Each side in the legal fight for control over Billy Bob’s Texas, the world’s largest honky tonk, has alleged that their former partners engaged in financial mismanagement.
But one faction of owners has asked that the courts disqualify the law firm that is representing the other ownership faction in court.
Appellate jurists from the Supreme Court of Texas elected to come from Austin and visit the Texas A&M University School of Law in Fort Worth on Thursday to hear oral arguments concerning the fight over whether the attorneys from Kelly Hart & Hallman can continue to represent one of the ownership groups in court.
Billy Bob’s Texas is paying the attorneys who have taken the other ownership group to court, and that particular ownership group does not believe that is fair, and also argue that one partnership agreement supersedes other agreements drafted to control how corporate decision making is handled.
Once the Supreme Court of Texas makes a decision on the issue at hand, which is expected to happen at any time between now and June, the case can be set for trial in the lower court.
Until then, the case remains in litigation limbo.
A fight between ownership factions
The controlling document described by one ownership group calls for all the partners to agree on major decisions about running the nightclub, but unfortunately the partners reached a place a long time ago where they could no longer unanimously agree on what direction Billy Bob’s should take, said Dale Wainwright, the attorney for the Murrin ownership faction.
That controlling agreement also dictates how litigation involving Billy Bob’s is agreed upon, Wainwright said.
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Billy Bob’s ex-manager Concho Minick filed a lawsuit in 2017 against the nightclub’s majority owners alleging that he was improperly dismissed without the unanimous approval of the bar’s owners, as stipulated in a company agreement. He denied allegations that he had mismanaged the bar, saying he was fired because he raised concerns about a $175 million development planned in the Fort Worth Stockyards.
“This led to anarchy,” Wainwright argued before the appellate court.
The dismissal, a transfer of funds to other bank accounts, the lockout of Minick from the computer systems and bank accounts, and a denial of voting rights from some of the partners, all took place without a unanimous agreement of the partners, a violation of the agreement, Wainwright said.
The Murrin group of owners is asking the court to appoint a receiver to represent the company because there are conflicts of interests inherent in the current litigation and in corporate operations, Wainwright said.
The other ownership group, referred to as the Hickman group, had also asked for a corporate receiver to run the business and the litigation at one time, Wainwright said.
A jury will decide
Chad Baruch, who presented oral arguments for the Hickman group of owners on Thursday, told the court that at one time a corporate receiver was requested. However, after examining the Billy Bob’s lease agreement, it was concluded that placing the company under a receivership for more than 60 days would place Billy Bob’s lease in jeopardy and could be construed as a breach of the lease agreement.
“Why is that so important?” Baruch asked. “Because Billy Bob’s Euless does not have quite the panache as Billy Bob’s in the historic Fort Worth Stockyards.”
Baruch said a receiver was requested with the hope that the unanimity clause in the corporate agreement could be abolished.
Baruch also argued that money is not at issue at the moment and what attorney or group of attorneys gets paid can be sorted out later by a jury.
“Billy Bob’s is a good little business,” Baruch told the judges.
What is unreasonable, Baruch said, is for one ownership faction to get permission from the other ownership faction to sue the other for misconduct.
Or, “Does Billy Bob’s really have to get Concho’s permission to defend itself in court?” Baruch asked.
“Ultimately, a jury will decide who is adverse and who is aligned with the company,” Baruch said.