LIT UPDATES (2024)
COA14 opinion dissolving lis pendens
ORDER SIGNED GRANTING REFERRAL TO MEDIATION
ORDER SIGNED DESIGNATING CASE TRIAL READY
ORDER SIGNED GRANTING PREFERENTIAL TRIAL SETTING
Unsurprisingly, not a cent of the $380k was deposited into registry and no contempt of court. There’s now an appeal which is also staying proceedings at the trial level, which was opposed by plaintiffs but granted by Judge Engelhart.
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Texas Title Companies: Con Artist n’ Thievin’ Brian A. Brewer Back in the Spotlight
If the judiciary, the US gov, and the lawless State of Texas were not aiding and abetting real estate fraud, this wouldn’t be a moment.https://t.co/Rn0FiOuZtE
— lawsinusa (@lawsinusa) July 28, 2024
202268763
HOUSTON SECURED DEVELOPMENT PARTNERS LLC vs. HSDP BAM LLC
(Court 151, JUDGE MIKE ENGELHART)
OCT 20, 2022 | REPUBLISHED BY LIT: OCT 23, 2022
MOTION FOR CONTEMPT FOR DISOBEDIENCE OF INJUNCTION HOUSTON SECURED DEVELOPMENT PARTNERS, LLC, Plaintiff in this lawsuit, asks this Court to hold Defendants in contempt for their repeated and flagrant violations of this Court’s injunctive orders.
I. Background Facts – Violation of Temporary Restraining Order
1. On October 21, 2022, Ancillary Judge Ursula Hall entered a Temporary Restraining Order in this case requiring the Defendants to, among other things, “protect and preserve all assets of Houston Secured Development Partners, LLC.” As clearly set out in the pleadings and the TRO, its purpose was to preserve the status quo until a hearing could be held on Plaintiff’s claim for injunctive relief. See Exhibit 1.
Due to a scheduling issue with the Temporary Injunction hearing that had been ordered by the Ancillary Judge, on October 28, 2022 this Court signed an Order extending the Temporary Restraining Order until November 28, 2022, which specifically stated that the TRO would “remain in in full force and effect” until the TI hearing which was then scheduled for November 28th.
2. In direct and blatant violation of the TRO, on November 14, 2022, Jackson, holding himself out as agent of Houston Secured Development Partners LLC, executed a General Warranty Deed (With Vendor’s Lien) purporting to convey real property owned by HSDP to defendant Premark Investments LLC.
Attached as Exhibit 2 is a copy of this document as maintained in the Harris County Real Property Records, which purports to convey title to Plaintiff’s real property located at 3327 Natchez Street in Houston, Texas.
Under the TRO, Jackson did not have authority to transfer HSDP’s real property on November 22, 2022!
As such, the deed to Premark Investments LLC is fraudulent and voidable. Additionally, Plaintiff was not provided with ANY consideration for this purported sale of its property; Jackson took it for himself.
Plaintiff has asserted claims in its petition related to this transaction, seeking a declaration that the Premark deed is void.
This TRO violation is included in this motion to illustrate a pattern of behavior and present a backdrop for Defendants’ recent contemptible conduct.
II. Violation of Temporary Injunction
3. On December 2, 2022 this Court signed a Temporary Injunction which modified the injunctive relief, requiring preservation of certain documentary records, and prohibiting conduct which would harm, deplete, or otherwise interfere with Plaintiff’s assets, pending a final trial on the merits of this case. See Exhibit 3.
The TI specifically prohibited the Defendants from transferring, withdrawing, or spending HSDP funds, collateralizing any HSDP assets, or selling, transferring, assigning, pledging, or conveying (by deed or otherwise) any HSDP assets, without first obtaining the approval of either the Court or DMI Securities, LLC.
This Temporary Injunction serves to protect the assets that are in dispute in this litigation.
4. On January 5, 2023, after discovering Defendants’ violation of the TRO, Plaintiff recorded a Notice of Lis Pendens with respect to properties that Defendants had acquired and/or improved since gaining access to the HSDP funds, including the property located at 3333 Kilgore Street in Houston, Texas.
On March 11, 2023, Defendants asked this Court to expunge the Notices of Lis Pendens, judicially admitting to this Court that the lis pendens notices “are the functional equivalent of an involuntary lien that clouds title” to the properties in question.1
On April 24, 2023, after a hearing on this motion, this Court denied the motion to expunge lis pendens. See Exhibit 4.
Not stymied by this Court’s order, Defendants took the matter into their own hands. On May 15, 2023, Defendant Jackson caused Defendant RL 360 Funding, LLC to sell the property located at 3333 Kilgore, defrauding both the buyer and the buyer’s lender (and Plaintiff, because the property in question would be subject to levy after final judgment) by improperly executing and delivering a “Release of Lis Pendens” purportedly on behalf of Plaintiff!
See Exhibits 5 (Warranty Deed) and 6 (“Release of Lis Pendens”).
Plaintiff discovered this fraudulent “Release” and resulting General Warranty Deed through a search of the Harris County Real Property records.
Defendants received consideration of over $304,000 (the amount of the buyer’s note) in exchange for the sale of 3333 Kilgore.
See Exhibit 7 (Deed of Trust).
5. The purpose of the lis pendens notice was to advise any prospective buyer that the property located at 3333 Kilgore had a claim attached to it. Plaintiff’s contingent
1 See Defendants’ Motion to Expunge Notices of Lis Pendens, on file with this Court.
interest in this property (by virtue of constructive trust or equitable title) is a real property interest, and is an asset.
See Walker v. Walker, 631 S.W.3d 259, 268 (Tex. App.—Houston [14th Dist.] 2020, no pet.) (finding that the plaintiff’s claim “for unjust enrichment [was] a real property claim”).
As such, the Temporary Injunction required Defendants to seek approval of this Court or DMI Securities, LLC before transferring, conveying, or otherwise disposing of that asset! Defendants tried–and failed–to have the lis pendens expunged, then in complete disregard of this Court’s prior orders and of the serious claims and property interests at issue in this litigation, falsely and fraudulently delivered a “Release of Lis Pendens” so that Defendants could sell the property and abscond with the proceeds.
III. Motion for Contempt
6. Rule 692 of the Texas Rules of Civil Procedure permits this court to punish the disobedience of an injunction as a contempt.
An officer or agent of a corporation who participates in or encourages the violation of a court order can be held in contempt. Ex parte Chambers, 898 S.W.2d 257 (Tex. 1995).
Plaintiff requests the issuance of an Order to Appear, served personally upon Defendant Joseph Jackson, requiring Jackson to appear and Show Cause why he should not be found in contempt for violations of this Court’s orders and punishment assessed at proven damages, attorney’s fees and costs, clarifications of Defendants’ duties, and if this Court deems appropriate, confinement in the Harris County Jail.
Plaintiff requests that at Jackson’s initial appearance on this motion that the Court read Jackson his legal rights and warnings.
7. As penalty for Defendants’ disobedience, Plaintiff seeks an order directing Defendants Jackson and RL 360 Funding LLC, jointly and severally, to deposit the sum of $380,000.00 into the Registry of the Court, within 24 hours of appearance on this motion.2
8. Plaintiff would show that Defendants had the past ability to comply with this Court’s orders, and willfully and intentionally chose not to comply.
An appropriate remedy for such willful noncompliance is criminal contempt.
As such, Plaintiff requests that Defendants Jackson be held in contempt for each violation found and ordered confined to the Harris County Jail for up to 180 days on each violation but that Jackson’s commitment be suspended upon specific terms and conditions as determined by the Court.
IV. Request for Attorney’s Fees and Costs
9. It was necessary for Plaintiff to secure the services of Mary Alice Parsons, a licensed attorney, to enforce and protect its rights in connection with Defendants’ repeated violations of this Court’s orders. Reasonable attorney’s fees, expenses, and costs in an amount not less than $2,000.00 should be taxed as costs and should be ordered paid by Defendants directly to the undersigned attorney.
WHEREFORE, PREMISES CONSIDERED, Plaintiff HOUSTON SECURED DEVELOPMENT PARTNERS, LLC respectfully requests that citation and notice issue as required by law, and that the Court render an order directing Defendant Joseph Jackson
2 The sale of 3333 Kilgore Street included delivery of a Deed of Trust to secure a $304,000 Note. See Exhibit 7. If the note represents 80% of the purchase price, then the purchase price was approximately $380,000 and this amount is rationally related to the financial gain Defendants realized, and loss to Plaintiff, due to the misconduct.
to appear in person at a date and time specific to answer this motion; and further, that the Court render an order directing Defendants to deposit the sum of $380,000.00 into the Registry of the Court within 24 hours, and that Jackson be held in contempt and punished as set forth herein if this timeline is not met.
Plaintiff also respectfully requests that the Court clarify any part of its prior Orders found not specific enough to be enforced by contempt, and award Plaintiff $2,000 for attorney’s fees and expenses, and grant all further relief authorized by law.
Notice of hearing granted, motion for contempt, Sep. 11, 2023
151 Notice of Hearing (In-Person) RE Defendants Motion for Continuance and Request for Entry of Amended Docket Control Order
Intervenor-Defendant HSDP BAM, LLC and Defendant Joseph Jackson’s Petition in Intervention and Motion to Compel Arbitration is set for submission on Monday, Jun 26, 2023 at 8:00 a.m., in the 151st Judicial District Court.
APPL REMOVE/CANCEL LIS PENDENS (MOTION TO)(ART. 6643A)
Mar 23 Update
Defendants’ Response To Plaintiff Houston Secured Development Partners, Llc’s Motion To Compel Discovery Responses
Plaintiff’s Motion to Compel Discovery Responses with request for atty fees of no less than $750 for non-compliance.
New defendants being added by plaintiff and citations issued and returned.
Plaintiff’s Second Amended Petition and Application for Injunctive Relief
Notice of Intention to Take Deposition by Written Questions
ORDER SIGNED DENYING MOTION T0 DISMISS
Plaintiff HOUSTON SECURED DEVELOPMENT PARTNERS, LLC respectfully asks this Court to deny Defendant’s Motion to Dismiss for the reasons set forth below:
I. SUMMARY OF RESPONSE
Defendant Joseph Jackson has asked this Court to dismiss the lawsuit “for lack of jurisdiction.1”
Jackson’s motion must be denied, because this dispute is not covered in its entirety by any arbitration agreement and because all of the parties to this suit did not agree to arbitration.
Only one of three defendants (HSDP BAM, LLC) is a member of Houston Secured Development Partners, LLC and therefore only the claims against it could possibly be subject to arbitration, if the arbitration clause was enforceable.
Further, Jackson’s motion must be denied because the arbitration clause is unconscionable and contrary to public policy and is therefore unenforceable, and because Defendants have breached the agreement prior to trying to enforce the arbitration clause.
1 This Court clearly has jurisdiction over this matter since the amount in controversy exceeds the minimum jurisdictional limits of this Court, and the Defendants all reside or maintain their principal place of business in Harris County, Texas.
II. ARGUMENT AND AUTHORITIES
1. The claims in this dispute should not be compelled to arbitration.
“A party seeking to compel arbitration must first satisfy a two-pronged burden of proof: first, it must demonstrate the existence of a valid agreement to arbitrate the dispute, and second, it must prove that the claims asserted are within the scope of the agreement.“
IHS Acquisition No. 171, Inc. v. Beatty-Ortiz, 387 S.W.3d 799, 805 (Tex. App.— El Paso 2012, no pet.).2
Jackson has provided proof of neither validity nor enforceability of the Internal Dispute Resolution provisions contained in the Company Agreement for Houston Secured Development Partners, LLC, and has not met this burden. See Exhibit A, pages 19 through 22.
Defendant Joseph Jackson is not a member of Houston Secured Development Partners, LLC, and is not a party to the Operating Agreement. See Exhibit A. Neither is
Baylor Asset Management, LLC. Id. The only defendant who is a party to the Operating
2 See also In re Dillard Dept. Stores, Inc., 186 S.W.3d 514, 515 (Tex.2006); In re AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex.2005)(orig. proceeding); Budd v. Max International LLC, 339 S.W.3d 915, 918 (Tex. App.- Dallas 2011, no pet.).
Agreement is HSDP BAM, LLC.3 As such, there is no valid arbitration agreement which exists between Plaintiff Houston Secured Development Partners, LLC and Joseph Jackson, nor between Plaintiff and Baylor Asset Management, LLC.
Further, the issues and disputes that are before this court are clearly outside the scope of Article 10 of the Houston Secured Development Partners, LLC Operating Agreement.
These provisions were clearly written to cover disputes “between the Members” or “between the Manager and one or more Members.”
In this case, Baylor Asset Management, LLC entered into a contract with HSDP for the development and construction of real properties (see Exhibit B), then materially breached the contract by failing to comply with documentation requirements for reimbursement of expenses,
and paying itself nearly $4 million of the company’s $5 million in capital.
Defendant Joseph Jackson, who is also not a party to the Operating Agreement, facilitated this malfeasance by moving funds from HSDP’s accounts into Baylor Asset Management, LLC’s accounts, and without justification, and then confiscated the funds or used them to acquire and/or improve real property holdings owned by other companies Jackson operated.
The claims and causes of action arising from that conduct are not within the scope of Article 10 of the Operating Agreement for Houston Secured Development Partners, LLC.
Defendant’s motion must be denied
3 The Operating Agreement provides that there are five Sponsor Unit members, and a large number of individual Preferred Unit members, who are individual investors. See Exhibit A (at PDF page 115). It is undisputed that Joseph Jackson is not a holder of Preferred Units in HSDP.
2. The arbitration clause as applied to the disputes before this court is unconscionable and therefore unenforceable, and is against public policy.
A trial court’s determination of whether to enforce an arbitration agreement is a question of law, specifically one of contract interpretation, as “a court may invalidate an arbitration agreement based on ‘generally applicable contract defenses’ like fraud or unconscionability.”
Kindred Nursing Centers, L.P. v. Clark, 137 S. Ct. 1421(2017).
Plaintiff would show that the ADR provisions are unenforceable under state contract law and are contrary to public policy. “Courts may consider both procedural and substantive unconscionability of an arbitration clause in evaluating the validity of an arbitration provision.”
In re Halliburton Co., 80 S.W.3d 566, 572 (Tex. 2002).
Procedural unconscionability relates to the making or inducement of the contract, focusing on the facts surrounding the bargaining process.
Delfingen US-Tex., L.P. v. Valenzuela, 407 S.W.3d 791, 798 (Tex. App.—El Paso 2013, no pet.).
Substantive unconscionability refers to the fairness of the arbitration provision itself. Id. at 797.
The critical inquiry in a substantive unconscionability analysis is “whether the arbitral forum… is an adequate and accessible substitute to litigation, a forum where the litigant can effectively vindicate his or her rights.”
In re Olshan Found. Repair Co., LLC, 328 S.W.3d 883, 894 (Tex. 2010).
The formation of Houston Secured Development Partners, LLC (and hence the Operating Agreement between its members), as well as the entry into a Development and Construction Contract with Baylor Asset Management, LLC, were materially induced by Joseph Jackson’s representations that he was qualified to manage a $5 million investment fund, that he had successfully managed another investment fund conducting similar business, and that he had decades of success in the real estate market in Houston.
Plaintiff has now learned that the other investment fund is in Chapter 7, Plaintiff’s capital is gone, and Baylor Asset Management, LLC has received millions of dollars in cash
transfers from Plaintiff’s bank accounts while Mr. Jackson and his solely owned LLCs have been acquiring and improving real estate holdings throughout the Houston area, often under construction permits pulled by Baylor Asset Management, LLC.
This lawsuit is complex and will involve significant discovery.
Based on the current circumstances, wherein the Defendants did not wholly comply with the document production requirements of the Temporary Restraining Order issued, and have made zero progress towards compliance with the document production requirements of this Court’s Temporary Injunction, we expect that discovery may include the necessity of Court intervention from time to time.
This complex dispute – only a small part of which is arguably subject to the Internal Dispute Resolution Procedures contained in the HSDP Operating Agreement, should be litigated in district court where all parties will have a fair opportunity to conduct discovery and have their claims considered by this Court.
Additionally, Section 10’s requirement that the parties attend mediation three times before proceeding to arbitration is unconscionable on its face as it would require the parties to incur excessive unreasonable cost and expense, and would unreasonably delay a final resolution of the disputes that are now before this Court.
However, the Operating Agreement requires the parties to attend these three mediations all administered by the American Arbitration Association, which charges its own fees on top of the mediators’ fees.
Harris County has a plethora of highly skilled, well qualified mediators who would be suitable to assist the parties in trying to negotiate a settlement;
requiring these parties to restrict their mediation efforts to the AAA rules and procedures is not in their best interest, and will unduly and unreasonably increase the cost of the ADR efforts and will also cause unreasonable delays as it is likely to increase the cost of mediation and reduce the potential for a successful outcome.
Further, Arbitration of this dispute would be far more expensive than traditional litigation.
Under the AAA rules, the cost of merely filing for arbitration is around $7,700 and the final fee is around $8,475; these fees do not include the arbitrator(s)’ fees.4
Arbitration of this case will not eliminate the need for discovery and depositions, as well as likely motion practice; it will just make it more expensive.
One of the primary purposes of alternate dispute resolution is to avoid expenses and delays and aid the parties in reaching an agreement more efficiently than through the litigation process.5
The AAA process does not serve those interests for this particular case.
For all of these reasons, Plaintiff asserts that it would be both procedurally and substantively unconscionable to compel this lawsuit to arbitration under Section 10 of the Operating Agreement.
3. Defendants have materially breached the Dispute Resolution Procedures, warranting a denial of Jackson’s motion.
Finally, a material breach of an arbitration agreement by the party attempting to enforce it can justify a refusal to compel arbitration.
See Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 940 (4th Cir. 1999) (holding that Hooters had materially breached its obligations
4 See AMERICAN ARBITRATION ASSOCIATION: Administrative Fee Schedules, available at: https://www.adr.org/sites/default/files/Commercial_Arbitration_Fee_Schedule_1.pdf
5 See U.S. DEPARTMENT OF LABOR: Alternative Dispute Resolution, available at: https://www.dol.gov/general/topic/labor-relations/adr#:~:text=With%20the%20exception%20of%20binding,other%20authority%20decide%20the%20case.
under the arbitration agreement, excusing food server plaintiffs from their obligation to arbitrate their claim).
See also Tri-Star Petrol Co. v. Tipperary Corp., 107 S.W.3d 607 (Tex. App. – El Paso 2003, pet. denied) (holding that a material breach of an arbitration agreement was sufficient to justify a refusal to order re-arbitration).
The Company Agreement requires that all parties “shall use their best efforts to settle any dispute among the members.
Plaintiff has tried for months to resolve the disputes that underlie their causes of action in this case, but the Defendants have refused to cooperate.
After securing the Temporary Restraining Order, Plaintiff has tried schedule a mediation; Defendants have refused to cooperate.
Additionally, the Defendants have refused to provide the documentation required by the Temporary Restraining Order, have not served any disclosures as required by Rule 194, and have not yet produced a single page of information required by this Court’s Temporary Injunction.
Defendants’ refusal to allow Plaintiff access to the books and records of its own operations is not in good faith, and prevents any real ability to resolve the pending disputes.
Mr. Jackson, in filing his motion to dismiss, is attempting to selectively enforce dispute resolution provisions that he has already chosen not to follow!
This Court is squarely within its authority to deny Mr. Jackson’s attempt to compel arbitration.
WHEREFORE, Plaintiff HOUSTON SECURED DEVELOPMENT PARTNERS, LLC, respectfully requests that this Court deny Defendant JOSEPH JACKSON’s Motion to Dismiss for Lack of Jurisdiction by Submission, and grant such other and further relief to which it may be justly entitled.
Respectfully submitted,
THE PARSONS LAW FIRM
By:
Mary Alice Parsons
State Bar No. 00791409
mary@parsonslawtexas.com
Colton B. Kiernan
State Bar No. 24132061
colton@parsonslawtexas.com
4545 Bissonnet Street, Suite 104
Bellaire, Texas 77401
Telephone: (713) 955-4878
Facsimile: (713) 589-2454
COUNSEL FOR PLAINTIFF
HOUSTON SECURED DEVELOPMENT PARTNERS, LLC
CERTIFICATE OF SERVICE
I certify that a true and correct copy of the foregoing pleading was served upon all counsel of record via transmission to a certified electronic filing manager and electronic filing service provider pursuant to Texas Rule of Civil Procedure 21a(a)(1), on the 16th day of December, 2022.
Motion to dismiss lodged on basis of Arbitration filed by Jackson, by Submission, to be heard on Dec. 19, 2022.
JUDGE RAVI SANDILL VIOLATES THE BASIC TENETS OF ACCESS TO COURTS BY BLOCKING THE ENTIRE CASE WITHOUT FOUNDATION IN LAW #VoteHimOut https://t.co/0SCEi1h0Te@harrisdemocrats @statebaroftexas @LStarLegal @tedcruz @abc13houston @KPRC2 @HuntonAK @LockeLord @bradleylegal #txlege pic.twitter.com/7eOGbnbhRU
— lawsinusa (@lawsinusa) October 23, 2022
October 26 – Did Someone Say “Ex-Parte”?
October 23
LIT decided to track this alleged real estate investment fraud/theft case and see what happens, considering there’s SEC filings and investors who we’ll maybe uncover later on, and at first glance appear to be from the Dallas/Denton area.
We’ll also find out who is or will be contributin’ to the outlaws in robes judicial campaign, especially when Dishonorable Mike Engelhart’s been randomly selected for the case (it’s expensive to run for an appellate judge position).
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LIT Response to Email from Plaintiff’s Counsel, Parsons.
Nov. 8, 2022 @ 0841 hrs
Top of the morn’
It’d be a far stretch for LIT readers to believe you are Joseph Jackson. That stated, we’ve addressed your concern by adding your photo and bio in our article at no cost to you, unless you recognize that it’s worth a donation for such marvelous free advertising.
While we’re here, we do have a question about the case.
Who are the names behind the plaintiff corporations, the investors?
Are they Wall St. related?
or
Citizens who were just defrauded into a bad investment?
We would like to know who you are representing.
p.s. the picture is of the last known address for Jackson in the Woodlands (the 45 Autumn Crescent referred to in our article), however, research shows he doesn’t own it, never did.
++++++++
From: Mary Alice Parsons <mary@parsonslawtexas.com>
Subject: Use of my photo in article
Message Body:
Hi there – you have an article posted about a lawsuit I have filed on behalf of a client. The article is great and I don’t have any issue with you covering the case, but why do you have my photo superimposed over the picture of some building? It is very misleading and some could believe that I am involved in the alleged fraud. Will you please remove my photo?
—
This e-mail was sent from a contact form on Laws In Texas (https://lawsintexas.com)
Mary Alice Parsons
Mary Alice Parsons was born in Fort Sill, Oklahoma, raised in Houston, Texas, and graduated from St. Agnes Academy. She was admitted to the State Bar of Texas in 1994 after graduating from Tulane University (B.S. 1991) and the University of Houston Law Center (J.D. 1994).
Ms. Parsons represents local, national, and international clients with sophisticated legal needs, including companies and individuals in the construction, services, manufacturing, and health care industries. She handles civil disputes in all phases of litigation, including trial and appeal, mediation, arbitration, and pretrial settlement negotiations. She also serves her clients’ business, corporate, and transactional needs. Her approach to client representation involves efficient and cost-effective legal services, with a focus on responsiveness and personalized service to her clients. Ms. Parsons has an AV® Preeminent ™ certification from Martindale-Hubbell, which is the highest peer review rating reflecting very high general ethical standards and legal ability.
Ms. Parsons has extensive experience in civil litigation, representing clients in various types of commercial, personal injury, and property damage lawsuits, including claims involving premises liability, products liability, construction defects, workplace injury, contractual disputes, personal and commercial auto liability, environmental issues, commercial disputes, dram shop, negligent security, insurance coverage disputes, and general negligence claims. She has handled complicated lawsuits involving severe personal injury and death, including construction site accidents, chemical plant accidents, boating accidents, and trucking accidents. She also has experience handling toxic tort lawsuits and medical malpractice claims. She handles cases in both state and federal courts all over Texas, and has also appeared pro hac vice on behalf of clients in several other states.
Ms. Parsons is admitted to practice before the Supreme Court of Texas, the Fifth Circuit Court of Appeals, the United States District Courts for the Southern, Northern, Western, and Eastern Districts of Texas, and the United States Court of Federal Claims. She is a member of the Houston Bar Association, the Texas Association of Defense Counsel, and the Defense Research Institute. Ms. Parsons has been recognized as a “Top Lawyer” in the 2014, 2015, 2016, and 2017 issues of H Texas Magazine, and is listed in the 2014 – 2017 issues of “Texas Top Rated Lawyers” published by ALM Legal Group.