DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 1

02674-401/4836-7800-6811, v. 1

CAUSE NO. DC-14-05215

TEXAS COASTAL ENERGY
COMPANY, LLC,

Plaintiff,

v.

TAYLOR STILOVICH and
ALLIANCE PETROLEUM
INTERESTS, LLC,

Defendants.













IN THE DISTRICT COURT





DALLAS COUNTY, TEXAS




68
TH
JUDICIAL DISTRICT


DEFENDANTS FIRST AMENDED ANSWER AND AFFIRMATIVE DEFENSES


Defendants Taylor Stilovich and Alliance Petroleum Interests LLC (collectively referred
to as the Defendants) file their First Amended Answer and Affirmative Defenses, stating as
follows:
I. INTRODUCTION
In April 2014, Taylor Stilovicha devout Mormonended his employment with Texas
Coastal Energy Company, LLC (Texas Coastal) because he could no longer tolerate working
in a Wolf-of-Wall-Street-type environment replete with illegal drugs, high-stakes gambling,
prostitutes, extramarital interoffice affairs, and ubiquitous sexual innuendo. Additionally, Mr.
Stilovich had mounting suspicions that the companys free-spending ways were putting its future
financial stability in jeopardy. In an attempt to effectuate a pleasant parting, Mr. Stilovich sent
Texas Coastals CEO, J eff Gordon, a polite, discreet letter explaining the reasons for his
departure.
FILED
DALLAS COUNTY
8/7/2014 2:49:39 PM
GARY FITZSIMMONS
DISTRICT CLERK
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 2
02674-401/4836-7800-6811, v. 1

Rather than understandably letting Mr. Stilovich go his separate way, Texas Coastal
responded by drumming up allegations that he stole company property and claiming that his
resignation letter disparaged the company. In reality, Mr. Stilovich did not steal anything and
his resignation letter is 100% true. Texas Coastals lawsuit is nothing more than a thinly-veiled
attempt to save face and intimidate its current employees into thinking twice before deciding to
follow Mr. Stilovich in walking away to escape its toxic corporate culture. It should be
dismissed, and Texas Coastal should take nothing.
II. GENERAL DENIAL
1. Defendants hereby generally deny each and every, all and singular, the allegations
contained in Plaintiff Texas Coastal Energy Company, LLCs Original Petition and demand
strict proof thereof pursuant to Rule 92 of the Texas Rules of Civil Procedure.
III. AFFIRMATIVE DEFENSES
2. Plaintiffs claims are barred, in whole or in part, by unclean hands, because
based on Texas Coastals own conduct, it would not be equitable for Texas Coastal to recover
against Defendants. Specifically, by way of example, the following actions demonstrate Texas
Coastals unclean hands:
Texas Coastal breached its agreements with Mr. Stilovich. Through suing Mr.
Stilovich for purportedly breaching agreements he made as an employee with Texas
Coastal, Texas Coastal has flagrantly breached its agreements with Mr. Stilovich. For
instance, while Mr. Stilovich was employed by Texas Coastal, the company expressly
agreed to pay him a bonus that included a 1% interest in Texas Coastals Schlegel #7
Well and a 1% interest in the West Texas #1 Well. Texas Coastal, however, later
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 3
02674-401/4836-7800-6811, v. 1

reneged on that promise, telling Mr. Stilovich they would provide him half of the
agreed upon interest and only if he signed a non-compete (which he would not do).
Texas Coastal created and maintained a vulgar, sex-drenched, hostile work
environment. Mr. Gordons routine workplace vulgarity and sexual misconduct
created a hostile work environment for its employees, including Mr. Stilovich. Mr.
Gordon would often make sexually explicit comments about and to other employees.
For instance, he told Texas Coastal employees that he hired certain female assistants
based on appearance alone because Mr. Gordon thought the male employees should
have something nice to look at. At times, Mr. Gordon (a married man) did more
than look, frequently having sexual relations with subordinate female company
employees, then openly bragging about it. Mr. Gordon also directed sexually explicit
and harassing comments at Mr. Stilovichs wife. For instance, in May 2013, Mr.
Stilovichs wife accompanied him on company trip to Las Vegas. During that trip,
Mr. Gordon told Mr. Stilovichs wife that she has a fucking figure and encouraged
her to show it off more. He then offered to take her shopping for better (more
revealing) clothes. On the same trip, Mr. Gordon made sexual pelvic thrusts at Mr.
Stilovichs wife. On another occasion, Mr. Gordon made comments to Mr. Stilovich
about his wifes breasts.
Texas Coastal discriminated against Mr. Stilovich because of his religious
beliefs. J eff Gordon, Texas Coastals principal and CEO, created and maintained a
work place environment suffused with drug use, gambling, sexual vulgarity, and
sexual harassment of female employees. Mr. Stilovich a Mormon resisted Mr.
Gordons frequent entreaties for him to participate in these activities. For this stance,
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 4
02674-401/4836-7800-6811, v. 1

he was ridiculed and mocked. J eff Gordon and others at Texas Coastal repeatedly
harassed Mr. Stilovich about his religious beliefs and deliberately forced him into
situations that the company and its principals knew were contrary to those beliefs.
For instance, on multiple occasions, Mr. Stilovich was required to attend company
trips and outings in which Texas Coastals principals pressured Mr. Stilovich to visit
strip clubs, use illegal drugs, and engage in other debauchery, apparently on the dime
of Texas Coastals investors. In another instance, when Mr. Stilovich had a religious
ceremony to attend, Mr. Gordon would harass Mr. Stilovich by concocting a
conflicting work obligation and threatening to fire Mr. Stilovich if he chose his
religion over his job. On one such occasion, Mr. Stilovich invited Mr. Gordon to the
baptism ceremony for his daughter, which was on a Saturday. Mr. Gordon responded
by telling Mr. Stilovich that he was going to make him choose between his job and
attending his childs baptism by requiring Mr. Stilovich to work during that time.
There was no legitimate business purpose for Mr. Gordons demand, and it was made
purely to harass Mr. Stilovich for his religious beliefs. Forced to endure the stress
and anxiety associated with his boss arbitrarily demanding that he choose work over
an important ceremony for his religion and his family, Mr. Stilovich ultimately chose
to attend his childs baptism. In the end, Mr. Gordon did not fire Mr. Stilovich,
though he continued to mock him for his religious beliefs, sometimes even enlisting
the assistance of Matt Daigle, who occasionally joined in making fun of Mr. Stilovich
and his religion.
Texas Coastal has engaged in the same conduct of which it has accused Mr.
Stilovich. While Mr. Stilovich was employed by Texas Coastal, the company hired
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 5
02674-401/4836-7800-6811, v. 1

employees away from competitors and used those competitors confidential
information to solicit investors and compete unfairly with them. In other words,
Texas Coastal engaged in the same conduct it now accuses Mr. Stilovich of doing.
Based on Texas Coastals conduct, including but not limited to the specific instances
described above, the equities weigh heavily against it in this case. Consequently, Defendants
affirmatively assert that the relief Texas Coastal seeks in this lawsuit is barred, in whole or in
part, by the equitable doctrine of unclean hands.
3. Plaintiffs claims are barred, in whole or in part, because, to the extent Plaintiff
claims that Defendants made disparaging remarks about Texas Coastal, those remarks are
true. Indeed, contrary to Texas Coastals allegations, the reasons Mr. Stilovich gave in his
private resignation letter were precisely the reasons he left the company. Mr. Stilovich left
Texas Coastal not as Texas Coastal has alleged to steal the companys confidential
information and illicitly use it to start a new company. Instead, as he politely implied in his
private resignation letter to Mr. Gordon, the reasons Mr. Stilovich left Texas Coastal were
because 1) he had grown tired of a company culture and work environment that was toxic and
hostile to his religious beliefs and the way he lives his life; 2) he could no longer tolerate
ongoing sexual and religious harassment from Mr. Gordon and other Texas Coastal employees;
and 3) Texas Coastal was in financial jeopardy and the company was heading in the wrong
direction.
Overall, the company culture at Texas Coastal revolved around partying, gambling,
illegal drug use, alcohol abuse, and the sexual exploits of its CEO J eff Gordon. Specifically, by
way of example:
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 6
02674-401/4836-7800-6811, v. 1

Alcohol abuse and binge gambling permeated Texas Coastal events. Texas
Coastal company trips routinely involved binge drinking by Mr. Gordon and other
Texas Coastal employees. On these same trips, Mr. Gordon would often engage in
high-stakes gambling binges, sometimes losing tens of thousands of dollars in a
matter of hours. In some instances, Mr. Gordon used company money to gamble. On
one company trip to Las Vegas, Mr. Gordon played $100,000 blackjack hands. When
a large investor got wind of this behavior, he decided not to invest any more with the
company, making Mr. Stilovich realize the potential risk to the company that Mr.
Gordons leadership created.
Drug use was rampant at Texas Coastal. Mr. Gordon and other employees
frequently and flagrantly also used illegal drugs, including cocaine. At one point, at
Mr. Gordons direction, Texas Coastal hired a known drug dealer as an employee.
On another occasion, on a company trip, Mr. Gordon used Mr. Stilovichs company
cell phone to call a drug dealer. Then, in front of Texas Coastal employees including
Mr. Stilovich, Mr. Gordon purchased illegal drugs from the drug dealer. Another
time, Mr. Stilovich was having lunch with Mr. Gordon and Matt Daigle, Texas
Coastals in-house attorney, when Mr. Gordon offered to give Mr. Stilovich cocaine
for his use, noting that Mr. Gordon had some in his possession.
Mr. Gordon engaged in reckless and vulgar sexual misbehavior with company
employees. As noted above, Mr. Gordon made frequent sexually explicit comments
about Texas Coastal employees and their spouses (including Mr. Stilovichs wife).
He also had sexual relationships with female subordinates, creating dramatic and
distracting sideshows that the company and Mr. Stilovich had to endure. As a result,
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 7
02674-401/4836-7800-6811, v. 1

female employees even threatened lawsuits, which made Mr. Stilovich worried about
the companys potential liabilities.
Mr. Stilovich also became concerned about the financial stability of Texas Coastal and
the direction in which the company was headed. Under Mr. Gordons leadership, it seemed more
company funds were directed toward fueling his personal extravagant lifestyle than were actually
invested in oil and gas wells. Mr. Gordon sought to keep the company finances secret from Mr.
Stilovich and other employees, but Mr. Stilovich began to develop suspicions and piece bits of
information together, leading him to the inevitable conclusion that it was not in his best interest
to stay with the company. Specifically:
Texas Coastal misused investor funds. Texas Coastal represented to investors that
their money will be used for expenses related to drilling oil and gas wells. Instead,
upon information and belief, on multiple occasions, Texas Coastal used investor
money to pay for lavish company trips (including one trip to Europe) that involved
extravagant spending on entertainment such as visits to strip clubs, high-stakes
gambling, illegal drugs, prostitutes, and luxurious accommodations. Numerous
company employeesincluding Texas Coastals in-house attorney, Matt Daigle,
would attend these trips. On one company trip to Las Vegas, Mr. Gordon paired off
prostitutes with company employees, after boasting about having anal sex with one of
them the night before. On another company trip to Key West, Mr. Gordon and
another married Texas Coastal principal met and courted some women they had met
by purchasing them expensive watches with company funds. At one point, the
company American Express credit card stopped working because it had an
outstanding balance of $500,000. Even when the company trips did have a business
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 8
02674-401/4836-7800-6811, v. 1

purpose, Mr. Gordon would frequently blow off scheduled business meetings or
presentations because he was too hung-over from the previous nights partying. All
of this made Mr. Stilovich concerned about the companys future.
Mr. Gordon used Texas Coastal as his personal piggy bank. Mr. Gordon spent
large sums of money for himself on an expensive house and several high-end luxury
vehicles. Mr. Stilovich began to suspect that Mr. Gordon was using Texas Coastal as
his own piggy bankconcerns that were confirmed when, after reviewing Texas
Coastals financials, a potential investor made the exact same complaint to a Texas
Coastal salesperson, and proclaimed that Texas Coastal was in the negative by
$350,000. As the sales team manager, Mr. Stilovich cautioned the other sales
employees (who were understandably concerned about what they were hearing) not to
panic and wait to get the facts before believing that what the potential investor said
was true. When Mr. Stilovich spoke to Mr. Gordon about the incident, Mr. Gordon
told Mr. Stilovich that he should have lied to the other employees and told them that
he had personal knowledge of the companys finances and that they were all in order.
For all of these reasons, Mr. Stilovich affirmatively asserts that the statements he made in
his resignation letter regarding his reasons for leaving Texas Coastal are true and represent the
actual reasons he left the company.
4. Plaintiffs claims are barred, in whole or in part, by estoppel, wavier, and/or
laches because Texas Coastal has allowed Mr. Stilovich and other employees to engage in the
activities alleged in its lawsuit (including using company property in the ways alleged in Texas
Coastals Petition).
DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 9
02674-401/4836-7800-6811, v. 1

5. Plaintiffs claims are barred, in whole or in part, by the doctrine of prior material
breach because to the extent Texas Coastal claims that its employee handbook creates binding
contractual obligations on Mr. Stilovich that he breached, the company breached its own
obligations set forth in its employee handbook. For instance, based on the conduct described
above, Texas Coastal was not an equal opportunity employer and did not abide by its own
harassment policies contained in the employee handbook.
IV. PRAYER
WHEREFORE, PREMISES CONSIDERED, Defendants pray that Plaintiff have and
recover nothing from Defendants, and for such other and further relief, both at law and in equity,
both general and special, to which Defendants may show themselves to be justly and equitably
entitled.
Dated: August 7, 2014 Respectfully submitted,

/s/ J onathan R. Patton
J eremy A. Fielding
Texas Bar No. 24088198
jfielding@lynnllp.com
J onathan Patton
Texas Bar No. 24088198
jpatton@lynnllp.com
LYNN TILLOTSON PINKER & COX, LLC
2100 Ross Avenue, Suite 2700
Dallas, Texas 75201
Telephone: 214.981.3800
Facsimile: 214.981.3839

Attorney for Defendants
Taylor Stilovich and Alliance Petroleum Interests,
LLC

DEFENDANTS FIRST AMENDED ANSWER & AFFIRMATIVE DEFENSES PAGE 10
02674-401/4836-7800-6811, v. 1

CERTIFICATE OF SERVICE

The above and foregoing document was served by E-service and E-mail on August 7,
2014 upon opposing counsel herein:

Matt Daigle
Law Offices of Matt Daigle, P.C.
2323 Bryan Street, Suite 2600
Dallas, Texas 75201
(214) 498-7117 Telephone
(214) 856-8474 Facsimile

/s/ J onathan R. Patton
J onathan R. Patton


4842-9535-1580, v. 1