M&M Livestock v. Robinson

FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
ENTERED
8/4/2025
2025 Tex. Bus. Ct. 29

The Business Court of Texas
Eighth Division

M&M LIVESTOCK, LLC, and JOHN §
MALOUFF, individually, and derivatively §
on behalf of ZMDR, LLC d/b/a REPUBLIC §
FOODS §
§
Plaintiffs, §
§
§
v.
§ Cause No. 24-BC08B-0003
§
§
JEREMY ROBINSON, individually, §
ZMDR, LLC d/b/a REPUBLIC FOODS, §
DAVID DEVITO, individually, and NMD §
ENTERPRISES, LLC §
§
Defendants. §

═══════════════════════════════════════════════════════
MEMORANDUM OPINION AND ORDER
ON DEFENDANTS’ PLEA TO THE JURISDICTION
══════════════════════════════════════════════════

[¶ 1] Before the Court is Defendants’ plea to the jurisdiction (“Plea”) raised

in their Supplemental Answer filed May 23, 2025. The Plea challenges subject

matter jurisdiction on grounds that Plaintiffs have not pleaded facts sufficient to

satisfy the $5 million minimum amount in controversy required by Section
25A.004(b) of the Texas Government Code. In a prior order, the Court deferred

ruling on the Plea to give the parties an opportunity to amend their pleadings and

provide additional jurisdictional briefing.

[¶ 2] After reviewing the parties’ submissions, the Court now concludes that

Plaintiffs, in their amended petition, have pleaded facts sufficient to satisfy the $5

million threshold requirement. Defendants’ Plea is therefore denied.

I. BACKGROUND

[¶ 3] This dispute arises out of the parties’ ownership of a limited liability

company (“LLC”) formed for purposes of operating a meat processing plant in

Missouri. Plaintiffs filed this action in October 2024 alleging the processing plant

failed because of Defendants’ gross mismanagement and depletion of company

assets. Plaintiffs also seek to recover for a series of livestock sales they made to the

LLC for which they have not been paid.

A. The parties

[¶ 4] Plaintiffs are John Malouff (“Malouff”), individually and derivatively

on behalf of ZMDR, LLC d/b/a Republic Foods (“ZMDR”), and his operating

company M&M Livestock, LLC (“M&M”). 1

1
Amend. Pet. ¶¶ 5-6, 15.

MEMORANDUM OPINION AND ORDER, Page 2
[¶ 5] Defendants are ZMDR, David DeVito (“DeVito”), Jeremy Robinson

(“Robinson”), and NMD Enterprises, LLC (“NMD”). 2

[¶ 6] ZMDR is the LLC at the heart of these disputes. It is a manager-managed

LLC governed by a company agreement. 3 Its managers are Robinson and DeVito,

and its current members are Malouff, Robinson, and NMD. 4 Malouff has never been

a manager of ZMDR. 5

B. The original petition

[¶ 7] In their original petition, Plaintiffs complained that Defendants ran

ZMDR into the ground through a series of managerial missteps and refused to pay

Plaintiffs for livestock sales made to ZMDR. 6 These complaints were subsumed in

six numbered counts:

Count 1: breach of contract (cattle sales)
Count 2: suit on a sworn account
Count 3: breach of contract (company agreement)
Count 4: fraud/fraudulent inducement
Count 5: breach of fiduciary duty
Count 6: unjust enrichment. 7

[¶ 8] For damages, Plaintiffs pleaded generally for monetary relief exceeding

$5 million, but identified specific damages only with respect to Counts 1, 2, and 3. 8

2
Id. ¶¶ 7-10.
3
Id. ¶¶ 20, 23.
4
Id. ¶¶ 20, 22-23.
5 Id. ¶¶ 20, 22.
6
Orig. Pet. ¶ 13.
7
Id. ¶¶ 31-57.
8
Id. ¶¶ 1, 35, 38-39, 45.

MEMORANDUM OPINION AND ORDER, Page 3
In Counts 1 and 2, Plaintiffs alleged $1,690,225.29 in damages pursuant to

ZMDR’s purported agreement to purchase M&M’s cattle. 9 In Count 3, Malouff

requested damages in excess of $5 million based on Defendants’ alleged breaches of

ZMDR’s company agreement, including for failure to pay ZMDR’s obligations and

to maintain ZMDR’s assets. 10 Plaintiffs also alleged that Malouff contributed

$800,000 to ZMDR based on Defendants’ agreement to fulfill their obligations

under the company agreement. 11

[¶ 9] As for subject matter jurisdiction, Plaintiffs alleged that the Court had

jurisdiction over this action pursuant to Sections 25A.004(b)(1), (2), (4), and (5) of

the Government Code, all of which require a minimum amount in controversy of

more than $5 million. 12

C. The plea to the jurisdiction

[¶ 10] In their Supplemental Answer filed May 23, 2025, Defendants disputed

that this case involves more than $5 million. 13 The Court, construing this objection

to be tantamount to a plea to the jurisdiction, agreed there was at least a reasonable

basis to question jurisdiction. 14 Accordingly, the Court ordered the parties to brief

9
Id. ¶¶ 21-22, 31-40.
10
Id. ¶¶ 19, 41-45.
11
Id. ¶ 42.
12
Id. ¶ 2; TEX. GOV’T CODE ANN. §§ 25A.004(b)(1)-(7).
13
Supp. Answer ¶ 1.
14
Order [May 30, 2025], at 2.

MEMORANDUM OPINION AND ORDER, Page 4
the issue under Section 25A.004(b), with particular emphasis on the amount-in-

controversy. 15 The parties complied by filing competing briefs. 16

D. The Court’s order permitting repleading and additional briefing

[¶ 11] After reviewing the pleadings and briefs, the Court concluded that

Plaintiffs had not pleaded facts sufficient to satisfy the minimum amount in

controversy. 17 In so concluding, the Court pointed out the jurisdictional deficiencies

in Plaintiffs’ petition, focusing on the damages sought in Counts 1, 2, and 3 and the

absence of any allegations that would measure damages by the impaired value of

ZMDR or Malouff’s interest in the company. 18

[¶ 12] To reiterate, the damages sought in Counts 1 and 2 ($1,690,225.29)

were not sufficient because those amounts related solely to cattle sales and do not

fall within this Court’s original jurisdiction as defined by subsections (b)(1), (2), (4),

and (5)—namely, derivative proceedings or actions regarding the internal affairs of

an organization or its owners, managers, or controllers. 19 Jurisdiction over the cattle

sales claims would exist only under Section 25A.004(f)’s grant of supplemental

jurisdiction, as the parties themselves acknowledged in their briefs. 20 Supplemental

15
Id., at 2.
16
Plaintiffs’ Brief [June 13, 2025]; Defendants’ Brief [June 27, 2025].
17
Order [July 7, 2025] ¶¶ 2, 8-13.
18
Id. ¶¶ 8-13.
19
Id. ¶ 8.
20
Id.; Plaintiffs’ Brief [June 13, 2025], at 15-17; Defendants’ Brief [June 27, 2025], at 8-10, 22-25. See TEX.
GOV’T CODE ANN. § 25A.004(f).

MEMORANDUM OPINION AND ORDER, Page 5
jurisdiction, of course, cannot exist on its own; it must be tied to some form of

original jurisdiction under subsections (b), (c), or (d) of Section 25A.004. 21

[¶ 13] The Court next turned to Count 3, which generally alleged damages “in

an amount of not less than $5,000,000[.]” 22 The Court concluded that this

allegation was likewise insufficient to satisfy the minimum amount in controversy

because there were no specific allegations explaining how such damages resulted

from any purported breaches of ZMDR’s company agreement. 23 It was not enough,

for example, to state that Malouff tendered a $9.5 million buyout offer without a

corresponding allegation that Defendants were somehow obligated by the company

agreement to accept Malouff’s tender. 24

[¶ 14] Plaintiffs, for their part, did identify in their jurisdictional briefing other

plausible theories of recovery and monetary amounts, but the Court could not

consider those theories or amounts because Plaintiffs did not adequately plead them

in their petition. 25 For example, Plaintiffs argued in their brief about the multi-

million dollar swings in ZMDR’s value as evidenced by the company’s balance

sheets, but nowhere did Plaintiffs plead any claim to recover, on ZMDR’s or

21 C Ten 31 LLC ex rel. SummerMoon Holdings LLC v. Tarbox, 2025 Tex. Bus. 1, ¶ 29, 31, 708 S.W.3d 223,

236-37 (3rd Div.).
22
Orig. Pet. ¶ 45.
23
Order [July 7, 2025] ¶ 9.
24
Id.
25
Id. ¶¶ 10-13.

MEMORANDUM OPINION AND ORDER, Page 6
Malouff’s behalf, damages commensurate with the impaired value of ZMDR. 26

Similarly, Plaintiffs argued in their brief that—because of Defendants’ alleged

breaches of contractual and fiduciary duties—Malouff now faces an $11.7 million

demand for payment as guarantor of ZMDR’s debt, yet Plaintiffs’ original petition

was missing these same allegations. 27

[¶ 15] Even so, because Plaintiffs’ allegations did not affirmatively negate

jurisdiction, the Court ruled that Plaintiffs should have an opportunity to amend (as

should Defendants, in turn). 28 The Plea was thus held in abeyance to permit the

parties to file amended pleadings and briefing. 29

E. The amended pleadings and additional briefing

[¶ 16] Plaintiffs filed their first amended petition—now their live pleading—

on July 15, 2025. In essence, Plaintiffs endeavored to cure the deficiencies in their

original petition while continuing to plead that the Court has jurisdiction pursuant

to Sections (b)(1), (2), (4), and (5). 30 Plaintiffs bolstered their fiduciary duty and

contract claims by alleging new supporting facts—like Malouff’s personal guaranty

on the loan—and new theories of recovery—like asset diminution—as well as

26
Order [July 7, 2025] ¶¶ 11-13; Plaintiffs’ Brief [June 13, 2025], at 9-11.
27
Order [July 7, 2025] ¶¶ 10-13; Plaintiffs’ Brief [June 13, 2025], at 9-11.
28
Order [July 7, 2025] ¶¶ 2, 14 (citing Dohlen v. City of San Antonio, 643 S.W.3d 387, 397 (Tex. 2022)).
29
Order [July 7, 2025] ¶¶ 2, 15.
30
Amend. Pet. ¶ 2.

MEMORANDUM OPINION AND ORDER, Page 7
identifying specific damages in excess of $5 million. 31 Plaintiffs also renumbered

their causes of action as follows:

Count 1: breach of fiduciary duty
Count 2: breach of contract (company agreement)
Count 3: fraud/fraudulent inducement
Count 4: breach of contract (cattle sales)
Count 5: suit on sworn account
Count 6: unjust enrichment. 32

[¶ 17] On July 22, 2025, Defendants responded with additional briefing and

by amending paragraph 1 of their supplemental answer. 33 The amendment to

paragraph 1 maintains that the Court lacks jurisdiction over the entire action; argues

that jurisdiction is lacking over any claims based on Malouff’s personal guaranty;

and asserts waiver and bar based on language in the guaranty. 34 Defendants also

argue the amended petition still fails for the same reasons as the original petition;

namely, that the jurisdictional allegations are conclusory and insufficient. 35

II. ANALYSIS

[¶ 18] The sole question before the Court is whether Plaintiffs’ pleadings are

sufficient to satisfy the $5 million amount in controversy requirement in Sections

31
Id. ¶¶ 37-39, 43-46, 47-51.
32
Id. ¶¶ 43-69.
33
Amend. Supp. Answer; Defendants’ Brief [July 22, 2025].
34
Amend. Supp. Answer ¶ 1.
35
Defendants’ Brief [July 22, 2025] ¶ 11.

MEMORANDUM OPINION AND ORDER, Page 8
25A.004 (b)(1), (2), (4), and/or (5). As this is an issue of subject matter jurisdiction,

it is ordinarily a question of law for the Court to decide. 36

A. Applicable law

1. Jurisdiction pursuant to Section 25A.004(b)

[¶ 19] Subsections (b)(1), (2), (4), and (5) grant this Court jurisdiction over

the following actions in which the amount in controversy exceeds $5 million,

excluding interest, statutory damages, exemplary damages, penalties, attorney’s

fees, and court costs:

(1) a derivative proceeding;

(2) an action regarding the governance, governing documents, or
internal affairs of an organization;
. . .
(4) an action by an organization, or an owner of an organization, if the
action:

(A) is brought against an owner, controlling person, or
managerial official of the organization; and

(B) alleges an act or omission by the person in the person’s
capacity as an owner, controlling person, or managerial official of the
organization; [and]

(5) an action alleging that an owner, controlling person, or managerial
official breached a duty owed to an organization or an owner of an
organization by reason of the person’s status as an owner, controlling
person, or managerial official, including the breach of a duty of loyalty
or good faith[.] 37

36
C Ten, 2025 Tex. Bus. 1, at ¶ 9, 708 S.W.3d at 230.
37
TEX. GOV’T CODE ANN. §§ 25A.004(b)(1), (2), (4), and (5).

MEMORANDUM OPINION AND ORDER, Page 9
[¶ 20] The Court has previously held that Section 25A.004(b)’s amount-in-

controversy requirement applies at the “action” level, considering all claims

properly joined before the Court, rather than as a per-claim minimum. 38 The amount

in controversy in an action is the sum of money or the value of the thing originally

sued for. 39 The amount in controversy is frequently determined by the damages

sought. 40

2. Standards for deciding a plea to the jurisdiction

[¶ 21] Defendants’ jurisdictional challenge is singularly focused on the

amount in controversy. In this circumstance, Texas courts follow well-established

principles. When a defendant argues that the amount in controversy does not meet

the jurisdictional threshold, the plaintiff’s pleadings are determinative unless the

defendant: (1) “pleads and proves that the plaintiff’s allegations of the amount in

controversy were made fraudulently for the purpose of obtaining jurisdiction”; or

(2) can readily establish that the amount in controversy is outside the court’s

jurisdiction. 41

38
C Ten, 2025 Tex. Bus. 1, at ¶ 25, 708 S.W.3d at 234.
39
Tune v. Tex. Dep’t of Pub. Safety, 23 S.W.3d 358, 361 (Tex. 2000) (quotation marks omitted); C Ten, 2025
Tex. Bus. 1, at ¶ 32, 708 S.W.3d at 237 (internal citation and quotation marks omitted).
40
Tune, 23 S.W.3d at 361-62.
41
Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224 n.4, 226 (Tex. 2004); accord Bland Indep.
Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); ET Gathering & Processing LLC v. Tellurian Prod. LLC,
2025 Tex. Bus. 11, ¶ 7, 709 S.W.3d 1, 4 (11th Div.) (quoting Bland, 34 S.W.3d at 554, and citing Miranda,
133 S.W.3d at 226); C Ten, 2025 Tex. Bus. 1, at ¶ 46, 708 S.W.3d at 242 (citing Miranda, 133 S.W.3d at
223, and Bland, 34 S.W.3d at 554).

MEMORANDUM OPINION AND ORDER, Page 10
[¶ 22] Thus, absent credible evidence of a fraudulent pleading or an amount in

controversy outside the jurisdictional threshold, a challenge to the amount in

controversy must ordinarily be decided solely on the pleadings. 42 The pleadings,

moreover, are to be liberally construed in favor of jurisdiction. 43 The Texas Supreme

Court has repeatedly cautioned that a plaintiff should not have to marshal its

evidence or prove its claims to survive early jurisdictional challenges. 44

[¶ 23] Here, Defendants have not pleaded, much less proved, that Plaintiffs’

pleadings are fraudulent for purposes of obtaining jurisdiction or that a different

amount in controversy is readily established. 45 In the absence of such challenges,

the Court must limit its jurisdictional inquiry to the pleadings. 46

B. Jurisdiction exists pursuant to subsections (b)(1), (2), (4) and (5)

[¶ 24] Construing the amended petition liberally in favor of jurisdiction, the

Court concludes that Plaintiffs have pleaded facts sufficient to satisfy the $5 million

42
C Ten, 2025 Tex. Bus. 1, at ¶¶ 47-51, 708 S.W.3d at 243.
43
Id., 2025 Tex. Bus. 1, at ¶ 35, 708 S.W.3d at 238.
44
Alamo Heights Indep. Sch. Dist. v. Clark, 544 S.W.3d 755, 805 (Tex. 2018); Mission Consol. Indep. Sch.
Dist. v. Garcia, 372 S.W.3d 629, 637 (Tex. 2012); Bland, 34 S.W.3d at 554.
45
The closest that Defendants come to challenging the pleadings as fraudulent is a single statement in their
opening jurisdictional brief that this dispute is about cattle sales, and that “[t]he rest [of the petition] was
conclusory and/or sham assertions of millions at issue, which does not create jurisdiction.” Defendants’
Brief [June 27, 2025], at 10. After Plaintiffs amended their petition, Defendants did not repeat this
allegation in their second jurisdictional brief, and in any event this single conclusory reference to “sham”
assertions does not amount to “plead[ing] and prov[ing] fraud.” Miranda, 133 S.W.3d at 224 n.4.
Elsewhere, Defendants also label as a “sham” Malouff’s pre-suit offer to sell his interest in ZMDR for $9.5
million. Defendants’ Brief [June 27, 2025], at 16. But the Court did not give any consideration or weight
to this pre-suit offer, or the value ascribed to the pre-suit offer, when making its jurisdictional
determination.
46
Miranda, 133 S.W.3d at 223.

MEMORANDUM OPINION AND ORDER, Page 11
threshold. 47 Of particular import are the breach-of-fiduciary-duty claim in Count 1,

the breach-of-contract claim (company agreement) in Count 2, and the fraudulent-

inducement claim in Count 3 and their supporting factual allegations. 48

1. Plaintiffs’ factual allegations support jurisdiction

[¶ 25] The relevant factual allegations supporting Plaintiffs’ claims for breach

of fiduciary duty, breach of contract, and fraudulent inducement can be summarized

as follows.

[¶ 26] Malouff contributed approximately $882,000 in cash and livestock to

acquire his 33% interest in ZMDR, whereas Robinson and DeVito contributed only

$10 for their respective 33% interests as members and managers of ZMDR. 49 Under

ZMDR’s company agreement, Robinson and DeVito, as managing members,

retained “sole and exclusive control of the management, business and affairs of

[ZMDR]” and were responsible for “maintaining the assets of [ZMDR] in good

order” and timely “[…] paying debts and obligations of [ZMDR].” 50

[¶ 27] DeVito’s and Robinson’s mismanagement resulted in myriad

operational, regulatory, and legal problems that effectively bankrupted the company

in a short period of time. 51 In December 2020, ZMDR reported assets—including

47
Amend. Pet. ¶¶ 1, 46, 51, 61, 64-65.
48
Id. ¶¶ 43-56.
49
Id. ¶¶ 20-22.
50
Id. ¶ 23.
51
Id. ¶ 25.

MEMORANDUM OPINION AND ORDER, Page 12
real estate, fixtures, cattle equipment, and livestock—valued at $13,159,469. 52 By

the end of 2022, the assets had grown to a reported value of $21,426,488. 53 Just

two years later, at the end of 2024, the value of ZMDR’s assets had plummeted to

negative $3,982,504—a decline of more than $25 million. 54

[¶ 28] According to the pleadings, this precipitous drop was caused by

Defendants’ “serial fraud, waste and abuse of corporate assts and other malfeasance

such that ZMDR’s business operations have been defunct for several months.” 55

Plaintiffs allege Defendants subjected the company to multiple lawsuits and

administrative proceedings and allowed money judgments to be abstracted. 56 Even

more, under Defendants’ management, ZMDR violated numerous health and safety

regulations. 57 As a result, ZMDR forfeited its licenses to sell beef. 58 Most recently,

ZMDR’s meat-processing plant was scheduled for a foreclosure sale on July 16,

2025, potentially resulting in a distressed sale of ZMDR’s single largest asset. 59

[¶ 29] Plaintiffs also allege that Defendants’ wrongful conduct has exposed

Malouff to personal liability. 60 In December 2024, Malouff received a demand for

52
Id. ¶ 26.
53
Id.
54
Id.; Plaintiffs’ Brief [June 13, 2025], at 9.
55
Amend. Pet. ¶ 30.
56
Id.
57
Id.
58
Id.
59
Id. ¶ 38.
60
Id. ¶ 37.

MEMORANDUM OPINION AND ORDER, Page 13
$11,682,266 from the lender that financed the real estate upon which ZMDR’s plant

is located. 61 The demand seeks to enforce a personal guaranty that Malouff made to

secure the loan. 62

2. Plaintiffs’ legal claims support jurisdiction

[¶ 30] In their amended petition, Plaintiffs have now linked their factual

allegations to their causes of action in a manner sufficient to support their requested

relief, and, in so doing, to satisfy the amount-in-controversy requirement necessary

for jurisdiction.

[¶ 31] In Count 1, Malouff asserts a claim for breach of fiduciary duty against

Robinson and DeVito, both individually and derivatively on behalf of ZMDR. 63 This

claim seeks to hold Robinson and DeVito liable for their alleged fiduciary breaches

in the mismanagement of ZMDR. Plaintiffs propose to measure such damages in

three ways. The first reflects the derivative claim on behalf of ZMDR and measures

“damages in the form of asset diminution of not less than $19MM.” 64 The second

measures the individual harm to Malouff based on his 33% pro rata share of the $19

million in diminished assets. 65 The third measures the individual harm to Malouff

based on his exposure to personal liability for ZMDR’s debts, amounting to

61
Id.
62
Id.
63
Id. ¶¶ 43-46.
64
Id. ¶ 46.
65
Id.

MEMORANDUM OPINION AND ORDER, Page 14
$11,682,266. 66 All three methods are sufficient to meet the $5 million jurisdictional

threshold under each of subsections (b)(1), (2), (4), and (5).

[¶ 32] In Count 2, Malouff asserts a breach of contract claim based on

Defendants’ alleged failure to comply with ZMDR’s company agreement. 67 This

claim, too, seeks to hold Defendants liable for failing to pay ZMDR’s obligations,

failing to maintain ZMDR’s assets, and failing to keep ZMDR compliant with health

and safety laws. 68 Malouff proposes two ways to calculate his alleged damages for

breach of contract. The first is the “loss of Malouff’s pro rata value of his 33%

ownership interest … based on ZMDR’s 2022 corporate asset valuations of

$21,426,487.79.” 69 The second is the loss of his initial capital contribution of

$882,000, plus out of pocket expenditures of $68,375. 70 The former method, when

accepted as true for purposes of determining jurisdiction, is more than adequate to

satisfy the $5 million threshold for jurisdiction under subsection (b)(2).

[¶ 33] In Count 3, Malouff asserts a claim for fraudulent inducement in

connection with the company agreement, essentially on grounds that Defendants

“had no intention of performing in accordance with” the agreement. 71 For this

claim, Malouff seeks to recover benefit-of-the-bargain damages in an unspecified

66
Id.
67
Id. ¶¶ 47-51.
68
Id. ¶ 50.
69
Id. ¶ 51.
70
Id.
71
Id. ¶¶ 52-56.

MEMORANDUM OPINION AND ORDER, Page 15
amount. 72 It is a reasonable inference, then, that Malouff’s measure of damages for

fraudulent inducement parallel those for breach of contract, as in both instances the

goal is to put a plaintiff in the same position they would have been in had the contract

been performed. 73 Thus, benefit-of-the-bargain damages for fraudulent inducement

would track those pleaded for breach of contract: the “loss of Malouff’s pro rata

value of his 33% ownership interest … based on ZMDR’s 2022 corporate asset

valuations of $21,426,487.79.” 74

[¶ 34] Taken as a whole, the pleadings allege that Defendants violated various

contractual and fiduciary obligations by grossly mismanaging the business and

fraudulently depleting the company’s assets by more than $25 million in two

years. 75 Plaintiffs seek to recover at least $19 million of this amount on behalf of

ZMDR, or 33% of the same amount on behalf of Malouff individually. 76 Either way,

the amount in controversy exceeds the $5 million threshold.

[¶ 35] The same is true for Plaintiffs’ claim that Defendants must reimburse

Malouff for any amounts he is required to pay based on his personal guaranty of

72
Id. ¶ 56.
73
Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 50 (Tex. 1998) (holding
that benefit-of-the-bargain damages for fraud “compensate[] for the profits that would have been made if
the bargain had been performed as promised.”); Clear Lake City Water Auth. v. Friendswood Dev. Co., 344
S.W.3d 514, 523 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (“The purpose of the benefit-of-the-
bargain measure of damages is to restore the injured party to the economic position it would have been in
had the contract been fully performed.”).
74
Amend. Pet. ¶ 51.
75
Id. ¶¶ 26, 30.
76
Id. ¶¶ 46, 51.

MEMORANDUM OPINION AND ORDER, Page 16
ZMDR’s debts. Plaintiffs plead that Malouff has received formal notice of a demand

for payment of $11,682,266 from the lender used to secure and purchase the real

estate on which ZMDR’s plant is located. 77 That amount, too, far exceeds the

Court’s minimum jurisdictional limits.

[¶ 36] Defendants, in their briefing, have responded that they view these

measures of recovery as highly implausible. 78 And indeed, some of the reasons given

could be considered persuasive. Still, what matters at this stage is only whether

Plaintiffs’ pleadings—liberally construed—evidence an intent to recover damages

exceeding the minimum jurisdictional limits, regardless of how likely such a

recovery might be. 79 Defendants may ultimately be proved right about the merits of

the case, but that is an issue for another day. For now, the Court is hard pressed to

see how the jurisdictional threshold is not satisfied by allegations of “serial fraud,

waste and abuse of corporate assets” totaling approximately $25 million and

potential personal liability for Malouff of more than $11 million. 80

[¶ 37] To be clear, in discussing the specific claims in Count 1, 2, and 3, the

Court is not holding that only these claims satisfy subsection (b)’s jurisdictional

prerequisites. As discussed, the jurisdictional inquiry occurs at the “action” level,

77
Id. ¶ 37.
78
Defendants’ Brief [July 22, 2025] ¶¶ 3-10.
79
See Bland, 34 S.W.3d at 554 (“The plaintiff’s allegation of damages in excess of jurisdictional limits
suffices to show the amount in controversy, even if damages cannot ultimately be proved at all.”).
80
Amend. Pet. ¶¶ 26, 30, 37, 46, 51.

MEMORANDUM OPINION AND ORDER, Page 17
not the claim level. Here, the “action,” as that term is used in Section 25A.004(b),

necessarily includes all claims challenging the management and internal affairs of

ZMDR, the depletion of its assets, and the conduct of its managers.

C. Supplemental jurisdiction alone would apply to the cattle sale claims

[¶ 38] Although Plaintiffs have established original jurisdiction over their

claims related to the mismanagement of ZMDR, they have not done so with respect

to their claims for amounts owed for livestock purchases. Plaintiffs assert four

causes of action related to M&M’s sale of cattle to ZMDR—fraud, breach of

contract, suit on sworn account, and unjust enrichment. 81 The maximum damages

pleaded for these claims is $1,690,225. 82

[¶ 39] These claims do not implicate the Court’s original jurisdiction under

subsection (b) because they do not involve the internal affairs of the LLC, as required

by the statute. The claims could, however, fall within the Court’s supplemental

jurisdiction under subsection (f). The parties, in their respective briefing, expressed

the same view. 83 The question, then, is whether Defendants will agree—or have

already agreed—to the application of supplemental jurisdiction. 84 This is an issue

for a later date, as addressed at the conclusion of this order.

81
Id. ¶¶ 53-69.
82
Id. ¶¶ 61, 64-65.
83
Plaintiffs’ Brief [June 13, 2025], at 15-17; Defendants’ Brief [June 27, 2025], at 8-10, 22-25.
84
Section 25A.004(f) provides that “a claim within the business court’s supplemental jurisdiction may
proceed in the business court only on the agreement of all parties to the claim and [the court.]” TEX. GOV’T
CODE ANN. § 25A.004(f). As Plaintiffs point out, the parties seemingly agreed in their Initial Case Status

MEMORANDUM OPINION AND ORDER, Page 18
III. CONCLUSION

[¶ 40] Consistent with this Memorandum Opinion, the Court denies

Defendants’ Plea.

[¶ 41] Further, pursuant to Section 25A.004(f), the parties are ordered to

notify the Court by August 15, 2025, whether they agree to the Court’s exercise of

supplemental jurisdiction over Plaintiffs’ claims related to the cattle sales in

dispute.

SO ORDERED.

Brian Stagner
Judge of the Texas Business Court,
Eighth Division

SIGNED: August 4, 2025

Report that “[t]here are no challenges to jurisdiction or venue. All of Plaintiffs’ claims … fall within the
Court’ subject matter jurisdiction. Thus, no claims fall exclusively within the Court’s supplemental
jurisdiction.” Plaintiffs’ Brief [June 13, 2025], at 17; Initial Case Status Report ¶ 6. Defendants, through
their new counsel, contend they have not yet consented to any exercise of supplemental jurisdiction and
that the parties’ prior statement was a “mutual mistake” based on a shared belief that there were no claims
within the Court’s supplemental jurisdiction. Defendants’ Brief [June 27, 2025], at 23.

MEMORANDUM OPINION AND ORDER, Page 19