropertythefundswereusedtopurchase.(see inventorylist) B) MostfundsreceivedandreferredtoinP2werefrominvoicespaidbyHEC.(Therewere noloandocumentsbecausetheywerenotloans.) C) GreggHosswasanamedDirectorwithsignatoryauthorityontheSiteWatchLLCbanking accounthavingfullaccesstoallfundsintheaccountheauthorizedcheckspaidto. ThepointherebeingtheywereinfactpartofaschemebyGreggHosstodisguisecapital contributionsassomethingother.ThesepointsbolsterAlardinscontentiontheyhada partnershipandthepaymentsinquestionwerenotloans. SeeHossExhibitA(fromtheiroriginalsuitclaims)whichcontainsthelistoffundsthesuit claimstheyareowed. GreggHossExhibitAlistfromthelawsuitclaimsheisowedof$125,257. Hossneverproducedanycancelledchecksoranydocumentationtosupporttheloan claims. ExhibitAfromHosswasriddledwitherrors.(Iprovidedcorrections,explanation,and counterargumenttoeachpointIcould) WhichoneofthesetwoExhibitsdoesHossclaimisaccurate;theybothcannotbe?In depositionthereistestimonythatmakesthediscrepanciesobvious.DidGreggHossmake claimsincourtthatarecountertotheirownpretrialexhibitsandclaims?YES. DidGreggHossstatethechronologyofevents(whichwastheirP2exhibitattrial)isaccurate andtheloansdepictedthereinindeedowedtoGreggHoss,himself?Thisisveryimportant. Theassumptionfromitsprominentusebythemisyes. Point1:CouldtheargumentbemadethatthedisparitybetweentheChronologyofEvents, P2oftheHosstrialexhibitsandtheiroriginalExhibitA(fromHosstosupporttheirclaimsof loss)beenoughthatP2shouldhavebeensuppressed?YES Evidencenotpresented. Onecaseinpoint:Evidenceshowsthatatleast10%ofthetrailersystemsHossprovidedfor reviewhavesignificantlyinflatedexpensecostsduetoadoublebillingschemewheretwo trailersarebilledintoasingletrailersystem.

This exhibit was prominently displayed by Hoss parties in court and represented as fact (Gregg Hoss award total appears SiteWatch Systems based on it); yet it contradicts their own (Chronology of events) pre-trial list of claims from "Exhibit A" . List of all funds contributed 2001 Gregg Hoss $25,000 2002 Gregg Hoss Gregg Hoss Gregg Gregg Gregg Gregg Hoss Hoss Hoss Hoss $10,000 $12,430 $15,000 $4,395 $17,900 $17,996 September 14, 2001

As was testified to by Tony Alardin; Since all these contributions were run thru RMT for benefit of SiteWatch project partnership, He referred to them as notes or loans for tracking purposes only.

March 7, 2002 (Prep for ConExpo - First trade show) April 18, 2002 (Rather than loan docs - Gregg had me submit invoices on products or inventory for funds as needed. August 2, 2002 - Submitted as loan on 2 demo systems. September 27, 2002 - Submitted as CC charges to pay bills. October 18, 2002 - Submitted as loan on 2 demo systems. November 27, 2002 - Submitted as loan on 2 demo systems.

$77,721
2003 Gregg Hoss Gregg Hoss Angela Hoss Angela Hoss Angela Hoss $14,760 $17,998 $5,500 $10,000 $15,000

Total for 2002

January 2, 2003 - Loan for inventory - 12 Orlacos and other. June 9, 2003 - Submitted as loan to RMT February 7, 2003 - Loan to RMT February 15, 2003 - Loan to RMT April 10, 2003 - Loan to RMT
Total of yellow highlighted items: $121,084 on this list was paid on invoices to HEC from RMT. Hoss Equipment even carried these items on inventory and sold them for full value to Hoss - Nevada in 2005.

$30,500
Anthony Anthony Anthony Anthony Alardin Alardin Alardin Alardin $5,600 $4,000 $3,000 $3,500

Total
September 3, 2003 - Loan to RMT September 12,2003 - Loan to RMT November 16, 2003 - Loan to RMT November 18, 2003 - Loan to RMT

$16,100
2004 Gregg Hoss Anthony Anthony Anthony Anthony Alardin Alardin Alardin Alardin $10,000 $5,314 $4,000 $15,500 $1,500

Total for 2003

January 16, 2004 - Loan to RMT February 13, 2004- Loan to RMT March 29, 2004 - Loan to RMT April 7 2004 - Loan to RMT May 6, 2004 - Loan to RMT
Total of yellow and pink highlighted are all claimed by Gregg Hoss. They add to $182,110. The same total as found against the Alardin parties.

$26,314
Gregg Hoss Gregg Hoss $9,906 $26,725

Total for 2004

July 29, 2004 - Loan to SiteWatch LLC for inventory September 7, 2004 - Loan to SiteWatch LLC for starting capital (Accumulated bills and MineExpo trade show)

$36,631 Totals

Total loans to SiteWatch LLC $157,110 $30,500 $42,414

Gregg Hoss Angela Hoss Anthony Alardin

NOTE: Items highlighted in yellow are listed on "Chronology" Exhibit by Hoss and Gregg Hoss was awarded those amounts as "loans", even though their description differs from "Chronology" description and Hoss claims here most "Chronology items were purchases by Hoss for re-sale. For items Hoss refers to as "loans" here; No supporting documentation was produced. Not even cancelled checks.
Date
12101199 03/01/01 05/01101 05/04/01 06129101 07110/01 09104/01 09/14/01 01131102 02107103 02115103 03106102 04110/03 04/15/02 04/18102 08102102 08113/02 09127/02 10101/02 10103/02 10/18102 11/27/02 12123/02 01102/03 02107/03 02115/03 55030 10356 57754 1971 1972 1999 FA648 3475 9796 I FA594 Cheekfwire IlIYoiee number number Stock number Amount Money Provider Money Recipient T. Alantin Loan RMT
RMT

o co

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o

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'-

DeseriptioD

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$6,000,00 HEC $13,363.31 HEC $5,690.00 A. Hoss $6322.50 A. Hoss $17,769.15 MEC $20,000.00 MEC $17,769.15 MEC $25.000.00 MEC $1,125.80 HEC $5,500.00 A.Hoss $10.000.00 A.Hoss SIO,OOO.OO HEC SI5,OOO.00 A. Hoss $5,000.00 G.Hoss STLOUl 1007 SWI002 & SWI003 $12,430.00 HEC $15,000.00 HEC $5.838.75 G. Hoss $4,395.00 G. Hoss $5,000_00 G.Hoss $7,077.30 G_Hoss 1012 1014 1015 SWI004& SWI005 SWI006& SWlO07 SWI008 $17,900.00 HEC $17,996.00 HEC $1,462.70 G. Hoss $14,760.00 MEC $5,500.00 A.Hoss $10 000.00 A. Hoss

Purchase 15t System for Fixed Assets-Main Irving Yd Loan

RMT
RMT RMT
RMT

LoBO
Purchase 2nd Sys\l:m for Fixed Assets-Nevada Yd Loan See promissory note repaid 7/2001 Purcbase 3rd System for Fixed Assets-MN Yd Purchase 1st Inventory-Stock 113475 for resale Fee
Loan Loan Loan
co m co

101J4

1972

FA612

RMT RMT

RMT
RMT
RMT RMT RMT
RMT

10868

LoBO
Loan for RM1"s lel!al fees BEC bought Ibis system, which RMT Iben sold again and kent the sales moceeds. Purchase Ioventory for resale-tiSWI 002 & 1003 Loan for RMT's leeal fees
Loan for credit-card charges

..

1653 11040 11397 1665 1672 1673 11643 11774 1681 11869

RMT'." RMT RMT RMT

RMT

Loan for RMT's leeRI fees Loan for RMT's legal fees Purchase Inventory for resale-# SW I004 & 1005 Purchase Inventory for resale1ISWI 006 & 1007 Loan for RM1"s Ieeal fees Purchase Inventory for resaie-tiSW1008 Loan Duplicate from above Loan

RMT

RMT
RMT RMT RMT

--

II

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o

iii

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=i

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--...

ro

o '" o

Date 04/10/03 06/09/03 06119103 09/04/03 10/16/03 10127/03 11/12103 11120/03 12123/03 01/16/04 01126/04 05/10/04 06102/04 07/12104 07120/04 08130/04 09113/04 10/11104 11123/04 04/08/05 Total

Cheeklwire Invoice nnmber number

1231l 1694 1702 16227 12657 1710 1713 12820 12891 13208 13271 1732 1734 174<i 1748 13619 76221 14166 1020

Slock number
SWI009

Amount

Money Provider

1026 1027

SWIOI0 SWI011

1033 1036 1030 1038

SWI012 SWI012 Various SWI013

1003 1006

SWIOI4 FA948

$15,000.00 A. Hoss $17,998.00 HEC $1,447.00 G. Hoss $2382.42 G.Hoss $13 500.00 HEC $1,649.85 BEe $5,000.00 G. Hoss $5,000.00 G. Hoss $10,877.00 FlEC $10,000.00 G.Hoos $5,314.28 HEC $9,000.00 HEC $18,000.00 HEC $5,482.39 G.Hoss $9,906.00 G.Hoss $16,000.00 G.Hoss $26,725.00 G. Hoss $22,992.80 BEC $11,442.70 HEC $14,541.28 G.Hoos $498,158.38 $251,458.04 $48,430.00 $73012.50 $125,257.84 $498,158.38

Money Recipient RMT RMT RMT RMT RMf RMf T. Alardin T. Alardin

Description

RMT RMT
RMT RMT RMT RMT SiteWatcb SiteWatcb SiteWatcb SiteWatch SiteWatch SiteWatch

Duplicate from above Loan Purchase Inventorv fur resale-#SWI 009 Loan fur RMT's leWlI fees Loan for RM"I's leWl1 fees Purchase Inventory for resale-#SWIOI0 PuIcbase Inventorv for resale-#SWI011 Loan Loan Pun:hase InventorY for resale-#SW 10 12 Loan Purchase Inventory for resale-# SW10 12-addl costs Purchase Inventorv for re.lale-#3880,3527,C422 Purchase Inventorv for re.sale-#SWI013 Loan for RM"I's leWl1 fees
Loan
Loan Check Flip - See repayment check on same day. Loan to pay bills and for Mine Exoo Purchase Inventory fur resale-#SWl014 Purchase 4th Svstem for Fixed Assets-Dallas Yd Loan-advance bv HEe

'"

."

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Z H

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I

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HEC svstems boumt for FA & Invemo v & files BEC loans I
A. Moss loans G. Hoss loans Total I

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Tony Alardin's rebuttal to the accuracy of Hoss' "Exhibit A". I left off the duplicates from "Exhibit A" this exercise. Legal fees in listed were paid by Hoss directly to attorney's designated and not paid to Alardin to pay.
Date Chk num Inv Num Stock Num 12/1/1999 3/1/2001 9796 1 FA594 5/1/2001 5/4/2001 6/29/2001 10134 1972 FA612 7/10/2001 7/31/2001 1032 9/4/2001 55030 1971 FA648 9/14/2001 10356 1/31/2002 57754 1999 3/6/2002 10868 4/15/2002 1653 4/18/2002 11040 STLOU1 8/2/2002 11397 1007 SW1002-3 8/13/2002 1665 9/27/2002 10/1/2002 1672 10/3/2002 1673 10/18/2002 11643 1012 SW1004-5 11/27/2002 11774 1014 SW1006-7 12/23/2002 1681 1/2/2003 11869 1015 SW1008 2/7/2003 2/15/2003 4/10/2003 6/9/2003 12311 1020 SW1009 6/19/2003 1694 9/4/2003 1702 10/16/2003 16227 1026 SW1010 10/27/2003 12657 1027 SW1011 11/12/2003 1710 11/20/2003 1713 12/23/2003 12820 1033 SW1012 1/16/2004 1/26/2004 12891 1036 SW012 5/10/2004 13208 1030 3 Orlaco Amount $6,000.00 $13,363.31 $0.00 $6,322.50 $17, 769.15 $20,000.00 ($20,000.00) $17,769.15 $25,000.00 $1,125.80 $10,000.00 $5,000.00 $12,430.00 $15,000.00 $5,835.75 $4,395.00 $5,000.00 $7,077.30 $17,900.00 $17,996.00 $1,462.70 $14,760.00 $5,500.00 $10,000.00 $15,000.00 $17,998.00 $1,447.00 $2,382.42 $13,500.00 $1,649.85 $5,000.00 $5,000.00 $10,877.00 $10,000.00 $5,314.28 $9,000.00 Fund prov Fund Recepien Hoss Exhibit A rebuttal -Description HEC Alardin Loan (Gregg vebally forgave in 2002) HEC RMT Hoss purched for own use -Irving A Hoss RMT $5,690 AL Consulting Lease guarantee to Happy Merm A Hoss RMT 6,322.50-was lease total for Happy Mermaid above -cu HEC RMT Hoss purchased for own use -Nevada HEC RMT (Promissory Note) Loan adavnce for PO with Empress RMT HEC Promissory Note above repaid HEC RMT Hoss purchased for own use -MN Yard HEC RMT Initial contribution to partnership HEC RMT Software license purchased for Irving Yard HEC RMT Contribution to partnership -prep for ConExpo G Hoss Haynes Boone Legal fees contribution for partnership HEC RMT Contribution to partnership -R& D -Airport project HEC RMT Contribution to partnership G Hoss Haynes Boone Legal fees contribution for partnership G Hoss CC charge Contribution to partnership G Hoss Haynes Boone Legal fees contribution for partnership G Hoss Haynes Boone Legal fees contribution for partnership HEC RMT Contribution to partnership HEC RMT Contribution to partnership G Hoss RMT Legal fees contribution for partnership HEC RMT Contribution to partnership A Hoss RMT Contribution to partnership -Per Gregg Hoss A Hoss RMT Contribution to partnership -Per Gregg Hoss A Hoss RMT Contribution to partnership -Per Gregg Hoss HEC RMT Contribution to partnership G Hoss Haynes Boone Legal fees contribution for partnership G Hoss Haynes Boone Legal fees contribution for partnership HEC RMT Hoss purchased for own use OR RE-SALE -Zachry SA HEC RMT Hoss purchased for own use OR RE-SALE -Makepeac G Hoss Alardin-? ?? Legal fees -contribution for partnership -?? G Hoss Alardin-? ?? Legal fees -contribution for partnership -?? HEC RMT Hoss purchased for own use OR RE-SALE -Ingersoll R G Hoss RMT Contribution to partnership HEC RMT Ingersoll Rand job expenses -Hoss repaid by IR HEC RMT Hoss purchased for own use OR RE-SALE

6/2/2004 7/12/2004 7/20/2004 8/30/2004 8/31/2004 9/13/2004 10/11/2004 11/23/2004 4/8/2005

13271 1732 1734 1746 1045 1748 13619 76221 14166

1038 9 Orlaco

1003 SW1014 1006 FA948

$18,000.00 $5,482.39 $9,906.00 $16,000.00 ($16,000.00) $26,725.00 $22,992.80 $11,451.28 $14,541.28 $398,298.81 $401,882.31

HEC G Hoss G Hoss G Hoss RMT G Hoss HEC HEC G Hoss

RMT RMT SiteWatch RMT HEC SiteWatch SiteWatch SiteWatch SiteWatch

Hoss purchased for own use OR RE-SALE Legal fees contribution for partnership Contribution to partnership -Tropos radios demos

Capital contribution to partnership Hoss purchased -MLK Installation Hoss purched for own use -Irving Parts Yard Contribution to partnership -Bills and expenses paid A

Totals

Get copies of all checks from G Hoss and A Hoss - Produced none HEC Syst $125,043.47 Get copy of $16,000 ?chk #1746 ?8/30/04 HEC Loa $6,000.00 $270,838.84 G Hoss or thru HEC Contributions to Partnership $401 882 31

The Appellate Court inaccurately referred to this document as a CREDIT APPLICATION rather than a Notarized Application for the SiteWatch LLC bank account which Hoss had signatory power on.

In Hoss' Exhibit A; They list the loan associated here but do not list this repayment. Notice it is also the only "loan" with a promissory note associated with it.

In Hoss' Exhibit A; They list the loan associated here but do not list this re-payment. Notice the date and the payee, It differs from the way Hoss lists it. (to SiteWatch not RMT)

Important: Hoss claims it should keep the items listed here (then sold to Hoss-Nevada for full value) and also be repaid by Alardin the money spent to acquire it.

This is a transaction related to an item listed on both "Chronology" and Exhibit A Hoss carried the item related to this invoice on their inventory on Exhibit A and as a loan from Gregg Hoss on "Chronology" above.

RMT invoice 1020.max

Important: Hoss claims it should keep the items listed here (then sold to Hoss-Nevada for full value) and also be repaid by Alardin the money spent to acquire it.

This is a transaction related to an item listed on both "Chronology" and Exhibit A Hoss carried the item related to this invoice on their inventory on Exhibit A and as a loan from Gregg Hoss on "Chronology" above.

RMT invoice 1020.max

Important: Hoss claims it should keep the items listed here (then sold to Hoss-Nevada for full value) and also be repaid by Alardin the money spent to acquire it.

This is a transaction related to an item listed on both "Chronology" and Exhibit A Hoss carried the item related to this invoice on their inventory on Exhibit A and as a loan from Gregg Hoss on "Chronology" above.

RMT invoice 1020.max

Important: Hoss claims it should keep the items listed here (then sold to Hoss-Nevada for full value) and also be repaid by Alardin the money spent to acquire it.

This is a transaction related to an item listed on both "Chronology" and Exhibit A Hoss carried the item related to this invoice on their inventory on Exhibit A and as a loan from Gregg Hoss on "Chronology" above.

RMT invoice 1020.max

Important: Hoss claims it should keep the items listed here (then sold to Hoss-Nevada for full value) and also be repaid by Alardin the money spent to acquire it.

This is a transaction related to an item listed on both "Chronology" and Exhibit A Hoss carried the item related to this invoice on their inventory on Exhibit A and as a loan from Gregg Hoss on "Chronology" above.

RMT invoice 1020.max

Important: Hoss claims it should keep the items listed here (then sold to Hoss-Nevada for full value) and also be repaid by Alardin the money spent to acquire it.

This is a transaction related to an item listed on both "Chronology" and Exhibit A Hoss carried the item related to this invoice on their inventory on Exhibit A and as a loan from Gregg Hoss on "Chronology" above.

RMT invoice 1020.max

Important: Hoss claims it should keep the items listed here (then sold to Hoss-Nevada for full value) and also be repaid by Alardin the money spent to acquire it.

This is a transaction related to an item listed on both "Chronology" and Exhibit A Hoss carried the item related to this invoice on their inventory on Exhibit A and as a loan from Gregg Hoss on "Chronology" above.

RMT invoice 1020.max

This shows how Hoss disposed of the transactions related to the invoices above by selling to another Hoss entity.

Invtry EQUIP Sort By LOC-SUM

Page 1 of 1

INVENTORY-SORT BY LOCATION / STOCK # -SUMMARY ONLY HOSS-TX Consignment: No, Equipment Type: EQUIPMENT, Sold Date: '', Purhased From: Remote* Location Stock Type Model No. Serial No. Mfg. Year Raw Costs Parts Labor Overhead Other Costs Total Cost

January 2, 2004 Page Purhased From 1

ANDY Report ID: 50029 Purchase Date

IRVING IRVING IRVING IRVING IRVING IRVING IRVING IRVING IRVING IRVING IRVING

3475

MEQ MISC

SITEWATCH

SITE SITE SITE SITE SITE SITE SITE SITE SITE SITE SITE

2001 2002 2002 2002 2002 2002 2002 2002 2002

25,000.00 0.00 7,500.00 7,500.00 8,000.00 9,900.00 8,998.00 8,998.00 14,760.00 17,998.00 10,877.00

192.66 2,983.92 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 7,409.75 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 8,377.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

SW1001 MEQ SiteWatch SW1001 SW1002 MEQ SiteWatch SW1002 SW1003 MEQ SiteWatch SW1003 SW1004 MEQ SiteWatch 1005 SW1005 MEQ SiteWatch 1006 SW1006 MEQ SiteWatch 1007 SW1007 MEQ SiteWatch 1008 SW1008 MEQ Orlaco SW1008

SW1009 MEQ SiteWatch SW1009 SW1012 MIS SiteWatch SW1012

25,192.66 Remote Monitoring Technologies 18,771.17 Remote Monitoring Technologies 7,500.00 Remote Monitoring Technologies 7,500.00 Remote Monitoring Technologies 8,000.00 Remote Monitoring Technologies 9,900.00 Remote Monitoring Technologies 8,998.00 Remote Monitoring Technologies 8,998.00 Remote Monitoring Technologies 14,760.00 Remote Monitoring Technologies 17,998.00 Remote Monitoring Technologies 10,877.00 Remote Monitoring Technologies

09/14/01 05/06/02 08/01/02 08/01/02 10/18/02 10/18/02 11/27/02 11/27/02 01/02/03 06/11/03 12/23/03

TOTAL11119,531.003,176.587,409.758,377.500.00138,494.83 GRAND TOTAL 11119,531.003,176.587,409.758,377.500.00138,494.83

Hoss inventory list showing they carried the items from invoices above purchased from RMT as inventory for years then sold them to Hoss-Nevada then claim they loans to Alardin in court.

SITE - 3377 - A

Hoss inventory list showing they carried the items from invoices above purchased from RMT as inventory for years then sold them to Hoss-Nevada then claim they loans to Alardin in court.

Monday, October 08, 2007 (2).max

SITE - 9624

Manufacturer Adams ADB Antenex Antenex Appleton Appleton Appleton Appleton Appleton Appleton Appleton Appleton Axis 2400+ Axis 2401 Bolide Brady Brady Carlon Carlon Carlon Charles Industries Commscope Commscope Commscope Commscope Connectronics Bolide Connectronics Costar Costar Costar Costar Costar Costar Costar Costar Costar Dell Dell Dell Dell Dell Draka Comteq Edwards Signal EGS F-Conn Generec Brand Gorilla Guard Grainger

Product Description Qty Model Number Product Type Switch 5 Solar Trailer network hubs 2,000 lb. flip ring 28 34030 Guy wire holds Antenna's 2 900 mGZ Omni Directional Antenna 1 2.4 gHZ Shark Fin Yagi 90 LT connector 1 1/2" 18 ST-90150 Solar Trailer Bottom 90's Straight LT Connector 1/ 1/2" 20 ST-150 partnership inventory at time of lockout. Pulling Elbows 1 1/2"This is a list 4 of SiteWatch FF2-150 Cord Grip .625-.750 13 CG-62100 Cord grips old style Cord Grip .750-.875 8 CG-75100 Cord grips old style As you can 7see CG-87100 below this inventory was disposed of under their Cord Grip .875-1.000 Cord grips old style new entity Hoss On-Site Solutions Cord Grip 1.000-1.125 9 CG-100125 Cord grips old style Cord Grip 1.125-1.375 20 CG-125125 Cord grips old style Video Server 4 4 Port Video Server 2 1 Port IR Illuminator 1 40M Infra-Red Illuminator on V.V. Office ID Expret 1 XPERT-ABC Label Maker ID Pal 1 IDPAL-ABC Label Maker 1 1/2" Elbow 10 LT20H 1 1/2" Non-Metallic 90 1 1/2" LT NM Tubing 100' 2 15110-100 Solar Trailer Black Tubing - 100' 1" LT NM Tubing 100' 1 Solar Trailer Gray Tubing - 100' Power Inverter 2 PC12500 Solar Trailer Power Inverter RG6 w/ 18X2 1 5654 Coaxial Cable 500' roll RG59 W/ 18X2 & GROUND 1 5554M Coaxial Cable 100' roll 1000' Outdoor Cat5e 4 2 rolls were freebies from phone company 1000' Cat59 w/ 18X2 & ground 1 Enclosures 9 Enclosures w/power supplies IR Pro camera 1 in Dave's office 24VAC Harness 1 Camera Power Harness Power Supply 1 shell (only enclosure no guts) Power Supply 2 12 VDC single output Color Camera 4 CCC3570N Color Camera Color Camera 7 CCC3575NNL Color Camera Black & White Camera 1 CCM3660N Black & White Camera Color Camera 1 CCC3560N Color Camera Camera Housing 3 Camera Arm 1 PTZ Stardome w Enclosure 1 Mounted on SW Corner of Shop Server Rack 1 221-0362 Daves Office Poweredge 750 1 462-8882 Daves Office Powerdege 1750 1 462-3309 Daves Office Poweredge 2650 1 462-3307 Daves Office 8 Port Switch 1 462-9032 Daves Office 500' Direct Burial Cat5e 1 Freebie from Phone Company Industrial Strobe Light 1 24 VAC on the ConExpo Tower 1 1/2" Pipe Hangers 100 CH-400-B Solar Trailer Coduit Hangers RG6 BNC 65 FS6BNC RG6 BNC Connectors USB Burner 1 on our office Trailer Keeper 9 TK100 Solar Trailer Wheel Boot Men Working Flag 2 4HC80 Safety Flag

Cost $175.00 $25.00 $119.00 $129.00 $7.50 $7.50 $7.50 $4.50 $4.50 $4.50 $4.50 $4.50 $995.00 $695.00 $395.00 $399.00 $138.99 $5.00 $838.34 $462.00 $461.00 $250.00 $100.00 $200.00 $200.00 $1,075.00 $275.00 $40.00 $15.00 $25.00 $540.00 $670.00 $410.00 $520.00 $30.00 $20.00 $1,975.00 $1,400.51 $2,903.00 $2,880.47 $3,412.00 $188.00 $100.00 $290.00 $0.99 $2.00 $100.00 $75.00 $75.00

Ext Cost $875.00 $700.00 $238.00 $129.00 $135.00 $150.00 $30.00 $58.50 $36.00 $31.50 $40.50 $90.00 $3,980.00 $1,390.00 $395.00 $399.00 $138.99 $50.00 $1,676.68 $462.00 $922.00 $250.00 $100.00 $800.00 $200.00 $9,675.00 $275.00 $40.00 $15.00 $50.00 $2,160.00 $4,690.00 $410.00 $520.00 $90.00 $20.00 $1,975.00 $1,400.51 $2,903.00 $2,880.47 $3,412.00 $188.00 $100.00 $290.00 $99.00 $130.00 $100.00 $675.00 $150.00

Retail Ea $269.00 $38.00 $183.00 $198.00 $12.00 $12.00 $12.00 $7.00 $7.00 $7.00 $7.00 $7.00 $1,531.00 $1,069.00 $608.00 $614.00 $214.00 $8.00 $1,290.00 $711.00 $709.00 $385.00 $154.00 $308.00 $308.00 $1,654.00 $423.00 $62.00 $23.00 $38.00 $831.00 $1,031.00 $631.00 $800.00 $46.00 $31.00 $3,038.00 $2,155.00 $4,466.00 $4,431.00 $5,249.00 $289.00 $154.00 $446.00 $2.00 $3.00 $154.00 $115.00 $115.00

Retail Ext $1,345.00 $1,064.00 $366.00 $198.00 $216.00 $240.00 $48.00 $91.00 $56.00 $49.00 $63.00 $140.00 $6,124.00 $2,138.00 $608.00 $614.00 $214.00 $80.00 $2,580.00 $711.00 $1,418.00 $385.00 $154.00 $1,232.00 $308.00 $14,886.00 $423.00 $62.00 $23.00 $76.00 $3,324.00 $7,217.00 $631.00 $800.00 $138.00 $31.00 $3,038.00 $2,155.00 $4,466.00 $4,431.00 $5,249.00 $289.00 $154.00 $446.00 $200.00 $195.00 $154.00 $1,035.00 $230.00

Manufacturer Grainger Grainger Grainger Grainger Grainger Grainger Grainger Grainger Grainger Grainger GreenLee GreenLee Halex Hoffman Hoffman Hoffman Hoffman Hoffman Hubbell Hubbell Hubble Hubble Hyperlink Hyperlink HyperLink HyperLink HyperLink HyperLink HyperLink HyperLink Bolide Bolide Intermec Intermec Intermec IO Gear IQEye3 IQEye3 Leviton Louroue Electronics Maxrad Maxtor Microhard Misc Misc Mohawk Mohawk NetGear NetGear

Product Description Mini Amber Lightbar First Aid Kit 4-6ft. Lanyard Full Body Harness 6ft. Cross arm strap Positioning assembly Large surveyors vest X-Large surveyors vest Barrier tape dispenser 28 in. plastic cone ToolBox 6.7 cu. Ft. Caster Set 1" Pipe Hangers Enclosures Enclosure Lock Kits Enclosure Flathead door latch Fiberglass Enclosure 6X6" Hinged Box 110V Cord Ends Male 110V Cord Ends Female Cable Track per foot Mounting feet per pair Amplifier Antenna's Antenna Antenna Antenna Antenna's Antenna Antenna Bolide IR Camera 22x zoom camera Antenna's Antenna's Access Point KVM Switch Network Megapixel camera Network Camera EZRJ45 Audio Antenna 250Gig Hard Drive Access Point Coaxial Cable Reel Wire 18AWG X 2 1000' Cat6 Outdoor 1000' Cat5e Outdoor Router 24 Port Switch

Qty 1 2 4 1 3 1 2 2 2 24 2 1 15 2 2 5 9 18 10 10 78 10 2 2 1 3 2 2 1 2 1 1 2 1 4 1 1 1 150 1 1 1 1 1 1 2 2 1 1

Model Number 3LY39 4TB84 4RC52 4YF80 1AG81 5WG68 1N934 1N932 1EC16 2W697 1636 694 67820

UU504020 A606CH HBL5266C HBL5269C HCT161191 HCTBK161 WL05MU

4' Parabolic Hotshot Yagi 9" omni

Y8963 71489 2101 303 302 47613-EZC SR47511 2' parabolic NT910

M57622 DS108

Cost $171.00 $28.70 $68.63 Boom truck safety lanyard $109.45 Boom truck safety harness $41.90 Boom truck saftey Boom truck safety $58.05 safety vests $18.33 $18.86 safety vests $3.99 do not enter saftey tape $11.60 orange cones $295.00 Portable Tool Box $101.00 Caster Set of 4 $0.69 Solar Trailer Coduit Hangers $16.00 Cable Box Enclosures Small 10 X 8 $16.00 $5.00 $211.00 Solar Trailer Main Box $46.70 Solar Trailer Top Boxes $16.72 Make your own Extension Cord Ends $29.30 Make your own Extension Cord Ends $14.20 solar trailer cable track $8.55 cable track mounting feet $595.00 500 mBS Antenna Amplifier 5 dBI $99.00 Little Puck Antenna $89.00 2.4 gHZ Yagi $119.00 Steel Mesh Antenna 2.4 gHZ $129.00 Omni Antenna 2.4 gHZ $99.00 12" 2.4 gHZ Solid Parabolic $129.00 Antenna 2.4 gHZ $129.00 Omni Direction Antenna 2.4 gHZ $475.00 $795.00 $129.00 900 mGZ Yagi $89.00 Diversity Antenna $1,195.00 Access Point $425.00 Dave's office $1,795.00 Three megapixel $1,495.00 Two megapixel $0.64 Pull Through RJ45 Connectors $75.00 Audio module $99.00 antenna on the light tower $275.00 Daves Office $995.00 Spectra NT retracting coaxial cable reel from original solar traile $250.00 $75.00 Security & Camera Wire 500' roll $295.20 Outdoor Plant Cat6 - 1000' $295.20 Burial Rated Cat5e+ - 1000' $99.00 Router in our office $299.00 Daves Office Product Type Truck mounted light bar

Ext Cost $171.00 $57.40 $274.52 $109.45 $125.70 $58.05 $36.66 $37.72 $7.98 $278.40 $590.00 $101.00 $10.35 $32.00 $32.00 $25.00 $1,899.00 $840.60 $167.20 $293.00 $1,107.60 $85.50 $1,190.00 $198.00 $89.00 $357.00 $258.00 $198.00 $129.00 $258.00 $475.00 $795.00 $258.00 $89.00 $4,780.00 $425.00 $1,795.00 $1,495.00 $96.00 $75.00 $99.00 $275.00 $995.00 $250.00 $75.00 $590.40 $590.40 $99.00 $299.00

Retail Ea $263.00 $44.00 $106.00 $168.00 $64.00 $89.00 $28.00 $29.00 $6.00 $18.00 $454.00 $155.00 $1.00 $25.00 $25.00 $8.00 $325.00 $72.00 $26.00 $45.00 $22.00 $13.00 $915.00 $152.00 $137.00 $183.00 $198.00 $152.00 $198.00 $198.00 $731.00 $1,223.00 $198.00 $137.00 $1,838.00 $654.00 $2,762.00 $2,300.00 $1.00 $115.00 $152.00 $423.00 $1,531.00 $385.00 $115.00 $454.00 $454.00 $152.00 $460.00

Retail Ext $263.00 $88.00 $424.00 $168.00 $192.00 $89.00 $56.00 $58.00 $12.00 $432.00 $908.00 $155.00 $15.00 $50.00 $50.00 $40.00 $2,925.00 $1,296.00 $260.00 $450.00 $1,716.00 $130.00 $1,830.00 $304.00 $137.00 $549.00 $396.00 $304.00 $198.00 $396.00 $731.00 $1,223.00 $396.00 $137.00 $7,352.00 $654.00 $2,762.00 $2,300.00 $150.00 $115.00 $152.00 $423.00 $1,531.00 $385.00 $115.00 $908.00 $908.00 $152.00 $460.00

Manufacturer Norvell Orlaco Paint Store Panduit Panduit Panduit Panduit Panduit Panduit Pelco Pelco Pelco Pelco Pelco Pelco Pelco Pelco Pelco Pelco Priority Quadroxx WebCCTV Revere Rohn Rohn Rohn Rohn Samsung Samsung Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Custom Sitewatch Trailer Sitewatch Trailer SmartBridges Sonicwall Sony Stahlin Stahlin

Product Description Power Supply Back-Up System Sitewatch Orange spraycans Heat Shrink tubing 1/2" Heat Shrink tubing 3/4" Heat Shrink tubing 1" Heat Shrink tubing 1 1/2" Outdoor RJ45 Jack Outdoor RJ45 Plug Accessory Matrix KeyBoard Conduit Adapter Camera Power Supply PTZ Camera 24VAC Power Supply Spectra Enclosures Control Keyboard PT Unit & Controller 500' 18AWG X 10 Wireless System 24VAC Power Block Antenna Tower middle section Antenna Tower top section Antenna tower work platform Tower short base PTZ Camera PTZ Controller Accessory Camera Mount Sun Shroud Sun Shroud Portable Stand Portable Carts Antenna Extensions Antenna Extensions Portable Carts Light Tower Enclosure Antenna Pole Antenna Pole Antenna Pole Antenna Pole Solar Trailer Solar Trailers w/ mounts Access Point Firewall SNCRZ30N w enclosure Enclosure Enclosure

Qty 9 2 12 1 1 1 1 1 11 1 1 2 1 1 1 3 3 1 1 1 1 3 3 1 1 1 1 1 3 1 7 1 3 1 1 1 1 1 1 1 1 1 1 6 2 1 1 4 1

Model Number Product Type PS3-D65250-001-00 Custom for Sitewatch Power Module Full Systems w/Camera & Monitors Solar Trailer Touch-up paint HSTTV50-Y Heat Shrink tubing 100' roll HSTTV75-Y Heat Shrink tubing 50' roll HSTTV100-Y Heat Shrink tubing 50' roll HSTTV150-Y Heat Shrink tubing 50' roll CJSI5E88T Sheilded TX5e Jack MPSI588T SHeilded TX5e Plug CM6700/MUX Wiring Kit ICS 300-Cond Conduit Adapter Espirit PTZ WCS4-20 4 output/input power supply (installed in lock-up) Espirit Demo Unit At Valley View Yard 8 camera Daves Office MLK MLK KBD200 Keyboard Solar Trailer PT Device Solar Trailer 18X10 - 500' Embedded XP original wireless box RT-2440SL/M 24VAC Camera Power Supply 25G 10 ft. section 25AG 9' top section WP25G galvanized platform SB25G base for 25G tower Mounted on NE Corner of V.V. Shop Module XL Steel Painted Green Aluminum Sun Shrouds 12' portable steel pole with enclosure mounts w/wheels 10' 12' Weighted Cart Base to fit a Rohn Tower SiteWatch Light Tower and generator oversized enclosure for light tower pole for demo unit at Hoss Valley View Antenna Pole outside our office Antenna pole at Alans Office Demo Unit At Valley View Yard Ready for delivery (no camera or radios) Solar Trailers ready for cabling Airpoint XO2 Daves Office On ConExpo trailer Fiberglass Enclosure Fiberglass Enclosure

40' 50' 50' 30' TS-01 - TS-10 TS-01 - TS-10 SB5100

J1412HPL J161408HPL

Cost $875.00 $1,375.00 $5.00 $350.00 $450.00 $475.00 $500.00 $45.00 $45.00 $175.00 $95.00 $2,475.00 $100.00 $2,000.00 $145.00 $30.00 $20.00 $145.00 $799.00 $750.00 $4,500.00 $15.00 $74.90 $84.00 $73.15 $31.50 $1,750.00 $250.00 $350.00 $495.00 $400.00 $1,500.00 $1,250.00 $300.00 $350.00 $1,500.00 $11,000.00 $350.00 $975.00 $450.00 $450.00 $400.00 $15,750.00 $12,500.00 $995.00 $1,750.00 $1,975.00 $250.00 $250.00

Ext Cost $7,875.00 $2,750.00 $60.00 $350.00 $450.00 $475.00 $500.00 $45.00 $495.00 $175.00 $95.00 $4,950.00 $100.00 $2,000.00 $145.00 $90.00 $60.00 $145.00 $799.00 $750.00 $4,500.00 $45.00 $224.70 $84.00 $73.15 $31.50 $1,750.00 $250.00 $1,050.00 $495.00 $2,800.00 $1,500.00 $3,750.00 $300.00 $350.00 $1,500.00 $11,000.00 $350.00 $975.00 $450.00 $450.00 $400.00 $15,750.00 $75,000.00 $1,990.00 $1,750.00 $1,975.00 $1,000.00 $250.00

Retail Ea Retail Ext $1,346.00 $12,114.00 $2,115.00 $4,230.00 $8.00 $96.00 $538.00 $538.00 $692.00 $692.00 $731.00 $731.00 $769.00 $769.00 $69.00 $69.00 $69.00 $759.00 $269.00 $269.00 $146.00 $146.00 $3,808.00 $7,616.00 $154.00 $154.00 $3,077.00 $3,077.00 $223.00 $223.00 $46.00 $138.00 $31.00 $93.00 $223.00 $223.00 $1,229.00 $1,229.00 $1,154.00 $1,154.00 $6,923.00 $6,923.00 $23.00 $69.00 $115.00 $345.00 $129.00 $129.00 $113.00 $113.00 $48.00 $48.00 $2,692.00 $2,692.00 $385.00 $385.00 $538.00 $1,614.00 $762.00 $762.00 $615.00 $4,305.00 $2,308.00 $2,308.00 $1,923.00 $5,769.00 $462.00 $462.00 $538.00 $538.00 $2,308.00 $2,308.00 $16,923.00 $16,923.00 $538.00 $538.00 $1,500.00 $1,500.00 $692.00 $692.00 $692.00 $692.00 $615.00 $615.00 $24,231.00 $24,231.00 $19,231.00 $115,386.00 $1,531.00 $3,062.00 $2,692.00 $2,692.00 $3,038.00 $3,038.00 $385.00 $1,540.00 $385.00 $385.00

Manufacturer Steel City Steel Guy Sunwize Super Cool Times Microwave Toshiba Trango Trango Tropos Tropos Tropos Tropos Versa Logic Wilson-Bohannon

Product Description 90 LT connector 1" Cable Power-Ready Solar Heat Exchanger Cable 100' B&W Camera Access Point w/ Antenna Subscriber Unit 5510 w Bat Backup 5110 Weather Shroud Kits Access Point Enclosure Locks-Various

Qty 40 1 1 7 1 3 1 3 1 2 3 1 1 7

Product Type Solar Trailer Top 90's Steel Guy Wire Cabling 500' roll Pole mount solar power AA-032-12-22-00-00 Peltier Dual Thermostat Heat Exchanger LMR400 100 foot section antenna cable MLK M5830S AP-60 Mounted on Demo Yard Trango Fox SU Mounted on Demo Yard and trailers

Model Number LT-293

3110 w antennas

Tropos Accessory Daves Office Black Enclosure Solar Trailer Lock Sets

Cost Ext Cost Retail Ea Retail Ext $9.00 $360.00 $14.00 $560.00 $500.00 $500.00 $769.00 $769.00 $2,250.00 $2,250.00 $3,462.00 $3,462.00 $225.00 $1,575.00 $346.00 $2,422.00 $450.00 $450.00 $692.00 $692.00 $10.00 $30.00 $15.00 $45.00 $904.00 $904.00 $1,391.00 $1,391.00 $375.00 $1,125.00 $577.00 $1,731.00 $3,555.00 $3,555.00 $5,469.00 $5,469.00 $2,995.00 $5,990.00 $4,608.00 $9,216.00 $149.00 $447.00 $229.00 $687.00 $2,095.00 $2,095.00 $3,223.00 $3,223.00 $95.00 $95.00 $146.00 $146.00 $100.00 $700.00 $154.00 $1,078.00 $119,073.56 $240,526.43 $183,186.00 $370,115.00

SiteWatch trailer inventory includes solar trailers Gregg Hoss purchased for RMT to design and integrate as a SiteWatch Systems product, thousands of dollars of improvements and design tweaking were made to the trailers in the process. SiteWatch issued a PO for the 10 trailers to Hoss Equipment with the expectation to pay once all were sold. No entity or individual shall have the right to sell, transfer or demo any part of the SiteWatch LLC inventory without prior written notification and approval of SiteWatch LLC manager(s). This inventory does not include trademarks, intellectual property rights, patentable ideas, goodwill, contracts, proposals, and general intangibles.

This is a list of SiteWatch partnership inventory at time of lockout. As you can see below this inventory was disposed of under their new entity Hoss On-Site Solutions

Page 1 of:

Andy Speer
From: Sent: To: Kylan Hoss [kylan@hossequipmenl.coml Tuesday, October 25, 2005 4:15 PM 'Andy Speer'

Subject: RE: Parts Inventory Andy, On-Site doesn't have that much inventory, aside from the trailers. We've mostly been using parts out of the Sftewatch inventory. Although we have put together some inventory as far as cable/parts are concerned, most every1hing has had a as number assigned to il. There would be a few enclosures that would be on a On-site inventory that didn't have as job numbers yet, but nothing significant except for the trailers.

Kylan Hoss Sales Support Specialist Hoss Equipment Company www.hossequipment.com Office Main: 877-BUY-HOSS Direct Line: 972-819-0389 Direct Fax: 972-819-0489
Cell: 469-576-0169

From: Andy Speer [mailto:andy@hossequipment.com] Sent: Tuesday, October 25, 2005 2:46 PM To: 'Kylan Hoss' Subject: RE: Parts Inventory
No, physical inventory is for parts only. Also, it will be important to keep the On-Site inventory separate from the Hoss NV sitewatch inventory. That said, how much inventory does On-Site have, and how is it being tracked? Is there On-Site parts that do not have an job number?

as

Finally, reminder to segregate the tagged parts inventory in the trailer(s) and against the fence from other inventory, and be sure all parts have tags and the bin locations readily identifiable. Thanks.

From: Kylan Hoss [mailto:kylan@hossequipment.com] Sent: Tuesday, October 2S, 200S 2:12 PM To: 'Andy Speer' Subject: RE: Parts Inventory Is this including inventory for On-Site

KylanHoss Sales Support Specialist Hoss Equipment Company www.hossequipmenl.com

10/26/2007

Page 2 of:< Office Main: 877-BUY-HOSS Direct Line: 972-819-0389 Direct Fax: 972-819-0489 Cell: 469-576-0169 From: Andy Speer [mailto:andy@hossequipment.com]
sent: Tuesday, October 18, 2005 11:22 AM To: 'Dan Smith'; 'Shane Boatman'; 'Kylan'
Cc: 'Ed Landers'; 'Alan'; jennifer@hossequipment.com; 'Tom Bagnell'; 'Michelle Garcia'; 'Travis Bonnema'; 'Patty'

Subject: Parts Inventory

Dan/Shane/Kylan: It's time for physical inventory of the parts inventory again. We will be performing the inventory on the Terex and Irving yards on Wednesday, 11/2/05 and on the Dallas yard on Thursday 11/3/05 (If needed, Dallas yard inventory may continue into Friday, 11/4/05). This should give adequate time to get all of the receiving and shipments from October business posted and caught up. Accordingly, all invoices need to be posted by 4 pm on Tuesday, 11/1/05 - and THERE SHOULD BE NO RECEIVING OR SHIPPING OF PARTS FOR NOVEMBER BUSINESS UNTIL YOUR LOCATION IS FINISHED WITH THE INVENTORY. Nothing should be pUlled for shipment during the inventory, and any incoming receivers should be segregated at the receiving "dock" or location and not commingled nor counted. With respect to the Dallas yard "knock-down" machines that are not parted and priced yet, prior to the inventory, please be sure to identify these units as "whole" units with a single tag. With respect to the Terex and Irving yards, it was noted that inventory items are commingled with non-inventory items, SO PLEASE BE SURE TO SEGREGATE ALL INVENTORY FROM THE NON-INVENTORY BEFORE INVENTORY DAY. Between now and month end, please have your team catching up on all sales invoicing, processing receivers, segregating non-inventory items from the inventory shelves, and checkinglrefreshing tags on the bin locations and on the part itself. The inventory each morning will start about 7:30 am, and will commence with a walk-thru of the facility to review procedures . and make sure the inventory areas are prepared for counting. After the counts are complete, we will compare to the perpetual inventory records, and the inventory will not be considered complete until we follow-up on any large and unusual items with recounts or other procedures. Accordingly, do not start with November business until Alan, Jennifer or I have notified your branch that all significant differences have been resolved and the inventory is considered complete. And beller yet, if you sell it all before inventory time, then we don't need to count it. Any questions, please give me a call. Andy

10/2612007

Andy Sp.. e.. er . ...

From: Sent:
David Yancey [dyancey@dozernet.comj Friday, June 10, 2005 9:08 AM 'Andy Speer' 'Kylan Hoss'; 'Tom Bagnell'; gregg@hossequipment.com; 'greggjr' RE: Hoss On-Site Solutions HOSS 2004-2005 JDS Invoices.xls

To: Cc: SUbject:

Attachments:

HOSS WOS JDS Invalc

Andy
Attached is the JDS invoices from Joe.

Item: 07/26/2004 40492 $7,740.00 is for 5 video servers and 5 Softsite32 licenses. MLK center install must be part of this order. But we only quoted 4
servers and 4 license. Not sure where the other license and server go on this invoice since we did not place it.

Item: 10/11/2004

40537

$1,092.00 is for 2 Softsite32 software do not know who they where sold too.

licenses. since we did not order these we

Item: 10/21/2004

40548

$5,394.00 is for 4 video servers and 2 1 license if good for 1

Softsite 32 software licenses. Again since server which leads to 2 severs being purchased w/o license we

do not know what these

where used for since we did not order them and have no way to

match them up. So looking over the break down from Joe the only thing that Hoss received payment for work
done is for the MLK center which is 4 video servers and 4 Softsite32 licenses out of these invoices. Since Tony did all the ordering and no paper work was kept we do not know what the other items are for. Some of the video servers would be for the

trai1er(s) but we can not tell how many. And of course the last item: 50445 as you stated is for EMX. Please advice on what we should pay. The total or just EMX and the MLK Center.
David

-----Original Message-----

From: Andy Speer [mailto:andy@hossequipment.com] Sent: Thursday, June 09, 2005 5:32 PM
To: 'Kylan Hoss'; 'David Yancey'; 'nyle'; 'greggjr' Cc: Gregg@HossEquipment.com; 'Tom Bagnell'; jennifer@hossequipment.com; 'Grant'; alan@hossequipment.com; 'Patty'; 'Phyllis' 'Marilyn Saylors';

Subject: Hoss On-Site Solutions Ky1an and/or David,

1

with regard to the invoices listed below, accounting awaits your approval to pay by signing the original invoices and forwarding, or if original invoices are not available, print this email, and notate and approve this as a statement of the invoices below as unpaid invoices from the City of Dallas job for us to pay (excluding the last invoice which we have figured out is for the two video servers sold to EMX). Once we get signed approval, we will fedex a check.

We are also now in receipt of an EMX check (still in the envelope) made payable to SiteWatch, which is presumably for the sale of the two video servers for 1,880 and that relates to the unpaid invoice from JOS for 1,717. We will hold both the EMX check and JOS invoice until resolved with SiteWatch.

Kylan agreed to get the Norvell invoice reissued in Hoss NV name, before we will release payment.

We will pay the Trafcon and Tropos invoices out of Hoss NV since they relate to the existing trailers owned by Hoss NV. All other invoices in possession of accounting have been paid in full, and all of the Valley View and accounting offices searched to confirm there are no more unpaid, past-due invoices, etc.

As agreed with David, effective as of June 1, 2005, we have formed and registered the new assumed name affiliate (100% owned by Hoss Equipment Co.), which will henceforth carryon all security camera business as:

Hoss On-Site Solutions (A Hoss Equipment Co. Company)

For the existing trailers (TSOI-TSI0) and camera systems (SWI00l-SWI015), these will continue to all be sold off and liquidated under Hoss NV, since these are owned by Hoss NV, and Hoss NV will continue to get the full revenue benefit from the sales of these items.

Subsequent June 1, 2005, all camera system business should now be done under IIHoss On-Site Solutions". As contracts renew, we will utilize this name, and with respect to ordering from vendors, let's arrange for new credit accounts under this name (which should get easily approved as a Hoss affiliate). We reviewed existing contracts and customer invoices and billings with David and Nyle to clarify which entity will be credited for the revenue, for deals that are "straddling the fencel!.

David and Nyle have confirmed that all of the vendors have been contacted, and the previous credit accounts as "Hoss/SiteWatch ll have been closed, and all vendors advised that I1Sitewatch ll is not a Hoss entity.

With respect to the Tl phone line with Mel, we are in receipt of an 3 month unpaid statement on the phone bill for about $2100. In checking with MCI, the contract is in SiteWatch name and will automatically renew unless terminated July 1st. Since the 2

contract is in Sitewatch name, Hoss has no authority to cancel the contract. We confirmed with David and Alan that the T1 line is not needed, and so we sent a letter to MCI affirming that even though Hoss can not terminate the contract, we will have no further liability exposure beyond July 1st, and MCI should contact Alardin to arrange a transfer or cancellation.

David has provided budget information to Bagnell, and upon his return, we will work together to commence the budgeting process for the On-Site operations.

Accounting will set up On-site as a separate budget center in the financial reporting, and a job costing system will be utilized similar to Hoss other operations, with all costs of On-Site operations identified and reported. All vendor invoicing will be circulated through David for approval. Nyle has arranged for a job numbering methodology, and will inform all parties as needed of such system, and will be responsible for assuring all inventory and purchases are clearly marked and tracked by such job system.

To clarify with respect to assets previously used in the camera system operations:

1) Most of the SiteWatch camera systems (SW1001 to SW1015) and the Trafcon trailers (TS01 to TS10) are owned by Hoss Equipment Nevada, Inc., and will be liquidated by David and Nyle for the benefit of Hoss NV (except for some of the cameras on the list to be IIgiven'l to Alardin) .
2) Most of the other inventory items used in the SiteWatch operations (aggregating an approximate $90,000) and tools (about $5000) were arguably purchased by Alardin, and will be "given ll to Alardin sometime in the near future - according to Nyle these items are segregated and not being used.

3) All other assets used in the On-Site business (such as the file server), or to be purchased, will be a contribution by Hoss Equipment Co. to the affiliate, and will be accounted for in the budgeting process.

Patty can work up a credit reference page for On-Site, and help with letterhead, invoicing, etc. with respect to the Banking, the same bank payment instructions that we use for Hoss Equipment Co., can be used for On-Site - Patty will just work up a new sheet with the On-Site name.

I'm sure there will be lots more questions - but for now, let's get out there and sell some cameras!

From: ny1e [mailto:ny1e@hossequipment.comJ Sent: Tuesday, June 07, 2005 12:42 PM To: 'Joe Marchese' Cc: 'David Yancey'; 'Tom Bagnell' Subject: RE: OverDue Invoices Compilation