IronOak Inc., Michael Sydow and Chidi Anunobi v. Michael Eugene Porter, John T. Preston, Cristen David Feldman, Jeffrey S. Baker, Geoffrey Alan Berg, Gabriel Berg and Kathryn E. Nelson

Opinion issued October 16, 2025

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-23-00924-CV
———————————
IRONOAK, INC., MICHAEL SYDOW, AND CHIDI ANUNOBI, Appellants
V.
MICHAEL EUGENE PORTER, JOHN T. PRESTON, CRISTEN DAVID
FELDMAN, JEFFREY S. BAKER, GEOFFREY ALAN BERG, GABRIEL
BERG, AND KATHRYN E. NELSON, Appellees

On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2022-80846

OPINION

This appeal arises from the trial court’s imposition of sanctions on IronOak,

Inc. f/k/a Iron Oak LLC (“Iron Oak”), and its attorneys, Michael Sydow and Chidi

Anunobi (collectively, “appellants”). Sydow and Anunobi represented Iron Oak in a

suit based on a settlement agreement that purportedly, wrongfully assigned claims
previously assigned to Iron Oak. Yet Iron Oak was not a party to the settlement, and

the settlement agreement did not include the claims Iron Oak alleged had been

improperly transferred.

Iron Oak brought suit against the parties to the settlement agreement who were

affiliated with Continuum Energy Technologies, LLC, (“CET”)—John Preston and

Michael Porter (CET’s principals); Geoffrey Berg, Gabriel Berg, and Kathryn

Nelson (Preston, Porter, and CET’s attorneys); John Hannan (CET’s receiver); and

Cristen Feldman and Jeffrey Baker (Hannan’s attorneys), but not CET itself. Iron

Oak alleged violations of the Texas Uniform Fraudulent Transfer Act (“TUFTA”),

conversion, and conspiracy, and shortly after, moved for a temporary restraining

order based on the same. Preston, Porter, Geoffrey Berg, Gabriel Berg, and Nelson

(collectively, “appellees”) responded by moving to dismiss under Rule 91a and

moving for sanctions. After the appellants nonsuited their claims, the trial court

granted the appellees’ motion for sanctions.

In three issues by Iron Oak and five issues each by Sydow and Anunobi, the

appellants contend that the trial court erred in imposing sanctions.

We modify the trial court’s judgment and affirm as modified.

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Background

Iron Oak and its principal, Rajiv Gosain, have a long history of litigation

against CET, Preston, and Porter that spans across multiple jurisdictions, including

three countries.

Iron Oak, the appellees, and CET mediated one of their prior disputes, and all

parties—except Iron Oak—entered into a settlement agreement. In the settlement

agreement, Hannan (as appointed receiver for CET) assigned CET’s claims against

Iron Oak, Gosain, and two of Gosain’s companies (CETech and Visualize Holdings)

to Preston, Porter, and CET. Hannan also assigned them “all claims asserted or those

that could be or could have been asserted by the Receiver against any party . . . in

the Massachusetts Suit.”

Iron Oak immediately moved to void the settlement agreement, and the court

denied that motion.

Iron Oak, through its attorneys Sydow and Anunobi, then filed this suit—but

not against CET. Instead, Iron Oak sued CET’s principals (Porter and Preston), the

attorneys who represented them (Geoffrey Berg, Gabriel Berg, and Nelson), Hannan,

CET’s former receiver, and Hannan’s attorneys (Feldman and Baker). Iron Oak

claimed violations of TUFTA, conversion, and civil conspiracy based on allegations

that the settlement agreement wrongfully assigned claims previously assigned to

Iron Oak. The settlement agreement attached to their pleading and on which they

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relied was mostly redacted. But the unredacted portion (1) named the parties to the

settlement agreement, which did not include Iron Oak; and (2) listed the claims

Hannan, as the receiver, had assigned to CET, which did not include the claims

forming the basis of Iron Oak’s suit.

A few weeks later, Iron Oak applied for a temporary restraining order (TRO)

in the trial court seeking to restrain the appellees from proceeding in a Massachusetts

suit, where a hearing on Porter and CET’s motion for summary judgment was set for

the following week. Iron Oak did not provide notice to the appellees of the first

hearing on its TRO application.

Shortly after, the appellees moved to dismiss this suit under Rule 91a and for

sanctions. In their motion for sanctions, they requested the trial court impose

sanctions based on Rule 13 of the Texas Rules of Civil Procedure, Chapter 10 of the

Texas Civil Practice and Remedies Code, and the court’s inherent authority.

Iron Oak, through Anunobi, filed a motion for nonsuit, which the trial court

granted.

The appellees supported their request for sanctions with, among other things,

the following:

• the unredacted settlement agreement and proof of Sydow’s and Anunobi’s
receipt of the same;
• evidence of Sydow and Iron Oak’s failure to comply with discovery in
other cases;

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• relevant pleadings in this and other cases;
• declarations of Iron Oak’s principal, emails between the parties and their
attorneys; and
• evidence of attorney’s fees.

After the hearing, Anunobi moved for leave to file additional evidence

consisting of his supplemental affidavit with attachments, including unredacted

email correspondence attached as Exhibit 19. The trial court allowed the appellees

to incorporate such evidence in their post-hearing briefing. One day later, Anunobi

amended his motion for leave with the same affidavit and a redacted version of

Exhibit 19, but the trial court denied his amended motion.

The trial court granted the appellees’ motion for sanctions and imposed the

following sanctions:

(1) $44,720 sanction to compensate the appellees for their attorney’s
fees and expenses plus conditional appellate fees, assessed jointly and
severally;
(2) $250,000 penalty against Sydow and Iron Oak, payable to the trial
court;
(3) $25,000 penalty against Anunobi, payable to the trial court; and
(4) compulsory completion of ten additional CLE hours for the next
five years.

The trial court also entered findings of fact and conclusions of law addressing

the existence of good cause for the sanctions under Rule 13 and Chapter 10.

5
Sanctions Award

Iron Oak, Sydow, and Anunobi contend that the trial court abused its

discretion in awarding sanctions against them. We disagree.

Standard of Review

When a sanctions order refers to a specific provision, either by citing it,

tracking its language, or both, we are confined to determining whether the sanctions

are appropriate under that provision. Metzger v. Sebek, 892 S.W.2d 20, 51 (Tex.

App.—Houston [1st Dist.] 1994, writ denied). Although the appellees included the

court’s inherent authority as a basis for sanctions in their motion, the judgment

invoked only Texas Rule of Civil Procedure 13 and Texas Civil Practice and

Remedies Code Chapter 10. We will thus confine our review to whether the trial

court properly sanctioned Iron Oak, Sydow, and Anunobi under these authorities.

We review the sanctions imposed pursuant to both provisions under the

abuse-of-discretion standard. Nath v. Tex. Child.’s Hosp., 446 S.W.3d 355, 361

(Tex. 2014). “Although we view conflicting evidence favorably to the court’s

decision, we are not bound by a trial court’s fact findings or conclusions of law and

must, instead, review the entire record independently to determine whether the trial

court abused its discretion.” Brewer v. Lennox Hearth Prods., LLC, 601 S.W.3d 704,

717 (Tex. 2020). “[We] may reverse the trial court’s ruling only if the trial court

acted without reference to any guiding rules and principles, such that its ruling was

6
arbitrary or unreasonable.” Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). The

degree of discretion we afford the trial court is greater when sanctions are imposed

for groundless pleadings than when imposed for discovery abuse. Falk & Mayfield

L.L.P. v. Molzan, 974 S.W.2d 821, 827 (Tex. App.—Houston [14th Dist.] 1998, pet.

denied).

“A sanctions award that fails to comply with due process constitutes an abuse

of discretion because a trial court has no discretion in determining what the law is or

applying the law to the facts.” Nath, 446 S.W.3d at 361. But a trial court does not

abuse its discretion when imposing sanctions if some evidence supports its decision.

Id. We defer to the trial court’s determination of credibility. Powell v. Grimes, No.

01-23-00129-CV, 2025 WL 626428, at *9 (Tex. App.—Houston [1st Dist.] Feb. 27,

2025, no pet.).

Generally, courts presume pleadings, motions, and other papers are filed in

good faith. Nath, 446 S.W.3d at 361. “The party seeking sanctions bears the burden

of overcoming this presumption of good faith.” Id.

Sanctions under Texas Civil Practice and Remedies Code Chapter 10 and Texas
Rule of Civil Procedure Rule 13

Chapter 10 prohibits attorneys from signing and filing pleadings or motions

with an improper purpose or that lack legal or factual support. Pressley v. Casar,

567 S.W.3d 327, 332 (Tex. 2019). Chapter 10 authorizes sanctions if (1) any claim

in the pleading is frivolous, or (2) a pleading was made for an improper purpose.
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TEX. CIV. PRAC. & REM. CODE § 10.001; Westergren v. Jennings, 441 S.W.3d 670,

678 (Tex. App.—Houston [1st Dist.] 2014, no pet.).

Chapter 10 provides:

The signing of a pleading or motion as required by the Texas Rules of
Civil Procedure constitutes a certificate by the signatory that to the
signatory’s best knowledge, information, and belief, formed after
reasonable inquiry:

(1) the pleading or motion is not being presented for any
improper purpose, including to harass or to cause
unnecessary delay or needless increase in the cost of
litigation;

(2) each claim, defense, or other legal contention in the pleading
or motion is warranted by existing law or by a nonfrivolous
argument for the extension, modification, or reversal of existing
law or the establishment of new law; [and]

(3) each allegation or other factual contention in the pleading or
motion has evidentiary support or, for a specifically identified
allegation or factual contention, is likely to have evidentiary
support after a reasonable opportunity for further investigation or
discovery . . . .

TEX. CIV. PRAC. & REM. CODE § 10.001. “A court that determines that a person has

signed a pleading or motion in violation of Section 10.001 may impose a sanction

on the person, a party represented by the person, or both.” Id. § 10.004(a). But a

court may not sanction a represented party under Chapter 10 based on unsupported

legal contentions. Id. § 10.004(d).

Rule 13 provides:

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The signatures of attorneys or parties constitute a certificate by them
that they have read the pleading, motion, or other paper; that to the best
of their knowledge, information, and belief formed after reasonable
inquiry the instrument is not groundless and brought in bad faith or
groundless and brought for the purpose of harassment . . . .
If a pleading, motion or other paper is signed in violation of this rule,
the court, upon motion or upon its own initiative, after notice and
hearing, shall impose an appropriate sanction available under Rule
215-2b, upon the person who signed it, a represented party, or both.
Courts shall presume that pleadings, motions, and other papers are filed
in good faith. No sanctions under this rule may be imposed except for
good cause, the particulars of which must be stated in the sanction
order. “Groundless” for purposes of this rule means no basis in law or
fact and not warranted by good faith argument for the extension,
modification, or reversal of existing law.

TEX. R. CIV. P. 13. Thus, Rule 13 authorizes sanctions against attorneys and

represented parties who file a groundless pleading in bad faith or for the purpose of

harassment. Id.

1. The appellants’ groundless pleadings

“Groundless” means “no basis in law or fact and not warranted by good faith

argument for the extension, modification, or reversal of existing law.” Id. To

determine whether a pleading is groundless, a trial court must examine the facts

available to the party and the circumstances existing when the party filed it.

WWW.URBAN.INC. v. Drummond, 508 S.W.3d 657, 674 (Tex. App.—Houston [1st

Dist.] 2016, no pet.).

The pleadings at issue here—the original petition and TRO application—are

based on the settlement agreement in a prior action.

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The trial court found that none of the exhibits attached to the pleadings

supported Iron Oak’s allegations and even the unredacted portion of the redacted

settlement agreement plainly contradicted Iron Oak’s allegations. The unredacted

portion established that Iron Oak was not a party to the settlement agreement and

that the receiver assigned claims held by CET, or that could have been asserted by

the receiver, to Porter, Preston, and CET. Thus, Iron Oak has no arguable cause of

action based on the settlement agreement. The record supports the trial court’s

conclusion that the appellants’ allegations had no basis in fact.

The trial court also concluded, even if all the facts alleged by Iron Oak were

true, the appellants’ allegations had no basis in law because:

(1) As to the claims against Hannan in his capacity as receiver for CET in the

prior suit, the original petition was an impermissible collateral attack on the former

receiver’s assignment in a new proceeding,1 and as the former receiver, Hannan had

absolute immunity for actions performed within the scope of the receivership;2

1
See Sun Tec Comput., Inc. v. Recovar Grp., LLC, No. 05-14-00257-CV, 2015 WL
5099191, at *3 (Tex. App.—Dallas Aug. 31, 2015, no pet.) (mem. op.).
2
See Davis v. West, 317 S.W.3d 301, 306-07 (Tex. App.—Houston [1st Dist.] 2009,
no pet.).

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(2) Iron Oak’s TUFTA claim alleged that the former receiver, not a debtor as

required by the statute,3 made the wrongful assignment;

(3) Iron Oak’s conversion claim involved a cause of action, and only tangible

property may be converted under Texas law;4

(4) Iron Oak’s conspiracy claim was derived solely from the groundless

conversion and TUFTA claims; and

(5) Iron Oak’s claims against the attorneys fail based on attorney immunity.5

Here, Anunobi argues that he had a plausible argument to overcome attorney

immunity, and Sydow and Iron Oak claim that attorney immunity, as an affirmative

defense, does not establish that Iron Oak’s claims are groundless. While an

affirmative defense, standing alone, may not establish that a claim is groundless, the

court may take it into account when appropriate to determine whether a party’s

claims have no good-faith basis in law or fact. See Nath, 446 S.W.3d at 367–71

(examining whether the claim was time-barred as a consideration to support the trial

court’s groundless and improper purpose finding). The evidence shows that the

3
See TEX. BUS. & COM. CODE § 24.005(a)(l)–(2). The trial court noted that Iron Oak
did not bring suit against CET, the party to the STA that agreed to pay the
promissory note.
4
See Robin Singh Educ. Servs., Inc. v. Test Masters Educ. Servs., Inc., 401 S.W.3d
95, 97 (Tex. App.—Houston [14th Dist.] 2011, no pet.).
5
See Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015).

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attorney-parties’ actions of representing their clients at mediation fall squarely

within their duties to represent their clients.

Sydow argues that the appellees never offered evidence showing that to

Sydow’s best knowledge, information, and belief, formed after reasonable inquiry,

CET’s collateral attack defense would defeat Iron Oak’s claims. Even so, there is at

least some evidence in the record to support the trial court’s conclusion that the

appellants brought the underlying suit to try to avoid the effect of the receiver’s

assignment and the denial of Iron Oak’s motion to void the settlement agreement in

the prior action.

Sydow and Iron Oak concede that Iron Oak’s claims were weak but urge that

they were not groundless. They challenge the trial court’s conclusions as to each

claim in the original petition. We address them below.

In its TUFTA claim, Iron Oak sued Hannan, the receiver but not CET, the

debtor. Anunobi argues that a receiver may be sued for breach of fiduciary duty.

Sydow and Iron Oak argue that Hannan, as the receiver, was a “debtor” under

TUFTA and that CET did not have to be a party to the case. Yet none of the

appellants cite any authority holding that a receiver may be liable for a violation of

TUFTA. Indeed, Hannan was entitled to absolute immunity. See Davis, 317 S.W.3d

at 306–07.

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Iron Oak’s conversion claim was based on claims CET previously assigned to

Iron Oak, but Texas law is well-settled that only tangible property may be converted.

See Robin Singh Educ. Servs. Inc., 401 S.W.3d at 97. The appellants argue they had

a good-faith argument for the extension of conversion to intangible property. But the

appellants did not make this argument below until sanctions were requested, and

they even used their conversion claim to seek a temporary restraining order, which

requires a likelihood of success on the merits. See DeSantis v. Wackenhut Corp., 793

S.W.2d 670, 686 (Tex. 1990).

As to the conspiracy claim, Sydow and Iron Oak argue that the legal merit of

the conspiracy claim is itself no basis for sanctions because if either the TUFTA

claim or the conversion claim was not groundless, then the same is true of the

conspiracy claim. Nevertheless, because conspiracy is not an independent,

actionable claim, Iron Oak’s inability to bring one actionable tort claim is fatal. See

Bradt v. Sebek, 14 S.W.3d 756, 767 (Tex. App.—Houston [1st Dist.] 2000, pet.

denied).

Anunobi argues that even if the court denied the claims on their merits, his

incorrect analysis should not be the basis for sanctions. But the trial court, as fact

finder, weighs evidence and determines credibility. McLaurin v. McLaurin, No.

01-14-00710-CV, 2016 WL 3023020, at *13 (Tex. App.—Houston [1st Dist.] May

26, 2016, pet. denied).

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Despite the lack of factual and legal basis for the claims, the appellants did

not qualify their allegations to be “upon information and belief”; they even went so

far in the TRO application to declare that they were “undisputed.” Anunobi argues

that he attempted to advocate in good faith that the results of the settlement

agreement’s terms were “undisputed” facts because it appeared that way from the

redacted settlement agreement. But the statements that certain facts are “undisputed”

when the unredacted portions of the settlement agreement plainly showed otherwise

reveal the hollowness of this argument. See TEX. R. CIV. P. 13.

We conclude that there is at least some evidence to support the trial court’s

finding that the TRO application was groundless because the appellants could not

show they had a probable right of recovery in a trial on the merits based on either

the redacted or the unredacted settlement agreement. See DeSantis, 793 S.W.2d at

686.

Thus, we hold that the trial court did not err in concluding that the appellants’

pleadings were groundless.

2. The appellants’ bad faith and improper purpose under Rule 13 and section
10.001

Under both Civil Practice and Remedies Code section 10.001(1) and Rule 13,

the movant must prove the offending party’s state of mind. TEX. CIV. PRAC. & REM.

CODE § 10.001(1); TEX. R. CIV. P. 13.

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Bad faith “means the conscious doing of a wrong for dishonest,

discriminatory, or malicious purposes” and does not exist when a party merely

exercises “bad judgment or negligence.” Gomer v. Davis, 419 S.W.3d 470, 478 (Tex.

App.—Houston [1st Dist.] 2013, no pet.). We construe “improper purpose” under

Chapter 10 as the equivalent of “bad faith” under Rule 13. Dike v. Peltier Chevrolet,

Inc., 343 S.W.3d 179, 184 (Tex. App.—Texarkana 2011, no pet.); see Gomer, 419

S.W.3d at 478 (“Improper motive is an essential element of bad faith”). A document

is filed for the purpose of harassment if it is filed with the intent to “annoy, alarm,

and abuse another person.” Akinwamide v. Transp. Ins. Co., 499 S.W.3d 511, 527

(Tex. App.—Houston [1st Dist.] 2016, pet. denied). The trial court must measure the

party’s conduct and examine the facts available to the party at the time the relevant

document was signed. Gomer, 419 S.W.3d at 478.

Additionally, a party acts in bad faith if he has been put on notice that his

understanding of the facts may be incorrect, and he does not make reasonable inquiry

before pursuing a claim further. Robson v. Gilbreath, 267 S.W.3d 401, 407 (Tex.

App.—Austin 2008, pet. denied). A court may infer bad faith, improper motive, and

intent to harass based on circumstantial evidence. Ketterman v. Tex. Dep’t of Fam.

& Protective Services, No. 01-12-00883-CV, 2014 WL 7473881, at *10 (Tex.

App.—Houston [1st Dist.] Dec. 30, 2014, no pet.); Scheel v. Alfaro, 406 S.W.3d

216, 227 (Tex. App.—San Antonio 2013, pet. denied). While a court is generally

15
required to hold an evidentiary hearing to make a determination about the motives

and credibility of the parties, the trial court may, in some circumstances, be able to

make such a determination by taking judicial notice of items in the case file. Gomer,

419 S.W.3d at 478.

Here, the trial court concluded that appellants filed this suit and TRO

application in bad faith and for improper purpose. The evidence in the record

supports the trial court’s conclusion.

In their briefing, the parties discuss numerous allegations of the appellants’

wrongdoing. We need not address each of these allegations, so long as we determine

that the trial court did not abuse its discretion by finding one or more of these

allegations violates Chapter 10 and Rule 13.

The appellees introduced ample evidence from which the trial court may have

inferred bad faith and improper purpose. Such evidence includes: (1) the unredacted

portion of the redacted settlement agreement’s direct contradiction with the

appellants’ allegations; (2) the appellants’ representation that facts were

“undisputed” when they were demonstrably false; (3) the appellants’ filing of a TRO

application explicitly seeking to restrain the appellees from proceeding in the

Massachusetts lawsuit just before a summary judgment hearing in that suit; (4) the

appellants’ failure to notify the parties of their TRO application in contravention of

the Texas Rules of Civil Procedure and their email discussion regarding whether to

16
give notice; (5) the appellants’ filing of a TRO application based on an extensively

redacted agreement; and (6) the appellants’ constructive possession of the

unredacted settlement agreement when they filed their original petition and TRO

application. These facts support a reasonable inference that the appellants filed their

original petition and TRO application in bad faith and for improper purpose.

Iron Oak contends that he should not be held responsible for his attorneys’

conduct. Although a party should not be punished for its counsel’s conduct “unless

the party is implicated apart from having entrusted its legal representation to

counsel,” the court can impose sanctions when a party gives false testimony.

Metzger, 892 S.W.2d at 52; see In re Reece, 341 S.W.3d 360, 368 (Tex. 2011).

Iron Oak, through Gosain’s declaration attached to the TRO application,

represented to the court under oath that multiple factual allegations were

“undisputed” when the evidence established the contrary and could not have been

represented as such in good faith. The appellees contend that Iron Oak’s acts are

sufficient to uphold the sanctions against it. We agree. Misrepresenting facts in a

declaration to the court disserves justice and sanctions are appropriate under both

Rule 13 and Chapter 10. See Metzger, 892 S.W.2d at 52–53 (holding sanctions under

Rule 13 was appropriate when the represented party lied through an affidavit

attached to the pleading).

17
Anunobi argues that his failure to give notification to the other parties is not

a ground for sanctions under Rule 13 or Chapter 10. Nonetheless, the trial court may

consider the case’s entire history. Greene v. Young, 174 S.W.3d 291, 301 (Tex.

App.—Houston [1st Dist.] 2005, pet. denied). To the extent Sydow and Anunobi

claim that they submitted evidence of their good faith, the trial court, as the fact

finder, was entitled to disbelieve all or any portion of Anunobi’s and Sydow’s

testimony. See Powell, 2025 WL 626428, at *9. The trial court resolves any

inconsistencies or conflicts in the evidence, and we may not substitute our judgment

for that of the trial court. Marshall v. MarOpCo, Inc., 714 S.W.3d 724, 770 (Tex.

App.—Houston [1st Dist.] 2025, pet. filed). Likewise, the trial court had the

discretion to disbelieve the appellants’ argument regarding their knowledge and

intention. See Powell, 2025 WL 626428, at *9.

The appellants urge that the appellees failed to meet their burden of showing

improper motive because the lack of witness testimony to admit their exhibits was

fatal to their motion for sanctions. At the hearing, counsel for Porter stated,

“[Anunobi] wants us to take up all of the exhibits one at a time . . . .” Anunobi later

questioned, “I’m just confused as to, when he says that’s how he’s going to be

offering them, is he testifying? Is he going to be arguing trying to get this in?” He

explained,

Because we intend to call them to testify and cross-examine them
because they’ve been filed for sanctions, as well; and I want to be able
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to have an opportunity to do that within the time we have. I’m just
concerned about equity with respect to time.

Anunobi’s objection to the trial court appears to be based on his own motion

for sanctions and his perceived lack of time to present his own evidence. In any

event, although he asked how the exhibits would be offered, he did not object on this

basis and did not state the grounds for his objection with sufficient specificity to

make the trial court aware of the complaint. See TEX. R. EVID. 103(a); TEX. R. APP.

33.1. Other than Anunobi’s vague objection, the appellants did not timely object to

the exhibits being admitted into evidence. See TEX. R. EVID. 103(a); TEX. R. APP.

33.1. Thus, any argument on how the exhibits were entered into the record is waived.

Sydow and Iron Oak contend that the trial court erred by considering their

misconduct in other cases. But a trial court may properly consider evidence of

misconduct in other litigation, especially regarding a party’s state of mind. See, e.g.,

Falk & Mayfield L.L.P., 974 S.W.2d at 824-25 (considering evidence of the party’s

conduct in other lawsuits to establish element of “bad faith”); Bradt, 14 S.W.3d at

767–68 (finding that a pattern of misconduct—including in other related litigation—

demonstrated the party’s bad faith in filing pleadings). Even if the evidence of

Sydow’s and Iron Oak’s misconduct in other cases is irrelevant, the appellants

waived their objection. See Low, 221 S.W.3d at 619.

In his fourth issue, Sydow contends that the trial court could not sanction

Sydow for any misrepresentation about his status as counsel and that the trial court
19
could not consider Anunobi’s affidavit filed after the hearing. At the same time,

Sydow’s signature on both the petition and TRO application, his name as one of the

case contacts in the automated system, his attendance at the hearings, and his request

for the unredacted settlement agreement all demonstrate that he represented Iron Oak

in this case, despite his declaration otherwise. We defer to the trial court’s

determination of the witnesses’ credibility on this issue. See Powell, 2025 WL

626428, at *9. Regardless of Anunobi’s affidavit, the evidence supports that Sydow

was Iron Oak’s counsel in this case, and Sydow’s representation otherwise is

patently false. Any error the trial court made by admitting Anunobi’s affidavit into

evidence was harmless. See TEX. R. APP. P. 44.1.

Based on the record before us, we hold that the trial court did not abuse its

discretion in concluding that the pleadings were filed in bad faith or with the intent

to harass and for improper purpose. Because there is at least some evidence to

support the trial court’s sanctions under both Civil Practice and Remedies Code

section 10.001(1) and Rule 13, we need not consider whether the trial court’s

sanctions were proper under section 10.001’s other provisions.

We overrule Iron Oak’s first issue, Anunobi’s first and second issue, and

Sydow’s first, second, and fourth issues.

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Attorney’s fees and expenses under Rule 13

Iron Oak complains that the evidence of attorney’s fees and expenses

supporting the $44,720 sanction under Rule 13 included unrecoverable items, such

as expenses for computer-assisted legal research, billing for the attorneys’ effort in

pursuing sanctions, and charges accounted for under block billing. But Iron Oak did

not include any citations to the clerk’s record and only makes a global assertion of

block billing. This does not properly present this issue for appeal, and thus his

complaint is waived due to inadequate briefing. TEX. R. APP. P. 38.1; See Adell v.

State, No. 01-21-00439-CR, 2023 WL 4938111, at *44 (Tex. App.—Houston [1st

Dist.] Aug. 3, 2023, pet. ref’d).

Amount of monetary sanctions under Chapter 10

In Iron Oak’s second issue, Sydow’s third issue, and Anunobi’s third issue,

the appellants contend that the $250,000 sanction against Sydow, the $250,000

sanction against Iron Oak, and the $25,000 sanction against Anunobi, respectively,

were excessive. Chapter 10 authorizes imposition of a monetary penalty, payable to

the court, against parties and lawyers who file groundless pleadings in bad faith.

TEX. CIV. PRAC. & REM. CODE §§ 10.001, 10.004(a).

“The amount of the sanction is limited by the trial court’s duty to exercise

sound discretion.” Low, 221 S.W.3d at 619. “A trial court abuses its discretion when

it acts without reference to any guiding rules or principles, not when it simply

21
exercises that discretion in a different manner than reviewing appellate courts

might.” Id. at 620.

To comply with constitutional due process, a sanction must be neither unjust

nor excessive. Nath, 446 S.W.3d at 363. The first prong of the due process analysis

requires a direct nexus between the offensive conduct, the offender, and the sanction

award. Id. A just sanction is “directed against the abusive conduct with an eye toward

remedying the prejudice caused to the innocent party.” Id. at 363. “A court must

attempt to determine whether the offensive conduct is attributable to counsel only,

to the party only, or to both.” Id.

The second prong of the due process analysis requires the punishment to be

proportional to the offensive conduct. Id. “[T]he sanction imposed should be no

more severe than necessary to satisfy its legitimate purposes.” Id. “Legitimate

purposes may include securing compliance with the relevant rules of civil procedure,

punishing violators, and deterring other litigants from similar misconduct.” Id.

Under Chapter 10, the only restriction on the amount of the penalty in the

language of the statute is that “[t]he sanction must be limited to what is sufficient to

deter repetition of the conduct or comparable conduct by others similarly situated.”

Id. § 10.004(b); see, e.g., Skepnek v. Mynatt, 8 S.W.3d 377, 380-81 (Tex. App.—El

Paso 1999, pet. denied) (upholding $25,000 sanction to be paid into registry of court

under Chapter 10).

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The Texas Supreme Court has recognized “a nonexclusive list of factors” for

courts to consider in determining an appropriate award of sanctions. See Low, 221

S.W.3d at 620 n.5. The factors are:

a. the good faith or bad faith of the offender;
b. the degree of willfulness, vindictiveness, negligence, or
frivolousness involved in the offense;
c. the knowledge, experience, and expertise of the offender;
d. any prior history of sanctionable conduct on the part of the offender;
e. the reasonableness and necessity of the out-of-pocket expenses
incurred by the offended person as a result of the misconduct;
f. the nature and extent of prejudice, apart from out-of-pocket expenses,
suffered by the offended person as a result of the misconduct;
g. the relative culpability of client and counsel, and the impact on their
privileged relationship of an inquiry into that area;
h. the risk of chilling the specific type of litigation involved;
i. the impact of the sanction on the offender, including the offender’s
ability to pay a monetary sanction;
j. the impact of the sanction on the offended party, including the
offended person’s need for compensation;
k. the relative magnitude of sanction necessary to achieve the goal or
goals of the sanction;
1. burdens on the court system attributable to the misconduct, including
consumption of judicial time and incurrence of juror fees and other
court costs; [and]
n. the degree to which the offended person’s own behavior caused the
expenses for which recovery is sought.

Id. Here, the trial court properly considered the factors applicable to the appellants’

conduct when determining the monetary sanctions imposed on each appellant.

23
Sydow complains that the trial court failed to consider all of the Low factors,

but the Texas Supreme Court only requires courts to consider relevant Low factors.

Low, 221 S.W.3d at 621 (Tex. 2007). In any event, Sydow did not preserve this

complaint because he raises it for the first time on appeal. TEX. R. APP. P. 33.1(a).

Much of the appellants’ arguments discuss the prompt nonsuit after the

appellees filed their Rule 91a motion and motion for sanctions. Nevertheless,

baseless filing burdens both courts and individuals with needless expense and delay,

and even if the litigant quickly nonsuits, the harm from the misconduct has already

occurred. Scott & White Mem’l Hosp. v. Schexnider, 940 S.W.2d 594, 597 (Tex.

1996). Although Sydow’s and Iron Oak’s sanctions were severe, they were

supported by the evidence of Sydow’s and Iron Oak’s flagrant bad faith conduct,

abuse of the court system, and blatant disregard of their responsibilities. See Brewer,

601 S.W.3d at 720 (observing “the severity of sanction imposed turns on the degree

of bad faith”) (emphasis in original); TransAm. Nat. Gas Corp. v. Powell, 811

S.W.2d 913, 918 (Tex. 1991) (explaining that severe sanctions should be reserved

for circumstances where offending party has flagrant bad faith or counsel callously

disregarded their responsibilities under rules of procedure). The trial court explained

that while the evidence showed Anunobi’s misconduct did not arise to the level of

Sydow’s and Iron Oak’s, Anunobi admitted that he would have done “the exact same

thing.”

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Sydow contends that the trial court failed to consider lesser sanctions or

explain why the $250,000 sanction was necessary. Yet the trial court explained that

the large monetary sanction was justified under the Low factors and necessary to

deter repetition of the sanctionable conduct. See Powell, 811 S.W.2d at 918 (holding

punishment and deterrence are legitimate purposes for sanctions).

Accordingly, we cannot say the trial court abused its discretion by awarding

$250,000 sanctions against Sydow, $250,000 sanctions against Iron Oak, and

$25,000 sanctions against Anunobi.

Additionally, Sydow and Anunobi argue that Chapter 10 does not allow the

trial court to impose continuing legal education requirements or notification

requirements on an attorney. But neither Sydow nor Anunobi raised this objection

in the trial court, and it is therefore not preserved for our review. TEX. R. APP. P.

33.1.

We overrule Iron Oak’s second issue, Anunobi’s third issue, and Sydow’s

third issue.

Evidentiary arguments by Anunobi

In Anunobi’s fifth issue, he contends that the trial court erred by admitting the

appellees’ exhibits into evidence despite his objection and for refusing to allow

Anunobi to call Berg as a witness at the evidentiary hearing.

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When the appellees asked the trial court to admit their documents into

evidence, Anunobi objected, stating, “Because we intend to call them to testify and

cross-examine them because they’ve been filed for sanctions, as well; and I want to

be able to have an opportunity to do that within the time we have. I’m just concerned

about equity with respect to time.” The trial court overruled Anunobi’s objection.

Although Anunobi complains in his brief that his due process rights were violated,

he did not object on that basis in the trial court. Accordingly, any error is waived.

TEX. R. EVID. 103; TEX. R. APP. P. 33.1.

Anunobi also contends that the trial court erred by not requiring Berg to testify

at the evidentiary hearing. At the hearing, Anunobi explained, “I filed a motion for

sanctions against him. So, he’s—actually, he’s a party to the case. He may be a

lawyer, but he’s a party to the ultimate lawsuit.” He further stated, “So, they filed

sanctions against me. So, I filed sanctions against them.” Thus, it appears from the

record that Anunobi merely wanted Berg to testify based on Anunobi’s own motion

for sanctions.

We uphold the trial court’s evidentiary ruling if there is any legitimate basis

for the ruling. Jones v. Mattress Firm Holding Corp., 558 S.W.3d 732, 737 (Tex.

App.—Houston [14th Dist.] 2018, no pet.). “A reviewing court will not reverse a

judgment because a trial court erroneously excluded evidence when the excluded

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evidence is cumulative or not controlling on a material issue dispositive to the case.”

Id. at 739; see TEX. R. APP. P. 44.1(a)(1).

Anunobi fails to show how Berg’s testimony is material or relevant to the

imposition of sanctions on Anunobi. See, e.g., Drew v. State, 76 S.W.3d 436, 449–

50 (Tex. App.—Houston [14th Dist.] 2002, pet. ref’d) (overruling issue regarding

right to confront when appellant was not permitted to cross-examine). The record

evidence of the appellants’ misconduct is sufficient to support the sanctions

imposed. Because the judgment does not involve Anunobi’s own motion for

sanctions, we hold any purported error in the admission or exclusion of Berg’s

testimony is harmless. See U–Haul Int’l, Inc. v. Waldrip, 380 S.W.3d 118, 132 (Tex.

2012); TEX. R. APP. P. 44.1.

We overrule Anunobi’s fifth issue.

Appellate fees

In Iron Oak’s third issue, Sydow’s fifth issue, and Anunobi’s fifth issue, the

appellants argue that the appellate attorney’s fees awarded should have been

explicitly contingent on the appellees’ success on appeal.

The final judgment states that the appellate attorney’s fees are contingent, but

the trial court was not explicit regarding such contingency. The trial court must

condition an award of appellate attorney’s fees upon the appellant’s unsuccessful

appeal. Keith v. Keith, 221 S.W.3d 156, 171 (Tex. App.—Houston [1st Dist.] 2006,

27
no pet.). We may modify the judgment to make the award of appellate attorney’s

fees contingent upon the receiving party’s success on appeal and do so here. See id.

Suggestion of Bankruptcy

After this case was set for submission, Iron Oak filed a suggestion of

bankruptcy requesting this Court to stay all proceedings because Iron Oak filed for

bankruptcy in France. Citing Texas Rule of Appellate Procedure 8.2, Iron Oak

contends that this French bankruptcy suspends this appeal. But Iron Oak has not

cited any authority to support such an application of Rule 8.2. Conversely, Anunobi

and the appellees contend that Rule 8.2 applies only to domestic bankruptcy filings.

We agree with Anunobi and the appellees.

“Congress has exercised its constitutional grant of authority over bankruptcy

matters by vesting jurisdiction over them exclusively in the federal courts.”

Kumkang Valve Mfg. Co. Ltd. v. Enter. Prods. Operating LLC, 442 S.W.3d 602, 606

(Tex. App.—Houston [1st Dist.] 2014, no pet.); see 28 U.S.C. § 1334(a); U.S.

CONST. art. I, § 8. The Texas Rules of Appellate Procedure recognize that a federal

bankruptcy filing triggers a Texas appellate court’s obligation to stay an appeal. See

TEX. R. APP. P. 8.1(d) (referencing bankruptcy filings available through federal court

online filing system); TEX. R. APP. P. 8.2 (“A bankruptcy suspends the appeal and

all periods in these rules from the date when the bankruptcy petition is filed until the

appellate court reinstates or severs the appeal in accordance with federal law.”

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(emphasis added)). As this Court explained in Kumkang Valve, a representative

appointed in a foreign bankruptcy proceeding may petition for recognition of the

foreign proceeding in United States bankruptcy court. 442 S.W.3d at 607; 11 U.S.C.

§§ 1504, 1509(a), 1515. If the petition meets the statutory requirements, the

bankruptcy court, after notice and a hearing, must enter an order granting recognition

of the foreign proceeding. See 11 U.S.C. §§ 1515, 1517. Without such recognition,

though, the entity seeking relief in the foreign bankruptcy proceeding is not entitled

to a stay of proceedings within the United States. See id. §§ 1520, 1521.

Iron Oak has provided no evidence that a federal court has recognized the

French bankruptcy. Accordingly, the suggestion of bankruptcy is deficient, and Iron

Oak is not entitled to the benefit of a stay pursuant to the federal bankruptcy law and

Texas Rule of Appellate Procedure 8.2.

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Conclusion

Based on the record before us, and all the reasons above, we affirm the trial

court’s imposition of sanctions under Chapter 10 and Rule 13. We modify the

portion of the trial court’s judgment ordering the appellants to pay the appellees’

attorney’s fees to be contingent on the appellees’ success on appeal and affirm as

modified.

Clint Morgan
Justice

Panel consists of Chief Justice Adams and Justices Morgan and Dokupil.

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